AMERISAFE (AMSF) 25 Apr 242024 Q1 Earnings call transcript

Good day, and welcome to the AMERISAFE 2024 First Quarter Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Ms. Kathryn Shirley, Chief Administrative Officer. Please go ahead, ma'am.

morning. Good AMERISAFE Investor the First XXXX to Call. Quarter Welcome

call the it amerisafe.com. how is you of call have earnings on to release, received not today's replay are A at If access available the Details in earnings our being recorded. be replay will available. is the on This release. website

may are the statements results differ these today's uncertainties. current expectations on our the and Factors this do we be will duty filings based results Commission and will other the call call, from factors, statements. discussed as over any in uncertainties the prove risks CEO. not to making XX-K, earnings assumptions materially are and Form be with turn subject that Exchange forward-looking expressed any the During Actual statements. release other during and in the various incorrect section Frost, the or Risk risks, results President forward-looking call underlying and statements. These implied reports AMERISAFE's of we XX-Q Janelle to to and undertake made factors including of the or assumptions and Form and and now update Securities in to I comments If

modest good and you, increases in industry continued in the compensation Thank to and morning, trends rates severity. Kathryn, decline favorable by first Workers' everyone. across frequency the quarter, spurred

decreases. multiyear wage industry growth of the rate Continued is the helping impact taper

not is as However, it as robust XXXX.

strategy record through and remain our competitive peace shareholders. a and With of We an ratio maintaining of and solid our value track giving in of our of ROE our conditions results the first these a for combined underwriting, of quarter, safety reporting backdrop, continuing as insurers had risk creating AMERISAFE XX.X%. mind services evaluating by XX.X%

wrote we were relatively policies quarter in of compared XXXX. to first the the quarter for flat Premiums

well basis we're as strong submissions increased renewal retention new Both the modest offered agent as business see a higher with engagement. policies policy for and continue in as We year-over-year first seeing retention of XX.X% quarter growth. to and buys which we on

with reported XXXX, lighter decreased Gross we Each pressure last compared slowing of from wage year, wage post-pandemic was audit premiums quarter growth is highs. X.X% first due written that primarily moderating. quarter premiums to the the as of

types the insure, For insured we to economic strength speaks that our the wage of upper growth, continue jobs classes term. single-digit near we in to see the of which

premium when national For example, we the will jobs construction lower I XXXX, than XXXX. levels in latest audit at data. continues industry looking the continue believe add to but positive report at to

accident year year for in line As losses, our with loss XX%. prior ratio was at the

favorable Our increases severity that frequency be the remain modest, as a trends similar is whole. expectation and to will will industry

handling. attributable In to years claims primarily addition, we accident $X.X of accident proactive prior favorable favorable years was due to XXXX to development on experienced development million The XXXX.

We time. potential continue care but to of nothing on at rising inflation, impact medical costs long-term this noteworthy monitor cost health the the

to that, the to With like discuss Andy the over to I'd call turn financials.

and to Janelle, you, morning good everyone. Thank

or $X.XX million of diluted or net of million $XX.X per income the share. $XX.X diluted reported net per XXXX, quarter and income For share, first AMERISAFE of operating $X.XX

premium or During favorable a or impacting share, income year the million earned combination diluted income $XX.X The diluted net year and was investment net the of $X.XX per this $XX.X net operating as quarter. income and primarily income quarter of first as $X.XX ago was well by lower XXXX, net items share. million was lower per driven

in moderating year. reached quarter million decrease compared $XX.X the in record wage which primarily million the prior quarter the were written with first levels $XX.X in was year-over-year of to XXXX. Gross premiums The due inflation,

an premium expense year first lower result increase commission a of and compared total the was with earned in in prior million quarter XX.X% resulted $XX the The with of in quarter quarter. the the Our in of ratio recognized profit-sharing in compared primarily and underwriting quarter. $XX.X from million million XXXX. were the $X.X impact This other XX.X% expenses year-ago increase favorable

our the to prior in income was compared quarter, in rate largely XX.X% proportion year. compared underwriting tax higher tax-exempt to the a the versus last For with XX.X% due income quarter of year,

to prior income reinvestment to first to the year. our despite Turning investment compared X.X% million, increased investment net the as portfolio. quarter, In rates decreased $X.X

points the the book gain X.XX% on basis of XXXX. the in were quarter with loss to during $XXX,XXX quarter our on XXXX. portfolio first investments driving For Realized points approximately portfolio yield of quarter, $XXX,XXX the to compared yield securities the sold roll-off, increased tax the first higher of the new for realized or in than equivalent XXX relation basis a XX quarter

U.S. equity portfolio is in held-to-maturity portfolio credit X.X bonds, investment portfolio XX% securities. X% carrying bond in Approximately an high of The comprised average of and our the is investments. cash with rating treasuries The and of agencies municipal composition and securities, in duration of quality, is AA- X% other years. bonds, XX% corporate a X% and in XX% of

at these or unrealized therefore, on a reflected gains not costs, As reminder, losses our held-to-maturity securities value. amortized are these securities book in carried and are

quarter sheet, cash At capital cash investment million $XXX conservative a position AMERISAFE loss Our portfolio. and roughly strong reserve solid is balance position end, with investments, carried equivalents. in high-quality and

operating And per X% topics. average equity finally, other was XX.X%. the and Book quarter, increase was to value compared share $XX.XX, an return couple of on prior of a

end, surplus million quarter statutory up $XXX.X XXXX. $XXX.X at December Our X.X% from at XX, million was

the SEC like close. Form open XX-Q Operator? And finally, the the I to call XXXX, we question-and-answer XX, tomorrow, Friday, would filing for portion. April market With that, be will after our with

first from with question Mark Hughes Truist. Instructions] [Operator take we'll And our

ELCM in quarter. the you give you have do the Janelle, that? Could

X.XX.

digits. payroll numbers you what to in you quarter is And then this alluded give growth? out of single that and to, you specific Could expect growth be the for growth upper proportion wage wage

Yes.

being that X.X%, of wage growth payroll increases then new for being Our others X.X% and was the the employees. quarter

steady what at count inflation least over the is. wage we but continue don't So from employee now, than higher have and that, see average to into extended quarters we're been many seeing visibility still the or national I hours, work new has

I think X% between is somewhere average and X%. the national

industry our little moderate higher bit expect seem So to be I groups that. somewhat during than that XXXX. a to

audit down. talked first of a we XXXX. number of premium first Yes, recall, other was about comparison quarter quarter, premium and if XXXX audit down being you This million. record were adjustments $X.X to in quarter of But

actually was first than quarter aren't that XXXX sequential. not sequential. the even Audit necessarily So of there's quarter, third premiums higher

growth maybe not same turn see to So we degree that being were to us, going we're wage starting. from which be our for think that but the wage I to said, insurers, continue pressure should do in

then slowly If the double started XXXX periods down. you of growth, tapering it harken back wage seeing right? to And digits, were we

my expectation. that's So

Who loss the trending? the that you was where got cost the NCCI, is How in dates quarter? the

at point, we've I call what most the seen state. costs -- would or through come this NCCI pretty the in the loss filings much we've they're still for of Mark, XXXX. Whether seen not, from yet It's approved effect

be So think and I we're what we we to would said we seeing. that's thought high -- digits, mid-single originally, XXXX

in somewhere it's X% around range. I X%, think that to the

all states across they the you the vary. at If certainly filings, look rate

Maine Florida lot I state, was about highest I like was a there -- Of know at think talk the Florida. think XX% of I decrease. our

X.X like around the I decrease but Virginia, think all lowest Florida like something maybe they was was have decreases. XX%. been maybe which point, And the would of highest were

Yes. the few from environment? quarters? How competitive Any would you characterize change last

this I'm real saying soft rate fluctuation just the really. competition. a Throughout didn't see were in as decreases not cycle, approved, we

what to very share. competitive, it's So right? capital companies bad, trying out But or would really nor I decreases. we market enter rate showing obviously, space, seen good really think haven't the there I have everyone new is buy call because seen we

good has pretty I as been for discipline whole. industry think the the a

cost think how in a decreases there's concern over industry I talked because magnitude has medical course, I inflation. as been I just continue calls there's part, years. there's concern about number the then, of do many rate profitable. of think of recently long them In because we've a everyone can of always, the amongst over a And is think these

it those but unchanging a add things competitive for you all terms in makes or So bad. together, of good it's marketplace,

the or losses final then how in question, And Yes. many quarter? any large

X think reported. Last is recall, quarter million And we same was if claims with X. $X excess We thing of first you which X. the had year I quarter, in the we the in ended

But I like no indication happen. quarter. as claims remind is to a quarters always the of in this I X business. just those what types everyone, as So have lumpy to

quarter? you stock back Did in any the buy

not. did We

Matt Our next come question JMP. Instructions] from Carletti with will [Operator Citizens

you of in you a I engagement. focus of kind -- of that's that late. -- there a think I obviously into what's caught what efforts hoping little a your I but you're for was dig recently, results update of of and happening you opening about have Janelle, bit seeing. on us I kind just a been and know agent made could made lot higher And comment script you kind

there's Yes. you for that to to the environment, Because are that's level we is our this terms relationships the other in knew rate what evil agent just we AMERISAFE efforts now, rate for find lines face about -- customers are this with In business. not regard. those just to particularly that of something do agents making necessary were rate remembering are in Thank this out Mark, America about a at of needed in new business. accounts we particularly when at decreases. order in opportunities right agents Shopping point, rate getting of competition having in there, talking we things

that priority So of renewal. workers' when time falls sort it for comes compensation off list

them to consider for to had find we AMERISAFE. So ways

what our safety value So what is AMERISAFE proposition with claims just agents, is, and reinforcing of services. with and our appetite the our particularly

that that the the for to client I be agent. a can source Our point how think that record. a over steady the we agent's of and focus track that time, hazard we've that serves and high in we the to discipline longevity had long We period classes, point

ourselves, of but and sort reintroducing the only our offer. really do we So appetite that say focusing in things not on

AMERISAFE. very markets the comes that's go account to think an and I where trucking." like rest us maybe with of we agents, gas you I us, my comfortable about. account But when they about oil think -- of a and I for or "Oh, say, don't comes our get lumber know That's

do mid-sized while hazard get we just regard. lost have we those agents so the that relationships are that I we a have, sometimes small those high and think niche, employers, shuffle do with we in to in And reinforcing do and

our I'm right same developing So account underwriting and on our safety so relationships and been our the of the business proud that and terms of and opportunities have can offers. conversations continually salesforce just in get possibly what AMERISAFE they have reminding accounts force books of agent or with force very renewing those them

which quarter, this the in were see. when So in remaining the we did we business that you strong see new renewals rate pressure in there. there's though happy premium regard, dollars, environment, at to increase Even certainly look

policy business we because were of count some we that So efforts have. of the to new grow able

Perfect. kind and of maybe special a That's kind that question in of higher just for balance going then more Or onetime Andy, your any little so out really Is a income on opening in obviously, contributing to for just period that? a of comments mentioned about items is is little. maybe yields, a there short time? despite the there lower a you investment paid helpful. you numbers dipped And Andy.

good But of the dividend. purely the all, of first Matt, decreased because asset you. base special it's to morning

with Hughes We a Mark Instructions] from now [Operator Truist. will take follow-up

my robust Janelle, as that? you not What Was had opening engaged, brain that wage comments that some before made pressure XXXX. was something got [indiscernible]? in in as was about your comment you're you

believe future if quarters It fact you simply coming it It increases the going those was audit wage growth wage premium. was. payroll coming or look we in for XXXX into which or was quarters, we mentioning, as XXXX, that, at double-digit was, Mark, through even I had bodes

less higher now the to look national with So seeing tapered but the we second quarters number very of XXXX, at you X%, in what the than average, So than quarter quarter. down robust, that previous were X.X%, of starting X.X%, X.X%,

future that positive remain be will and do at not while to audit it indicative look as robust say So think that be going that's if number, strong you premium, XXXX. of I as it's a and

look I slowly comments, true opening that has my do true workers' employers at not comp, has experiencing the it's it's AMERISAFE, down that across taper I were believe I even only think wage in time. industry, numbers, started the you believe pressure that think to and I said over come feeling national for if I number

If gauge that you a I for true. same premium, use think as audit that being

did number, for a quarter it was record AMERISAFE, first a very I was a $X over XXXX decrease. quarter strong about, ours XXXX, first However, as comparison number, was to talking million. again in show for of which But

or XX.X%. year-over-year underwriting of impact ratio run level commission. Or expense rate? is anything? the profit-sharing expense, But skewed that on by There's of that ratio, the reasonable Andy, a is expense Understood. this XX.X% that a is

would say, XX%. no, the we in But XX% first you. anywhere morning to we the and between I good normally No, are Mark, of I all, the are range think where

there nothing the XX.X% that by from is I last commission. is profit the year X.X% And so think due skewed. the favorably Again, came for depressed

And no the it Ms. appears conference to further this Janelle over like there for turn Frost time. closing are at questions back to I'd comments.

cycle. robust to the injured small businesses workers conditions, providing a protection market to strong for and returns their of delivering AMERISAFE's has focus on record shareholders for our caring challenging Despite throughout track midsized by retention

you continued joining first quarter the demonstrated strategy. of today. us our The Thank for success

conference. And does all for participation. once that thank again, conclude your We you today's

disconnect. now may You