Earnings call transcript Q2 2023

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Operator

Good day, and welcome to the AMERISAFE 2023 Second Quarter Earnings Call. Today's conference is being recorded.

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

Kathryn Shirley

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

call the it 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 the assumptions the materially are XX-K, be subject other undertake that Factors reports expressed and During today's 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-Q, 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

overall of cycles. workers' the XX.X% the ratio on market strong the in The rate is has an reported Thank high-hazard cost throughout to compensation are morning, Kathryn, good redundant XX.X%. equity margins approved of compensation despite remain ratio and return we a a below of second combined expected continue. softening. a loss industry-wide In declines profitable everyone. underwriter disciplined average and market workers' the market The AMERISAFE you, maintain line reporting to remains ability continued and that state is XXX%, reserves quarter, combined many demonstrated

the inflation our quarter, X.X%, quarter by and top year-over-year compared XXXX. declines a strong rate wage slowing, the when with line growth second driven slightly of in During continued decreased

second for with quarter, with the offer in competition. We recent for which largely retention continued retention experience, continue to line policies XX% we despite the renewal, see strong in

to As we headwind, look ahead, offset by competitive pressures expected payrolls. and strong declines remain a are rate

Moving ratio loss year to a losses. The steady current XX%. accident remained

drove loss primarily the in period XX.X% through These our outcomes, better-than-expected reserves ratio or development handling During from prior points. $XX.X XXXX. of claims accident years million were quarter, favorable released XXXX practices resulting

As frequency it previous loss relates than in compared trending trends, the lower line severity and our to accident both months. six are year slightly with at to expectations,

inflation year As stated these last trends medical quarter, and the reserves. progresses continue we to as in reflect expect to case (ph) increase [outstanding]

with no in positioned million reserve cash, position investments solid conservatively is $XXX roughly sheet in balance a and Our outstanding debt.

our expect to market We dynamics challenging. remain

positioned returns robust long and However, market retain cycles, to attract experience are policyholders well given our business, through tenure our to we while shareholders. of our delivering

and XX property casualty expertise Finally, the the AMERISAFE's for like recognition year. inclusion XXth testament stability high-hazard in highlight also Ward's niche, top-performing compensation consecutive I'd companies company. our and in of financial our This in employees' resulting strength workers' a the is to to

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

Anastasios Omiridis

to Thank you, everyone. good Janelle, morning and

of $XX.X income the per of or and of income XXXX quarter of $X.X $X.XX million share, or second operating income $XX.X of diluted quarter share, For share. and diluted $X.XX million or per net net net surpasses million the million operating net This per XXXX, of $X.XX second share. diluted $X.XX reported income AMERISAFE diluted per $XX or

of quarter million in basis. securities driven X.X% a second year-over-year our $XX.X the of gains by compared was the equity Gross to the written losses a premiums compared as were in income million higher XXXX, quarter in $XX.X of primarily as in XXXX. Net quarter to decrease on second

the quarter premium to and by related second compared for audit premium XXXX. adjustments the quarter rate decreased voluntary second to of primarily continued $XXX,XXX During decreased XXXX Payroll due the quarter, X.X%, pressure. as of

However, by year. for payroll as to prior quarter the the audits stand-alone increased $XXX,XXX compared

due incremental $X.X compared remains the million premium first lower are six off months primarily for XXXX related to the leveling Ceded to $X.X the and we reinsurance audit of some of in seeing coverage. While strong, wage to second the as for quarter costs increased quarter growth. to million additional due growth the premiums XXXX,

well to driven Turning million reinvestment million increase as increased investment the on by fixed maturity rates In cash investment to securities. our higher The net the portfolio. second yields $X.X year. was XX.X% in $X.X income prior on quarter, from as higher

quarter, the basis investments yield XX to approximately increased quarter basis book higher our equivalent XXXX. yield new the on of For than second points tax or X.XX% XXX points, driving

an AMERISAFE's cash portfolio bonds, the equity carrying US X% municipal of years. with investment a composition rating and credit portfolio quality, XX% X.X is agencies, in and is bonds, in AA- in in corporate The X% in securities of XX% investments. treasuries average X% and high duration other

moderate increase a in in $XX resulted Approximately is position the and during securities XX% bond held-to-maturity of net our rates the comprised portfolio of million. with quarter, of unrealized

As a reflected securities amortized not on in securities at are reminder, carried are and or book unrealized the therefore, held-to-maturity losses these gains these costs, value.

with expense other earned Our premiums. quarter Despite a in XXXX. lower due the expenses of were quarter, in $XX total in million line the of with ratio dollar an the resulting ratio the to the second XX.X% flat, as year, increased largely of level underwriting expenses expense XX.X% level in of remaining compared prior and net

last Our underwriting low versus largely second proportion XX.X% tax tax-exempt quarter. for of was to due rate income quarter, in to the income compared year's XX.X%

Our investment position solid with position strong capital a conservative high-quality sheet, balance is loss reserve portfolio. and

share, declared second dividend third this the quarter its cash of week, in per Board regular September paid on quarterly for to of September Our quarterly dividend X, of payable a $X.XX XXXX, of the Earlier the record quarter. $X.XX cash XXXX. as per XX, share company shareholders

-- and an other just finally, value was XX, topics. and ROE from of of December at share XX, our XXXX, X.X% XX.X%. And $XX.XX, per Book at June couple a ROE up $XX.XX XXXX,

the million million $XXX.X and XX-Q XX, XXXX, from December SEC $XXX filing million market end, close. with was March XX, be at surplus today, after we at later And statutory finally, Our our at XXXX. $XXX.X up quarter Form will

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

Operator

Thank [Operator take go first our Carletti And you. JMP. will Matt Instructions] from Please ahead. question with now we

Matthew Carletti

Hi. Thanks. morning. Good

Janelle Frost

Matt. morning, Good

Matthew Carletti

across over a of deeper hoping Janelle, little about kind that forward? of of inflation wage could versus you weaker your -- I going outlook the dive trends there just results curious opening kind Just insureds? Or in areas pretty book? impact I'd Are how hoping stronger was your particular quarters. have you is it talked bit your several past different maybe little be kind was in I uniform in how your might for a those it's evolved comments, or there.

Janelle Frost

we've door, kind guess, been I some I payrolls Matt, way, looking in which, giving audit are last in bodes few the Right. coming premium. like it’s think, in the coming for I reported of future as the quarters what door, mean being

we So few seeing I we the see wage have quarters, think continue to last record growth, moderated some things to have not been the probably probably levels at degree.

of -- of And So the most I growth. growth. wages, quarter think Wage was in payroll we had double-digit that XXXX, right? starting third

was counting was I itself, from around new it closer averaging growth X% this to think quarters, quarter, last the employees. X%. not it And in few wage

about a still we're growth equivalent on number, average. healthy to what very national So seeing a

X.X%. saw was, I point latest data the the think national for think, I I

wage much terms in line in very with So growth. of that

by the at look business, industry, I show our down some spending very the I slowing data, or construction still book construction BLS When If in growth, but Layoffs construction were obviously, of of is being data at numbers. data is still it did largest Analysis wage labor The sequential Bureau Economic look point. the construction in last market for still up. up. healthy

over of group, particular our book well for So is things I XX% of which think bode that industry business.

employee for what been very somewhere prior it as From from steady count, was new quarter that's this quarters. the well. new a for X% employees, averaging around it was We've and

So we're really additional not workforce. seeing

Matthew Carletti

Perfect. really year? into That's gears Top capital kind been update you continue on And shifting you come then kind super might off good has to returns. of as helpful. us how flattish you Could thinking year-to-date, throw the little be end management line of just you about of the a bit. maybe

that we forward? Just going how think should about

Janelle Frost

talks every Certainly, good up you our capital quarter. this as mentioned, putting -- We actively really and about year. absolutely. Yes, management returns each we're Board

last great this some happen. the looking has year been so where for don't in We I year, six growth. would some organic few opportunity stance to years return Our to to see see is like The shareholders. a that at think sit really months. to that we I strategy that capital Obviously, there's today, in change

quite cost due would in saw quarter We premium like changes. out though dollars even this to even count didn't the loss an to the way we increase them policy

I I little see a and we're gained we feel new of We -- don't between approaching are momentum But to business. dividend we've special don't really I -- year-end. in ability do of at are again, now terms six our pay months, a how impacting like here that bit

Matthew Carletti

Perfect. then ELCM comments, it quarter. just opening the the Okay. your one, in last I probably I And and quick apologize missed for

Janelle Frost

XXX.

Matthew Carletti

you Wonderful. Appreciate it. very All much. right. Thank

Janelle Frost

you, Thank Matt.

Operator

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

Mark Hughes

morning. Good Thank you.

Janelle Frost

Mark. morning, Good

Mark Hughes

broke The kind could not I'm put you quarter, but a pieces together out that audit of more the sure properly. that detail, in the in I premium little

just I for What's premium the the quarter, $X.X the use audit in you million. second could quarter second last report... your think of if I year that was number should

Janelle Frost

[indiscernible] $X.X million.

Mark Hughes

okay. going like of Very this The kind million, was $X good. up because little something the a we million, of should $X.X level forward, about mentioned you reinsurance. premium, $X.X million ceded Is that? bit expect

Janelle Frost

-- It that or structured is. $X Mark. our recall, We renewed we we year. which call Great Yes. million may product a layer working excess million, of this It as you $X is. question, have product

XX times times X XX. also in XX-K, extended the XX to of a we addition of details and are of the our added times XX In two, topside all layer, that finite which

-- obviously So run have But little this coverage an there that. the dollars accurate would and associated there's yes, more we rate with rate have quarter be -- see the rate. you a run we

Mark Hughes

ratio ratio said, there that, Andy, or anything any was -- Then like Were were is assessments little steady, a the influenced as yes. you the that higher. dollars Yes, number? expense relatively

Anastasios Omiridis

No. were would this flat. that have no were -- assessments quarter our there Actually, affected they

Mark Hughes

Okay.

$XX.X good perhaps baseline on kind So that million, expenses, a is go a $XX is million, of forward? the

Anastasios Omiridis

$XX,XXX. say, two yes. was the the would I I between again, years we -- are difference mean

a million, $XX $XX.X think, I perspective. is million, from correct rate the run So

Mark Hughes

Yes.

mentioned Okay. kind partnerships that idea marketing of other And then Janelle, you or of that this initiatives business can new Any to update carriers. at had or with on pursuing point? potentially the any you other speak

Janelle Frost

hey, this is as done. Sure. what we've update No in,

very we've who's Wise, Ray added going very We are I'm still company. excited excited exploring my be Sales avenues. to a taking -- the Officer, closing Chief you're I'm that remarks, new joining

doesn't experience, of amount I'm broader excited have in -- And really to relationships about particularly say, agent to He whether is just effective that board. to, pipeline, we're agent I has tremendous our more on we're regard. talking more how widen -- for and think be So do to been workers' that it Ray a job and agents, compensation. in a we've means efficient that force. great necessarily going that Ray And with mean us our going

Mark Hughes

And then the you've medical that been pointed front, Yes. it's inflation out on expected. as

-- at it it with anything You accelerate new points, claims signs any the by. you're data will or trends... will anticipate goes the seeing idea in time that of you're as reserving that, Any least actual the that

Janelle Frost

with know than I've I just that pockets times other calls, Mark. we've had on talked pockets I conversation these No. about numerous and here this mean there. you, the

One updated constriction things our reimbursement think our Either of to concerns inflation expenses to directly happening we're two we're care, industry the related health medical is all to of its I of going in schedules find the or rates to see seeing care -- our going into the a going supply. cost or updated ways. start for that fee one way are in is,

according compensation opinion, if In I there's is an am workers' health. talked world am if will example where I of about for of carriers. is limit provider, of prior them available. That's they reimbursement just And point their opinion to Janelle. to the home this I less the reach supply where a it calls, constrict not care comp their as advantageous think for is workers' medical I a -- availability the providers rates or

going the specifically its medical I way -- XX% workers' we've Not not, to one That's cost widespread, in a community seen has industry think, the is system costs. a way fear, mean, medical people you're of all a high the are in costs company, any know that we ultimately that comp I have. given medical through labor the but increased or lot of your work related to hazard whether XX% another. or to incurred

an Go as I'm -- AMERISAFE ahead. example sorry. using So

Mark Hughes

-- you going. no, please No, keep

Janelle Frost

of we as really using closing example, I was is focus the one going say on an AMERISAFE to claims. things

So we've been this fortunate year.

have are come been counts than last quarter, starting but year, have have think back, we I claim quarter rates to -- fewer still Although claims our did at XX we this we reported still good. really second closing

So my had year XXX I over I at adding had even I I'm less inventory, year-end, and claims second open than fewer have last quarter even than XXX claims. reported though

we're really So future and a claims on better of closing medical getting of lack term. sort against settled, costs, those focused for them hedging

and that reflecting only but reserves, not liability. close it in reserve sort to case claims of finding So to -- limit claims our ways settle to

Mark Hughes

forward? And Yes, good Andy, then a going rate yes, the -- exactly. what's tax

Anastasios Omiridis

tax a is XX.X% the say would good I rate.

Mark Hughes

Great. right. Thank All much. you very Okay.

Janelle Frost

Mark. you, Thank

Operator

that hand or does . conclude Janelle for any over closing back that, call to session. question-and-answer like our I remarks. the would additional to And Frost with

Janelle Frost

moving would welcome Officer. Thank to AMERISAFE team. the Wise said through has will Mark, to you. play Ray He background than our the I company of fits like driving to leadership appointed results in I as integral would role -- I AMERISAFE's of and industry. Chief has Sales XX more Ray been well customer an officially experience with in years model experience in His the forward.

joining for today. Thank us you

Operator

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

disconnect. You may now

AMERISAFE (AMSF) 28 Jul 232023 Q2 Earnings call transcript