AMERISAFE(US:AMSF)2023-07-28 18:49Financial Data and Key Metrics Changes - AMERISAFE reported net income of $15.6 million or $0.81 per diluted share for Q2 2023, an increase from $6.1 million or $0.32 per diluted share in Q2 2022 [9] - Operating net income for Q2 2023 was $14 million or $0.73 per diluted share, compared to $13.1 million or $0.68 per diluted share in the same quarter last year [9] - The company reported a combined ratio of 85.4% and a return on average equity of 18.6% [5][9] - Gross written premiums decreased by 3.7% year-over-year to $71.7 million from $74.5 million [9] Business Line Data and Key Metrics Changes - Voluntary premium decreased by 2.3% due to continued rate pressure [10] - Payroll audit and related premium adjustments decreased by $800,000 compared to Q2 2022, while stand-alone payroll audits increased by $200,000 [10] - The current accident year loss ratio remained steady at 71%, with favorable prior period development of $10.9 million [6][9] Market Data and Key Metrics Changes - The overall workers' compensation market remains profitable, with an industry-wide combined ratio below 100% [5] - AMERISAFE's policy retention rate was 93% for Q2, consistent with recent experience despite competitive pressures [6] Company Strategy and Development Direction - AMERISAFE aims to maintain strong margins in the high-hazard workers' compensation market and is focused on retaining policyholders while attracting new business [5][7] - The company is exploring partnerships with other carriers and has appointed a new Chief Sales Officer to enhance agent relationships and broaden the business pipeline [29][35] Management's Comments on Operating Environment and Future Outlook - Management noted that competitive pressures and rate declines are expected to continue, but strong payrolls may offset these challenges [6] - The company anticipates medical inflation to increase, which will be reflected in case reserves [7][32] - Management expressed confidence in the company's ability to deliver robust returns to shareholders despite market challenges [7] Other Important Information - AMERISAFE's investment portfolio reported a 19.1% increase in net investment income to $7.7 million [11] - The company declared a quarterly cash dividend of $0.34 per share for Q3 2023 [14] - Book value per share increased by 7.2% to $17.76 from $16.57 at the end of 2022 [14] Q&A Session Summary Question: Can you elaborate on wage inflation trends? - Management indicated that wage growth has moderated to around 5% in Q2 2023, down from double-digit growth in previous quarters, with construction being the largest segment showing healthy numbers [17][18] Question: What is the outlook for capital management? - Management stated that the Board actively discusses capital management and plans to continue returning capital to shareholders while seeking organic growth opportunities [21] Question: What is the audit premium for the quarter? - The audit premium for Q2 was reported at $4.8 million [22] Question: What should be expected for ceded premiums going forward? - Management confirmed that the current run rate for ceded premiums is expected to remain around $5 million to $5.5 million [24] Question: What is a good baseline for expenses going forward? - Management indicated that $20 million to $20.5 million is a good baseline for future expenses [27] Question: Any updates on partnerships or new business initiatives? - Management is still exploring partnerships and is optimistic about the new Chief Sales Officer's potential to enhance business development [29] Question: What is the anticipated tax rate going forward? - Management suggested that a tax rate of 19.5% is a reasonable expectation [34]