AMERISAFE(US:AMSF)2024-07-30 15:46Financial Data and Key Metrics Changes - For Q2 2024, AMERISAFE reported net income of $11 million or $0.57 per diluted share, down from $15.6 million or $0.81 per diluted share in Q2 2023 [9] - Gross written premiums increased to $76.4 million in Q2 2024 from $71.7 million in Q2 2023, reflecting a year-over-year growth of 6.6% [9][10] - The expense ratio improved to 29.8% from 30.4% in the prior year [10] - Book value per share was $15.78, and operating return on average equity was 14.4% [11] Business Line Data and Key Metrics Changes - The accident year loss ratio remained stable at 71%, consistent with the prior year [7] - Audit premiums increased significantly, contributing $7.3 million compared to $4.8 million in Q2 2023 [9] Market Data and Key Metrics Changes - The overall approved loss cost decreased by approximately 8% to 9% for the year, aligning with NCCI predictions [20] - Wage inflation in the industry was around 6%, primarily driven by increased wages rather than new employees [31] Company Strategy and Development Direction - AMERISAFE is focused on profitable growth through enhanced agent engagement and pipeline efficiency, which has led to increased policy count and retention rates [6][14] - The company emphasizes disciplined underwriting to maintain long-term profitability in a competitive marketplace [6][8] Management's Comments on Operating Environment and Future Outlook - Management noted that the workers' compensation market remains profitable despite rate softening, with a competitive environment necessitating disciplined underwriting [6] - There are concerns about medical inflation and its potential impact on costs, although current fee schedules are effectively containing costs [22][40] Other Important Information - The company declared a regular quarterly cash dividend of $0.37 per share [11] - AMERISAFE was recognized in Ward's 50 top-performing property and casualty companies for the 16th consecutive year, highlighting its financial strength and stability [51] Q&A Session Summary Question: Can you expand on the growth in the quarter? - Management indicated that growth is attributed to improved agency relationships and pipeline efficiency, with voluntary debt growth of 2.7% in the quarter [14] Question: What was the ELCM in the quarter? - The ELCM was reported at 148 [15] Question: Any details on approved loss costs? - Approved loss costs are down approximately 8% to 9% for the year, consistent with NCCI predictions [20] Question: How have large claims trended? - There have been four claims over $1 million in the first six months, indicating a stable trend [26] Question: What is driving the increase in the expense ratio? - The increase is due to investments in sales and underwriting, which are expected to level off [34] Question: How is policy count growth distributed? - Policy count growth is not concentrated in specific distribution partners or geographies, but rather due to overall efficiency improvements [36] Question: What is the outlook on severity with changes in Florida's reimbursement schedules? - Management acknowledged the potential impact of Florida's changes but emphasized their claims adjusters' expertise in managing reserves effectively [39] Question: What conditions would lead to a bottoming out of loss costs? - A combined ratio above 100 in the industry would help slow the decline in loss costs [43]