AMSF - Earnings call 3 2023

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Operator

Good day, and welcome to the AMERISAFE 2023 Third Quarter Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Kathryn Shirley. Please go ahead.

Kathryn Shirley

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

call the it amerissafe.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

are statements uncertainties. current expectations on this we be will based and call, risks making assumptions are subject that During various forward-looking statements. These to and

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

G. Frost

Kathryn, everyone. good you, and Thank morning,

count top increase third in the momentum in-force as grew in well our quarter, increased with policy audit During premium. as an line

last However, the compensation workers' market our some quarter, with to more inflation. expense during rates, on. ratio stable declining by The overall wage has the was infrequent which from provide items quarter, elevated partially due fairly detail Andy offset will remained

ratio return equity quarter, we many XX.X%. our of Our combined underwriting third cycles. maintain market is In ability strong to a a of the on and XX.X% throughout in demonstrated average discipline reported margins

for the the X.X% voluntary increased of written compared quarter in line policies quarter with third X.X%. top Our with XXXX, growing premium

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

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

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

word relates with lower trends, at -- since previous and it It's the were prepared to expectations, trending with when claims in year severe claims of year, favorable compared I an lumpy I when when reminded used severity is while to remarks, but a in line been trends the no my As than end reporting am that frequency there X loss before both months. our seasonality happen. accident

High utilize on shareholders. within While to hazard the outperformance market to we remains policyholders delivering business, company demonstrating work our position risk strong for continue the we retention industry. high our returns focus attract position robust with the challenging, to new to while

to reflects turn to capital through value to creation over capital the Andy deployment call I'll shareholders operational dividend. Before returning declared I the XXXX. record December for company's call Board X, our that, dividend Directors of the financials. excess of discuss of AMERISAFE The excellence special $X.XX returning Andy, appropriate. shareholder With wanted of to as and dividend when discuss This over our and the to special a of commitment

Anastasios Omiridis

and everyone. to Thank you, Janelle, good morning

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

share. XXXX, $XX.X $XX.X tax to third quarter high basis. by higher income primarily million third $XX.X interest a driving million million the per as compared and on third XXXX, was of income $X.XX as were driven premiums of the million rate XXXX. the quarter in lower of During income in written or items driving the expense tax-exempt quarter, X.X% versus quarter ratio well net year-over-year Gross a $XX.X less growing in quarter the share The operating income was certain of diluted net or diluted net the $X.XX per

related and the adjustments to third written audit quarter of an million $X.X $X.X XXXX. premiums premium in as million increase by increased of compared Payroll

to out we to was to premium for quarter, some the due expect audit additional costs quarter, million flattening this quarter primarily in to prior coming premiums strong year reinsurance the related While compared continue coverage. increased periods. $X.X Ceded

total expenses quarter, in million with and compared were year in the XX% a Our increase underwriting million $XX.X other $XX.X prior recognized the the quarter.

This a development due an $XXX,XXX quarter increase due an compared in in XXXX. $X.X older of from reinsurance ratio $XXX,XXX treaty, increase expense in in million fees. and The commission XX.X% increase regulatory assessments resulted reduction was to increase XX.X% to expense of adverse third primarily with in a commission and the profit-sharing

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

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

third XXXX, realized new investments approximately basis sold driving X.XX% our in yield with securities on Realized equivalent points the on $XXX,XXX basis equity security. yield quarter, an increased third XXXX. of higher were $X.X million for the the gains primarily For compared on XXX quarter portfolio XX than tax related to book points, during quarter gains to the or of quarter the

during with X% a increase net agencies, bonds, of unrealized cash end. at the years. in our bond bonds, in the Approximately was is due municipal quarter X% of and composition high-quality of rates corporate securities equity rating portfolio XX% held-to-maturity position $XX.X of credit million The the loss other in XX% in portfolio investments. X% duration quarter, minus treasuries U.S. carrying comprised AA is to a investment is X.X And the and notable portfolio in in and a XX% securities. The

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

and portfolio. At Our quarter end, cash investment high-quality cash conservative with loss a capital million position $XXX is roughly and sheet, reserve AMERISAFE equivalents. solid strong carried in investments, balance position

regular paid per $X.XX cash third Our the share quarterly its quarter. of dividend company in

This shareholders of quarterly of finally, to of per December $X.XX a declared as XX, December topics. cash a And XXXX, the quarter, X, dividend just XXXX. record couple other share Board on of payable

question-and-answer Book tomorrow, value And XXXX, call. like close. increase XX.X%. $XX.XX, per October average with of year-end market XX, call XXXX, open would Form on Friday, the the the finally, of X.X% equity will from I filing was operating and an the Operator? XX-Q to SEC for share was after our return With portion that, we be

Operator

first Our with Hughes Instructions] Truist. Mark today question [Operator from comes

Mark Hughes

Thank you. Good morning.

G. Frost

Mark.

Mark Hughes

you Did number? the give ELCM

G. Frost

XXX.

Mark Hughes

expenses about -- you happening costs. And anything up you then are all employee inflation. health medical do care going about and that? seeing benefits with do think There's What you this how talk

G. Frost

It industry is in jour certainly comp. the amongst du the top workers' of everyone and

I other compensation given think we the believe we cost system. the will care see that eventually the any this at that pockets we've there into that -- point, all health truly anecdotal data seen to it and point know of elements of industry. prolific But I can't way believe impact would workers' Nothing work than indeed that experiences. here I I say its that

view little thoughtful the do little I heavily case for -- think cost are depending they're are people expectations in think medical about contemplating industry do on it a our when AMERISAFE that. being However, on more and companies more reserves, is reserves. people relies in a of probably reserving, top how mind or they their cautious I

case in the practice. approach their taken Our case that FCMs us haven't has medical inflation have long-term always or that to a and past, medical reserves, individual we within and inflation benefited our changed

the pockets look happening, closely So really what's monitoring particularly for landscape medical degree but are, always to feel some and we like has of I trying to as we are savings changed. when

Mark Hughes

but The the than presented, -- first top line it Xst positive on yes. that's helping this is XXXX not there going top is dramatic anything I'm premiums a at -- think and support calculate it Yes, number since line we little ex-audit quarter but if a differently to the properly, looking here? you I XXXX change,

G. Frost

Yes, couple few over there. a growth reported the policy happening I'll that talk -- is some of We've last things quarters. there's

growth. a follow have the policy been necessarily rate that's But So didn't premium positive. the -- decreases certainly, dollars

This the penetration business, no make work the we relationships, contacts the within agent ease even their AMERISAFE sure had able grow most count the to the I trying we're that growth. and employees, rate were And making question, declines, hard of doing quarter, more policy of of really to agency. that right we still but to attributed making

kudos -- So really and them to for making difference a there.

as shift don't in view a the I it marketplace.

same AMERISAFE wage time, of we've -- I If walls for wage right? X%. sort talked were think of I the a rate of back, XX%, inflation efforts XX% we that it's needle. increase, within quarters. is a number look acting more At moving as of inflation So reporting the about X

the industry than but This terms average was down X.X%, as quarter, to wage still of countrywide higher inflation. it the -- in

terms the of in putting certainly not really premium both books we're So audit seeing much. well. as course, the of that We're premium shift that benefiting counts we're new now employee all then, that and on

don't the terms add they're in So to to labor of point but where a I economies for able I are feel strong, not like our insurers -- new shortage the experiencing being workers.

Mark Hughes

you large the through Could X months? give claims number Yes. of

G. Frost

with $X quarter X the million. within case over incurred claims ended We

If from was last last you I [indiscernible] look where so down year, were at that were we still that we compared slightly at where think XX, to year.

Mark Hughes

was the -- profit the had there? circumstance offset reduced that... sharing treaties they Did the impact own to reinsurance sharing, adverse you was or your had where reserves? what profit been The have what would Yes. Clearly, you reverse that and

G. Frost

were just good commission with caused This treaties Yes, profit sharing XXXX older there that and reverse. had where to that that is treaties development, a associated very was adverse that prior some these ceding it those were point. or to claims

used it's So over And know it It on very -- you're older but those But something how word impact period it treaties. experienced in reinsurance right. that was often, I development not we we profit aggregate of that to time. didn't was didn't the quarter. describe commission to been particular because that it really a years. infrequent. the net Obviously, had that accrued just absolutely happens the

Mark Hughes

rude, then about Any COVID 'XX I'm you're have years, of and obviously And I'll kind been the developing? accident being on 'XX X and observations ask those those. fairly taking the more years, gains but how

G. Frost

industry but different would a say expected. the that the great question. our years any accident think, a were are, COVID standpoint. that lot Yes, down those claims I other yet that's differently think right? us -- year I bit our are still they're not So than severe expectation, within for had of a developing we little than se, I counts per claims, claim any from developing

hasn't That our 'XX 'XX, 'XX than say either way. 'XX and we any in fourth claim within cat they're 'XX, accident that -- developed they're had and Obviously, within of at had I talking year. or this expectations you're our in at for the the the think point, quarter. I -- would expectation So differently about our just that end right, we

Operator

Our Instructions] Matt next JMP. question [Operator with from will Carletti come

Matthew Carletti

Mark feels he you and specifically appointed noted a little of there, new bit? covered in what Officer he focus don't It Could a so ground growth a a left unturned maybe of stone no underwriting effort a like there's concerted agencies. you being had of not of the more dive was Sales course, rude. appetite. of kind expand I that just to -- Chief you're within on making I about maybe I your every mean and Could little have sure deeper -- on -- the doing you this on question towards is little just your kind some summer. lot at

G. Frost

That's no left stone way this. unturned. I'll put start to with it a great

and not Our discipline and changed. has selection appetite our underwriting risk

start I'll there. So

relationships. it I in focus way Ray phrased company on -- the Sales customers right. Chief is, Officer, absolutely you like brought would the Wise. our was our I elevated and agent the And feel a agent You're phrase We we've it within how

but We've level. past, they not executive the had Head of at Sales were in the

So it's doing that at focused standpoint. sitting a when need decisions, be really making from the we're agent we having on that to person customer strategic table what and

have we in before, even change good the working effort time, hard to trying -- for the like our on that from had pushed that. company, I and customers to things So employees ease concerted agent with a have of within look said even At relationship. -- come doing our really I business, same

like I sometimes is a that root. And take while it things these momentum to root. take to feel takes And starting for

Operator

comes next Truist. from Hughes And question with our Mark

Mark Hughes

next the couple important. Any construction more. a commentary job of market. seeing the you on end Just that... concept How very is The are

G. Frost

They the being construction My employee large, relatively way and show book, my a gauge Right. both of large payrolls some -- in is our And but us increases. payrolls best best monthly wage that basis. new reported been what's strong. have on count not to growth

holding up that aspect, from quite well. it's So

an The to people, that, something largest roofing always think construction. is we that we out not are new to that class aggregate as benefit report we construction at. is within And Roofing I always component really which like necessarily experts remind maintenance think There's I risk is from. roofing. group. a we

there in -- feel even lag that resilient. So if pretty well or like a downturn is pretty commercial up I construction, a holds

Mark Hughes

at what kind thoughts I leverage. And properly, know then of position to special there if Where no dividend, point, at guess are your I I debt looking this capital? is your going you've is think. so on got, nice you? I'm that it underwriting

much you more If capacity could you with did debt, add? lever up how

G. Frost

underwriting do when declining this the AMERISAFE right profitable long time. the for an about leverage. market writing has do about I'll has asking is enabled this Board business? those been the very us invest Do in we say we really protect of was started rates special we And has Yes. Do been what And build capital? with so our itself and And unprofitable you're to softening, question the to in excess it the from terms then capital. and think it standpoint started profitable that -- I margin? a question -- was thinking about dividend.

Obviously, our to decision the was margin. protect

repeat our may the change decision turn, starting return shareholders great, to dividends grow that was capital generate I we've declaring there I'll that are to some some accustomed And so the capital return shareholders. is, and to and organically would work returns be this which to are along, as shareholders. that. led all see it organically to that, in us we able expect put to But is to to, this to special point, to as growth, to the At we're said to that grow capital

acquisition. yet, we're momentum, right? yet. there's we're but And and But possibility there not a seeing as course, then, there of of not of now, the right always merger We're

on we You have mentioned the no debt sheet. balance

So and repurchase shares something. there's then go program out still And as -- but program. a haven't And share little over we left there's we have that if of repurchase $XX any use capital, roughly buy to a another well. recently, that's were share million we in purchased

Mark Hughes

comment, the sort put see trends, know just you or I of the release if curious that. then And cost Appreciate loss out don't of what you that NCCI. in a made but

G. Frost

Yes.

for around think for I going NCCI's and around, latest number averaging around -- XXXX into somewhere X.X%. XXXX somewhere is

effective for were that that became costs this around loss effective So average -- AMERISAFE quarter X%.

So still that slowing a still but in maybe or declines, loss rate cost declines decline.

sharing what there's either needle in that I'm were in in approved see future being costs. going basis the that on if data loss other CEOs macro completely near reported industry terms I a that But candid, move in or just the that of were to is nothing anytime

appreciate that. you, we're just I Mark. think Thank I something pardon? that's --

Operator

And I'll any or Janelle turn Thank conference additional session. the to that remarks. Frost you. question-and-answer for now does back over closing conclude the

G. Frost

We are claims today. driven results, Thank disciplined when by the fundamentals we on, and underwriting, with particularly proactive focus for you pleased the extensive management. us joining safety quarter's

Operator

thank conclude today's We And day. thank and an you. your Well, excellent does participation, do you that conference. have for

AMERISAFE (AMSF) 26 Oct 232023 Q3 Earnings call transcript