Employers NYSE: EIG reported second-quarter 2026 diluted earnings per share growth of 29% from a year earlier and adjusted earnings per share growth of 46%, as the workers’ compensation insurer said its recapitalization and share repurchase program increased per-share results despite essentially flat net income.
Chief Executive Officer Kathy Antonello said the quarter demonstrated the “direct compounding benefit” of accretive repurchases completed since the company’s recapitalization. During the quarter, Employers repurchased 651,752 shares for $28 million, at an average price of $42.43 per share.
The average repurchase price was a 17% discount to beginning book value per share including the deferred gain, and an 18% discount to beginning adjusted book value per share, according to Chief Financial Officer Mike Pedraja. The company has $113 million remaining under its repurchase authorization through the end of 2027, and Pedraja said Employers expects to remain an active buyer of its shares, with the pace depending on the stock price and investment returns available from repurchases.
Premium declines reflect underwriting actions
Gross premiums written declined 20% year over year to $163 million in the second quarter, from $203 million. Net premiums earned fell 12%, while policies in force declined 5%.
Antonello said the declines reflected deliberate pricing and underwriting actions designed to prioritize profitability over volume, particularly in targeted customer segments and geographies as Employers concentrates on its core small-business market.
Pedraja said lower new and renewal business writings drove the reduction in gross premiums written. The decline was partly offset by a higher ending final-audit premium accrual and a $2.5 million premium restitution from a former policyholder.
During the question-and-answer session, Antonello said competition has been particularly intense among package writers and in the middle-market segment. Employers has turned away business when it cannot achieve the margins it seeks, she said, adding that the difference between the premium decline and smaller reduction in policy count reflects competitive conditions in the middle market.
Across its renewal book, Employers achieved an approximately 5% year-over-year rate increase, Antonello said. Payrolls were relatively flat, rising about 0.5%.
Loss ratio held steady as company remains cautious on reserves
Losses and loss-adjustment expenses were $122 million, compared with $140 million a year earlier. Employers recorded no prior-period loss development on voluntary business during the quarter and maintained its current accident-year loss and LAE ratio, excluding the loss portfolio transfer on voluntary business, at 72%—consistent with the full-year 2025 accident-year ratio.
The $2.5 million premium restitution lowered the second-quarter combined ratio by about 1.5 percentage points, Pedraja said.
Antonello said the company’s actuarial review was in line with expectations, resulting in no changes to reserves for accident years 2025 and earlier. She said Employers continues to see favorable development in older accident years but is taking a cautious approach to more recent periods, especially given uncertainty around cumulative-trauma claims and the company’s relatively high California exposure.
On broader workers’ compensation trends, Antonello said inflation pressures remain “quite benign.” The company has not seen concerning effects from tariffs on medical costs, she said, and its quarterly prescription-drug index has not indicated material pressure.
Expenses decline and investment yield improves
Commission expense decreased to $22 million from $26 million in the year-earlier period, driven by lower agency incentive accruals and a smaller proportion of higher-commission new-business premium.
Underwriting expenses fell 8% to $40 million from $43 million. Pedraja attributed the decline to expense-management measures, including lower personnel costs, policyholder dividends and bad-debt expense.
Net investment income was $27 million, essentially unchanged from the prior year. The company’s weighted-average book yield increased 40 basis points to 4.9% at quarter-end, following investment rebalancing completed last year. Fixed maturities had a modified duration of 4.5 years and an average credit quality of A-plus.
Adjusted net income, excluding realized and unrealized investment gains and losses as well as loss portfolio transfer deferred-gain amortization, was $13 million, compared with $12 million a year earlier. Book value per share, including the deferred gain and dividends, increased 9% year over year to $52.58.
New excess product gains early traction
Employers launched its excess workers’ compensation product in June, writing its first policy during the month. In July, the company received more than 200 submissions and bound 20 policies, generating $4 million in premium.
Antonello said July 1 is a significant renewal date for the product’s targeted segments, including municipalities and schools, and the company does not expect the same premium volume every month. Still, she said the submission flow and broker interest have been strong.
The company also plans to expand its loss-sensitive workers’ compensation offerings, including large-deductible products. Antonello said Employers believes the new products can diversify its book, add flexibility through market cycles and support new-business growth.
Employers reported a 94% staff adoption rate for its artificial-intelligence tools during the quarter and said it has implemented AI-assisted use cases with tangible returns. Antonello said the company is using AI to support productivity across much of the organization and expects to use the technology in building its large-deductible offering, as it did with the excess workers’ compensation product.
The board declared a third-quarter 2026 dividend of $0.34 per share, unchanged from the dividend level following the 6.25% increase implemented in the prior quarter. Antonello also said California’s approval of a 6.6% advisory pure premium rate increase effective Sept. 1 could support results in the company’s largest market, although Employers believes it had already incorporated part of that increase into its pricing and expects limited impact on its own book.
About Employers (NYSE:EIG)
Employers Holdings, Inc NYSE: EIG is a publicly traded property and casualty insurance holding company headquartered in Des Moines, Iowa. Through its subsidiaries, Employers Mutual Casualty Company and Employers Preferred Insurance Company, the firm specializes in providing workers' compensation coverage alongside an array of commercial insurance products. Its service offerings include general liability, commercial auto, businessowners policies and umbrella coverages, tailored to meet the risk-management needs of small and mid-sized businesses across multiple industries.
The company markets its insurance solutions primarily through a network of independent agencies and brokers, leveraging local market expertise to underwrite policies that address the unique exposures faced by clients in manufacturing, construction, healthcare, retail and service sectors.
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