NASDAQ:AMSF AMERISAFE Q2 2023 Earnings Report $46.61 -0.03 (-0.06%) As of 12:57 PM Eastern This is a fair market value price provided by Polygon.io. Learn more. Earnings HistoryForecast AMERISAFE EPS ResultsActual EPS$0.73Consensus EPS $0.69Beat/MissBeat by +$0.04One Year Ago EPSN/AAMERISAFE Revenue ResultsActual Revenue$73.54 millionExpected Revenue$75.34 millionBeat/MissMissed by -$1.80 millionYoY Revenue GrowthN/AAMERISAFE Announcement DetailsQuarterQ2 2023Date7/27/2023TimeN/AConference Call DateFriday, July 28, 2023Conference Call Time10:30AM ETConference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfilePowered by AMERISAFE Q2 2023 Earnings Call TranscriptProvided by QuartrJuly 28, 2023 ShareLink copied to clipboard.There are 6 speakers on the call. Operator00:00:00Good day, and welcome to the Amerisafe 2023 Second Quarter Earnings Call. Today's conference is being recorded. At this time, I'd like to hand the call over to Catherine Shirley. Please go ahead. Speaker 100:00:13Good morning. Welcome to the Amerisafe 2023 Second Quarter Investor Call. If you have not received the earnings release, it is available on our website atamerisafe.com. This call is being recorded. A replay of today's call will be available. Speaker 100:00:31Details on how to access the replay are in the earnings release. During this call, we will be making forward looking statements. These statements are based on current expectations and assumptions that are subject to various risks and uncertainties. Actual results may differ materially from the results expressed or implied in these statements If the underlying assumptions prove to be incorrect or as the result of risks, uncertainties and other factors, including factors discussed in the earnings release, We do not undertake any duty to update any forward looking statements. I will now turn the call over to Janelle Frost, Amerisafe's President and CEO. Speaker 100:01:22Thank you, Catherine, and good morning, everyone. Speaker 200:01:25The state of the workers' compensation market overall remains profitable despite continued rate softening. The line is reporting an industry wide combined ratio below 100%. Reserves remain redundant and approved loss cost declines are expected to continue. Amerisade is a disciplined underwriter in the high hazard workers' compensation market that has demonstrated the ability to maintain strong margins throughout many market cycles. In the Q2, we reported a combined ratio of 85.4% And a return on average equity of 18.6%. Speaker 200:02:03During the quarter, our top line decreased 3.7% driven by continued rate And wage inflation slightly slowing when compared with a strong year over year growth in the Q2 of 2022. We continue to see strong retention in policies for which we offer renewal with 93% retention for the 2nd quarter, largely in line with the recent experience despite continued competition. As we look ahead, competitive pressures Rate declines are expected to remain a headwind, offset by strong payroll. Moving to losses, the current accident year loss ratio remained a During the quarter, our claims handling practices drove better than expected outcomes, resulting in favorable prior period development of $10,900,000 or 16.7 loss ratio points. These reserves were primarily released from accident years 2018 through to 2021. Speaker 200:03:02As it relates to loss trends, frequency and severity are both in line with our expectations, Trending slightly lower than compared to the previous accident year at 6 months. As stated last quarter, we continue to expect medical inflation to increase as the year progresses and reflect these trends in our setting set case reserves. Our balance sheet is conservatively positioned Roughly $960,000,000 in investments and cash, a solid reserve position and no outstanding debt. We expect our market dynamics to remain challenging. However, given our long tenure of experience through market cycles, We are well positioned to retain our policyholders and attract business, while delivering robust returns to our shareholders. Speaker 200:03:50Finally, I'd also like to highlight Amerisafe's inclusion in the Ward 50 Top Performing Property and Casualty Companies for the 15th consecutive year. With that, I'll turn the call over to Andy to discuss the financials. Speaker 300:04:13Thank you, Janelle, and good morning to everyone. For the Q2 of 2023, Amerisafe reported net income of $15,600,000 or $0.81 per diluted share and operating net income of $14,000,000 or 0.73 dollars per diluted share. This surpasses the Q2 of 2022 net income of $6,100,000 or $0.32 per diluted share And operating net income of $13,100,000 or $0.68 per diluted share. Net income was higher primarily driven by gains in our equity securities as Compared to losses in the Q2 of 2022. Gross written premiums were $71,700,000 in the quarter as compared to $74,500,000 In the Q2 of 2022, a decrease of 3.7% on a year over year basis. Speaker 300:05:02During the quarter, Voluntary premium decreased 2.3%, primarily due to continued rate pressure. Payroll audit and related premium adjustments decreased by $800,000 for the Q2 of 2023 as compared to the Q2 of 2022. However, payroll audits Standalone increased by $200,000 for the quarter as compared to the prior year. While audit premium remains strong, We are seeing some leveling off in the incremental growth due to the lower wage growth. Ceded premiums increased $1,200,000 for the quarter And $2,900,000 for the 1st 6 months of 2023 as compared to the Q2 of 2022, primarily due to costs related to additional reinsurance coverage. Speaker 300:05:45Turning to our investment portfolio. In the 2nd quarter, net investment income increased 19.1 percent to $7,700,000 from $6,500,000 in the prior year. The increase was driven by higher yields on cash as well as higher reinvestment rates on fixed maturity securities. For the quarter, yield on new investments increased approximately 260 basis points, driving our tax equivalent book yield to 3.62% or 76 basis points higher than the Q2 of 2022. Amerisafe's investment portfolio is high quality, Carrying an average AA- credit rating with the duration of 3.9 years. Speaker 300:06:26The composition of the portfolio is 57% in municipal bonds, 28% in corporate bonds, 3% in U. S. Treasuries and agencies, 7% in equity securities and 5% in cash and other investments. Approximately 57% of our bond portfolio is comprised of held to maturity securities and with the moderate increase in rates during the quarter, We resulted in a net unrealized position of $21,000,000 As a reminder, these held to maturity securities are carried at amortized costs And therefore, unrealized gains or losses on these securities are not reflected in the book value. Our total underwriting and other expenses were $20,000,000 in the quarter, Largely in line with the prior year, resulting in an expense ratio of 30.4% as compared with 28.3% in the Q2 of 2022. Speaker 300:07:15Despite the dollar level of expenses remaining flat, the expense ratio increased due to a lower level of net earned premiums. Our tax rate was 20.1% compared to 13.9% for last year's Q2, largely due to lower proportion of Tax exempt income versus underwriting income in the quarter. Our capital position is strong with a high quality balance sheet, solid loss reserve position and conservative investment Our company paid its regular quarterly cash dividend of $0.34 per share in the 2nd quarter. Earlier this week, the Board declared for the Q3 a quarterly cash dividend of $0.34 per share payable on September 22, 2023 to shareholders of as of September 8, 2023. And finally, just a couple of other topics. Speaker 300:08:04Book value per share at June 30, 2023 was 17 point $0.76 up 7.2 percent from $16.57 at December 31, 2022 And an ROE of 18.6 percent. Our statutory surplus was $284,000,000 atquarterend, Up from $270,100,000 at March 31, 2023 $252,500,000 at December 31, 2022. And finally, later today, we will be filing our Form 10 Q with the SEC after market close. With that, I would like to open the call for the Operator00:09:08And we will now take our first question from Matt Carletti with JMP. Please go ahead. Speaker 400:09:17Thanks. Good morning. Operator00:09:18Good morning, Matt. Speaker 500:09:21Chanel, I was hoping you talked a Speaker 400:09:22little bit about wage inflation in your opening comments. I was hoping maybe you could dive in a little deeper there. I'd be curious just kind of how those trends have evolved over kind of the past several quarters. Are there particular areas in your book where it's stronger versus weaker? Or is it pretty uniform across different You know, insureds, and just kind of your outlook, for how that might impact your results going forward? Speaker 200:09:52Right. I mean, I think, Matt, the last few quarters we've kind of been giving what it's looking like as payrolls are coming in the door being reported coming in the door, which I guess in some way both for future audit premium. So we continue to see wage growth, Not at probably the record levels we have been seeing probably the last few quarters. I think things have moderated to some degree. So I think the lab Starting in Q3 of 2022, we had double digit payroll growth and most of that was Wage is right, wage growth. Speaker 200:10:29I think the last few quarters, it was averaging around 8%. For wage growth itself, not counting new employees, and this quarter was closer to 5%. So still a very healthy growth number, about Equivalent to what we're seeing on a national average. I think the latest data point I saw for the national was I think 5.5%. So very much in line with that in terms of wage growth. Speaker 200:10:55When I look at it by industry, Obviously, construction being the largest book of our business, construction did show some slowing And the wage growth, but still very healthy numbers. If I look at BLS data or Bureau of Economic Analysis data, construction spending is still up. The labor market for construction is still up. Layoffs were down in the last sequential data point. So I think things bode well for that particular industry group, which is over 40% of our book of business. Speaker 200:11:29From a New employee count, it was very steady from the prior quarters. We've been averaging somewhere around 2% for new employees and that's what it was for this quarter as well. So we're not really seeing additional workforce. Speaker 400:11:45Perfect. That's super helpful. And then maybe shifting gears a little bit, could you just update us on kind of how you Might be thinking about capital management as you come into the end of the year, top line has been kind of flattish year to date. You continue to throw off really good returns. Just how should we think about that as going forward? Speaker 200:12:08Yes, absolutely. Our Board actively talks about capital management each and every quarter. Certainly, as you mentioned, we're putting off really good returns this year. Our stance the last few years has been to return that capital to shareholders. The year is looking great this year, so I don't really see a change in that strategy where I sit today at 6 months. Speaker 200:12:32Obviously, we would like to see some organic growth. We think there's some opportunity for that to happen. We saw an increase in policy count this quarter even though the premium dollars didn't quite even out the way we would like them to have Due to loss cost changes, we are I do feel like we've gained a little bit of momentum in terms of how we're approaching new business. But again, I don't Here we are at 6 months. I don't see that really impacting our ability to pay a special dividend between now year end. Speaker 400:13:05Okay, perfect. And then last quick one and I apologize, I probably missed it in your opening comments, just the ELCM for the quarter? Speaker 200:13:12146. Speaker 400:13:15Wonderful. All right. Thank you very much. Appreciate it. Speaker 200:13:17Thank you, Matt. Operator00:13:27And we'll go ahead and take our next question from Mark Hughes with Truist. Please go ahead. Speaker 500:13:35Yes. Thank you. Good morning. Speaker 200:13:37Good morning, Mark. Speaker 500:13:39Good morning, Janelle. The audit premium in the quarter, you kind of broke that out in a little more detail, but I'm not I think your audit premium in the Q2 of last year was 5,500,000 What's the number that I should use for the Q2? Speaker 200:14:03It's imperative 4.8. Speaker 500:14:09Okay. Very good. The Ceded premium, you mentioned it was up a little bit because of reinsurance. Is this the kind of level We should expect going forward about 5.5% something like that? Speaker 200:14:26Yes. Great question, Mark. We As you may recall, we have a structured product that we call our working layer products, our $8,000,000 excess of 2, Which renewed this year. In addition to that 8x of 2 and all the finite details are in the 10 ks, we added a 10x 10 layer, which also extended our topside 20x of 80. So we have a little we have more coverage there and there's obviously dollars associated with that. Speaker 200:14:55But yes, the run rate you see this quarter would be an accurate run rate. Speaker 500:15:01Yes. Then Andy, the expense ratio was as you said dollars were relatively steady, Ratio is a little higher. Were there any assessments or anything like that that influenced the number? Speaker 300:15:20No, actually there were no assessments this quarter that would have affected our they were flat. Speaker 500:15:28Okay. So is the kind of expenses $20,500,000 is that A good baseline perhaps on a go forward? Speaker 300:15:40I would say, yes. I mean, we are again, the difference Between the 2 years was $50,000 so the $20,000,000 $20,500,000 I think is correct from a run rate perspective. Speaker 500:15:54Yes. Okay. And then, Janelle, you had mentioned the idea of Potentially pursuing partnerships with other carriers, any Update on that or any other kind of marketing or new business initiatives that you can speak to at this point? Speaker 200:16:18Sure. No update as in, hey, this is what we've done. We are still exploring avenues. I'm very excited you're taking my closing remarks. I'm very excited that we've added a new Chief Sales Officer, Ray Wise, who joining the company, so we're really excited to have Ray on board. Speaker 200:16:36He has a tremendous amount of experience, particularly in workers' compensation. And we've been talking about our agent relationships and how to, I'm going to say broaden widen that pipeline, whether that doesn't necessarily More agents just means be more efficient and more effective with our agent force. And I think Ray is going to do a great job for us in that regard. Speaker 500:17:02Yes. And then on the medical inflation front, you pointed out that it's been As expected, you anticipate that it will or at least you're reserving with the idea that it will accelerate As the time goes by, any new signs of that? Any actual data points? Is there anything you're seeing in the claims Speaker 200:17:26Trends, move Speaker 400:17:29gears. No, I mean, other than the Speaker 200:17:30pockets that we've talked about numerous times on these calls, just pockets here and there. I know I've had this conversation with you, Mark. One of our concerns is all the things that are happening in the healthcare industry, I think inflation is going Find its way into our cost in one of 2 ways. Either we're going to see updated fee schedules or updated expenses directly related to Our reimbursement rates for medical care or we're going to start seeing a constriction of the supply. In prior calls, I talked about That's an example of where there's just less supply available. Speaker 200:18:08And I think if It is I am of the opinion, this is The World According to Janelle. I am of the opinion, if providers reach a point where Their reimbursement rates for workers' compensation is not advantageous to them as a medical care provider. They will limit or constrict Their availability for workers' comp carriers, that's a fear I think a lot of people in the industry have. Not that we've seen it widespread, But ultimately, we know all the increased labor costs that the medical community has incurred It's going to work its way through the system one way or another. I mean, in any given workers' comp company, whether you're high hazard or not, 50% to 60% of your costs are medical, specifically related to medical costs. Speaker 500:19:02Yes. Speaker 200:19:03So using the Meredith as an example I'm sorry, go ahead. Speaker 500:19:08No, no, you please keep going. Speaker 400:19:11I was going to say using Speaker 200:19:12the Meredith example, it's one of the things we really focus on is closing claims. So we've been fortunate this year, Although claim counts are starting to come back, I think we still have this quarter, we still had 56 fewer claims reported And we did at Q2 last year, but our closing rates have been really good. So my open inventory, I have 2 75 claims less than I had 2nd quarter last year and over 100 fewer than I had even at year end, even though I'm adding reported claims. So we're really focused on closing those claims and getting them settled, sort of hedging against Future medical costs, for lack of a better term. So not only reflecting it in our case reserves, but finding ways to reserve to close claims and settle claims To sort of limit that liability. Speaker 500:20:05Yes, yes, exactly. And then the, Andy, what's a good tax rate Going forward? Speaker 300:20:12I would say the 19.5% is a good tax rate. Okay. Speaker 500:20:18All right. Great. Thank you very much. Speaker 200:20:21Thank you, Mark. Speaker 300:20:23Thank you. Operator00:20:27And with that, that does conclude our question and answer session. I would like to hand the call back over to Janelle Frost for any additional or closing remarks. Speaker 200:20:36Thank you. I would, as I said to Mark, I would like to officially welcome Ray Reis to Amerisafe and the leadership team. Ray has been appointed our Chief Sales Officer. He has more than 30 years of experience in the industry. His background is driving results through customer experience fits well with Amerisafe's model and will play an integral role in the company moving forward. Speaker 200:20:57Thank you for joining us today. Operator00:21:01And with that, that does conclude today's call. Thank you for your participation. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallAMERISAFE Q2 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K)Quarterly report(10-Q) AMERISAFE Earnings HeadlinesAMERISAFE's (AMSF) "Market Outperform" Rating Reaffirmed at JMP SecuritiesMay 3 at 2:45 AM | americanbankingnews.comAMERISAFE reports Q1 2025 premium growth of 4.6% amid competitive marketMay 1, 2025 | msn.comBlackrock’s Sending THIS Crypto Higher on PurposeWhile everyone's distracted by Bitcoin's moves, a stealth revolution is underway. One altcoin is quietly positioning itself to overthrow the entire banking system.May 5, 2025 | Crypto 101 Media (Ad)AMERISAFE Inc (AMSF) Q1 2025 Earnings Call Highlights: Navigating Challenges with Strategic GrowthMay 1, 2025 | gurufocus.comAMERISAFE’s Earnings Call: Balancing Growth and ChallengesApril 30, 2025 | tipranks.comAMERISAFE's (NASDAQ:AMSF) investors will be pleased with their 16% return over the last five yearsApril 12, 2025 | finance.yahoo.comSee More AMERISAFE Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like AMERISAFE? Sign up for Earnings360's daily newsletter to receive timely earnings updates on AMERISAFE and other key companies, straight to your email. Email Address About AMERISAFEAMERISAFE (NASDAQ:AMSF), an insurance holding company, underwrites workers' compensation insurance in the United States. The company provides benefits to injured employees for temporary or permanent disability, death, and medical and hospital expenses. It sells its products through retail and wholesale brokers and agents; and small and mid-sized employers engaged in hazardous industries, including construction, trucking, logging and lumber, agriculture, manufacturing, telecommunications, and maritime. 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There are 6 speakers on the call. Operator00:00:00Good day, and welcome to the Amerisafe 2023 Second Quarter Earnings Call. Today's conference is being recorded. At this time, I'd like to hand the call over to Catherine Shirley. Please go ahead. Speaker 100:00:13Good morning. Welcome to the Amerisafe 2023 Second Quarter Investor Call. If you have not received the earnings release, it is available on our website atamerisafe.com. This call is being recorded. A replay of today's call will be available. Speaker 100:00:31Details on how to access the replay are in the earnings release. During this call, we will be making forward looking statements. These statements are based on current expectations and assumptions that are subject to various risks and uncertainties. Actual results may differ materially from the results expressed or implied in these statements If the underlying assumptions prove to be incorrect or as the result of risks, uncertainties and other factors, including factors discussed in the earnings release, We do not undertake any duty to update any forward looking statements. I will now turn the call over to Janelle Frost, Amerisafe's President and CEO. Speaker 100:01:22Thank you, Catherine, and good morning, everyone. Speaker 200:01:25The state of the workers' compensation market overall remains profitable despite continued rate softening. The line is reporting an industry wide combined ratio below 100%. Reserves remain redundant and approved loss cost declines are expected to continue. Amerisade is a disciplined underwriter in the high hazard workers' compensation market that has demonstrated the ability to maintain strong margins throughout many market cycles. In the Q2, we reported a combined ratio of 85.4% And a return on average equity of 18.6%. Speaker 200:02:03During the quarter, our top line decreased 3.7% driven by continued rate And wage inflation slightly slowing when compared with a strong year over year growth in the Q2 of 2022. We continue to see strong retention in policies for which we offer renewal with 93% retention for the 2nd quarter, largely in line with the recent experience despite continued competition. As we look ahead, competitive pressures Rate declines are expected to remain a headwind, offset by strong payroll. Moving to losses, the current accident year loss ratio remained a During the quarter, our claims handling practices drove better than expected outcomes, resulting in favorable prior period development of $10,900,000 or 16.7 loss ratio points. These reserves were primarily released from accident years 2018 through to 2021. Speaker 200:03:02As it relates to loss trends, frequency and severity are both in line with our expectations, Trending slightly lower than compared to the previous accident year at 6 months. As stated last quarter, we continue to expect medical inflation to increase as the year progresses and reflect these trends in our setting set case reserves. Our balance sheet is conservatively positioned Roughly $960,000,000 in investments and cash, a solid reserve position and no outstanding debt. We expect our market dynamics to remain challenging. However, given our long tenure of experience through market cycles, We are well positioned to retain our policyholders and attract business, while delivering robust returns to our shareholders. Speaker 200:03:50Finally, I'd also like to highlight Amerisafe's inclusion in the Ward 50 Top Performing Property and Casualty Companies for the 15th consecutive year. With that, I'll turn the call over to Andy to discuss the financials. Speaker 300:04:13Thank you, Janelle, and good morning to everyone. For the Q2 of 2023, Amerisafe reported net income of $15,600,000 or $0.81 per diluted share and operating net income of $14,000,000 or 0.73 dollars per diluted share. This surpasses the Q2 of 2022 net income of $6,100,000 or $0.32 per diluted share And operating net income of $13,100,000 or $0.68 per diluted share. Net income was higher primarily driven by gains in our equity securities as Compared to losses in the Q2 of 2022. Gross written premiums were $71,700,000 in the quarter as compared to $74,500,000 In the Q2 of 2022, a decrease of 3.7% on a year over year basis. Speaker 300:05:02During the quarter, Voluntary premium decreased 2.3%, primarily due to continued rate pressure. Payroll audit and related premium adjustments decreased by $800,000 for the Q2 of 2023 as compared to the Q2 of 2022. However, payroll audits Standalone increased by $200,000 for the quarter as compared to the prior year. While audit premium remains strong, We are seeing some leveling off in the incremental growth due to the lower wage growth. Ceded premiums increased $1,200,000 for the quarter And $2,900,000 for the 1st 6 months of 2023 as compared to the Q2 of 2022, primarily due to costs related to additional reinsurance coverage. Speaker 300:05:45Turning to our investment portfolio. In the 2nd quarter, net investment income increased 19.1 percent to $7,700,000 from $6,500,000 in the prior year. The increase was driven by higher yields on cash as well as higher reinvestment rates on fixed maturity securities. For the quarter, yield on new investments increased approximately 260 basis points, driving our tax equivalent book yield to 3.62% or 76 basis points higher than the Q2 of 2022. Amerisafe's investment portfolio is high quality, Carrying an average AA- credit rating with the duration of 3.9 years. Speaker 300:06:26The composition of the portfolio is 57% in municipal bonds, 28% in corporate bonds, 3% in U. S. Treasuries and agencies, 7% in equity securities and 5% in cash and other investments. Approximately 57% of our bond portfolio is comprised of held to maturity securities and with the moderate increase in rates during the quarter, We resulted in a net unrealized position of $21,000,000 As a reminder, these held to maturity securities are carried at amortized costs And therefore, unrealized gains or losses on these securities are not reflected in the book value. Our total underwriting and other expenses were $20,000,000 in the quarter, Largely in line with the prior year, resulting in an expense ratio of 30.4% as compared with 28.3% in the Q2 of 2022. Speaker 300:07:15Despite the dollar level of expenses remaining flat, the expense ratio increased due to a lower level of net earned premiums. Our tax rate was 20.1% compared to 13.9% for last year's Q2, largely due to lower proportion of Tax exempt income versus underwriting income in the quarter. Our capital position is strong with a high quality balance sheet, solid loss reserve position and conservative investment Our company paid its regular quarterly cash dividend of $0.34 per share in the 2nd quarter. Earlier this week, the Board declared for the Q3 a quarterly cash dividend of $0.34 per share payable on September 22, 2023 to shareholders of as of September 8, 2023. And finally, just a couple of other topics. Speaker 300:08:04Book value per share at June 30, 2023 was 17 point $0.76 up 7.2 percent from $16.57 at December 31, 2022 And an ROE of 18.6 percent. Our statutory surplus was $284,000,000 atquarterend, Up from $270,100,000 at March 31, 2023 $252,500,000 at December 31, 2022. And finally, later today, we will be filing our Form 10 Q with the SEC after market close. With that, I would like to open the call for the Operator00:09:08And we will now take our first question from Matt Carletti with JMP. Please go ahead. Speaker 400:09:17Thanks. Good morning. Operator00:09:18Good morning, Matt. Speaker 500:09:21Chanel, I was hoping you talked a Speaker 400:09:22little bit about wage inflation in your opening comments. I was hoping maybe you could dive in a little deeper there. I'd be curious just kind of how those trends have evolved over kind of the past several quarters. Are there particular areas in your book where it's stronger versus weaker? Or is it pretty uniform across different You know, insureds, and just kind of your outlook, for how that might impact your results going forward? Speaker 200:09:52Right. I mean, I think, Matt, the last few quarters we've kind of been giving what it's looking like as payrolls are coming in the door being reported coming in the door, which I guess in some way both for future audit premium. So we continue to see wage growth, Not at probably the record levels we have been seeing probably the last few quarters. I think things have moderated to some degree. So I think the lab Starting in Q3 of 2022, we had double digit payroll growth and most of that was Wage is right, wage growth. Speaker 200:10:29I think the last few quarters, it was averaging around 8%. For wage growth itself, not counting new employees, and this quarter was closer to 5%. So still a very healthy growth number, about Equivalent to what we're seeing on a national average. I think the latest data point I saw for the national was I think 5.5%. So very much in line with that in terms of wage growth. Speaker 200:10:55When I look at it by industry, Obviously, construction being the largest book of our business, construction did show some slowing And the wage growth, but still very healthy numbers. If I look at BLS data or Bureau of Economic Analysis data, construction spending is still up. The labor market for construction is still up. Layoffs were down in the last sequential data point. So I think things bode well for that particular industry group, which is over 40% of our book of business. Speaker 200:11:29From a New employee count, it was very steady from the prior quarters. We've been averaging somewhere around 2% for new employees and that's what it was for this quarter as well. So we're not really seeing additional workforce. Speaker 400:11:45Perfect. That's super helpful. And then maybe shifting gears a little bit, could you just update us on kind of how you Might be thinking about capital management as you come into the end of the year, top line has been kind of flattish year to date. You continue to throw off really good returns. Just how should we think about that as going forward? Speaker 200:12:08Yes, absolutely. Our Board actively talks about capital management each and every quarter. Certainly, as you mentioned, we're putting off really good returns this year. Our stance the last few years has been to return that capital to shareholders. The year is looking great this year, so I don't really see a change in that strategy where I sit today at 6 months. Speaker 200:12:32Obviously, we would like to see some organic growth. We think there's some opportunity for that to happen. We saw an increase in policy count this quarter even though the premium dollars didn't quite even out the way we would like them to have Due to loss cost changes, we are I do feel like we've gained a little bit of momentum in terms of how we're approaching new business. But again, I don't Here we are at 6 months. I don't see that really impacting our ability to pay a special dividend between now year end. Speaker 400:13:05Okay, perfect. And then last quick one and I apologize, I probably missed it in your opening comments, just the ELCM for the quarter? Speaker 200:13:12146. Speaker 400:13:15Wonderful. All right. Thank you very much. Appreciate it. Speaker 200:13:17Thank you, Matt. Operator00:13:27And we'll go ahead and take our next question from Mark Hughes with Truist. Please go ahead. Speaker 500:13:35Yes. Thank you. Good morning. Speaker 200:13:37Good morning, Mark. Speaker 500:13:39Good morning, Janelle. The audit premium in the quarter, you kind of broke that out in a little more detail, but I'm not I think your audit premium in the Q2 of last year was 5,500,000 What's the number that I should use for the Q2? Speaker 200:14:03It's imperative 4.8. Speaker 500:14:09Okay. Very good. The Ceded premium, you mentioned it was up a little bit because of reinsurance. Is this the kind of level We should expect going forward about 5.5% something like that? Speaker 200:14:26Yes. Great question, Mark. We As you may recall, we have a structured product that we call our working layer products, our $8,000,000 excess of 2, Which renewed this year. In addition to that 8x of 2 and all the finite details are in the 10 ks, we added a 10x 10 layer, which also extended our topside 20x of 80. So we have a little we have more coverage there and there's obviously dollars associated with that. Speaker 200:14:55But yes, the run rate you see this quarter would be an accurate run rate. Speaker 500:15:01Yes. Then Andy, the expense ratio was as you said dollars were relatively steady, Ratio is a little higher. Were there any assessments or anything like that that influenced the number? Speaker 300:15:20No, actually there were no assessments this quarter that would have affected our they were flat. Speaker 500:15:28Okay. So is the kind of expenses $20,500,000 is that A good baseline perhaps on a go forward? Speaker 300:15:40I would say, yes. I mean, we are again, the difference Between the 2 years was $50,000 so the $20,000,000 $20,500,000 I think is correct from a run rate perspective. Speaker 500:15:54Yes. Okay. And then, Janelle, you had mentioned the idea of Potentially pursuing partnerships with other carriers, any Update on that or any other kind of marketing or new business initiatives that you can speak to at this point? Speaker 200:16:18Sure. No update as in, hey, this is what we've done. We are still exploring avenues. I'm very excited you're taking my closing remarks. I'm very excited that we've added a new Chief Sales Officer, Ray Wise, who joining the company, so we're really excited to have Ray on board. Speaker 200:16:36He has a tremendous amount of experience, particularly in workers' compensation. And we've been talking about our agent relationships and how to, I'm going to say broaden widen that pipeline, whether that doesn't necessarily More agents just means be more efficient and more effective with our agent force. And I think Ray is going to do a great job for us in that regard. Speaker 500:17:02Yes. And then on the medical inflation front, you pointed out that it's been As expected, you anticipate that it will or at least you're reserving with the idea that it will accelerate As the time goes by, any new signs of that? Any actual data points? Is there anything you're seeing in the claims Speaker 200:17:26Trends, move Speaker 400:17:29gears. No, I mean, other than the Speaker 200:17:30pockets that we've talked about numerous times on these calls, just pockets here and there. I know I've had this conversation with you, Mark. One of our concerns is all the things that are happening in the healthcare industry, I think inflation is going Find its way into our cost in one of 2 ways. Either we're going to see updated fee schedules or updated expenses directly related to Our reimbursement rates for medical care or we're going to start seeing a constriction of the supply. In prior calls, I talked about That's an example of where there's just less supply available. Speaker 200:18:08And I think if It is I am of the opinion, this is The World According to Janelle. I am of the opinion, if providers reach a point where Their reimbursement rates for workers' compensation is not advantageous to them as a medical care provider. They will limit or constrict Their availability for workers' comp carriers, that's a fear I think a lot of people in the industry have. Not that we've seen it widespread, But ultimately, we know all the increased labor costs that the medical community has incurred It's going to work its way through the system one way or another. I mean, in any given workers' comp company, whether you're high hazard or not, 50% to 60% of your costs are medical, specifically related to medical costs. Speaker 500:19:02Yes. Speaker 200:19:03So using the Meredith as an example I'm sorry, go ahead. Speaker 500:19:08No, no, you please keep going. Speaker 400:19:11I was going to say using Speaker 200:19:12the Meredith example, it's one of the things we really focus on is closing claims. So we've been fortunate this year, Although claim counts are starting to come back, I think we still have this quarter, we still had 56 fewer claims reported And we did at Q2 last year, but our closing rates have been really good. So my open inventory, I have 2 75 claims less than I had 2nd quarter last year and over 100 fewer than I had even at year end, even though I'm adding reported claims. So we're really focused on closing those claims and getting them settled, sort of hedging against Future medical costs, for lack of a better term. So not only reflecting it in our case reserves, but finding ways to reserve to close claims and settle claims To sort of limit that liability. Speaker 500:20:05Yes, yes, exactly. And then the, Andy, what's a good tax rate Going forward? Speaker 300:20:12I would say the 19.5% is a good tax rate. Okay. Speaker 500:20:18All right. Great. Thank you very much. Speaker 200:20:21Thank you, Mark. Speaker 300:20:23Thank you. Operator00:20:27And with that, that does conclude our question and answer session. I would like to hand the call back over to Janelle Frost for any additional or closing remarks. Speaker 200:20:36Thank you. I would, as I said to Mark, I would like to officially welcome Ray Reis to Amerisafe and the leadership team. Ray has been appointed our Chief Sales Officer. He has more than 30 years of experience in the industry. His background is driving results through customer experience fits well with Amerisafe's model and will play an integral role in the company moving forward. Speaker 200:20:57Thank you for joining us today. Operator00:21:01And with that, that does conclude today's call. Thank you for your participation. You may now disconnect.Read morePowered by