Construction, tourism woes felt by Reno-based insurer

Slowdowns in two of Nevada's key industries tourism and construction are starting to affect Employers Holdings Inc., the Reno-based workers compensation carrier.

Douglas Dirks, its president and chief executive officer, told securities analysts a few days ago that Employers believes that construction payrolls may be down by as much as 50 percent statewide in the past year. Tourism payrolls, he said, may be down by 10 to 12 percent.

That's a big reason, Dirks said, that the premiums written by Employers Holdings in Nevada during the first half of this year declined to $21.4 million from $37.3 million a year earlier. On June 30, Employers had 5,761 policies in force in Nevada compared with 6,147 at the start of the year.

And the publicly held company, which grew out of the old state-operated monopoly on workers comp coverage in Nevada, said its home state accounts for a shrinking portion of its business.

In the first six months of this year, premiums written in Nevada accounted for 13.9 percent of the company's business compared with 20.7 percent a year earlier.

Premium revenues also were pressured, Dirks said, by price competition

in California and elsewhere that sometimes appears to be irrational.

"We continue to observe a small number of carriers that are pricing risks at levels that we believe will not generate profit," he said.

While California and Nevada account for nearly 88 percent of the company's business, Dirks said Employers has seen strong growth in states such as Illinois and Arizona.

In the second quarter, the company reported net income of $52.9 million on revenues of $186.3 million. That compares with income of $58.6 million on revenues of $215.8 million a year earlier.

Dirks also told analysts that Employers' planned a $194 million acquisition of AmCOMP Inc., a Florida-based workers compensation carrier, has been stalled by a disagreement with regulators.

The Florida Office of Insurance Regulation has ruled that AmCOMP generated $11.7 million in excessive profits in 2003, 2004 and 2005. AmCOMP has appealed that decision, but the proposed merger with

Employers can't move forward without the approval of Florida regulators.

The deal has a deadline of Oct. 31 unless AmCOMP and Employers agree to an extension.

Despite the delays, Dirks said Employers' executives still think the merger makes sense, especially because the Florida company is strongest in states where Employers has only a small presence, or no presence at all.

Separately, Employers said it will pay a dividend of 6 cents a share Sept. 4 to shareholders of record Sept. 4.