AMERISAFE(AMSF) - 2023 Q4 - Annual Report

Business Performance - The company had a policy renewal rate of 94.1% for voluntary business in 2023, up from 93.8% in 2022 and 93.5% in 2021[24]. - As of December 31, 2023, the company had over 8,500 voluntary business policyholders with an average annual workers' compensation policy written premium of $28,658[24]. - The company's expense ratio was 29.3% in 2023, indicating efficient operations compared to competitors[15]. - Gross premiums written in 2023 totaled$ 285,355 thousand, an increase from $276,110 thousand in 2022, representing a growth of 6.5%[30]. - The voluntary business segment accounted for 97.2% of total gross premiums written in 2023, up from 96.4% in 2022[30]. - The construction industry generated$ 135,758 thousand in gross premiums in 2023, making up 47.6% of voluntary business, an increase from 44.8% in 2022[30]. - Florida contributed 13.4% of gross premiums in 2023, the highest among states, compared to 11.8% in 2022[33]. - Total voluntary business gross premiums written in 2023 reached $277.3 million, a 4.1% increase from$ 266.2 million in 2022[30]. Underwriting and Claims Management - The company utilizes proactive safety reviews, with 93.4% of new voluntary business policyholders having pre-quotation safety inspections in 2023[13]. - Open indemnity claims per field case manager averaged 44 claims as of December 31, 2023, which is significantly lower than the industry average[14]. - The company aims to increase market penetration in existing states, leveraging specialized underwriting expertise and safety services[17]. - The company employs a proactive approach to underwriting and claims management, with an average of 44 open indemnity claims per field case manager as of December 31, 2023[14]. - The underwriting strategy focuses on hazardous industries, with a selective approach to policyholder evaluation based on industry trends and statistical data[36]. Reserves and Losses - As of December 31, 2023, the total net reserve for loss and loss adjustment expenses was estimated at $554.2 million, which includes$ 13.0 million for mandatory pooling arrangements[61]. - The gross case loss and DCC reserves decreased to $535.1 million in 2023 from$ 559.6 million in 2022, reflecting a decline of approximately 4.0%[63]. - The gross unpaid loss, DCC, and AO reserves totaled $673.9 million as of December 31, 2023, down from$ 696.0 million in 2022, indicating a reduction of approximately 3.2%[63]. - The company established reserves for incurred but not reported (IBNR) losses amounting to $119.8 million as of December 31, 2023, slightly up from$ 118.9 million in 2022[63]. - The total incurred losses for the current accident year in 2023 were reported at $189.7 million, compared to$ 192.9 million in 2022[68]. - The average case incurred amount is subject to significant variability due to factors such as medical treatment uncertainties and judicial determinations[55]. - Sensitivity analysis indicated that a 30% increase in paid loss development factors would result in a net loss and DCC amount change of $31.1 million, representing a 5.9% increase in reserves[64]. - The company utilized six actuarial methods to estimate reserves, including the Paid Development Method and Incurred Development Method, to ensure accuracy in reserve estimation[59]. Investment Portfolio - The carrying value of the investment portfolio, including cash and cash equivalents, was$ 896.5 million, with a fair value of $886.0 million as of December 31, 2023[78]. - The company’s investment policy aims to preserve capital and surplus while maximizing after-tax income and risk-adjusted total return[78]. - 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[80]. - The effective interest rate for the investment portfolio categories as of December 31, 2023, is detailed in the management's discussion and analysis section[81]. - The pre-tax investment yield for the twelve months ended December 31, 2023, was 3.4% per annum[82]. - The average composite rating of the investment portfolio, excluding equity holdings, was "AA-" as of December 31, 2023[87]. - The credit quality of the investment portfolio showed that 12.5% was rated "AAA" and 56.4% was rated "AA" as of December 31, 2023[87]. Employee and Corporate Governance - As of December 31, 2023, the company had 350 full-time employees, with an average employee tenure of 10.8 years and 62% of the workforce being female[110]. - The company invests in the professional development of its employees, including insurance certification programs and leadership training[111]. - The company is committed to employee health and wellness, offering various benefits such as health care, 401k retirement programs, and wellness initiatives[107]. - The company has launched a new committee to focus on charitable giving and corporate volunteering efforts, comprising employees from various levels and departments[109]. - The company has a competitive compensation and benefits program aligned with shareholders' interests, including incentive compensation programs for underwriting and field safety professionals[106]. Regulatory Compliance and Market Position - The company is licensed in 27 states, with 51.0% of voluntary in-force premiums generated in six states where it derived 5.0% or more of gross premiums written in 2023[18]. - The examinations by the Nebraska and Texas insurance departments for AIIC and SOCI were completed in 2023 with no material findings[125]. - As of December 31, 2023, AIIC, SOCI, and AIICTX exceeded the minimum risk-based capital requirements, with Nebraska requiring a minimum capital and surplus of$ 2.0 million and Texas requiring $5.0 million[139]. - The 2023 IRIS results for AIIC, SOCI, and AIICTX were within expected values for all 13 industry ratios, indicating stable financial conditions[140]. - The company estimates that more than 300 insurance companies participate in the workers' compensation market, with its competitive advantages including underwriting expertise and lower premium rates compared to state insurance pools[104][105].