AMERISAFE(US:AMSF)2024-04-25 18:42Financial Data and Key Metrics Changes - AMERISAFE reported net income of $16.9 million or $0.88 per diluted share for Q1 2024, compared to $17.3 million or $0.90 per diluted share in Q1 2023, indicating a decrease in net income primarily due to lower earned premium and net investment income [9][10] - The combined ratio for the quarter was 87.3%, and the return on equity (ROE) was 22.8% [6] - Gross written premiums decreased by 2.9% year-over-year to $80.1 million from $82.5 million in Q1 2023 [9][10] - Total underwriting and other expenses increased to $18.7 million, resulting in an expense ratio of 27.3%, up from 24.5% in the prior year [10] Business Line Data and Key Metrics Changes - Premiums for policies written in the quarter were relatively flat compared to Q1 2023, with a strong retention rate of 94.9% [6] - New business submissions and bonds increased year-over-year, reflecting higher agent engagement [7] - The accident year loss ratio remained consistent at 71%, with $8.6 million of favorable development on prior accident years attributed to proactive claims handling [8] Market Data and Key Metrics Changes - Workers' compensation rates across the industry continued to decline in Q1 2024, influenced by favorable frequency trends and modest increases in severity [6] - Payroll growth for the quarter was reported at 7.6%, with wage increases accounting for 6.4% of that growth [15] - The National Council on Compensation Insurance (NCCI) indicated approved loss costs for 2024 are trending in the 7% to 8% range [18] Company Strategy and Industry Competition - AMERISAFE's strategy focuses on evaluating risk through safety services and underwriting, maintaining competitiveness in a declining rate environment [6] - The competitive landscape remains stable, with no significant new capital entering the market, and companies are not aggressively pursuing market share despite rate decreases [20] - The company emphasizes the importance of agent relationships to capture new business opportunities in a competitive market [24][25] Management's Comments on Operating Environment and Future Outlook - Management noted that while wage growth is still positive, it is not as robust as in 2023, and they expect this trend to moderate throughout 2024 [15][30] - Concerns about the sustainability of rate decreases and medical cost inflation were highlighted as ongoing challenges for the industry [20] - The company remains optimistic about its ability to deliver strong returns to shareholders despite challenging market conditions [35] Other Important Information - The investment portfolio's net investment income decreased by 0.9% to $7.4 million, with a tax-equivalent book yield of 3.75% [11][12] - Book value per share increased by 3% to $15.74, and the statutory surplus rose to $270.5 million, up 6.1% from the previous quarter [13] Q&A Session Summary Question: What was the ELCM for the quarter? - The ELCM was reported at $144 [14] Question: Can you provide specific numbers for payroll growth and wage growth? - Payroll growth was 7.6%, with 6.4% attributed to wage increases [15] Question: How is the competitive environment characterized? - The competitive environment remains unchanged, with no new capital entering the space and companies maintaining discipline despite rate decreases [20] Question: Were there any large losses in the quarter? - There were two claims in excess of $1 million, consistent with the previous year [22] Question: Did the company buy back any stock in the quarter? - The company did not engage in stock buybacks during the quarter [22] Question: What contributed to the decrease in investment income despite higher yields? - The decrease was attributed to asset-based decreases due to a special dividend [28]