An income tax benefit of $9.3 million was recorded in 2012 compared with an income tax benefit of $2.1 million in 2011. The increased tax benefit was primarily related to higher tax exempt income as a percentage of pre-tax net income. The change in estimate of the contingent commission receivable - LPT Agreement also resulted in an additional $0.6 million bonus accrual that increased the income tax benefit by $0.2 million during the year ended December 31, 2012. This change in estimate increased net income by $8.2 million or $0.26 per diluted share.

The 2012 combined ratio was 95.3% (115.3% before the impact of the LPT), compared with 113.9% (119.2% before the impact of the LPT) in 2011. The year over year combined ratio improved 18.6 percentage points on a GAAP basis and 3.9 percentage points before the impact of the LPT.

Debt, Capital Structure

Total outstanding debt at December 31, 2012, was $112.0 million, with a debt to total capitalization ratio, including the deferred reinsurance gain - LPT Agreement, of 12.0%. As of December 31, 2012, the Company's capital structure consisted of $80.0 million principal balance on its credit facility with Wells Fargo, $32.0 million in surplus notes maturing in 2034, and $820.4 million of stockholders' equity including the deferred reinsurance gain - LPT Agreement.

In September of 2012, the Company made a cash capital contribution of $70 million to its operating subsidiaries to support future growth and maintain financial strength ratings.

Investments

Total invested assets were approximately $2.1 billion at December 31, 2012. The Company's investment portfolio, which is classified as available-for-sale, consisted of 94% fixed maturity securities and 6% equity securities at the end of the fourth quarter of 2012.

The Company provides a list of portfolio securities by CUSIP in the Calendar of Events, Fourth Quarter “Investors” section of its web site at www.employers.com.

Common Stock Repurchases and First Quarter 2013 Dividend

The Company repurchased 22,824 shares of common stock during the fourth quarter of 2012 at an average price of $17.95 per share for a total cost of $0.4 million. Since the inception of its current stock repurchase program in November of 2010, the Company has repurchased 9.4 million shares of common stock at an average price of $15.79 per share for a total of $148.8 million. At December 31, 2012, approximately $51.2 million remained available for share repurchases through June 30, 2013 pursuant to the Company's current stock repurchase program.

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