AMSF - Earnings call transcript Q3 2021

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Operator

Good day, and welcome to the AMERISAFE 2021 Third Quarter Earnings Conference Call. [Operator Instructions] At this time, I'd like to turn the conference over to Kathryn Shirley, Chief Administrative Officer. Please go ahead.

Kathryn Shirley

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

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

Janelle Frost

agents, compared was foundation count written a sheet. created buy policy premium for business, our our year. policyholders found opportunities policies of also strong solid Kathryn, the grow strategy deploying for combined retention an ratio built quarter's compensation underwriting, In voluntary allowing everyone. last pleased We injured Thank in good to expertise services and safety the Competition when a services by We in and in to XX.X%, down workers. new for promoting and rate by individual our quarter. morning, remained The benefited and on the XX.X% shareholders quarter strong safe quarter, value and us workers' were performed caring our was results, maintained balance workplaces a you, of our with and to we associated and evaluating strong risk reporting through XX.X%. These ROE of X.X%. we this competitive

cost period. our the For average renewed policy lower X% for perspective in on than the prior the policies decrease, were quarter loss

the this as covered the million. resulting was decreasing quarter the Our in other X.XX. by impacted Audit measured written premiums $X.X headwind payrolls premium given was a audit not the slowdown. This pandemic negative. ELCM, quarter adjustments, by was fully quarter audited A the premium pricing, surprising our economic in was and and slightly overall in premium policies by

payrolls by X.X% payrolls and will slight number year future growth are from impact by prior now, mostly the increase in total, down driven seeing in we of being for the growth wage in gross As a audit In reported quarter workers. premiums written quarter. which was the premium,

and or Turning Prior to better-than-anticipated our year ratio favorable experienced losses. We $XX reach adjustment in loss the million quarter as loss favorable by development prior handling accident in outcomes. quarter points. practices case expenses year reduced the development loss claims XX.X

our injured for We reach closing on singular workers' are workers, and to maximum pleased us improvement compensation settling return that medical claims. while enabled focus to also experience and and work

based in of Severity loss within trends on year, remained our year the claims the quarter, unchanged. of accident to has XX% for returned not current the are premium ratio our for Therefore, current accident up was As but frequency earned pre-pandemic levels. expectations.

potential cost costs of the on the healthcare monitor long-term to medical continue We inflation. impact rising

Neal now the and a and management. expenses this we're wages systems over the in we seeing costs, earlier I increases workers. attract trend medical concern turn retain to going will, example, and plan is believe some healthcare I call and as nurses to inflation nationwide in this watch. slight the investments, to discuss care nurses injured particularly raised impact long-term will for I capital I the paying an cost for forward. pandemic, are As demand to believe,

Neal Fuller

morning, you, and Thank Janelle, everyone. good

share or third decreased the with the quarter to quarter premiums in from $X.XX $XX earned for decrease net the For diluted a quarter quarter. XXXX, Net $XX.X million year's million million income third was $XX Revenues the reported of in per XXXX. decreased income $X.XX third per net AMERISAFE in X.X% to or compared of XXXX. year's quarter. share, compared to quarter or third million $XX.X diluted $XX.X the of last with quarter of compared third Operating third of million $X.XX last when $XX.X million $X.XX share per

Turning the XX% and quality, ago corporate not high other value these an XX% balances bonds dividends. investment decreased rating continues The of by in quarter costs. million to quarter XX.X% amortized third in well are quarter quarter quarter, a ago. X.XX were the with munis, is securities These our fixed with There or yield year higher which the at The million or to losses investment The portfolio of portfolio in bond unrealized quarter. in lower X.XX% the our was in as $XX.X taxable securities in be the carried significant X% reflected as Approximately our securities, in were equivalent agencies, the investments. income net XX% was end. U.S. with investment in of $X XX% in which cash bonds, of yield in on at position minus on XX% of third treasuries of net portfolio, end municipal X% at driven gain at held-to-maturity portfolio rates from our the carrying no for investment and realized comprised down book includes XXXX. unrealized and in compared the pre-tax average third gains X.XX% special million on tax a portfolio duration end as in interest equity $X.X X.XX% of cash bonds, is The decrease income AA credit year the to quarter. a and gains are

Moving to expenses. operating now

$X.X lower a other $X.X expenses million expenses. $X to of $X.X were the of compensation expenses underwriting $XX.X year's related of third and due third in lower with the quarter XXXX. of due sharing the were expenses million $X.X in fund. and of increase the an $XX.X XXXX quarter million to quarter assessment third multiple total $X.X million in XXXX. injury compared to XXXX million benefits, in the salaries third quarter largely commissions accrual for million expenses were included million lower underwriting last the in Our was costs. quarter benefit The termination million a from category, benefit, profit Adjusted well as treaty a compared quarter By reinsurance of to the and on and and These third as other commission a

last the last benefit. million for ratio in XX.X% expense expense $X.X adjusted an expense year's ratio XX.X% Our quarter third compared with was year's for quarter, of

on for investment This income higher of estimate effective XX.X% and to quarter compared was period last Return third quarter ROE for compared of the same third equity to from for was of the underwriting quarter. quarter due taxable in to tax compared quarter the Our was was XXXX XXXX. for a rate XX.X%. XX.X% Operating in year's third XXXX. the XX.X% to the income XX.X%

our company's per Now XXXX, per conjunction to of Board XXXX. a declared brings years of release, nine November of November for turning This to record paid to of share $X the dividends as amount shareholders the announced capital last the Directors special shareholders out management, with in earnings in XX, of $XX.XX XX, and as dividend share. special on payable total

$X.XX of share other at items $XX.XX, per also a value from was shareholders of dividend X, as And Directors note. XX, declared per cash In XXXX. December up addition, at a Board to Book of to the few of September XXXX, December share record XX, finally, year-end. XXXX, company's payable X.X% on quarterly just $XX.XX

the can some SEC the we session. wanted That close. found and plan with XX-Q for concludes let now after on finally, I SASB open And to Next, disclosures the published These the our that disclosures, Operator? with up remarks, we be tomorrow know like company align call the and Form standards for my TCFD to you file recently website to additional investors. Sustainability. our would under question-and-answer sustainability market which

Operator

question Please Hughes we'll and And take go first Mark Truist. our ahead Instructions] ahead. [Operator from go from

Mark Hughes

audit what a didn't then quite you I basis? anything say driver go-forward on the about pick it Janelle, was that What quarter? And in up. mean did the does premium?

Janelle Frost

negative, audit was total. I for the premium quarter that is Yes. said in slightly and

remained we positive. that of had So classes certainly still business

it roofing. looking forward, had was economic still we're for the remarks, the us on seeing oil example, for payroll in wage based well is But a gas, remained slightly the audit Lumber, negative. construction slightly total, of was negative I responded was But quarter. and positive workers. sans quite we're if even number prepared positive. my still seeing the also seeing growth. that Trucking slight in example, we For for negative and in positive. the pandemic are Roofing mentioned which increase We're been now, slowdown, has with right premium. during

audited. audit that kind premiums when this of maybe to policy future speaks period is So

Operator

Mark. recall we'll [Operator Instructions] and And go ahead

Mark Hughes

the you're like XXXX, think are trend the a now little I similar still that likely look dynamic? a a would thinking And I the period, Thank If properly, we that know the but QX, the to maybe positive. QX premium that going question about think QX I about macro Yes. over would don't would quarter, audited just from or to maybe a my guess policies hear is, back I the similar that see Or... to assume I'm fourth in thought is intervening saying guess quarters I -- been see have perspective. audit you impact? I'm about But what wonder you. have are mid-late I or the negative? they're payrolls if thinking better. when be we I the going

Janelle Frost

out, don't don't going how that's know pan I say Mark. -- that to know exactly this. I I'll

your I were do that little -- thinking economy you quarter boost about first to If that fourth a period, -- to bit -- back point, XXXX, aspect. think quarter in from the you're XXXX, seeing think some the if of time we

slightly again, negative quarter. ever but So it -- so was this

-- So we're and a us concern. a big surprise not to major that nor wasn't

Mark Hughes

guess the Delta impacted interim have I aggregate the in you Yes. yield... that Yes. variant the might had

Janelle Frost

point. Good perhaps. Yes, Perhaps.

Mark Hughes

that to How is expected. but about last pre-pandemic as the not -- to be bit levels, you little Wouldn't up ought year suggest severities accident returned lower? a mentioned that year from current frequency

Janelle Frost

great question. a That's

claims levels. We the return reported number has have to pre-pandemic seen That happened. not not of

remarks, as pandemic, in kind prepared the the the things of of side, costs the watching things healthcare of we claims. -- One about and severity our long-term and what in early on the we're is mentioned on we're of component the this one happens talked I

current out reserve accident As those We you for most year. quickly. case the even reserves likely know, rather we we reserve, when outcome most

rate And pay what so we're the we're these services. of going for to having for contemplating some

is there's national and to medical Now debate is it how our the a that long currently. as I lasts, it sustainable reality for guess but community,

Mark Hughes

number the losses in compared large or year? And Yes. the last of year-to-date then to quarter

Janelle Frost

end the end of nine as quarter, the as -- had the quarter, or of in of of We the the quarter not the in quarter, nine.

Mark Hughes

through it two what And three last was year, quarters?

Neal Fuller

three through two Last the year, yes, same we we last at had time, XX quarters, -- had year.

Mark Hughes

Okay.

large prior this the bigger reduced So down how a any And even the quarter level. then or from quarters? your regional versus either about losses, of difference competition, behavior competitors,

Janelle Frost

remained of quarter some backing itself, we a hear. which, hazardous changes quarter. the really in I from would some -- say we been there rumblings competition strong, lot of Post have like didn't of In quarter, say certain course, classes, to I'll the carriers away see

Mark Hughes

that commentary? Right. ground? just the on in Or public that Is you're sort seeing of

Janelle Frost

We're that ground. the seeing on

Mark Hughes

-- that bad are Or... some Is they Yes. results? having

Janelle Frost

-- can't I -- say underwriting appetite. don't seen this. other will I've what -- I I've I heard to -- companies' haven't speak seen drives I

of adverse something public, my as current seeing certain carriers I haven't can't head, top as there's speak development So development, I know business. seen if year loss on the but in think to adverse I pulling up, of right? view ratio think I off of But companies' but no, yes, that. out I you we're go the to don't can accident seen that what reporting classes that ground of of we've

Mark Hughes

of one it you but I'll written I'm audit about still premium maybe down was low like bit a it ex a Yes. end, little just It thinking digit... if what ask your seems properly, low X%, more. had dip, premium, single

Janelle Frost

average, cost for voluntary quarter. during Loss on X%. X.X% the

Mark Hughes

recent of Yes. kind middle claims. of the That's

Okay. Thank you. All good. right. Very

Janelle Frost

Thank you, Mark.

Operator

Matt from And we'll on move go question our Instructions] ahead Please [Operator from to ahead. JMP. Carletti and go next

Matt Carletti

Thanks. Good Morning.

Janelle Frost

Matt. morning Good

Matt Carletti

there as that in say, hold, of A couple Would severities kind mine. covered that we a to pre-pandemic or accident But following just next and that, loss expectations frequency loss items, cost be norms speaks of it a at the questions. to couple and that below within kind conditions severity think stays need think will right about there otherwise on frequency those of or unchanged Or year that likely we year Mark discussion. up that that if ratio? to, equation? are continued ahead to other be think pressure

Janelle Frost

we high decline. that -- approved loss now, Matt, right we're still mid-single-digit costs seeing in to

I inflation. you we severity are do, we are on with cost set what us. my larger of is So huge concern what to know cost particularly a obviously, we're what to the said, trying ultimate we medical when looking ultimately Like happens costs think really side going that component for pressure. reserves adds -- medical when claims are for these Obviously,

employees. of growth. And reported a the uptick -- that have Same actual side, we of But I reported from this, premium. the claims, more little From often number so our higher bit that -- higher we wages, the say is severity workers, number growth, we've seen seen wage a slight like wage in which concern. will say of we the

entering the that degree. drive classes these that let's If out. further, new some to classes play of business, economy we and even employees frequency hazardous -- could higher rebounds So have

think on has so the relatively would an loss frequency for employees be it to be new baked but may how long. been into interesting see the You impact decline It'd quickly. balance those frequency cost,

Matt Carletti

Yes. That question. then another makes sense. And just

You a medical and wages nursing side. little severity just of that that mentioned of you cost around, you're on lines, I particularly kind element think concerned mentioned the bit those cost, along

staying mentioned virtual it Have a start power legs in But cases. obviously, recent that as and people persist? medicine, quarters, that something in you it stuff, pandemic, seen helps that right, kind some some to you Do maybe some severity of kind you bit? but that's that has the used once can be has to needed You've be remote using not that situations. having little of see that that, think -- and it used in only certain offsets do it medicine

Janelle Frost

think long-term care. to I acute do. people going for silver lining to do you're think an Certainly, But that basis, a there will, pandemic to in you've of how lost some severe it all care. instances, there's access them. do impact I on of think the injury, I change for arm, some go I industry, could medical one be If there's us. the

Matt Carletti

and Well. Thank on answers nice the a you for quarter. congrats

Janelle Frost

Matt. you, Thank

Operator

our call discipline for And the question-and-answer does the team, Thank that, it do turn the out. I imperative expert or term. And In is our this season believe Thank of consistency $X you this with and for session like the what back to thank us I to giving closing Frost today. discipline thanks, dividend that operational AMERISAFE the AMERISAFE additional employees the to in you. now is long that day to of you would conclude for any rooted recognize commitment remarks. over and over today. and Janelle reflects joining day they in to and special

Operator

conclude that today's participation. call. Thank for And does you with your that,

You may now disconnect.

AMERISAFE (AMSF) 30 Oct 212021 Q3 Earnings call transcript