Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Employers Holdings (EIG -1.55%) have lost 18% of their value today after the small business insurer reported terrible results for its fiscal fourth quarter, which were blamed on the cost of claims originating in California.

So what: Employers Holdings reported quarterly revenue of $192.4 million, up 20% from the year-ago quarter, and its net income was $0.44 per diluted share. This was a huge drop from the year-ago quarter, in which Employers Holdings recorded $2.82 in EPS. Adjusted results were even worse, as Employers Holdings backs out the positive impact of its Loss Portfolio Transfer agreement to arrive at an adjusted loss of $0.03 per share, compared to a $0.06 profit per share in the year-ago quarter. Analysts were looking for $0.27 in EPS for the quarter on $183.2 million in revenue, so the market understandably chose to ignore the top line and focus on Employer Holdings' lousy bottom line instead.

The company posted 5% year-over-year growth in total policy count and a 9% growth in the average policy size, resulting in a 15% growth in in-force premiums. However, California was a major thorn in the company's side, driven by "attorney involvement in open claims in Southern California." Most of the 14% jump in indemnity claims with legal representation in California occurred in the fourth quarter, which helps explain the exceptionally lousy result for that three-month period.

Now what: Employers Holdings is now cheaper on valuation than it has been since going public right at the onset of the financial crisis, and it still managed to report nearly four times the adjusted net income in 2013 as it did in 2012. Of course, this isn't the whole picture, and comprehensive net income still looks pretty ugly year over year. However, we're talking about an insurer with a history of generally consistent (though not always stable) profitability, and the company is already working to mitigate the impact of Californian litigation. If you're looking for a dirt-cheap rebound candidate, you might want to dig a little deeper today.

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