AMERISAFE Q4 2024 Earnings Report

AMERISAFE EPS Results

• Actual EPS: $0.67
• Consensus EPS: $0.60
• Beat/Miss: Beat by +$0.07
• One Year Ago EPS: N/A

AMERISAFE Revenue Results

• Actual Revenue: $73.51 million
• Expected Revenue: $77.37 million
• Beat/Miss: Missed by -$3.86 million
• YoY Revenue Growth: N/A

AMERISAFE Announcement Details

• Quarter: Q4 2024
• Date: 2/26/2025
• Time: After Market Closes
• Conference Call Date: Thursday, February 27, 2025
• Conference Call Time: 10:30AM ET

AMERISAFE (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.

AMERISAFE Q4 2024 Earnings Call Transcript

Key Takeaways

• Amerisafe achieved 3.9% Q4 and 3.1% full-year gross premium growth, driven by an 8.5% rise in voluntary premiums and a 9.6% increase in in-force policy count.
• The company delivered a combined ratio of 88.7%, maintained an accident year loss ratio of 71%, and generated a 20.2% return on equity for 2024.
• Favorable development from prior accident years totaled $9.7 million in Q4 and $34.9 million for the full year, underscoring disciplined reserve management.
• Amerisafe’s board approved a 5.4% dividend increase, raising the regular quarterly payout to $0.39 per share.
• The investment portfolio’s yield on new purchases rose by 42 basis points to 3.8%, even as net investment income declined due to post-dividend asset reductions.

Presentation

[Operator]

Good day, and welcome to the Amerisafe Fourth Quarter twenty twenty four Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Ms. Catherine Shirley. Please go ahead, ma'am.

[Kathryn Shirley, Executive VP, Chief Administrative Officer & Secretary at AMERISAFE]

Good morning. Welcome to Amerisafe twenty twenty four fourth quarter investor call. If you have not received the earnings release, it is available on our website at americisafe.com. This call is being recorded. A replay of today's call will be available.

[Kathryn Shirley, Executive VP, Chief Administrative Officer & Secretary at AMERISAFE]

Details 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 K, 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.

[Kathryn Shirley, Executive VP, Chief Administrative Officer & Secretary at AMERISAFE]

I will now turn the call over to Janelle Frost, Amerisafe's President and CEO.

[Janelle Frost, President & CEO at AMERISAFE]

Thank you, Catherine, and good morning, everyone. We are pleased to share Amerisafe's results for both the fourth quarter and the full year 2024. A key priority throughout the year has been top line growth with consistent underwriting margin, which is reflected in our gross premiums written increase of 3.9% for the fourth quarter and 3.1% for the full year. Voluntary premiums on policies written rose by 8.5% in the fourth quarter and 4.6% for the year compared to 2023, while our in force policy count grew 9.6. Strong premium retention and robust new business production were the primary drivers for this growth, underscoring our commitment to profitable growth in the competitive landscape.

[Janelle Frost, President & CEO at AMERISAFE]

Despite industry wide headwinds, including rate reductions and declining wage inflation, our ability to identify and capitalize on profitable opportunity is a testament to the expertise and collaboration of our team. We are improving our agent relationships, protecting our policyholders and caring for injured workers. Our focus led to a combined ratio of 88.7% and an ROE of 20.2%. This success is direct result of collaboration across the organization and the empowerment of our employees to foster a sales driven culture. From frontline teams of underwriting sales and safety to the backend support of claims and premium audit and operational functions such as regulatory, IT and finance, every department played a role in driving growth.

[Janelle Frost, President & CEO at AMERISAFE]

Our employees have embraced the challenge of competing in a dynamic P and C market where workers' compensation is aligned as aligned remains attractive to carriers. For the full year, our accident year loss ratio remained steady at 71% consistent with the prior year, and we anticipate maintaining that level in 2025. Additionally, we recognized favorable development from prior accident years of $9,700,000 in the quarter and $34,900,000 for the full year 2024. On capital management front, Amerisafe's Board of Directors has approved a 5.4 increase in our regular dividend to $0.39 per share. Looking ahead, we remain focused on top line growth.

[Janelle Frost, President & CEO at AMERISAFE]

We're confident that our ability to identify and ensure profitable high risk high hazard risk will continue to offset broader market challenges. With strong policy retention and a disciplined approach to growth, Amerisafe remains committed to delivering exceptional value to our shareholders. With that, I'll turn the call over to Andy to discuss the financials.

[Anastasios Omiridis, Executive VP & CFO at AMERISAFE]

Thank you, Janelle, and good morning to everyone. For the fourth quarter of twenty twenty four, Amerisafe reported net income of $13,200,000 or $0.69 per diluted share and operating net income of $12,800,000 or $0.67 per diluted share. During the fourth quarter of twenty twenty three, net income was $19,200,000 or $1 per diluted share and operating net income of $14,300,000 or $0.74 per diluted share. The lower net income was primarily driven by lower net unrealized gains on equity securities. For the full year, net income was $55,400,000 and net operating income was $48,400,000 compared with $62,100,000 and $55,900,000 respectively in 2023.

[Anastasios Omiridis, Executive VP & CFO at AMERISAFE]

Gross written premiums were $62,700,000 in the quarter and $294,100,000 for the year, growing 3.93.1% respectively. Net premiums earned were $66,500,000 in the quarter and $270,600,000 for the year growing 1.21.3% respectively. Overall strong premium retention and new business production were the primary drivers of top line growth for both the quarter and year reflecting an organizational focus on growing profitable sales despite competitive market conditions. Our total underwriting and other expenses were $19,800,000 in the quarter, a 4% increase compared with $19,000,000 recognized in the fourth quarter of twenty twenty three. This increase resulted in an expense ratio of 29.7% compared with 28.9% in the fourth quarter of twenty twenty three.

[Anastasios Omiridis, Executive VP & CFO at AMERISAFE]

The increase was primarily the result of slightly lower earned premium growth in relation to other operating expenses. For the full year, the expense ratio was 29.6% compared with 29.3% in 2023. For the year, our tax rate was 19.7% unchanged from the prior year. Turning to our investment portfolio, for the fourth quarter and full year net investment income decreased 14.4% to $6,900,000 and 6.8% to $29,200,000 respectively. This was due to the decrease in investable assets following the payment of the special dividend in December.

[Anastasios Omiridis, Executive VP & CFO at AMERISAFE]

For the quarter, the yield on new investments increased approximately 42 basis points driving our tax equivalent book yield to 3.8% or 11 basis points higher than the fourth quarter of twenty twenty three. Realized losses for the portfolio and securities sold were $400,000 in the quarter compared with a gain of $1,000,000 during the fourth quarter of twenty twenty three. The investment portfolio is high quality carrying an average AA- credit rating with a duration of four point four years. The composition of the portfolio is 62% in municipal bonds, 22% in corporate bonds, 3% in U. S.

[Anastasios Omiridis, Executive VP & CFO at AMERISAFE]

Treasuries and agencies, 7% in equity securities and 6% in cash and other investments. Approximately 56% of our bond portfolio is comprised of held to maturity securities and due to the notable increase in rates during the quarter, the net unrealized loss was $13,300,000 at quarter end. As a reminder, these held to maturity securities are carried at amortized costs and therefore unrealized gains or losses on these securities are not reflected in 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 $830,000,000 in investments, cash and cash equivalents.

[Anastasios Omiridis, Executive VP & CFO at AMERISAFE]

And finally, just a couple of other topics. Book value per share was $13.51 after paying the special dividend in December 2024, a decrease in book value of 11.6% from year end 2023. Operating return on average equity was 17.5 for the quarter and 17.1% for the full year. We will be filing our Form 10 ks with the SEC tomorrow, February 28, after the market close. With that, I would like to open the call for the question and answer portion of the call.

[Anastasios Omiridis, Executive VP & CFO at AMERISAFE]

Operator?

[Operator]

We'll now take a question from Mark Hughes with Truist.

[Mark Hughes, Analyst at Truist Securities]

Yes, thanks. Good morning. Janelle, the policy count growth, I think you said 9.6%. Could you put that in the context of what you've experienced in recent quarters? And could you also talk about what the average size per policy has been?

[Mark Hughes, Analyst at Truist Securities]

How that has trended over the last few quarters?

[Janelle Frost, President & CEO at AMERISAFE]

Yes, great. I believe, Mark, the 9.6% that I quoted was for the year. That's on an in store space, but not just the quarter. So that was for the entire year. And how does that compare?

[Janelle Frost, President & CEO at AMERISAFE]

So I'm sorry. Go ahead.

[Mark Hughes, Analyst at Truist Securities]

I was going to I'm sorry to interrupt. But how was that in the fourth quarter?

[Janelle Frost, President & CEO at AMERISAFE]

Great question. I don't have that in front of me actually. I only got the year to date. Let me speak about it.

[Mark Hughes, Analyst at Truist Securities]

I guess the year over year is 9.6%, but

[Anastasios Omiridis, Executive VP & CFO at AMERISAFE]

9.6%.

[Janelle Frost, President & CEO at AMERISAFE]

Yes. Policy growth in the fourth quarter was 2.6%.

[Mark Hughes, Analyst at Truist Securities]

Okay. And that's a sequential number?

[Janelle Frost, President & CEO at AMERISAFE]

Yes.

[Mark Hughes, Analyst at Truist Securities]

Okay. Very good. And then, sorry for interrupting. You were saying I think I'd asked about size as well.

[Janelle Frost, President & CEO at AMERISAFE]

Yes. So the size of policy, our average policy size for 2024 was slightly lower than 2023, but still holding strong. We're certainly were boosted by stronger payrolls coming into the year. We knew that going into 2024 that we were seeing payroll growth. In the fourth quarter, we saw some slowing in terms of average wages.

[Janelle Frost, President & CEO at AMERISAFE]

If you recall, the last probably the first three quarters of twenty twenty four, we were seeing somewhere around 7% each quarter. It dropped to 4% in the fourth quarter of twenty twenty four, not a complete surprise, obviously. But we were trending higher than national averages and now we're starting to see some moderation there.

[Mark Hughes, Analyst at Truist Securities]

Okay. How about the renewal rate, the pricing measures that shall not be named, we don't have that, which is perfectly fine. But generally speaking, this quarter, I think you had undertaken a strategy of being a little more active on renewal rate. Was that a contributor this quarter? Is that kind of run its course?

[Mark Hughes, Analyst at Truist Securities]

Or how much was that an impact on the top line?

[Janelle Frost, President & CEO at AMERISAFE]

Right. Yes, it certainly was impactful to the quarter and to the full year actually. But for the quarter, our policy retention was 94.1% on a policy basis and on a premium basis, 88%. So strong renewals.

[Mark Hughes, Analyst at Truist Securities]

And then your reserve gains, I think you had some gains from 2022 earlier in the year and you described this quarter also reserve gains from older accident years including 2022. Any observations about the post COVID years 2021, '20 '20 '2, just kind of how they're shaping up?

[Janelle Frost, President & CEO at AMERISAFE]

Yes. Those are going to be good accident years for us. The 9.7% favorable development or not percent, dollars 9,700,000.0 of favorable development we had this quarter, 1,000,000 of it was from '22, '1 point '5 million was from '21, '1 point '6 million from 2020 and then 2019 and prior was 5,600,000.0. So we're obviously seeing even from the more green years, we're seeing favorable taste development come out of those exiting years.

[Mark Hughes, Analyst at Truist Securities]

Yes. And then maybe one more, the ceded premium was a little elevated in this quarter. I think it was a little higher in the fourth quarter of last year, but even compared to that, it's up year over year. If we think about, I guess, number one, why was that? And then number two, for 2025, should it be kind of back in the I see it as around 6% normally of gross premiums written?

[Anastasios Omiridis, Executive VP & CFO at AMERISAFE]

Mark, it's Andy. Good morning to you. So you're right, the session was a little bit higher. I think that's because of the growth that we saw in the quarter. And of course, in Q4, we always go back and make sure that if there's any true up needed, it's done.

[Anastasios Omiridis, Executive VP & CFO at AMERISAFE]

But overall, it's really based on the growth that we're seeing in the policy count coming through voluntary deck. And just as far as 2025, I think it's fair to say that every quarter isn't linear. So I think the 6% you're saying is probably correct, but it's right around that number.

[Mark Hughes, Analyst at Truist Securities]

Yes. Okay. Very good. I had a couple more, but I'll jump back in the queue. Thank you.

[Janelle Frost, President & CEO at AMERISAFE]

Thank you, Mark.

[Operator]

We'll now take a question from Matt Carletti with Citizens JMP.

[Matt Carletti, Managing Director at Citizens JMP]

Thanks. Good morning.

[Janelle Frost, President & CEO at AMERISAFE]

Good morning, Matt.

[Matt Carletti, Managing Director at Citizens JMP]

First question is, obviously talked a bit about what we've seen the voluntary growth really pick up kind of back half of the year. And I think we've talked a bit about how that's been pretty intentional kind of interacting with your agencies and trying to be easy to do business with. And one of the aspects you pointed to, I think it was last call, was kind of the idea of like getting them just to not think of you as like the roofing company and that you write other high hazard kind of class codes and things like that. Have you seen that in the growth that's come through that there is an expanded kind of maybe appetite by the agency and that in certain cases you might have been pigeonholed to a particular type of risk and that's broadening and that's driving the growth or is it something else?

[Janelle Frost, President & CEO at AMERISAFE]

One, it's a great question. We certainly have to your point really have been making sure our agency base understands, A, the value proposition of Amerisafe, particularly our safety and claims services and then, two, what our appetite is. So making sure that that is easily accessible to our agents, both through our TSMs and both through digital platforms as well. But basically, excuse me, getting our TSMs in front of agents, reiterating what do you have in your book, Mr. Agent, that fits in the mirror safe's risk appetite and give us an opportunity.

[Janelle Frost, President & CEO at AMERISAFE]

So the question to is that attributable to a growth? I would say yes. Could I put percentages around that? Probably no. But I will say this, we are trying to be sure that we are being more effective with the agents that we have appointed.

[Janelle Frost, President & CEO at AMERISAFE]

So increasing the percentage of our agents that are submitting business to us and more importantly increasing the number of agents that have a bind with us. Those are two numbers internally that we're really focused on. So driving home the appetite is part of that equation certainly.

[Matt Carletti, Managing Director at Citizens JMP]

Okay, perfect. And then second question, kind of latter part of last year, couple of hurricanes came through areas in the country that you have a lot of business. Have you seen as any of I guess, has any of the growth we saw in Q4 kind of been a result of kind of that reconstruction, if you will? Or would you expect to see any of that maybe as we go forward? I know it can take time for that to come through.

[Janelle Frost, President & CEO at AMERISAFE]

Yes. You're right, Matt. It does take time. It certainly hasn't shown up an audit premium yet because obviously we haven't audited those policies that would have been affected during those time periods. We do look at the monthly reporting that our policyholders are sending into us and we've seen some a little bit of increase if I look at Florida, Georgia and the Carolinas, but nothing that I could point to and say, yes, that's definitely hurricane related business.

[Janelle Frost, President & CEO at AMERISAFE]

I think it's more normal course of business. So I don't know that I can quantify if any of that's particular to storms.

[Matt Carletti, Managing Director at Citizens JMP]

Okay. Great. Thank you very much for the color. I appreciate it.

[Janelle Frost, President & CEO at AMERISAFE]

Thank you,

[Janelle Frost, President & CEO at AMERISAFE]

Matt.

[Operator]

We'll now take a question from Bob Farnham with Janney.

[Robert Farnam, Managing Director at Janney Montgomery Scott]

Hey there, good morning. I'd just like to maybe expand a little bit on Matt's question about the kind of the expansion of your new business. And I just wanted to know, are you looking at adding additional class codes as you're expanding or are you really just focusing on stuff that you already write?

[Janelle Frost, President & CEO at AMERISAFE]

We are focusing on things that we already write. If I talk about it in terms of hazard groups, A to G, we specialize in E, F and G and still over 80% of our enforced policies are E, F and G. So even with our new business growth, that is our focus area. We haven't added necessarily classes of business. It's really about penetrating the markets that we're in and being more effective about that.

[Robert Farnam, Managing Director at Janney Montgomery Scott]

Right. Okay. That's what I thought. And just kind of a qualitative view on reserves. How much of your kind of open claim inventory is related to claims that are ten years or older?

[Robert Farnam, Managing Director at Janney Montgomery Scott]

I'm trying to get an idea of kind of how long claims can stay open and kind of what the average duration of your liabilities is kind of what I'm getting at.

[Janelle Frost, President & CEO at AMERISAFE]

Yeah. If I look at accident years and I'll use the same sort of the same accident years that we put in the 10 ks, you know, where we have '23, '20 '20 '2, it goes in this prior to 2019. Prior to 2019, I would say 99% of the claims that were reported to us are closed. So very small percentage of those are open. And some are open for there are some states that we can't technically close the claims just for medical reasons and so they're open for medical enrollment.

[Janelle Frost, President & CEO at AMERISAFE]

We're done with the indemnity portion of the claim. But yes, 99% of those claims, I would say are closed for those that would for that prior to 2019.

[Robert Farnam, Managing Director at Janney Montgomery Scott]

Okay. So it sounds like relative to the overall workers' comp industry, your claims closures seem to be more quick than maybe the average for the industry. Is that accurate?

[Janelle Frost, President & CEO at AMERISAFE]

I believe so. And I totally give the credit to my claims organization. It is definitely in the way that Amerisafe handles claims. We still use, we call it good old fashioned claims adjusting. We meet with people.

[Janelle Frost, President & CEO at AMERISAFE]

We take written statements. We manage those claims intensely and we keep those low inventories per the case manager. I can't stress that enough. I know that that is unique to Amerisafe. On average, across many field case managers, on average, they have less than 50 claims per adjuster.

[Janelle Frost, President & CEO at AMERISAFE]

When you think about that, they are really they really have the opportunity difference in these claims, know these claims and that's how we're able to close them and find resolutions, getting maximum medical improvement, return those injured workers to work as quickly as we can, because they have the opportunity and the means to which to close those claims.

[Robert Farnam, Managing Director at Janney Montgomery Scott]

Great. All right. Thanks for being interested in

[Operator]

We'll now take a follow-up from Mark Hughes with Truist.

[Mark Hughes, Analyst at Truist Securities]

Yes, thanks. You talked about the payroll, one of the concepts that's come up from time to time is kind of that next job in construction. Do you have any view on the construction industry and the prospects there?

[Janelle Frost, President & CEO at AMERISAFE]

You know, Mark, I feel I mean, this is the world of court needs to know. But my opinion is that at least for our insured base, the economy seems to be supporting their work pretty well. I mean, we're still seeing strong payroll growth there. We are finding opportunities. We think about all the headlines that I read every day and we always contemplate how does that affect our book of business.

[Janelle Frost, President & CEO at AMERISAFE]

We think about tariffs and what that could mean to construction as a whole. I know people talk about steel and those types of things. Not that we are completely isolated from that, but you also think about small to mid sized employers. I do think we have some buffer around those types of impacts to the industry as a whole. So not immune, but made somewhat insulated, I would think.

[Janelle Frost, President & CEO at AMERISAFE]

Immigration is again a question that we've been asked about particularly regarding our construction and agriculture book. For Amerisafe, I don't have a way of quantifying from the premium side of things how many of our workers are non documented workers. But certainly, we know from a claims perspective, we do have injured workers that are non documented workers. But from a claims perspective, they are entitled to the same benefits every other worker is entitled to. So if I play that through in my mind, what happens for non documented workers, particularly in our construction book or our agriculture book, could it be influential to the labor force?

[Janelle Frost, President & CEO at AMERISAFE]

Perhaps. But again, these are small to mid sized employers. So even if it is influential in terms of maybe less resilient labor force, perhaps that also could lead to higher wages if those jobs are replaced with documented workers. So headline wise, those are the things I think about in terms of our industries, fans of the economy as it stands. But I mean, as of right now, obviously, things change every day.

[Janelle Frost, President & CEO at AMERISAFE]

But as of right now, I feel pretty strongly that our construction book and even our entire book is, has a bright future for 2025.

[Mark Hughes, Analyst at Truist Securities]

Yeah. How about the large claims for the year?

[Janelle Frost, President & CEO at AMERISAFE]

Yeah. So, you're going to laugh when I say this, Mark, but it's been a while since I've had to use this word, but it's lumpy. So we ended the year with 18 claims, over $1,000,000 And when you look comparatively to 2023, which was a record year in terms of a loan number, nine, is there I hearken back to my lumpy word. 'eighteen is not that unusual. If I look at the five year average of where we were at twelve months because obviously claims develop after an accident at the end of an accident year.

[Janelle Frost, President & CEO at AMERISAFE]

But if I look at the five year average at twelve months, we average around 15. So 2018

[Janelle Frost, President & CEO at AMERISAFE]

is not too far off

[Janelle Frost, President & CEO at AMERISAFE]

of the average. But compared to 2023, that number certainly you look at and go, wow, that's a change. But when you look at the book as a whole, it's really not that much of a frequency of severity. It's just there were 18 claims. If I look at how they occurred or what industries they incurred in, it very much mirrors our book of business.

[Janelle Frost, President & CEO at AMERISAFE]

And even the types of injury have been are very consistent with what we've seen in terms of the types of injuries. Obviously falls and slips being the number one cause of loss for those larger claims and that's true for 2024.

[Mark Hughes, Analyst at Truist Securities]

Yes. Okay. And then anything on the medical inflation front, either from costs or ability to access certain services in case of lack of capacity because reimbursement rates are too low. Any changes there you've noted?

[Janelle Frost, President & CEO at AMERISAFE]

No real development other than what we've shared over the last couple of quarters. Home health is still probably the one I focus on the most simply because it's such a big component of our larger claims. Home health is a big component of those costs. So we certainly are paying attention to that. But nothing new other than those things.

[Janelle Frost, President & CEO at AMERISAFE]

In terms of reimbursement rate, no. We certainly are monitoring the loss costs or the rates that are being approved by the states and how that it could or could not be impactful. But it's been a wide range. If you look at the loss costs that have been approved for oneone or the ones that we know about for 2025 at this point, I think the high is a 19% decrease in Maine and the or the I say the high, the low, the decrease. And then the largest increase I think we've seen is 6.5% in Nevada.

[Janelle Frost, President & CEO at AMERISAFE]

But there's a wide range there in the loss costs that are being approved. So how medical costs will influence or how the reimbursement rates will influence that on a go forward basis, I guess time would tell. But I don't I can't see anything in those rate filings that were specific to medical fee schedules being adjusted to the degree that it was highlighted in the rate filing. I don't recall that. It's been more just experience.

[Mark Hughes, Analyst at Truist Securities]

Yes. Did you have you averaged up the rate filings if you look at the recent trend?

[Janelle Frost, President & CEO at AMERISAFE]

Yes. The average is a little

[Janelle Frost, President & CEO at AMERISAFE]

bit less than that.

[Janelle Frost, President & CEO at AMERISAFE]

Yes. I shouldn't I don't think I said this, but it's a decrease of and somewhere around the mid single digit range.

[Mark Hughes, Analyst at Truist Securities]

Yes. How is that how is that mid year or this time last year?

[Janelle Frost, President & CEO at AMERISAFE]

So for 2020 that's a good point. In 2023, we were a little we were sort of upper single digit, so more in the 8% to 9% depending I think we said somewhere in the range of 7% to 9%.

[Mark Hughes, Analyst at Truist Securities]

Yes.

[Janelle Frost, President & CEO at AMERISAFE]

So it's a still ever so slight improvement if you're trying to get me to give you great news about rates. There you go.

[Mark Hughes, Analyst at Truist Securities]

Hey, it's inflection. The trend

[Mark Hughes, Analyst at Truist Securities]

is right.

[Janelle Frost, President & CEO at AMERISAFE]

Yes.

[Janelle Frost, President & CEO at AMERISAFE]

Yes.

[Mark Hughes, Analyst at Truist Securities]

And then anything on the audit front? Is that, we're just kind of progressing through that earlier period of wage inflation? And so, as you do the audits on a look back, it's kind of naturally tapering. Is that a way to think about it?

[Mark Hughes, Analyst at Truist Securities]

Maybe that audits just naturally from a macro perspective, you'll see deceleration there?

[Janelle Frost, President & CEO at AMERISAFE]

Yes. I believe we'll see a deceleration or a moderation. I don't see again looking forward to 22.5% based on what I know today. I don't see audit premium turning negative. I think it still remains positive.

[Janelle Frost, President & CEO at AMERISAFE]

I think the new employee count still have been averaging between that 12% of the things that we've been seeing each quarter and then there's been wage inflation. I don't think there's I don't foresee that flipping to being negative, but certainly the year over year comparisons get tough are going to get tougher and tougher and there will be deceleration from that standpoint. But stand alone audit premium, I believe will still remain positive in 2025.

[Mark Hughes, Analyst at Truist Securities]

Yes. And then any instances of any competitors getting a more aggressive for workers' comp premium? It seems like you're holding your own and then some in terms of policy count and premium growth. So you wouldn't know it by looking at it in that sense, but I'm just sort of curious whether you've seen any changes.

[Janelle Frost, President & CEO at AMERISAFE]

It is very competitive, Mark. If that's a change, probably not. But as the other P and C lines have not yet rectified their issues in terms of overall results, workers' compensation remains attractive. And so as long as the combined ratios for the industry remain attractive, we will have competitors and we will have competitors dipping into the high hazard space. But that's a reality that we are prepared to face.

[Mark Hughes, Analyst at Truist Securities]

Yeah. Zipping into high hazard is probably a bad approach.

[Janelle Frost, President & CEO at AMERISAFE]

Well, yes, if you're asking me for advice, yes, I would say that, certainly.

[Mark Hughes, Analyst at Truist Securities]

That's super dangerous. You need to stay away.

[Janelle Frost, President & CEO at AMERISAFE]

Exactly.

[Mark Hughes, Analyst at Truist Securities]

Yeah. Any early thoughts on lost pick for 2025?

[Janelle Frost, President & CEO at AMERISAFE]

Yeah. I I as of right now, I believe we're gonna hold at seventy one.

[Mark Hughes, Analyst at Truist Securities]

Okay. Very good. Thank you for all the answers.

[Operator]

And it appears there are no further telephone questions. I'd like to turn the conference back to Ms. Frost for any additional or closing comments.

[Janelle Frost, President & CEO at AMERISAFE]

Profitable incremental growth is the focus goal for the AMERISAFE team, one that we delivered on in 2024 and are well positioned for 2025. Thank you for joining us today.

[Operator]

And once again, that does conclude today's conference. We thank you all for your participation. You may now disconnect.

Participants

Executives

• Kathryn Shirley, Executive VP, Chief Administrative Officer & Secretary
• Janelle Frost, President & CEO
• Anastasios Omiridis, Executive VP & CFO

Analysts

• Mark Hughes, Analyst at Truist Securities
• Matt Carletti, Managing Director at Citizens JMP
• Robert Farnam, Managing Director at Janney Montgomery Scott