AMSF - Earnings call transcript Q1 2018

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Operator

Good day, ladies and gentlemen. And welcome to the AMERISAFE's 2018 First 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 call is being recorded. to host like Ms. today's now would introduce for your conference, I Shirley, Counsel. Kathryn General may Ma'am, begin. you

Kathryn Shirley

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

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

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

Janelle Frost

consistency, Compensation our policy fundamental results AMERISAFE, aggressively supporting quarter employees declined as valued It At growth quarter. premiums gross a to policy the mind in first policy a decline new to market was count quarter. by three enabled new a down in This that business of pricing of And selection, Pricing and for and this large part, in those to focus, on on loss serving is retention slightly metrics in discuss and start in years. quarter XX%, environment. to grow on quarter. our as and has costs however, you, good retention results Thank operational pride was executing our ago been was holders for dedicated down. Workers' saying safety compared carriers pressure AMERISAFE, in XX.X% a frugality you holders the results. valued supported written grew for performance grew our decrease by decline navigating premium a of the ELCM Keep and Kathryn. rate while on gradual at of in were XXXX's our year financial this risk we ourselves and ability decrease submissions the the And begin good The a been as in continued on X.X%. proactive the the X.X% underlying costs ELCM, focused loss by offset first the historic Overall, policy management. financial X.XX business we XXXX, expertise attributes. a first Thank competitive retaining us result approved today The those I morning, maintain XXXX. service. was our joining discipline have from when Voluntary was searched the everyone. related demonstrate through policies the XX.X% somewhat X.XX will of quarter premium. X% those written for claims

premium and benefited we positive In we related as $X from year than less tailwind remained cancellation We ago. we classes quarter sign economy growing a this and this a premium top-line the addition positive the policies premium also one for audit adjustments. see of to had quarter, some Audit wrote premium million audit underwrite. of from

of XX.X% quarter of quarter's comprised year current XX.X%. XX.X% development and the a of first XX.X% was ratio loss ratio ratio to in of loss a quarter the for negative ratio loss The a accident prior was XXXX. year Our compared

initial estimate year of X accident accident measured as the year end higher year. accident Our the is percentage point XXXX for at than XXXX

will Our on rather severity. result counts. continue pressure increased estimate claims than assumes a to less-earned frequency frequency see we of and premium is Pressure more on

for earned premium but three claims first down months were the up reported Our X.X%, X%. was

the we severity, XXXX $X with for XXXX. did claims excess expect modest increase first As the in In a in saw severity have accident five in with we million what we years line through of quarter, of This losses. cannot a We certainly the such first end three large to claims incurred in and of months XXXX at of determine three trend for claims XX full quarter data. compares year.

lumpy, As are but and such severity bears we've years, the of in occurrence year as the monitoring losses accident progresses. seen prior

favorable accident prior the XXXX for overall and million. $X.X quarter, As which years of development accident to case years, led in strong from we favorable development had 'XX

Our open at quarter claims the inventory year's end was relatively the from last first unchanged of of quarter.

over return We continue focus closing medical turn call for and maximum work to to improvement to our now Neal. concludes on my the prepared claimants, remarks. I'll That claims.

Neal Fuller

good Thank And Janelle. everyone. you, morning,

in XXXX, million quarter reported first net or AMERISAFE quarter. the $X.XX share million of $X.XX with of first year's per income compared share, last diluted diluted per $XX.X or For $XX.X

requiring During value equity the we be of changes the the implemented securities quarter, included in income. new the accounting standard net in

unrealized Net was quarter with a to X% first better realized operating result result, a $X.XX equity any securities. last on along quarter Revenues quarter, which our be will quarter in than will losses of net to amount the $X.XX when share, recent fixed or was income year's the a the of our X.X% securities. per quarter XXXX. for from in income item XXXX. gains from this in income, gains with excluded an million, million compared new of to the decreased $XX.X million, quarter or see earned Operating or losses net As $XX.X financial line investment declined $X.XX the increase first premiums trend. This net you statements, on first $XX.X compared

average cash in a with duration quarter. in continues carrying corporate of portfolio XX% XX% year's due XXXX. at hedge bonds, $X.X in decrease investments. compared up X.X% a compared Net municipal first The during bonds, pre-tax first value gains comprised These securities carried bond rating in value Approximately of was end, cost. X.X%, in without there remainder last during were portfolio the Turning million, of XX% gain equivalent $X.X to the our our reflected of the from on year's investment and bonds increased the quarter portfolio. or quarter-end. quarter our to tax yield on last to which in X.X% quarter, no to was were largely AA were and in portfolio amortized the securities, unrealized other any XX% our unrealized are hedge losses with end. the yield X.XX% The income the with investment The portfolio million at in million of held Net treasuries first overall and X.XX of quarter. at held-to-maturity quarter. agencies impact position slightly quarter significant first investment on up to in the investment high was book are fund quality, the and in the increase is fund X.XX% impairments investment of an not end gains the portfolio these realized was the There of investment an U.S. year quarter. as no in $X.X income in The at be

Moving operating now to expenses.

million the was million million commissions to of compared XXXX category, in salaries $XX.X quarter first benefits, other The and XXXX. due assessment, and quarter. By expenses underwriting included and in $X.X last in were $X.X with other of compensation quarter, year's the total first compared and million million to first of the and largely Our lower underwriting quarter insurance-based $XX.X decrease expenses costs. $X.X

As compared XXXX. XX.X% the a our quarter of quarter, the first of ratio in was result expenses these XX.X%, in lower with expense

rate tax result a the corporate reform was as tax lower federal quarter tax rate. for the Our new the XX% of bill lower and significantly

was the first Return quarter quarter. first Our year's the benefited tax with of $X.XX for And share which the a the equity amount. to the ROE regular last operating quarter our earnings dividend its for was quarter XX% XXXX. difference per by paid to first share XX.X%, XX.X% XX.X%. on XX.X% last for quarter, The year's $X.XX, quarter XXXX. rate company was represented compared quarterly cash first XX.X%, capital compared rate over quarter compared In for tax increase in per the of the for first management, in of

value cash of a This per of year-end. finally, topics. of per March couple a from payable June quarterly on board other at XX, X, June XXXX, dividend Book as declared $XX.XX at the $XX.XX, XX up share $X.XX And record quarter, share shareholders of just XXXX. was to

That close. call million April now my the surplus the And finally, our Form from like Our up XX, XXXX. December million quarter-end, XX, for session. with open $XXX up statutory the filing will tomorrow, and SEC remarks, be Operator? the to question-and-answer we after at market XX-Q was $XXX we'd at concludes

Operator

question Carletti Matt [Operator with comes Instructions] from first JMP. Our

is Your line open. now

Matt Carletti

Just have for Neal, a first few one might questions. you. be

as Qs about premium, those to as forward? you quarters going handy numbers for might you're was of looking X, in at we audit of a Just what have X, kind compare those expect audit think 'XX. we Do X base for premium what

Neal Fuller

of third quarter fourth a premium positive XXXX $X.X minus minus of million. quarter was $X.X quarter million, XXXX, audit the Yes. million $X.X In and second was was

Matt Carletti

a type how at coming market, in Great. are any it's where for feel competition Okay. changing, be you all. more be the that might of or your in of the trying mutual Just market or national geographically? regional to from seeing versus change competitor, of On kind whether from get if

Janelle Frost

question, when on quarter We fourth at see of a ELCMs really is where very pricing still I'm and We the seen we're we That's I what -- what first Matt. of irrational change still in we anecdotal, seeing really this look and quoted good my failed slightly consider missing pockets see haven't accounts. and quarter. versus pockets

others. out going the and pockets concerns very preliminarily are saw one-offs long as end more ‘XX NCCI as for There multi-line Best about out well of any their their XXXX put to the couple weeks has how already competition your in will last say would trends those that many combined results is comp. point to in XX.X%. there. was for A.M. they So and put But one -- particular that's estimates is, is, year our about intense than a as workers' the ratio a the times of their data. carriers I no more broad. It's is talked the we've here

in start those thinking their workers' of published will be how many underwriting and we start So third this will because respond news, for -- times carriers will compensation. start getting numbers profits getting what the year

I carriers. it attractive makes that think those So to multi-line

will part there's profitable of when start last, cycle that will me increase obviously to irrational if people trying turn, and if there's will "Okay, says those their profits, lines how year” eventually." because -- long top they're no, chasing the market becoming time adverse were we trying that were another going development then to me So to leads to the of soft “Oh, part that says, be and that to

Matt Carletti

Right, okay. based? of lot seeing success like it like How by conditions versus you competitive are another? conditions versus and about versus agriculture so a logging economic in Is any forth? or area just -- that Are having also you whether bar be transportation one sub-segment, pretty

Janelle Frost

you like in this whenever of that know, premium, we roofing. premium, of But of to trucking in I terms And it line even classes still tell the tower the business. conditions larger business. that the saw again write, are which repair, the we I'll cell more use We audit window from that's washers, Well, remains Right. strong type services. how we of trucking from try say classes and audit premium services coming construction for increases and as you which the saw economic of judge quarter, audit that

the so the seem be Just change quarter-over-quarter, coming to trucking more the line. increases from

Matt Carletti

different any Those are changes for what last then million. the just kind frequency Are last some But more the or level. $X know caught number of year mean, in turning QX? year on QX the there you're severity On on Got I more up Got you. worse? anything seeing trends, most. in you for of accident I for brought that better over this you. your question. deeper you'd I And comments severity the and seeing concerns --

Janelle Frost

data of No. year. I'll months' the caveat with that accident worth -- it’s three for

XXXX. what causes there's that's came number much pretty obviously for for nothing with to the year -- change accident we estimate So that my up we me

Operator

Our with Hughes SunTrust. next question comes Mark from

line now Your open. is

Mark Hughes

up full like view sounds data Anything what any in you necessarily hear inflation, sounds book? points. it XXX back that like the had the wouldn't be obviously year It saying, from points I of XX.X% quarter inflation that's the basis you're loss last incorporates there and new the pick.

in is is So but you're loss in it? saying this You system, inflation the guess view? no covering pick I change think still

Gerry Frost

my think wrote the in as I earned thoughts thought declining, unlike not what as was I be far And that. year do. I I frequency, that into my my or are going we 'XX. XXXX. do to know going what because accident premium assumptions concern, of in

counts And pressure so not claim that or numbers. may will even relatively though remain rate my put frequency on our flat, increase

Mark Hughes

be the development control What's good and we a of some your favorable and always back about Or risk accident increase the The but potential years, is had think see, there? stable? Does there risk, to there that seem you severity I there movement that like When inflation quarter. mean is it's the under book, view think longevity in reason on there? could you there's in claims. older

Gerry Frost

ultimate you're the of terms to? accident those that for years. referring Is what picks In

Mark Hughes

Is severity in things' the older years? Exactly. some uptick there of accident longevity, sort bad the Yes. in

Gerry Frost

You is premiums coming think off know, I of of in those that there. that highs years, recession. But the for think we're I obviously, always of your all-time I that to point, think terms risk covering off loss the the we're it costs when

industry. 'XX, think So, years, what years I be of couple good comes are I the to earlier, be NCCI mean, those see a weeks. 'XX would I to interesting going think said for within out it I Like

all that business pricing far think I of book as built was that the into inflation of assumptions. the as

Mark Hughes

think it much is the The sounds not changed. ELCM, the you X.XX, like competition

Or people excited. is more But et get to here? continues do you it you be cetera, on happen incrementally that? may think the X.XX, stabilize if think pockets, pressure do that downward there should Some

Gerry Frost

the loss because See that costs to ago, latest going think there's see I that continuing years think X.X but to mean on seeing loss pressure were declines I costs on still simply pressure not they come there. as still the be probably through. impacts going the are there declines. is to downward be are we're we're same a filings in to I

Mark Hughes

lower pricing, your account the And loss Right. costs. this into takes

So the denominator costs Is you come lower are reducing out. that loss right? when those

Gerry Frost

correct. That's

Mark Hughes

it of situation, new and of your out about new so an talk then much contradictory like dynamic? being it's moving, submissions. not Kind implies high, Could not moving retention interesting the business, but you but so guess Yes. kind moving there some business there's business? it that seems I in competition is more or parts

Gerry Frost

Yes.

exactly you're right. think I

said. was think of People the lot they getting come a decreases at business a retention don't I that it our think was level from fact new historical when rate for business down, and our up carrier. carrier was I just renewals. what moving to there's you are

have they no they need -- that or actively issue to service to unless moving effect, real So no something carriers. a pursue have

policy the retain. tenured been be on -- because holders little job unknown. of we doable. So sales talking the going bit valued new been that accounts we're be quarters, department aggressive the know we've policy but more those a to to where holders about the we've are makes But really walking the versus difficult, need focus if trying retaining last as that we're focusing, really into where to we And the we aggressive, that's those businesses, want best to few

Mark Hughes

Did in perceptible say, in you storms, rebuild get your, construction? anything off boost terms of any the of

Janelle Frost

in saw trucking, states yes particularly by those and impacted I think say audit I I Yes, payrolls premium from trucking would the think trucking uptick because storms. I simply were the to like in that

yes. So would from I that aspect, say

Operator

Riley [Operator FBR. comes Randy next question with Instructions] from B. Our Binner

Your line is now open.

Ryan Aceto

Randy for in filling Aceto Ryan today. is This

are it Is across on more you wanted prevalent mentioned specific prior XXXX. two know any the something I elevated guys about guess had points. accidents there -- guys you was most Severity most single-vehicle seeing Just or I board? segment up quick follow to quarters. in in

Neal Fuller

particular sort fourth Yes. the wasn't seemed any of on see number mentioned board. In having just It business. same And one of pocket quarter, call across in of sort severe the of it accidents, the was we the really to but more that we're incidents.

thinking those we lifetime those wasn't the call. I a particular But people about young cost than someone more because other what is worker. get for we saw, maybe, an mentioned quarter fourth before on any medical there are injured. who you tend also think older the more few versus individuals to And area

Ryan Aceto

on expense That's one I -- helpful. Little this to is XX%, you then lower year? XX% year-over-year, And guided play quarter quick guys the still this ratio. note bit that is know to for in about

Neal Fuller

benefits expenses. quarter of significant Yes, pretty had it we on is. End some

which drives are and quarter year quarter. states lower those in different first $X.X million first than it and reserve that loss-based development states assessments, depends Our expense, this the those loss-based assessments in upon that in last were your

take year, ratio you of the of out XX.X%. really X.X would've full kind include if to that for we adds expense the be that XX% And the not our And XX% dividends, the in policyholder another expect around somewhere to that's So points. equation, which where been range. does

that's we quarter unusual the see first on think some benefit in I what expenses. did we So still expect,

Operator

Instructions]. [Operator

with Bruyette, Our Christopher question next comes Keefe, from Campbell Woods.

Your line now is open.

Christopher Campbell

just I I which of service your audit newer the assuming increases on first premiums. then guess is my think Janelle, question trucking I'm mentioned mostly you're from employees. you kind seeing industries, and be would like larger

about less-experienced for of assuming terms there your picks and is employees? that changes more in those you're just loss So presumably any potentially you're industries, thinking higher-frequency getting

Gerry Frost

Yes.

think new I than employees related more growth per it's to se. payroll

are are prefer that your losses or that newer losses the inflation things would wage employees. about point to the of growth, are, of frequency payroll So we the things severity than rather

Neal Fuller

employees existing somewhat. particularly inflation some with seen We've wages to it's the trucking And still competitive. truckers have insure us who very for in industry, wage raise Yes. had

is So that more it's employees. new than it

Christopher Campbell

makes That it. sense. Got

good, So growth. of good it's type a it's the

Gerry Frost

Yes.

Neal Fuller

it. Right now. watching But we're

Christopher Campbell

macro level, increasing there you than seeing multiline then carriers talking into to those a monolines? noted or And an more Are would of trend try price multiline you competitiveness to for know kind comp larger I there's I just regionals tie workers' was, carriers at the accounts. you. Got from aggressive from

Gerry Frost

It's to with give you and a me because bit difficult carrier, take certain Yes. a measure little multiline lines to simply going more that know they're business. on for of

comparison, price really comp workers' what the price don't have they're an I on product. versus So was apples-to-apples my

pricing it's can account it pricing I they're because they're fact an take package. me on way lines they're being hard But that compare only for that as one exact is as more account, the all far that So a the the measure taking bit they'll the account, as us. competitive to from a together little really

say, may the Oh, package. they really they're comp, making So in else a we're work discount on giving XX% the up but somewhere

Christopher Campbell

you're, would, Got that And or competitions the is monolines? you potentially the Okay. the it. like you're trend multiline of a losing than those more head-to-head that there against regionals

Gerry Frost

Yes. fourth quarter in really quarter. first that We lot any third in a and last and talked year about change there wasn't the

probably year were terms for other we accounts, So in now maybe we our that not a large moderate losing It's we're those, large but we've to environment aggressive not more It's retention, to account talking been working to the that in. seemed has what of fact was larger that of us. the But now. ago. just X quarters carriers, sort call, than it

Operator

Ms. closing questions. over the I'm to At no remarks. call like for showing this to time, turn I'd further Janelle Frost back

Gerry Frost

care Congratulations. and anniversary. of joining for provides take quality shareholders. consistent wish expertise for injured today. It all. above dedication, returns and you for your employees to policyholders, services like the Thank to service happy years that being our early this the AMERISAFE insurance opportunity safe I'd us XX our to is publicly

Neal Fuller

Thank you.

Operator

in the today's for Ladies program. gentlemen, participation conference. thank you and conclude does This your

a Everyone, disconnect. great now may day. You have

AMERISAFE (AMSF) 28 Apr 182018 Q1 Earnings call transcript