NASDAQ:AMSF AMERISAFE Q3 2024 Earnings Report $47.10 +0.57 (+1.23%) Closing price 04:00 PM EasternExtended Trading$47.08 -0.02 (-0.03%) As of 04:05 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast AMERISAFE EPS ResultsActual EPS$0.58Consensus EPS $0.56Beat/MissBeat by +$0.02One Year Ago EPS$0.61AMERISAFE Revenue ResultsActual Revenue$78.70 millionExpected Revenue$75.38 millionBeat/MissBeat by +$3.32 millionYoY Revenue GrowthN/AAMERISAFE Announcement DetailsQuarterQ3 2024Date10/23/2024TimeAfter Market ClosesConference Call DateThursday, October 24, 2024Conference Call Time10:30AM ETConference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfilePowered by AMERISAFE Q3 2024 Earnings Call TranscriptProvided by QuartrOctober 24, 2024 ShareLink copied to clipboard.There are 6 speakers on the call. Operator00:00:00Good day, and welcome to the Amerisafe Third Quarter 2024 Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Catherine Shirley, Chief Administrative Officer. Please go ahead. Speaker 100:00:14Good morning. Welcome to the AMERISAFE 20 24 Third 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 a result of risks, uncertainties and other factors, including factors discussed in the earnings release, in the comments made during today's call and in the Risk Factors section of our Form 10 ks, Form 10 Qs and other reports and filings with the Securities and Exchange Commission. We do not undertake any duty to update any forward looking statements. Speaker 100:01:15I will now turn the call over to Janelle Frost, Amerisafe's President and CEO. Speaker 200:01:20Thank you, Catherine, and good morning, everyone. We are pleased with Amerisafe's quarterly financial results, particularly in response to a competitive marketplace driven by declining rates and industry wide profitability. The workers' compensation industry has benefited from multiyear declines in frequency, moderate severity and growing wages. Amerisafe's trends have been no different. However, I would argue our specialist nature and the history of underwriting discipline better position Amerisafe for consistent returns and a strong balance sheet throughout market cycles, which brings stability to our policyholders and agents and value to our shareholders. Speaker 200:02:03As such, our Board of Directors declared a special dividend of $3 for shareholders of record as of December 6, 2024. This special dividend reflects long term operational excellence and our commitment to shareholder returns. The special dividend is in addition to our regular quarterly dividend of 0.3 $7 Our capital strength is created by our long term profitability and our current strategic priorities centered on achieving targeted profitable growth. This quarter, similar to the second, we have maintained positive momentum in terms of production and top line performance. For policies written in the quarter, premium grew 8.8% over last year's Q3. Speaker 200:02:49I've spoken over the last few quarters about the effectiveness of our agent engagement and creating internal efficiencies to enhance agent experience. Through employee led initiatives and collaboration, we are seeing wins. And as the saying goes, success breeds success. Working with agents and without changing our appetite, we are improving our ability to incrementally add new business among strong competition. New business growth coupled with a strong renewal retention of 93.6 percent led to higher in force policy count and gross written premium growth of 5.8%. Speaker 200:03:29While audit premiums remain positive and additive to premiums earned, their contribution is moderating compared to the same period last year. Payroll growth and wage inflation are leveling off within the industries we insure. Regarding losses, our accident year loss ratio was consistent with last year at 71%. Loss cost trends remain stable. I believe the threat to the current loss trends for the industry are medical inflation and the viability of current fee schedules. Speaker 200:04:01That being said, we have not noted any significant changes. The company also saw $8,500,000 in favorable development on prior accident years, stemming from favorable case development in accident years 2017 through 2022. To summarize, we are pleased to see premium growth in the quarter and continued favorable loss experience through our claims management efforts. I will now turn the call over to Andy to discuss expenses, investments and other financial metrics. Speaker 300:04:33Thank you, Janelle, and good morning to everyone. For the Q3 of 2024, Amerisafe reported net income of 14,300,000 or $0.75 per diluted share and operating net income of $11,100,000 or $0.58 per diluted share. During the Q3 of 2023, net income was $10,000,000 or $0.52 per diluted share and operating net income was $11,700,000 or $0.61 per diluted share. Gross written premiums were $74,900,000 in the quarter compared with $70,800,000 in Q3 of 2023. The increase in the top line was driven by a combination of increased sales efforts with agents, which drove increased new business and strong retentions. Speaker 300:05:18Order premiums increased the top line by $4,000,000 and remain a material contributor to overall premiums. In the Q3 of 2023, audit premiums were $5,600,000 Our total underwriting and other expenses were $21,300,000 in the quarter as compared to $22,400,000 in the prior year, resulting in an expense ratio of 31.7% versus 33.6% in the prior year. As we continue to invest in our business, expense outlays may proceed growth in earned premiums leading to quarterly expense ratio fluctuations. However, we expect our full year expense ratio to be within historical ranges. During the quarter, our claims handling practices drove better than expected outcomes resulting in favorable prior year development of $8,500,000 or 12.6 percent loss ratio points. Speaker 300:06:08These reserves were primarily released from exiting years 2017 through 2022. For the quarter, our tax rate was 19.5% in line with the prior year. Turning to the investment portfolio. In the Q2, net investment income decreased 7.6 percent to $7,500,000 due to the reduced portfolio size, partially offset by increased reinvestment rates. For the quarter, yield on new investments increased approximately 119 basis points in relation to roll off, driving our tax equivalent book yield to 3.84 percent or 7 basis points prior than the Q3 of 2023. Speaker 300:06:46Net unrealized gains for the portfolio in equity securities was $3,900,000 in the quarter due to a strong equity market returns compared to an unrealized loss of $7,300,000 in the Q3 of 2023. The investment portfolio is high quality carrying an average AA- credit rating with a duration of 4.1 years. The composition of the portfolio is 59% in municipal bonds, 24% in corporate bonds, 3% in U. S. Treasuries and agencies, 6% in equity securities and 8% in cash and other investments. Speaker 300:07:19Approximately 56% of our bond portfolio is comprised of health to maturity securities. As a reminder, these health to maturity securities are carried at amortized costs and therefore unrealized gains or losses on these securities are not reflected in our book value. Our capital position is strong with a high quality balance sheet, solid loss reserve position and conservative investment portfolio. At quarter end, Amerisafe carried roughly $900,000,000 in investments, cash and cash equivalents. Couple of other topics. Speaker 300:07:47Book value per share was $16.50 and operating return on average equity was 14.2%. Our statutory surplus was $294,100,000 at quarter end, up from $254,900,000 at December 31, 2023. During the quarter, roughly 22,000 shares were repurchased at an average price of $46.79 for a total of $1,000,000 Since the inception of the initial share repurchase program in 2010, we have repurchased roughly 1,700,000 shares at an average cost of $24.99 per share for a total of $42,000,000 And finally, Friday, October 25, 2024, 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 question and answer portion of the call. Operator? Operator00:08:37Thank you. We'll go first to Matt Carletti with Citizens JMP. Speaker 400:08:58Hey, thanks. Good morning. Speaker 200:08:59Good morning, Matt. Speaker 500:09:02Chanel, I was hoping I Speaker 400:09:03could start with the top line. I mean, obviously, there's been a nice acceleration for a few quarters now, particularly the voluntary kind of the underlying growth. Can you you've talked a lot for several quarters about kind of the efforts you're making at the agency level. Can you just give us an idea of maybe what inning here and there? I mean, I know Ray only joined you a little over a year ago, so I'd imagine he's still getting going and what he wants to do, but any sort of high level perspective would be helpful. Speaker 200:09:34Absolutely. Matt, we have really done considerable efforts internally to find ways to better respond to this workers' comp environment that we find ourselves in. We have a tremendous amount of focus, as you mentioned. We've talked about it over the last few quarters about our agent engagement, our agent experience, how we're handling the effectiveness of our underwriting in terms of our time and process and just a number of things. I think the thing I'm most proud of is that it's really an employee led initiative. Speaker 200:10:08So from that regard and talking about how much trajectory is there related to that, I use the comment in my opening remarks about success breeds success. I think as we get these wins, the momentum builds for us. But I want to be very clear about the underwriting discipline that surrounds that. We are trying to be more efficient. We are attempting to be more effective, at the same time not changing our appetite. Speaker 200:10:36All of the things that you think about when you think about Amerisafe and our underwriting discipline and our pre quote safety, all of those things are still in place and still working effectively. And I would even argue maybe working more effectively for us. If you look at our pre quote number, it's still well north of 90%. Those things are still happening. We're just finding ways to engage our agents a little bit differently. Speaker 200:10:58And more importantly, clarifying our appetite so that we are working effectively with those agents. So they understand the types of accounts that we want to underwrite and the types of business that we feel like we can get the appropriate price for. So I think it's a combination of all of those things. I love that it's starting to show in the top line numbers that we're releasing publicly. I think internally, we've been filling those small wins for a number of quarters now, but it's nice to see it coming to fruition in numbers that we report publicly. Speaker 400:11:31Great. That's super helpful. Kind of staying on top line, but maybe a little more nuance or in the weeds. As I think about the hurricanes that have occurred in the past couple of months, I look at kind of your footprint and see Florida is 13% of the book, Georgia 11%, North Carolina 6%, kind of all top 5 states, construction is half your book. And what have you seen in past events? Speaker 400:11:56Like am I right in thinking that as reconstruction efforts take place that sort of footprint and your exposure to construction, you tend to benefit from the work activity? Speaker 200:12:06Yes. I think you're right on, Matt. Obviously, being in Louisiana, our first thought is we feel for those people. We understand we know what that feels like and we hope for a quick recovery. From a business perspective, a quick recovery for us could mean to your point, it could be somewhat of a boost for us. Speaker 200:12:24Our southeastern footprint is very important. And the mix of business there is very much like our overall book, a lot of construction, trucking getting those materials in and out, I think, would be somewhat beneficial to us. Speaker 400:12:39Great. And then lastly, just my typical numbers question, do you have the LCM for the quarter, Andy? Speaker 200:12:47I do. 157 is the LCM for the quarter. Speaker 400:12:52Wonderful. Thank you. Thank you for the color and congrats on nice quarter. Speaker 200:12:55Thank you, Matt. Operator00:13:02We'll go next to Mark Hughes with Truist. Speaker 500:13:07Yes. Thank you. Good morning. Speaker 200:13:10Good morning, Mark. Speaker 500:13:12Janelle, I'll ask the question another way. Why now on the engagement? You've been talking about this for a while. You have seen some building momentum, but this seemed like another step up. Was there something in the broader market environment, some new steps that you implemented that led to the uptick this quarter? Speaker 200:13:40Yes, I would love to answer that question and say, yes, the competition level has changed. Unfortunately, that is not the case. The competition level is still quite strong, quite intense. I believe Amerisafe is trying to we're positioning ourselves a little bit differently in that marketplace. Again, really reinforcing what our appetite is and trying to figure out how we work best with our agents. Speaker 200:14:02And again, as I talked about with Matt, these efforts have been going on for over a year now. I love that it's starting to gain ground and we're being able to see it in the top line growth. But internally, being focused on small incremental growth, adding to our policy count, has been a strategic priority for us for a little while now. I'll say this, I believe that the policy count focus is extremely important to what we're trying to achieve here. We've always I say we've always. Speaker 200:14:38Our renewal retention has been quite strong. This quarter, 93.6%. And that is if you look at premium dollars, that's 80% of our premium dollars. So that's extremely important to us. Where I felt like we were lacking and I've talked about this for at least a year now, where I felt like we were lacking, where we could put forth a better effort was on the new business side. Speaker 200:15:00How do we add incremental new business to help build up that renewal retention? I think we're getting well, the top line would say we're achieving some success there. It is not a silver bullet. It is the small blocking and tackling, but it's making a difference and it's making a difference with our agents. Speaker 500:15:23Is there some you say you haven't changed your appetite or underwriting. Are you finding that there is there are certain end markets or customer sizes or hazard classes that are responding better to this engagement initiative? Speaker 200:15:42Yes, that's a really good question. I was actually looking right before the call. If I look at our mix of business, so again, you mentioned hazard classes, so I'll use that as an example. Hazard classes A through G, if you look at our overall in force policy count, we hover between 84% 85% of our book is in that E, F and G classes. That is true today at 9 or today. Speaker 200:16:06It was true at 9:30. And if I look back over the last 10 years, it was true then. It's still somewhere when that 84% to 85% percentage of our in force policy count is in those classes of E, F and G. So from that aspect, we're still writing the same hazard groups, same class as a business. We haven't veered that much. Speaker 200:16:32And if you look at the 10 ks and you look at how much of our book comes from construction or trucking or logging in lumber, This percentage hasn't varied a lot. I think the premium dollars have shifted ever so slightly, but some of that is really where wages are coming from, not necessarily our mix of business, which is why I was using policy count as the proxy. So I don't know that we're achieving more success in any particular policy group than we were previously. I think we're just being more effective about it. Speaker 500:17:06Yes. Okay. Any nuance in the issue of multiliner package writers that obviously bundle comp, whereas your monoline, have you seen the I assume your engagement maybe involves some changes there that the brokers are more open to giving you the comp business. But do you see any evolution in that question of package versus monoline? Speaker 200:17:42Right. I would say globally, the answer to that, Mark, is probably no. We haven't really seen that. We haven't seen package carriers sort of pull away from comp. What we're selling is the value proposition of Amerisafe. Speaker 200:18:00Our safety services, our claim services, the fact that we're not in and out of those markets and we add stability for an agent, we're adding stability to their clients, I think is really where we're ringing a little bit true. But I'm not naive to think that what's happening in the other P and C lines are not impactful to us. It certainly is. And from an agent perspective, going back to really refining with the agents understanding our appetite, it's extremely important right now because most agents when their commercial clients are coming in the door, they are really focused on where they're going to place their property, where they're going to place their liability, where they're going to place the commercial auto. Workers' comp is not probably top of mind unless that particular client has had an issue of some kind. Speaker 200:18:48And if they've had an issue of some kind, that's usually a win for Amerisafe, right, because we I think from a service perspective, we do rise to the top. So making sure that agents understand our appetite and that we're remaining top of mind for them is extremely important. However, from a competition standpoint, I would say that really hasn't I haven't seen a shift happen in the marketplace yet. Still hopeful, but haven't seen it happen yet. Speaker 500:19:16Yes. I had a couple of more. I can get back in the queue if there's anybody else in line or should I keep going, Janelle? Speaker 200:19:23Keep going, Mark. Speaker 500:19:25Okay. You mentioned the medical inflation, the risk of medical inflation maybe based on the viability of current fee schedules. I think you said you're not seeing any change yet, not noticed any change yet. Have you seen in the past a breakdown in the fee schedules? Where does it start to go off the rails? Speaker 500:19:55And is that even possible? Yes. That's a good question. Is that even possible? Speaker 200:19:59Right. Last quarter, we I believe in the earnings call I should have looked back. I believe in the earnings call last quarter, we briefly touched on Florida. Florida had some rate changes come through in regards to reimbursement rates for surgeries and physicians. That hasn't it's effective oneonetwenty 25, so it should be built into the Florida rate going into next for next year, which we haven't seen yet. Speaker 200:20:27So fingers crossed that Florida because Florida, if you recall, Florida had like a 15% rate decline for 2024. So hopefully those fee changes will be reflected in the rate change for Florida going into for the 2025 policy year. So that's an example of, I think, a fee schedule change that was built into the rate. Typically, if it's something major or if there's an expansion of benefits that come through state legislatures, they'll have like a law there'll be a law only filing for a rate change. Otherwise, depending on the effective date, they'll just build it into the rate filing. Speaker 200:21:07So it'll be interesting to see going in when we start seeing the 2025 loss cost changes or the approved loss cost changes coming through with the states, if there are any others. Florida is the one that I think caught everyone's attention last quarter. I don't know of any larger ones as of yet that are happening, but the pressure will come from the provider side. So with and I'll use Florida as my example, when the providers start pushing back saying these rates are not adequate for our reimbursement, that's typically when the changes happen. Harkening back to the broader P and C line, however, I will say this, I don't know of workers' comp being on the top of any department insurance department's list right now in terms of rates and things happening in the marketplace. Speaker 200:21:56Because of all the catastrophes that we've seen and the impacts to the other lines of business, I think workers' comp is probably not the top priority from that regard. So I don't anticipate any major changes, at least that popped up on my radar. Speaker 500:22:13Yes. Correct me. A lot of the fee schedules are tied to government reimbursement. I don't know that they're going to Speaker 200:22:23You're correct. You're correct. Speaker 500:22:24That they're going to change direction or be so influenced. Right. Speaker 200:22:29I think the latest was between 2% 3% coming out of the schedule. So that's pretty in line with the industry and relatively benign if you think about it, which going back to my opening remarks, I mean, that's one of the things that's driving the profitability in workers' comp, right? Severity has been relatively moderate. Speaker 500:22:49Yes. How many new not I'm sorry, how many large claims year to date? Speaker 200:22:55We ended the quarter with 13 claims in excess of 1,000,000 Speaker 500:23:01dollars Okay. And that's below the Speaker 200:23:05long term trend? Pretty much on track with where we were, I think, last year or the last if you look at the last few accident years, it's in that range. So nothing from that aspect that gives me pause. Speaker 500:23:17Yes. You mentioned the NCCI loss cost numbers for 2025. Any change in trajectory on those where you've seen them lately? Has anything caught your eye? Or is that kind of steady Speaker 200:23:30as you go and still down? I think we're still anticipating upper single digit declines. I was looking this morning at the chart that shows, I think it's the rate changes back to 20 20 or 2004. And it's funny when you look at that chart because I lose track of how many years we're actually been at. So from 2000, I'd say 2018 on, the rate of the declines, and this is all NCCI states, not just Amerisafe classes. Speaker 200:24:00So 2018 forward, it has been greater than a 5% decline. So when you think about it from that perspective, that is a large number of rate a big number of rate decreases over sequential years. Speaker 500:24:15Yes, big cumulative. Speaker 200:24:17Well, you're exactly right. Speaker 500:24:21Matt had asked about the top line growth here. And is this just the beginning? I mean, do you does this carry through for the next 4 quarters? Is that would that be the natural tempo? You hit this new level of effectiveness and engagement. Speaker 500:24:38And so therefore, one would kind of assume that it's going to have some staying power for the near to medium term? Speaker 200:24:49Yes. I do not have a crystal ball, but I can assure you our strategic priority is to add incremental profitable growth each quarter. Speaker 500:25:00Yes. Yes. Okay. And then the new money yields, last question. Speaker 300:25:07New money yields were about 5%. Speaker 500:25:11And the portfolio yield 2.84%, I think you said? Speaker 300:25:153.84%. Speaker 500:25:173.84. Okay, I'm sorry. Thank you. Okay. Thank you for indulging me. Speaker 500:25:23I appreciate it. Speaker 200:25:25Thank you, Mark. Nice talking to you. Speaker 500:25:27Yes. Operator00:25:30Thank you. With no additional questions in queue, I would like to turn the call back over to Janelle Frost for any additional or closing remarks. Speaker 200:25:39Amerisafe's long standing presence in the high hazard workers' compensation space positions us well for delivering long term value to our stakeholders and stability to our policyholders, agents and employees. Thank you for joining us today. Operator00:25:55Thank you. That will conclude today's call. We appreciate your participation.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallAMERISAFE Q3 202400:00 / 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.comOur $1 AI stock to buy right nowDid Elon Musk just set the stage for the next AI stock explosion? One 30-year Wall Street veteran thinks so. Musk has been quietly creating one of the most ambitious AI ventures in history.May 6, 2025 | Behind the Markets (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. AMERISAFE, Inc. was incorporated in 1985 and is based in DeRidder, Louisiana.View AMERISAFE ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Palantir Stock Drops Despite Stellar Earnings: What's Next?Is Eli Lilly a Buy After Weak Earnings and CVS-Novo Partnership?Is Reddit Stock a Buy, Sell, or Hold After Earnings Release?Warning or Opportunity After Super Micro Computer's EarningsAmazon Earnings: 2 Reasons to Love It, 1 Reason to Be CautiousRocket Lab Braces for Q1 Earnings Amid Soaring ExpectationsMeta Takes A Bow With Q1 Earnings - Watch For Tariff Impact in Q2 Upcoming Earnings ARM (5/7/2025)AppLovin (5/7/2025)Fortinet (5/7/2025)MercadoLibre (5/7/2025)Cencora (5/7/2025)Carvana (5/7/2025)Walt Disney (5/7/2025)Emerson Electric (5/7/2025)Johnson Controls International (5/7/2025)Lloyds Banking Group (5/7/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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There are 6 speakers on the call. Operator00:00:00Good day, and welcome to the Amerisafe Third Quarter 2024 Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Catherine Shirley, Chief Administrative Officer. Please go ahead. Speaker 100:00:14Good morning. Welcome to the AMERISAFE 20 24 Third 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 a result of risks, uncertainties and other factors, including factors discussed in the earnings release, in the comments made during today's call and in the Risk Factors section of our Form 10 ks, Form 10 Qs and other reports and filings with the Securities and Exchange Commission. We do not undertake any duty to update any forward looking statements. Speaker 100:01:15I will now turn the call over to Janelle Frost, Amerisafe's President and CEO. Speaker 200:01:20Thank you, Catherine, and good morning, everyone. We are pleased with Amerisafe's quarterly financial results, particularly in response to a competitive marketplace driven by declining rates and industry wide profitability. The workers' compensation industry has benefited from multiyear declines in frequency, moderate severity and growing wages. Amerisafe's trends have been no different. However, I would argue our specialist nature and the history of underwriting discipline better position Amerisafe for consistent returns and a strong balance sheet throughout market cycles, which brings stability to our policyholders and agents and value to our shareholders. Speaker 200:02:03As such, our Board of Directors declared a special dividend of $3 for shareholders of record as of December 6, 2024. This special dividend reflects long term operational excellence and our commitment to shareholder returns. The special dividend is in addition to our regular quarterly dividend of 0.3 $7 Our capital strength is created by our long term profitability and our current strategic priorities centered on achieving targeted profitable growth. This quarter, similar to the second, we have maintained positive momentum in terms of production and top line performance. For policies written in the quarter, premium grew 8.8% over last year's Q3. Speaker 200:02:49I've spoken over the last few quarters about the effectiveness of our agent engagement and creating internal efficiencies to enhance agent experience. Through employee led initiatives and collaboration, we are seeing wins. And as the saying goes, success breeds success. Working with agents and without changing our appetite, we are improving our ability to incrementally add new business among strong competition. New business growth coupled with a strong renewal retention of 93.6 percent led to higher in force policy count and gross written premium growth of 5.8%. Speaker 200:03:29While audit premiums remain positive and additive to premiums earned, their contribution is moderating compared to the same period last year. Payroll growth and wage inflation are leveling off within the industries we insure. Regarding losses, our accident year loss ratio was consistent with last year at 71%. Loss cost trends remain stable. I believe the threat to the current loss trends for the industry are medical inflation and the viability of current fee schedules. Speaker 200:04:01That being said, we have not noted any significant changes. The company also saw $8,500,000 in favorable development on prior accident years, stemming from favorable case development in accident years 2017 through 2022. To summarize, we are pleased to see premium growth in the quarter and continued favorable loss experience through our claims management efforts. I will now turn the call over to Andy to discuss expenses, investments and other financial metrics. Speaker 300:04:33Thank you, Janelle, and good morning to everyone. For the Q3 of 2024, Amerisafe reported net income of 14,300,000 or $0.75 per diluted share and operating net income of $11,100,000 or $0.58 per diluted share. During the Q3 of 2023, net income was $10,000,000 or $0.52 per diluted share and operating net income was $11,700,000 or $0.61 per diluted share. Gross written premiums were $74,900,000 in the quarter compared with $70,800,000 in Q3 of 2023. The increase in the top line was driven by a combination of increased sales efforts with agents, which drove increased new business and strong retentions. Speaker 300:05:18Order premiums increased the top line by $4,000,000 and remain a material contributor to overall premiums. In the Q3 of 2023, audit premiums were $5,600,000 Our total underwriting and other expenses were $21,300,000 in the quarter as compared to $22,400,000 in the prior year, resulting in an expense ratio of 31.7% versus 33.6% in the prior year. As we continue to invest in our business, expense outlays may proceed growth in earned premiums leading to quarterly expense ratio fluctuations. However, we expect our full year expense ratio to be within historical ranges. During the quarter, our claims handling practices drove better than expected outcomes resulting in favorable prior year development of $8,500,000 or 12.6 percent loss ratio points. Speaker 300:06:08These reserves were primarily released from exiting years 2017 through 2022. For the quarter, our tax rate was 19.5% in line with the prior year. Turning to the investment portfolio. In the Q2, net investment income decreased 7.6 percent to $7,500,000 due to the reduced portfolio size, partially offset by increased reinvestment rates. For the quarter, yield on new investments increased approximately 119 basis points in relation to roll off, driving our tax equivalent book yield to 3.84 percent or 7 basis points prior than the Q3 of 2023. Speaker 300:06:46Net unrealized gains for the portfolio in equity securities was $3,900,000 in the quarter due to a strong equity market returns compared to an unrealized loss of $7,300,000 in the Q3 of 2023. The investment portfolio is high quality carrying an average AA- credit rating with a duration of 4.1 years. The composition of the portfolio is 59% in municipal bonds, 24% in corporate bonds, 3% in U. S. Treasuries and agencies, 6% in equity securities and 8% in cash and other investments. Speaker 300:07:19Approximately 56% of our bond portfolio is comprised of health to maturity securities. As a reminder, these health to maturity securities are carried at amortized costs and therefore unrealized gains or losses on these securities are not reflected in our book value. Our capital position is strong with a high quality balance sheet, solid loss reserve position and conservative investment portfolio. At quarter end, Amerisafe carried roughly $900,000,000 in investments, cash and cash equivalents. Couple of other topics. Speaker 300:07:47Book value per share was $16.50 and operating return on average equity was 14.2%. Our statutory surplus was $294,100,000 at quarter end, up from $254,900,000 at December 31, 2023. During the quarter, roughly 22,000 shares were repurchased at an average price of $46.79 for a total of $1,000,000 Since the inception of the initial share repurchase program in 2010, we have repurchased roughly 1,700,000 shares at an average cost of $24.99 per share for a total of $42,000,000 And finally, Friday, October 25, 2024, 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 question and answer portion of the call. Operator? Operator00:08:37Thank you. We'll go first to Matt Carletti with Citizens JMP. Speaker 400:08:58Hey, thanks. Good morning. Speaker 200:08:59Good morning, Matt. Speaker 500:09:02Chanel, I was hoping I Speaker 400:09:03could start with the top line. I mean, obviously, there's been a nice acceleration for a few quarters now, particularly the voluntary kind of the underlying growth. Can you you've talked a lot for several quarters about kind of the efforts you're making at the agency level. Can you just give us an idea of maybe what inning here and there? I mean, I know Ray only joined you a little over a year ago, so I'd imagine he's still getting going and what he wants to do, but any sort of high level perspective would be helpful. Speaker 200:09:34Absolutely. Matt, we have really done considerable efforts internally to find ways to better respond to this workers' comp environment that we find ourselves in. We have a tremendous amount of focus, as you mentioned. We've talked about it over the last few quarters about our agent engagement, our agent experience, how we're handling the effectiveness of our underwriting in terms of our time and process and just a number of things. I think the thing I'm most proud of is that it's really an employee led initiative. Speaker 200:10:08So from that regard and talking about how much trajectory is there related to that, I use the comment in my opening remarks about success breeds success. I think as we get these wins, the momentum builds for us. But I want to be very clear about the underwriting discipline that surrounds that. We are trying to be more efficient. We are attempting to be more effective, at the same time not changing our appetite. Speaker 200:10:36All of the things that you think about when you think about Amerisafe and our underwriting discipline and our pre quote safety, all of those things are still in place and still working effectively. And I would even argue maybe working more effectively for us. If you look at our pre quote number, it's still well north of 90%. Those things are still happening. We're just finding ways to engage our agents a little bit differently. Speaker 200:10:58And more importantly, clarifying our appetite so that we are working effectively with those agents. So they understand the types of accounts that we want to underwrite and the types of business that we feel like we can get the appropriate price for. So I think it's a combination of all of those things. I love that it's starting to show in the top line numbers that we're releasing publicly. I think internally, we've been filling those small wins for a number of quarters now, but it's nice to see it coming to fruition in numbers that we report publicly. Speaker 400:11:31Great. That's super helpful. Kind of staying on top line, but maybe a little more nuance or in the weeds. As I think about the hurricanes that have occurred in the past couple of months, I look at kind of your footprint and see Florida is 13% of the book, Georgia 11%, North Carolina 6%, kind of all top 5 states, construction is half your book. And what have you seen in past events? Speaker 400:11:56Like am I right in thinking that as reconstruction efforts take place that sort of footprint and your exposure to construction, you tend to benefit from the work activity? Speaker 200:12:06Yes. I think you're right on, Matt. Obviously, being in Louisiana, our first thought is we feel for those people. We understand we know what that feels like and we hope for a quick recovery. From a business perspective, a quick recovery for us could mean to your point, it could be somewhat of a boost for us. Speaker 200:12:24Our southeastern footprint is very important. And the mix of business there is very much like our overall book, a lot of construction, trucking getting those materials in and out, I think, would be somewhat beneficial to us. Speaker 400:12:39Great. And then lastly, just my typical numbers question, do you have the LCM for the quarter, Andy? Speaker 200:12:47I do. 157 is the LCM for the quarter. Speaker 400:12:52Wonderful. Thank you. Thank you for the color and congrats on nice quarter. Speaker 200:12:55Thank you, Matt. Operator00:13:02We'll go next to Mark Hughes with Truist. Speaker 500:13:07Yes. Thank you. Good morning. Speaker 200:13:10Good morning, Mark. Speaker 500:13:12Janelle, I'll ask the question another way. Why now on the engagement? You've been talking about this for a while. You have seen some building momentum, but this seemed like another step up. Was there something in the broader market environment, some new steps that you implemented that led to the uptick this quarter? Speaker 200:13:40Yes, I would love to answer that question and say, yes, the competition level has changed. Unfortunately, that is not the case. The competition level is still quite strong, quite intense. I believe Amerisafe is trying to we're positioning ourselves a little bit differently in that marketplace. Again, really reinforcing what our appetite is and trying to figure out how we work best with our agents. Speaker 200:14:02And again, as I talked about with Matt, these efforts have been going on for over a year now. I love that it's starting to gain ground and we're being able to see it in the top line growth. But internally, being focused on small incremental growth, adding to our policy count, has been a strategic priority for us for a little while now. I'll say this, I believe that the policy count focus is extremely important to what we're trying to achieve here. We've always I say we've always. Speaker 200:14:38Our renewal retention has been quite strong. This quarter, 93.6%. And that is if you look at premium dollars, that's 80% of our premium dollars. So that's extremely important to us. Where I felt like we were lacking and I've talked about this for at least a year now, where I felt like we were lacking, where we could put forth a better effort was on the new business side. Speaker 200:15:00How do we add incremental new business to help build up that renewal retention? I think we're getting well, the top line would say we're achieving some success there. It is not a silver bullet. It is the small blocking and tackling, but it's making a difference and it's making a difference with our agents. Speaker 500:15:23Is there some you say you haven't changed your appetite or underwriting. Are you finding that there is there are certain end markets or customer sizes or hazard classes that are responding better to this engagement initiative? Speaker 200:15:42Yes, that's a really good question. I was actually looking right before the call. If I look at our mix of business, so again, you mentioned hazard classes, so I'll use that as an example. Hazard classes A through G, if you look at our overall in force policy count, we hover between 84% 85% of our book is in that E, F and G classes. That is true today at 9 or today. Speaker 200:16:06It was true at 9:30. And if I look back over the last 10 years, it was true then. It's still somewhere when that 84% to 85% percentage of our in force policy count is in those classes of E, F and G. So from that aspect, we're still writing the same hazard groups, same class as a business. We haven't veered that much. Speaker 200:16:32And if you look at the 10 ks and you look at how much of our book comes from construction or trucking or logging in lumber, This percentage hasn't varied a lot. I think the premium dollars have shifted ever so slightly, but some of that is really where wages are coming from, not necessarily our mix of business, which is why I was using policy count as the proxy. So I don't know that we're achieving more success in any particular policy group than we were previously. I think we're just being more effective about it. Speaker 500:17:06Yes. Okay. Any nuance in the issue of multiliner package writers that obviously bundle comp, whereas your monoline, have you seen the I assume your engagement maybe involves some changes there that the brokers are more open to giving you the comp business. But do you see any evolution in that question of package versus monoline? Speaker 200:17:42Right. I would say globally, the answer to that, Mark, is probably no. We haven't really seen that. We haven't seen package carriers sort of pull away from comp. What we're selling is the value proposition of Amerisafe. Speaker 200:18:00Our safety services, our claim services, the fact that we're not in and out of those markets and we add stability for an agent, we're adding stability to their clients, I think is really where we're ringing a little bit true. But I'm not naive to think that what's happening in the other P and C lines are not impactful to us. It certainly is. And from an agent perspective, going back to really refining with the agents understanding our appetite, it's extremely important right now because most agents when their commercial clients are coming in the door, they are really focused on where they're going to place their property, where they're going to place their liability, where they're going to place the commercial auto. Workers' comp is not probably top of mind unless that particular client has had an issue of some kind. Speaker 200:18:48And if they've had an issue of some kind, that's usually a win for Amerisafe, right, because we I think from a service perspective, we do rise to the top. So making sure that agents understand our appetite and that we're remaining top of mind for them is extremely important. However, from a competition standpoint, I would say that really hasn't I haven't seen a shift happen in the marketplace yet. Still hopeful, but haven't seen it happen yet. Speaker 500:19:16Yes. I had a couple of more. I can get back in the queue if there's anybody else in line or should I keep going, Janelle? Speaker 200:19:23Keep going, Mark. Speaker 500:19:25Okay. You mentioned the medical inflation, the risk of medical inflation maybe based on the viability of current fee schedules. I think you said you're not seeing any change yet, not noticed any change yet. Have you seen in the past a breakdown in the fee schedules? Where does it start to go off the rails? Speaker 500:19:55And is that even possible? Yes. That's a good question. Is that even possible? Speaker 200:19:59Right. Last quarter, we I believe in the earnings call I should have looked back. I believe in the earnings call last quarter, we briefly touched on Florida. Florida had some rate changes come through in regards to reimbursement rates for surgeries and physicians. That hasn't it's effective oneonetwenty 25, so it should be built into the Florida rate going into next for next year, which we haven't seen yet. Speaker 200:20:27So fingers crossed that Florida because Florida, if you recall, Florida had like a 15% rate decline for 2024. So hopefully those fee changes will be reflected in the rate change for Florida going into for the 2025 policy year. So that's an example of, I think, a fee schedule change that was built into the rate. Typically, if it's something major or if there's an expansion of benefits that come through state legislatures, they'll have like a law there'll be a law only filing for a rate change. Otherwise, depending on the effective date, they'll just build it into the rate filing. Speaker 200:21:07So it'll be interesting to see going in when we start seeing the 2025 loss cost changes or the approved loss cost changes coming through with the states, if there are any others. Florida is the one that I think caught everyone's attention last quarter. I don't know of any larger ones as of yet that are happening, but the pressure will come from the provider side. So with and I'll use Florida as my example, when the providers start pushing back saying these rates are not adequate for our reimbursement, that's typically when the changes happen. Harkening back to the broader P and C line, however, I will say this, I don't know of workers' comp being on the top of any department insurance department's list right now in terms of rates and things happening in the marketplace. Speaker 200:21:56Because of all the catastrophes that we've seen and the impacts to the other lines of business, I think workers' comp is probably not the top priority from that regard. So I don't anticipate any major changes, at least that popped up on my radar. Speaker 500:22:13Yes. Correct me. A lot of the fee schedules are tied to government reimbursement. I don't know that they're going to Speaker 200:22:23You're correct. You're correct. Speaker 500:22:24That they're going to change direction or be so influenced. Right. Speaker 200:22:29I think the latest was between 2% 3% coming out of the schedule. So that's pretty in line with the industry and relatively benign if you think about it, which going back to my opening remarks, I mean, that's one of the things that's driving the profitability in workers' comp, right? Severity has been relatively moderate. Speaker 500:22:49Yes. How many new not I'm sorry, how many large claims year to date? Speaker 200:22:55We ended the quarter with 13 claims in excess of 1,000,000 Speaker 500:23:01dollars Okay. And that's below the Speaker 200:23:05long term trend? Pretty much on track with where we were, I think, last year or the last if you look at the last few accident years, it's in that range. So nothing from that aspect that gives me pause. Speaker 500:23:17Yes. You mentioned the NCCI loss cost numbers for 2025. Any change in trajectory on those where you've seen them lately? Has anything caught your eye? Or is that kind of steady Speaker 200:23:30as you go and still down? I think we're still anticipating upper single digit declines. I was looking this morning at the chart that shows, I think it's the rate changes back to 20 20 or 2004. And it's funny when you look at that chart because I lose track of how many years we're actually been at. So from 2000, I'd say 2018 on, the rate of the declines, and this is all NCCI states, not just Amerisafe classes. Speaker 200:24:00So 2018 forward, it has been greater than a 5% decline. So when you think about it from that perspective, that is a large number of rate a big number of rate decreases over sequential years. Speaker 500:24:15Yes, big cumulative. Speaker 200:24:17Well, you're exactly right. Speaker 500:24:21Matt had asked about the top line growth here. And is this just the beginning? I mean, do you does this carry through for the next 4 quarters? Is that would that be the natural tempo? You hit this new level of effectiveness and engagement. Speaker 500:24:38And so therefore, one would kind of assume that it's going to have some staying power for the near to medium term? Speaker 200:24:49Yes. I do not have a crystal ball, but I can assure you our strategic priority is to add incremental profitable growth each quarter. Speaker 500:25:00Yes. Yes. Okay. And then the new money yields, last question. Speaker 300:25:07New money yields were about 5%. Speaker 500:25:11And the portfolio yield 2.84%, I think you said? Speaker 300:25:153.84%. Speaker 500:25:173.84. Okay, I'm sorry. Thank you. Okay. Thank you for indulging me. Speaker 500:25:23I appreciate it. Speaker 200:25:25Thank you, Mark. Nice talking to you. Speaker 500:25:27Yes. Operator00:25:30Thank you. With no additional questions in queue, I would like to turn the call back over to Janelle Frost for any additional or closing remarks. Speaker 200:25:39Amerisafe's long standing presence in the high hazard workers' compensation space positions us well for delivering long term value to our stakeholders and stability to our policyholders, agents and employees. Thank you for joining us today. Operator00:25:55Thank you. That will conclude today's call. We appreciate your participation.Read morePowered by