UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number: 001-12251 AMERISAFE, INC. (Exact Name of Registrant as Specified in Its Charter) Texas 75-2069407 (State of Incorporation) (I.R.S. Employer Ident ...

Financial Data and Key Metrics Changes - For Q2 2025, Amerisafe reported net income of $14 million or $0.73 per diluted share, compared to $11 million or $0.57 per diluted share in Q2 2024, indicating a significant increase in profitability [10] - Operating net income for Q2 2025 was $10 million or $0.53 per diluted share, down from $11.1 million or $0.58 per diluted share in the same quarter last year [10] - Gross written premiums increased by 4.3% to $79.7 million in Q2 2025 from $76.4 million in Q2 2024 [10][11] - The expense ratio rose to 31.3% in Q2 2025 from 29.8% in Q2 2024, reflecting ongoing investments in growth [11][12] Business Line Data and Key Metrics Changes - Voluntary premiums for policies written in the quarter grew by 12.8%, supported by new business production and strong renewal retention of 93.8% [5][11] - The in-force policy count increased by 3.4% in the quarter, indicating effective risk selection and agent collaboration [5][10] Market Data and Key Metrics Changes - The workers' compensation market remains competitive, with the industry's combined ratio below 100% for 2024, but not improving compared to 2023 [6] - Approved loss costs for workers' compensation are down mid-single digits, with California being an outlier with an 8.7% increase [6] Company Strategy and Development Direction - Amerisafe is focused on maintaining pricing discipline and effective risk selection while navigating a competitive market [5][24] - The company has reauthorized a $25 million share repurchase program, reflecting confidence in long-term business value [8] - The investment portfolio remains high quality, with a focus on municipal bonds and a conservative approach to capital management [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in Amerisafe's operational positioning and strong balance sheet to generate consistent underwriting profitability, regardless of market conditions [7] - The claims team has demonstrated expertise in managing loss experience, with a current accident year loss ratio of 71% [7][10] - Management noted that while there is upward pressure on loss ratios due to declining loss costs, the company is well-prepared to manage these challenges [46] Other Important Information - The company declared a regular quarterly cash dividend of $0.39 per share, payable on September 26, 2025 [8] - Book value per share increased to $13.96, up 3.3% year-to-date, and statutory surplus rose to $257 million from $235 million at year-end 2024 [15] Q&A Session Summary Question: What drove the impressive 13% growth in premiums? - Management attributed the growth to employee focus on ease of doing business, agent effectiveness, and scalability, resulting in a 5.8% increase in policy count since year-end [20][22] Question: Any change in average policy size? - Management indicated a slight change, with average premium size potentially down slightly, but still within the target range [25][26] Question: Observations on medical inflation? - Management noted a 6% increase in medical severity for 2024, but they have not changed their reserving practices based on current trends [28][30] Question: Any stats on new business production? - While specific numbers were not disclosed, management highlighted successful new business growth despite a decrease in agent count [34][36] Question: How is the company balancing share repurchases and special dividends? - Management confirmed that there is capital sufficiency for both share repurchases and potential special dividends [48] Question: What is the long-term target for the expense ratio? - Management indicated that they expect to remain within historical ranges for the expense ratio, which is currently at 31.3% for the quarter [50][51] Question: What drove the increase in policyholder dividends? - Management explained that the increase was due to more policies qualifying for dividends, reflecting both competitive and loss experience factors [54][56]

Core Insights - AMERISAFE, Inc. (AMSF) reported second-quarter adjusted earnings per share of 53 cents, missing the Zacks Consensus Estimate by 3.6% and reflecting an 8.6% year-over-year decline [1][8] - Operating revenues reached $76.1 million, showing a slight year-over-year increase but falling short of the consensus mark by 1.5% [1][8] Financial Performance - Net premiums earned increased by 1.1% year over year to $69.4 million, but were below the Zacks Consensus Estimate of $70.5 million, supported by strong retention rates and new business growth [3] - Net investment income dropped 10.2% year over year to $6.7 million due to reduced investable assets, although it exceeded the consensus estimate of $6.6 million [3] - Pre-tax underwriting profit was reported at $5.7 million, down 12.2% year over year [4] - Total expenses rose by 2.5% year over year to $63.6 million, driven by higher loss and loss adjustment expenses [4][8] - Operating net income decreased by 9.7% year over year to $10 million [4] Ratios and Metrics - The net combined ratio was 91.7%, worsening by 120 basis points year over year and exceeding the consensus estimate of 90.5% [5] - Return on average equity improved by 660 basis points year over year to 21.2% [6] Capital Management - AMERISAFE repurchased 62.8 thousand common shares for $2.8 million in the second quarter and reauthorized a $25 million share repurchase program [7] Dividend Announcement - A quarterly cash dividend of 39 cents per share was announced, scheduled for payment on September 26, 2025, to shareholders of record as of September 12 [9]

Core Viewpoint - Amerisafe reported quarterly earnings of $0.53 per share, missing the Zacks Consensus Estimate of $0.55 per share, and down from $0.58 per share a year ago, indicating a -3.64% earnings surprise [1] - The company posted revenues of $76.14 million for the quarter, missing the Zacks Consensus Estimate by 1.5%, and showing a slight increase from $76 million year-over-year [2] Company Performance - Over the last four quarters, Amerisafe has surpassed consensus EPS estimates three times, but has not beaten consensus revenue estimates during the same period [2] - Amerisafe shares have declined approximately 14.6% since the beginning of the year, contrasting with the S&P 500's gain of 8.1% [3] Future Outlook - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the next quarter is $0.55 on revenues of $78.3 million, and for the current fiscal year, it is $2.25 on revenues of $311.32 million [7] Industry Context - The Insurance - Accident and Health industry, to which Amerisafe belongs, is currently ranked in the top 39% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Employers Holdings, another company in the same industry, is expected to report quarterly earnings of $0.94 per share, reflecting a year-over-year decline of -14.6%, with revenues anticipated to be $214.65 million, down 1.1% from the previous year [9][10]

[Executive Summary](index=1&type=section&id=Executive%20Summary) A concise overview of AMERISAFE's Q2 2025 financial and operational highlights, including key performance indicators and company profile [Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) AMERISAFE, Inc. announced solid results for the second quarter ended June 30, 2025, marked by a fifth consecutive quarter of growth in gross premiums written and a significant increase in net income and diluted EPS Key Financial Metrics | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | % Change | YTD 2025 (in thousands) | YTD 2024 (in thousands) | % Change | | :--------------------------------- | :--------------------- | :--------------------- | :------- | :---------------------- | :---------------------- | :------- | | Gross premiums written | $79,704 | $76,428 | 4.3% | $163,488 | $156,502 | 4.5% | | Net premiums earned | $69,381 | $68,633 | 1.1% | $138,266 | $137,079 | 0.9% | | Net investment income | $6,691 | $7,447 | -10.2% | $13,343 | $14,813 | -9.9% | | Net realized gains (losses) | $3,116 | ($117) | NM | $3,118 | ($339) | NM | | Net unrealized gains (losses) | $1,829 | ($58) | NM | ($1,323) | $4,718 | NM | | Net income | $13,955 | $10,993 | 26.9% | $22,904 | $27,918 | -18.0% | | Diluted earnings per share | $0.73 | $0.57 | 28.1% | $1.20 | $1.46 | -17.8% | | Operating net income | $10,048 | $11,131 | -9.7% | $21,486 | $24,459 | -12.2% | | Operating earnings per share | $0.53 | $0.58 | -8.6% | $1.12 | $1.28 | -12.5% | | Book value per share | $13.96 | $15.78 | -11.5% | $13.96 | $15.78 | -11.5% | | Net combined ratio | 91.7% | 90.5% | | 90.5% | 88.8% | | | Return on average equity | 21.2% | 14.6% | | 17.5% | 18.8% | | - Voluntary premiums on policies written increased by **12.8%** in Q2 2025 compared to Q2 2024, driven by increased policy count and strong retention[3](index=3&type=chunk) - The company achieved its **fifth consecutive quarter** of growth in gross premiums written[3](index=3&type=chunk) [Company Profile](index=1&type=section&id=Company%20Profile) AMERISAFE, Inc. is a specialty provider of workers' compensation insurance, primarily serving small to mid-sized employers in high-hazard industries across 27 states - AMERISAFE specializes in workers' compensation insurance for high-hazard industries[2](index=2&type=chunk) - The company focuses on small to mid-sized employers in sectors like construction, trucking, logging, agriculture, and manufacturing[22](index=22&type=chunk) - AMERISAFE actively markets workers' compensation insurance in **27 states**[22](index=22&type=chunk) [Financial Performance Analysis](index=2&type=section&id=Financial%20Performance%20Analysis) An in-depth analysis of AMERISAFE's insurance and investment results for Q2 2025, detailing premium growth, underwriting profitability, and investment income trends [Insurance Results](index=2&type=section&id=Insurance%20Results) AMERISAFE's insurance operations in Q2 2025 showed a 4.3% increase in gross premiums written, but underwriting profit decreased by 12.2% due to higher underwriting and operating costs Insurance Operations Summary | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | % Change | YTD 2025 (in thousands) | YTD 2024 (in thousands) | % Change | | :------------------------------------------ | :--------------------- | :--------------------- | :------- | :---------------------- | :---------------------- | :------- | | Gross premiums written | $79,704 | $76,428 | 4.3% | $163,488 | $156,502 | 4.5% | | Net premiums earned | $69,381 | $68,633 | 1.1% | $138,266 | $137,079 | 0.9% | | Loss and loss adjustment expenses incurred | $40,660 | $40,624 | 0.1% | $80,819 | $80,615 | 0.3% | | Underwriting and certain other operating costs | $21,746 | $20,429 | 6.4% | $42,345 | $39,127 | 8.2% | | Policyholder dividends | $1,239 | $1,049 | 18.1% | $1,873 | $2,121 | -11.7% | | Underwriting profit (pre-tax) | $5,736 | $6,531 | -12.2% | $13,229 | $15,216 | -13.1% | - Voluntary premiums on policies written increased by **12.8%** in Q2 2025, driven by stable policy retention, strong premium retention, and robust new business production[6](index=6&type=chunk) - Payroll audits and related premium adjustments contributed **$1.5 million** to written premiums in Q2 2025, a decrease from **$7.3 million** in Q2 2024[6](index=6&type=chunk) [Insurance Ratios](index=2&type=section&id=Insurance%20Ratios) The net loss ratio improved to 58.6% in Q2 2025, aided by favorable prior accident year loss reserve development, while the net underwriting expense ratio increased to 31.3% Key Insurance Ratios | Insurance Ratio | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------ | :------ | :------ | :------- | :------- | | Current accident year loss ratio | 71.0% | 71.0% | 71.0% | 71.0% | | Prior accident year loss ratio | -12.4% | -11.8% | -12.5% | -12.2% | | Net loss ratio | 58.6% | 59.2% | 58.5% | 58.8% | | Net underwriting expense ratio | 31.3% | 29.8% | 30.6% | 28.5% | | Net dividend ratio | 1.8% | 1.5% | 1.4% | 1.5% | | Net combined ratio | 91.7% | 90.5% | 90.5% | 88.8% | - The loss ratio for Q2 2025 was **58.6%**, an improvement from **59.2%** in Q2 2024, due to **$8.6 million** in favorable net loss reserve development for prior accident years[6](index=6&type=chunk) - The underwriting expense ratio increased to **31.3%** in Q2 2025 from **29.8%** in the prior-year quarter, reflecting a **100 basis point** increase from insurance-based assessments and sustained investment in the business[6](index=6&type=chunk) [Investment Results](index=3&type=section&id=Investment%20Results) Net investment income decreased by 10.2% in Q2 2025 due to a reduction in investable assets, but the company reported significant net realized and unrealized gains on equity securities Investment Performance | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | % Change | YTD 2025 (in thousands) | YTD 2024 (in thousands) | % Change | | :------------------------------------------ | :--------------------- | :--------------------- | :------- | :---------------------- | :---------------------- | :------- | | Net investment income | $6,691 | $7,447 | -10.2% | $13,343 | $14,813 | -9.9% | | Net realized gains (losses) on investments | $3,116 | ($117) | NM | $3,118 | ($339) | NM | | Net unrealized gains (losses) on equity securities | $1,829 | ($58) | NM | ($1,323) | $4,718 | NM | | Pre-tax investment yield | 3.3% | 3.3% | | 3.3% | 3.3% | | | Tax-equivalent yield | 3.9% | 3.8% | | 3.9% | 3.8% | | - Net investment income decreased by **10.2%** to **$6.7 million** in Q2 2025, primarily due to a decrease in investable assets year-over-year following a special dividend in Q4 2024[11](index=11&type=chunk) - Net realized gains on investments were **$3.1 million** in Q2 2025, driven by gains on equity securities[11](index=11&type=chunk) - Net unrealized gains on equity securities totaled **$1.8 million** for the quarter, attributed to strong equity market performance[11](index=11&type=chunk) - As of June 30, 2025, the carrying value of AMERISAFE's investment portfolio, including cash and cash equivalents, was **$807.4 million**[11](index=11&type=chunk) [Capital Management](index=3&type=section&id=Capital%20Management) An overview of AMERISAFE's capital allocation strategies, including share repurchases, dividend payments, and book value per share performance [Share Repurchase Program](index=3&type=section&id=Share%20Repurchase%20Program) AMERISAFE repurchased 62,757 shares for $2.8 million in Q2 2025, and the Board reauthorized a new share repurchase program of up to $25.0 million - In Q2 2025, the Company repurchased **62,757 shares** at an average cost of **$44.55** per share, totaling **$2.8 million**[8](index=8&type=chunk) - Since February 2010, AMERISAFE has repurchased **1,745,608 shares** for a total of **$44.8 million** at an average cost of **$25.69**[8](index=8&type=chunk) - As of June 30, 2025, the remaining share repurchase authorization was **$2.5 million**[8](index=8&type=chunk) - On July 23, 2025, the Board reauthorized a new share repurchase program of up to **$25.0 million**, replacing the previous program[9](index=9&type=chunk) [Dividends](index=4&type=section&id=Dividends) The company paid a regular quarterly cash dividend of $0.39 per share in June 2025, representing a 5.4% increase from 2024, and declared another for September 2025 - A regular quarterly cash dividend of **$0.39 per share** was paid on June 20, 2025, marking a **5.4%** increase compared to 2024[12](index=12&type=chunk) - On July 22, 2025, the Board declared another quarterly cash dividend of **$0.39 per share**, payable on September 26, 2025[12](index=12&type=chunk) [Book Value Per Share](index=4&type=section&id=Book%20Value%20Per%20Share) Book value per share increased by 3.3% to $13.96 as of June 30, 2025, compared to December 31, 2024 - Book value per share was **$13.96** on June 30, 2025, an increase of **3.3%** from **$13.51** on December 31, 2024[13](index=13&type=chunk) [Supplemental Information](index=4&type=section&id=Supplemental%20Information) Presentation of non-GAAP financial measures and their reconciliation to GAAP, providing additional insights into the company's operational performance [Non-GAAP Financial Measures](index=4&type=section&id=Non-GAAP%20Financial%20Measures) The report includes non-GAAP financial measures such as operating net income and operating earnings per share, which enhance understanding of core operating performance Reconciliation of Non-GAAP Financial Measures | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | YTD 2025 (in thousands) | YTD 2024 (in thousands) | | :------------------------------------ | :--------------------- | :--------------------- | :---------------------- | :---------------------- | | Net income | $13,955 | $10,993 | $22,904 | $27,918 | | Less: Net realized gains (losses) | $3,116 | ($117) | $3,118 | ($339) | | Less: Net unrealized gains (losses) | $1,829 | ($58) | ($1,323) | $4,718 | | Tax effect | ($1,038) | $37 | ($377) | ($920) | | Operating net income | $10,048 | $11,131 | $21,486 | $24,459 | | Average shareholders' equity | $263,192 | $301,043 | $261,456 | $296,722 | | Less: Average accumulated other comprehensive loss | ($7,415) | ($9,150) | ($8,218) | ($8,377) | | Average adjusted shareholders' equity | $270,607 | $310,193 | $269,674 | $305,099 | | Diluted weighted average common shares | 19,119,600 | 19,146,294 | 19,120,530 | 19,171,206 | | Return on average equity | 21.2% | 14.6% | 17.5% | 18.8% | | Operating return on average adjusted equity | 14.9% | 14.4% | 15.9% | 16.0% | | Diluted earnings per share | $0.73 | $0.57 | $1.20 | $1.46 | | Operating earnings per share | $0.53 | $0.58 | $1.12 | $1.28 | - Non-GAAP financial measures, including operating net income and operating earnings per share, are provided to enhance understanding of core operating performance[15](index=15&type=chunk)[19](index=19&type=chunk) - The tax effect for non-GAAP adjustments is calculated using an effective tax rate of **21%**[14](index=14&type=chunk) [Corporate Information](index=5&type=section&id=Corporate%20Information) Essential corporate communications, including details for the Q2 2025 conference call and important disclosures regarding forward-looking statements [Conference Call Details](index=5&type=section&id=Conference%20Call%20Details) AMERISAFE scheduled a conference call for July 25, 2025, at 10:30 a.m. Eastern Time to discuss the second quarter results - A conference call to discuss Q2 2025 results was scheduled for July 25, 2025, at 10:30 a.m. Eastern Time[20](index=20&type=chunk) - Participants can dial 786-789-4797 (Conference Code 2260581) or listen via webcast on the company's investor relations website[20](index=20&type=chunk)[21](index=21&type=chunk) [Forward-Looking Statements](index=6&type=section&id=Forward-Looking%20Statements) The release contains forward-looking statements regarding AMERISAFE's plans, expectations, and performance, which are subject to various risks and uncertainties - Statements in the press release that are not historical facts are forward-looking statements, subject to risks and uncertainties[24](index=24&type=chunk) - Factors affecting results are detailed in the Company's filings with the U.S. Securities and Exchange Commission, including the Annual Report on Form 10-K[24](index=24&type=chunk) - AMERISAFE does not undertake any obligation to update or revise any forward-looking statements[24](index=24&type=chunk) [Consolidated Financial Statements](index=7&type=section&id=Consolidated%20Financial%20Statements) Comprehensive financial statements, including the Consolidated Statements of Income and Consolidated Balance Sheets, providing a detailed view of the company's financial performance and position [Consolidated Statements of Income](index=7&type=section&id=Consolidated%20Statements%20of%20Income) The Consolidated Statements of Income provide a detailed breakdown of revenues and expenses for the three and six months ended June 30, 2025, and 2024 Consolidated Statements of Income (in thousands) | Revenues (in thousands) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :---------------------- | :------ | :------ | :------- | :------- | | Gross premiums written | $79,704 | $76,428 | $163,488 | $156,502 | | Net premiums earned | $69,381 | $68,633 | $138,266 | $137,079 | | Net investment income | $6,691 | $7,447 | $13,343 | $14,813 | | Net realized gains (losses) on investments | $3,116 | ($117) | $3,118 | ($339) | | Net unrealized gains (losses) on equity securities | $1,829 | ($58) | ($1,323) | $4,718 | | Total revenues | $81,088 | $75,830 | $153,685 | $156,319 | | Expenses (in thousands) | | | | | | Loss and loss adjustment expenses incurred | $40,660 | $40,624 | $80,819 | $80,615 | | Underwriting and other operating costs | $21,746 | $20,429 | $42,345 | $39,127 | | Policyholder dividends | $1,239 | $1,049 | $1,873 | $2,121 | | Total expenses | $63,633 | $62,086 | $125,009 | $121,830 | | Income before taxes | $17,455 | $13,744 | $28,676 | $34,489 | | Income tax expense | $3,500 | $2,751 | $5,772 | $6,571 | | Net income | $13,955 | $10,993 | $22,904 | $27,918 | | Basic earnings per share | $0.73 | $0.58 | $1.20 | $1.46 | | Diluted earnings per share | $0.73 | $0.57 | $1.20 | $1.46 | [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets) The Consolidated Balance Sheets present the company's financial position as of June 30, 2025, and December 31, 2024, detailing assets, liabilities, and shareholders' equity Consolidated Balance Sheets (in thousands) | (in thousands) | June 30, 2025 | December 31, 2024 | | :------------- | :------------ | :---------------- | | **Assets** | | | | Investments | $758,888 | $788,778 | | Cash and cash equivalents | $48,465 | $44,045 | | Amounts recoverable from reinsurers | $115,771 | $117,019 | | Premiums receivable, net | $166,344 | $142,659 | | Deferred income taxes | $20,073 | $19,448 | | Deferred policy acquisition costs | $21,149 | $19,151 | | Other assets | $24,424 | $26,691 | | **Total Assets** | **$1,155,114** | **$1,157,791** | | **Liabilities and Shareholders' Equity** | | | | **Liabilities:** | | | | Reserves for loss and loss adjustment expenses | $624,095 | $651,309 | | Unearned premiums | $138,784 | $121,926 | | Insurance-related assessments | $17,386 | $14,852 | | Other liabilities | $109,279 | $112,363 | | **Shareholders' equity** | **$265,570** | **$257,341** | | **Total liabilities and shareholders' equity** | **$1,155,114** | **$1,157,791** |

Core Insights - Special dividends are one-time cash payouts that can significantly enhance yield for investors, often overlooked by mainstream financial websites [1][2] - Companies like Pilgrim's Pride and Amerisafe exemplify special dividend payers, with yields that can double or triple the regular dividend [2][11] - Business Development Companies (BDCs) are notable for their regular special dividends, providing attractive yields [13] Group 1: Special Dividend Overview - Special dividends can yield significantly higher returns than stated yields, with some stocks showing yields as high as 13.8% when including special distributions [1][3] - A special dividend is often a result of extraordinary profits or cash influxes, such as asset sales [1][2] Group 2: Company Examples - Pilgrim's Pride (PPC) recently paid a special dividend of $6.30 per share, resulting in a yield of 12.7% [2] - Buckle (BKE) has a stated dividend yield of 3.2%, but the actual yield with specials is 9.0%, showcasing its strategy of modest regular dividends supplemented by larger special dividends [4][6] - Amerisafe (AMSF) has a stated yield of 3.3%, but with special dividends, the yield rises to 9.7%, reflecting its approach to managing dividends amid profit fluctuations [9][11] Group 3: Business Development Companies (BDCs) - Gladstone Investment Corp. (GAIN) has a stated yield of 6.4%, but with specials, the yield increases to 14.3%, highlighting its unique investment strategy [14][18] - Nuveen Churchill Direct Lending Corp. (NCDL) offers a stated yield of 11.3%, which rises to 13.8% with special dividends, indicating strong financial backing and investment strategy [19][21] - Barings BDC (BBDC) has a stated yield of 11.3% and an actual yield of 12.9% with specials, reflecting its recovery and strategic investment approach [24][28]

Core Viewpoint - Amerisafe's shares have underperformed the S&P 500, losing approximately 0.1% since the last earnings report, raising questions about future performance leading up to the next earnings release [1]. Earnings Estimates - Analysts have not made any earnings estimate revisions in the last two months, indicating a period of stability in expectations [2]. VGM Scores - Amerisafe has a subpar Growth Score of D and a Momentum Score of C, with an overall aggregate VGM Score of D, placing it in the bottom 40% for the value investment strategy [3]. Outlook - The company holds a Zacks Rank of 3 (Hold), suggesting an expectation of an in-line return from the stock in the upcoming months [4].

Core Viewpoint - AMERISAFE, Inc. (AMSF) experienced a 5.5% decline in share price following the release of its first-quarter 2025 results, primarily due to decreased net investment income, weaker underwriting results, and elevated expenses impacting margins, although strong retention rates and new business growth provided some offset [1] Financial Performance - AMSF reported adjusted earnings per share of 60 cents, exceeding the Zacks Consensus Estimate by 1.7%, but reflecting a 13% year-over-year decline [2] - Operating revenues remained flat at $76 million year-over-year, falling short of the consensus estimate by 1.4% [2] - Net premiums earned increased by 0.6% year-over-year to $68.9 million, but were below the Zacks Consensus Estimate of $69.8 million, supported by strong retention rates and new business growth [3] - Net investment income decreased by 9.7% year-over-year to $6.7 million, missing the consensus mark of $6.9 million, attributed to reduced investable assets from a special dividend paid in the prior quarter [3] - Fee and other income surged by 70.7% year-over-year [3] - Pre-tax underwriting profit fell by 13.7% year-over-year to $7.5 million [4] - Total expenses rose by 2.7% year-over-year to $61.4 million, driven by higher loss and loss adjustment expenses and increased underwriting and operating costs [4] - Operating net income decreased by 14.2% year-over-year to $11.4 million [4] Ratios and Metrics - The net combined ratio was 89.1%, worsening by 180 basis points year-over-year but better than the consensus estimate of 91% [5] - Return on average equity declined by 900 basis points year-over-year to 13.8% [6] Capital Deployment - Management announced a quarterly cash dividend of 39 cents per share, scheduled for payment on June 20, 2025, to shareholders of record as of June 13 [7] Industry Comparison - Other insurers such as Arch Capital Group, RLI Corp., and Kinsale Capital Group reported better-than-expected bottom-line results in the same quarter [9]

Financial Performance - Gross premiums written increased to $83,784,000 in Q1 2025, up from $80,074,000 in Q1 2024, representing a growth of 3%[15] - Net premiums written rose to $79,605,000 in Q1 2025, compared to $76,148,000 in Q1 2024, reflecting an increase of 6%[15] - Net income for Q1 2025 was $8,949,000, a decrease of 47% from $16,925,000 in Q1 2024[15] - Total revenues decreased to $72,597,000 in Q1 2025, down from $80,489,000 in Q1 2024, a decline of 10%[15] - Comprehensive income for Q1 2025 was $10,555,000, down from $15,379,000 in Q1 2024, a decrease of 31%[18] - Basic earnings per share (EPS) for Q1 2025 was $0.47, down from $0.89 in Q1 2024, reflecting a 47.2% decline[39] - Diluted EPS for Q1 2025 was $0.47, compared to $0.88 in Q1 2024, indicating a 46.6% decrease[39] - Net investment income decreased by 9.7% to $6.7 million in Q1 2025 from $7.4 million in Q1 2024[103] - The net combined ratio for Q1 2025 was 89.1%, compared to 87.3% in Q1 2024[98] - Return on average equity decreased to 13.8% in Q1 2025 from 22.8% in Q1 2024[98] - Book value per share decreased to $13.69 in Q1 2025 from $15.74 in Q1 2024[98] Cash Flow and Dividends - Cash dividends declared per common share increased to $0.39 in Q1 2025 from $0.37 in Q1 2024, a rise of 5.4%[15] - Net cash provided by operating activities was $(1.792) million for Q1 2025, a significant decline from $7.506 million in Q1 2024[1] - Net cash used in operating activities was $1.8 million in Q1 2025, a decrease of $9.3 million from $7.5 million in Q1 2024[110] - The company paid dividends to shareholders totaling $7.424 million in Q1 2025, compared to $7.075 million in Q1 2024, reflecting a 4.9% increase[1] - The Board declared a regular cash dividend of $0.39 per share on April 29, 2025, payable on June 20, 2025[90] Assets and Liabilities - Total assets as of March 31, 2025, were $1,156,717,000, slightly down from $1,157,791,000 as of December 31, 2024[13] - Total liabilities decreased to $895,904,000 as of March 31, 2025, from $900,450,000 as of December 31, 2024, a reduction of 0.6%[13] - Shareholders' equity increased to $260,813,000 as of March 31, 2025, compared to $257,341,000 as of December 31, 2024, an increase of 1%[13] Claims and Reserves - The net balance for unpaid loss and loss adjustment expenses at the end of March 31, 2025, was $529.464 million, down from $550.580 million at the end of March 31, 2024[60] - The total incurred losses for the current accident year as of March 31, 2025, were $48.908 million, compared to $48.597 million for the same period in 2024[60] - The company recorded favorable prior accident year development of $8.7 million in Q1 2025, compared to $8.6 million in Q1 2024[117] - The total net development for the accident year was $8.7 million for 2025, compared to $8.6 million for 2024[118] - Claims reported during the three months ended March 31, 2025, were 906, slightly up from 900 in the same period of 2024[119] - Claims closed during the same period were 864, down from 1,091 in 2024, indicating a decrease in claim resolution speed[119] - The company does not intend to modify its assumptions for establishing reserves despite recent favorable results in certain accident years[120] - The reserves for loss and loss adjustment expenses may exhibit greater volatility due to the focus on higher severity, lower frequency claims[121] Investments - The carrying value of the investment portfolio was $825.8 million as of March 31, 2025, down 0.8% from $832.8 million at the end of 2024[113] - The total fair value of financial instruments was $370,202,000, with $69,623,000 classified as Level 1 inputs and $300,579,000 as Level 2 inputs[75] - The fair value of securities available-for-sale—fixed maturity totaled $314,726,000, consisting of $14,147,000 in U.S. Treasury securities and $300,579,000 in corporate bonds and other securities[75] - The total fair value of equity securities was $55,476,000 as of March 31, 2025[81] - The company reported a net unrealized gain on equity securities of $3.152 million in Q1 2025, contrasting with a net unrealized loss of $(4.776) million in Q1 2024[1] - The Company recognized $3.2 million of net unrealized losses on equity securities for the three months ended March 31, 2025, compared to $4.8 million of net unrealized gains for the same period in 2024[52] Operational Insights - The Company operates solely within the U.S. as a monoline insurance company, focusing on workers' compensation insurance for small to mid-sized employers[85] - The return on average equity and growth in book value per share are key financial measures used to evaluate performance[86] - There have been no material changes in the company's market risk profile since December 31, 2024[123] - The company continues to evaluate the effectiveness of its disclosure controls and procedures, concluding they were effective as of the end of the reporting period[124] - No changes in internal control over financial reporting have materially affected the company's controls during the reporting period[126]

Financial Data and Key Metrics Changes - For Q1 2025, the company reported net income of $8.9 million or $0.47 per diluted share, down from $16.9 million or $0.88 per diluted share in Q1 2024 [12] - Operating net income decreased to $11.4 million or $0.60 per diluted share from $13.3 million or $0.69 per diluted share year-over-year [12] - Gross written premiums increased by 4.6% to $83.8 million compared to $80.1 million in Q1 2024 [12] - Net premiums earned rose by 60 basis points to $68.9 million from $68.4 million in the prior year [13] - The expense ratio increased to 29.9% from 27.3% due to higher expenses related to business investments [13][14] Business Line Data and Key Metrics Changes - Premiums on policies written in the quarter grew by 7.1% compared to the prior year quarter [9] - Policy retention rate was strong at 93.1% in Q1 2025, contributing to policy count growth [9] - The company experienced $5 million from payroll audits and other premium adjustments, down from $6.4 million in the previous year [10] Market Data and Key Metrics Changes - The competitive environment remains strong, driven by declining workers' compensation rates and challenges in other property and casualty lines [6] - The company noted that economic conditions affecting payrolls could influence premium levels, with factors such as unemployment and wage inflation being monitored closely [7] Company Strategy and Development Direction - The company is focused on incremental growth within its existing geographic footprint and risk appetite, leveraging relationships with agents and policyholders [6] - The management emphasized the importance of proactive claims handling, which contributed to favorable case development [11] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding economic uncertainties, including tariffs and inflation, but noted that niche industries have historically performed well during mild recessions [7] - The company expects favorable frequency trends to continue, with modest severity trends anticipated [11] Other Important Information - The investment portfolio is of high quality, with an average credit rating of double A minus and a duration of 4.48 years [15] - Book value per share was reported at $13.69, with a statutory surplus of $243.6 million, up 3.6% from the previous year [16] Q&A Session Summary Question: Audit premium impact on previous quarters - Management provided audit premium figures for the previous year: Q1 was $6.4 million, Q2 was $7.3 million, Q3 was $4 million, and Q4 was $2.5 million [22][24] Question: Impact of recent hurricanes on work activity - Management noted a slight increase in audit premiums for rebuilding classifications in North Carolina and Georgia, but not as much in Florida [26] Question: Potential tariff impacts on business - Management speculated that tariffs could impact medical costs, particularly in pharmacy and durable medical equipment, but the overall effect on premiums would depend on whether costs are passed through to customers [30][31] Question: Changes in competitive dynamics - Management indicated that there has been no significant change in competitive dynamics in the first quarter [35] Question: Expense ratio and future expectations - Management quantified the increase in expenses at $1.9 million and expected costs to moderate in the coming quarters [36] Question: Trends in state loss costs - Management confirmed that the trend in state loss costs is still declining, with average decreases between 6% to 8% [38] Question: Medical inflation and physician care costs - Management observed increases in physician care costs, attributing it to labor costs rather than tariffs [39][40] Question: Large losses in the quarter - Management reported two large losses in the quarter, which is below trend [56]