Workers' compensation insurer Employers Holdings (NYSE: EIG) fell short of the market’s revenue expectations in Q4 CY2025, with sales falling 21.3% year on year to $170.5 million. Its non-GAAP profit of $0.66 per share was 32% above analysts’ consensus estimates.

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Chief Executive Officer Katherine Antonello commented: “Our full-year 2025 results demonstrate the strength and resilience of our organization. While navigating the impact of increased California Cumulative Trauma (CT) claim frequency, we moved swiftly and decisively, implementing targeted pricing and underwriting actions that we believe successfully positions us for a return to historical profitability levels. We are confident these strategic steps set the stage for stronger performance ahead, and we are already seeing the benefits.

Company Overview

With roots in Nevada and a strong concentration in California where 45% of its premiums are generated, Employers Holdings (NYSE: EIG) is a specialty provider of workers' compensation insurance focused on small and select businesses engaged in low-to-medium hazard industries across the United States.

Revenue Growth

In general, insurance companies earn revenue from three primary sources. The first is the core insurance business itself, often called underwriting and represented in the income statement as premiums earned. The second source is investment income from investing the “float” (premiums collected upfront not yet paid out as claims) in assets such as fixed-income assets and equities. The third is fees from various sources such as policy administration, annuities, or other value-added services. Regrettably, Employers Holdings’s revenue grew at a sluggish 3.8% compounded annual growth rate over the last five years. This fell short of our benchmark for the insurance sector and is a tough starting point for our analysis.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. Employers Holdings’s recent performance shows its demand has slowed as its revenue was flat over the last two years. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Employers Holdings missed Wall Street’s estimates and reported a rather uninspiring 21.3% year-on-year revenue decline, generating $170.5 million of revenue.

Net premiums earned made up 87% of the company’s total revenue during the last five years, meaning Employers Holdings barely relies on non-insurance activities to drive its overall growth.

Markets consistently prioritize net premiums earned growth over investment and fee income, recognizing its superior quality as a core indicator of the company’s underwriting success and market penetration.

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Book Value Per Share (BVPS)

Insurance companies are balance sheet businesses, collecting premiums upfront and paying out claims over time. The float – premiums collected but not yet paid out – are invested, creating an asset base supported by a liability structure. Book value captures this dynamic by measuring:

• Assets (investment portfolio, cash, reinsurance recoverables) - liabilities (claim reserves, debt, future policy benefits)

BVPS is essentially the residual value for shareholders.

We therefore consider BVPS very important to track for insurers and a metric that sheds light on business quality. While other (and more commonly known) per-share metrics like EPS can sometimes be lumpy due to reserve releases or one-time items and can be managed or skewed while still following accounting rules, BVPS reflects long-term capital growth and is harder to manipulate.

Employers Holdings’s BVPS grew at a sluggish 2% annual clip over the last five years. However, BVPS growth has accelerated recently, growing by 8.4% annually over the last two years from $39.96 to $46.98 per share.

Key Takeaways from Employers Holdings’s Q4 Results

It was good to see Employers Holdings beat analysts’ EPS expectations this quarter. On the other hand, its revenue missed and its net premiums earned fell slightly short of Wall Street’s estimates. Overall, this print was mixed but still had some key positives. The stock remained flat at $42.58 immediately after reporting.

Is Employers Holdings an attractive investment opportunity at the current price? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).