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Employers Holdings, Inc.

Employers Holdings, Inc.EIG财报

NYSE · 金融 · 火灾、海上及意外险

Employers Holdings, Inc. is a U.S.-headquartered insurance holding company that specializes in offering workers' compensation insurance and customized risk management services primarily for small and medium-sized enterprises across the United States. It mainly serves clients in low-to-medium hazard industries, helping them mitigate workplace safety risks and meet relevant regulatory requirements for employee protection.

What changed in Employers Holdings, Inc.'s 10-K — 2024 vs 2025

Top changes in Employers Holdings, Inc.'s 2025 10-K

336 paragraphs added · 326 removed · 291 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

82 edited+16 added−13 removed91 unchanged
These state agencies have broad regulatory, supervisory, and administrative powers, including, among other things, the power to grant and revoke licenses to transact business, license agencies, set the standards of solvency to be met and maintained, determine the nature of, and limitations on, 13 investments and dividends, approve policy forms and rates in some states, periodically examine financial statements, determine the form and content of required financial statements, set the rates that we may charge in some states, and periodically examine market conduct.
These state agencies have broad regulatory, supervisory, and administrative powers, including, among other things, the power to grant and revoke licenses to transact business, license agencies, set the standards of solvency to be met and maintained, determine the nature of, and limitations on, investments and dividends, approve policy forms and rates in some states, periodically examine financial statements, determine the form and content of required financial statements, set the rates that we may charge in some states, and periodically examine market conduct.
We provide expert advice on the root cause of incidents and assistance in the development of policies and programs. Policyholders have access to an extensive array of professional risk management resources available through self-service and direct options. Premium Audit We conduct premium audits on substantially all of our policyholders annually upon the policy expiration or termination.
We provide expert advice on the root cause of incidents and assistance in the development of policies and programs. Policyholders have access to an extensive array of professional risk management resources available through self-service and direct options. 7 Premium Audit We conduct premium audits on substantially all of our policyholders annually upon the policy expiration or termination.
Our premium rates are based upon actuarial analyses for each state in which we do business, except in administered pricing states, where premium rates are set by state insurance regulators and are adjusted periodically. The insurance industry is highly competitive, and there is significant competition in the national workers' compensation industry that is based on price and quality of services.
Our premium rates are based upon actuarial analyses for each state in which we do business, except in administered pricing states, where premium rates are set by state insurance regulators and are adjusted periodically. 10 The insurance industry is highly competitive, and there is significant competition in the national workers' compensation industry that is based on price and quality of services.
The level must not be less than the outstanding reserve for losses and a loss expense allowance equal to 11 7% of estimated paid losses discounted at a rate of 6%. If the assets held in trust fall below this threshold, we may require the reinsurers to contribute additional assets to maintain the required minimum level of collateral.
The level must not be less than the outstanding reserve for losses and a loss expense allowance equal to 7% of estimated paid losses discounted at a rate of 6%. If the assets held in trust fall below this threshold, we may require the reinsurers to contribute additional assets to maintain the required minimum level of collateral.
Our business, including our ability to adequately price products and services, establish reserves, provide an effective and secure 8 service to our customers and report our financial results in a timely and accurate manner, depends significantly on the integrity, availability, and timeliness of the data we maintain, as well as the data held by our third party service providers.
Our business, including our ability to adequately price products and services, establish reserves, provide an effective and secure service to our customers and report our financial results in a timely and accurate manner, depends significantly on the integrity, availability, and timeliness of the data we maintain, as well as the data held by our third party service providers.
On January 1, 2000, we assumed all of the assets, liabilities and operations of the Fund, including the Fund's rights and obligations associated with the LPT Agreement. We account for the LPT Agreement as retroactive reinsurance. Upon entry into the LPT Agreement, an initial deferred reinsurance gain (Deferred Gain) was recorded as a liability on our Consolidated Balance Sheets.
On January 1, 2000, we assumed all of the assets, liabilities and operations of the Fund, including the Fund's rights and obligations 6 associated with the LPT Agreement. We account for the LPT Agreement as retroactive reinsurance. Upon entry into the LPT Agreement, an initial deferred reinsurance gain (Deferred Gain) was recorded as a liability on our Consolidated Balance Sheets.
Actual increases or decreases in premiums resulting from completed final audits are known as final audit pick-ups or refunds, respectively. Anticipated increases or decreases in premiums associated with policies that are no longer in-force and in which a 7 final audit has not yet been completed are considered in the determination of our final audit accruals.
Actual increases or decreases in premiums resulting from completed final audits are known as final audit pick-ups or refunds, respectively. Anticipated increases or decreases in premiums associated with policies that are no longer in-force and in which a final audit has not yet been completed are considered in the determination of our final audit accruals.
We continue to actively seek new digital distribution partnerships and expect our existing partnerships to continue to grow in this channel. Direct-to-Customer To address the changing buying behaviors of small and micro-businesses, we continue our commitment to our Cerity brand, which offers digital insurance solutions, including direct-to-customer workers' compensation coverage.
We continue to actively seek new digital distribution partnerships and expect our existing partnerships to continue to grow in this channel. 13 Direct-to-Customer To address the changing buying behaviors of small and micro-businesses, we continue our commitment to our Cerity brand, which offers digital insurance solutions, including direct-to-customer workers' compensation coverage.
Employees and our Board are required to familiarize themselves with our comprehensive Code of Business Conduct and Ethics Policy and must remain in compliance with periodic training thereon, which is designed to assist them in conducting business in a legal, professional and ethical manner. 15
Employees and our Board are required to familiarize themselves with our comprehensive Code of Business Conduct and Ethics Policy and must remain in compliance with periodic training thereon, which is designed to assist them in conducting business in a legal, professional and ethical manner.
In addition, insurance laws in many states in which we are licensed require pre-notification to the state's insurance commissioner of a proposed change in control of a non-domestic insurance company licensed in those states. Statutory Accounting and Solvency Regulations.
In addition, insurance laws in many states in which we are licensed require pre-notification to the state's insurance commissioner of a proposed change in control of a non-domestic insurance company licensed in those states. 14 Statutory Accounting and Solvency Regulations.
(CGI) and, in turn, the ability of EGI and CGI to pay dividends to EHI. Additional information regarding financial, dividend, and investment restrictions is set forth in Note 15 in the Notes to our Consolidated Financial Statements. 14 Insurance Assessments.
(CGI) and, in turn, the ability of EGI and CGI to pay dividends to EHI. Additional information regarding financial, dividend, and investment restrictions is set forth in Note 15 in the Notes to our Consolidated Financial Statements. Insurance Assessments.
Over the past few years, the amount of business that we have written in hazard groups D through G has increased, which is, in part, due to this expansion. This expansion was achieved by thoughtfully considering industries that we previously excluded on a broad basis, and applying a finer approach to identify the lower hazard opportunities within these classes.
Over the past few years, the amount of business that we have written in hazard groups E through G has increased, which is, in part, due to this expansion. This expansion was achieved by thoughtfully considering industries that we previously excluded on a broad basis, and applying a finer approach to identify the lower hazard opportunities within these classes.
We also engage medical case management services for those claims that will benefit from such involvement. We utilize an outcomes-based medical network that incorporates predictive analytics to identify medical providers who achieve superior clinical outcomes for our injured employees. Our outcomes-based medical network and our managed care programs focus on achieving optimal outcomes, while accelerating injured employees' return to work.
We also engage medical case management services for those claims that will benefit from such involvement. We utilize an outcomes-based medical network that incorporates predictive analytics to identify medical providers who achieve superior clinical outcomes for our injured employees. Our outcomes-based medical network and our medical programs focus on achieving optimal outcomes, while accelerating injured employees' return to work.
In addition, our Corporate Governance Guidelines, Code of Business Conduct and Ethics, Code of Ethics for Senior Financial Officers, Related Person Transactions Policy, and charters for the Audit, Board Governance and Nominating, Executive, Human Capital Management and Compensation, and Risk Management, Technology and Innovation committees of our Board of Directors (Board) are available on our website.
In addition, our Corporate Governance Guidelines, Code of Business Conduct and Ethics, Code of Ethics for Senior Financial Officers, Related Person Transactions Policy, and charters for the Audit, Finance and Investment, Board Governance and Nominating, Executive, Human Capital Management and Compensation, and Risk Management, Technology and Innovation committees of our Board of Directors (Board) are available on our website.
Our investment portfolio is structured to support our need for: (i) optimizing our risk-adjusted total return; (ii) providing adequate liquidity; (iii) facilitating financial strength and stability; and (iv) ensuring regulatory and legal compliance. Equity Capital Strategy We believe that we have a strong equity capital position.
Our investment portfolio is structured to support our need for: (i) optimizing our risk-adjusted total returns; (ii) providing adequate liquidity; (iii) facilitating financial strength and stability; and (iv) ensuring regulatory and legal compliance. Equity Capital Strategy We believe that we have a strong equity capital position.
The combined ratio is calculated by adding: (i) the ratio of losses and loss adjustment expense (LAE) to earned premiums (known as the "loss and LAE ratio"); (ii) the ratio of commission expenses to earned premiums (known as the "commission expense ratio"); and (iii) the ratio of underwriting and general and administrative expenses to earned premiums (known as the "underwriting expense ratio"), with each component determined in accordance with U.S. generally accepted accounting principles (GAAP).
The combined ratio is calculated by adding: (i) the ratio of losses and loss adjustment expense (LAE) to earned premiums (known as the "loss and LAE ratio"); (ii) the ratio of commission expense to earned premiums (known as the "commission expense ratio"); and (iii) the ratio of underwriting expenses to earned premiums (known as the "underwriting expense ratio"), with each component determined in accordance with U.S. generally accepted accounting principles (GAAP).
Financial, Dividend, and Investment Restrictions. State laws require insurance companies to maintain minimum levels of surplus and place limits on the amount of premiums a company may write based on the amount of that company's surplus. These limitations may restrict the rate at which our insurance operations can grow.
Financial, Dividend, and Investment Restrictions. State laws require insurance companies to maintain minimum levels of surplus and place limits on the amount of premiums a company may underwrite based on the amount of that company's surplus. These limitations may restrict the rate at which our insurance operations can grow.
We compete with other specialty workers' compensation carriers, state agencies, multi-line insurance companies, professional employer organizations, self-insurance funds, and state insurance pools. Losses and LAE Reserves and Loss Development We are directly liable for losses and LAE under the terms of the insurance policies our insurance subsidiaries write.
We compete with other specialty workers' compensation carriers, state agencies, multi-line insurance companies, professional employer organizations, self-insurance funds, and state insurance pools. Losses and LAE Reserves and Loss Development We are directly liable for losses and LAE under the terms of the insurance policies our insurance subsidiaries underwrite.
These investments provide a steady source of income, which may fluctuate with changes in interest rates and our current investment strategies. While we oversee all of our investment activities, we employ independent Investment Managers. Our Investment Managers follow our written investment guidelines, which are approved by the Audit Committee.
These investments provide a steady source of income, which may fluctuate with changes in interest rates and our current investment strategies. While we oversee all of our investment activities, we employ independent Investment Managers. Our Investment Managers follow our written investment guidelines, which are approved by the AFI Committee.
The California Department of Insurance (California DOI), Florida Office of Insurance Regulation (Florida OIR), Nevada Division of Insurance (Nevada DOI), and New York Department of Financial Services (New York DFS) periodically examine the statutory financial statements of their respective domiciliary insurance companies. The most recent financial examinations for each of our insurance companies were conducted through December 31, 2022.
The California Department of Insurance (California DOI), Florida Office of Insurance Regulation (Florida OIR), Nevada Division of Insurance (Nevada DOI), and New York Department of Financial Services (New York DFS) periodically examine the statutory financial statements of their respective domiciliary insurance companies. The most recent financial examinations for each of our insurance companies were conducted through December 31, 2023.
These exclusions include but are not limited to losses arising from the following: reinsurance assumed by us under pooling arrangements; financial guarantee and insolvency; certain nuclear risks; liability as a member, subscriber, or reinsurer of any pool, syndicate, or association, but not assigned risk plans; liability arising from participation or membership in any insolvency fund; loss or damage caused by war other than acts of terrorism or civil commotion; workers' compensation business covering persons employed in Minnesota; and any loss or damage caused by any act of terrorism involving biological, chemical, nuclear, or radioactive pollution or contamination.
These exclusions include but are not limited to losses arising from the following: reinsurance assumed by us under pooling arrangements; financial guarantee and insolvency; certain nuclear risks; liability as a member, subscriber, or reinsurer of any pool, syndicate, or association, but not assigned risk plans; liability arising from participation or membership in any insolvency fund; loss or damage caused by war other than acts of terrorism or civil commotion; workers' compensation business covering persons employed in Minnesota (due to the state's mandatory reinsurance program); and any loss or damage caused by any act of terrorism involving biological, chemical, nuclear, or radioactive pollution or contamination.
An insurance company must maintain capital and surplus of at least 200% of the RBC computed by the NAIC's RBC model, known as the "Authorized Control Level" of RBC. At December 31, 2024, each of our insurance subsidiaries had total adjusted capital in excess of the minimum RBC requirements.
An insurance company must maintain capital and surplus of at least 200% of the RBC computed by the NAIC's RBC model, known as the "Authorized Control Level" of RBC. At December 31, 2025, each of our insurance subsidiaries had total adjusted capital in excess of the minimum RBC requirements.
These additional channels include distribution partners that utilize partnerships and alliances with entities such as payroll companies, and health care and property and casualty insurers, as well as digital agents and marketplaces. Our workers’ compensation insurance products are jointly offered and marketed with and through our partners and alliances .
These additional channels include distribution partners that utilize partnerships and alliances with entities such as payroll companies and property and casualty insurers, as well as digital agents and marketplaces. Our workers’ compensation insurance products are jointly offered and marketed with and through our partners and alliances .
Our asset allocation is reevaluated by management and reviewed by the Audit Committee on a quarterly basis. We also utilize our Investment Managers' investment advisory services to assist us in developing a tailored set of portfolio targets and objectives.
Our asset allocation is reevaluated by management and reviewed by the AFI Committee on a quarterly basis. We also utilize our Investment Managers' investment advisory services to assist us in developing a tailored set of portfolio targets and objectives.
Our underwriting guidelines generally require that insured risks fall within the coverage provided in the reinsurance program. Executive review and approval would be required if we were to write risks outside the reinsurance program.
Our underwriting guidelines generally require that insured risks fall within the coverage provided in the reinsurance program. Executive review and approval would be required if we were to underwrite risks outside the reinsurance program.
Our equity capital strategy is focused on supporting our business operations by maintaining equity capital levels commensurate with our desired ratings from independent rating agencies, satisfying regulatory constraints and legal requirements, and sustaining a level of financial flexibility to prudently manage our business through insurance and economic cycles while allowing us to take advantage of investment opportunities, including acquisitions of insurance and insurance-related entities, as and when they arise.
Our equity capital strategy is focused on supporting our business operations by maintaining equity capital levels commensurate with the insurance risks we underwrite, our desired ratings from independent rating agencies, satisfying regulatory constraints and legal requirements, and sustaining a level of financial flexibility to prudently manage our business through insurance and economic cycles while allowing us to take advantage of investment opportunities, including acquisitions of insurance and insurance-related entities, as and when they arise.
In addition to our medical networks, we work closely with local vendors, including attorneys, medical professionals, pharmacy benefits managers, and investigators, to bring local expertise to our reported claims. We use preferred provider organizations, bill review services, and utilization management to actively manage medical treatment appropriateness.
In addition to our medical networks, we work closely with local vendors, including attorneys, medical professionals, pharmacy benefits managers, and investigators, to bring local expertise to our reported claims. We use preferred provider organizations, bill review services, and utilization management to actively manage medical outcomes.
Our Business Strategy Our overall strategy is to pursue profitable growth opportunities across workers' compensation insurance market cycles, maximize our investment earnings within the constraints of prudent portfolio management, maintain a strong equity capital position at all times, and deliver value to our shareholders while being conscious of environmental, social and governance (ESG) concerns. 4 Underwriting Strategy We pursue profitable growth opportunities by focusing on disciplined underwriting and claims management, utilizing medical provider networks designed to produce superior medical and indemnity outcomes, establishing and maintaining strong, long-term relationships with traditional and specialty insurance agencies, developing important alternative distribution channels, and offering workers' compensation insurance solutions directly to customers.
Our Business Strategy Our overall strategy is to pursue profitable growth opportunities across workers' compensation insurance market cycles, to maximize investment earnings within the parameters of prudent portfolio management, to maintain a strong equity capital position at all times, and to deliver long-term value to our shareholders while remaining conscious of environmental, social and governance (ESG) considerations. 4 Underwriting Strategy We pursue profitable growth opportunities by focusing on disciplined underwriting and claims management, utilizing medical provider networks designed to produce superior medical and indemnity outcomes, establishing and maintaining strong, long-term relationships with traditional and specialty insurance agencies, developing alternative distribution channels, and offering workers' compensation insurance solutions directly to customers.
Investments Our investment portfolio is structured to support our need for: (i) optimizing our risk-adjusted total returns; (ii) providing adequate liquidity; (iii) facilitating financial strength and stability; and (iv) ensuring regulatory and legal compliance. As of December 31, 2024, the total carrying value of our investment portfolio was more than $2.4 billion.
Investments Our investment portfolio is structured to support our need for: (i) optimizing our risk-adjusted total returns; (ii) providing adequate liquidity; (iii) facilitating financial strength and stability; and (iv) ensuring regulatory and legal compliance. 12 As of December 31, 2025, the total carrying value of our investment portfolio was more than $2.2 billion.
We review the aging of our reinsurance recoverables on a quarterly basis and no material amounts due from our reinsurers have been written-off as uncollectible over the past several years. At December 31, 2024, we had no reinsurance recoverables on paid losses that were greater than 90 days overdue.
We review the aging of our reinsurance recoverables on ceded paid losses on a quarterly basis and no material ceded paid loss amounts due from our reinsurers have been written-off as uncollectible over the past several years. At December 31, 2025, we had no reinsurance recoverables on paid losses that were greater than 90 days overdue.
Workers' compensation is provided under a statutory system wherein most employers are required to provide coverage for their employees' medical, disability, vocational rehabilitation, and/or death benefit costs for work-related injuries or illnesses. We provide workers' compensation insurance throughout most of the United States, with a concentration in California, where 45% of our in-force premiums are generated.
Workers' compensation is provided under a statutory system wherein most employers are required to provide coverage for their employees' medical, disability, vocational rehabilitation, and/or death benefit costs for work-related injuries or illnesses. We provide workers' compensation insurance throughout most of the United States, with a concentration in California, where 46% of our gross premiums written are generated.
Item 1. Business General Employers Holdings, Inc. (EHI) is a holding company, which was incorporated in Nevada in 2005, with subsidiaries that are specialty providers of workers' compensation insurance and services focused on small and mid-sized businesses engaged in low-to-medium hazard industries.
Item 1. Business General Employers Holdings, Inc. (EHI) is a holding company, which was incorporated in Nevada in 2005, with subsidiaries that are specialty providers of workers' compensation insurance and related services focused on small and mid-sized businesses engaged in lower hazard industries.
We actively investigate and pursue all types of fraud including claimant fraud, premium fraud, and provider fraud. We also aggressively pursue all subrogation recoveries to mitigate claims exposure. Our fraud and subrogation efforts are handled through dedicated units.
We actively investigate and pursue all types of fraud including claimant fraud, premium fraud, and provider fraud. We also aggressively pursue all subrogation recoveries to mitigate claims exposure. Our fraud and subrogation efforts are handled through dedicated units, which include external partnerships.
Years Ended December 31, 2024 2023 2022 (in millions) Net premiums written $ 769.5 $ 760.6 $ 707.2 Total revenues 880.7 850.9 713.5 Net income 118.6 118.1 48.4 Our insurance subsidiaries are domiciled in the following states: State of Domicile Employers Insurance Company of Nevada (EICN) Nevada Employers Compensation Insurance Company (ECIC) California Employers Preferred Insurance Company (EPIC) Florida Employers Assurance Company (EAC) Florida Cerity Insurance Company (CIC) New York Products and Services Workers' compensation provides insurance coverage for the statutorily prescribed benefits that employers are required to provide to their employees who may be injured or suffer illness in the course of employment.
Years Ended December 31, 2025 2024 2023 (in millions) Net premiums written $ 750.1 $ 769.5 $ 760.6 Total revenues 858.7 880.7 850.9 Net income 10.8 118.6 118.1 Our insurance subsidiaries are domiciled in the following states: State of Domicile Employers Insurance Company of Nevada (EICN) Nevada Employers Compensation Insurance Company (ECIC) California Employers Preferred Insurance Company (EPIC) Florida Employers Assurance Company (EAC) Florida Cerity Insurance Company (CIC) New York Products and Services Workers' compensation provides insurance coverage for the statutorily prescribed benefits that employers are required to provide to their employees who may be injured or suffer illness in the course of employment.
During the years ended December 31, 2024, 2023, and 2022, our net investment income totaled $107.0 million, $106.5 million and $89.8 million, respectively. In addition, certain of our invested assets also generate net realized and unrealized gains and losses that we record on our Consolidated Statements of Comprehensive Income (Loss).
During the years ended December 31, 2025, 2024, and 2023, our net investment income totaled $116.7 million, $107.0 million and $106.5 million, respectively. In addition, certain of our invested assets also generate net realized and unrealized gains and losses that we record on our Consolidated Statements of Comprehensive Income (Loss).
In the fourth quarter of 2023, we developed and executed an integration plan to consolidate our previously segregated direct-to-consumer operations (Cerity) into our mainstream operations, while retaining its digital distribution capabilities.
In 2023, we developed and executed an integration plan to consolidate our previously segregated direct-to-consumer operations (Cerity) into our mainstream operations, while retaining its digital distribution capabilities.
Additional information regarding our Cybersecurity risk management, strategy and governance, is set forth under "Item 1C -Cybersecurity." Workers' Compensation Premiums We target small to mid-sized businesses engaged in low-to-medium hazard industries.
Additional information regarding our Cybersecurity risk management, strategy and governance, is set forth under "Item 1C -Cybersecurity." Workers' Compensation Premiums and Policies In-Force We target small to mid-sized businesses engaged in lower hazard industries.
These final audit increases or decreases, which can be significant, result in adjustments to our written and earned premiums, as well as our net losses and LAE, in the periods in which they are recognized.
These final audit increases or decreases, which can be significant, result in adjustments to our written and earned premiums, as well as our net losses and LAE, commission expense and other variable expenses in the periods in which they are recognized.
During the years ended December 31, 2024, 2023, and 2022, our net realized and unrealized gains (losses) from those invested assets totaled $24.1 million, $22.7 million and $(51.8) million, respectively.
During the years ended December 31, 2025, 2024, and 2023, our net realized and unrealized (losses) gains from those invested assets totaled $(20.4) million, $24.1 million and $22.7 million, respectively.
We also believe in returning equity capital not needed for these purposes to our stockholders through regular quarterly dividends and, when feasible, special dividends, and common stock repurchases. During the three-year period ended December 31, 2024, we declared $150.7 million of dividends on our common stock and eligible plan awards, and we repurchased $149.2 million of our common stock.
We also believe in returning equity capital not needed for these purposes to our stockholders through regular quarterly dividends and, when feasible, special dividends, and common stock repurchases. During the three-year period ended December 31, 2025, we declared $89.3 million of dividends on our common stock and eligible plan awards, and we repurchased $306.1 million of our common stock.
Additional information regarding our investment portfolio, including our approach to managing investment risk, is set forth under "Item 7 –Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations –Liquidity and Capital Resources –Investments" and "Item 7A –Quantitative and Qualitative Disclosures about Market Risk." Marketing and Distribution We market and sell our workers' compensation insurance products through: (i) local, regional, specialty and national insurance agents and brokers; (ii) national, regional, and local trade groups and associations; and (iii) direct-to-customer interactions. 12 Traditional Insurance Agents and Brokers We establish and maintain strong, long-term relationships with our vetted and appointed traditional insurance agencies that actively market our products and services.
Additional information regarding our investment portfolio, including our approach to managing investment risk, is set forth under "Item 7 –Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations –Liquidity and Capital Resources –Investments" and "Item 7A –Quantitative and Qualitative Disclosures about Market Risk." Marketing and Distribution We market and sell our workers' compensation insurance products through: (i) local, regional, specialty and national insurance agents and brokers; (ii) national, regional, and local trade groups and associations; and (iii) direct-to-customer interactions.
Overall, we experienced $4.4 million of pretax net unrealized investment losses arising from our fixed maturity investments in 2024, versus $58.9 million of pretax gains in 2023 and $256.1 million of pretax losses in 2022, and we experienced $32.9 million of pretax net unrealized investment gains arising from our equity securities and other investments in 2024, versus $30.7 million of pretax gains in 2023 and $48.2 million of pretax losses in 2022.
Overall, we experienced $59.1 million of pretax net unrealized investment gains arising from our fixed maturity investments in 2025, versus $4.4 million of pretax losses in 2024 and $58.9 million of pretax gains in 2023, and we experienced $34.3 million of pretax net unrealized investment gains arising from our equity securities and other investments in 2025, versus $32.9 million of pretax gains in 2024 and $30.7 million of pretax gains in 2023.
Recoverability of Reinsurance Reinsurance holds the assuming reinsurer liable to the ceding company to the extent of the reinsurance; however, it does not discharge the ceding company from its primary liability to its policyholders in the event the reinsurer cannot or refuses to pay its obligations under such reinsurance.
The Contingent Commission was formally settled with the reinsurers in 2024. Recoverability of Reinsurance Reinsurance holds the assuming reinsurer liable to the ceding company to the extent of the reinsurance; however, it does not discharge the ceding company from its primary liability to its policyholders in the event the reinsurer cannot or refuses to pay its obligations under such reinsurance.
Description of Business We are a specialty provider of workers' compensation insurance focused on small and mid-sized businesses engaged in low-to-medium hazard industries.
Description of Business We are a specialty provider of workers' compensation insurance and related services focused on small and mid-sized businesses engaged in lower hazard industries.
We also believe that these technological and intellectual capabilities will further support our future growth initiatives, provide continued direct access to workers' compensation insurance to those customers seeking an online experience, provide us with greater pricing precision and flexibility, and promote long-term value creation.
Our technology aims to save our insurance agents and brokers, and our policyholders, considerable time and maintains our competitiveness in our target markets. 8 We also believe that these technological and intellectual capabilities will further support our future growth initiatives, provide continued direct access to workers' compensation insurance to those customers seeking an online experience, provide us with greater pricing precision and flexibility, and promote long-term value creation.
Select insurance agencies who possess deep expertise in specialized industries market and sell our insurance products that generally fall outside of our traditional appetite, such as senior care and parcel delivery. Specialty agents and distribution partners generated 34.7%, 32.9%, and 30.7% of our in-force premiums as of December 31, 2024, 2023, and 2022, respectively.
Select insurance agencies who possess deep expertise in specialized industries market and sell our insurance products that generally fall outside of our traditional appetite, such as senior care and parcel delivery. Specialty agents and distribution partners generated 35.5%, 34.1%, and 32.4% of our gross premiums written, excluding adjustments, as of December 31, 2025, 2024, and 2023, respectively.
In recent years, we have made improvements in female representation in leadership roles such that women currently represent 64% of all our employees, 72% of our managers and supervisors, 48% of our vice presidents and directors, 71% of our executive team, and 33% of our members of the Board.
In recent years, we have made improvements in female representation in leadership roles such that women currently represent 66% of all our employees, 73% of our managers and supervisors, 49% of our vice presidents and directors, 63% of our 15 executive team, and 38% of our members of the Board.
ESG Strategy As a U.S. domestic workers' compensation provider with a small real-estate footprint, our most significant ESG considerations are primarily limited to: (i) with regard to environmental concerns, the potential impacts of climate change and increased climate change awareness to our investment portfolio over time; (ii) with regard to social concerns, diversity, equity and inclusion, human rights and labor standards; and (iii) with regard to governance concerns, Board and management composition, 5 employee relations, executive and employee compensation, bribery and corruption, and cyber risks, including data protection and privacy.
Any future returns of equity capital to our stockholders are dependent on a variety of factors, including our financial position, holding company liquidity, share price, corporate and regulatory requirements, and any other factors that our Board and Audit, Finance and Investment Committee (AFI Committee) of our Board deem relevant. 5 ESG Strategy As a U.S. domestic workers' compensation provider with a small real-estate footprint, our most significant ESG considerations are primarily limited to: (i) with regard to environmental concerns, the potential impacts of climate change and increased climate change awareness to our investment portfolio over time; (ii) with regard to social concerns, diversity, equity and inclusion, human rights and labor standards; and (iii) with regard to governance concerns, Board and management composition, employee relations, executive and employee compensation, bribery and corruption, and cyber risks, including data protection and privacy.
The estimated remaining liabilities subject to the LPT Agreement were approximately $277.1 million and $291.7 million, as of December 31, 2024 and 2023, respectively (See Note 10 in the Notes to our Consolidated Financial Statements). Losses and LAE paid with respect to the LPT Agreement totaled approximately $895.6 million and $877.6 million through December 31, 2024 and 2023, respectively.
The estimated unpaid losses and LAE ceded to the LPT Agreement was $259.6 million and $277.1 million, as of December 31, 2025 and 2024, respectively (See Note 10 in the Notes to our Consolidated Financial Statements). Losses and LAE paid with respect to the LPT Agreement totaled approximately $913.1 million and $895.6 million through December 31, 2025 and 2024, respectively.
We believe we have a cost-effective and scalable information technology infrastructure that complements our geographic reach and business model. We continue to invest in technology to automate business processes and further develop our data and analytics capabilities, which we believe will enable us to reduce our operating costs over the long-term and set a foundation for our future needs.
We continue to invest in technology to automate business processes and further develop our data analytic and artificial intelligence capabilities, which we believe will enable us to reduce our operating costs over the long-term and set a foundation for our future needs.
Premium rates vary by state according to the nature of the employees' duties and the business of the employer. Policy premiums are computed by applying the applicable premium rate to each class of the insured's payroll after it has been appropriately classified.
Policy premiums are computed by applying the applicable premium rate to each class of the insured's payroll after it has been appropriately classified.
The following table sets forth our in-force premiums, excluding estimated final audit premium, by hazard group and as a percentage of our total in-force premiums as of December 31: Hazard Group 2024 Percentage of 2024 Total 2023 Percentage of 2023 Total 2022 Percentage of 2022 Total (in millions, except percentages) A $ 118.5 16.0 % $ 132.6 19.1 % $ 126.4 20.3 % B 168.6 22.7 163.5 23.5 174.6 28.0 C 172.1 23.2 147.6 21.2 181.3 29.2 D 149.8 20.2 146.2 21.1 101.3 16.3 E 63.3 8.5 57.5 8.3 28.6 4.6 F 41.5 5.6 29.6 4.3 9.5 1.5 G 28.3 3.8 17.6 2.5 0.8 0.1 Total in-force $ 742.1 100.0 % $ 694.6 100.0 % $ 622.5 100.0 % 9 In-force premiums, excluding estimated final audit premium, for our top ten employer classifications as of December 31, 2024, and as a percentage of our total in-force premiums as of December 31, 2024, 2023, and 2022 were as follows: 2024 2023 2022 Employer Classifications In-force Premiums Percentage of Total Percentage of Total Percentage of Total (in millions, except percentages) Restaurants and Other Eating Places $ 126.5 17.0 % 17.4 % 19.4 % Traveler Accommodation 47.4 6.4 6.3 6.6 Building Finishing Contractors 39.3 5.3 3.5 1.8 Services to Buildings and Dwellings 30.9 4.2 3.7 3.7 Building Equipment Contractors 28.6 3.9 2.8 1.4 Real Estate Management 24.8 3.3 3.3 3.3 Schools 22.7 3.1 2.9 3.0 Architectural, Engineering and Related Services 22.0 3.0 2.3 1.7 Automobile Dealers 21.8 2.9 3.7 4.0 Automotive Repair and Maintenance 21.8 2.9 3.4 3.9 Total $ 385.8 52.0 % 49.3 % 48.8 % We provide workers' compensation insurance throughout the United States, with the exception of four states that are served exclusively by their state funds.
In California, from 2023 through 2025, our total gross premiums written increased 4.5% and our policies in-force increased 5.6%. 9 The following table sets forth our gross premiums written, excluding adjustments, by hazard group as a percentage of our total gross premiums written, excluding adjustments, as of December 31: Hazard Group Percentage of 2025 Total Percentage of 2024 Total Percentage of 2023 Total (in millions, except percentages) A 15.1 % 17.4 % 19.0 % B 21.8 22.7 24.2 C 22.1 22.6 22.1 D 20.2 20.1 20.8 E 8.8 7.9 7.4 F 7.0 5.6 4.1 G 5.0 3.7 2.4 Total 100.0 % 100.0 % 100.0 % Gross premiums written, excluding adjustments, for our top ten employer classifications as a percentage of our total gross premium written, excluding adjustments, as of December 31, 2025, 2024, and 2023 were as follows: 2025 2024 2023 Employer Classifications Percentage of Total Percentage of Total Percentage of Total (in millions, except percentages) Restaurants and Other Eating Places 14.8 % 16.7 % 17.7 % Building Finishing Contractors 7.5 5.1 3.4 Traveler Accommodation 6.1 6.5 6.7 Building Equipment Contractors 4.8 3.9 2.7 Services to Buildings and Dwellings 4.8 4.1 3.7 Real Estate Management 3.3 3.2 3.1 Architectural, Engineering and Related Services 3.3 3.0 2.3 Offices of Physicians 3.0 2.8 2.9 Automotive Repair and Maintenance 3.0 3.1 3.4 Business Support Services 2.9 2.5 2.4 Total 53.5 % 50.9 % 48.3 % We provide workers' compensation insurance throughout the United States, with the exception of four states that are served exclusively by their state funds.
The final determination of the Contingent Commission was $70.0 million, and we received the final payment of the Contingent Commission of $14.6 million during the third quarter of 2024. 6 We had total assets of $3.5 billion and $3.6 billion at December 31, 2024 and 2023, respectively.
The final determination of the Contingent Commission was $70.0 million, and we received the final payment of the Contingent Commission of $14.6 million during 2024. We had total assets of $3.4 billion and $3.5 billion at December 31, 2025 and 2024, respectively. The following table highlights key results of our operations for the last three years.
July 1, 2025 and consists of one treaty covering excess of loss and catastrophic loss events in four layers of coverage. Our reinsurance coverage is $190.0 million in excess of our $10.0 million retention on a per occurrence basis; including a maximum any one life limit of $20.0 million, subject to certain exclusions.
Our reinsurance coverage is $190.0 million ($171.0 million net of our co-participation) in excess of our $10.0 million retention on a per occurrence basis; including a maximum any one life limit of $20.0 million, subject to certain exclusions.
For a detailed description of our reserves, and the judgments, key assumptions and actuarial methodologies that we use to estimate our reserves, see "Item 7 –Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations –Critical Accounting Estimates –Reserves for Losses and LAE" and Note 9 in the Notes to our Consolidated Financial Statements. 10 Reinsurance Reinsurance is a transaction between insurance companies in which an original insurer, or ceding company, remits a portion of its premiums to a reinsurer, or assuming company, as payment for the reinsurer assuming a portion of the risk.
For a detailed description of our reserves, and the judgments, key assumptions and actuarial methodologies that we use to estimate our reserves, see "Item 7 –Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations –Critical Accounting Estimates –Reserves for Losses and LAE" and Note 9 in the Notes to our Consolidated Financial Statements.
The reinsurers are Chubb Bermuda Insurance Limited, XL Re Limited, and National Indemnity Company. The contract provides that during the term of the agreement that these reinsurers need to maintain an AM Best financial strength rating of not less than "A-" (Excellent). Currently, each of these reinsurers have a rating that satisfies this requirement.
The contract provides that during the term of the agreement that these reinsurers need to maintain an AM Best financial strength rating of not less than "A-" (Excellent). Currently, each of these reinsurers have a rating that satisfies this requirement. We account for the LPT Agreement as retroactive reinsurance.
The length of time between receiving premiums and paying out losses and other expenses, commonly referred to as the "tail," can significantly affect how profitable float can be. Long-tail losses, such as workers' compensation, pay out over longer periods of time, which provides us the opportunity to generate significant investment earnings from float.
Long-tail losses, such as workers' compensation, pay out over longer periods of time, which provides us the opportunity to generate significant investment earnings from float.
The solid growth we experienced in new and renewal premiums in 2024 was partially offset by lower final audit premiums and policy endorsements. We ended the year with a record amount of premium in-force and number of policies in-force. This growth resulted in part from our continued appetite expansion efforts, which are complementary to our business model.
Growth in our renewal business premiums in 2025 was partially offset by declines in new business premiums, final audit premiums, and policy endorsements. We ended 2025 with policies in-force at 133,605 versus 130,767 in 2024, a 2% increase. This growth resulted in part from our continued appetite expansion efforts, which are a component of our business model.
Our underwriters use their local market expertise and disciplined underwriting to identify those risks within the classes of business we underwrite that are likely to generate loss ratios that are below the industry average. Our total in-force premiums were $742.1 million, $694.6 million, and $622.5 million as of December 31, 2024, 2023, and 2022, respectively.
Our underwriters use their local market expertise and disciplined underwriting to identify those risks within the classes of business we underwrite that are likely to generate loss ratios that are below the industry average.
A combined ratio under 100% indicates that an insurance company is generating an underwriting profit. A combined ratio over 100% indicates that an insurance company is generating an underwriting loss. An insurance company’s calendar year loss experience includes loss and LAE movements recognized during any given calendar year regardless of the year in which the underlying insured event actually occurred.
An insurance company’s calendar year loss experience includes loss and LAE movements recognized during any given calendar year regardless of the year in which the underlying insured event actually occurred. An insurance company’s accident year loss experience includes only those loss and LAE movements recognized during the year in which the underlying insured event actually occurred.
We may require a special commutation of the percentage share of any loss in the reinsurance program of any subscribing reinsurer that is in runoff. We believe that our reinsurance program meets our current needs. LPT Agreement In 1999, the Fund entered into a retroactive 100% quota share reinsurance agreement through a loss portfolio transfer transaction with third party reinsurers.
We believe that our reinsurance program meets our current needs. 11 LPT Agreement In 1999, the Fund entered into a retroactive 100% quota share reinsurance agreement through a loss portfolio transfer transaction with third party reinsurers, Chubb Bermuda Insurance Limited, XL Re Limited, and National Indemnity Company.
We believe that the bundling of products and services through these relationships contributes to higher retention rates than business generated by our traditional agents, and we continue to actively seek new partnerships and alliances in these areas. A significant concentration of our business is generated by our specialty agent ADP.
We believe that the bundling of products and services through these relationships contributes to high levels of policyholder retention rates, and we continue to actively seek new partnerships and alliances in these areas.
These agencies generated 65.3%, 67.1%, and 69.3% of our in-force premiums at December 31, 2024, 2023, and 2022, respectively, and our largest traditional insurance agency generated less than three percent of our in-force premiums at each of December 31, 2024, 2023, and 2022.
These agencies generated 64.5%, 65.9%, and 67.6% of our gross premiums written, excluding adjustments, at December 31, 2025, 2024, and 2023, respectively, and our largest traditional insurance agency group generated less than 5.0% percent of our gross premiums written at each of December 31, 2025, 2024, and 2023.
The Board Governance and Nominating Committee of our Board (Governance Committee) periodically reviews our ESG programs, including receiving periodic updates from our management responsible for such activities. Recent Events and Trends Premium Production and Policies In-Force Our premium growth in 2024 was primarily the result of higher new and renewal business premiums.
The Board Governance and Nominating Committee of our Board (Governance Committee) periodically reviews our ESG programs, including receiving periodic updates from our management responsible for such activities.
ADP is the largest payroll services provider in the United States. As part of its services, ADP sells our workers' compensation insurance product along with its payroll and accounting services through its insurance agency and field sales staff. ADP generated 17.2%, 16.2%, and 15.0% of our in-force premiums as of December 31, 2024, 2023, and 2022, respectively.
A significant concentration of our business is generated by one of our specialty agents, Automatic Data Processing (ADP), which is the largest payroll services provider in the United States. As part of its services, ADP sells our workers' compensation insurance product along with its payroll and accounting services through its insurance agency and field sales staff.
We were also entitled to receive a Contingent Commission under the LPT Agreement through June 30, 2024, which was based on actual paid losses under the LPT Agreement through that date. The Contingent Commission was formally settled with the reinsurers in the third quarter of 2024.
Upon entry into the LPT Agreement, an initial Deferred Gain was recorded as a liability on our Consolidated Balance Sheets as Deferred Gain. We were also entitled to receive a Contingent Commission under the LPT Agreement through June 30, 2024, which was based on actual paid losses under the LPT Agreement through that date.
The coverage under our prior annual reinsurance programs that ended as of June 30, 2024 and 2023 was also $190.0 million in excess of our $10.0 million retention on a per occurrence basis.
The coverage under our prior annual reinsurance programs that ended as of June 30, 2025 and 2024 was $190.0 million in excess of our $10.0 million retention on a per occurrence basis. We are solely responsible for any losses we suffer above $200.0 million except those covered by the Terrorism Risk Insurance Program Reauthorization Act of 2019 (TRIPRA of 2019).
Underwriting income or loss is determined by deducting losses and LAE, commission expenses, and underwriting and general and administrative expenses from net premiums earned.
A combined ratio under 100% indicates that an insurance company is generating an underwriting profit. A combined ratio over 100% indicates that an insurance company is generating an underwriting loss. Underwriting income or loss is determined by deducting losses and LAE, commission expenses, and underwriting expenses from net premiums earned.
During that time, the insurer has the opportunity to invest the money, thereby earning investment income and generating investment gains and losses. Insurance companies operating at a combined ratio of greater than 100% can be profitable when investment income and net investment gains are taken into account.
Insurance companies operating at a combined ratio of greater than 100% can be profitable when investment income and net investment gains are taken into account. The length of time between receiving premiums and paying out losses and other expenses, commonly referred to as the "tail," can significantly affect how profitable float can be.
We had 715 full-time employees at December 31, 2024 and our corporate headquarters are located at 5340 Kietzke Lane, Suite 202, Reno, Nevada. We operate throughout the United States (U.S.) with the exception of North Dakota, Ohio, Washington and Wyoming, which are served exclusively by their state funds.
We operate throughout the U.S. with the exception of North Dakota, Ohio, Washington and Wyoming, which are served exclusively by their state funds.
We are not dependent on any single policyholder, and the loss of any single policyholder would not have a material adverse effect on our business. Our premiums are generally a function of the applicable premium rate, the amount of the insured's payroll, and if applicable, a factor reflecting the insured's historical loss experience (experience modification factor).
Our premiums are generally a function of the applicable premium rate, the amount of the insured's payroll, and if applicable, a factor reflecting the insured's historical loss experience (experience modification factor). Premium rates vary by state according to the nature of the employees' duties and the business of the employer.
Beginning in 2021, we extended our reach by applying our established underwriting approach to new industries, including landscaping, janitorial, property management, and artisan contracting. This expansion has provided meaningful and complementary growth for the Company as we’ve been able to identify and partner with those small to mid-sized businesses in these classes that fit a desirable low-to-medium risk profile.
These classes have continued to provide meaningful and complementary growth for the Company as we have been able to identify and partner with those small to mid-sized businesses in these classes that align with our desirable low-to-medium risk profile.
Our digital distribution channel utilizes proprietary application programming interfaces (APIs) to submit, quote and bind applications for workers' compensation insurance. Our digital channel is comprised of digital marketplace platforms as well as appointed digital retail and wholesale agency models. Digital agents generated 7.0%, 5.0%, and 4.5% of our in-force premiums as of December 31, 2024, 2023, and 2022, respectively.
Our digital channel is comprised of digital marketplace platforms as well as appointed digital retail and wholesale agency models. Digital agents generated 9.4%, 8.3%, and 7.0% of our gross premiums written, excluding adjustments, as of December 31, 2025, 2024, and 2023, respectively.
As part of our continued technology and process improvement initiatives, we implemented a new digital first notice of loss tool and an enhanced payment processing system in 2024. Business Continuity/Disaster Recovery We maintain business continuity and disaster recovery plans for our critical business functions, including the restoration of information technology infrastructure and applications.
As part of our continued technology and process improvement initiatives, we are driving data maturity, modernizing our underwriting capabilities, and accelerating the use of artificial intelligence across the organization. Business Continuity/Disaster Recovery We maintain business continuity and disaster recovery plans for our critical business functions, including the restoration of information technology infrastructure and applications.
Such reinsurance reduces the magnitude of such losses on our net income and the capital of our insurance subsidiaries. Excess of Loss Reinsurance Our current reinsurance program applies to all covered losses occurring between 12:01 a.m. July 1, 2024 and 12:01 a.m.
Such reinsurance reduces the magnitude of such losses on our net income and the capital of our insurance subsidiaries.
We offer ease of doing business, provide responsive service, and pay competitive commissions. Our sales representatives and underwriters work closely with these agencies to market and underwrite our business. This results in enhanced understanding of the businesses, the risks we underwrite, and the needs of prospective customers. We do not delegate underwriting authority to agents or brokers.
Traditional Insurance Agents and Brokers We establish and maintain strong, long-term relationships with our vetted and appointed traditional insurance agencies that actively market our products and services. We offer ease of doing business, provide responsive service, and pay competitive commissions. Our sales representatives and underwriters work closely with these agencies to market and underwrite our business.
An insurance company’s accident year loss experience includes only those loss and LAE movements recognized during the year in which the underlying insured event actually occurred. In insurance and reinsurance operations, "float" arises when premiums are received before losses and other expenses are paid, an interval that may extend over many years.
In insurance and reinsurance operations, "float" arises when premiums are received before losses and other expenses are paid, an interval that may extend over many years. During that time, the insurer has the opportunity to invest the money, thereby earning investment income and generating investment gains and losses.
The following table shows our in-force premiums, our in-force premiums including estimated final audit premium, and number of policies in-force for each of our largest states and all other states combined as of December 31: 2024 2023 2022 State In-force Premiums Policies In-force In-force Premiums Policies In-force In-force Premiums Policies In-force (dollars in millions) California $ 336.1 44,540 $ 311.5 43,353 $ 279.7 42,876 Florida 60.1 10,943 56.6 10,008 49.4 9,417 New York 36.1 7,938 31.9 7,603 27.3 7,497 Other (43 states and D.C.) 309.8 67,346 294.6 65,445 266.1 61,566 Total in-force $ 742.1 130,767 $ 694.6 126,409 $ 622.5 121,356 Estimated audit premium 26.1 — 14.8 — 31.5 — Total in-force, including estimated audit premium $ 768.2 130,767 $ 709.4 126,409 $ 654.0 121,356 From 2022 through 2024, our total in-force premiums increased 19.2% and our policies in-force increased 7.8%.
The following table shows our gross premiums written, excluding adjustments, and number of policies in-force for each of our largest states and all other states combined as a percentage of our total gross premiums written, excluding adjustments, as of December 31: 2025 2024 2023 State Percentage of Total Gross Premiums Written Percentage of Policies In-force Percentage of Total Gross Premiums Written Percentage of Policies In-force Percentage of Total Gross Premiums Written Percentage of Policies In-force (dollars in millions) California 46.1 % 34.3 % 45.0 % 34.1 % 44.5 % 34.3 % Florida 8.7 % 8.5 % 8.0 % 8.4 % 8.4 % 7.9 % New York 5.4 % 6.2 % 5.1 % 6.1 % 4.9 % 6.0 % Other (43 states and D.C.) 39.8 % 51.0 % 41.9 % 51.4 % 42.2 % 51.8 % Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % From 2023 through 2025, our total gross premiums written decreased 1.5% and our policies in-force increased 5.7%.
The majority of this business is written through ADP's small business unit, which specializes in accounts from 1 to 50 employees. Our relationship with ADP is non-exclusive; however, we believe that we are a key partner for ADP in our selected markets and classes of business.
Our relationship with ADP is non-exclusive; however, we believe that we are a key partner for ADP in our selected markets and classes of business. Our digital distribution channel utilizes proprietary application programming interfaces (APIs) to submit, quote and bind applications for workers' compensation insurance.
We had approximately 2,500 traditional insurance agencies that marketed and sold our insurance products at December 31, 2024.
This results in enhanced understanding of the businesses, the risks we underwrite, and the needs of prospective customers. We do not delegate underwriting authority to agents or brokers. We had approximately 2,500 traditional insurance agencies that marketed and sold our insurance products at December 31, 2025.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Regulations vary from state to state, but typically address or include: • standards of solvency, including RBC measurements; • restrictions on the nature, quality, and concentration of investments; • restrictions on the types of terms that we can include in the insurance policies we offer; • mandates that may affect wage replacement and medical care benefits paid under the workers' compensation system; • requirements for the handling and reporting of claims and procedures for adjusting claims; • restrictions on the way rates are developed, and premiums are determined; • the manner in which agents may be appointed; • establishment of liabilities for unearned premiums, unpaid losses and LAE; • limitations on our ability to transact business with affiliates; • sustainability practices; • mergers, acquisitions, and divestitures involving our insurance subsidiaries; • licensing requirements and approvals that affect our ability to do business; • applicable privacy laws, including the protection of nonpublic personal information and personally identifiable information, including health information; • cyber-security, privacy, and artificial intelligence laws and regulations; • potential assessments for the settlement of covered claims under insurance policies issued by impaired, insolvent, or failed insurance companies or other assessments imposed by regulatory agencies; and 20 • the amount of dividends that our insurance subsidiaries may pay to EGI and CGI and, in turn, the ability of EGI and CGI to pay dividends to EHI.
Regulations vary from state to state, but typically address or include: • standards of solvency, including RBC measurements; 20 • restrictions on the nature, quality, and concentration of investments; • restrictions on the types of terms that we can include in the insurance policies we offer; • mandates that may affect wage replacement and medical care benefits paid under the workers' compensation system; • requirements for the handling and reporting of claims and procedures for adjusting claims; • restrictions on the way rates are developed, and premiums are determined; • the manner in which agents may be appointed; • establishment of liabilities for unearned premiums, unpaid losses and LAE; • limitations on our ability to transact business with affiliates; • sustainability practices; • mergers, acquisitions, and divestitures involving our insurance subsidiaries; • licensing requirements and approvals that affect our ability to do business; • applicable privacy laws, including the protection of nonpublic personal information and personally identifiable information, including health information; • cyber-security, privacy, and artificial intelligence laws and regulations; • potential assessments for the settlement of covered claims under insurance policies issued by impaired, insolvent, or failed insurance companies or other assessments imposed by regulatory agencies; and • the amount of dividends that our insurance subsidiaries may pay to EGI and CGI and, in turn, the ability of EGI and CGI to pay dividends to EHI.
Because techniques used to obtain unauthorized access to or to sabotage systems change frequently and may not be known until launched, we and the third parties on which we rely may be unable to anticipate or prevent these attacks, react in a timely manner or implement adequate preventive measures, and we may face delays in our detection or remediation of, or other responses to, security breaches and other privacy-and security-related incidents.
Because techniques used to obtain unauthorized access to or to sabotage systems change frequently and may not be known until launched, we and the third parties on which we rely may be unable to anticipate or prevent these attacks, react in a timely manner or implement adequate preventive measures, and we may face delays in our detection or remediation of, or other responses to, security breaches and other privacy-and security- 23 related incidents.
A significant decline in our investment income or the value of our investments as a result of changes in interest rates, deterioration in the credit of the securities in which we have invested, decreased dividend payments, general market conditions, events that have an adverse impact on any particular industry, asset class, or geographic region in which we hold significant investments could have an adverse effect on our net income and, as a result, on our stockholders' equity and policyholder surplus.
A significant decline in our investment income or the value of our investments as a result of changes in 22 interest rates, deterioration in the credit of the securities in which we have invested, decreased dividend payments, general market conditions, events that have an adverse impact on any particular industry, asset class, or geographic region in which we hold significant investments could have an adverse effect on our net income and, as a result, on our stockholders' equity and policyholder surplus.
If the value of the collateral in the trusts drops below the required minimum level and the reinsurers are unable to contribute additional assets, we could be responsible for substituting a new reinsurer or paying those claims without the benefit of reinsurance. The reinsurers have collateralized their obligations under the LPT Agreement by placing investment securities in trust.
If the value of the collateral in the trusts drops below the required minimum level and the reinsurers are unable to contribute additional assets, we could be responsible for substituting a new reinsurer or paying those claims without the benefit of reinsurance. The reinsurers have collateralized their obligations under the LPT Agreement by placing investment securities in 18 trust.
In certain states, we have a relatively limited operating history and must rely on a combination of industry experience and our specific experience regarding claims emergence and payment patterns, medical cost inflation, and claim cost trends, adjusted for future anticipated changes in claims-related and economic trends, as well as regulatory and legislative changes, to establish our best estimate of reserves for losses and LAE.
Additionally, in certain states, we have a relatively limited operating history and must rely on a combination of industry experience and our specific experience regarding claims emergence and payment patterns, medical cost inflation, and claim cost trends, adjusted for future anticipated changes in claims-related and economic trends, as well as regulatory and legislative changes, to establish our best estimate of reserves for losses and LAE.
Because 21 we have insurance subsidiaries domiciled in California, Florida, Nevada, and New York, any transaction that would constitute a change in control of us would generally require the party attempting to acquire control to obtain the prior approval of the insurance commissioners of these states and may require pre-notification of the proposed change of control in these or other states in which we are licensed to transact business.
Because we have insurance subsidiaries domiciled in California, Florida, Nevada, and New York, any transaction that would constitute a change in control of us would generally require the party attempting to acquire control to obtain the prior approval of the insurance commissioners of these states and may require pre-notification of the proposed change of control in these or other states in which we are licensed to transact business.
Further, any such incidents or any perception that our security measures are inadequate could lead to a loss of confidence in us and harm to our 23 reputation. Any of the foregoing matters could have a material adverse effect upon our business, financial condition, and operating results.
Further, any such incidents or any perception that our security measures are inadequate could lead to a loss of confidence in us and harm to our reputation. Any of the foregoing matters could have a material adverse effect upon our business, financial condition, and operating results.
Assessments and other surcharges for guaranty funds, second injury funds, and other mandatory pooling arrangements may reduce our profitability. All states require insurance companies licensed to do business in their state to bear a portion of the unfunded obligations of insolvent insurance companies.
Assessments and other surcharges for guaranty funds, second injury funds, and other mandatory pooling arrangements may reduce our profitability. 21 All states require insurance companies licensed to do business in their state to bear a portion of the unfunded obligations of insolvent insurance companies.
Any failure to remit such premiums to us or to remit such amounts on a timely basis could have an adverse effect on our results of operations. We rely on statistical data models and analytics that leverage internal and external data.
Any failure to remit such premiums to us or to remit such amounts on a timely basis could have an adverse effect on our results of operations. 17 We rely on statistical data models and analytics that leverage internal and external data.
We continue to experience price competition in our target markets. 16 Because of cyclicality in the workers' compensation market, due in large part to competition, capacity, and general economic factors, we cannot predict the timing or duration of changes in the market cycle.
We continue to experience price competition in our target markets. Because of cyclicality in the workers' compensation market, due in large part to competition, capacity, and general economic factors, we cannot predict the timing or duration of changes in the market cycle.
Additional inflationary concerns are considered in determining the level and adequacy of our reserves for losses and LAE, and particular consideration is given to medical and hospital inflation rates as these inflation rates have historically exceeded general inflation rates.
Additional inflationary concerns are considered in determining the 19 level and adequacy of our reserves for losses and LAE, and particular consideration is given to medical and hospital inflation rates as these inflation rates have historically exceeded general inflation rates.
These could result in substantial costs, diversion of resources, fines, penalties, and other damages and liabilities, and harm to our customer relationships, our market position, and our ability to attract new customers. Any of these could harm our business, financial condition, and results of operations. 24
These could result in substantial costs, diversion of resources, fines, penalties, and other damages and liabilities, and harm to our customer relationships, our market position, and our ability to attract new customers. Any of these could harm our business, financial condition, and results of operations.
Greater financial resources also permit an insurer to gain market share through more competitive pricing, even if that pricing results in reduced underwriting margins or an underwriting loss.
Greater financial 16 resources also permit an insurer to gain market share through more competitive pricing, even if that pricing results in reduced underwriting margins or an underwriting loss.
In addition, California could be more adversely impacted by pandemics and terrorist acts than most other states due to population density in its major metropolitan areas. Additionally, the workers' compensation industry has seen a higher level of claims litigation in California, which could expose us beyond the liabilities currently expected and included in our financial statements.
In addition, California could be more adversely impacted by pandemics and terrorist acts than most other states due to population density in its major metropolitan areas. Additionally, the workers' compensation industry has seen a higher level of claims litigation and cumulative trauma claims in California, which could expose us beyond the liabilities currently expected and included in our financial statements.
General Risk Factors We may be unable to realize our investment objectives, and economic conditions in the financial markets could lead to investment losses. Investment income is a key component of our revenue and net income. Our investment portfolio is managed by independent asset managers that operate under investment guidelines approved by our Audit Committee.
General Risk Factors We may be unable to realize our investment objectives, and economic conditions in the financial markets could lead to investment losses. Investment income is a key component of our revenue and net income. Our investment portfolio is managed by independent asset managers that operate under investment guidelines approved by our AFI Committee.
We may require additional capital in the future, which may not be available to us or may be available only on unfavorable terms. Our future capital requirements will depend on many factors, including state regulatory requirements, our ability to write new business successfully, and our ability to establish premium rates and reserves at levels sufficient to cover losses.
We may require additional capital in the future, which may not be available to us or may be available only on unfavorable terms. Our future capital requirements will depend on many factors, including state regulatory requirements, our ability to underwrite new business successfully, and our ability to establish premium rates and reserves at levels sufficient to cover losses.
Intense competition and the fact that we write only a single line of insurance could adversely affect our ability to sell policies at rates that we deem adequate. The market for workers' compensation insurance products is highly competitive.
Intense competition and the fact that we underwrite only a single line of insurance could adversely affect our ability to sell policies at rates that we deem adequate. The market for workers' compensation insurance products is highly competitive.
We rely on these systems to operate key aspects of our business, including processing and generating new and renewal business, providing customer service, administering and making payments on claims, facilitating collections, and underwriting and administering the policies we write.
We rely on these systems to operate key aspects of our business, including processing and generating new and renewal business, providing customer service, administering and making payments on claims, facilitating collections, and underwriting and administering the policies we underwrite.
A reduction in our AM Best rating could adversely affect the amount of business we could write, as well as the relationships we currently have with our insurance agents, brokers, distribution partners, reinsurers, and others.
A reduction in our AM Best rating could adversely affect the amount of business we could underwrite, as well as the relationships we currently have with our insurance agents, brokers, distribution partners, reinsurers, and others.
If we are unable to obtain reinsurance or collect on ceded reinsurance, our ability to write new policies and to renew existing policies could be adversely affected and our financial condition and results of operations could be materially adversely affected.
If we are unable to obtain reinsurance or collect on ceded reinsurance, our ability to underwrite new policies and to renew existing policies could be adversely affected and our financial condition and results of operations could be materially adversely affected.
Financial Risks We focus on small and mid-sized businesses, and those businesses may be severely and disproportionately impacted by a downturn in economic conditions or changes in applicable regulations, taxes, or labor conditions.
Financial Risks We focus on small and mid-sized businesses, and those businesses may be severely and disproportionately impacted by a downturn in economic conditions or changes in applicable regulations or regulatory enforcement, taxes, or labor conditions.
Our agreement with ADP is not exclusive. A termination of this agreement, our failure to maintain a good relationship with ADP, or its failure to successfully market our products could each materially reduce our revenues and could have a material adverse effect on our results of operations.
A termination of this agreement, our failure to maintain a good relationship with ADP, or its failure to successfully market our products could each materially reduce our revenues and could have a material adverse effect on our results of operations.
Our reinsurance coverage is $190.0 million in excess of our $10.0 million retention on a per occurrence basis; including a maximum any one life limit of $20.0 million, subject to certain exclusions. The availability, amount, and cost of reinsurance depend on market conditions and our loss experience and may fluctuate significantly.
Our reinsurance coverage is $190.0 million ($171.0 million net of our co-participation), in excess of our $10.0 million retention on a per occurrence basis; including a maximum any one life limit of $20.0 million, subject to certain exclusions. The availability, amount, and cost of reinsurance depend on market conditions and our loss experience and may fluctuate significantly.
We have multiple initiatives that are focused on developing innovative technologies and capabilities and enhancing our information technology infrastructure. Some long-term technology development and new business initiatives may negatively impact our expense ratios as we invest in such initiatives, may cost more than anticipated to complete, or may not be completed.
We have multiple initiatives that are focused on developing innovative technologies and capabilities and enhancing our information technology infrastructure. Some long-term technology development and new business initiatives, including the entrance into excess workers' compensation, may negatively impact our expense ratios as we invest in such initiatives, may cost more than anticipated to complete, or may not be completed.
At December 31, 2024, we had $417.8 million of reinsurance recoverable for paid and unpaid losses and LAE, of which $6.3 million was due to us on paid claims. 17 We purchase reinsurance to protect us against severe individual claims and from aggregate losses associated with certain catastrophic events.
At December 31, 2025, we had $391.6 million of reinsurance recoverable for paid and unpaid losses and LAE, of which $5.9 million was due to us on paid claims. We purchase reinsurance to protect us against severe individual claims and from aggregate losses associated with certain catastrophic events.
Our concentration in California ties our performance to the business, economic, demographic, natural perils, competitive, legislative and regulatory conditions in that state. Our business is concentrated in California, where we generated 45% of our in-force premiums as of December 31, 2024.
Our concentration in California ties our performance to the business, economic, demographic, natural perils, competitive, legislative and regulatory conditions in that state. Our business is concentrated in California, where we generated 46% of our gross premiums written for the year ended December 31, 2025.
Our reinsurance protection covers natural perils and acts of terrorism events, but excludes nuclear, biological, chemical, and radiological events. On July 1, 2024, we entered into a new reinsurance program that is effective through June 30, 2025. The reinsurance program consists of one treaty covering excess of loss and catastrophic loss events in four layers of coverage.
Our reinsurance protection covers natural perils and acts of terrorism events, but excludes nuclear, biological, chemical, and radiological events. On July 1, 2025, we entered into a new reinsurance program that is effective through June 30, 2026.
We could be liable for some or all of those ceded losses if the coverage provided by the LPT Agreement proves inadequate or we fail to collect from the reinsurers to the transaction. As of December 31, 2024, the estimated remaining liabilities subject to the LPT Agreement were $277.1 million.
We could be liable for some or all of those ceded losses if the coverage provided by the LPT Agreement proves inadequate or we fail to collect from the reinsurers to the transaction. As of December 31, 2025, the estimated unpaid losses and LAE ceded to the LPT Agreement was $259.6 million.
The loss or disruption of business from these distribution partners or the failure or inability of these distribution partners to successfully market our insurance products, could have a material adverse effect on our business, financial condition, and results of operations. ADP, our largest distribution agent, generated 17.2% of our total in-force premiums as of December 31, 2024.
The loss or disruption of business from these distribution partners or the failure or inability of these distribution partners to successfully market our insurance products, could have a material adverse effect on our business, financial condition, and results of operations.
We cannot fully predict the impact of these laws or regulations, including those that may be modified or enacted in the future, or new or evolving industry standards or actual or asserted obligations, relating to privacy, information security, or data processing on our business or operations.
We cannot fully predict the impact of these laws or regulations, including those that may be modified or enacted in the future, or new or evolving industry standards or actual or asserted obligations, relating to privacy, information security, or data processing on our business or operations. 24 These laws, regulations, and other obligations to which we are or may become subject, or that may be argued to apply to us, including contractual obligations and industry standards, may require us to modify our practices and policies and to incur substantial costs and expenses to comply.
Further, if we were to experience 19 a diminution in dividend payments from these subsidiaries in the future, we may not be able to continue to pay dividends to our stockholders and/or repurchase shares of our common stock.
Further, if we were to experience a diminution in dividend payments from these subsidiaries in the future, we may not be able to continue to pay dividends to our stockholders and/or repurchase shares of our common stock. Acts of terrorism and natural, or man-made catastrophes or other disruptive events could materially adversely impact our financial condition and results of operations.
This rating is assigned to companies that, in the opinion of AM Best, have demonstrated excellent overall performance when compared to industry standards. AM Best considers "A" (Excellent) rated companies to have an excellent ability to meet their ongoing obligations to policyholders. This rating does not refer to our ability to meet non-insurance obligations.
AM Best considers "A" (Excellent) rated companies to have an excellent ability to meet their ongoing obligations to policyholders. This rating does not refer to our ability to meet non-insurance obligations.
While we have no international operations, recent geo-political uncertainties, including impacts from ongoing conflicts abroad have indirectly impacted the value of our investment portfolio, and may continue to impact our investment portfolio in the future. Regulatory and Legal Risks The insurance business is subject to extensive regulation and legislative changes, which impact the manner in which we operate our business.
While we have no international operations, recent geo-political uncertainties, including the effects of ongoing conflicts abroad have indirectly impacted the value of our investment portfolio, and may continue to impact our investment portfolio in the future.
The impact of any terrorist act is unpredictable, and the ultimate impact on us would depend upon the nature, extent, location, and timing of such an act. We would be particularly adversely affected by a terrorist act occurring during normal business hours in an area where our policyholders have a large concentration of workers.
We would be particularly adversely affected by a terrorist act occurring during normal business hours in an area where our policyholders have a large concentration of workers.
Judgment is required in applying actuarial techniques to determine the relevance of historical payment and claim settlement patterns under current facts and circumstances.
Judgment is required in applying actuarial techniques to determine the relevance of historical payment and claim settlement patterns under current facts and circumstances. Recently, trends in the frequency of cumulative trauma claims in California, our largest state, have accelerated beyond historical levels.
Given our focus on small and mid-sized businesses, certain classes of business that we insure could be adversely and disproportionately affected by these challenges, including the tariffs proposed in the first quarter of 2025 and potential labor market disruptions due to changes in the rules or enforcement around immigration. 18 A downgrade in our financial strength rating could reduce the amount of business that we are able to write or result in the termination of certain of our agreements with our strategic partners.
Given our focus on small and mid-sized businesses, certain classes of business that we insure could be adversely and disproportionately affected by these challenges, including changes to global tariff policies and potential labor market disruptions due to changes in the rules or enforcement around immigration.
Rating agencies rate insurance companies based on financial strength as an indication of an ability to pay claims. Our insurance subsidiaries are currently assigned a group financial strength rating of "A" (Excellent) by AM Best, which is the rating agency that we believe has the most influence on our insurance operations.
Our insurance subsidiaries are currently assigned a group financial strength rating of "A" (Excellent) by AM Best, which is the rating agency that we believe has the most influence on our insurance operations. This rating is assigned to companies that, in the opinion of AM Best, have demonstrated excellent overall performance when compared to industry standards.
Our determinations, including the use of valuation models, pricing services and other techniques, can have a material effect on the valuation of our investments which may adversely affect our financial condition and results of operations. 22 We regularly review the valuation of our portfolio of fixed maturity investments, including the identification of other-than-temporary declines in fair value and current expected credit losses (CECL).
Our determinations, including the use of valuation models, pricing services and other techniques, can have a material effect on the valuation of our investments which may adversely affect our financial condition and results of operations.
For example, when initiating coverage on a policyholder, we must rely on the information provided by the policyholder, agent, or the policyholder's previous insurer(s) to properly estimate future claims expense.
For example, when initiating coverage on a policyholder, we must rely on the information provided by the policyholder, agent, or the policyholder's previous insurer(s) to properly estimate future claims expense. In order to set premium rates accurately, we must utilize a pricing model that appropriately assesses risks based on individual characteristics and takes into account actual and projected industry characteristics.
Acts of terrorism and natural, or man-made catastrophes or other disruptive events could materially adversely impact our financial condition and results of operations. Under our workers' compensation policies and applicable laws in the states in which we operate, we are required to provide workers' compensation benefits for losses arising from acts of terrorism.
Under our workers' compensation policies and applicable laws in the states in which we operate, we are required to provide workers' compensation benefits for losses arising from acts of terrorism. The impact of any terrorist act is unpredictable, and the ultimate impact on us would depend upon the nature, extent, location, and timing of such an act.
For more information regarding market risk, see "Item 7A–Quantitative and Qualitative Disclosures About Market Risk." Sharp increases in market interest rates throughout 2022 negatively impacted the fair value of our fixed maturity investments.
For more information regarding market risk, see "Item 7A–Quantitative and Qualitative Disclosures About Market Risk." The outlook for our investment income is dependent on current and future interest rates, maturity schedules, and cash available for investment.
Removed
In order to set premium rates accurately, we must utilize an appropriate pricing model that correctly assesses risks based on individual characteristics and takes into account actual and projected industry characteristics. Wage inflation typically increases the total payrolls of our policyholders, which is the basis for the premiums we charge.
Added
ADP, our largest distribution agent, generated 18.6% of our gross premiums written, excluding adjustments. for the year ended December 31, 2025. Our agreement with ADP is not exclusive.
Removed
Wage inflation can also impact the amount of future indemnity losses that we may incur, which could serve to offset any increase in premiums and negatively impact our financial condition and results of operations.
Added
The reinsurance program consists of one treaty covering excess of loss and catastrophic loss events in four layers of coverage which includes a 10% co-participation share within each layer of coverage retained by us.
Removed
In addition, economic and market disruptions caused by volatility and credit concerns in certain financial and banking markets, inflationary pressures, and geo-political uncertainties negatively impacted the fair value of our equity securities in 2022. The negative impacts to our investment portfolio experienced in 2022 consisted primarily of unrealized investment losses.
Added
A downgrade in our financial strength rating could reduce the amount of business that we are able to underwrite or result in the termination of certain of our agreements with our strategic partners. Rating agencies rate insurance companies based on financial strength as an indication of an ability to pay claims.
Removed
In 2023 and 2024, despite volatility, market interest rates largely stabilized, and equity markets performed well versus those of 2022. These factors served to meaningfully reduce, but did not eliminate, the unrealized losses that we experienced in 2022. The outlook for our investment income is dependent on current and future interest rates, maturity schedules, and cash available for investment.
Added
Regulatory and Legal Risks The insurance business is subject to extensive regulation and legislative changes, which impact the manner in which we operate our business.
Removed
These laws, regulations, and other obligations to which we are or may become subject, or that may be argued to apply to us, including contractual obligations and industry standards, may require us to modify our practices and policies and to incur substantial costs and expenses to comply.
Added
We regularly review the valuation of our portfolio of fixed maturity investments, including the identification of other-than-temporary declines in fair value and current expected credit losses (CECL).

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Our information security program is also subject to internal and independent external audits. We are not aware of any cybersecurity risks, including as a result of any cybersecurity incidents during 2024, that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition.
Our information security program is also subject to internal and independent external audits. We are not aware of any cybersecurity risks, including as a result of any cybersecurity incidents during 2025, that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition.
Governance Our cybersecurity risks and strategies are overseen by both management, including our CISO, Chief Information Officer (CIO), VP, Enterprise Risk Management, Executive Risk Committee (ERC), and the Board and relevant Board committees, including the Risk Management, Technology & Innovation Committee (RMTIC).
Governance Our cybersecurity risks and strategies are overseen by both management, including our CISO, Chief Information Officer (CIO), VP, Enterprise Risk Management, Executive Risk Committee (ERC), and the Board and relevant Board committees, including the Risk Management, Technology and Innovation Committee (RMTIC), with the Board retaining the ultimate oversight authority.
Members of our senior management team have specific and relevant cybersecurity expertise and experience, including the following: • Our CISO has more than 30 years of experience in technology and cybersecurity, he also holds multiple professional certifications in security, privacy, governance, audit, and technology. • Our CIO has more than 17 years of experience in technology, she has directly managed global privacy, compliance, ethics, and records retention technology, has been responsible for addressing global cybersecurity risks, and has also attended multiple training programs in cybersecurity, privacy, governance, and technology. • Our VP, Enterprise Risk Management holds a Certificate in Risk and Information Systems Controls certification and has more than 25 years of experience in managing technology delivery, vendor management, privacy, and governance.
Specific and relevant cybersecurity expertise and experience includes the following: • Our CISO has more than 40 years of experience in technology and cybersecurity, he also holds multiple professional certifications in security, privacy, governance, audit, and technology. • Our CIO has more than 18 years of experience in technology, she has directly managed global privacy, compliance, ethics, and records retention technology, has been responsible for addressing global cybersecurity risks, and has also attended multiple training programs in cybersecurity, privacy, governance, and technology. • Our VP, Enterprise Risk Management holds a Certificate in Risk and Information Systems Controls certification and has more than 25 years of experience in managing technology delivery, vendor management, privacy, and governance. 25 Cybersecurity is one of several key risk categories that are evaluated and rated by the ERC on a quarterly basis.
The RMTIC in turn reports to the Board on its oversight of cybersecurity risk.
The ERC reports periodically on its activities, findings, and areas of concern to the RMTIC. The RMTIC in turn reports to the Board on its oversight of cybersecurity risk.
Removed
Cybersecurity is one of several key risk categories that are evaluated and rated by the ERC on a quarterly basis. Each of our CISO, CIO, and VP, Enterprise Risk Management is a member of the ERC. The ERC reports periodically on its activities, findings, and areas of concern to the RMTIC.

Item 2. Properties

Properties — owned and leased real estate

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We believe that our existing office space is adequate for our current needs. We will continue to evaluate our office needs and may further adjust our real estate footprint in the future. 25
We believe that our existing office space is adequate for our current needs. We will continue to evaluate our office needs and may further adjust our real estate footprint in the future.
Item 2. Properties As of February 1, 2025, we leased a total of 50,152 square feet of office space in four states, including our corporate headquarters located in Reno, Nevada. Since 2021, we have reduced our real estate footprint by closing and vacating certain of our offices previously located in California, Missouri, Nevada, North Carolina and Wisconsin.
Item 2. Properties As of February 1, 2026, we leased a total of 29,120 square feet of office space in three states, including our corporate headquarters located in Reno, Nevada. Since 2021, we have reduced our real estate footprint by closing and vacating certain of our offices previously located in California, Missouri, Nevada, North Carolina, Pennsylvania, Texas, and Wisconsin.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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However, any repurchase of shares of our common stock in the future will be at the discretion of our Board and Audit Committee and will depend on: • the surplus and earnings of our insurance subsidiaries and their ability to pay dividends and/or other statutorily permissible payments to their parent; • our results of operations and cash flows; • our financial position and capital requirements; • general business and social economic conditions; • any legal, tax, regulatory, and/or contractual restrictions on repurchases of our common stock; and • any other factors our Board deem relevant.
However, any repurchase of shares of our common stock in the future will be at the discretion of our Board and AFI Committee and will depend on: • the surplus and earnings of our insurance subsidiaries and their ability to pay dividends and/or other statutorily permissible payments to their parent; • our results of operations and cash flows; • our financial position and capital requirements; • general business and social economic conditions; • any legal, tax, regulatory, and/or contractual restrictions on repurchases of our common stock; and • any other factors our Board deem relevant.
Any determination to declare and pay additional or future dividends will be at the discretion of our Board and Audit Committee and will depend on: • the surplus and earnings of our insurance subsidiaries and their ability to pay dividends and/or other statutorily permissible payments to their parent; • our results of operations and cash flows; • our financial position and capital requirements; • general business conditions; • any legal, tax, regulatory, and/or contractual restrictions on the payment of dividends; and • any other factors our Board or Audit Committee may deem relevant.
Any determination to declare and pay additional or future dividends will be at the discretion of our Board and AFI Committee and will depend on: • the surplus and earnings of our insurance subsidiaries and their ability to pay dividends and/or other statutorily permissible payments to their parent; • our results of operations and cash flows; • our financial position and capital requirements; • general business conditions; • any legal, tax, regulatory, and/or contractual restrictions on the payment of dividends; and • any other factors our Board or AFI Committee may deem relevant.
The 2023 Program provides that shares may be purchased in the open market and/or in privately negotiated transactions from time to time, and that all purchases shall be made in compliance with all applicable provisions of the Nevada Revised Statutes and federal and state securities laws including, but not limited to, Rules 10b5-1 and 10b-18 of the Exchange. 27 Performance Graph The following information compares the cumulative total return on $100 invested in our common stock, ticker symbol EIG, for the period commencing at the close of market on December 31, 2019 and ending on December 31, 2024 with the cumulative total return on $100 invested in each of the Standard and Poor's (S&P) 500 Index (S&P 500) and the Standard and Poor's 500 Property-Casualty Insurance Index (S&P P&C Insurance Index).
The 2025 Program provides that shares may be purchased in the open market and/or in privately negotiated transactions from time to time, and that all purchases shall be made in compliance with all applicable provisions of the Nevada Revised Statutes and federal and state securities laws including, but not limited to, Rules 10b5-1 and 10b-18 of the Exchange. 27 Performance Graph The following information compares the cumulative total return on $100 invested in our common stock, ticker symbol EIG, for the period commencing at the close of market on December 31, 2020 and ending on December 31, 2025 with the cumulative total return on $100 invested in each of the Standard and Poor's (S&P) 500 Index (S&P 500) and the Standard and Poor's 500 Property-Casualty Insurance Index (S&P P&C Insurance Index).
In addition, we may also pay special dividends from time-to-time as we did in 2022, though there can be no assurance that we will do so.
In addition, we may also pay special dividends from time-to-time, though there can be no assurance that we will do so.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information, Holders, and Stockholder Dividends Our common stock is listed on the New York Stock Exchange (NYSE) under the symbol "EIG." There were 648 registered holders of record as of February 24, 2025.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information, Holders, and Stockholder Dividends Our common stock is listed on the New York Stock Exchange (NYSE) under the symbol "EIG." There were 616 registered holders of record as of February 23, 2026.
The following table provides information with respect to the Company's repurchases of its common stock during the quarter ended December 31, 2024: Period Total Number of Shares Purchased Average Price Paid Per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares that May Yet be Purchased Under the Program (2) (in millions) October 1 – October 31, 2024 20,602 $ 47.45 20,602 $ 38.6 November 1 – November 30, 2024 11,242 48.17 11,242 38.1 December 1 – December 31, 2024 162,013 51.89 162,013 29.7 Total 193,857 $ 51.20 193,857 (1) Includes fees and commissions paid on stock repurchases, but excludes any applicable excise taxes imposed by the Inflation Reduction Act of 2022.
The following table provides information with respect to the Company's repurchases of its common stock during the quarter ended December 31, 2025: Period Total Number of Shares Purchased Average Price Paid Per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares that May Yet be Purchased Under the Program (2) (in millions) October 1 – October 31, 2025 286,298 $ 41.27 286,298 $ 178.0 November 1 – November 30, 2025 751,047 39.10 751,047 148.6 December 1 – December 31, 2025 1,331,500 41.90 1,331,500 92.8 Total 2,368,845 $ 40.94 2,368,845 (1) Includes fees and commissions paid on stock repurchases, but excludes any applicable excise taxes imposed by the Inflation Reduction Act of 2022.
(2) On July 26, 2023, the Board authorized a stock repurchase authorization (the 2023 Program) for up to $50.0 million of repurchases of the Company's common stock from July 31, 2023 through December 31, 2024.
(2) On April 30, 2025, the Board authorized the 2025 Program (the 2025 Program) for repurchases of up to $125.0 million of our common stock from May 6, 2025 through December 31, 2026. The 2025 Program replaces a similar program that was scheduled to expire on July 31, 2025, but whose remaining repurchase authorization had been exhausted.
On June 10, 2024, the Board authorized a $50.0 million addition to the 2023 Program, increasing our aggregate purchase authority to $100.0 million, and extended the repurchase authority pursuant to the 2023 Program through July 31, 2025.
On October 29, 2025, the Board authorized a $125.0 million addition to the 2025 Program, increasing the aggregate share repurchase authority to $250.0 million.
Removed
Cumulative Total Return Performance Period Ending 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 Employers Holdings, Inc. $ 79.46 $ 104.79 $ 118.02 $ 110.83 $ 147.79 S&P 500 118.40 152.39 124.79 157.59 197.02 S&P 500 P&C Insurance Index 106.96 127.58 151.65 168.05 227.67
Added
Cumulative Total Return Performance Period Ending 12/31/2021 12/31/2022 12/31/2023 12/31/2024 12/31/2025 Employers Holdings, Inc. $ 131.89 $ 148.53 $ 139.49 $ 186.00 $ 161.23 S&P 500 128.71 105.40 133.10 166.40 196.16 S&P 500 P&C Insurance Index 119.28 141.79 157.12 212.86 234.33

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Item 7. Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements, the accompanying notes thereto, and the financial statement schedules included in Item 8 and Item 15 of this report.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements, the accompanying notes thereto, and the financial statement schedules included in Item 8 and Item 15 of this report.
Our investment results benefited from a sharp increase in our net investment income due to higher bond yields and net realized and unrealized gains. Our non-underwriting expenses in 2023 included the cost of the early lease termination of our former corporate headquarters and a write-off of previously capitalized cloud computing costs associated with a former policy management system.
Our investment results benefited from a sharp increase in net investment income due to higher bond yields and net realized and unrealized gains. Our non-underwriting expenses in 2023 included the cost of the early lease termination of our former corporate headquarters and a write-off of previously capitalized cloud computing costs associated with a former policy management system.
Realized losses are also recognized for adverse changes in our CECL allowance or when securities are written down because of an other-than-temporary impairment. Changes in the fair value of equity securities and other invested assets are also included in Net realized and unrealized gains (losses) on investments on our Consolidated Statements of Comprehensive Income (Loss).
Realized losses are also recognized for adverse changes in our CECL allowance or when securities are written down because of an other-than-temporary impairment. Changes in the fair value of equity securities and other invested assets are also included in Net realized and unrealized (losses) gains on investments on our Consolidated Statements of Comprehensive Income (Loss).
The net investment gains on our other invested assets resulted primarily from an increase in the underlying value of the private equity limited partnership interests we own.
The net investment gains on our other invested assets resulted primarily from an increase in the underlying value of the private equity limited partnership interests we own.
In doing so, we make reference to the most current actuarial analyses, including a review of the assumptions and the results of the various actuarial methods used. We conduct comprehensive studies in the second and fourth quarters. On the alternate quarters, we update the results of the preceding quarter's studies for actual claim payment and case reserve activity.
In doing so, we make reference to the most current actuarial analyses, including a review of the assumptions and the results of the various actuarial methods used. Typically, we conduct comprehensive studies in the second and fourth quarters, and on the alternate quarters, update the results of the preceding quarter's studies for actual claim payment and case reserve activity.
We 45 bear credit risk with respect to the reinsurers, which could be significant in the future, considering that some of the loss reserves remain outstanding for an extended period of time. Reinsurers may refuse or fail to pay losses that we cede to them, or they might delay payment.
We bear credit risk with respect to the reinsurers, which could be significant in the future, considering that some of the loss reserves remain outstanding for an extended period of time. Reinsurers may refuse or fail to pay losses that we cede to them, or they might delay payment.
Net realized and unrealized gains (losses) on investments in 2023 included $27.0 million of net realized and unrealized gains on equity securities, $(8.0) million of net realized losses on fixed maturity securities, and $3.7 million of unrealized gains on other invested assets. The net investments gains on our equity securities were largely consistent with the performance of U.S. equity markets.
Net realized and unrealized (losses) gains on investments in 2023 included $27.0 million of net realized and unrealized losses on equity securities, $(8.0) million of net realized losses on fixed maturity securities, and $3.7 million of unrealized gains on other invested assets. The net investment losses on our equity securities were largely consistent with the performance of U.S. equity markets.
The declaration and payment of future dividends to our stockholders, including any special dividends, will be at the discretion of our Board and will depend upon many factors, 39 including our financial position, capital requirements of our operating subsidiaries, legal and regulatory requirements, and any other factors that our Board deems relevant.
The declaration and payment of future dividends to our stockholders, including any special dividends, will be at the discretion of our Board and will depend upon many factors, including our financial position, capital requirements of our operating subsidiaries, legal and regulatory requirements, and any other factors that our Board deems relevant.
Years Ended December 31, 2024 2023 2022 (in millions) Amortization of the Deferred Gain - losses $ 6.1 $ 6.3 $ 6.8 Amortization of the Deferred Gain - Contingent Commission 0.8 1.5 1.5 Impact of LPT Reserve adjustments (1) (1.7) (0.9) — Contingent Commission adjustments (2) 0.4 0.3 — Total impact of the LPT $ 5.6 $ 7.2 $ 8.3 (1) LPT Reserve Adjustments result in a cumulative adjustment to the Deferred Gain, which is recognized in losses and LAE incurred on our Consolidated Statements of Comprehensive Income (Loss), such that the Deferred Gain reflects the balance that would have existed had the revised reserves been recognized at the inception of the LPT Agreement.
Years Ended December 31, 2025 2024 2023 (in millions) Amortization of the Deferred Gain - losses $ 6.0 $ 6.1 $ 6.3 Amortization of the Deferred Gain - Contingent Commission — 0.8 1.5 Impact of LPT Reserve adjustments (1) — (1.7) (0.9) Contingent Commission adjustments (2) — 0.4 0.3 Total impact of the LPT $ 6.0 $ 5.6 $ 7.2 (1) LPT Reserve Adjustments result in a cumulative adjustment to the Deferred Gain, which is recognized in losses and LAE incurred on our Consolidated Statements of Comprehensive Income (Loss), such that the Deferred Gain reflects the balance that would have existed had the revised reserves been recognized at the inception of the LPT Agreement.
Management considers the results of various actuarial methods and their underlying assumptions, among other factors, in establishing loss reserves. 43 Judgment is required in the actuarial estimation of loss reserves, including the selection of various actuarial methodologies to project the ultimate cost of claims.
Management considers the results of various actuarial methods and their underlying assumptions, among other factors, in establishing loss reserves. Judgment is required in the actuarial estimation of loss reserves, including the selection of various actuarial methodologies to project the ultimate cost of claims.
The net favorable development recognized in 2023 was primarily the result of decreasing medical paid loss trends in California related to accident years 2020 and prior, partially offset by reserve strengthening related to accident year 2021.
Prior accident year favorable loss reserve development recognized in 2023 was primarily the result of decreasing medical paid loss trends in California related to accident years 2020 and prior, partially offset by reserve strengthening related to accident year 2021.
The calendar year loss and LAE ratio reflects changes made during the calendar year in reserves for losses and LAE established for insured events 32 occurring in the current and prior years. The calendar year loss and LAE ratio for a particular year will not change in future periods.
The calendar year loss and LAE ratio reflects changes made during the calendar year in reserves for losses and LAE established for insured events occurring in the current and prior years. The calendar year loss and LAE ratio for a particular year will not change in future periods.
Additional information regarding our reserves for losses and LAE is set forth under "–Critical Accounting Estimates –Reserves for Losses and LAE." Loss and LAE Ratio. We analyze our loss and LAE ratios on both a calendar year and accident year basis.
Additional information regarding our reserves for losses and LAE is set forth under "–Critical Accounting Estimates –Reserves for Losses and LAE." We analyze our loss and LAE ratios on both a calendar year and accident year basis.
Investments Our investment portfolio is structured to support our need for: (i) optimizing our risk-adjusted total returns; (ii) providing adequate liquidity; (iii) facilitating financial strength and stability; and (iv) ensuring regulatory and legal compliance. These investments provide a steady source of income. Our Investment Managers follow our written investment guidelines, which are approved by the Audit Committee.
Investments Our investment portfolio is structured to support our need for: (i) optimizing our risk-adjusted total returns; (ii) providing adequate liquidity; (iii) facilitating financial strength and stability; and (iv) ensuring regulatory and legal compliance. These investments provide a steady source of income. Our Investment Managers follow our written investment guidelines, which are approved by the AFI Committee.
Each of our insurance subsidiaries had total adjusted capital in excess of the minimum RBC requirements that correspond to any level of regulatory action at December 31, 2024. Various state laws and regulations require us to hold investment securities or letters of credit on deposit with certain states in which we do business.
Each of our insurance subsidiaries had total adjusted capital in excess of the minimum RBC requirements that correspond to any level of regulatory action at December 31, 2025. Various state laws and regulations require us to hold investment securities or letters of credit on deposit with certain states in which we do business.
The modest growth in our premiums written in 2024 was the result of higher new and renewal business 31 premiums, partially offset by lower final audit premiums and endorsements.
The modest growth in our premiums written in 2024 was the result of higher new and renewal business premiums, partially offset by lower final audit premiums and endorsements.
We also have a $5.7 million investment in FHLB stock which we record at cost. We receive periodic dividends from the FHLB for this investment, when declared, which can vary from period to period. Our investment portfolio also contains certain other investments, which made up 4% of our investment portfolio at December 31, 2024, and include private equity limited partnerships.
We also have a $7.5 million investment in FHLB stock which we record at cost. We receive periodic dividends from the FHLB for this investment, when declared, which can vary from period to period. Our investment portfolio also contains certain other investments, which made up 4% of our investment portfolio at December 31, 2025, and include private equity limited partnerships.
The Letter of Credit Agreements in effect will expire on March 31, 2025 and may only be used to satisfy, in whole or in part, insurance deposit requirements with the State of California and must be fully secured with eligible collateral at all times (See Note 11 in the Notes to our Consolidated Financial Statements).
The Letter of Credit Agreements in effect will expire on March 31, 2026 and may only be used to satisfy, in whole or in part, insurance deposit requirements with the State of California and must be fully secured with eligible collateral at all times (See Note 11 in the Notes to our Consolidated Financial Statements).
Other Expenses In 2023, we wrote-off $1.6 million of previously capitalized cloud computing costs associated with a policy management system as part of a continual evaluation of our ongoing technology initiatives. Additionally, we recorded a non-recurring charge in connection with the early termination of the lease associated with our former corporate headquarters in Reno, Nevada.
In 2023, we wrote-off $1.6 million of previously capitalized cloud computing costs associated with a policy management system as part of a continual evaluation of our ongoing technology initiatives. Additionally, we recorded a non-recurring charge in connection with the early termination of the lease associated with our former corporate headquarters in Reno, Nevada.
These operating cash inflows were partially offset by net claims payments of $471.6 million, underwriting and general and administrative expenses paid of $157.3 million, commissions pa id of $92.7 million , i nterest and financing fees paid of $5.8 million, lease termination and related disposal payments of $7.8 million, and federal income taxes paid of $30.4 million.
These operating cash inflows were partially offset by net claims payments of $471.6 million, underwriting expenses paid of $157.3 million, commissions pa id of $92.7 million , i nterest and financing fees paid of $5.8 million, lease termination and related disposal payments of $7.8 million, and federal income taxes paid of $30.4 million.
Our investment guidelines require that the minimum weighted average quality of our fixed maturity securities portfolio be “A,” using ratings assigned by S&P or an equivalent rating assigned by another nationally recognized statistical rating agency. Our fixed maturity portfolio had a weighted average quality of “A+” as of December 31, 2024. Our investment portfolio also contains equity securities.
Our investment guidelines require that the minimum weighted average quality of our fixed maturity securities portfolio be “A,” using ratings assigned by S&P or an equivalent rating assigned by another nationally recognized statistical rating agency. Our fixed maturity portfolio had a weighted average quality of “A+” as of December 31, 2025. Our investment portfolio also contains equity securities.
We also recognized a related lease termination gain pertaining to the elimination of the lease liability, net of an associated right-of-use asset (ROU asset) of $1.0 million, which was included in Other expenses on our Consolidated Statements of Comprehensive Income (Loss).
We also recognized a related lease termination gain pertaining to the elimination of the lease liability, net of an associated right-of-use asset (ROU asset) of $1.0 million, which was included in Other non-recurring expenses on our Consolidated Statements of Comprehensive Income (Loss).
If it is determined that it is not more-likely-than-not that we could fully realize our deferred tax assets in future periods, we would establish a deferred tax asset valuation allowance that would increase our provision for income taxes. As of December 31, 2024, we did not require a deferred tax asset valuation allowance.
If it is determined that it is not more-likely-than-not that we could fully realize our deferred tax assets in future periods, we would establish a deferred tax asset valuation allowance that would increase our provision for income taxes. As of December 31, 2025, we did not require a deferred tax asset valuation allowance.
Our calendar year loss and LAE ratio is analyzed to measure profitability in a particular year and to evaluate the adequacy of premium rates charged in a particular year to cover expected losses and LAE from all periods, including development (whether favorable or unfavorable) of reserves established in prior periods.
Our calendar year loss and LAE ratio is analyzed to measure profitability in a particular year and to evaluate the adequacy of premium rates charged in a particular year to cover expected losses and LAE from all periods, including development (whether favorable or adverse) of reserves established in prior periods.
The remaining fixed maturity securities whose total fair value was less than amortized cost at December 31, 2024, 2023, and 2022, were those in which we had no intent, need or requirement to sell at an amount less than their amortized cost.
The remaining fixed maturity securities whose total fair value was less than amortized cost at December 31, 2025, 2024, and 2023, were those in which we had no intent, need or requirement to sell at an amount less than their amortized cost.
Over 50% of our claims payments during the three years ended December 31, 2024 related to medical care for injured workers. The utilization and cost of medical services in the future is a significant source of uncertainty in the establishment of loss reserves for workers' compensation.
Over 50% of our claims payments during the three years ended December 31, 2025 related to medical care for injured workers. The utilization and cost of medical services in the future is a significant source of uncertainty in the establishment of loss reserves for workers' compensation.
This revision, which was immaterial, reduced our 2024 commission expenses and commission expense ratio by $2.4 million and 0.3 percentage points, respectively, and increased our 2024 underwriting and general and administrative expenses and underwriting and general and administrative expense ratio by the same amounts. This revision had no effect on our total expenses or net income.
This revision, which was immaterial, reduced our 2024 commission expenses and commission expense ratio by $2.4 million and 0.3 percentage points, respectively, and increased our 2024 underwriting expenses and underwriting expense ratio by the same amounts. This revision had no effect on our total expenses or net income.
Net cash provided by investing activities in 2023 related primarily to investment sales, maturities, and redemptions whose proceeds were used to fund claims payment, underwriting and general and administrative expenses, stockholder dividend payments, common stock repurchases, and to repay FHLB advances.
Net cash provided by investing activities in 2023 related primarily to investment sales, maturities, and redemptions whose proceeds were used to fund claims payment, underwriting expenses, stockholder dividend payments, common stock repurchases, and to repay FHLB advances.
Our asset allocation is reevaluated by management and reviewed by the Audit Committee on a quarterly basis. We also utilize our Investment Managers' investment advisory services to assist us in developing a tailored set of portfolio targets and objectives.
Our asset allocation is reevaluated by management and reviewed by the AFI Committee on a quarterly basis. We also utilize our Investment Managers' investment advisory services to assist us in developing a tailored set of portfolio targets and objectives.
We prepared reserve estimates for all accident years using our own historical claims data, industry data and many of the generally accepted actuarial methodologies for estimating loss reserves, such as paid loss development methods, incurred loss development methods, and Bornhuetter-Ferguson methods.
We prepare reserve estimates for all accident years using our own historical claims data, industry data and many of the generally accepted actuarial methodologies for estimating loss reserves, such as paid loss development methods, incurred loss development methods, and Bornhuetter-Ferguson methods.
(See Note 2 in the Notes to our Consolidated Financial Statements.) (2) LPT Contingent Commission adjustments resulted in an adjustment to the Contingent commission receivable - LPT Agreement, which is recognized in losses and LAE incurred on our Consolidated Statements of Comprehensive Income (Loss). See Note 2 in the Notes to our Consolidated Financial Statements. Commission Expense Ratio.
(See Note 2 in the Notes to our Consolidated Financial Statements.) (2) LPT Contingent Commission adjustments resulted in an adjustment to the Contingent commission receivable - LPT Agreement, which is recognized in losses and LAE incurred on our Consolidated Statements of Comprehensive Income (Loss). See Note 2 in the Notes to our Consolidated Financial Statements.
These operating cash inflows were partially offset by net claims payments of $522.0 million, underwriting and general and administrative expenses paid of $160.7 million, commissions paid of $100.9 million, interest and financing fees paid of $0.1 million, and federal income taxes paid of $31.0 million.
These operating cash inflows were partially offset by net claims payments of $522.0 million, underwriting expenses paid of $160.7 million, commissions paid of $100.9 million, interest and financing fees paid of $0.1 million, and federal income taxes paid of $31.0 million.
Through our insurance subsidiaries, we provide workers' compensation insurance coverage to small and mid-sized businesses engaged in low-to-medium hazard industries. Workers' compensation insurance is provided under a statutory system wherein most employers are required to provide coverage for their employees' medical, disability, vocational rehabilitation, and/or death benefit costs for work-related injuries or illnesses.
Through our insurance subsidiaries, we provide workers' compensation insurance coverage to small and mid-sized businesses engaged in lower hazard industries. Workers' compensation insurance is provided under a statutory system wherein most employers are required to provide coverage for their employees' medical, disability, vocational rehabilitation, and/or death benefit costs for work-related injuries or illnesses.
The cash outflows used in these activities were largely offset by investment sales, maturities, and redemptions whose proceeds were used to fund claims payments, underwriting and general and administrative expenses, stockholder dividend payments, and common stock repurchases.
The cash outflows used in these activities were largely offset by investment sales, maturities, and redemptions whose proceeds were used to fund claims payments, underwriting expenses, stockholder dividend payments, and common stock repurchases.
Commission expenses include direct commissions to our agents and brokers, including our partnerships and alliances, for the premiums that they produce for us, as well as agency incentive payments, other marketing costs, and fees. We refined the presentation of certain expenses associated with our involuntary premium during the year ended December 31, 2024.
Commission Expense Commission expense includes direct commissions to our agents and brokers, including our partnerships and alliances, for the premiums that they produce for us, as well as agency incentive payments, other marketing costs, and fees. We refined the presentation of certain expenses associated with our involuntary premium during the year ended December 31, 2024.
Further, the change in our adjusted stockholders' equity per share (after taking into account stockholder dividends declared) serves as the performance measure associated with our 2024, 2023, and 2022 performance share unit awards.
Further, the change in our adjusted stockholders' equity per share (after taking into account stockholder dividends declared) serves as the performance measure associated with our 2025, 2024, and 2023 performance share unit awards.
The primary uses of 37 cash for our operating subsidiaries are payments of losses and LAE, commission expenses, underwriting and general and administrative expenses, ceded reinsurance, investment purchases and dividends paid to their parent.
The primary uses of 37 cash for our operating subsidiaries are payments of losses and LAE, commission expenses, underwriting expenses, ceded reinsurance, investment purchases and dividends paid to their parent.
Tax-advantaged investment income, pre-Privatization loss and LAE reserve adjustments, LPT adjustments, Deferred Gain amortization, certain other adjustments and tax credits utilized reduced our income tax expense computed at a statutory rate of 21% by $2.7 million, $0.9 million, and $4.3 million for the years ended December 31, 2024, 2023, and 2022, respectively.
Tax-advantaged investment income, pre-Privatization loss and LAE reserve adjustments, LPT adjustments, Deferred Gain amortization, certain other adjustments and tax credits utilized reduced our income tax expense computed at a statutory rate of 21% by $1.3 million, $2.7 million, and $0.9 million for the years ended December 31, 2025, 2024, and 2023, respectively.
The accident year loss and LAE ratio is calculated by dividing cumulative losses and LAE for reported events that occurred during a particular year by the net premiums earned for that year.
The accident year loss and LAE ratio is calculated by dividing cumulative losses and LAE that occurred during a particular year by the net premiums earned for that year.
For example, if the rate of medical claim cost inflation increases by 1% above the inflation rate that is implicitly included in the loss reserves at December 31, 2024, we estimate that future medical costs over the lifetime of current claims would increase by approximately $73.0 million on a net-of-reinsurance basis.
For example, if the rate of medical claim cost inflation increases by 1% above the inflation rate that is implicitly included in the loss reserves at December 31, 2025, we estimate that future medical costs over the lifetime of current claims would increase by approximately $51.0 million on a net-of-reinsurance basis.
In addition to recognizing realized gains and losses upon the disposition of an investment security, we also record provisions and recoveries for changes in our CECL allowance on AFS investments as realized gains and losses. We maintained a CECL allowance of $1.1 million, $2.7 million, and $4.5 million on AFS investments as of December 31, 2024, 2023, and 2022, respectively.
In addition to recognizing realized gains and losses upon the disposition of an investment security, we also record provisions and recoveries for changes in our CECL allowance on AFS investments as realized gains and losses. We maintained a CECL allowance of $0.4 million, $1.1 million, and $2.7 million on AFS investments as of December 31, 2025, 2024, and 2023, respectively.
The growth in new business premiums experienced in 2024 was the result of increases in new business submissions, quotes and binds in the majority of the states in which we operate, which is being largely driven by the expansion in the classes of business that we offer.
The growth in new business premiums experienced in 2024 was the result of increases in new business submissions, quotes, and binds in a majority of the states in which we operate, which was being largely driven by our expansion in the classes of business that we offer.
Additionally, standby letters of credit from the FHLB have been issued in lieu of $170.0 million and $70.0 million of securities on deposit at December 31, 2024 and 2023, respectively. Certain reinsurance contracts require funds owned by us to be held in trust for the benefit of the ceding reinsurer to secure the outstanding liabilities we have assumed.
Additionally, standby letters of credit from the FHLB have been issued in lieu of $170.0 million of securities on deposit at both December 31, 2025 and 2024. Certain reinsurance contracts require funds owned by us to be held in trust for the benefit of the ceding reinsurer to secure the outstanding liabilities we have assumed.
Our reinsurance coverage is $190.0 million in excess of our $10.0 million retention on a per occurrence basis; including a maximum any one life limit of $20.0 million, subject to certain exclusions. We believe that our reinsurance program currently meets our needs.
Our reinsurance coverage is $190.0 million ($171.0 million net of our co-participation) in excess of our $10.0 million retention on a per occurrence basis; including a maximum any one life limit of $20.0 million, subject to certain exclusions. We believe that our reinsurance program currently meets our needs.
Other income (loss) was $0.1 million, $(0.2) million, and $0.3 million for the years ended December 31, 2024, 2023, and 2022, respectively. 35 Interest and Financing Expenses Interest and financing expenses include fees and interest associated with our credit facilities, fees and interest associated with our various credit arrangements with the FHLB, finance lease interest, and other financing fees.
Other income (loss) was $0.5 million, $0.1 million, and $(0.2) million for the years ended December 31, 2025, 2024, and 2023, respectively. 35 Interest and Financing Expenses Interest and financing expenses include fees and interest associated with our credit facilities, fees and interest associated with our various credit arrangements with the FHLB, finance lease interest, and other financing fees.
The fair value of fixed maturity securities held in trust for the benefit of our ceding reinsurers was $3.0 million at both December 31, 2024 and 2023. Sources of Liquidity We monitor the cash flows of each of our subsidiaries individually, as well as collectively as a consolidated group.
The fair value of fixed maturity securities held in trust for the benefit of our ceding reinsurers was $3.1 million and $3.0 million at December 31, 2025 and 2024, respectively. Sources of Liquidity We monitor the cash flows of each of our subsidiaries individually, as well as collectively as a consolidated group.
In addition, we believe that these non-GAAP measures, as presented, are helpful to our management in identifying trends in our performance because the LPT has limited significance to our current and ongoing operations. Gross Premiums Written Gross premiums written were $776.3 million, $767.7 million, and $714.2 million for the years ended December 31, 2024, 2023, and 2022, respectively.
In addition, we believe that these non-GAAP measures, as presented, are helpful to our management in identifying trends in our performance because the LPT has limited significance to our current and ongoing operations. Gross Premiums Written Gross premiums written were $756.1 million, $776.3 million, and $767.7 million for the years ended December 31, 2025, 2024, and 2023, respectively.
The following table summarizes our beginning and ending stockholders' equity balance and the changes thereto for each of the years ended December 31, 2024, 2023, and 2022: December 31, 2024 2023 2022 (in millions) Beginning Balance $ 1,013.9 $ 944.2 $ 1,213.1 Stock-based obligations 6.2 6.1 5.1 Stock options exercised — 0.7 1.1 Shares withheld to satisfy minimum tax withholdings for certain stock-based obligations (1.8) (1.6) (2.3) Acquisition of common stock (41.7) (77.1) (30.4) Dividends declared on common stock and eligible plan awards (30.0) (29.4) (91.3) Net income for the year 118.6 118.1 48.4 Change in net unrealized gains (losses) on investments, net of taxes 3.5 52.9 (199.5) Ending Balance $ 1,068.7 $ 1,013.9 $ 944.2 Deferred Gain.
The following table summarizes our beginning and ending stockholders' equity balance and the changes thereto for each of the years ended December 31, 2025, 2024, and 2023: December 31, 2025 2024 2023 (in millions) Beginning Balance $ 1,068.7 $ 1,013.9 $ 944.2 Stock-based obligations 5.0 6.2 6.1 Stock options exercised — — 0.7 Shares withheld to satisfy minimum tax withholdings for certain stock-based obligations (1.4) (1.8) (1.6) Acquisition of common stock (187.3) (41.7) (77.1) Dividends declared on common stock and eligible plan awards (29.9) (30.0) (29.4) Net income for the year 10.8 118.6 118.1 Change in net unrealized gains (losses) on investments, net of taxes 89.8 3.5 52.9 Ending Balance $ 955.7 $ 1,068.7 $ 1,013.9 Deferred Gain.
Years Ended December 31, 2024 2023 2022 Loss and LAE ratio excluding LPT 61.6 % 57.2 % 59.1 % Loss and LAE ratio - LPT (0.7) % (1.0) % (1.2) % Commission expense ratio 13.5 13.9 14.2 Underwriting expense ratio 23.5 24.9 24.8 Combined ratio 97.9 % 95.0 % 96.9 % Combined ratio excluding LPT 98.6 % 96.0 % 98.1 % Losses and LAE represent our largest expense item and includes claim payments made, amortization of the Deferred Gain, Contingent Commission adjustments, estimates for future claim payments and changes in those estimates for current and prior accident years, and costs associated with investigating, defending, and adjusting claims.
Years Ended December 31, 2025 2024 2023 Loss and LAE ratio excluding LPT 77.2 % 61.6 % 57.2 % Loss and LAE ratio - LPT (0.8) % (0.7) % (1.0) % Commission expense ratio 12.8 13.5 13.9 Underwriting expense ratio 21.7 23.5 24.9 Combined ratio 110.9 % 97.9 % 95.0 % Combined ratio excluding LPT 111.7 % 98.6 % 96.0 % Losses and LAE Losses and LAE represent our largest expense item and includes claim payments made, estimates for future claim payments and changes in those estimates for current and prior accident years, costs associated with investigating, defending, and adjusting claims, amortization of the Deferred Gain and Contingent Commission adjustments.
Net premiums written were $769.5 million, $760.6 million, and $707.2 million for the years ended December 31, 2024, 2023, and 2022, respectively, which included $6.8 million, $7.1 million, and $7.0 million of reinsurance premiums ceded, respectively. Net Premiums Earned Net premiums earned are primarily a function of the amount and timing of net premiums previously written.
Net premiums written were $750.1 million, $769.5 million, and $760.6 million for the years ended December 31, 2025, 2024, and 2023, respectively, which included $6.0 million, $6.8 million, and $7.1 million of reinsurance premiums ceded, respectively. Net Premiums Earned Net premiums earned are primarily a function of the amount and timing of net premiums previously written.
Net investment income includes interest and dividends earned on our invested assets and amortization of premiums and discounts on our fixed maturity securities, less bank service charges and custodial and portfolio management fees. Net investment income was $107.0 million, $106.5 million, and $89.8 million for the years ended December 31, 2024, 2023, and 2022, respectively.
Net investment income includes interest and dividends earned on our invested assets and amortization of premiums and discounts on our fixed maturity securities, less bank service charges and custodial and portfolio management fees. Net investment income was $116.7 million, $107.0 million, and $106.5 million for the years ended December 31, 2025, 2024, and 2023, respectively.
In addition, EHI paid a fee on each lender's unused commitment, ranging from 0.20% to 0.50%. Interest paid and/or fees incurred pursuant to the former Credit Agreement was $0.5 million and $0.3 million for the years ended December 31, 2023 and 2022, respectively.
In addition, EHI paid a fee on each lender's unused commitment, ranging from 0.20% to 0.50%. Interest paid and/or fees incurred pursuant to the former Credit Agreement was $0.5 million for the year ended December 31, 2023.
Rating Percentage of Total Estimated Fair Value “AAA” 11.5 % “AA” 40.4 “A” 29.0 “BBB” 11.3 Below Investment Grade 7.8 Total 100.0 % Investments that we currently own could be subject to default by the issuer. We regularly assess individual securities as part of our ongoing portfolio management, including the identification of credit related losses.
Rating Percentage of Total Estimated Fair Value “AAA” 9.6 % “AA” 48.7 “A” 29.7 “BBB” 4.5 Below Investment Grade 7.5 Total 100.0 % Investments that we currently own could be subject to default by the issuer. We regularly assess individual securities as part of our ongoing portfolio management, including the identification of credit-related losses.
Our investments in private equity limited partnerships totaled $106.6 million at December 31, 2024 and are generally not redeemable by the investees and cannot be sold without prior approval of the general partner. These investments have a fund term of 3 to 12 years, subject to two or three one-year extensions at the general partner's discretion.
Our investments in private equity limited partnerships totaled $96.5 million at December 31, 2025 and are generally not redeemable by the investees and cannot be sold without prior approval of the general partner. These investments have a fund term of 3 to 12 years, subject to two or three one-year 41 extensions at the general partner's discretion.
Our premiums written in 2024 were negatively impacted by a $16.5 million decrease to our ending final audit premium accrual, partially offset by $10.7 million of final audit premium pick-up. Further, our renewal premiums benefited from strong retention rates experienced throughout the year.
Our premiums written in 2024 were negatively impacted by a $16.5 million decrease to our ending final audit premium accrual, partially offset by $10.7 million of final audit premium pick-up. Further, our renewal premiums benefited from strong retention rates experienced throughout the year. Net Premiums Written Net premiums written are gross premiums written less reinsurance premiums ceded.
The amount by which estimated losses in the aggregate differ from those previously estimated for a specific time period is known as reserve "development." Reserve development is unfavorable when losses ultimately settle for more than the amount estimated or subsequent estimates indicate a basis for reserve increases, causing the previously estimated loss reserves to be ''deficient.'' Reserve development is favorable when estimates of ultimate losses indicate a decrease in established reserves, causing the previously estimated loss reserves to be ''redundant.'' Development is reflected in our operating results through an adjustment to incurred losses and LAE during the period in which it is recognized.
The amount by which estimated losses in the aggregate differ from those previously estimated for a specific time period is known as reserve "development." Reserve strengthening is adverse when losses ultimately settle for more than the amount estimated or subsequent estimates indicate a basis for reserve increases, causing the previously estimated loss reserves to be ''deficient.'' Reserve development is favorable when estimates of ultimate losses indicate a decrease in established reserves, causing the previously estimated loss reserves to be ''redundant.'' Development and strengthening are reflected in our operating results through adjustments to incurred losses and LAE during the period in which they are recognized.
Losses and LAE paid with respect to the LPT Agreement totaled $895.6 million at December 31, 2024. We account for the LPT Agreement as retroactive reinsurance. Entry into the LPT Agreement resulted in a Deferred Gain that was recorded on our Consolidated Balance Sheets as a liability.
Losses and LAE paid with respect to the LPT Agreement totaled $913.1 million at December 31, 2025. We account for the LPT Agreement as retroactive reinsurance. Entry into the LPT Agreement resulted in a Deferred Gain that was recorded on our Consolidated Balance Sheets as a liability.
We believe our claims practices, including our continued emphasis on accelerating claims settlements, as well as our various underwriting initiatives, have contributed to our favorable results in California. 44 In Nevada, we have compiled a lengthy history of workers' compensation claims payment patterns based on the business of the Fund and EICN.
We believe our claims practices, including our continued emphasis on accelerating claims settlements, as well as our various underwriting initiatives, have a positive impact on our results in California. In Nevada, we have compiled a lengthy history of workers' compensation claims payment patterns based on the business of the Fund and EICN.
Income Tax Expense Income tax expense was $28.1 million, $30.3 million, and $7.4 million for the years ended December 31, 2024, 2023, and 2022, respectively, representing effective tax rates of 19.2%, 20.4%, and 13.3% for the years ended December 31, 2024, 2023, and 2022, respectively.
Income Tax Expense Income tax expense was $1.2 million, $28.1 million, and $30.3 million for the years ended December 31, 2025, 2024, and 2023, respectively, representing effective tax rates of 10.1%, 19.2%, and 20.4% for the years ended December 31, 2025, 2024, and 2023, respectively.
No material amounts due from reinsurers have been written-off as uncollectible since our inception in 2000, and in assessing future default, we evaluate the allowance for CECL under the ratings based method using the AM Best Average Cumulative Net Impairment Rates. Reinsurer ratings are also assessed through this process.
No material amounts related to ceded paid losses have been written-off as uncollectible since our inception in 2000, and in assessing future default, we evaluate the allowance for CECL under the ratings based method using the AM Best Average Cumulative Net Impairment Rates. Reinsurer ratings are also assessed through this process.
Net premiums earned were $749.5 million, $721.9 million, and $675.2 million for the years ended December 31, 2024, 2023, and 2022, respectively. Losses and LAE, Commission Expenses, and Underwriting Expenses The following table presents our calendar year combined ratios.
Net premiums earned were $761.9 million, $749.5 million, and $721.9 million for the years ended December 31, 2025, 2024, and 2023, respectively. Losses and LAE, Commission Expense, and Underwriting Expenses The following table presents our calendar year combined ratios.
Securities having a fair value of $630.9 million and $748.1 million were on deposit at each of December 31, 2024 and 2023, respectively. These laws and regulations govern both the amount and types of investment securities that are eligible for deposit.
Securities having a fair value of $587.4 million and $630.9 million were on deposit at each of December 31, 2025 and 2024, respectively. These laws and regulations govern both the amount and types of investment securities that are eligible for deposit.
We strive to limit the exposure to equity price risk associated with publicly traded equity securities by diversifying our holdings across several industry sectors. These equity securities had a fair value of $254.1 million at December 31, 2024, which represented 11% of our investment portfolio at that time.
We strive to limit the exposure to equity price risk associated with publicly traded equity securities by diversifying our holdings across several industry sectors. These equity securities had a fair value of $184.0 million at December 31, 2025, which represented 8% of our investment portfolio at that time.
Investing Activities Net cash used in investing activities in 2024 related primarily to investments of premiums received, the receipt of the Contingent Commission, the reinvestment of funds from investment sales, maturities, redemptions, and interest income.
The cash inflows used in these activities were largely offset by investments of premiums and the reinvestment of funds from investment sales, maturities, redemptions, and interest income. Net cash used in investing activities in 2024 related primarily to investments of premiums received, the receipt of the Contingent Commission, the reinvestment of funds from investment sales, maturities, redemptions, and interest income.
For additional information regarding our investments, including the cost or amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of our investments, the amortized cost and estimated fair value of fixed maturity securities by contractual maturity, and net realized and unrealized gains and losses on investments, see Note 5 in the Notes to our Consolidated Financial Statements.
For additional information regarding our investments, including the cost or amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of our investments, the amortized cost and estimated fair value of fixed maturity securities by contractual maturity, and net realized and unrealized gains and losses on investments, see Note 5 in the Notes to our Consolidated Financial Statements. 42 Off-Balance Sheet Arrangements We have no off-balance sheet arrangements.
The aggregate carried reserve calculated by management represents our best estimate of our outstanding unpaid losses and LAE. In establishing management's best estimate of unpaid losses and LAE at December 31 for the last two years, we reviewed and considered the following: (i) our actuaries' assumptions, point estimates, and ranges; and (ii) the inherent uncertainty of workers' compensation loss reserves.
In establishing management's best estimate of unpaid losses and LAE at December 31 for the last two years, we reviewed and considered the following: (i) our actuaries' assumptions, point estimates, and ranges; and (ii) the inherent uncertainty of workers' compensation loss reserves.
If the actual loss reserves were at the high or the low end of the actuarial range, the impact on our financial results would have been as follows: December 31, 2024 2023 Increase (decrease) in reserves (1) (in millions) At low end of range $ (148.8) $ (139.3) At high end of range 201.4 175.6 Increase (decrease) in stockholders' equity and net income At low end of range $ 117.6 $ 110.0 At high end of range (159.1) (138.7) (1) The range of actuarial indications captures the range of reasonable estimates and is asymmetrical (e.g., not based on a normal distribution).
If the actual loss reserves were at the high or the low end of the actuarial range, the impact on our financial results would have been as follows: December 31, 2025 2024 Increase (decrease) in reserves (1) (in millions) At low end of range $ (124.8) $ (148.8) At high end of range 119.3 201.4 Increase (decrease) in stockholders' equity and net income At low end of range $ 98.6 $ 117.6 At high end of range (94.2) (159.1) (1) The range of actuarial indications captures the range of reasonable estimates and is asymmetrical (e.g., not based on a normal distribution).
We provide workers' compensation insurance throughout most of the United States, with a concentration in California, where 45% of our in-force premiums are generated. Our revenues primarily consist of net premiums earned, net investment income, and net realized and unrealized gains and (losses) on investments.
We provide workers' compensation insurance throughout most of the United States, with a concentration in California, where 46% of our 2025 gross written premiums were generated. Our revenues primarily consist of net premiums earned, net investment income, and net realized and unrealized gains and losses on investments.
Total interest paid and/or fees incurred pursuant to the Credit Agreement was $0.1 million for the year ended December 31, 2024.
Total interest paid and/or fees incurred pursuant to the Credit Agreement was $0.2 million and $0.1 million for the years ended December 31, 2025 and 2024, respectively.
Off-Balance Sheet Arrangements We have no off-balance sheet arrangements. 42 Critical Accounting Estimates The preparation of financial statements in accordance with GAAP requires both the use of estimates and judgment, relative to the application of appropriate accounting policies, which include the recognition of premium revenue, recoverability of deferred income taxes, and valuation of investments.
Critical Accounting Estimates The preparation of financial statements in accordance with GAAP requires both the use of estimates and judgment, relative to the application of appropriate accounting policies, which include the recognition of premium revenue, recoverability of deferred income taxes, and valuation of investments.
The key factors that affected our financial performance during those years included: • Net premiums earned increased 3.8% in 2024 and 6.9% in 2023, each compared to the previous year; • Losses and LAE increased 12.4% in 2024 and 3.8% in 2023, each compared to the previous year; • Underwriting and general and administrative expenses decreased 1.9% in 2024 and increased 7.6% in 2023, each compared to the previous year; • Underwriting income was $15.6 million, $36.2 million, and $21.0 million in 2024, 2023, and 2022, respectively; • Net investment income increased 0.5% in 2024 and 18.6% in 2023, each compared to the previous year; • Net realized and unrealized gains (losses) on investments were $24.1 million, $22.7 million, and $(51.8) million in 2024, 2023, and 2022, respectively; and • Other non-recurring expenses were $11.0 million in 2023.
The key factors that affected our financial performance during those years included: • Gross premiums written decreased 2.6% in 2025 and increased 1.1% in 2024, each compared to the previous year; • Net premiums earned increased 1.7% in 2025 and 3.8% in 2024, each compared to the previous year; • Net investment income increased 9.1% in 2025 and 0.5% in 2024, each compared to the previous year; • Net realized and unrealized (losses) gains on investments were $(20.4) million, $24.1 million, and $22.7 million in 2025, 2024, and 2023, respectively; • Losses and LAE increased 27.5% in 2025 and 12.4% in 2024, each compared to the previous year; • Commission expense decreased 3.3% in 2025 and increased 1.2% in 2024, each compared to the previous year; • Underwriting expenses decreased 6.3% in 2025 and 1.9% in 2024, each compared to the previous year; • Underwriting (loss) income was $(83.2) million, $15.6 million, and $36.2 million in 2025, 2024, and 2023, respectively; and • Other non-recurring expenses were $1.1 million in 2025 and $11.0 million 2023.
The Deferred Gain, which totaled $94.0 million and $99.2 million as of December 31, 2024 and 2023, respectively, reflects the unamortized gain from the LPT Agreement.
The Deferred Gain, which totaled $88.0 million and $94.0 million as of December 31, 2025 and 2024, respectively, reflects the unamortized gain from the LPT Agreement.
The decrease in our CECL allowance of $1.6 million in 2024 was due to the sale of securities that previously had an allowance and the stabilization in the financial markets, which decreased our CECL provision.
The decrease in our CECL allowance of $0.7 million in 2025 was due to the sale of securities that previously had an allowance and the stabilization in the financial markets, which decreased our CECL provision.
Our underwriting results for the three year period ending December 31, 2024 are as follows: Years Ended December 31, 2024 2023 2022 (in millions) Gross premiums written $ 776.3 $ 767.7 $ 714.2 Net premiums written $ 769.5 $ 760.6 $ 707.2 Net premiums earned $ 749.5 $ 721.9 $ 675.2 Losses and LAE 456.2 405.7 391.0 Commission expense 101.2 100.0 95.9 Underwriting and general and administrative expenses 176.5 180.0 167.3 Total underwriting expenses 733.9 685.7 654.2 Underwriting income $ 15.6 $ 36.2 $ 21.0 Total impact of the LPT (5.6) (7.2) (8.3) Underwriting income excluding LPT (1) $ 10.0 $ 29.0 $ 12.7 Loss and LAE ratio 60.9 % 56.2 % 57.9 % Commission expense ratio 13.5 13.9 14.2 Underwriting expense ratio 23.5 24.9 24.8 Combined ratio 97.9 % 95.0 % 96.9 % Total impact of the LPT 0.7 % 1.0 % 1.2 % Combined ratio excluding LPT (1) 98.6 % 96.0 % 98.1 % (1) The LPT Agreement is a non-recurring transaction that no longer provides us with any ongoing cash benefits.
Our underwriting results for the three year period ending December 31, 2025 are as follows: Years Ended December 31, 2025 2024 2023 (in millions) Gross premiums written $ 756.1 $ 776.3 $ 767.7 Net premiums written $ 750.1 $ 769.5 $ 760.6 Net premiums earned $ 761.9 $ 749.5 $ 721.9 Losses and LAE 581.8 456.2 405.7 Commission expense 97.9 101.2 100.0 Underwriting expenses 165.4 176.5 180.0 Total underwriting expenses 845.1 733.9 685.7 Underwriting (loss) income $ (83.2) $ 15.6 $ 36.2 Total impact of the LPT (6.0) (5.6) (7.2) Underwriting (loss) income excluding LPT (1) $ (89.2) $ 10.0 $ 29.0 Loss and LAE ratio 76.4 % 60.9 % 56.2 % Commission expense ratio 12.8 13.5 13.9 Underwriting expense ratio 21.7 23.5 24.9 Combined ratio 110.9 % 97.9 % 95.0 % Total impact of the LPT 0.8 % 0.7 % 1.0 % Combined ratio excluding LPT (1) 111.7 % 98.6 % 96.0 % (1) The LPT Agreement is a non-recurring transaction that no longer provides us with any ongoing cash benefits.
We did not incur any such expenses in 2024 or 2022. 29 Summary of Year Ended December 31, 2024 Our underwriting results for the year ended December 31, 2024 reflect increases in net premiums earned from higher new and renewal business premiums, and lower underwriting and general and administrative expenses, partially offset by lower final audit premiums and endorsements, a decrease in favorable prior year loss reserve development, and a higher current accident year loss and LAE ratio.
Summary of Year Ended December 31, 2024 Our underwriting results for the year ended December 31, 2024 reflect increases in net premiums earned from higher new and renewal business premiums, and lower underwriting expenses, partially offset by lower final audit premiums and endorsements, a decrease in favorable prior year loss reserve development, and a higher current accident year loss and LAE ratio.
Under the LPT Agreement, the Fund initially ceded $1.5 billion in liabilities for the incurred but unpaid losses and LAE related to claims incurred prior to July 1, 1995 for consideration of $775.0 million in cash. The estimated remaining liabilities subject to the LPT Agreement were $277.1 million as of December 31, 2024.
Under the LPT Agreement, the Fund initially ceded $1.5 billion in liabilities for the incurred but unpaid losses and LAE related to claims incurred prior to July 1, 1995 for consideration of $775.0 million in cash. The estimated unpaid losses and LAE ceded to the LPT Agreement was $259.6 million as of December 31, 2025.
Net realized and unrealized gains (losses) on investments were $24.1 million, $22.7 million, and $(51.8) million for the years ended December 31, 2024, 2023, and 2022, respectively.
Net realized and unrealized (losses) gains on investments were $(20.4) million, $24.1 million, and $22.7 million for the years ended December 31, 2025, 2024, and 2023, respectively.
The net investment gains on our equity securities were largely consistent with the performance of the U.S. equity markets. The net investment losses on our fixed maturity securities were primarily the result of sales associated with the rebalancing of our fixed maturity investment portfolio, partially offset by a decrease of $1.6 million in our allowance for CECL.
The net investment losses on our fixed maturity securities were primarily the result of sales associated with the rebalancing of our fixed maturity investment portfolio, partially offset by a decrease of $1.6 million in our allowance for CECL.
As of December 31, 2024, we had other purchase obligations totaling $13.8 million, of which $7.8 million is payable within 12 months. Unfunded Investment Commitments As of December 31, 2024, we had private equity limited partnerships with unfunded investment commitments totaling $15.6 million that can be called at any time.
As of December 31, 2025, we had other purchase obligations totaling $7.7 million, of which $3.4 million is payable within 12 months. Unfunded Investment Commitments As of December 31, 2025, we had private equity limited partnerships with unfunded investment commitments totaling $11.3 million that can be called at any time.
Our consolidated financial results of operations for the three year period ending December 31, 2024 are as follows: Years Ended December 31, 2024 2023 2022 (in millions) Gross premiums written $ 776.3 $ 767.7 $ 714.2 Net premiums written $ 769.5 $ 760.6 $ 707.2 Net premiums earned $ 749.5 $ 721.9 $ 675.2 Net investment income 107.0 106.5 89.8 Net realized and unrealized gains (losses) on investments 24.1 22.7 (51.8) Other (loss) income 0.1 (0.2) 0.3 Total revenues 880.7 850.9 713.5 Underwriting expenses: Losses and LAE 456.2 405.7 391.0 Commission expense 101.2 100.0 95.9 Underwriting and general and administrative expenses 176.5 180.0 167.3 Non-underwriting expenses: Interest and financing expenses 0.1 5.8 3.5 Other expenses — 11.0 — Total expenses 734.0 702.5 657.7 Net income before income taxes 146.7 148.4 55.8 Income tax expense 28.1 30.3 7.4 Net income $ 118.6 $ 118.1 $ 48.4 A primary measure of our financial strength and performance is our ability to increase Adjusted stockholders' equity and Adjusted stockholders' equity per share over the long-term.
Our consolidated financial results of operations for the three year period ending December 31, 2025 are as follows: Years Ended December 31, 2025 2024 2023 (in millions) Gross premiums written $ 756.1 $ 776.3 $ 767.7 Net premiums written $ 750.1 $ 769.5 $ 760.6 Net premiums earned $ 761.9 $ 749.5 $ 721.9 Net investment income 116.7 107.0 106.5 Net realized and unrealized (losses) gains on investments (20.4) 24.1 22.7 Other income (loss) 0.5 0.1 (0.2) Total revenues 858.7 880.7 850.9 Underwriting expenses: Losses and LAE 581.8 456.2 405.7 Commission expense 97.9 101.2 100.0 Underwriting expenses 165.4 176.5 180.0 Non-underwriting expenses: Interest and financing expenses 0.5 0.1 5.8 Other non-recurring expenses 1.1 — 11.0 Total expenses 846.7 734.0 702.5 Net income before income taxes 12.0 146.7 148.4 Income tax expense 1.2 28.1 30.3 Net income $ 10.8 $ 118.6 $ 118.1 A primary measure of our financial strength and performance is our ability to increase Adjusted stockholders' equity and Adjusted stockholders' equity per share over the long-term.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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This sensitivity analysis does not reflect the results of any action that we may take to mitigate such hypothetical losses in fair value. 46 We use fair values to measure our potential loss in this model, which includes fixed maturity securities and short-term investments. For invested assets, we use modified duration modeling to calculate changes in fair values.
This sensitivity analysis does not reflect the results of any action that we may take to mitigate such hypothetical losses in fair value. We use fair values to measure our potential loss in this model, which includes fixed maturity securities and short-term investments. For invested assets, we use modified duration modeling to calculate changes in fair values.
See Note 6 in the Notes to our Consolidated Financial Statements. Interest Rate Risk Investments Our fixed maturity securities are exposed to interest rate risk, which is the risk of a change in fair value resulting from changes in prevailing interest rates, which we manage through duration.
See Note 6 in the Notes to our Consolidated Financial Statements. 46 Interest Rate Risk Investments Our fixed maturity securities are exposed to interest rate risk, which is the risk of a change in fair value resulting from changes in prevailing interest rates, which we manage through duration.
To 47 the extent inflation causes these costs to increase above established reserves, we will be required to increase those reserves for losses and LAE, reducing our earnings in the period in which our assumptions are revised.
To the extent inflation causes these costs to increase above established reserves, we will be required to increase those reserves for losses and LAE, reducing our earnings in the period in which our assumptions are revised.
Adverse changes in the market prices of the equity securities we hold in our investment portfolio would result in decreases in the fair value of our total assets on our Consolidated Balance Sheets and in net realized and unrealized gains and losses on our Consolidated Statements of Comprehensive Income (Loss).
Adverse changes in the market prices of the equity securities we hold in our investment portfolio could result in decreases in the fair value of our total assets on our Consolidated Balance Sheets and in net realized and unrealized (losses) gains on our Consolidated Statements of Comprehensive Income (Loss).
Durations on invested assets are adjusted for call, put, and interest rate reset features. Invested asset portfolio durations are calculated on a market value weighted basis, excluding accrued investment income, using holdings as of December 31, 2024.
Durations on invested assets are adjusted for call, put, and interest rate reset features. Invested asset portfolio durations are calculated on a market value weighted basis, excluding accrued investment income, using holdings as of December 31, 2025.
Economic disruptions caused by ongoing financial market volatility, inflationary pressures, and heightened geo-political conditions, have impacted the credit risk associated with certain of our investment holdings. As a result, we maintained a $1.1 million and $2.7 million allowance for CECL on our fixed maturity portfolio as of December 31, 2024 and 2023, respectively.
Economic disruptions caused by ongoing financial market volatility, inflationary pressures, geo-political conditions, and tariff uncertainty have impacted the credit risk associated with certain of our investment holdings. As a result, we maintained a $0.4 million and $1.1 million allowance for CECL on our fixed maturity portfolio as of December 31, 2025 and 2024, respectively.
Our fixed maturity investments (excluding cash and cash equivalents) had a duration of 4.5 at December 31, 2024. Our investment strategy balances consideration of duration, yield and credit risk. We continually monitor changes in interest rates and their impact on our liquidity and ability to meet our obligations.
Our fixed maturity investments (excluding cash and cash equivalents) had a duration of 4.4, which is measured by their sensitivity to changes in interest rates, at December 31, 2025. Our investment strategy balances consideration of duration, yield and credit risk. We continually monitor changes in interest rates and their impact on our liquidity and ability to meet our obligations.
The estimated changes in fair values on our fixed maturity securities and short-term investments, which had an aggregate value of $2,097.5 million as of December 31, 2024, based on specific changes in interest rates are as follows: Hypothetical Changes in Interest Rates Estimated Pre-tax Increase (Decrease) in Fair Value (in millions, except percentages) 300 basis point rise $ (256.6) (12.2) % 200 basis point rise (174.8) (8.3) 100 basis point rise (88.7) (4.2) 50 basis point decline 44.8 2.1 100 basis point decline 89.5 4.3 200 basis point decline 177.8 8.5 300 basis point decline 264.0 12.6 The most significant assessment of the effects of hypothetical changes in interest rates on investment income would be based on GAAP guidance related to " Accounting for Nonrefundable Fees and Costs Associated with Originating or Acquiring Loans and Initial Direct Costs of Leases, " which requires amortization adjustments for mortgage-backed securities.
The estimated changes in fair values on our fixed maturity securities and short-term investments, which had an aggregate value of $2,050.8 million as of December 31, 2025, based on specific changes in interest rates are as follows: Hypothetical Changes in Interest Rates Estimated Pre-tax Increase (Decrease) in Fair Value (in millions, except percentages) 300 basis point rise $ (256.8) (12.5) % 200 basis point rise (171.4) (8.4) 100 basis point rise (83.9) (4.1) 50 basis point decline 39.8 1.9 100 basis point decline 75.9 3.7 200 basis point decline 142.4 6.9 300 basis point decline 209.1 10.2 The most significant assessment of the effects of hypothetical changes in interest rates on investment income would be based on GAAP guidance related to " Accounting for Nonrefundable Fees and Costs Associated with Originating or Acquiring Loans and Initial Direct Costs of Leases, " which requires amortization adjustments for mortgage-backed securities.
The table below shows the sensitivity of our equity securities at fair value to price changes as of December 31, 2024: (in millions) Cost Fair Value 10% Fair Value Decrease Pre-tax Impact on Decrease in Total Equity Securities 10% Fair Value Increase Pre-tax Impact on Increase in Total Equity Securities Equity securities $ 145.0 $ 254.1 $ 228.7 $ (25.4) $ 279.5 $ 25.4 Effects of Inflation In recent years, economic slowdowns, financial market volatility, monetary and fiscal policy measures, heightened geo-political tensions and fluctuations in interest rates have contributed to higher levels of inflation and may continue to lead to elevated levels of inflation in future periods.
We mitigate our exposure to equity price risk through dollar-cost averaging and by diversifying our equity holdings across several industry sectors. 47 The table below shows the sensitivity of our equity securities at fair value to price changes as of December 31, 2025: (in millions) Cost Fair Value 10% Fair Value Decrease Pre-tax Impact on Decrease in Total Equity Securities 10% Fair Value Increase Pre-tax Impact on Increase in Total Equity Securities Equity securities $ 96.5 $ 184.0 $ 165.6 $ (18.4) $ 202.4 $ 18.4 Effects of Inflation In recent years, economic slowdowns, financial market volatility, monetary and fiscal policy measures, heightened geo-political tensions and fluctuations in interest rates have contributed to higher levels of inflation and may continue to lead to elevated levels of inflation in future periods.
Inflation is also incorporated in our reserving process through projections supported by historical loss emergence. Under the current elevated inflationary environment, additional inflationary considerations were included in determining the level and adequacy of our reserves, and particular consideration was given to medical and hospital inflation rates as these inflation rates have historically exceeded general inflation rates.
Inflation is also incorporated in our reserving process through projections supported by historical loss emergence, and particular consideration was given to medical and hospital inflation rates as these inflation rates have historically exceeded general inflation rates.
As of December 31, 2024, the par value of our commercial and residential mortgage-backed securities holdings was $727.9 million, and the amortized cost was 100.7% of par value. The commercial and residential mortgage-backed securities portion of the portfolio totaled 29.1% of total investments as of December 31, 2024.
As of December 31, 2025, the par value of our commercial and residential mortgage-backed securities holdings was $832.7 million, and the amortized cost was 99.6% of par value. The commercial and residential mortgage-backed securities portion of the portfolio totaled 37.2% of total investments measured at fair value as of December 31, 2025.
Agency-backed residential mortgage pass-throughs totaled $463.8 million, or 74.8%, of the residential mortgage-backed securities portion of the portfolio as of December 31, 2024. Equity Price Risk Equity price risk is the risk that we may incur losses in the fair value of the equity securities we hold in our investment portfolio.
Agency-backed residential mortgage pass-throughs totaled $696.2 million, or 86.7%, of the residential mortgage-backed securities portion of the portfolio as of December 31, 2025. Equity Price Risk Equity price risk is the risk of a decline in market value of the equity securities we hold in our investment portfolio.
Increases in market interest rates that have occurred in recent years, which were intended to aid in the suppression of inflation, continue to negatively impact the market value of our existing fixed maturity investments while also having the effect of increasing our net investment income.
Elevated market interest rates in recent years, intended to aid in the suppression of inflation, can negatively impact the market value of our existing fixed maturity investments, despite our ability and intent to hold these investments to maturity. Higher interest rates, however, have also contributed to an increase in our net investment income.
Economic and market disruptions caused by geo-political conditions, inflationary pressures and credit concerns in certain financial and banking markets, have resulted in volatility in the fair value of our equity securities. We minimize our exposure to equity price risk by investing primarily in the equity securities of mid-to-large capitalization issuers and by diversifying our equity holdings across several industry sectors.
Economic and market disruptions caused by geo-political conditions, inflationary pressures and tariff uncertainty, have resulted in volatility in the fair value of our equity securities.

Other EIG 10-K year-over-year comparisons