Earnings call transcript Q4 2022

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Operator

Good day, and welcome to the AMERISAFE 2022 Fourth Quarter Earnings Conference Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Kathryn Shirley. Please go ahead.

Kathryn Shirley

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

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

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

will I the to over Frost, President turn and call AMERISAFE's CEO. Janelle now

Janelle Frost

Thank morning, Kathryn, good everyone. and you,

to quarter of pleased strong are the full XXXX. continued fourth We for and results report year the

we of decline costs a continue ROE trend For of the to despite operating year, XX.X%, pressure written of XX.X%. loss as reported and less combined point gross premiums ratio rate than X down, an

debt. strong with strong position remains sheet billion outstanding investments cash, balance $X reserve Our in in and no roughly a

in in fourth renewal see we XX.X% We retention offer retention strong which for to continue policies quarter. with

fourth ELCM, was quarter. as measured XXX a Our by for overall the pricing,

near growth headwind, expect and pressures expected term. declines are we the mitigating -- to wage remain largely ahead, though a As be in largely a cost factor look loss we to competitive

basis, we results wage the in growth XXXX. wage further. on be growth strong little metric saw the muted will into a this looking a When at year-over-year given Digging

is growth employees. that note to like primarily payroll existing coming I'd Additionally, from

Moving The year ratio accident remained XX% loss steady losses. at year. to throughout the

$XX accident XXXX. in prior experienced the from million favorable XXXX development, to we primarily year During quarter, years

$XX For the full in as year, favorable development lower released claims resulted severities. claim we active handling million in roughly

using reported ago, to As outlined we find on avenues our claims a drop and close claims. in call to year focused the resolve on open

we XXXX, compared at severe For XX year-end excess XX year-end and instance, case the in incurred year million. XXXX. I with this In ended severe with a claims XX of XXXX define as $X to those reserves claim at

relates both it and As to within are trends, loss our severity expectations. frequency

inflation of Bringing given very in to medical begin exhibiting our the back the steady health of year are our early and quarter XX% the pieces ratio up the to we tick the first as market to information half all in experience indicators. of expect certain loss together We the in the expect accident loss hold XXXX. we of now, year pockets have ratio at

we quarterly are our niche, and it business, to for returns Finally, shareholders. robust approved With of capital has policyholders well X.X% AMERISAFE's Directors our delivering of positioned to our increase Board as to compete $X.XX. in experience tenure in regular the long management, relates while to dividend a retain high-hazard new

turn financials. like to the the over to discuss call to I'd that, Andy With

Andy Omiridis

morning good Thank you, Janelle, and to everyone.

loss and difference driven net QX $X.XX with income favorably by net large diluted per million share. diluted or income primarily the of reported prior For million -- operating or $X,XXX share $X.XX per $XX.X $X.XX This net or per of year. claims in compares quarter a income income $XX.X operating the fourth XXXX, AMERISAFE of diluted with million $X.X XXXX of the of net and share

income was XXXX, equity $XX.X year, million in and move, respectively. million $XX.X in securities roughly was by unrealized million with compared net million full and $XX.X driven income net the position. $XX.X income our million For net sorry, $XX.X was The above operating in decline

million year, and written in quarter the the for million full $XX.X both premiums a relatively were Gross $XXX.X year-over-year flat basis. on

voluntary by audit adjustments million. premium related the offset was payroll premiums X.X%, $X.X of largely which and During quarter, decreased

by premiums For $XX voluntary pressured the adjustments declined remain declines by as industry full X.X%, year, partially related and loss audit costs. to experience the offset continues Rates million. improved premium of in

quarter year, $XX.X quarter in for the The in both ratio accident quarter was favorable million for for loss loss for the $XX.X XX.X% full loss full full year. year. year and was and the ratio which XX% reflects the net The XX.X% development and million fourth the

$XX.X with XX.X% were other in quarter of expenses the of fourth resulting an quarter, Our expense underwriting ratio total in million in the compared and XX.X% XXXX.

million year, full other expenses year. for or $XX the to premium the compared other XX.X% expense prior earned was and largely and the in as XX.X% underwriting full increase due were unchanged. The ratio expenses were underwriting lower largely in year with For the

in securities with cash X% investments. is other rating Approximately credit of and U.S. years. portfolio in an composition X% our XX% to which X% treasuries XX% bonds, of the investment is high and XX% average securities. XX% in comprised agencies, Turning includes taxable held-to-maturity carrying The portfolio. portfolio investment in in quality duration portfolio of municipal X.X The corporate munis, of our AA- and bonds, in is equity

$X.X reinvestment on The net income maturity quarter. as quarter, securities. year higher rates million $X.X increased fixed funds driven as the well was market to accounts, money bank from increase in and prior by In the on million investment XX.X% fourth yields

the net For investment $XX.X grew X% year, million million $XX.X income full from XXXX. to in

book basis driving higher XX previous the year. our XXX or than approximately points new yield on Yield increased tax equivalent points, investments X.XX% to basis

is total, strong position portfolio. reserve operating was conservative balance with on high-quality XX.X%. solid loss and position investment a equity In capital sheet, Our average return

to With of that, the I call the would portion Operator? for question-and-answer like call. the open

Operator

go Thank you. first to Mark We'll with from Truist. question our Hughes [Operator Instructions]

Mark Hughes

you. Thank morning. Yes. Good

Janelle Frost

morning, Good Mark.

Mark Hughes

as that was -- a maybe little talk bit? seeing about the say wonder I on least a Your pockets. amplify little more a Janelle, you little medical comment the measure could Could decelerated like clearly you're about inflation, seeing It last certain if in bit, different. had that. you but seems inflation, at something you're you

Janelle Frost

Certainly, certainly.

you medical the in our medical supply increase our a durable associated cost definitely health DME, of medical issues post-pandemic as of seen that obviously, we costs. chain makes injuries, significant If equipment, such portion costs things with out. and with cost, up severe about it types crisis, those we've happening claims, things And an pay think

cost component. will seen I call that -- calls, LPN, the medical help degree, think in that about injured equipment. I've health, put that to would couple particular home I is all what pressure Hopefully, read last of it to CNAs a with down the over on absolute we talked about we've Obviously, then with nursing, issues, supply we've durable inflation the just chain to experiencing would tamper our some certainly And of have like that health industry regard. like environment in that wage long-term health care workers home the

impactful that's us. so to And

we So we on. following, inflation the everyone a -- the whole, that industry that pockets eye trends are those keeping like maybe medical same costs follow not of certainly are is but our as that there else

Mark Hughes

quarters. I've Understood. couple question And think last the then I asked loss of on costs, the

the as as been? recent had Is it state-by-state negative new it seeing still Just you're trends, there? anything

Janelle Frost

Right.

cost the number down most look filings Minnesota. just order and latest magnitude, But you chart two are state, Hawaii there by shows to that's that just an only the rate increases that of give NCCI are recent down X.X% states a as I think I for NCCI was at if being last the whole of expected XXXX. for out coming the to loss be showing

And then the XX.X%. decreases range from X.X% to

-- using our I So filing in cost D.C. so that's a an mean, use larger filings. very one as was significant And again, swing. wide drivers. But those example, I'll Georgia down XX.X% XX.X% or the Georgia, states. last rate loss was their of

Mark Hughes

Yes.

to at numbers… fair if not any getting So better you it's say those look

Janelle Frost

Yes.

the As are to better slowing no. we of we -- a seeing seeing perhaps. going rate see decrease, Are increases, means, are we

Mark Hughes

yes. Yes,

Okay.

You used in what you was to. the Wonder I not your word if up could... referring script. that pick did And muted

Janelle Frost

problem. growth. was referring to no wage I Yes,

about to we So just had tagging on just costs. the loss conversation

to things see equal, other going have think that So we that in mitigate growth. we to fact that we're What degree the to we be being XXXX. will some help rate facing expectation this wage decreases continue all is

the voluntary to of audits debt though see I -- and factor basis, been XXXX. offset. some that been quarters, relatively it's that's a the payroll sort I experienced certainly, we've what mitigate down fact relatively But sort of degree. don't want mitigates what We'll I two in with mean happens premium, on that we've to flat. strong, wage does slightly growth, say completely we've think, in that audit So and been last the seen even we've

Mark Hughes

kind end market Anything yes. in in Yes, your tone? construction of any change you're activity, seeing

Janelle Frost

It's very interesting.

say seeing off seeing it on payrolls just monthly to new it few about very robust. activity work a of We're is is -- say have quarters -- I we strong. base basis, hasn't that been if So are employees. We're growth. the reported But from I probably of coming would X% that last us the wage

to there's the here, I'm all think same come rental is be reads the as we on is really read I business Wall going going just there across in our of recession, a a receiving, just say, if slowing in commercial seen the and We about just well. look I a it rental -- it, there at Journal would knock So I'm properties. recession? for about today that haven't headline wood data I haven't a potential is headlines Street I really seen to else was down. book everybody

Mark Hughes

sound effects appreciate I the Yes. there.

Janelle Frost

Thanks.

Mark Hughes

large And quarter? the then that Did fourth that more. development claim? in maybe on quarter Any one help fourth

Janelle Frost

you're -- No yes, right.

I'd reported no sit looking there's is the as the So of the fourth reserves to I'm catastrophic we those established XXXX at in here we -- can year quarter very and claims. in the been XXXX, that reserves. comparative at the if I regards you're with end today, I when development comfortable say

Mark Hughes

very you Thank much. Okay.

Operator

Thank you.

the turn to over call management. will back We

Janelle Frost

Thank you today. for joining us

with the pleased to Happy outcome continued are look XXXX, XXXX. in forward and [indiscernible]. We of success we

Operator

call. conference today's conclude does This

You may disconnect. now

AMERISAFE (AMSF) 21 Feb 232022 Q4 Earnings call transcript