What AMERISAFE (AMSF) Said on Its Q3 Earnings Call

Key Points

• Third-quarter profitability declined: Net income fell to $7.2 million, or $0.39 per diluted share, from $13.8 million, or $0.72, a year earlier. Higher expenses and competitive pressure offset growth in earned premiums.
• Premium growth faced significant market headwinds: Gross written premiums dropped 4.5% to $76.7 million, although net premiums earned rose 3% to $73.3 million. Policy retention remained strong at 92.3%, and management maintained its full-year expectation for mid-single-digit growth despite aggressive competitor pricing and expected rate declines.
• Underwriting and financial position remained disciplined: The accident-year loss ratio held at 72%, while the company recorded $6.9 million of favorable reserve development. AMERISAFE continued monitoring medical-cost inflation and ended the quarter with approximately $753 million in investments, cash and equivalents, though statutory surplus and book value per share declined year to date.

AMERISAFE NASDAQ: AMSF reported third-quarter 2026 net income of $7.2 million, or $0.39 per diluted share, compared with $13.8 million, or $0.72 per diluted share, in the prior-year quarter. Operating net income was $7.4 million, or $0.40 per diluted share, down from $10.6 million, or $0.55 per diluted share, a year earlier.

Management said the quarter reflected continued growth in earned premiums, favorable reserve development and strong policy retention, while competitive pressures in the workers’ compensation market weighed on written premium growth and contributed to higher expenses.

Premium trends and competition

Gross written premiums declined 4.5% to $76.7 million from $80.3 million in the third quarter of 2025. Chief Financial Officer Guillermo Ramos said payroll audits and related adjustments reduced premiums by $1.6 million during the quarter, compared with a $2.5 million increase in the prior-year period.

Net premiums earned nevertheless rose 3% to $73.3 million, supported by premium production in recent quarters. President and Chief Executive Officer Janelle Frost said voluntary premium on policies written during the quarter increased 0.8%, aided by pricing, while the company renewed 92.3% of policies for which it offered renewal.

Frost said AMERISAFE’s in-force policy count grew 4% year over year, though reported claim counts also increased. She said rate pressure remained significant, with the company having anticipated mid- to high-single-digit rate declines for the year. Looking ahead to the 2027 premium year, she said loss-cost declines across states were averaging roughly 5% to 6%, while North Carolina’s latest decline was 10.8%.

Management described the competitive environment as increasingly intense. Chief Risk Officer Vincent Gagliano said the company was seeing the same competitors become more aggressive and characterized some behavior as “irrational,” citing pricing, commission structures and dividends used to win accounts. AMERISAFE said it would continue to avoid pursuing business that it cannot write profitably.

Frost said the company’s expectation for mid-single-digit growth for the full year had not changed, despite the slower voluntary premium growth in the third quarter.

Claims, reserves and medical costs

AMERISAFE maintained its current accident-year loss ratio at 72%. Frost said both claim frequency and severity during the third quarter were in line with the prior accident year, although reported claims were growing faster than premium.

The company recorded $6.9 million of favorable reserve development, primarily related to accident years 2023 and earlier. Frost attributed the development to proactive claims handling and the company’s approach to managing severe claims from reporting through resolution.

Management also continues to monitor medical inflation. Frost said hospitalization and hospital costs were among the areas of greatest pressure, alongside home-health costs, which are particularly significant given the severity of injuries in AMERISAFE’s insured industries.

For the first nine months of 2026, AMERISAFE had 18 claims exceeding $1 million, compared with 17 such claims through the third quarter of 2025. The company ended 2025 with 25 claims above that threshold.

On audit premium trends, Frost said audit premiums remained positive overall, meaning insured payrolls were above their original estimates, but were substantially lower than in the prior-year quarter. She pointed to slower wage growth and pressure on small and midsize employers’ margins. Gagliano added that several unusually large negative audits and robust cancellation premium affected the quarterly result, noting that the third quarter has historically been the company’s lowest period for audit and adjustment premium.

Expenses, investments and capital

Total underwriting and other expenses increased to $23.8 million from $22.1 million a year earlier, producing an expense ratio of 32.5%, compared with 31.1%. Ramos cited higher insurance-related assessments, compensation costs and commission expense. He said Delaware accounted for the largest of three states with elevated assessments.

Net investment income increased 0.6% to $6.6 million. The tax-equivalent book yield rose nine basis points from a year earlier to 4%, as yields on new investments exceeded portfolio roll-off yields by approximately 146 basis points.

At quarter-end, AMERISAFE held about $753 million in investments, cash and cash equivalents. Its portfolio had an average A-minus credit rating and a duration of 4.7 years. Municipal bonds represented 58% of the portfolio, corporate bonds 25%, U.S. Treasuries and agencies 3%, equity securities 9%, and cash and cash equivalents 5%.

Statutory surplus was $208.4 million at quarter-end, compared with $217.8 million at the end of 2025. Book value per share was $12.80, down 4.8% year to date. During the quarter, AMERISAFE repurchased approximately 5,000 shares for $0.2 million, at an average price of $30.18 per share.

Frost said the company’s recently affirmed AM Best rating reflected its underwriting discipline, reserving practices and capitalization. Management said it remains focused on underwriting profitability, disciplined capital management and maintaining a conservative investment portfolio amid competitive workers’ compensation market conditions.

About AMERISAFE (NASDAQ:AMSF)

AMERISAFE, Inc is a specialty workers' compensation insurance company serving small and midsized businesses. The company focuses on employers in industries with elevated workplace risks, including construction, trucking, logging, agriculture, manufacturing, and maritime operations.

Through its insurance subsidiaries, AMERISAFE provides workers' compensation coverage designed to protect businesses from costs associated with workplace injuries and occupational illnesses. Its services also include workplace safety and loss-control support, claims management, medical cost containment, and premium audit services.

Headquartered in DeRidder, Louisiana, AMERISAFE primarily serves employers in the southeastern and south-central United States.

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