NASDAQ:AMSF AMERISAFE Q4 2023 Earnings Report $46.64 +0.81 (+1.77%) Closing price 05/2/2025 04:00 PM EasternExtended Trading$46.64 +0.01 (+0.01%) As of 06:13 AM 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$0.74Consensus EPS $0.66Beat/MissBeat by +$0.08One Year Ago EPSN/AAMERISAFE Revenue ResultsActual Revenue$73.88 millionExpected Revenue$75.15 millionBeat/MissMissed by -$1.27 millionYoY Revenue GrowthN/AAMERISAFE Announcement DetailsQuarterQ4 2023Date2/21/2024TimeN/AConference Call DateThursday, February 22, 2024Conference Call Time10:30AM ETConference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Annual Report (10-K)Earnings HistoryCompany ProfilePowered by AMERISAFE Q4 2023 Earnings Call TranscriptProvided by QuartrFebruary 22, 2024 ShareLink copied to clipboard.There are 7 speakers on the call. Operator00:00:00Good day, and welcome to the AMERISAFE 2023 4th Quarter Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the presentation over to Ms. Catherine Shirley, Chief Administrative Officer. Please go ahead, ma'am. Speaker 100:00:13Good morning. Welcome to the Amerisafe 2023 4th quarter investor call. If you have not received the earnings release, it is available on our website atamerisec.com. This call is being recorded. A replay of today's call will be available. Speaker 100:00:30Details 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, 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 Speaker 200:01:12to update any forward looking statement. I will now turn the call over to Janelle Frost, Amerisafe's President and CEO. Thank you, Catherine, and good morning, everyone. We are pleased to report solid operating earnings results for both the Q4 and full year of 2023. For the year, we reported a combined ratio of 85.9%, gross premium written growth of 3.3% and operating ROE of 17.7%. Speaker 200:01:43These results come during a period in the workers' compensation industry of multiyear rate decreases, somewhat offset by recent wage inflation. Competition has not lessened as workers' compensation is one of the more profitable of the property and casualty lines. Remaining true to our disciplined approach of underwriting high hazard risk, while being responsive to our agents and caring for the needs of injured workers and their employers is evident in our consistent results year after year and serves all of our stakeholders. Gross written premiums for the quarter were $60,300,000 increasing 8.4%. During the quarter, premiums for policies written in the quarter increased 4.7%, which was further improved by payroll audit and related premium adjustments of $4,800,000 At Amerisafe, we continue to see strong retention in policy for which we offer renewal with 93.9 percent retention in the 4th quarter. Speaker 200:02:45For the full year, our accident year loss ratio was in line with the prior year at 71%. The company experienced $41,100,000 of favorable development on prior accident years in 2023, which we attribute to lower claims severities and proactive claims handling. In addition, we ended the year with 9 severe claims, of those with case incurred in excess of $1,000,000 As of December 31, 2023, our open claim count was down 6.4% from 2022. This metric demonstrates the success of our focus on resolving and closing claims and the decline in reported claims. Our balance sheet is conservatively positioned with roughly $897,000,000 in investments and cash, a solid reserve position and no outstanding debt. Speaker 200:03:41Despite challenging market conditions, our tenure ensuring high hazard risk positions the company for continued solid results. Amerisafe's strong retention, coupled with our focus on profitable growth, is delivering robust returns to our shareholders. Finally, as it relates to capital management, Amerisafe's Board of Directors has approved 8.8% increase in our regular dividend to $0.37 With that, I'll turn the call over to Andy to discuss the financials. Speaker 300:04:11Thank you, Janelle, and good morning to everyone. For the Q4 of 2023, Amerisafe reported net income of $19,200,000 or $1 per diluted share and operating net income of $14,300,000 or $0.74 per diluted share. During the Q4 of 2022, net income was 20,800,000 or $1.08 per diluted share and operating net income of $16,100,000 or $0.84 per diluted share. The lower net income was primarily driven by certain items in the quarter driving the expense pressure higher as well as less tax exempt interest income driving a higher tax rate compared with the Q4 of 2022. For the full year, net income was $62,100,000 and net operating income was $55,900,000 compared with $55,600,000 $59,300,000 in the prior year, respectively. Speaker 300:05:04Our total underwriting and other expenses were $19,000,000 in the quarter, a 9% increase compared with the $17,400,000 recognized in the prior year quarter. This increase resulted in an expense ratio of 28.9 compared with 26.4 in the Q4 of 2022. The increase was primarily due to wage inflation and an increase in insurance related assessments. For the full year, the expense ratio was 29.3% compared with 26.5 in 2022. For the year, our tax rate was 19.7% compared to 17.8 percent in the prior year, largely due to a lower proportion of tax exempt income versus underwriting income in the quarter compared with the last year. Speaker 300:05:47Turning to our investment portfolio. In the 4th quarter, net investment income increased 5.7 percent to $8,100,000 from $7,600,000 in the prior year quarter. For the full year, net investment income was $31,300,000 compared with $27,200,000 in 2022. The increase was driven by the yield on new investments, which exceeded that of portfolio roll off by approximately 200 basis points and drove the portfolio tax equivalent book yield to 3.69 percent or 31 basis points higher than the previous year. Realized gains for the portfolio and securities sold were $1,100,000 in the quarter compared with $1,000,000 during the Q4 of 2022. Speaker 300:06:29The investment portfolio is high quality carrying an average AA- credit rating with a duration of 4.2 years. The composition of the portfolio is 61% in municipal bonds, 25% in corporate bonds, 4% in U. S. Treasuries and agencies, 6% in equity securities and 4% in cash and other investments. Approximately 60% of our bond portfolio is comprised of held to maturity securities. Speaker 300:06:55During the Q4, interest rates moved noticeably lower, which improved the net unrealized loss position of held to maturity securities to $10,500,000 from $35,100,000 in the 3rd quarter. As a reminder, these held to maturity securities are carried at amortized cost 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. For the year, the company returned $93,300,000 to shareholders through a combination of regular and special dividends, plus an additional $2,200,000 of shares were repurchased. And finally, just a couple of other topics. Speaker 300:07:37Book value per share was $15.28 after paying the special dividend in December 2023, a decrease of 7.8% from year end 2022 and operating return on average equity was 17.4% for the quarter and 17.7% for the full year. Our statutory surplus was $254,900,000 at year end, up from $252,500,000 at the prior year end. And finally, tomorrow, February 23, 2024, we will be filing our 10 ks 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? Operator00:08:20Yes, sir. Thank you. We'll take our first question from Matt Carletti with JMP Securities. Speaker 400:08:55Hey, good morning. Speaker 200:08:56Good morning, Matt. Speaker 400:08:59Maybe if I could start with the top line, specifically the voluntary premiums showed some modest growth. And I think you commented that policies in force also grew. So the question is just can you give us a little bit of color on are there certain geographies or kind of underlying sectors of the economy exposures that you have that you're seeing certain success with or is it more just broad based? Speaker 200:09:30I'll start with your question about geographies. I'll steer away a little bit from that and I don't think I'm not directly answering question, but for competitive reasons, I want to be careful about speaking about geographies that I feel like we're being more successful in at the moment. Fair enough. Operator00:09:44But I will say, Speaker 200:09:44I think it's more broad based, to be honest, Matt. We've talked a lot over the last few quarters about our internal focus on ease of doing business with our agents. We've had really strong retention for a number of years, which we are very appreciative of and I think really speak to the service level of the Amerisafe employees. At the same time, agents are trying to shop new business does come at fewer and fewer opportunities during this market where everyone's getting a rate decrease. So we really have been focusing on ease of doing business with our agents, streamlining processes, making sure we have the right workflows and just focusing on those agent relationships so that when the opportunities do present themselves from a new business perspective, we are at the ready. Speaker 200:10:34And I do think just a combination of those things happening over a period of time, we've been successful in growing some new business along with our strong retention. And you were spot on about the policy count. We're very excited that we were able to grow policy count in 2023. Speaker 400:10:54Great. And then if I shift to thinking about where kind of margins are in the business, and as we look forward, I mean, you mentioned frequency was down. I think I I guess, you throw a severity in there too. I guess, I'm asking, looking at your crystal ball a little bit, I guess you throw severity in there too. I guess I'm asking looking at your crystal ball a little bit and kind of how do you feel about sustainability of accident year margins when you kind of put all those pieces of the puzzle together and any other ones that I'm forgetting? Speaker 200:11:26No, those you hit all the right elements. Certainly, we have the realities of multiple years of rate decreases. And I think if we look at 2024, nothing on a macro basis that seems to be changing that directionally. I still think it's going to be higher single digit rate decreases going into 2024. I like how Amerisafe is positioned because we are very disciplined in our approach, in our underwriting approach and that we individually underwrite every single account. Speaker 200:12:01That's built into that margin is built in to how we are underwriting those accounts today and in our pricing for those accounts. So I feel really good about that. From the loss we are appreciative of. But keep in mind, the things that we write are more severity driven than frequency driven. So severity has been relatively modest within our expectations. Speaker 200:12:31There's certainly a concern in the industry across the industry. Every article you pick up talks about medical inflation and concerns about medical inflation. But to the credit of the industry, right now, fee schedules are helping contain costs. I read an article recently that the CMS is predicting medical inflation to be somewhere between 2.5% and 3.5% going into 2024 and the years to come. If the industry can hold on to that, that would be fantastic, but there's going to be pressure. Speaker 200:13:04No question on medical inflation. So I feel really good about our margins going forward because I know we're maintaining that discipline. Speaker 400:13:16Great. And then one last quick one if I could. ELCM for the quarter? Speaker 200:13:21146. Speaker 400:13:23146. Awesome. Thanks so much. Appreciate it. Speaker 200:13:27Thank you, Matt. Operator00:13:31We'll now take our next question from Mark Hughes with Truist. Speaker 500:13:37Yes, thanks. Good morning, Janelle. Good morning, Andy. Speaker 200:13:40Good morning, Mark. Good morning, Mark. Speaker 500:13:44The Janelle, frequency down 6% and then I think did you say severity was within your expectations? Did you give a number for that? Speaker 600:13:52I missed the first couple of quarters. Speaker 200:13:54I did not. I did not. So within our expectations built into the 71% that we've been carrying for accident year 2023. Speaker 500:14:04Yes. And have you ever historically outlined your expectations on severity, low single digits? Speaker 200:14:16That's a great question, Mark. I mean, if you think about it in terms again, I was just talking to Matt about it, if you think about it in terms of medical inflation, we've always took a long term approach to that and it's always been mid single digit range in terms of medical inflation. The other side of that is just how many given the types of injuries that we deal with, I don't know any given year how many of those are going to be the horrific catastrophic claims. I mentioned in my prepared remarks, we had 9 claims with $1,000,000 in excess of $1,000,000 case incurred this year, which is a little bit lower than prior years. So I hate to go back to my favorite term when I'm talking about severe claims, but we're just in a lumpy business. Speaker 200:15:03I don't know when the accident is going to happen or the severity of those accidents. Speaker 500:15:09Yes. Did you have any movement in the reserves on the large accident that came at the end of 2020? Speaker 200:15:17No, we have not. No, we have not. We are we're still very comfortable with the reserves that we initially recorded for that claim. Speaker 500:15:32Yes. The audit premium is holding in there pretty well. One might have thought with the economy slowing, that would be tapering a bit. Is there any particular area you're seeing a better audit premium? Speaker 200:15:50Mark, across our book, we're seeing strong audit premium. Across our book, I can tell you we had about 7.4% of what I would call payroll growth, 5.6% of that was wage growth. And if you look at BLS data, I think the wage growth number projected at least for construction or maybe the countrywide is 4.1 as of the last quarter. So we're running slightly higher than that. That doesn't really surprise me given the skilled labor jobs that we insure. Speaker 200:16:22And we're still not seeing a large influx of new employees. Now what the labor market will do in 2024, that I don't know, but construction jobs are up. So we feel pretty confident that being a large part of our book of business that should be pretty resilient in 2024. Speaker 500:16:43Yes. I was going to ask you that question. You used the formulation of kind of the next job, but it sounds like you see construction holding in there pretty well? Speaker 200:16:52We do. We do. Speaker 500:16:56Okay. And was the 7.4 and 5.6, is that the 4th quarter or is that full year? Speaker 200:17:02That was 4th quarter and it was right in line with 3rd quarter. If you recall, 3rd quarter was 7.5%. So in line, no real deterioration between the two quarters. Speaker 500:17:14Yes. And you think the still projected loss cost is going to be down high single digits again? Speaker 200:17:24I do. And again, that's Janelle's opinion, but I do. I mean, based on the approved loss costs that have already come in the door this year, I do think that and I just don't see anything on a macro basis that's going to change that. I mean, we'll get industry wide results in May and we'll see what that looks like. But just based on following other companies and their reporting, I don't think anyone has had any large surprises in terms of losses. Speaker 200:17:53Concerns, I think we can all list the things we worry about, but haven't really seen any in the results. So I don't know that that will change the perspective on loss costs. Speaker 500:18:06Yes. You mentioned the growth being helped by your ease of doing business. Anything on the competitive front or your change in your own appetite in terms of end markets, class codes, anything like that? Speaker 200:18:23No, I appreciate the looking for clarity on that. No, we really we have not changed our underwriting approach. We have not changed our mix of business. We haven't changed our risk tolerance. This is really just about trying to further our relationships with our agents. Speaker 500:18:43Yes. Okay. I think that was it for me. Appreciate it. Speaker 200:18:50Thank you, Mark. Operator00:18:59We'll take our next question from Bob Farnam with Janney. Speaker 600:19:05Hey there, good morning. Good morning, Bob. I have additional questions on the improved loss costs. So this year you got Florida down 15%. You have a change coming up in Louisiana down 9% or so. Speaker 600:19:20I'm curious, do the classes of business that you write, are they comparable to the overall, the statewide averages or are they better or worse in terms of kind of loss cost Speaker 200:19:33changes? That's a really good point, Bob. They are. They run our book of business sometimes varies a little higher, sometimes a little lower. But on average, I think using the industry wide, if you're trying to move out, I think using the industry wide approved loss cost does track with our own experience. Speaker 600:19:52Okay. And this is probably more of a kind of a philosophical question, but as the approved loss costs continue to go down, at some point, they're going to go beyond where they should go down. So you're going to kind of miss the inflection point, I believe. So how do you ensure that your strong profitability remains if kind of the underlying loss costs have gone too far? Speaker 200:20:21It goes back to what I was just saying earlier. The fact that we are individually underwriting our accounts and we've had a very consistent book of business for a long period of time. So I think my underwriters have a true expertise in understanding how much rate or how much how many dollars of payroll we need to cover our loss and to cover the margin that we want in that individual book of business. Hence why we always try to report the we had been reporting the ELCM. It was just trying to give you a measure. Speaker 200:20:53It's not absolute cost, but the fact that we're not chasing that 10%, 20%, or 10%, 15% down in terms of the rate that the approved rate. I think we have the expertise to understand that rate per $100 of payroll and what it takes for an individual risk. But we're highly relying on our expertise versus the industry wide averages. Speaker 600:21:21Right. Just refresh my memory, the ELCM, does that include or not include kind of scheduled credits and debits? Speaker 200:21:33The ELCM would include that. So it's sort of the aggregate. If I took all my states and aggregated them together, it would be inclusive of that. Speaker 600:21:40Yes. That's what I thought. Okay. Thank you. Speaker 200:21:44Thank you, Bob. Operator00:21:48It appears there are no further telephone questions. I'd like to turn the conference back over to Ms. Frost for any additional or closing comments. Speaker 200:21:57Thank you for joining us today. We are pleased with both the quarter and full year results reported. These results are reflected of the dedication of Amerisafe employees to fulfilling commitments to our policyholders, agents and shareholders. I believe our consistent returns year in and year out clearly reflect our unwavering focus on turning risk into opportunity. Operator00:22:23And once again, that does conclude today's conference. We thank you all for your participation. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallAMERISAFE Q4 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K)Annual report(10-K) 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.comWarning: “DOGE Collapse” imminentElon Strikes Back You may already sense that the tide is turning against Elon Musk and DOGE. Just this week, President Trump promised to buy a Tesla to help support Musk in the face of a boycott against his company. But according to one research group, with connections to the Pentagon and the U.S. government, Elon's preparing to strike back in a much bigger way in the days ahead.May 5, 2025 | Altimetry (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 Amazon Earnings: 2 Reasons to Love It, 1 Reason to Be CautiousMeta Takes A Bow With Q1 Earnings - Watch For Tariff Impact in Q2Palantir Earnings: 1 Bullish Signal and 1 Area of ConcernVisa Q2 Earnings Top Forecasts, Adds $30B Buyback PlanMicrosoft Crushes Earnings, What’s Next for MSFT Stock?Qualcomm's Earnings: 2 Reasons to Buy, 1 to Stay AwayAMD Stock Signals Strong Buy Ahead of Earnings Upcoming Earnings Advanced Micro Devices (5/6/2025)American Electric Power (5/6/2025)Constellation Energy (5/6/2025)Marriott International (5/6/2025)Energy Transfer (5/6/2025)Mplx (5/6/2025)Brookfield Asset Management (5/6/2025)Arista Networks (5/6/2025)Duke Energy (5/6/2025)Zoetis (5/6/2025) 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. Start Your 30-Day Trial MarketBeat All Access Features Best-in-Class Portfolio Monitoring Get personalized stock ideas. Compare portfolio to indices. Check stock news, ratings, SEC filings, and more. Stock Ideas and Recommendations See daily stock ideas from top analysts. Receive short-term trading ideas from MarketBeat. Identify trending stocks on social media. Advanced Stock Screeners and Research Tools Use our seven stock screeners to find suitable stocks. Stay informed with MarketBeat's real-time news. Export data to Excel for personal analysis. Sign in to your free account to enjoy these benefits In-depth profiles and analysis for 20,000 public companies. Real-time analyst ratings, insider transactions, earnings data, and more. Our daily ratings and market update email newsletter. Sign in to your free account to enjoy all that MarketBeat has to offer. Sign In Create Account Your Email Address: Email Address Required Your Password: Password Required Log In or Sign in with Facebook Sign in with Google Forgot your password? Your Email Address: Please enter your email address. Please enter a valid email address Choose a Password: Please enter your password. Your password must be at least 8 characters long and contain at least 1 number, 1 letter, and 1 special character. Create My Account (Free) or Sign in with Facebook Sign in with Google By creating a free account, you agree to our terms of service. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
There are 7 speakers on the call. Operator00:00:00Good day, and welcome to the AMERISAFE 2023 4th Quarter Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the presentation over to Ms. Catherine Shirley, Chief Administrative Officer. Please go ahead, ma'am. Speaker 100:00:13Good morning. Welcome to the Amerisafe 2023 4th quarter investor call. If you have not received the earnings release, it is available on our website atamerisec.com. This call is being recorded. A replay of today's call will be available. Speaker 100:00:30Details 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, 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 Speaker 200:01:12to update any forward looking statement. I will now turn the call over to Janelle Frost, Amerisafe's President and CEO. Thank you, Catherine, and good morning, everyone. We are pleased to report solid operating earnings results for both the Q4 and full year of 2023. For the year, we reported a combined ratio of 85.9%, gross premium written growth of 3.3% and operating ROE of 17.7%. Speaker 200:01:43These results come during a period in the workers' compensation industry of multiyear rate decreases, somewhat offset by recent wage inflation. Competition has not lessened as workers' compensation is one of the more profitable of the property and casualty lines. Remaining true to our disciplined approach of underwriting high hazard risk, while being responsive to our agents and caring for the needs of injured workers and their employers is evident in our consistent results year after year and serves all of our stakeholders. Gross written premiums for the quarter were $60,300,000 increasing 8.4%. During the quarter, premiums for policies written in the quarter increased 4.7%, which was further improved by payroll audit and related premium adjustments of $4,800,000 At Amerisafe, we continue to see strong retention in policy for which we offer renewal with 93.9 percent retention in the 4th quarter. Speaker 200:02:45For the full year, our accident year loss ratio was in line with the prior year at 71%. The company experienced $41,100,000 of favorable development on prior accident years in 2023, which we attribute to lower claims severities and proactive claims handling. In addition, we ended the year with 9 severe claims, of those with case incurred in excess of $1,000,000 As of December 31, 2023, our open claim count was down 6.4% from 2022. This metric demonstrates the success of our focus on resolving and closing claims and the decline in reported claims. Our balance sheet is conservatively positioned with roughly $897,000,000 in investments and cash, a solid reserve position and no outstanding debt. Speaker 200:03:41Despite challenging market conditions, our tenure ensuring high hazard risk positions the company for continued solid results. Amerisafe's strong retention, coupled with our focus on profitable growth, is delivering robust returns to our shareholders. Finally, as it relates to capital management, Amerisafe's Board of Directors has approved 8.8% increase in our regular dividend to $0.37 With that, I'll turn the call over to Andy to discuss the financials. Speaker 300:04:11Thank you, Janelle, and good morning to everyone. For the Q4 of 2023, Amerisafe reported net income of $19,200,000 or $1 per diluted share and operating net income of $14,300,000 or $0.74 per diluted share. During the Q4 of 2022, net income was 20,800,000 or $1.08 per diluted share and operating net income of $16,100,000 or $0.84 per diluted share. The lower net income was primarily driven by certain items in the quarter driving the expense pressure higher as well as less tax exempt interest income driving a higher tax rate compared with the Q4 of 2022. For the full year, net income was $62,100,000 and net operating income was $55,900,000 compared with $55,600,000 $59,300,000 in the prior year, respectively. Speaker 300:05:04Our total underwriting and other expenses were $19,000,000 in the quarter, a 9% increase compared with the $17,400,000 recognized in the prior year quarter. This increase resulted in an expense ratio of 28.9 compared with 26.4 in the Q4 of 2022. The increase was primarily due to wage inflation and an increase in insurance related assessments. For the full year, the expense ratio was 29.3% compared with 26.5 in 2022. For the year, our tax rate was 19.7% compared to 17.8 percent in the prior year, largely due to a lower proportion of tax exempt income versus underwriting income in the quarter compared with the last year. Speaker 300:05:47Turning to our investment portfolio. In the 4th quarter, net investment income increased 5.7 percent to $8,100,000 from $7,600,000 in the prior year quarter. For the full year, net investment income was $31,300,000 compared with $27,200,000 in 2022. The increase was driven by the yield on new investments, which exceeded that of portfolio roll off by approximately 200 basis points and drove the portfolio tax equivalent book yield to 3.69 percent or 31 basis points higher than the previous year. Realized gains for the portfolio and securities sold were $1,100,000 in the quarter compared with $1,000,000 during the Q4 of 2022. Speaker 300:06:29The investment portfolio is high quality carrying an average AA- credit rating with a duration of 4.2 years. The composition of the portfolio is 61% in municipal bonds, 25% in corporate bonds, 4% in U. S. Treasuries and agencies, 6% in equity securities and 4% in cash and other investments. Approximately 60% of our bond portfolio is comprised of held to maturity securities. Speaker 300:06:55During the Q4, interest rates moved noticeably lower, which improved the net unrealized loss position of held to maturity securities to $10,500,000 from $35,100,000 in the 3rd quarter. As a reminder, these held to maturity securities are carried at amortized cost 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. For the year, the company returned $93,300,000 to shareholders through a combination of regular and special dividends, plus an additional $2,200,000 of shares were repurchased. And finally, just a couple of other topics. Speaker 300:07:37Book value per share was $15.28 after paying the special dividend in December 2023, a decrease of 7.8% from year end 2022 and operating return on average equity was 17.4% for the quarter and 17.7% for the full year. Our statutory surplus was $254,900,000 at year end, up from $252,500,000 at the prior year end. And finally, tomorrow, February 23, 2024, we will be filing our 10 ks 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? Operator00:08:20Yes, sir. Thank you. We'll take our first question from Matt Carletti with JMP Securities. Speaker 400:08:55Hey, good morning. Speaker 200:08:56Good morning, Matt. Speaker 400:08:59Maybe if I could start with the top line, specifically the voluntary premiums showed some modest growth. And I think you commented that policies in force also grew. So the question is just can you give us a little bit of color on are there certain geographies or kind of underlying sectors of the economy exposures that you have that you're seeing certain success with or is it more just broad based? Speaker 200:09:30I'll start with your question about geographies. I'll steer away a little bit from that and I don't think I'm not directly answering question, but for competitive reasons, I want to be careful about speaking about geographies that I feel like we're being more successful in at the moment. Fair enough. Operator00:09:44But I will say, Speaker 200:09:44I think it's more broad based, to be honest, Matt. We've talked a lot over the last few quarters about our internal focus on ease of doing business with our agents. We've had really strong retention for a number of years, which we are very appreciative of and I think really speak to the service level of the Amerisafe employees. At the same time, agents are trying to shop new business does come at fewer and fewer opportunities during this market where everyone's getting a rate decrease. So we really have been focusing on ease of doing business with our agents, streamlining processes, making sure we have the right workflows and just focusing on those agent relationships so that when the opportunities do present themselves from a new business perspective, we are at the ready. Speaker 200:10:34And I do think just a combination of those things happening over a period of time, we've been successful in growing some new business along with our strong retention. And you were spot on about the policy count. We're very excited that we were able to grow policy count in 2023. Speaker 400:10:54Great. And then if I shift to thinking about where kind of margins are in the business, and as we look forward, I mean, you mentioned frequency was down. I think I I guess, you throw a severity in there too. I guess, I'm asking, looking at your crystal ball a little bit, I guess you throw severity in there too. I guess I'm asking looking at your crystal ball a little bit and kind of how do you feel about sustainability of accident year margins when you kind of put all those pieces of the puzzle together and any other ones that I'm forgetting? Speaker 200:11:26No, those you hit all the right elements. Certainly, we have the realities of multiple years of rate decreases. And I think if we look at 2024, nothing on a macro basis that seems to be changing that directionally. I still think it's going to be higher single digit rate decreases going into 2024. I like how Amerisafe is positioned because we are very disciplined in our approach, in our underwriting approach and that we individually underwrite every single account. Speaker 200:12:01That's built into that margin is built in to how we are underwriting those accounts today and in our pricing for those accounts. So I feel really good about that. From the loss we are appreciative of. But keep in mind, the things that we write are more severity driven than frequency driven. So severity has been relatively modest within our expectations. Speaker 200:12:31There's certainly a concern in the industry across the industry. Every article you pick up talks about medical inflation and concerns about medical inflation. But to the credit of the industry, right now, fee schedules are helping contain costs. I read an article recently that the CMS is predicting medical inflation to be somewhere between 2.5% and 3.5% going into 2024 and the years to come. If the industry can hold on to that, that would be fantastic, but there's going to be pressure. Speaker 200:13:04No question on medical inflation. So I feel really good about our margins going forward because I know we're maintaining that discipline. Speaker 400:13:16Great. And then one last quick one if I could. ELCM for the quarter? Speaker 200:13:21146. Speaker 400:13:23146. Awesome. Thanks so much. Appreciate it. Speaker 200:13:27Thank you, Matt. Operator00:13:31We'll now take our next question from Mark Hughes with Truist. Speaker 500:13:37Yes, thanks. Good morning, Janelle. Good morning, Andy. Speaker 200:13:40Good morning, Mark. Good morning, Mark. Speaker 500:13:44The Janelle, frequency down 6% and then I think did you say severity was within your expectations? Did you give a number for that? Speaker 600:13:52I missed the first couple of quarters. Speaker 200:13:54I did not. I did not. So within our expectations built into the 71% that we've been carrying for accident year 2023. Speaker 500:14:04Yes. And have you ever historically outlined your expectations on severity, low single digits? Speaker 200:14:16That's a great question, Mark. I mean, if you think about it in terms again, I was just talking to Matt about it, if you think about it in terms of medical inflation, we've always took a long term approach to that and it's always been mid single digit range in terms of medical inflation. The other side of that is just how many given the types of injuries that we deal with, I don't know any given year how many of those are going to be the horrific catastrophic claims. I mentioned in my prepared remarks, we had 9 claims with $1,000,000 in excess of $1,000,000 case incurred this year, which is a little bit lower than prior years. So I hate to go back to my favorite term when I'm talking about severe claims, but we're just in a lumpy business. Speaker 200:15:03I don't know when the accident is going to happen or the severity of those accidents. Speaker 500:15:09Yes. Did you have any movement in the reserves on the large accident that came at the end of 2020? Speaker 200:15:17No, we have not. No, we have not. We are we're still very comfortable with the reserves that we initially recorded for that claim. Speaker 500:15:32Yes. The audit premium is holding in there pretty well. One might have thought with the economy slowing, that would be tapering a bit. Is there any particular area you're seeing a better audit premium? Speaker 200:15:50Mark, across our book, we're seeing strong audit premium. Across our book, I can tell you we had about 7.4% of what I would call payroll growth, 5.6% of that was wage growth. And if you look at BLS data, I think the wage growth number projected at least for construction or maybe the countrywide is 4.1 as of the last quarter. So we're running slightly higher than that. That doesn't really surprise me given the skilled labor jobs that we insure. Speaker 200:16:22And we're still not seeing a large influx of new employees. Now what the labor market will do in 2024, that I don't know, but construction jobs are up. So we feel pretty confident that being a large part of our book of business that should be pretty resilient in 2024. Speaker 500:16:43Yes. I was going to ask you that question. You used the formulation of kind of the next job, but it sounds like you see construction holding in there pretty well? Speaker 200:16:52We do. We do. Speaker 500:16:56Okay. And was the 7.4 and 5.6, is that the 4th quarter or is that full year? Speaker 200:17:02That was 4th quarter and it was right in line with 3rd quarter. If you recall, 3rd quarter was 7.5%. So in line, no real deterioration between the two quarters. Speaker 500:17:14Yes. And you think the still projected loss cost is going to be down high single digits again? Speaker 200:17:24I do. And again, that's Janelle's opinion, but I do. I mean, based on the approved loss costs that have already come in the door this year, I do think that and I just don't see anything on a macro basis that's going to change that. I mean, we'll get industry wide results in May and we'll see what that looks like. But just based on following other companies and their reporting, I don't think anyone has had any large surprises in terms of losses. Speaker 200:17:53Concerns, I think we can all list the things we worry about, but haven't really seen any in the results. So I don't know that that will change the perspective on loss costs. Speaker 500:18:06Yes. You mentioned the growth being helped by your ease of doing business. Anything on the competitive front or your change in your own appetite in terms of end markets, class codes, anything like that? Speaker 200:18:23No, I appreciate the looking for clarity on that. No, we really we have not changed our underwriting approach. We have not changed our mix of business. We haven't changed our risk tolerance. This is really just about trying to further our relationships with our agents. Speaker 500:18:43Yes. Okay. I think that was it for me. Appreciate it. Speaker 200:18:50Thank you, Mark. Operator00:18:59We'll take our next question from Bob Farnam with Janney. Speaker 600:19:05Hey there, good morning. Good morning, Bob. I have additional questions on the improved loss costs. So this year you got Florida down 15%. You have a change coming up in Louisiana down 9% or so. Speaker 600:19:20I'm curious, do the classes of business that you write, are they comparable to the overall, the statewide averages or are they better or worse in terms of kind of loss cost Speaker 200:19:33changes? That's a really good point, Bob. They are. They run our book of business sometimes varies a little higher, sometimes a little lower. But on average, I think using the industry wide, if you're trying to move out, I think using the industry wide approved loss cost does track with our own experience. Speaker 600:19:52Okay. And this is probably more of a kind of a philosophical question, but as the approved loss costs continue to go down, at some point, they're going to go beyond where they should go down. So you're going to kind of miss the inflection point, I believe. So how do you ensure that your strong profitability remains if kind of the underlying loss costs have gone too far? Speaker 200:20:21It goes back to what I was just saying earlier. The fact that we are individually underwriting our accounts and we've had a very consistent book of business for a long period of time. So I think my underwriters have a true expertise in understanding how much rate or how much how many dollars of payroll we need to cover our loss and to cover the margin that we want in that individual book of business. Hence why we always try to report the we had been reporting the ELCM. It was just trying to give you a measure. Speaker 200:20:53It's not absolute cost, but the fact that we're not chasing that 10%, 20%, or 10%, 15% down in terms of the rate that the approved rate. I think we have the expertise to understand that rate per $100 of payroll and what it takes for an individual risk. But we're highly relying on our expertise versus the industry wide averages. Speaker 600:21:21Right. Just refresh my memory, the ELCM, does that include or not include kind of scheduled credits and debits? Speaker 200:21:33The ELCM would include that. So it's sort of the aggregate. If I took all my states and aggregated them together, it would be inclusive of that. Speaker 600:21:40Yes. That's what I thought. Okay. Thank you. Speaker 200:21:44Thank you, Bob. Operator00:21:48It appears there are no further telephone questions. I'd like to turn the conference back over to Ms. Frost for any additional or closing comments. Speaker 200:21:57Thank you for joining us today. We are pleased with both the quarter and full year results reported. These results are reflected of the dedication of Amerisafe employees to fulfilling commitments to our policyholders, agents and shareholders. I believe our consistent returns year in and year out clearly reflect our unwavering focus on turning risk into opportunity. Operator00:22:23And once again, that does conclude today's conference. We thank you all for your participation. You may now disconnect.Read morePowered by