AMSF - Earnings call transcript Q1 2021

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Operator

Good day, everyone, and welcome to the AMERISAFE 2021 First Quarter Earnings Conference Call. [Operator Instruction] At this time, I would like to turn the conference over to Vincent Gagliano, Chief Risk Officer. Please go ahead.

Vincent Gagliano

Good morning. Welcome to the AMERISAFE 2021 First Quarter Investor Call.

received at release, www.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

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

Janelle Frost

changed. competition you, February earnings of increases workers' There decline. Since agents Vincent, slight everyone. compensation of to seeing in albeit costs loss compensation. our rate workers' in slower and has level the Thank rate of continue call, good not decrease, Approved a morning, at are reports

lesser Economic yet lower given payrolls. the the we Certain part and has in reporting pricing and unemployment industry However, are Over impacted I but experienced to due insurance AMERISAFE compensation from insurance insure. business. states our industries ability is workers' in rebounded payrolls, payrolls. our continue premiums a groups. rates conclude all, pandemic-related to I particular to this shrinking within to of industries have and to classes believe to degree, isolated levels declining the not part not experience conditions raise carriers due

and the optimism pandemic, vaccinations increasing was and during by economic were the economic some The of high-hazard provide outdoors. Driven half industries positive essential much increasingly for for performed work second of outlook. the of optimism for have Our health public the deemed number year. the we conditions,

for the we passed bill the insure. being an industries infrastructure positively impact potential could addition, In

example, bill spending roads, which right highways, For bridges on the AMERISAFE's proposed current includes wheelhouse. and are in

for more also We which the policy X.X% quarter signs we continued the strong positive quarter quarter. declines for to offered our and business was XX.X%, experience XXXX. wrote policies in the loss compared saw policies the growth We saw We of to other those in renewal. of improvement cost Offsetting X.X%. first new of retention, in average policy

year. quarter in our the continuing X.XX, prior the each pattern compared quarter quarter of lower from for was ELCM the of first XXXX, to slightly being Our X.XX

down of in experienced result audit voluntary we As other were a we the premium compared premiums less robust to quarter, quarter X% adjustments. the first written XXXX.Additionally, and of

to for $XXX,XXX, activity audits was audit The premium quarter first the the by XXXX. payroll policies the audit conducted were my slowing we which that, XXXX premium quarter estimated the quarter, premiums impacted during written the XXXX. speaks from pandemic. first the quarter earlier X.X% in in positive, difference during fourth pandemic-related activity are recession. Therefore, was adjustments other first $X.X million It in to of Overall, the of quarter reflects quarter down the work XXXX for premium quarter annual gross work of premium Still, and the of distinction the written on quarter ability important for audit compared were during first of audit to is insureds' in comment our an generally, the which the XXXX. of recognized

in to quarter was loss The XX.X%. LAE for Moving the losses. ratio on

from declined, the decline frequency particularly XXXX. severity I in in point Year Accident of in we for estimate We our X.X call. about trends this spoke XXXX is XX%, Accident in estimate years. recognition estimate in XXXX. experienced The acknowledge accident loss Year Our the recent is favorable percentage February down more

business of regarding data months be low-frequency, quarter, However, appropriate. of our high-severity. believe experienced Based to our we estimate percentage case on the is XXXX. million XXXX, development, XXXX, In points. XXXX case also Years loss book development, we X by assumptions for the the in favorable and in loss favorable resulted $XX.X particularly LAE XXXX decreasing favorable in XXXX, Accident of This ratio development XX.X and

to medical and impact changes delivery in the of are on procedures, influence current year from potential accident of Delayed some years. closely the and the factors any continue monitor the just prior severity, open We which for inflation the claims. of both methods claims pandemic accident the of cost on

We call financial injured metrics. the turn continue work workers to other medical sheet to to back quickly. to to maximum over I on improvement, getting claims balance settling discuss expenses, and the and will now focus Neal

Neal Fuller

everyone. Janelle, you, morning, good and Thank

reported and, last impacted the in securities year's million million on $XX.X first XXXX, compared $X.XX $X.XX to compared million, For million, quarter gains million, by increased first quarter. XXXX. income AMERISAFE $X.XX of decrease or Operating Revenues compared equity of share, earned in income million, net last XX.X%, Net net $XX.X year's share, of share, the or the the diluted of quarter. $XX.X from in quarter million, XXXX. a first diluted $X.X quarter per per first $XX.X per was $X.XX in of therefore, when with first or quarter to to $XX.X premiums $XX.X decreased were the first with quarter unrealized for

on first investment net XXXX. million, $X.X The with driven $X.X in Turning the rates compared to securities, our income was quarter overnight and to XX% by lower fixed decrease in on securities. interest million portfolio, short-term of the quarter income investment decreased particularly first investment investments

rating, Approximately with municipal taxable X.XX the $X sold and bonds; securities in with high muni XX% million first investment The at pre-pandemic, right from the now, quarter XX% at a These our first for equivalent Treasuries equity gains duration and securities, XXXX. such in investment $XXX,XXX, yield the of hold carrying on are comprised in credit of at X.X%, the Because were bond our recall, in and are yield of which and and compared tax funds X which in The of compared low compared unrealized on portfolio X.XX% to overnight XXXX. of basis includes X.X% and as one amortized Fed are yields not other the cash just in year position bonds; quality, If cost. book of is earning XX% agencies; X.XX% X% quarter. portfolio quarter cash investments pre-tax first we X% during on in the X.X% a investments first X.X% were quarter reflected AA year, most The time. value, portfolio quarter-end. of last million in rate just end the gain quarter, of an the in with at held-to-maturity the of average $XX.X overnight in cash at you Realized last investments. bonds, at portfolio corporate the and XX% points to our portfolio to U.S. net down of carried is securities; investments at was X.X% was unrealized end were quarter-end the this X% year bonds ago. gains overnight

operating Moving expenses. now to

and underwriting in quarter salaries in expenses expenses total the quarter, and other due insurance-related underwriting $X.X were first million largely benefits, the $XX.X assessments. million in XXXX. was loss-based The and included million compared $XX Our of of to XXXX with and million By quarter million costs. category, of lower commissions the premium-based and decrease first other $X.X $X.X

a quarter was of to of expenses, XXXX. in our As decline the XX.X%, for first the held with ratio compared result the XX.X% in favorable expense quarter

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

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

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

Operator

Please take will comes go [Operator It question Carletti. ahead. the Instructions] from at first this We time. Matt

Matt Carletti

morning. thanks. Good Yes,

Janelle Frost

Matt. morning, Good

Neal Fuller

Good morning.

Matt Carletti

work getting through I opening your in of I a of or sensed workforce. right. cautious and workforce you direction thinking things optimism few -- Could to little to economy I'm your your me help kind of bit about sure insured a make about Janelle, comments want back

seeing you the First working, normal of them I'm spot. premium? whether all, of expect in working workers about, is they're hours that go to worked more existing thinking hours or as insureds delay bit your through existing us on a more that’s help up, workers and can a working like, hiring little it

cognizant Is be of? but And of losses, audit you a that an that in there function some premium later Can those we through bit so should come something might of mismatch? be might see on. little

Janelle Frost

That’s Matt. question, great a

are the be right, of built premium activity, -- it agent it's the going absolutely an beginning annual If premium. period. that into estimated You anticipated hadn't annual at the estimate the because if annual are policy, policy insured the won't increase the to we in the and

get those premium So if audit. but period, insured until hours, working, will working losses, have is we we if the throughout additional policy could the that not the they're do recognized

Matt Carletti

then have what is on like, doing. lot inflation; of I thing inflation of kind And another is people think an a just Okay. eye

more, talking And necessarily more you're wage up just extent loss it? and sense exposure; so but is more that in I'm paid hours not workers inflation, so paid you're worked, favorable to ratio the there's your getting not to just picking for the that just getting

Janelle Frost

That’s exactly right.

means wage That in premium. the paying it for inflation. a on collect more little side, we are definitely it's win if revenue. just of like bit us more terms a we the means yes, we out Even So indemnity

Matt Carletti

are during probably come anything pandemic. you adapt AMERISAFE things Okay, or it I the workers has to, of, thought there it, be see great. we’ve guess, to then -- but give pandemic, What or good things to things medical take, Zoom that a of you have being whether have lasting I impact calls a lot as recession, do of see it's bad? that injured even the or whether haven't look, And adapted happened your or XX been, months,

Janelle Frost

and as meetings we underwriter, took aspect. I a same particularly company those professional, forward still we of the happened a they're injured build think we room great relationships And of building everything they're in a There's on they're workers. That’s is still their about was clients carry people it us professional, in even opportunity, year. To and And yet tired a as back can coordinate that virtual from AMERISAFE's agent, and great but and agents a back get I at reluctant an that's TSM, those right? the lessons this impact lasting back XXXX. to call certainly that we're you relationships connections. quarter model beneficial all is I know in able maybe me, visitors, don’t know, a that in are maybe are an And Zoom first for though anxious and also if to and meetings us, I we making a So to an as work, as a recession. to with with provides great -- on example that think built offices, our the claims relationships. getting all and people, have of safety way their even to organization think are

take a forward, So I we think with can that's just going us, going for a lesson to us. plus be really

because into basis, that it shut telemedicine. forced Again, workers' adopters down. when I everything forced were we to with, would begin on a compensation we mentioned definitely think were into impact You been to slow right, some have it. degree, go-forward but will Maybe we

dictated stages will these see and I lasting medical a the I on recovering really to community. reason in-person. an gets from initial because provided profession by the And can't we workers' how up be gets economy is as prescribed. or it medical the that certain word It happened, the really whether prescribed, use carrier dictate visits certain that It's services to will the everything interesting happen telemed impact think have in back be as compensation. insurance going are versus

they things, interesting the of to And may So how a respond of add there's a our something could up is in be I telemedicine the one how things they the it see the actually for fee mentioned same to to want which Are earlier we're be end potential be always will eye on component out. that to inflation on or being get to keeping that the interesting medical have one basis. go-forward a they less, really end. to that or more those to It going it will Is So my comments, happen? that. paid wash in because plays see it some visits? determined,

Matt Carletti

missed one. the it. then Okay, quick last sure and the great. quarter? I mentioned you I'm I for ELCM But apologize. And it

Janelle Frost

X.XX.

Matt Carletti

Thank the you so Great. for Congrats start much. the year. nice of All right.

Janelle Frost

you Matt. Thank

Neal Fuller

Matt. Thanks

Operator

will Please go Mark comes Instructions] the question. [Operator next Hughes. We from ahead. take It

Mark Hughes

you. thank morning. Good Yes,

Janelle Frost

Mark. morning Good

Mark Hughes

Janelle, did the number large you of us quarter? give the in claims

Janelle Frost

didn't, happen to had remind myself rhyme time a we I with throughout one, the we say, lumpy claims XX. be a doesn't we business. be had There as timing I always had year. when can We and exciting those reason which Mark. or to If one, in to the seem as to at year year far have this recall, oh, last we're large ended I one.

well. the there of at So XXXX, one, at one the was quarter, end first was of quarter end in there as the the but

Mark Hughes

so good. Well, far, so

Janelle Frost

sound did I'm Yes, not I'm grateful. grateful. I sorry

Mark Hughes

and but end touched in of XXXX aside. would have what have of was Clearly, been XQ, on that think frequency few has about the XXXX? expected. this, kind months below might How even claims you you large And when frequency the trended last

Janelle Frost

Yes, XXXX. down. were frequency was down obviously Reported in claim counts

the slightly at well. If that down frequency-driven; you we're reported the in fact XX-Q, I counts see XXXX keep we're will severity-driven. as were you on look not claim focusing

yes, X with months So months data. it severity oh, average really It's And can line with XXXX. my of is going data, in with to matter say, what I in happens it's expectations. of three

Mark Hughes

Yes.

more Could Okay. And up business that? maybe you a was of then running, maybe depth Can brokers underlying on that? that give the activity, new small more and up. about little much business business, being construction? talk you was more How more

Janelle Frost

getting think getting things start Absolutely. question with and the agents I back of will agents. into do your brokers about flow and brokers things, are again. I going

really did that in everybody safety we've their first always construction and good now is within guess class quarter, building work those and time mentioned, happening, what's reintroducing just of going, and their But AMERISAFE claims class largest which I an clients, the new from business. that focusing was one As class relationships, with the on if offer. was has professional if of Roofing is Unfortunately, roofing relationships for saw those their services We in tell and I can been trucking construction. it terms business taking ourselves right, the underwriter or translate roofing class; a been that new tell person how I so business the us, just they roofing. in they is that's maintenance it's can improvements their and coming proposition, can our the and see roofing. single can't improvement we you really I considered to in building quarter. that we roofing in of you that's

roofing. another saw So positive the in saw for improvement was we improvement in in We us quarter. manufacturing

Mark Hughes

claims, sense I in you any there any terms catch-up late-reported that get And asked were might claims? these Did indication some in then there have that have any claims? should of of was been

Janelle Frost

are of of businesses. have reported severity-driven. true in don't late claims line a our lot we Again, we No,

us injury. tell a to they've severe going quickly they're really when had So

reported So than have tunnel not doesn't us things. like type it's impact much those of and as late we -- really carpal claims

Mark Hughes

Yes, exactly.

voluntary have auto will at do think get about isn't mean, upside? hold next same face less think I that it XQXX well, once corner? turning Okay. on since Or were probably are it talking they XQ -- as Matt is -- impact -- X% were together, maybe basis, already audited, you time when good last presumably this you they either -- they I you you a that policies, captured this quarter the year? similarly, I ex down think you do which put a If those premium, you The that. was here framed

Janelle Frost

No.

we I think that will have same the impact.

Mark Hughes

Then [multiple here was corner All some right. given down back I you earlier Okay. kind will turned my to get feel like X%? the which speakers] we've of question, do

Janelle Frost

to, feel definitely there I I point like positive that some are signs can right?

Mark Hughes

Yes.

Janelle Frost

told with had and not, businesses the crystal contagious. think, corner we've in time that there of me tell. sense and I economy, would the I rollout vaccinations believe or that. a that's Whether optimism, ball a of turned is I the I the wish

people start there maybe contracts So an that there reality, new are bill. hopefully, building capital converts do And expenditures into it and infrastructure do start and will be things.

So there's can things point we to that positive signs. are that

think cautiously So, yes, I -- Matt's words were optimistic. are we

Mark Hughes

Yes, okay. Yes.

good so they say. as far So

Janelle Frost

why to these things, -- so so good. also That’s I I’m write going far

Mark Hughes

I Thanks. it. appreciate Okay.

Janelle Frost

Thank you, Mark.

Neal Fuller

Thanks, Mark.

Operator

[Operator at Caller, the take this time. go next ahead. will we question Instructions] And please

Randy Binner

This caller? is Am B. the the Randy Binner next from I Riley.

Janelle Frost

Hi, Randy.

Neal Fuller

Randy. Hi,

Randy Binner

Hey.

there. didn't I intro Sorry, the catch

Janelle Frost

Welcome.

Randy Binner

analysts same So interested are in. I’m the thing in mostly that the interested other

And comp of going the that, of kind just from who as a but confidence comp larger we next to yes, the of lack seems was, a turn so to, of hear because my year like has kind it couple and always there's is farther writers corner are oh, guess of it from steps evidence. question though, back folks maybe comp, I a there's

market of but for workers' say, it or a kind different is different workers' it's of package just general I'd is out is to that going other that know to? part want sense you a I there corners -- be comp just non-hazard industry? is overdue comp don't Like, so it's turn it's the just people other to that And is what curious, of speak because there a the where part class? for of narrative or to

Janelle Frost

it by line, as a what profit. generating a a turning. the whether still I is really compensation, mean Right. you depends monoline markets on workers' Because guess or you're multiline,

estimates has A.M. it's even below think put with out, NCCI XXX. I Best and the still that

of in there. So terms still it's profitability,

I deteriorating. think it's

point again, I or have to that reason. think, projected ratio and within NCCI both up like, A.M. I going Best two, combined the is a think go

that in industry So profitable. aspect, still the is

turn of turn a If … you -- in mean terms reaching

Randy Binner

pricing. of terms In

Janelle Frost

you're going that's right, I -- … was to couple focused When premium referring I we to, growth, a what talking were there's if was of and things on. Matt Mark, on, or I those of declining. was but same on loss and focused apply, still economy. said work activity costs things the all payrolls are that the And the at I and time,

down, still premium a that decline dollars. battling for X%, Hawaii. almost going that rates range and rate are The of XX%, high a the are to a think, latest fact of I down, shrinks in filings Virginia XX% from, We

think X of -- costs loss there maybe themselves. were on loss just that I had regardless are X cost, what loss increases on but charging, states X, carriers or on

in So regard, catch still falling are trying that down. carriers the are still to, The going knife, right? rates

positive So earlier, not to that's to a like going pointed I even economy going workforce, the still XXXX. or to in going we That's away. the happen that’s be if have signs, in hurdle

Randy Binner

pool too, trending the current guess I one along both think with might of I year would help excess if I the this tricky, kind and can of other generally but loss of accident kind reserve would the as of pick downwards. you kind be with, observation have,

kind your to when are generally the natural is market be those again? that the from higher of transition the offsetting side items. way other Would view pricing we'd of So

Janelle Frost

Are It how Are That's a you in seeing see definitely deterioration that loss whole. be for impacted to starting everyone adverse reserves? you that looks development? will comp XXXX to sign workers' see right? interesting a as for,

we think recognize people's point, the so and If be in that does whatever about will accident will than some, change we companies into 'XX, XXXX, that think much recent going development things normally about they for industry accident start fruition? does more -- seeing recognize to redundancies end sign at 'XX or another know XXXX, their XXXX. what reserves. down excess were the whole, development be, somehow loss And If that and years, you a if I as frequency deficiencies? that to the that coming there's be current earlier, think it pick, year terms case will year from in with development mask do, of they for deterioration another come going mean those of your a rate maybe that may more different adverse I in

Randy Binner

I it Thank there. so leave All right. much. you

Janelle Frost

you Thank

Neal Fuller

Randy. Thanks

Operator

there over It remarks. Janelle no appears turn further any closing to are like to time. at back for it I'd questions this you Frost,

Janelle Frost

the Okay, boost news point of to amazed a dose find end of continues our great. employees, between. Thank joining to Nevertheless, and everything and history, a to to. return over normalcy of our through pandemic, injured their you. potential the the for happy Thank global to has peaks, our to how respond I'm our economy. and I’m workers you us the in clients to earnings the XX-year valleys good today. elements somewhat small us AMERISAFE needs vaccine operations the and Because agents, of

Operator

conference. today’s for concludes participation. your Thank you That

You disconnect. may now

AMERISAFE (AMSF) 1 May 212021 Q1 Earnings call transcript