Employers Holdings Inc

Ladies and gentlemen, thank you for standing by, and welcome to the Q4 2020 Employers Holdings Incorporated Earnings Conference Call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any assistance, please press star 0. Thank you. And without further ado, I'd like to hand the conference over to your host today, Ms. Lori Brown. Thank you. Please go ahead.

Thank you, Operator. Good morning and welcome, everyone, to the 2020 fourth quarter and year-end earnings call for employers. Today's call is being recorded in webcast from the investor section of our website, where a replay will be available following the call. Presenting today on the call will be Kathy Antonello, our Chief Actuary, Mike Paquette, our Chief Financial Officer, Steve Festa, our Chief Operating Officer, and Doug Dirks, our Chief Executive Officer. Statements made during this conference call that are not based on historical facts are considered forward-looking statements. These statements are made in reliance on the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Although we believe the expectations expressed in our forward-looking statements are reasonable, risks and uncertainties could cause actual results to be materially different from our expectations, including the risks set forth in our filings with the Securities and Exchange Commission. All remarks made during the call are current only at the time of the call and will not be updated to reflect subsequent developments. The company also uses its website as a means of disclosing material non-public information and for complying with disclosure obligations under SEC's Regulation FD. Such disclosures will be included in the investor section of the company's website. Accordingly, investors should monitor that portion of the company's website in addition to following the company's press releases, SEC filings, public conference calls, and webcasts. In our earnings press release and in our remarks or responses to questions, we may use non-GAAP financial metrics. Reconciliations of these non-GAAP metrics to our GAAP results are included in our financial supplement as an attachment to our earnings press release, our investor presentation, and any other materials available in the investor section of our website. Now I will turn the call over to Kathy. Thank you.

Thank you, Lori, and welcome, everyone. It's a pleasure to be with you today. 2020 was an exceptional year for employers in that we achieved record levels for the number of policies in force, stockholders' equity, statutory surplus, and book value per share. We also generated more submissions, quotes, and binds than at any time in the history of the company. We accomplished these speeds during a pandemic while working from home and supporting agents, small businesses, and their injured workers. Our fourth quarter and full year results were very strong, especially considering the challenging macroeconomic environment. Our record number of policies in force at year end demonstrates that our policyholders are enduring the pandemic with reduced payrolls, which directly impact workers' compensation premium. We remain optimistic that as more vaccines are delivered and state restrictions are lifted, we will be able to begin replacing the premium we lost in 2020. In support of this anticipated recovery, we have continued to pursue and advance the significant investments we have made in delivering a superior customer experience for our agents and insureds. As expected, the challenging pandemic environment confirmed that ease of doing business is the critical element in producing and servicing small account business. Prior to the COVID-19 pandemic, we experienced strong new business opportunities, as evidenced by record levels of submissions, quotes, and binds. But the levels began to decrease as the pandemic progressed, particularly in certain states. Later in the year, as many businesses began to reopen and resume more fulsome operations, we began to experience year-over-year increases in new business submissions and new policies bound in nearly all of the states in which we operate, with the notable exception of California. Unfortunately, even with the increase in new business policies that we experienced outside of California in 2020, our new business premium has fallen, driven primarily by significant declines in payrolls and declines in the number of policies with annual premiums greater than $25,000. In regard to losses, we experienced a significant decline in the frequency of compensable indemnity claims in 2020, despite government mandates and legislative changes related to the COVID-19 pandemic, including the presumption of COVID-19 compensability for all or certain occupational groups in many states. We experienced this decline in nearly all states, including California. As a result, we reduced our current accident year loss in LAE ratio to 64.3% during the fourth quarter from the 65.5% maintained throughout the prior 21 months. We also reduced our prior accident year loss in LAE reserves by nearly $40 million during the quarter, which related to nearly every prior accident year. Our underwriting expenses for the quarter and the year were each down, and we have recently taken actions that will further reduce our underwriting expenses in 2021. Our plan is to achieve our targeted expense ratios as quickly as possible, despite the meaningful reductions in earned premium we're currently experiencing. My primary goal as the new CEO will be to fully capitalize on the post-COVID economic lift on the horizon while continuing to maintain discipline, both in terms of our underwriting and our underwriting expenses. With that, Mike will now provide a further discussion of our financial results. Steve will then discuss some of the current trends, and then Doug will provide his closing remarks. Mike?