Employers Holdings recorded a Q2 2026 loss and LAE ratio of 70.2%, an improvement from 70.7% a year earlier. It also posted zero prior-year reserve development on its voluntary workers' compensation book. Both results are consistent with the underwriting discipline the company has maintained since a steep earnings collapse in 2025.
Gross premiums written fell 19.6% to $163.4 million from $203.3 million in Q2 2025, while net premiums earned declined 12% to $174.1 million. The company said both reductions reflected deliberate pricing and underwriting actions begun in 2025 to prioritize profitability and shift focus toward its core small business segment.
The GAAP combined ratio was 105.8%, compared with 105.6% in the prior-year quarter. Excluding the loss portfolio transfer, the combined ratio was 106.7% versus 106.4%, with the underwriting expense ratio widening to 22.8% from 21.7% as the smaller premium base raised the ratio even though absolute underwriting expenses fell $3.4 million year-over-year.
Policies in-force declined to 127,601 from 134,421, a 5% drop, which management noted was smaller than the premium reduction, reflecting the shift toward smaller accounts at lower average premiums.
Net income fell 2% to $29.1 million from $29.7 million. Diluted earnings per share rose 29% to $1.59 from $1.23, as the diluted share count contracted from roughly 24.1 million to 18.3 million following an active repurchase program tied to the company's recapitalization plan. The company issued $125 million in senior debt in connection with the plan, with proceeds supporting share repurchases alongside operating cash flow.
Adjusted diluted EPS, which strips out investment gains and LPT effects, grew 46% to $0.70 from $0.48. Adjusted net income rose 11% to $12.8 million from $11.5 million.
"Diluted earnings per share grew 29% year-over-year and adjusted earnings per share grew 46%, even as net income was essentially flat," said Katherine Antonello, Employers Holdings' chief executive officer. "These results reflect the accretive impact of our recapitalization strategy and the share repurchases we have executed as a part of it."
Net investment income was $27.4 million, up slightly from $27.1 million. The portfolio's book yield reached 4.9%, a 40 basis-point increase from the prior year following investment rebalancing in 2025. The fixed maturity portfolio carried a weighted average credit quality of A+ and a duration of 4.5 years.
The company returned $34 million to stockholders in the quarter, split between $6.3 million in dividends and $27.7 million in share repurchases. It bought back 651,752 shares at an average of $42.43, leaving $113 million under the 2026 repurchase program.
Book value per share, including the deferred gain, grew 9% year-over-year to $52.58. Adjusted book value per share increased 5.6% to $53.26, both including dividends declared.
In June, the company began writing excess workers' compensation, marking the launch of a product line targeting self-insured enterprises and complementing its existing guaranteed cost small business focus. The move broadens the company's product range into a segment less exposed to the California cumulative trauma dynamics that pressured its voluntary book in 2025.
The board declared a regular quarterly dividend of $0.34 per share, payable August 26 to stockholders of record as of August 12. The dividend is 6% higher than $0.32 per share in the prior-year quarter.
