Focused and disciplined, Employers Holdings (EIG)
isn’t likely to ever be a fiery growth stock, but then I think you
could argue that aggressive growth in insurance doesn’t often work out
so well. Instead, Employers has delivered consistent shareholder value
growth since going public by staying focused on its core market
opportunity of underwriting workers’ comp insurance for small businesses
in industries with low-to-medium hazard risk.
I’m
less than comfortable making a big leap into a pure workers’ comp play
today, though. The industry has benefited from an extended period of
lower losses due in part to the benefits of the ACA and rates have come
under pressure in recent years as a result of lower losses and strong
returns. Worsening loss trends are a threat, as is a slowdown in
employment growth, and more insurers are trying to target the smaller
business markets that Employers has targeted. While I do think the
shares are modestly undervalued today, another dip toward $40 would
certainly get my attention.
Read more here:
Employers Holdings A Well-Run Play On Small Business Growth Through Workers Comp
