AMERISAFE (AMSF) 30 Jul 242024 Q2 Earnings call transcript

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

Good morning. XXXX Investor AMERISAFE's the to Second 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

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

is the year in good long-term NCCI you, May combined despite compensation market in was a cost one An critical below continued state competitive to Thank accident remains and morning, loss to underwriting declines. reserves profitability. by of AMERISAFE's similar few last translate approved Kathryn, disciplined we've to which and conditions profitable years. data industry-wide rate ratio XXX redundant The These driving everyone. marketplace, the over seen published workers' softening. what The

premiums engagement growth investment saw growth we count have We policy written drove and gross of quarters, year-over-year greater agent several our in in X.X% quarter. efficiency. These actions premium the supported and boost line. policies offer also pipeline For would profitable discussed with by for Audit a quarter, for to wage see to we renewal the XX.X% in we which retention. inflation growth continue top strong through retention

losses. to Turning

year XX%. remain was line line accident the loss cost trends quarters. with year previous with at Our in in ratio prior Loss

to to continue inflation. -- continue monitor We see medical

However, fee from experienced million The and years development XXXX. XXXX, on $X.X years, favorable in containing general accident company in costs. prior schedules accident medical are primarily 'XX

We to claim and cycle. With AMERISAFE's attribute discuss claims conditions, record protection that, and call Despite market focus workers the to I'll a track favorable Andy our retention small on their development shareholders providing to financials. throughout businesses midsized to severities the lower of proactive to caring strong robust turn returns challenging the for has delivering to and handling. over

and everyone. you, morning Thank to Janelle, good

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

$XX.X a income the During $XX.X combination in with of was with by increased million per quarter business the by per was agents, $X.X were top $X.XX XXXX. $X.X of new drove of which of the in premiums line increased compared the or premiums second compared share second retentions. Audit net income net $XX.X diluted million quarter driven million top strong line efforts the increase in sales in increased was quarter million The with and XXXX. or diluted $XX XXXX, Gross and second quarter million written share. the million $X.XX operating

with the XX.X% year. underwriting quarter compared the total in expenses in $XX in XX.X% in compared ratio an million million XXXX, quarter of were the $XX.X prior expense of other with Our and second resulting

We in market continue leveraging disciplined attractive AMERISAFE's business, advantage to approach our invest take of to opportunities.

year. to XX.X% was in the tax our rate quarter, For compared prior the XX%

consecutive quarter versus QX the second to base a for the to On of investment X.X% $X.X versus increased net lower million decreased net our to basis, quarter, portfolio. a income XXXX. income XXXX asset Turning investment due QX In prior X.X% investment of year.

basis or to second approximately of the higher new increased investments basis in points than yield on relation X.XX% XX to yield roll quarter quarter, points tax XXXX. off, the the For XXX equivalent driving book our

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

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

X, high-quality Our million capital AMERISAFE $XXX on The in equivalents. with portfolio. reserve of of XXXX. cash a Directors and investments, declared conservative cash record September share At per Board Friday, investment and July is position company's strong end, quarterly dividend loss roughly regular cash of carried a position shareholders XXXX, of balance solid to sheet, $X.XX quarter XX,

share couple Book $XX.XX and average per equity And XX.X%. topics. on was other return finally, of value was a operating

the Our statutory quarter December XX-Q like Operator? million up July open Form with SEC after I the XXXX. finally, million portion we from call. close. With $XXX.X And filing the XX, $XXX.X to XX, at that, end, market our surplus today, call XXXX, question-and-answer would was at the XX.X% will of for be

Matt And with Instructions] question is Citizens first from coming Carletti JMP. our [Operator

the press growth. you've relationships. I it hoping I'm us referenced investments nicely. release bit hoping I ] opening give the your was of you I in can and was expand comments more you about noted the Janelle The made color, on comment Yes, could [ the you I agency know a little in recent of little grew efforts question, just PIF made in some maybe voluntary guess first growth kind mean, a a my quarter. maybe

ability Just kind of forward? forward build about how as that you or that the sustainability to of move the feel kind of we going

want of either This premium Matt. quarter, flat. slight I fourth voluntary our growth debt say Certainly, is to relatively are in

on the more to in efficient, our effort a ease have of business on those that's terms employees building and concerted and of relationships. and trying agents made our with So pipeline something make doing agent with we just that

a our efforts. It's to and It's efficiencies creating some just employee really I those at So AMERISAFE's really about all. there business like momentum relationships. feel not change the valuing do we're in through approach gaining

So growth. I pretty the feel good about

debt of last We've absolutely the We've I X.X% had in the You're grown quarters. growth voluntary for X quarter. right. policy count, believe,

we're us. are growth to those all So are generating signs there the that efforts business pointing in putting for place

could. then there's One questions, of if ELCM Wonderful. what And the is couple quarter? I in the was a numbers

X.XX.

potential of audit okay. to premium an of this was on X.XX, audit get just of kind comparison premium, quarter. do And have then quarter third the handy 'XX what you idea

Exactly.

$X.X was year last million. quarter Third

Second was $X.X million. quarter

question coming Our is with Mark next Truist. Hughes from

had I a heard if but like think result Janelle, year-over-year, that's a think the I for sounds the you that's then quite properly, first I XQ, scrolling number, while. in which flat positive still X.XX, still it up scrolling, you

or remind an Mark. I when we others ELCM, cost. think that's have underlying I that right, really the that's mean I index myself over Yes, the really like remind loss when to report I to and

account, coming So profitably. we sure continue doing as Because we decline. make all cost, of underwrite rates loss so individually underlying we to the that are have every to we out know, states the the approved

industry, the as right And now, accident battling look there. whole, so carrier industry while just is XXX, we're year to the there as combined continue every we at year, -- you soften. that below other rates fact for for ratios some we're -- The if like deterioration a the results each

are So just reaching we I where -- that. we protective of to point have like that be very

Any they're the details quarter loss Any on down. Obviously, Yes. approved trend noting? costs. data the in worth Right. new state of is

somewhere cost for to decrease loss the filings. approved the for No. The X% around overall is X% XXXX year

that's predicting. is because accident this -- much course year even on the the is industry XXX% on point, So what combined. -- and NCCI I think was basis, industry at pretty below Again, with an

or the Yes. the that's kind medical The that. going fee suppression continue lid that talked that mean think just ever rate separate? restrain to might there to say? on to you'll structures to any of going to I keep and about continue reason Is inflation from government not benefit ever a schedules the one -- it you is fee

believe I Mark, to actually that's pressure. going we're see where

opinion, of schedules on workers' types compensation. I services, humble pressure hits case operating in from may will what about be, road But the be, most part, some whatever of the there. surgeons, referring of their models. to reimbursed reimbursed I costs. pressure the opinion it's providers, in For hospitals, doing terms believe and particularly provider for and -- the And what certain pressure are in their is what will terms fact fee in fits that my the in continue talk being have compensation for workers' there within that's there the job are point, to actually be eye physicians, do my they're being I'm been our side containing when rubber keeping medical own There at whether there what of inflation, we're

Does less in ELCM, around. does you're that I reflect the little Yes. competition? a the uptick being disciplined know

reflect a competition. still It it less I No, marketplace. does competitive is not wish. very

claims? the Yes. X And through large How have then anything trended the months? on they

Through the X months, over $X X million. claims we are at

in that -- is had number, going at to what happen. that, quarters point, haven't But -- terms never million-dollar or out to I going not we to I that every is frequency So is lumpy. of I happen severity of throw I again, that's are have time have a know to caution claims. this

-- on And Anything it little the was you Yes. quarters. but why this performing more very of simplistic bit sort lower would deed a you guys still in an couple a as going stellar to that bit compared no development, even performance was quarter years? of unpunished, reserve so recent down the say from then from last to are just tremendously, perspective, a little

Yes. from of Reserve claims favorable the for you I development the and favorable your has be that $X truly of philosophy practices intimately balk recognize the cases. coming million that reserve [ we assure happen. likely development, to -- individual and goes do which not a and last development, survivability the claims than about those year. I quarter of least the reflecting you me had adjusters second pulse can procedures our development have at in I the changed. point, lack is a is outcome their from to claims healthy it quarters AMERISAFE's of development very have that. I even inflation that hard that phrased million of what on know reserves, finger when reserve number. and how the for favorable going in less often consider AMERISAFE, certainly not is not at way linear, is to I reserving or our my we to they can't ] feel predict case $XX.X standpoint, they are like And way It's that talk we like right? their still I a because their better term, and we in -- terms that. of the truly their for happening most believe are what's into assumed though,

opportunities So us, the changed. that so move injured I and believe that when philosophy to case don't to not we that their favorable my resulted and those find into taking help for we has return of, development. work an that built I care And pattern, see has have medical in at reserves least, that's care find on opportunities. worker

today? Understood. And about times stand construction job, but years, about over the the we've the next end talked does many I question how think market, that then about how the

it, We're industry groups. insurance are wage working. having premium. within our inflation this Our have we experiencing why favorable Hence, still we're audit

inflation employees. For new from the all X% X%, increased came that was of less wages, quarter, wage from almost so around really

that's -- been So very consistent. and

doesn't they're a small up. employees So -- insured me, new the large employers. fact influx obviously not are seeing working wages given mid-sized and going we that payrolls really But that and we're of ensure surprise payroll to

for our So industry positively I think groups. that speaks

next Instructions] James. coming [Operator from with question Gregory Raymond is Peters Our

last points. I was ratio looking the year little basis the bit, it's on XX result at and a months expense X say, versus up

going on driving expense there's that's higher? curious structural Just ratio if that anything

what just really the that house. you're for based expenses sales front that is of annual are these in level the and now to range back it for then in assume and on X growth But linear in the The investing the we never be expenses X an then should for a the side ratio. in us either, investment further again, is underwriting, more months, the is expense just probably upfront fact the off seeing first months

X then been color growth there just is with maybe consecutive where back want you the the comment quarters. but you, some coming from? Janelle, And comment. last pivoting certain geographies? certain call, concentrated don't policy has on been positive you I to count thought distribution Okay. in misquote has to I growth give on the the or said Or growth the for can partners us the

answer coming Yes. not no. distribution Great It's particular is And the question. from network. a

we And that's we're As the making that really agents hasn't business changed. mentioned right you look down. pipeline best. agents really probably as that we're can serve Actually, doing if we at working and know, I the on slightly agent sure earlier, agents count, our independent with use you that efficiency, they're because,

our anything that doing to of our So And that's being what to opportunities -- thing doing. bit trying we're the call, of way handling back which things agents really better wouldn't of I of because ease I'm and we going a just point agency -- we I has groups an it's about to or to been things have industry making have. The say particular in agency nothing attribute type we and to saying for making it's it goes I industry particular certain a growth make in been the at the very to mentioned, what a new particular count, -- most business, It's policy I state. efforts not is it's us. we're earlier those efficient around this turn was employees, for distribution. positive able And policy group, time but It's just to sure it's pipeline that really of is been, our or just to your it's are grow not we relationships. AMERISAFE that more the the guess, giving efficiency, the not the terms not little quotes

some to going that raised previous you schedules couple calls, fact in question I'm come rate on severity other conference it beginning the of year schedules, next the answers, were come Florida but calls. a addressing up in the And at your reimbursement again. its the reimbursement other concept, I that's Medicare has of know

what how just I'm or look forward, so are you your And think is on curious, what outlook gauging severity? out we as you measuring about,

yes. -- That's Right.

charges seems talking So physician Because we're of exactly wow, for made Those increases, percentage couple the adjustments at things that. kinds to Florida top you both certainly and I significant. they've when everyone that mentioned things the everyone pretty things procedures, talking inflation be about medical about. a when about. eyes mind about keeping because believe earlier is think, of things that's that two to surgical look the is I are the of that and and was that our I talking kinds we're that's on of you

state have well. of to on have you each keep large Now mind one percentages, in networks within things when that at the the look you do do we is as costs that that containing work

rate for has So even to it's services. oh, in XXX% from XXX% -- not XXX% the dollar reimbursement terms, gone physician for dollar up

that type have top things. mechanisms our within on of mind those provider that of networks keep to other we have in and also savings We cost

dollar. So it's for not dollar

that's one caveat. So

second we're because they're in focused compensation think and using so my case happening their states fields, claims their experts beauties how of reserves really The I AMERISAFE in of one and they the to I what's really a an reserve this initial reflecting works Florida as to I'll our really, example wholly workers' on attuned very severity we that and a, our carrier, individual -- say think adjusters is are quickly. in are of monoline the example, and Florida about think because efficiently reserving, speaks how model thing terms

experience. of accident question. as to AMERISAFE's it's your costs terms also out time of a answer taking in initial we're the in our in very -- our into when of a So that in period account of important Florida in pricing long our keep it to whenever That building that in and underwriting to severity us That's loss into severity But not our loss mind, reserves loss the account, live and then our long terms a case happens. over ratio. we're that helps We're not all are reflecting real playing of rates. recognition individual terms was because we that us

question is with And coming Bob final our from Farnam Janney.

to would to question. what loss look got keep up of out? a for of philosophical to lag filings bottom thinking more how wondering condition the and is a to there much And is what's start it actual going raising have like rates? of the loss the cost with the actual I'm to need they And I've catch market be I'm or take going cost down. going the

question. Great Yes.

not going it help, ratio rate these will in -- industry bleeding and your least, what's for there's a when to example eventually will what take? happens as again, that actually up and change that going out terms the then NCCI each to that costs like it's combined because only cost what's earlier cycle accident changes the the in decreases filings. I'll an XXX, be tick mentioned I rate on years year make they filing law a those using if can continuing because a profitable. To major state as about industry. So of I believe, state. the and try typically slow going to Florida to own has accident rate example, like And an As a considered will from break even point at dates, filing NCCI off their using take Florida, normal use figure and

of aware their needs law to rate, what be in pricing. that So the carrier when should reflect immediately reflected is trying But happen. in other words, something theoretically it, in happens the they change start and to that in a that is

ELCM. hence, their So in

wouldn't change I cost, an little the tricky. as own Florida, a that loss if then administrative Florida example, would would state, carriers is so try assume at an their of underlying all, anything use to, within let's within Florida pricing, course, forget So it's pricing

methods, to own that me be paying way, try to their the their let going pressure sure happen. that side. out more make of hopefully they're to fact it declines to I the loss dollars, that are the premium competitive even that, will because through or so building those more decline into that out the flatten cost more going examples see believe we're they're approved in think But of continue just costs will use on loss and to rate slow and continue, pressures going I that which

the to I an something know less model to shortage going don't what, going you going for by want a reason either that, than adjustment very have providers. be they're achieve. to profit which to some other workers' or for earlier, compensation of compensation For that margin was your speaking if there's physicians the to getting have say, In of operating reimbursed patients there's be they they're pricing. workers' they're trying a have to words, I And

Right.

So it to cost fact there like, kind that pressure to you'd some with just of I go loss just if of that your and that even it's getting willing fact down, choose because sounds away point this rates the happy example, the costs quarter, Is retention taking mean are raising you rate increased, to ELCM you keep your there. that yes, elsewhere? more customers for going are go despite be a loss

know if don't to -- you great I strong look because ratios to loss retention retention account. would you rephrase because question. a We've low better about go? it. let well, loss I loss than the only know experience really that's had I simply -- way not providing think accounts. new we services try you case, account If how quick have and we've great really you And a typically, AMERISAFE a That's always that better or that, at numbers would really on then on know do safety the account ratios loss renewal we experience, account been the you my to

towards attitude is. safety their what know we So

profitable to retention attention, retention? do above and level, underwrite the at we about us. but that's have to write a say we Yes, test profit we extremely I hey, underwriting do when things. Do other something to we is we pay important our market going So all affect know, think or will --

Right. want start rates your And I'm dragging I don't selection well. start adverse not to saying significantly. an as in raising there you should

to curious, So your it's just retention ELCM it make something that, where you is. your tweak to sure just up. hopefully stays just was as I start I want

one -- term, ways, And has Absolutely. is loss making but to on of that starting And If I a of I the in it's bridge consider little at. X% say rates, basis little we they're things and rate year acted strong now, wages, other have inflation employees, the but fact a to sort to still terms is the the that, wage help lack have I'll nothing you been this higher approved about for some of right? over balk thing same for cost that's the I've don't about Bob, it's talked of really premium. Absolutely. and has really think declines. in bit, as this a have effectively better a It's the bit wane of call, gap the

There are closing Janelle to turn further I Frost, or questions the no conference any time. will additional for over this CEO, remarks. now at

companies year. hazard to thank the for stability compensation This and the to to recognition expertise use and Ward's underlies highlight for inclusion consecutive financial XX in you today. for casualty team I'd top-performing property high strength XXth us stakeholders. the to joining AMERISAFE their AMERISAFE's employees' and niche the Congratulations ability workers' like produce in our company's

for participation. This call. Thank today's your concludes you

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