Mr. Dirks: Employers is a specialty writer of workers' compensation insurance, a 50 billion per year industry. Within this large industry, we sell workers' compensation insurance to small Main Street businesses engaged in low to medium hazard industries. We believe this customer segment is characterized by less price sensitivity and strong customer loyalty. We are an established enterprise with a 95-year operating history that has produced consistently strong results through a disciplined and selective underwriting approach. We have a unique distribution network that includes traditional agents and strategic partners. Our strategic partners include ADP, the country's largest payroll servicing company, and Wellpoint, the country's largest health insurer. We have a strong balance sheet with conservative reserves that have developed favorably over time. We are headquartered in Reno and we're currently conducting business in 29 states from coast to coast.
TWST: Is the recession in the business environment having an impact on the
insurance industry? What direct impact is it having on Employers?
Mr. Dirks: It is having an impact because we do business coast-to-coast, and
business environments vary by region. For our company, the greatest impact from
the economic slowdown has been observed in Nevada, where currently we produce
about 10% of our total premium revenue, and the economic slowdown in Nevada is a
phenomenon that we've observed now for a little over a year. Some of the other
markets have held up fairly well. Our largest market is California — we do
approximately 45% of our business in California — and the economy in California
has held up reasonably well in the 12 months ending September 2008. It would not
be unreasonable to expect tightening credit markets to impact new business
growth and our revenue premium is based on total payroll, so as payrolls
decline, premium will follow. We have raised rates in California 10% and will
begin to write policies at those higher rates effective February 1, 2009.
Tickers included in this excerpt: EIG
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