Nov. 5, 2009 (PR Newswire) -- LANCASTER, Pa., Nov. 5 /PRNewswire-FirstCall/ -- Eastern Insurance Holdings, Inc. ("EIHI") (Nasdaq: EIHI) today reported earnings for the three months ended September 30, 2009. EIHI reported net income of $3.3 million, or $0.36 per diluted share, for the third quarter of 2009, compared to a net loss of $3.1 million, or $0.34 per diluted share, for the same period in 2008. EIHI's diluted book value per share was $15.55 as of September 30, 2009 compared to $14.13 as of December 31, 2008, an increase of $1.42 per share or 10.0 percent.
"Our largest business segment, workers' compensation insurance, led the Company to another strong quarter of earnings and increases in our book value per share" said Bruce M. Eckert, Chief Executive Officer. "Our profitable performance was aided by the positive returns of our investment portfolio. Also of significance were the solid operating results in our Midwest and Southeast regions; additional confirmation of the benefits of our strategic, geographic initiatives. Despite continuing rate pressures, we were able to not only retain 84.7 percent of our renewal business, but also achieve year-over-year premium growth. We continue to be pleased with the marketplace's receptivity to our "ParallelPay" workers' compensation product. Since its introduction at the end of the first quarter of this year, we have recorded premium writings of approximately $4.2 million through September 30, 2009, the majority of which represents new premium writings."
Eckert continued, "Our group benefits insurance segment recorded a profitable quarter, as well, principally aided by the strong performance of its investment portfolio, particularly the convertible bond portfolio. Loss ratios in our group life and long- and short-term disability policies were as expected for the quarter; however, our dental loss ratio came in higher than expected as a result of competitive rate pressure, particularly in our Southeast market. We were pleased to note, however, that September results indicated a 5.1 percent rate increase on our dental renewals while we maintained an 85.9 percent retention ratio. A continuation of this trend should bring our dental loss ratio more in line with previous years' results."
Consolidated highlights for the third quarter include:
-- Revenue for the third quarter of 2009 increased to $37.9 million
compared to $29.5 million for the same period in 2008. The increase in
revenue is due primarily to an increase in income from limited
partnerships and a change to net realized investment gains in 2009 from
net realized investment losses in 2008, partially offset by a decrease
in investment income;
-- Net premiums earned were $33.1 million for the third quarter of 2009 and
2008. Net premiums earned were impacted by the growth in workers'
compensation insurance premium and the acquisition of Employers Security
Insurance Company offset by the termination of the reinsurance treaty
effective July 1, 2008 that comprised the run-off specialty reinsurance
segment and a $588,000 reduction related to favorable third quarter 2009
loss experience under retrospectively rated policies;
-- Net investment income decreased $400,000 to $2.0 million ($1.4 million
after-tax) for the three months ended September 30, 2009, compared to
$2.4 million ($1.6 million after-tax) for the same period in 2008. The
decrease in net investment income is due primarily to the short-term
interest rate environment;
-- The change in equity interest in limited partnerships increased $2.2
million to income of $523,000 ($376,000 after-tax) for the three months
ended September 30, 2009, compared to a loss of $1.7 million ($1.1
million after-tax) for the same period in 2008;
-- Net realized investment gains, excluding the segregated portfolio cell
reinsurance segment, were $1.8 million ($1.1 million after-tax) for the
three months ended September 30, 2009, compared to net realized
investment losses, excluding the segregated portfolio cell reinsurance
segment, of $3.8 million ($2.5 million after-tax) for the same period in
2008; and
-- $350,000 ($228,000 after-tax) of favorable loss reserve development on
prior accident years was recorded in the workers' compensation insurance
segment for the three months ended September 30, 2009, compared to no
favorable loss reserve development on prior accident years for the same
period in 2008.
Weighted average fully diluted shares considered outstanding used to calculate diluted earnings per share for the three months ended September 30, 2009 and 2008 consisted of the following:
2009 2008
---- ----
Shares issued on June 16, 2006 10,603,548 10,603,548
Weighted average ESOP shares 236,845 162,095
Weighted average restricted stock shares 117,429 93,711
Weighted average treasury shares purchased (2,091,757) (2,038,235)
Weighted average stock warrants exercised(1) 180,291 -
Stock warrants(1) - 306,099
--------- -------
Total 9,046,356 9,127,218
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(1) 306,099 warrants were outstanding as of January 1, 2009 of which
244,879 warrants were earned. The remaining 61,220 warrants will not be
earned. On March 10, 2009, the 244,879 warrants were exercised. EIHI
retained 64,588 warrants as payment of the exercise price.
Segment Operating Results
Workers' Compensation Insurance
EIHI's workers' compensation insurance segment reported net income of $2.5 million for the third quarter of 2009, compared to $527,000 for the third quarter of 2008. Highlights for the third quarter include:
-- Direct written premiums increased to $29.8 million for the three months
ended September 30, 2009, compared to $26.4 million for the same period
in 2008, an increase of 12.8 percent;
-- Net premiums earned increased to $17.8 million for the third quarter of
2009, compared with $15.8 million for the third quarter of 2008, an
increase of 12.7 percent;
-- Net investment income was $800,000 for the third quarter of 2009,
compared to $1.1 million for the same period in 2008.
