A surge in California Cumulative Trauma (CT) claims has pushed Employers Holdings to a steep earnings decline, with the workers' comp specialist posting financial results that stand in sharp contrast to the broader industry's sustained profitability streak.
Full-year 2025 net income fell to $10.8 million ($0.46 per diluted share) from $118.6 million ($4.71 per diluted share) in 2024, as deteriorating underwriting performance overwhelmed steady investment gains.
Adjusted net income declined to $21.8 million ($0.93 per diluted share) from $94.0 million ($3.73 per diluted share). The GAAP combined ratio widened to 110.9% from 97.9%, with the loss and LAE ratio climbing to 76.4% from 60.9%.
Gross premiums written edged down to $756.1 million from $776.3 million, while net premiums earned rose to $761.9 million from $749.5 million and policies in-force grew to 133,605. Net investment income rose 9% to $116.7 million.
The company returned $215.4 million to stockholders through share repurchases and dividends – a figure that dwarfs full-year net income and reflects the deployment of prior retained capital.
Unlike standard workers' comp claims tied to a single incident, cumulative trauma claims arise from repetitive stress or motion injuries that develop gradually over time. The California Workers' Compensation Institute puts the cost differential in stark terms: CT claims cost 53% more than specific-event claims, and 91% of CT lost-time claims involved an attorney.
Read more: Employers Holdings records higher net income
The trend is not new – CT claim frequency in California has doubled over the past decade — but it is now landing directly on Employers Holdings' financial results.
The California Department of Insurance has estimated the state's projected accident year combined ratio at 123% for 2024 – the highest in nearly 15 years.
Chief executive Katherine Antonello (pictured above) noted the issue remains California-specific, with claim frequency in other states and non-CT claims in California continuing to trend favorably.
The contrast with broader workers' comp performance is sharp. NCCI data puts the industry's calendar year combined ratio at 86% for 2024 – the eighth consecutive year under 90% and the eleventh straight year of underwriting gains. AM Best places the line's combined ratio at 88.8%, the lowest among major property/casualty lines.
Against that backdrop, Employers Holdings' 110.9% represents a roughly 25-percentage-point gap, concentrated in California, which accounts for 45% of the company's premiums.
The fourth quarter produced a net loss of $23.4 million ($(1.06) per diluted share), against net income of $28.3 million ($1.14 per diluted share) a year earlier. The period included $49.7 million in investment losses from a strategic portfolio rebalancing – a deliberate management decision rather than a reflection of underwriting deterioration.
Alongside its financial results, Employers Holdings launched an Excess Workers' Compensation product targeting large self-insured employers and joint powers authorities, underwritten by Employers Assurance Company and rated A (Excellent) by AM Best.
Antonello said the product was developed using AI internally, with AM Best separately reaffirming its financial strength rating across the company's subsidiaries.
