AM Best Revises Outlooks to Stable for Employers Holdings, Inc. and Its Subsidiaries

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has revised the outlooks to stable from positive and affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a-” of Employers Preferred Insurance Company and its pooled affiliates, collectively referred to as Employers Insurance Group (Employers). (See below for a detailed list of companies.) Concurrently, AM Best has revised the outlooks to stable from positive and affirmed the Long-Term ICR of “bbb-” and the indicative Long-Term Issue Credit Ratings (Long-Term IR) of Employers Holdings, Inc. (EHI) [NYSE:EIG], the publicly traded ultimate parent of Employers. All companies are headquartered in Reno, NV.

The Credit Ratings (ratings) reflect Employers’ balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

The ratings are supported by Employers’ risk-adjusted capitalization, considered to be at the strongest level, as well as consistent operating earnings and significant expertise in the workers’ compensation market. The ratings also reflect the financial flexibility afforded by its publicly traded parent, EHI. Employers maintains business concentration risk, operating as a monoline workers’ compensation insurer focusing on small businesses engaged in low-to-medium hazard industries, with a relatively high concentration of premium volume in a select number of states. While this concentration subjects the company to heightened degree of economic, regulatory and judicial risks, this concern is mitigated partially by management’s market expertise.

The revision of the outlooks to stable reflects the modest deterioration in the combined ratio year over year to be more in line with adequate performance metrics. Results have been impacted by a significant decrease in earned premiums and a minor increase in underwriting expenses. Although Employers continues to generate profitable results, there is negative pressure on workers’ compensation premium from the ongoing impact of the COVID-19 pandemic. This is particularly apparent in their small business and hospitality niches in California. The change in the outlooks to stable also reflects the lingering uncertainty of the challenging macroeconomic environment.

The FSR of A- (Excellent) and the Long-Term ICR of “a-” have been affirmed with the outlooks revised to stable from positive for the following pooled subsidiaries of Employers Holdings, Inc.:

• Employers Preferred Insurance Company
• Employers Compensation Insurance Company
• Employers Insurance Company of Nevada
• Employers Assurance Company
• Cerity Insurance Company

The following indicative Long-Term IRs under the shelf registration have been affirmed with the outlooks revised to stable from positive:

Employers Holdings, Inc.—

--“bbb-” on senior unsecured debt

--“bb+” on subordinated debt

--“bb” on preferred debt

This press release relates to Credit Ratings that have been published on AM 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 see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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