Good day, ladies and gentlemen, and welcome to the Fourth Quarter and Full Year 2007 Employers Holdings, Incorporated Earnings Conference Call. My name is Eric. I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will facilitate the question and answer session towards the end of the conference. (Operator Instructions). I would now like to turn your presentation over to your host for today’s call Ms. Vicki Erickson, Vice President, Investor Relations.

Thank you, Eric. And welcome everyone to the fourth quarter and full year 2007 earnings call for Employers Holdings, Inc. After the close of market yesterday, we announced our fourth quarter and full year 2007 earnings results. The press release is available on the company’s website at www.employers.com. Today’s call is being recorded and webcast from the Investor Relations section of our website where a replay will be available following the call. Representing the company on the call today are Doug Dirks, our Chief Executive Officer; Ric Yocke, our Chief Financial Officer; and Marty Welch, the President and Chief Operating Officer of our insurance subsidiaries. Before I turn the call over to Doug for opening remarks, I would like to remind everyone that statements made during this conference call that are not based on historical facts are considered forward-looking statements. These statements are made in reliance on the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Though we believe the expectations expressed in our forward-looking statements are reasonable, risks and uncertainties could cause actual results to be materially different from our expectations including the risks set forth in our filings with the Securities and Exchange Commission. There are additional risk factors concerning our acquisition of AmCOMP Incorporated. For example the following factors, among others, could cause or contribute to such material differences: Failure to satisfy any of the conditions of closing, including the failure to obtain AmCOMP stockholder approval or any required regulatory approvals; The risks that the businesses of Employers and AmCOMP will not be integrated successfully; The risk that Employers and AmCOMP will not realize estimated cost savings and synergies and cost relating to the proposed transaction. All remarks made during the call are current at the time of the call and will not be updated to reflect subsequent material development. I would also like to remind you that we use a non-GAAP metric that excludes the impact of the 1999 Loss Portfolio Transfer or LPT. This metric is defined in our earnings press release available on our website. Now I will turn the call over to Doug.

Thank you, Vicki. While 2007 was a year of challenges in the insurance industry and in the financial markets, we were able to execute our strategies and achieve profitable results throughout the year. Our 2007 net income was $120.3 million compared to $171.6 million in 2006, which I might add was a record year for Employers. Our net income before the impact of the LPT was $102.2 million in 2007 and $152.2 million in 2006. The decrease in our net income was largely the result of an investment gain from the portfolio reallocation in the fourth quarter of 2006 and differences in our adjustments for reserve development. In 2006, we recognized $107.1 million in favorable reserve development. In 2007, we recognized favorable prior period development of $61.6 million. In California, our largest market, gains from declining loss trends continued in 2007 although impacts from prior reforms appear to be moderating both in terms of reductions in loss costs and rate declines. Although the national economy is showing many signs of economic slowdown, we did not observe a similar trend in California. We continue to observe strong persistency in our renewal book of California business, but are monitoring both our independent agent book and our strategic partner business for signs of economic slowdown. In our California independent agent book of business renewals and new business submittals continue to be strong. However, our success in increasing top line revenue in California is challenged by declining rate levels on our existing book of business and by irrational pricing by some competitors who appear to be buying top line revenue or who are defending existing books of business by decreasing premium levels below where we believe profit can be realized. We also find that in California we are increasingly challenged by competitors who understand…

Thank you, Doug, and good morning to everyone. First I will cover our fourth quarter results. Our combined ratio was 75.9% on a GAAP basis and 81.1% before the LPT. That compares favorably with 80% and 85.1% before the LPT in the fourth quarter of 2006. The four-percentage point improvement in the combined ratios reflects our continued strong underwriting results as our loss in LAE ratios were 37.9% on a GAAP basis and 43% before the LPT. Consistent with past quarters, we saw a favorable prior accident year development and in the fourth quarter of 2007 this favorable development represented 19.7% of the combined ratio. Our run rate for underwriting and other operating expenses was 28%. Underlying the lower expense ratio were decreases in professional and consulting fees in the fourth quarter of 2007. Fourth quarter 2006 consulting fees were linked largely to our conversion to a public company, strategic planning, and implementation of our underwriting systems. For the full year 2007, our combined ratio was 80.4% on a GAAP basis and 85.6% before the LPT. Our combined ratio increased compared with last year because we recognized favorable prior accident year development at higher levels in 2006 than in 2007. Our underwriting and other operating expenses were 4.1% or $3.6 million higher than last year. The effect of favorable prior accident year developments in 2007 net of third quarter computation was 17.3 percentage points on the full year combined ratio. In 2007, California and Nevada generated 72% and 17% of direct premiums written respectively. Our earned premium declined 11.7% as past rate decreases in California continued to roll through the book of business. Our filed California rates on new business and renewals were 14% lower than December 31, 2006. Additionally, our 2007 written premiums declined in Nevada as a result…

Thank you, Ric. To update you on our operations, I will begin by providing some details about our 2007 written premium. While we have experienced and continue to experience a decrease in written premium due to falling California rates and an increasingly competitive marketplace, we continue to grow our business profitably. Our healthy growth in policy count is coming as a result of our continued focus on customers within lower hazard businesses. The four lowest industry defined hazard groups, A through D comprised 83.3% of our total base direct premiums written in 2007. This compares to 82% in these categories in 2006. Our top ten classes of business continue to reflect these lower hazard groups and represent 33% of our base direct premiums written and 42% of our in-force policies. For those of you who may not be aware, these top ten classes include restaurants, physicians’ offices, wholesale and retail stores, colleges, machine shops, clothing manufacturers, dentists’ office, and automobile dealerships, and repair centers. Further, our policy growth in these top ten classes was consistent with our company-wide policy growth rate of 13.3%. Our policy count growth was strong in California with an increase of 3,627 in-force policies for an annual growth rate of 17% since December 31, 2006. Nevada experienced a decrease in policy count of 376 or 5.8% due to increasing rate competition and our adherence to underwriting guidelines. In states other than California and Nevada, we increased in-force policies by 706, a very healthy growth rate of 38%. Independent agents and brokers generated 69.5% of base direct written premiums in 2007, while our strategic partnerships generated 28.5%. At year-end, we are contracted with over 950 agencies, earning an average policy commission of 10% to 12.5%. Our retention rates continue to be high, in the mid 80s to…

Thanks, Marty. Looking ahead the economic conditions in which we will operate in 2008 are uncertain. Ultimately, we sell a product the price of which is derivative of total payroll. A slowing economy or a reduction in employment will have a direct impact on workers’ compensation premiums, although we believe less so in our book of business. We carefully monitor our book of business, as well as macroeconomic conditions for any signs that might indicate a change in business conditions. Throughout 2008, we will continue to drive profitable growth by executing the strategies put in place over the past year. That is, our focus on selected markets with our targeted classes of business that we believe will provide greater opportunities for profitable returns. We will continue to focus on disciplined underwriting, on maintaining a strong balance sheet, and on operating within the core values that have withstood the challenges of a changing market throughout this past year. Thank you for joining us this morning. And now I will turn the call over to Eric to take your questions.

(Operators Instructions). Your first question comes from the line of Robert Farnam - KBW.

One question on the California Restaurant Association, any progress on policies coming through that program yet?

We just started that. That was late fourth quarter that announcement; we are seeing activity there, obviously it’s not huge numbers at this point in time and we are reporting on fourth quarter numbers. So, I really don’t have a whole lot to report there but we are pleased with the relationship and we do have activity.

Okay, I just was curious if it was going according to plan or not. But the second question, can you just remind us in terms of your capital position what type of premiums or surplus you are comfortable writing at?

If you look at the industry as a whole it’s drifted down given some of the reductions in rates across the country and profitability. And so it’s drifted to something more like to one to one which I think is historically low for the workers’ compensation line. We seek to be more industry-like and don’t think at one-to-one we would in any way be stretched or over levered.

Right. And third question, with the AmCOMP deal now that you maybe had a better chance to take a look at the policies; how much of that type book of business do you think fits into your underwriting profile and how much do you expect to renew going forward?

We have looked into that. We did that as part of the due diligence, Bob, and we continue to do integration planning with AmCOMP. They have a book of business that is somewhat different than ours from a class selection standpoint, and it really has a little bit to do, I think, with the geographic nature of their book as well. We have no intention of taking their book of business and trying to make it look exactly like ours. One of the attractions of this was that it does help us broaden our organization both geographically and from an appetite in what our book of business will look like. So there is no intention here to not continue with classes of business that AmCOMP has written successfully that perhaps we have chosen not to write in the past.

Okay. So if I were to characterize it, I’d say in taking a look at what they produced in the past might be, a good portion of that would probably hit your books in the second half of 2008?

I think that would be a fair assumption.

Next question comes from the line of Adnan Alum - ADAR Investment Management.

I had a couple of quick questions. One was, was there any reserve releases or changes from that first three quarters of this year?

Yes there was: $40, $45 million; we had totaled $61 for the year, $16 of which is in the fourth quarter. So we had ratable reserve releases over the course of the year.

No, I actually meant in terms of the fourth quarter, were there any recognition of any changes from business written in the first three quarters?

No.

There wasn’t? Okay, and also like your premium per policy that fell and I was just trying to get a handle as to how much of that do you think was due to mix versus rates and what was the mix shift?

If I understand your question, you are trying to understand the reasons that our average policy size has fallen in 2007, is that correct?

Yes I am.

That is partly driven by rate level, certainly in California which in 2007 was over 70% of our book; that has increased, that is decreasing our average policy size for the same customers we had the year before, and our focus on small just continues to drive more of that business into our book. I don’t know that we can say that economically, yet, we are seeing the payroll impacts, impact that average policy size. It may have started a little bit in the fourth quarter, but it’s too soon to say absolutely we are certain of that.

And are you seeing less competition in the smaller accounts that you are targeting or is it still the same?

We are seeing more competitions than we have in the past. But our contention has always been that in the small business market space that we target that we believe there is less competition and less rate sensitivity on that end of the spectrum than there is a middle market and larger.

(Operator Instructions) It appears we have no more audio questions at this time. I’d like to turn the call over for closing remarks.

Thank you, Eric. Once again thank you everyone for joining us on our call this morning and we look forward to talking to you again at the end of the first quarter. Good morning.

Thank you for your participation in today’s conference. This concludes our presentation, and you may now disconnect. Have a good day.