AM Best Information Services

DECEMBER 12, 2014 02:59 PM (EST)

A.M. Best Affirms Ratings of Employers Holdings, Inc. and Its Subsidiaries

Gordon McLean
Senior Financial Analyst
(908) 439-2200, ext. 5304

Jennifer Marshall
Assistant Vice President
(908) 439-2200, ext. 5327

Christopher Sharkey
Manager, Public Relations
(908) 439-2200, ext. 5159

Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644


OLDWICK - DECEMBER 12, 2014 02:59 PM (EST)
A.M. Best has affirmed the financial strength rating of A- (Excellent) and the issuer credit rating (ICR) of "a-" of Employers Insurance Company of Nevada, Employers Compensation Insurance Company, Employers Assurance Company and Employers Preferred Insurance Company, collectively referred to as the Employers Insurance Group. In addition, A.M. Best has affirmed the ICR of "bbb-" of Employers Holdings, Inc. (EHI) [NYSE: EIG], the publicly traded ultimate parent of the Employers Insurance Group. The outlook for all ratings remains negative. All companies are headquartered in Reno, NV.

The ratings reflect the Employers Insurance Group's supportive level of risk-adjusted capitalization, historically strong operating performance that has been improving in the most recent years and management's market expertise. The companies also benefit from the financial flexibility afforded by EHI, as evidenced by capital contributions made to support premium growth and associated liabilities.

These positive rating factors are partially offset by weakened pre-tax operating results in recent years that have resulted, in part, in combined ratios for accident years 2008-2013 that are elevated from the group's historical performance levels, although they have been improving since accident-year 2010. In addition, the loss reserves associated with those accident years have developed adversely since inception. Significant premium growth in 2011–2013 is also an offsetting factor, although the growth rate has slowed significantly in 2014.

The rating also reflects the business concentration risk, with the group operating as a monoline workers' compensation carrier with a relatively high percentage of total premium volume in its largest state. These lines of business and geographic concentrations expose the group to higher potential impact of legislative, judicial and regulatory changes. Controlled state expansion and management's historical expertise in its niche markets partially mitigate these concerns.

Key factors that could trigger negative rating actions include a reduction in risk-adjusted capitalization to a level that is not in line with A.M. Best's expectations, premium growth in excess of projections, a decline in operating performance and further deterioration in the group's reserve position for the most recent accident years.

Positive rating actions could occur if the group stabilizes its loss reserve position for the recent accident years, continues moderation in the growth of premiums and policy counts and sustains improvement in underwriting and operating results to levels more in line with the group's historical performance, while maintaining or further improving its risk-adjusted capital position.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at

  • Key insurance criteria reports utilized:

  • Catastrophe Analysis in A.M. Best Ratings

  • Equity Credit for Hybrid Securities

  • Insurance Holding Company and Debt Ratings

  • Rating Members of Insurance Groups

  • Risk Management and the Rating Process for Insurance Companies

  • The Treatment of Terrorism Risk in the Rating Evaluation

  • Understanding BCAR for Property/Casualty Insurers

  • Understanding Universal BCAR

This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best's Ratings & Criteria Center .

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.

Related Companies

For information about each company, including the Best's Credit Reports, group members (where applicable) and news stories, click on the company name. An additional purchase may be required.