![]() Exhibit 99.1 Sidoti & Company, LLC 15 th Annual New York Conference March 22, 2011 G. Janelle Frost Chief Financial Officer C. Allen Bradley Chairman & Chief Executive Officer |
![]() Forward Looking Statements Statements made in this presentation that are not historical facts, including statements accompanied by words such as “will,” “believe,” “anticipate,” “expect,” “estimate,” “preliminary,” or similar words are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding AMERISAFE’s plans and performance. These statements are based on management’s estimates, assumptions, and projections as of the date of this presentation and are not guarantees of future performance. Actual results may differ materially from the results expressed or implied in these statements as the result of risks, uncertainties, and other factors, including the factors set forth in the Company’s filings with the Securities and Exchange Commission, including in Item 1A “Risk Factors” in AMERISAFE’s Annual Report on Form 10-K for the year ended December 31, 2010. AMERISAFE cautions you not to place undue reliance on the forward-looking statements contained in this presentation. AMERISAFE does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information, or circumstances that arise after the date of this presentation. 2 |
![]() 3 Market data as of March 15, 2011; Financial data as of December 31, 2010 Nasdaq: AMSF Market Statistics: Stock Price $21.82 52 week range $15.50 - $22.19 Shares Outstanding 18.2 M Market Cap $397 M Book Value per Share $17.72 Price-to-Book 1.23 |
![]() Overview AMERISAFE has a 25-year operating history as a specialty provider of workers’ compensation insurance for small to mid-sized employers engaged in high hazard industries 4 2010 Highlights GPW: $228.4 million Combined ratio: 93.3% Operating ROE: 9.9% Premium Distribution by State AMERISAFE actively markets insurance in 33 states and Washington D.C. |
![]() Premium Distribution 5 Premium Distribution by Industry as of 12/31/10 Historical Premium Distribution of Major Industry Groups (in $ millions) 150 100 50 0 2008 Construction 2009 2010 Trucking Agriculture Oil and Gas Construction Trucking Agriculture 24.1% 6.8% Logging 4.2% Other 26.9% 4.0% 34.0% |
![]() AMERISAFE Differentiators 6 Focus on High Hazard Industries Niche Focus on Small to Mid-Sized Employers Specialized Underwriting Expertise Comprehensive Safety Services Intensive Claims Management Integrated High-Touch Service |
![]() High Hazard Niche Focus High hazard industry workers’ comp rates are more than 3 times the national average Difficult to serve industry sub-segments Less impacted by soft market cycles Represents a broad spectrum of risk quality; favors expertise in risk selection and pricing Higher severity losses require unique claims handling skills and processes 7 |
![]() Small to Mid-Sized Employers 1 Competition is fragmented, and favors multi-state writers of small to mid-sized employers 8 Intensity of Competition Annual premium > $100,000 Annual premium $35,000 to $100,000 Annual premium < $35,000 Large Competitors (major national firms); Represents 3% of AMSF policies; 22% of premiums Mid-sized Competitors (regional and smaller national firms); Represents 19% of AMSF policies; 36% of premiums Small Competitors (single-state writers, self-insured funds); Represents 78% of AMSF policies; 42% of Premiums 1 As of 12/31/2010 |
![]() Specialized Underwriting Expertise Industry-specific risk analysis and proprietary rating tools developed over 25-year history Underwriters have in-depth knowledge of insureds’ industry practices and loss exposures No delegation of underwriting authority to agents or MGA’s Track record of maintaining pricing discipline and low loss experience 9 1.43 1.53 1.56 1.54 1.51 1.46 1.45 1.43 1.20 1.25 1.30 1.35 1.40 1.45 1.50 1.55 1.60 2003 2004 2005 2006 2007 2008 2009 2010 Policy Year ELCM |
![]() Comprehensive Safety Services Pre-quotation, worksite safety inspections were performed on approximately 90% of new voluntary policyholders in 2010 Voluntary policies inspected prior to renewal Detailed safety reports provided to underwriters after safety visits Field Safety Professionals have in-depth knowledge of our high hazard industries 10 60% 70% 80% 90% 100% 2003 2004 2005 2006 2007 2008 2009 2010 Safety Inspection Ratio |
![]() Intensive Claims Management Field Case Managers (FCMs) located in service areas; visit claimants personally On average, only 56 indemnity claims per FCM as of 12/31/10 FCMs focus on timely resolution of claims 11 4,000 4,500 5,000 5,500 6,000 6,500 2003 2004 2005 2006 2007 2008 2009 2010 Total Open Claims at Period End |
![]() Strong Financial Performance 12 -9.2% 13.6% 20.7% 21.0% 11.3% 4.7% 14.3% 15.3% 14.5% 12.1% 9.6% 8.4% $7.42 $9.23 $11.66 $13.86 $16.00 $17.72 -10.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 2005 2006 2007 2008 2009 2010 $(3.00) $- $3.00 $6.00 $9.00 $12.00 $15.00 $18.00 Pre-tax Underwriting ROE Pre-tax Investing ROE BVPS |
![]() 13 Investment Portfolio Carrying value of cash and investments was $826.5 million at December 31, 2010 Investment Book Value ($millions) Fair Value ($millions) Unrealized Gain (Loss) Municipals $466.9 $479.1 $12.2 U.S. Agency MBS $62.1 $65.9 $3.8 Commercial MBS $51.5 $54.1 $2.6 U.S. Treasuries $14.8 $15.8 $1.0 Corporate Bonds $60.8 $62.2 $1.4 ABS $6.4 $5.5 $(0.9) Long-term CD $0.8 $0.8 - Total $663.3 $683.4 $20.1 As of 12/31/2010, fixed-maturity securities have an average composite credit rating of “AA” Value of Fixed-Maturity Securities Classified as Held-to-Maturity (as of 12/31/2010) Portfolio Allocation (as of 12/31/2010) Municipals 56.5% U.S. Agency MBS 7.5% Commerical MBS 6.2% U.S. Treasuries/ agencies 2.5% Corporates 9.3% Asset- backed securities 0.8% Long-term CD 0.1% Equities 0.2% Cash & cash equilvalents 7.4% Short-term investments 9.5% |
![]() Combined Ratio 14 71.9% 74.2% 79.5% 66.6% 64.7% 60.9% 65.1% 71.9% 27.3% 24.8% 24.7% 23.8% 21.3% 19.3% 21.5% 21.0% 99.6% 99.5% 104.2% 92.4% 85.9% 81.4% 86.9% 93.3% 0% 20% 40% 60% 80% 100% 120% 2003 2004 2005 2006 2007 2008 2009 2010 Loss Expense Dividend |
![]() Current Workers Compensation Market Conditions 15 |
![]() WC Premiums Continue Declines ($ Billions) P Preliminary Source: NCCI Holdings, Inc. 2010 State of the Workers Compensation Line 16 0.0 10.0 20.0 30.0 40.0 50.0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009p Net Written Premium 31.0 31.3 29.8 30.5 29.1 26.3 28.2 26.9 25.9 25.0 28.6 32.1 37.7 42.3 46.5 47.8 46.5 44.3 39.3 34.1 |
![]() History of Rates/Loss Cost Changes Source: NCCI Holdings, Inc. 2010 State of the Workers Compensation Line Cumulative 1990-1993 +36.3% Cumulative 2004-2010 -26.7% Cumulative 1994-1999 -27.8% Cumulative 2000-2003 +17.1% Calendar Year *States approved through 4/23/2010 Countrywide approved changes in advisory rates, loss costs, and assigned risk rates as filed by the applicable rating organization 17 12.1 7.4 10.0 2.9 -6.4 -3.2 -6.0 -8.0 -5.4 -2.6 3.5 1.2 4.9 6.6 -6.0 -5.1 -5.7 -6.6 -3.1 -2.4 -1.4 -10 -5 0 5 10 15 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010* Average Approved WC Bureau Rate/Loss Cost Level Changes |
![]() Effect of Recessions* on Payroll (Workers Comp Exposure) *Data is an estimate and represents maximum recorded decline over 12-month period using annualized quarterly wage and salary accrual data Source: Insurance Information Institute research; Federal Reserve Bank of St. Louis (wage and salary data); National Bureau of Economic Research (recession dates). -4.4% -2.0% -1.1% 1.1% 3.7% 4.6% 8.5% 3.5% 2.1% -0.5% -3.6% -6% -4% -2% 0% 2% 4% 6% 8% 10% 1948- 1949 1953- 1954 1957- 1958 1960- 1961 1969- 1970 1973- 1975 1980 1981- 1982 1990- 1991 2001 2007- 2009 Recessions in the 1970s and 1980s saw smaller exposure impacts because of continued wage inflation, a factor not present during the 2007-2009 recession The Dec. 2007 to mid- 2009 recession caused the largest impact on WC exposure in 60 years (Percent Change) (All Post WWII Recessions) Recession Dates (Beginning/Ending Years) 18 |
![]() Calendar Year Reserve Deficiencies ($ Billions) Source: NCCI Holdings, Inc. 2010 State of the Workers Compensation Line 19 Workers Compensation Loss and LAE Reserve Deficiency Private Carriers 2009 Tabular Discount is $5.3 Billion Calendar Year |
![]() WC Required Returns Percent * Based on NCCI’s 2009 Internal Rate of Return model Source: NCCI Holdings, Inc. 2010 State of the Workers Compensation Line 20 Workers Compensation Combined Ratios for Given Cost of Capital* Assumptions: 3.4% Pre-Tax Investment Yield 2.7% After-Tax Investment Yield WC Reserve to Surplus Ratio = 2.05 Cost of Capital 75 80 85 90 95 100 105 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 103 100 98 96 94 93 91 90 88 87 86 |
![]() WC Industry Combined Ratio 118% 122% 111% 110% 107% 103% 98% 104% 104% 110% 94% 106% 104% 100% 100% 104% 92% 86% 81% 87% 93% 110% 60% 70% 80% 90% 100% 110% 120% 130% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 WC Ind. AMSF Workers Comp Underwriting Results Are Deteriorating Markedly Sources: A.M. Best; Insurance Information Institute. 21 |
![]() Investment Considerations 22 Consistent growth in book value Strong and growing balance sheet Consistent high returns Efficient expense structure Specialized underwriting expertise developed over 25-year history Prudent reserving policy |
![]() Appendix 23 |
![]() Selected Balance Sheet Data 24 (in thousands) 2008 2009 2010 Investments, Cash and cash equivalents 799,973 800,485 826,503 Amounts recoverable from reinsurers 67,763 81,878 95,133 Premiums receivable, net 156,567 151,570 122,618 Deferred income taxes 33,580 28,489 31,512 Deferred policy acquisition costs 20,289 18,128 17,400 Total Assets 1,107,833 1,118,809 1,128,134 Reserves for loss and loss adjustment expenses 531,293 534,655 532,204 Unearned premiums 137,100 122,500 111,494 Insurance-related assessments 42,505 40,072 33,898 Subordinated debt securities 36,090 36,090 36,090 Redeemable preferred stock 25,000 - - Shareholders’ equity 253,272 302,417 325,223 Metrics Book Value Per Share 1 $13.86 $16.00 $17.72 Debt to Capital 1 11.5% 10.7% 10.0% 1 Includes redeemable preferred stock for 2008 |
![]() Income Statement 25 (in thousands) 2009 2010 Revenues: Gross premiums written $256,454 $228,424 Ceded premiums written (20,158) (20,549) Net premiums written $236,296 $207,875 Net premiums earned $250,896 $218,881 Net investment income 28,014 26,242 Net realized gains on investments 2,033 2,449 Fee and other income 1,268 584 Total revenues 282,211 248,156 Expenses: Loss and loss adjustment expenses incurred 163,316 157,388 Underwriting and other operating costs 53,957 45,959 Interest expense 1,810 1,548 Policyholder dividends 770 834 Total expenses 219,853 205,729 Income before taxes 62,358 42,427 Income tax expense 15,927 9,074 Net income $46,431 $33,353 |
![]() Return on Equity Drivers 26 Year to Date 12/31/2010 Loss Ratio 71.9% + Expense Ratio 21.0% + Policyholder Dividend Ratio 0.4% = Combined Ratio 93.3% Underwriting Profit 6.7% x Operating Leverage 0.7 = ROE from Underwriting 4.7% Pre-tax Investment Yield 3.2% x Investment Leverage 2.59 = ROE from Investing 8.4% ROE from Other Income (Expense) 0.4% Pre-tax ROE (tax-equilvalent basis) 13.5% Effective Tax Rate 21.4% After-tax Return on Fully Converted Equity 10.6% |