AMSF - Earnings call transcript Q3 2017

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Operator

Good morning, ladies and gentlemen, and welcome to the AMERISAFE's 2017 Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Officer. Risk Chief Gagliano, Vincent Please go ahead. [Technical Difficulty].

Vincent Gagliano

Welcome quarter third morning. AMERISAFE XXXX call. the investor Good to

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

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

Janelle Frost

of Thank share is fact easily you, profound, them view so is or Vincent. I'll underlying cyclical My historical profitability. is premium industry. This volume proven regardless prepared I with results Insurance think the remarks loss were at a you costs, again. looking

crisis, inadequate an is long-term what I having cycle identity AMERISAFE market, chasing We identity are have companies that when not crisis. in begin we're point at an prices losses. to to at premiums the soft a cover currently call in

service underwriting discipline our to managing to while We policyholders. exceptional providing provide returns are claims to our shareholders focusing our on and

we is are current special strength Our quarter which capital were the for future. market view and well our of return of dividend $X.XX per shareholders capital to reflection conditions a they of share this positioned our

throughout Premiums business results driven This in market successful quarter quarter cycles. policies quarters intense. the as reflective approach operational renewal increasing new consistent policy of decline our by count. X% renewal remained protecting competition our compensation were written We in down workers in are this by a the to were

was from Our up in policy in with greater last was retention policies we same What XX.X%, did the slippage premium, quarter XX.X% annual from $XXX,XXX than premium. year. have

Our compared year. with Relative million $X.X pricing on our related quarter premiums at $X.XX ratio to year. in accident current XX% in decreased we've last to adjustments as the last the year. par loss Audit for represented losses, cost in effective third was multiplier and $X.XX premium LAE loss remained

As projected frequency up. was

XXXX X.X% reported beginning for in the the was year net were premiums the of was earned year which yet claims calendar accident at Severity higher X.X%. down Our projected also year. were down

We so the monitoring into bears have progresses stated often that the as severity quarter. accident losses last are lumpy, year

experienced XXXX closing As of and a for case most returning quarter Accident losses experienced we development incurred to injured the development claims years, focused which lead favorable as work. million. years the XXXX, favorable prior reduction and workers in on $XX.X we to accident in XXXX

over was quarter incurred ratio XXXX the claim LAE lower the in XX.X% the XX, the at Our to loss of XXXX. our was of end September compared development X.X% count than open favorable the third a summary for end quarter After discuss XX.X% quarter. will $XX.X metrics of of ratio the this to financial is profit combined turn pretax and call third million. last now results. to Neal best The operational XX.X% I of underwriting

Neal Fuller

and you, good Janelle, Thank morning, everyone.

limited net or X.X% to quarter, the $X.XX Net million income $X.XX position when of decrease with fund The decreased a partnership third XXXX, last change quarter. in $XX.X last the last X.X%. a per year's investment of a the million in in third X.X% per to in third This decreased mark-to-market significant was AMERISAFE through third in diluted $X.X quarter third realized of the $XX.X the $X.XX at with limited third million totaled of $X.XX on no of compared $XX.X investment of the of quarter Operating when investment quarter compared Net during of third share XXXX, year's yield or gains XXXX with no share third net income quarter large share. last XXXX. quarter. in quarter For diluted net premiums $XX.X or investment income is the Revenues from due quarter. decrease year's decrease the compared our portfolio of each equivalent of reported were was compared million the or change quarter lower earned value losses end year's share quarter last a partnership hedge or XXXX. tax X.X%, million X.X% the than year's of The to to per per impairments million third quarter. end was $XX.X There quarter. income the

quality AA and investments. continues we the is Our rating, XX% and Agencies, remainder municipal in corporate hold be duration bonds, other of average and to high carrying in X.XX% XX% bonds, XX% investment Treasuries and an U.S. portfolio our in cash portfolio in the

costs. our underwriting year's a same of operating commissions our in compared quarter $X These million net in is Approximately is and million gains last expenses and last costs. year, with of to in treasury regard not bonds other slightly these and position our securities past million quarter. carried other corporate of decreased to are our gained the quarter assessments expenses By to in $X.X X.X% and as of the allocation classified third of and bonds third million in quarter allocation $XX.X slightly. decreased We $XX.X to reflected has salaries benefits, decreases bonds unrealized underwriting XXXX type investment this and amortized million value $XX.X with held saw included of million. as are expense, compared the at $X book has year. XX% the our quarter commissions, Over total municipal to increased and which portfolio expenses, maturity of With

ratio Our third with the the year. XX.X% quarter in compared last of for quarter XX.X% was expense third

third rate decrease third with tax was last XX.X% to quarter, XXXX quarterly the quarter income of to XX, from cash XXXX. during larger record amount the quarter. XX, December XXXX underwriting reflects compared compared on The in quarter a the October of year. of the the for shareholders tax ROE quarter income regular dividend third December was in XX.X%. Directors on payable the down to decreased XXXX Return Operating for the XX.X% as declared XX.X% Our XX.X% Board of share of the equity $X.XX of XX, quarter On of XXXX. Company's for per exempt

amount with the in was as year-end. to And other per of share. dividend up payable capital management shareholders part share our for couple special as four total of per addition, out Board from finally, X.X% XX dates. same book brings share of of efforts, record $XX.XX, Janelle a and special the a and last dividends $X.XX paid at In items This just $XX.XX value mentioned note; ongoing earlier, declared the Company's September the years per to

after XX, to then remarks, $XX.X year-end. and question-and-answer concludes statutory Operator? from markets million up for XXXX, now September at like million call open surplus my XX-Q That for And our session. Our closes $XXX.X we'd finally, filed will up the was AMERISAFE. tomorrow our be

Operator

of [Operator question from you. from line comes first Thank SunTrust. Our Instructions] the Mark Hughes

Your line is open.

Mark Hughes

quarter? good in X.XX morning. Janelle, the you, Thank the ELCM was

Janelle Frost

Correct.

Mark Hughes

or it the sounded that quite Could draft a last like two strategies was premium? undertaking was retention the drove seen a it down this in but you've you written you're better, new admit more that quarters in quite three the market, out where different was obviously turnabout that? from Anything of strong

Janelle Frost

strategies product quite our and taking, trying that we're just new in competitive not marketplace. to still keep appropriately, No, the our they we're price discipline maintain are

Mark Hughes

competitors maybe bit more off like bagging business of or their Any note anything that brokers that? shifting a elsewhere of little

Janelle Frost

a good question. that's Yes, really

into seeking for deteriorate, and results run is our carriers as continue compensation carriers the which unprecedented industry to P&C multi-line continue are industry. workers the to more more We

compete carriers. continue we multi-line So against to

Mark Hughes

Right.

the So the the of [indiscernible] from quarter just marketplace? be down perspective kind to down X would last XX the your of

Janelle Frost

to the we has know, losses, from in certainly we lumpy nothing a a as word the you has when case, there premium in perspective talk that gone. our that's far know put and use way I competition it. to improved good this marketplace is like about Yes, because as

by this more quarter; of tell the we of put pricing, there I can to is now differentiation we amount more our able a so You terms yet we're of at X.XX once we tremendous last at X.XX were policies. buying were in had ELCM, renewal quarter, think

that protect to that us has those throughout but adjustments trying a accounts. been been renewal the to cycle protecting that for So make the that book focus softening necessary has we're sure making particular

Mark Hughes

at You've seen [ph], you activity; any construction any all? helping bump post-storm that Texas, Florida, is

Janelle Frost

Yes, it's a question. good

in would So premiums keep the those monitor mind, way and rolls month or reported are that in that a being pay is are I arrears. audit

we'd point point particular anecdotal could thus some increased that So at I and this exposure I those growth yes, suspect think to you, would payroll tell say, start note that it things start or nothing point. We definitely seeing to at but could not areas, some this payrolls. I far off we're seeing that from

Mark Hughes

claims down bit; up you your was down frequency the When X%, did that little said you point? frequency, say premium X%, a therefore

Janelle Frost

originally talked would we on so the that loss actually frequency but the stayed of yet, if the that up. assumptions the about same down planning pressure frequency. on putting what kind about that one, were ratio yes. beginning our even of would was XX% counts claim I Roughly, when being under about year, talked claim pressure That count it's at to we put my gone premium the -- go base, have My frequency

Mark Hughes

seeing had way quite a that a think in a large more in you you are few bad haven't claims? kind I quarter while. Severity, of

Janelle Frost

knocking as say that you this I'm Mark. on table

point as XX We estimating incurred we're claims losses. claims this $X claims are to in a as million over at large known up

XX last I the exiting if think XXXX. with not for year year I'm mistaken we ended year

summer that's that's our this think are we when on people picked the have more months So that's expected we've par, -- outdoing they months employment a full so things quarter do. up I that few but hazardous because

as that severity. something unusual my watching for in not prepared mentioned remarks, But I bears us. So is

Mark Hughes

Is any this up QX. rate benefits? reasonable up investment of year-over-year expecting a mark-to-market run quarter million kind these without of The income -- any and $X.X of but down from last

Neal Fuller

Yes.

with this I than investment most volatile, be better can -- of recent rate think run that maybe income training months looking mark-to-market we've seen bit sort a a but XX it a I little -- maybe just is at our the think hedge fund think quarter. would be I

Mark Hughes

this lower on little quarter or Okay. sustainable variability? ratio this expense a the And then just is also

Neal Fuller

we some saw positive. think I to variability

continuing we're expect expenses focus about, think talked we in can soft on this managing best to as our I standpoint we that from as we as market.

because little a because certain bit of the would expectation is our see effect dividend dividends climb XX to does trying So pay in up best mind see do in policyholders. don't we to but continuing to in expense XX can our also certain ratio those that customers out be the ratio had payouts history we down. to to you the typically manage states. a that compete And on good that we that range. running can to loss continue We We're it states basis policyholder that to mean the

Mark Hughes

Thank you.

Operator

from [Operator Carletti Matt Securities. Instructions] comes Our line next from of JMP the question

is Your open. line

Matthew Carletti

difficult covered to lot I but maybe good morning. Mark Thanks, of a follow-up. what had

kind big potential, coming the at On states Texas of impacts have the around; increased might you I of big some expect say aren't impact, there some mean to obviously see the but obviously construction arised? for see Florida get any discussion be to -- areas, what is you part work your where and will you I are expect book commercial would most, there materials is and of about of residential storm to out a activity know it trucking you; would that

Janelle Frost

down people your well see what logging uptick there. To an and participate that getting really think terms as those in vegetation you're [ph], are some would residential But and in is I as don't in the of we part point, I cleanup materials and playing dealing in see with regards, in right, call out, place we definitely we think trucking from slumberous field. we

Matthew Carletti

thinking premium quarters just -- show it would about comes take of few because I through, And to that the of how is right? probably nature Okay. up the audits and that that am a

Janelle Frost

so Right. Because is definitely we [indiscernible] arrears, in our keep posted. in still early we're process, a will you the month so

Matthew Carletti

negative was of it what I Okay, year premium equal was ago number other And $X.X just was think great. quarter. kind was one the know then million this on -- which a audits it with question, I themselves, quarter

we do ago have last numbers what up the we're know forward year the you so As audit stacking to QX premium and I QX, year from periods, move -- against?

Janelle Frost

I do were I in premium positive. have should Yes, mind absolutely, keep that And audits it. themselves

So basically what as that such it's line quarter, thing. were last that were they sort they thing in with makes what of cancellations it endorsements,

Neal, So you out reach for to me want [ph]?

Neal Fuller

Yes.

quarter $X.X of In the of XXXX, adjustments positive million. first our a million. a in and premium $X.X million, fourth and were third the year other quarter minus last $X.X they So were quarter the were positive in XXXX they audit

Matthew Carletti

very nice quarter helpful. Congrats great, Okay, luck forward. and the of going on best

Janelle Frost

Matt. you, Thank

Neal Fuller

Thanks, Matt.

Operator

the questions further back There to are Janelle I Chief like Executive Frost, turn over now conference Officer. time. to no at this would

Janelle Frost

AMERISAFE, staying us thank for would comprehensive and I beautiful tell phone safety should day distinctions; high services; the to like I on employers; we intensive Ridder, one, our our three, our you on your Louisiana, it difficulties. focus to in with five, hazard two, When mid-size here De four, problems. technical while our discuss our focus management. patience claims foremost, our obviously tend we I first on is have Well, small to in a and expertise; through underwriting niche; line five you

you today. stable, We cycles. to level are expenses us with through with and distinctions employees are joining of consistent retention. our service and to critical we built is are These expert our our also proceed our coupled successful Thank out-market for frugal

Operator

Thank participation have your and conference. you day. this for and Ladies wonderful a concludes today's gentlemen,

may disconnect. You all

AMERISAFE (AMSF) 26 Oct 172017 Q3 Earnings call transcript