AMERISAFE (AMSF) 24 Oct 242024 Q3 Earnings call transcript

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

Good morning. Welcome to the AMERISAFE's 2024 Third Quarter Investor Call.

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

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

Kathryn, you, and everyone. good Thank morning,

been and compensation different. competitive declines We AMERISAFE's response profitability. a results, declining no moderate quarterly severity marketplace frequency, in industry AMERISAFE's workers' industry-wide rates have driven wages. particularly are to The trends has benefited by multiyear in financial with pleased from growing and

our position discipline, to sheet and However, and for shareholders. to argue throughout underwriting stabilities which history better returns AMERISAFE cycles, and our brings would and I our agents nature strong market specialist consistent value of policyholders a balance the

addition of reflects X, shareholders our a excellence regular dividend shareholder $X.XX. of our long-term of commitment The is XXXX. special quarterly This As record dividend of Directors dividend in Board dividend $X special declared such, returns. to to and of operational special for December as our

profitability growth. our is strength capital by targeted profitable strategic created on centered current achieving and long-term our Our priorities

in momentum and line maintained to we top similar second, the terms This performance. of have positive quarter, production

have the employee-led we our wins. efficiencies success And in our For few our we spoken about Working over ability are policies with goes, experience. without quarters to quarter, over success. breeds written internal X.X% premium the collaboration, and and of agent enhance as grew saying quarter. I last Through creating initiatives effectiveness third the agents agent engagement year's last are strong appetite, new among add to seeing competition. and changing improving business the incrementally

with led of coupled New growth, a growth in-force of and higher policy X.X%. business retention to count premium renewal XX.X% gross written strong

additive off to that growth contribution While inflation the premiums premiums period remain wage are last moderating their within and to is earned, compared we insure. industries Payroll positive audit the leveling same and year.

To ratio XXXX. years, to Regarding management the the I prior consistent and accident XX.X industry schedules. loss for with also will financial quarter through see efforts. I metrics. expenses, now growth the the in pleased premium stemming favorable favorable in development from continued case years we turn experience summarize, on over in other accident investments favorable XXXX to claims our loss are Andy call through to company losses, significant development to our and the remain of discuss fee The was trends That accident threat year we at current trends said, million believe and not any last saw stable. noted changes. medical cost are have inflation being XX%. Loss loss viability year current the

to and everyone. Janelle, you, morning good Thank

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

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

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

growth As our quarterly in to outlays ratio expense fluctuations. to continue earned we leading in expense business, premiums, proceed invest may

However, ratio within to be ranges. we expect expense year our full historical

$X.X in released During reserves the from XX.X% of loss years year through quarter, favorable ratio our claims development drove points. XXXX better-than-expected resulting exiting or prior outcomes, These primarily million handling practices XXXX. were

quarter, the the with XX.X%, rate year. was line in prior tax our For

second Turning $X.X income net to increased to investment investment In partially portfolio. decreased the rates. portfolio the to the due offset million reduced quarter, reinvestment X.X% size, by

of is minus years. is investments. carrying equivalent on increased investments X% in in high and in XXXX. The in of driving points the tax a quarter basis The our XX% is the market million duration X X.XX% due securities securities quarter, X.X basis composition a loss equity bonds, of in quarter portfolio third in portfolio For of the U.S. yield rating of the with an AA of of relation municipal comprised returns Net credit securities. for other book quality, third portfolio investment held-to-maturity and XX% the bond X% treasuries bonds, the and to prior agencies, X% Approximately strong to equity XX% million quarter unrealized cash average to portfolio off, corporate in compared XXXX. equity yield in $X.X new approximately $X.X our and XXX than gains roll unrealized or to was points an

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

equivalents. A solid couple on cash per average $XX.XX is of XX.X%. and operating carried with At was conservative roughly strong other position value in investments, was position and end, reserve topics. quarter high-quality capital portfolio. sheet, equity Book a Our return million investment and balance loss cash AMERISAFE share $XXX

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

price per question-and-answer an $XX.XX SEC initial share would $XX.XX an total the call. open roughly $XX for a repurchase to total have that, shares average cost average we for quarter, repurchased at of $X repurchased our of X.X Operator? the share million. the I we Friday, market finally, a were XXXX, XXXX, of Since XX-Q filing And the of be close. With call During of the shares million like will the program the portion XX, million. inception with October Form in roughly at for XX,XXX after of

Citizens to Matt JMP. with [Operator Instructions] We'll first go Carletti

growth. idea so Can us But wants a an hoping making the few Can line. still acceleration -- maybe of you're top obviously, quarters there? perspective give high-level talked imagine mean, I'd level. getting with just inning agency helpful. a would a there's you could several the you're quarters the been a in little you of I I going for I particularly year only mean, over I at of start any the do. kind nice to the now, was voluntary Janelle, be for I and efforts what he lot he's you've sort ago, Ray about joined a kind underlying of know what

that ways considerable efforts to really we Absolutely. ourselves respond Matt, better in. find internally comp have find this to we done environment to workers'

things. the few of agent you process as about engagement, agent how our tremendous just of a a mentioned. last focus, underwriting it amount the talked and We've have quarters about number we're our our effectiveness experience, in and terms We handling of of over our time

thing think I of that the employee-led I'm is an it's most really proud initiative.

much how comment is and So there in opening about success used from success. that that, breeds regard I related remarks to trajectory talking about my the

want us be underwriting builds very wins, discipline clear about the surrounds I I get think to as but we that these that. momentum for the

efficient. trying are to We be more

same We are more at the effective changing attempting not be time appetite. to our

you still I that working our about AMERISAFE and all things place effectively, think our even working and of are discipline the would for things about argue underwriting of still effectively us. and when in safety, more think you pre-quote and those maybe All

XX%. bit still And appetite that at those If importantly, north engage effectively well Those just a to of things we differently. ways clarifying you are our with pre-quote it's finding so our agents. agents happening. working still are little look our We're more number,

understand appropriate price the that types we the accounts business and to can of we types of they underwrite get want like for. the that So we feel

I So show those to combination of a all the in that things. we're of think numbers it's that it's I starting line releasing publicly. top love

but for number numbers a filling I now, coming quarters nice it report we've of in the think to small to fruition publicly. that see it's internally, we those wins been

nuance top Great. That's line, but maybe helpful. the staying of a in on weeds. Kind little more super

you of couple of Georgia, and And your Carolina, of sort footprint occurred have work have benefit is right I that hurricanes X, place I the efforts about past book. from take as and in Florida that events? reconstruction that think top look North your exposure kind in tend of the past what to the seen your Like, months, I construction, states, X half at see all of constructions, XX% the XX, book, kind in you to activity? thinking As footprint am

Yes.

thought out, a understand. mean, We quick a Matt. feels perspective, on, like could for a what Obviously, quick our us. Louisiana, for know we From us boost hope -- in a to Southeastern And you're people. think your those recovery. is very feel I our it the us. point, We for much for first being business and book, trucking, construction, right We overall footprint those a to that business important. in somewhat like getting we recovery and there of our somewhat would be of beneficial very mix is be could is of materials think, I lot

Great. quarter, the my for question. lastly, numbers ELCM the Do And you just have typical Andy? then

I the XXX quarter. is do. for the ELCM

on quarter. that Congrats

go next Hughes Mark We'll Instructions] to with Truist. [Operator

the while, something like have this Why momentum, to about environment, engagement talking building uptick ask for the but seemed way. new this on step led steps you question up. that I'll in some there a the Was you've implemented some this Janelle, seen now another the been market another that broader quarter? you

level love year quite quite our believe agents. a marketplace. in been I have out not that positioning that Yes. being to been going is has what count love really the answer incremental work a it's is see for to top important And extremely achieve our to growth. that case. talked this. Matt, and able it growth, the little ourselves question. to I'd on we're say for as yes, best about always starting focused us competition the we a differently priority Again, with competition is our trying reinforcing I trying Unfortunately, we're always But to been internally, strategic would quite strong, gain The We've efforts and still AMERISAFE that in policy policy over line small these changed. trying real I I count to figure what I being is is we've the -- that to I has level we're say, on ground, strong. now. appetite adding has with while say, how bit -- little a that intense. for now. I'll our believe retention focus here.

This quarter, dollars. premium And look XX.X%. that's -- our at you if premium is that dollars, XX% of

up to lacking a business like to Where we put how where important felt incremental extremely were year the forth on now, were build at we least for that's business do this side, and we So talked retention. new effort lacking, could where help renewal add felt new I've I I was a we that about better us. like

a getting agents. top blocking It's difference, it's bullet. line not making think some a we're and a -- is there. the tackling, our It achieving difference success silver small we're say and making but the would with it's I well,

hazard Is there markets some haven't underwriting. sizes your finding say responding engagement there customer is you classes initiative? -- are are -- to you or certain this better or appetite that that or there changed you Are end

use that's look mentioned If Yes, before so Hazard I question. really an so call. you good actually hazard a I'll as classes that A at business, the looking G. classes, again, right example. through our I was of mix

at between overall if those percentage F E, G that in-force in of our our today to that And back look years, is it the is -- XX% in we at count today, it XX% policy and in If policy our book was over not at count, you is That It's E, F look and then. G. of somewhere true X/XX. hover XX% XX was true last classes. still of classes XX% I in-force true and

groups, So writing same that we're from business. aspect, of still the same hazard classes

from at This look varied and We at percentages lot. book And veered construction you in of haven't lumber. comes much. our you that or trucking look how logging the a haven't if much XX-K or

was really from, necessarily slightly, premium our wages but I shifted have business, policy coming I mix that which is count so ever are where of some of proxy. the is using think dollars the not why as

So any particular that achieving know more success than I we policy don't previously. were we're in group

I about think it. we're just more effective being

Yes.

the maybe nuance to in your in that obviously brokers are involves that bundle Okay. the there issue engagement of package you giving Any -- the multiliner of more you seen package monoline? any monoline, comp do But business. writers your have assume see changes open I the versus some evolution comp question you that whereas

I that, Mark, globally, the say would is to no. answer probably

really it. We haven't seen

pull value AMERISAFE. carriers away is proposition sort of packaged seen comp. the haven't of We selling from we're What

their out and an to Our of markets safety that our agent, we fact those for we're stability and in not claim stability services, services, clients. adding add the we're

really win going to comp particular an naive to to they perspective, they us. are it's right liability, I'm not is place they're mind that for an their true. they're that commercial back happening rise auto. is. And coming extremely because do door, right, on service focused kind, has usually to clients It we're P&C think certainly if they're the -- it's And little a the think going of unless really we not really what's top. probably other going I top important the But we I impactful are when agents AMERISAFE, some from bringing from their think in kind. the client that's place property, appetite, a an some our where a of because issue of to not bit place agents where issue are lines perspective, where the refining now most had to their going understanding commercial to had Workers' where in agent with

them sure understand extremely and that we're important. agents appetite for making is remaining top So our that of mind

standpoint, hasn't I yet. I haven't but However, marketplace shift from it haven't competition yet. I that a seen a -- hopeful, the really would happen in seen say Still happen

a in Yes. there's more. I keep Janelle. back couple I or if queue in I should line can had anybody the of going, get else

Mark. going, Keep

Okay.

inflation, You yet, you maybe the the I mentioned inflation, the medical schedules, you're any of change medical not on risk notice think seeing based fee current said of any the viability does in where the even go seen you that a rails. Is Have -- past, And breakdown to the yet. change yes. in it possible? is schedules, the off fee it start not

call, -- look effective Last Right. quarter, should through I for into we regards built seen call come for the earnings into to so rate in changes hasn't -- Florida touched some I briefly the believe believe we in it the in quarter, X/X/XXXX, had which on physicians. earnings year, rates I rate and -- it's next That should be we last Florida back, Florida. next surgeries going reimbursement yet. haven't

rate XX% had So a like for Florida you -- that if because fingers decline Florida recall, crossed XXXX.

will -- reflected policy the change into for in the fee So changes XXXX for Florida hopefully, rate going those year. be

example or into build rate state -- think, Typically, date, there it's be just have on the law filing. rate Otherwise, legislatures, the through into the an schedule that's of, benefits something they'll for they'll there's depending of an a a effective if rate. a built if change only So like come it expansion that that fee will change. filing a major I was

the there to seeing states, be others. Florida cost are approved or will will provider any that the changes attention know from the quarter. that interesting cost it when don't the one is through happening, yet So with everyone's as we loss larger pressure side. in coming any the are ones see caught come of XXXX. Loss changes to but last I start of going if think I

back So with P&C the changes saying, not Florida, line. that's broader when are I'll pushing adequate use rates When my our the -- for example. back as happen. Harkening and reimbursement, to these providers start typically the

of we've catastrophes of know the workers' don't top all I I the departments because marketplace things insurance of this, other the is the priority comp say of and terms on happening not that seen right comp rates that now think being regard. in to business, lines of the list from in will impact I the However, any workers' top probably and

anticipate major popped radar. don't that I least on at changes, any my So up

Yes. to the me. schedules Correct tied are government of fee that A lot I don't know reimbursement. going... they're

You're correct.

You're correct.

But change direction [indiscernible]. to they're be going or so

I and of think X% coming out the those latest schedules. was between X%

it, driving that's industry think comp, the right? back been my has with of line in you to pretty things in about the if going benign opening workers' that's Severity the relatively I that's So relatively moderate. remarks, mean profitability which one and

new I'm claims large many year-to-date? how many How sorry, -- Yes. -- not

ended quarter We excess XX $X in the of claims with million.

below constraint Okay. X And [ ]? that's

on with where much were. track Pretty we

I I think years, the last last looked it's in accident few at that -- last year or range. the

that So aspect nothing from pause. that me gives

Yes.

the NCCI mentioned those? lately? that go Is seen you've You anything for study or likely down? Any them of kind trajectory should change XXXX. loss cost Where numbers contrary on in

think still this the was I look morning funny years you at back single-digit chart it's when XXXX at changes of think declines. that I we're rate anticipating track to at. -- how XXXX. shows, many I And lose upper actually been we've looking I chart, that the it's

XXXX, than a say, classes. rate is this of NCCI Since it and the the 'XX AMERISAFE I'd declines, been states, all X% on has XXXX So not from forward, decline. just greater

decreases think sequential perspective, -- a it rate a you over when is that that of number -- from number big that's So years. of about large

The Yes. cumulative.

right. exactly You're

that engagement. be of this And hit do the the level effectiveness about new beginning? -- mean, the this Is X and this You've would for natural through that, the tempo? of Amount carry I top next here. growth you just does line that is quarters?

some to staying kind one that the have would it's going term? medium for therefore, power assume near so to of And

do not I Yes. to ball, assure a quarter. have our each strategic you, priority profitable incremental is I growth but can add crystal

Yes. Yes.

last Okay. And money then yields, the new question.

about yields X%. New money were

yield, you I said? think And portfolio X.XX, the

X.XX.

With the questions to for Janelle no remarks. call any Frost would additional or closing in additional like turn queue. back over I to

us presence space employees. today. positions joining agents in to policyholders, workers' for AMERISAFE's us to stability our long-standing you high for Thank long-term and well the and compensation hazard delivering stakeholders value our

Thank call. appreciate today's We you. conclude That your participation. will