Employers Holdings, Inc. EIG is set to report its fourth-quarter 2023 results on Feb 15, after the closing bell. It is expected to have witnessed increased net premiums earned and lower net investment income in the December quarter.

Earnings Surprise History

Employers Holdings’ earnings beat the consensus estimate in all the prior four quarters, with the average being 26.5%. This is depicted in the graph below:

Employers Holdings Inc Price and EPS Surprise

Employers Holdings Inc price-eps-surprise | Employers Holdings Inc Quote

In the last reported quarter, the workers' compensation insurance provider reported adjusted operating earnings per share of 68 cents, beating the Zacks Consensus Estimate by 6.3% due to new business growth and strong renewal rates, as well as a solid contribution from the Employers segment.

The positives were partially offset by an elevated expense level, which resulted from increased compensation-related expenses, policyholder dividends and bad debt expenses.

Now, let’s see how things have shaped up prior to the fourth-quarter earnings announcement.

Q4 Factors to Note

The Zacks Consensus Estimate for fourth-quarter combined ratio — a measure of underwriting profitability — is pegged at 95.5%, significantly higher than 86.6% witnessed a year ago. This means a smaller portion of Employers segment premiums were retained by the company following the claims payouts in the fourth quarter.

The company is expected to have encountered higher expenses due to increased losses and LAE incurred and commission expenses. Also, the consensus mark for net investment income predicts a 5.4% decrease from the year-ago period. Lower bond yields are likely to have affected the figure.

The factors stated above are likely to have led to a year-over-year decline in EIG’s fourth-quarter results, making an earnings beat uncertain. The Zacks Consensus Estimate for fourth-quarter earnings per share of $1 suggests a 20% decline from the prior-year level of $1.25. The estimate remained stable over the past week.

Moreover, the consensus estimate for fourth-quarter revenues of $213.3 million indicates a 3.9% decrease from the year-ago reported figure. Nevertheless, the negatives are likely to have been partially offset by higher net premiums earned.

The Zacks Consensus Estimate for fourth-quarter net premiums earned indicates 4.8% year-over-year growth. This is expected to have been supported by Cerity and Employers segments’ net premiums earned growth. Continuous new business growth and strong renewal rates are expected to have aided EIG’s fourth-quarter performance.