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 [8] - 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 - A slight increase in audit premiums was noted in rebuilding classifications in North Carolina and Georgia, but not significantly 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 - No significant changes in competitive dynamics were reported in the first quarter [35][36] Question: Expense ratio and future expectations - The increase in the expense ratio was attributed to investments for growth, with expectations that costs will moderate throughout the year [37] Question: Trends in state loss costs - The trend of declining rates continues, with average decreases expected to be in the 6% to 8% range [39][40] Question: Medical inflation and physician care costs - Increases in physician care costs were noted, attributed to labor costs rather than tariffs [41][42] Question: Industry redundancy and loss costs - Management anticipated that overall redundancy in the industry should be declining, with concerns about confidence in more current accident years [45][46] Question: Wage inflation trends - Wage inflation indications are slightly above the national average, with a potential increase in employee count [48][49] Question: Large losses in the quarter - Only two large losses were reported, which is below trend [56]

Financial Data and Key Metrics Changes - For Q1 2025, Amerisafe 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 [11] - 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 [11] - Gross written premiums increased by 4.6% to $83.8 million compared to $80.1 million in Q1 2024 [11] - Net premiums earned rose by 60 basis points to $68.9 million from $68.4 million in the prior year [12] - The expense ratio increased to 29.9% from 27.3% due to higher expenses related to business investments [12][13] Business Line Data and Key Metrics Changes - Premiums on policies written in the quarter grew by 7.1% over the prior year quarter, with a retention rate of 93.1% [7][8] - The company experienced $5 million from payroll audits and other premium adjustments, down from $6.4 million in the previous year [8] 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 [5][6] - The company noted a favorable frequency trend in claims, with a current accident year loss ratio of 71, consistent with the prior year [8] Company Strategy and Development Direction - Amerisafe continues to focus on incremental growth within its existing geographic footprint and risk appetite, leveraging relationships with agents and policyholders [5] - The company is investing in business growth despite a competitive market, aiming to maintain profitability [12] Management Comments on Operating Environment and Future Outlook - Management expressed caution regarding economic uncertainties such as tariffs, inflation, and interest rates, which could impact payrolls and premiums [6] - The company anticipates favorable frequency trends to continue, with modest severity trends expected [9] Other Important Information - The investment portfolio is of high quality, with a tax-equivalent book yield of 3.85% and a strong capital position [14][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 [15] 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 - There was 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 - Tariffs could impact medical costs, particularly in pharmacy and durable medical equipment, which account for about 15% of medical costs in workers' compensation [29] Question: Changes in competitive dynamics - There has been no significant change in the competitive landscape during the first quarter [35] Question: Expense ratio and future expectations - The increase in the expense ratio was approximately $1.9 million, and costs are expected to moderate as the year progresses [37] Question: State loss cost updates - The trend remains a decline in rates, with average decreases between 6% to 8% across states [39] Question: Medical inflation trends - There are increases in physician care costs, likely due to labor costs rather than tariffs [41] Question: Large losses in the quarter - The company reported two large losses in the quarter, which is below trend [56]

Group 1 - Amerisafe reported $75.75 million in revenue for Q1 2025, a year-over-year decline of 0.3% [1] - The EPS for the same period was $0.60, down from $0.69 a year ago, with a surprise of +1.69% compared to the consensus estimate of $0.59 [1] - The revenue fell short of the Zacks Consensus Estimate of $76.83 million, resulting in a surprise of -1.41% [1] Group 2 - Key metrics indicate that Amerisafe's net investment income was $6.65 million, below the average estimate of $6.85 million, reflecting a year-over-year decline of 9.7% [4] - Fee and other income reached $0.21 million, exceeding the estimated $0.18 million, marking a significant increase of 70.7% compared to the previous year [4] - Net premiums earned were reported at $68.89 million, slightly below the average estimate of $69.81 million, with a year-over-year increase of 0.6% [4] Group 3 - Amerisafe's stock has returned -6.7% over the past month, compared to a -0.8% change in the Zacks S&P 500 composite [3] - The company currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Core Viewpoint - Amerisafe reported quarterly earnings of $0.60 per share, exceeding the Zacks Consensus Estimate of $0.59, but down from $0.69 per share a year ago, indicating a mixed performance in earnings despite a slight surprise [1][2] Earnings Performance - The company achieved an earnings surprise of 1.69% for the recent quarter and had a previous quarter surprise of 11.67% with earnings of $0.67 per share against an expectation of $0.60 [1][2] - Over the last four quarters, Amerisafe has surpassed consensus EPS estimates three times [2] Revenue Analysis - Amerisafe's revenues for the quarter ended March 2025 were $75.75 million, which missed the Zacks Consensus Estimate by 1.41% and decreased from $75.94 million year-over-year [2] - The company has only topped consensus revenue estimates once in the last four quarters [2] Stock Performance - Amerisafe shares have declined approximately 4.9% since the beginning of the year, while the S&P 500 has seen a decline of 6% [3] - The immediate price movement of the stock will largely depend on management's commentary during the earnings call [3] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.55 on revenues of $77.84 million, and for the current fiscal year, it is $2.25 on revenues of $313.17 million [7] - The estimate revisions trend for Amerisafe is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6] Industry Context - The Insurance - Accident and Health industry is currently ranked in the top 34% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Performance - Net premiums earned for Q1 2025 were $68,885,000, a slight increase of 0.6% from $68,446,000 in Q1 2024[3] - Net income for Q1 2025 decreased by 47.1% to $8,949,000 compared to $16,925,000 in Q1 2024[3] - Diluted earnings per share (EPS) fell by 46.6% to $0.47 in Q1 2025 from $0.88 in Q1 2024[3] - Gross premiums written increased by 4.6% to $83,784,000 in Q1 2025, up from $80,074,000 in Q1 2024[4] - The net combined ratio for Q1 2025 was 89.1%, compared to 87.3% in Q1 2024[4] - Net investment income decreased by 9.7% to $6,652,000 in Q1 2025 from $7,366,000 in Q1 2024[7] - The underwriting expense ratio increased to 29.9% in Q1 2025, up from 27.3% in Q1 2024, reflecting continued investment in the business[6] - The effective tax rate for Q1 2025 was 20.2%, compared to 18.4% in Q1 2024[6] Shareholder Information - Book value per share at March 31, 2025, was $13.69, a decrease of 13.0% from $15.74 at the same time last year[3] - The company declared a quarterly cash dividend of $0.39 per share, representing a 5.4% increase compared to 2024[8] Asset and Liability Changes - Total assets decreased slightly from $1,157,791 million in December 2024 to $1,156,717 million in March 2025, a decline of 0.09%[27] - Investments decreased from $788,778 million to $781,012 million, a reduction of approximately 0.98%[27] - Premiums receivable, net increased from $142,659 million to $156,746 million, reflecting a growth of 9.87%[27] - Reserves for loss and loss adjustment expenses decreased from $651,309 million to $639,965 million, a decline of 1.84%[27] - Unearned premiums increased from $121,926 million to $132,646 million, an increase of 8.77%[27] - Shareholders' equity increased from $257,341 million to $260,813 million, a growth of 1.93%[27] - Other liabilities decreased from $112,363 million to $107,405 million, a reduction of 4.03%[27] - Amounts recoverable from reinsurers decreased from $117,019 million to $114,278 million, a decline of 2.35%[27] - Deferred policy acquisition costs increased from $19,151 million to $20,422 million, an increase of 6.64%[27] - Cash and cash equivalents increased slightly from $44,045 million to $44,753 million, a growth of 1.60%[27]

Core Viewpoint - Amerisafe (AMSF) shares have increased by approximately 4.3% since the last earnings report, outperforming the S&P 500, raising questions about the sustainability of this positive trend leading up to the next earnings release [1] Group 1: Earnings Report and Estimates - Recent estimates for Amerisafe have trended upward over the past month, indicating a positive outlook for the company [2][4] - The stock has received a Zacks Rank of 2 (Buy), suggesting expectations for above-average returns in the coming months [4] Group 2: VGM Scores - Amerisafe currently holds a poor Growth Score of F, a Momentum Score of D, and a Value Score of D, placing it in the bottom 40% for the value investment strategy [3] - The overall aggregate VGM Score for Amerisafe is F, which is a critical metric for investors not focused on a single strategy [3]

Premiums and Business Performance - The company reported gross premiums written of $294.1 million for the year ended December 31, 2024, an increase from $285.4 million in 2023 and $276.1 million in 2022[44]. - The voluntary business accounted for 97.2% of total gross premiums written in 2024, with a policy renewal rate of 94.2%[36][44]. - In 2024, 14.7% of gross premiums written were derived from Florida, followed by Georgia at 10.3% and Pennsylvania at 7.2%[47]. - Independent agencies accounted for 98.4% of voluntary in-force premiums as of December 31, 2024, with no single agency exceeding 2.0%[49]. - As of December 31, 2024, the company had over 9,300 voluntary business policyholders, with the ten largest accounting for only 2.3% of in-force premiums[36]. - The company derived 3.9% of its voluntary in-force premiums from employers engaged in the maritime industry for the year ended December 31, 2024[158]. - In 2024, 85.4% of gross premiums written were derived from policyholders in the construction, trucking, logging and lumber, agriculture, manufacturing, maritime, and telecommunications industries[186]. Underwriting and Risk Management - The company has a disciplined underwriting approach, with a focus on maintaining adequate rate levels and improving risk selection and pricing[27]. - The underwriting strategy focuses on hazardous industries in profitable states, with specific guidelines excluding certain high-risk activities[50]. - The company’s expense ratio was 29.6% in 2024, which is believed to be lower than that of competitors, enhancing the opportunity for underwriting profit[26]. - The company’s proactive claims management practices resulted in an average of 44 open indemnity claims per field case manager as of December 31, 2024, significantly lower than the industry average[25]. - The company conducts annual premium audits for all voluntary business policyholders to verify payroll expenses and job classifications[62]. - The company stopped accepting direct assignments and only participates in pooling arrangements to fulfill its residual market obligations beginning in 2023[155]. Claims and Reserves - As of December 31, 2024, the company's ultimate liability for loss and loss adjustment expenses is estimated at $538.6 million, including $13.0 million for mandatory pooling arrangements[79]. - The gross unpaid loss, DCC, and AO reserves decreased to $651.3 million in 2024 from $673.9 million in 2023, primarily due to favorable development from prior accident years[87]. - The average unpaid loss and loss adjustment expenses per open claim increased to $171,487 in 2024 from $168,372 in 2023[87]. - The total incurred related to the current accident year for 2024 was $192.2 million, compared to $189.7 million in 2023[86]. - The company recognized $34.9 million of favorable development for prior accident years in 2024[87]. - The company’s loss reserves are based on estimates and may be inadequate to cover actual losses, with substantial judgment required to determine the relevance of historical experience[187]. Investment Portfolio - As of December 31, 2024, the carrying value of the investment portfolio was $832.8 million, while the fair value was $819.5 million[94]. - The majority of fixed maturity securities are classified as "held-to-maturity," with changes in non-credit related unrecognized gains and losses not reflected until realized[97]. - The pre-tax investment yield for the twelve months ended December 31, 2024, was 3.4% per annum[99]. - The average composite rating of the investment portfolio, excluding equity holdings, was "AA-" as of December 31, 2024[104]. - The company limits holdings in equity securities to the lesser of 10% of the investment portfolio or 30% of shareholders' equity, on a fair value basis[97]. - The company periodically reviews its investment portfolio with the risk committee of the board of directors for compliance with the investment policy[96]. Reinsurance - The company has a reinsurance treaty program providing coverage for each loss occurrence up to $100.0 million, with a retention of $2.0 million for each occurrence[109][111]. - Total amounts recoverable from reinsurers as of December 31, 2024, were $117.3 million, net of an allowance for credit losses of $300, resulting in $117.0 million recoverable[116]. - The company evaluates the financial condition of reinsurers and monitors credit risk concentrations continuously to minimize exposure to significant losses[108]. - The company has 26 reinsurers participating in its 2025 reinsurance program, with most rated "A" or better by A.M. Best[113][114]. - The company remains liable to policyholders even if it is unable to recover amounts due from reinsurers, exposing it to credit risk[210]. Regulatory and Compliance - The company is subject to periodic examinations by state insurance departments, with recent examinations covering calendar years 2018 through 2021[151]. - The company is required to participate in residual market programs, which provide workers' compensation insurance to employers unable to obtain coverage[154]. - The company is subject to extensive regulation, which may limit its ability to obtain premium rate increases or take actions to increase profitability[195]. - The company must maintain minimum capital and surplus of $2.0 million under Nebraska law and $5.0 million under Texas law[165]. Employee and Community Engagement - The company has established an endowment to provide scholarships to dependents of employees and community members, emphasizing its commitment to education[131]. - The company invests in employee professional development, including insurance certification programs and leadership training[133]. - The company has launched a new committee to focus on charitable giving and corporate volunteering efforts, enhancing community engagement[130]. - As of December 31, 2024, the company had 362 full-time employees, with an average employee tenure of 10.0 years and 61% of the workforce being female[132].

AMERISAFE, Inc. (NASDAQ:AMSF) Q4 2024 Earnings Conference Call February 27, 2025 10:30 AM ET Company Participants Kathryn Shirley - Chief Administrative Officer Janelle Frost - President & Chief Executive Officer Andy Omiridis - Executive Vice President & Chief Financial Officer Conference Call Participants Mark Hughes - Truist Matt Carletti - Citizens JMP Bob Farnam - Janney Operator Good day, and welcome to the AMERISAFE fourth quarter 2024 earnings call. Today's conference is being recorded. At this time ...

Financial Data and Key Metrics Changes - AMERISAFE reported net income of $13.2 million or $0.69 per diluted share for Q4 2024, down from $19.2 million or $1 per diluted share in Q4 2023 [13] - For the full year, net income was $55.4 million compared to $62.1 million in 2023, while net operating income decreased to $48.4 million from $55.9 million [14] - The combined ratio improved to 88.7% with a return on equity (ROE) of 20.2% [8][11] Business Line Data and Key Metrics Changes - Gross premiums written increased by 3.9% in Q4 and 3.1% for the full year, with voluntary premiums rising by 8.5% in Q4 and 4.6% for the year [6] - The enforced policy count grew by 9.6% for the year, indicating strong premium retention and new business production [6][7] Market Data and Key Metrics Changes - The accident year loss ratio remained steady at 71%, consistent with the prior year, with favorable development from prior accident years amounting to $9.7 million in Q4 and $34.9 million for the full year [10] - The investment portfolio's net investment income decreased by 14.4% to $6.9 million for Q4 and by 6.8% to $29.2 million for the full year [17] Company Strategy and Development Direction - The company is focused on top-line growth while maintaining consistent underwriting margins, emphasizing the importance of agent relationships and a sales-driven culture [6][8] - AMERISAFE aims to identify and ensure profitable high-risk, high-hazard risks to offset broader market challenges [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate a competitive landscape and maintain strong policy retention [11][79] - The outlook for the construction industry remains positive, with expectations of continued payroll growth and opportunities for business [74][79] Other Important Information - The Board of Directors approved a 5.4% increase in the regular dividend to $0.39 per share [11] - The company reported a book value per share of $13.51 after paying a special dividend, reflecting an 11.6% decrease from year-end 2023 [21] Q&A Session Summary Question: Can you provide context for the 9.6% policy count growth? - Management clarified that the 9.6% growth was for the entire year, with a 2.6% growth in the fourth quarter [24][28] Question: How has the average policy size trended? - The average policy size for 2024 was slightly lower than in 2023, with a noted decrease in average wages in Q4 [34] Question: What impact did renewal rates have on the top line? - Renewal rates were strong, with a policy retention rate of 94.1% on a policy basis and 88% on a premium basis [37] Question: How are claims from prior years developing? - Favorable development from prior accident years was noted, with significant contributions from 2022 and earlier years [39] Question: What is the outlook for the construction industry? - Management believes the construction industry remains strong, with payroll growth and opportunities for business despite potential economic challenges [74][79] Question: How many large claims were there in 2024? - The company reported 18 claims over a million dollars, which is consistent with the five-year average [81] Question: Any updates on medical inflation and reimbursement rates? - No significant changes were noted, but home health costs remain a focus due to their impact on larger claims [86] Question: What is the outlook for audit premiums? - Management expects audit premiums to remain positive in 2025, despite potential deceleration in year-over-year comparisons [102] Question: Have competitors become more aggressive in the workers' comp market? - The market remains competitive, but AMERISAFE is prepared to handle competitors entering the high hazard space [104]

Core Viewpoint - AMERISAFE, Inc. reported mixed financial results for the fourth quarter and full year of 2024, with adjusted earnings per share beating estimates but overall revenues and net income declining year over year [1][3]. Group 1: Fourth Quarter Performance - Adjusted EPS for Q4 was 67 cents, exceeding the Zacks Consensus Estimate by 11.7%, but down 9.5% from the previous year [1]. - Operating revenues decreased by 0.5% year over year to $73.5 million, missing the consensus mark by 4.9% [1]. - Net premiums earned rose by 1.2% year over year to $66.5 million but fell short of estimates by 4.6% [4]. - Net investment income dropped 14.4% year over year to $6.9 million due to reduced investable assets [4]. - Total expenses increased to $57.3 million in Q4, up from $56.2 million a year ago [5]. - The net combined ratio worsened by 60 basis points year over year to 86.1%, although it was better than the consensus estimate of 90.95% [5]. Group 2: Full-Year Performance - Full-year operating revenues were $300.1 million, slightly up from $299 million the previous year [3]. - Total expenses rose to $240 million from $229.5 million in the prior year [3]. - Operating earnings per share decreased to $2.53 from $2.91 year over year [3]. - Net income fell to $55.4 million from $62.1 million a year ago [3]. - Pre-tax underwriting profit declined by 18.6% year over year to $30.6 million [3]. Group 3: Financial Position - As of December 31, 2024, cash and cash equivalents increased to $44 million from $38.7 million at the end of 2023 [6]. - Total assets decreased to $1.16 billion from $1.23 billion at the end of 2023 [6]. - Shareholders' equity fell to $257.3 million from $292.5 million at the end of 2023 [6]. - Book value per share increased by 11.6% to $13.51 as of December 31, 2024 [6]. Group 4: Return on Equity and Capital Deployment - Return on average equity decreased by 590 basis points year over year to 18.5% in Q4 [7]. - A quarterly cash dividend of 39 cents per share was announced, reflecting a 5.4% increase, to be paid on March 21, 2025 [8].