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Date

Friday, July 25, 2025, at 10:30 a.m. ET

Call participants

  • Chief Executive Officer — Janelle Frost
  • Chief Financial Officer — Andy Omiridis

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Takeaways

  • Voluntary premiums written growth-- Voluntary premiums written increased 12.8% in the second quarter of 2025, driven by higher policy count and agent effectiveness in a competitive market.
  • In‑force policy count-- Policy count increased 3.4% in the second quarter of 2025, attributed to new business production and a 93.8% retention rate.
  • Gross written premiums-- Gross written premiums totaled $79.7 million in the second quarter of 2025, with audit premiums contributing $1.5 million (down from $7.3 million in the second quarter of 2024).
  • Net income-- Net income was $14 million, or $0.73 per diluted share (GAAP), in the second quarter of 2025, with operating net income of $10 million, or $0.53 per diluted share.
  • Investment gains-- Net unrealized gains on equity securities were $1.8 million in the second quarter of 2025 and $3.1 million in realized gains, both primarily from equities.
  • Loss ratio-- The current accident year loss ratio was 71% in the second quarter of 2025, with lower frequency than in the second quarter of 2024 and severity trends remaining within expectations.
  • Favorable reserve development-- Favorable prior accident year reserve development totaled $8.6 million in the second quarter of 2025, chiefly from accident years 2020 and before.
  • Expense ratio-- The expense ratio was 31.3%, compared to 29.8% in the prior-year period. The increase reflects investment in growth, insurance-based assessments (contributing 100 basis points), and a premium-earning timing mismatch.
  • Net investment income-- Net investment income decreased 10.2% to $6.7 million, attributed to reduced investable assets after a special dividend payment.
  • Share repurchases-- The company repurchased 63,000 shares at an average cost of $44.55 per share in the second quarter of 2025, totaling $2.8 million.
  • Share repurchase program-- The Board authorized a new $25 million repurchase program on July 23, 2025, replacing the previous authorization.
  • Dividend-- Regular quarterly dividend of $0.39 per share declared, payable on September 26, 2025, to shareholders as of Sept. 12, 2025.
  • Book value per share-- Book value per share increased to $13.96 in the second quarter of 2025.
  • Statutory surplus-- Statutory surplus was $257 million at the end of the second quarter of 2025, compared to $235 million at year-end 2024.
  • Investment portfolio-- Investments, cash, and cash equivalents totaled $887 million as of the second quarter of 2025, with an average AA‑minus credit rating and 4.5-year duration; the tax-equivalent book yield was 3.85%.
  • Portfolio composition-- As of the second quarter of 2025, the portfolio consisted of 62% municipal bonds, 21% corporate bonds, 4% U.S. treasuries/agencies, 7% equity securities, and 6% cash/other, with 50% classified as held-to-maturity at amortized cost.
  • Return on equity-- Operating return on equity was 14.9% in the second quarter of 2025.

Summary

Amerisafe (AMSF -0.69%) emphasized targeted premium growth and disciplined underwriting within a highly competitive workers' compensation market. Management reported a notable reduction in agent count, down to nearly 1,500 by the second quarter of 2025, while maintaining higher policy counts, indicating targeted relationship management was effective. Voluntary premiums saw double-digit gains, increasing 12.8% in the second quarter of 2025, despite audit premium moderation, supporting total premium growth. Investment income declined 10.2% in the second quarter of 2025 due to lower investable assets following a special dividend, although net unrealized and realized gains on equities contributed to profitability. The company increased its book value per share and statutory surplus year to date, and continued capital management initiatives, including both regular dividends and a renewed $25 million share repurchase authorization approved on July 23, 2025.

  • CEO Frost said, "[in-force] policy count grew 5.8% since year-end."
  • Policyholder dividends increased as more policies qualified, and management described the program as "lumpy" rather than a result of competitive repricing alone.
  • The company maintained its 71% current year loss ratio assumption, with management acknowledging ongoing upward pressure tied to persistent declining loss costs, specifically noting pressure on the 71% current accident year loss ratio assumption going forward.
  • Amerisafe leadership reaffirmed a "high-quality balance sheet, solid loss reserve position, and conservative investment portfolio" as the operational foundation for responding to potential market turns.

Industry glossary

  • Audit premiums: Additional premiums billed or returned after policy period-end, reflecting actual payroll or classification data versus initial estimates.
  • Loss cost: Benchmark rate for anticipated loss and claim expense, used by regulators and underwriters to price insurance coverage.
  • Held-to-maturity (HTM): Debt securities intended to be held until maturity, recorded at amortized cost and not marked to market in book value calculations.
  • Statutory surplus: Excess of assets over liabilities as measured under insurance regulation, reflecting an insurer’s financial strength.
  • Accident year loss ratio: Ratio of losses and loss adjustment expenses incurred in a particular year to earned premiums for that year.
  • Expense ratio: Ratio of underwriting and other specified expenses to written or earned premiums, measuring efficiency in insurer operations.

Full Conference Call Transcript

Janelle Frost: Thank you, Kathryn, and good morning, everyone. I am pleased to begin today's call highlighting our continued success in growing premiums by increasing policy count, exhibiting pricing discipline, and strong renewal retention. Our risk selection, coupled with working more effectively with our agents, generated 12.8% growth in voluntary premiums for policies written in the quarter. Our in-force policy count grew 3.4% in the quarter, supported by new business growth and 93.8% renewal retention. These accomplishments took place in the competitive market where workers' compensation remains the most profitable in the property and casualty space. According to NCCI, the industry's combined ratio remained below 100% for 2024.

However, it did not improve over 2023, unlike the other P&C lines, which are getting rate increases. Workers' compensation approved loss costs, on average, are down mid-single digits, California being a significant outlier with an 8.7% increase. While AMERISAFE only has ancillary exposure in California, we cannot ignore the potential for this dramatic increase to signal a shift in the cycle. Another potential sign for a shift was NCCI's reported 6% increase in medical severity for 2024. Regardless if the market remains soft or begins to harden, AMERISAFE is well-positioned both operationally and with a strong balance sheet to respond and generate consistent underwriting profitability.

As for AMERISAFE's loss experience, frequency was down compared to the second quarter of 2024, and severity trends are within our expectations. Our current accident year loss ratio was 71% as of the end of the second quarter. In addition, we had $8.6 million of favorable development in the quarter, as our claims team continues to demonstrate expertise in finding opportunities to close claims effectively and efficiently. This quarter, accident years 2020 and prior drove most of the favorable case development. Further, on 07/23/2025, our Board of Directors approved the reauthorization of a $25 million share repurchase program, replacing the prior program.

Since the inception of our initial program in February, we have repurchased approximately 1,750,000 shares at an average cost of $25.69 per share, totaling $44.8 million. In addition, the company's Board of Directors declared a regular quarterly cash dividend of $0.39 per share payable on 09/26/2025, to shareholders of record as of 09/12/2025. These ongoing capital management strategies reflect confidence in the long-term value of our business and our commitment to delivering shareholder returns. I'll now turn the call over to Andy Omiridis to discuss financial results surrounding our underwriting profitability and investments.

Andy Omiridis: Thank you, Janelle, and good morning, everyone. For the second quarter of 2025, AMERISAFE reported net income of $14 million or $0.73 per diluted share and operating net income of $10 million or $0.53 per diluted share. The second quarter of 2024, net income was $11 million or $0.57 per diluted share and operating net income was $11.1 million or $0.58 per diluted share. The higher reported net income was primarily driven by stronger valuations across our equity holdings, which resulted in a net unrealized gain on equity securities of $1.8 million during the quarter. In addition to $3.1 million of realized gains also primarily from equity securities.

Gross written premiums were $79.7 million in the quarter, compared with $76.4 million in 2024, increasing 4.3%. Audit premiums continued to moderate, which increased the top line by $1.5 million compared with $7.3 million in the year-ago period. Despite the audit premium headwinds, voluntary premium growth on policies written in the quarter was 12.8% fueled by new business production and strong retention. Our total underwriting and other expenses were $21.7 million in the quarter, compared with $20.4 million recognized in the prior year quarter. This increase resulted in an expense ratio of 31.3% compared with 29.8% in the year-ago quarter. The expense ratio reflects ongoing investment in AMERISAFE's growth.

Further, audit premium, which is earned immediately, has declined in comparison to the prior year, but is still a material contributor to net premiums earned. While voluntary premiums are earned over time, creating an expense premium mismatch that elevates the ratio. Lastly, 100 basis points of the current quarter's expense ratio is due to increased insurance-based assessments. We anticipate the full-year expense ratio to be in line with previous years. Our effective tax rate was 20.1% compared to 20% in the prior year quarter. Turning to our investment portfolio. In the second quarter, net investment income decreased 10.2% to $6.7 million driven by a decrease in investable assets following the payment of the special dividend.

At quarter-end, we had approximately $887 million in investments, cash, and cash equivalents, compared to $884 million at 06/30/2024. On a consecutive quarter basis, net investment income increased by 60 basis points. The reinvestment rate environment remained strong this quarter with yields on new investments exceeding portfolio roll-off by 230 basis points contributing to a tax-equivalent book yield of 3.85% compared to 3.79% in the second quarter of 2024. Our investment portfolio remains high quality, carrying an average AA-minus credit rating with a duration of 4.5 years. The composition of the portfolio is 62% in municipal bonds, 21% in corporate bonds, 4% in US treasuries and agencies, 7% in equity securities, and 6% in cash and other investments.

Approximately 50% of the portfolio is classified as held to maturity. As a reminder, these securities are carried at amortized cost and therefore unrealized gains and losses are not reflected in our reported book value. Our capital position is strong with a high-quality balance sheet, solid loss reserve position, and conservative investment portfolio. During the second quarter, the company repurchased 63,000 shares at an average cost of $44.55 totaling $2.8 million. And finally, a couple of other topics. Book value per share increased to $13.96, up 3.3% year to date. Statutory surplus was $257 million compared to $235 million at year-end 2024.

And lastly, we will be filing our 10-Q with the SEC later today after the close of the market. With that, I would like to open the call for the question and answer portion of the call. Operator?

Operator: Thank you. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. We will pause for just a moment to allow everyone an opportunity to signal. We will now take our first question from Mark Hughes with Truist.

Mark Hughes: Yes, thank you. Good morning.

Janelle Frost: Morning, Mark. Good morning.

Mark Hughes: 13%. Pretty impressive. You described it in the usual way, good retention and strong new business, but could you give something as good or stronger than last quarter just sort of curious what you saw in the quarter that drove that business?

Janelle Frost: Yeah, Mark. I'll start by saying this. Shout out to the AMERISAFE team. The employees have truly been focused on ease of doing business, agent effectiveness, and creating scalability. I've been talking about it for gee. I should probably look back and see how many earnings calls now. And they really are seeing the fruits of their labor. You know, coming into this year and at the end of last year, we said we were looking for small incremental growth. We are achieving that. We've grown policy count 5.8% since year-end, 3.4% in the quarter.

But yet, sticking to our knitting, sticking to our risk selection process, starting from the beginning of the sales process with our sales folks on the ground, working with agents, making sure that we are working with the right agents that fit AMERISAFE's profile onto safety being part of that process. Still, 93% of our accounts are still getting that pre-quote safety inspection or safety visit with our safety folks out on the ground visiting with prospects, understanding those risks, providing that information back to my underwriters, and then our underwriters do what they do best in terms of risk selection, understanding risk, pricing it appropriately.

I know we don't give pricing information anymore on this call, but I'll say this about our risk process. If I look at that in-force policy count, 83% to 85% of that is still within those hazard groups E, F, and G, which is where we consider our specialty, where we consider our sweet spot. That's a very long answer to say that I just feel like all of those things collectively are coming together, with the intention of finding ways to address this very competitive market that we're in. You know, for the longest time, AMERISAFE probably took more of a defensive position in terms of the market price. And now we look at yeah.

The soft market's been gone for I think we're in our tenth maybe tenth or eleventh year of approved loss cost continuing to go down. With some improvement and we're not in double-digit declines anymore. We're at mid-single digits. But finding a way to respond to that market and still keep our risk selection profile and what we know we want to underwrite to in terms of profitability top of mind, and finding ways to get that done.

Mark Hughes: Very good. How about the average policy size? I think policy count up 6%. Written up 13%, and I know that's kind of apples and oranges, but any change in the average policy size?

Janelle Frost: A slight change, I would say. You know, again, approved loss costs, I think, are down mid-single digits, so in that five to six range. I do know I can say this. I know that wage inflation, at least for this past quarter, you know, wages were up roughly around 5% and even NCCI mentioned for 2024, that wage growth did not exceed the loss cost changes. For the longest time, we were receiving premium dollars basically, rate from just wage inflation stand-alone. That has sort of balanced out now in terms of wage growth being somewhere around the 5% range. Loss cost being in that 5% to 6% range.

So the average premium size may have changed ever so slightly, maybe slightly down, but, you know, our sweet spot is still in that 25 to 35 thousand dollar range.

Mark Hughes: Gotcha. How about medical inflation? And maybe I'll just a general comment there, and then the Medicare fee schedule whether any of these updates are impacting your view on inflation on I think it there's a lot of detail that I assume folks are still working through, but maybe some of the reimbursement arrangements for specialists, maybe they've gone up. Just curious if you have any observations there.

Janelle Frost: Yeah. As I said in my opening remarks, you know, NCCI reported for 2024, medical severity had gone up 6%. Now they do a workers' comp medical index, and that number was 2.8% up. So the remainder of that, really NCCI really attributed to the utilization which I think is something everybody in the industry has been talking about for some time now and how we view that, what is actually happening, and then how we view that in terms of reserves. Going back to my claims team, I feel like this is where they shine the most. In terms of how they initially set up those reserves, how they view those claims on a long-term basis.

We haven't really changed our view, again, because we use long-term averages when we think about medical severity, so we have not changed our reserving practices in terms of some of the noise that, you know, I think people are starting to see in the data. We probably two years ago, were talking about home health as an example of just pockets of medical costs where we were seeing inflation. Right? It was harder to find providers in certain parts of the country, and then we were able to find providers. The rate had gone up significantly.

I think there are in the industry, again, pockets of where we're seeing that probably a little bit more surgical procedures, in terms of maybe increased hospitalizations. Nothing that I can point to in our particular data right now that would say, that I feel like we need to change our reserving practices. Again, kudos to my claims team because they really have taken a long-term view of that. And we have a very consistent book of injury types and the severity of our injuries there's not many things that we haven't seen at this point for lack of a better term, knock on wood. Don't need that to happen today.

So I feel very confident in our case reserving process.

Mark Hughes: Very good. Any stats on new business, like new business production year over year in the quarter? Know that's something you haven't historically disclosed.

Janelle Frost: Yeah. We I hear you. We're very excited about the new business growth, not a number I would next wanna put out there because it's my competitors listening to this call. But we are having success. And I'll say this. If you look and I'll try to back into what I've in what I mean in terms of the new business growth. I mentioned real retention at 93.8%, and that was on a policy count basis. And yet policy count grew 3.4% in the quarter. So you can back into that math. But I'll say this.

As far as new business, and talking about initially when I said ease of doing business, and making and having more effective relationships with our agents. If you look at our agent count, at the end of 2023, 2,200. At the end of 2024, roughly 1,700 agents. By second quarter, we were down to almost 1,500 agents. Yet policy count has gone up. So I think that speaks to how we've been able to find new business and be more effective with fewer agents.

Mark Hughes: The addition by subtraction method. I'll ask you one final question. Construction, what's the vibe in construction?

Janelle Frost: Great question. You know, we're still seeing wage growth there in terms of the payrolls that are being reported to us. Interestingly enough, this past quarter, we did not see an increase in new employee count. We actually saw maybe even a slight decrease. So something we're keeping our eye on there. That can go a couple of different ways. If new obviously, we feel like new employees tend to drive up claim counts, tend to drive up frequency, so we if we have our druthers, we'd rather extend work hours. And anecdotally, we're hearing that. We're hearing things about extended work hours, same employees working longer hours.

There's my thought process behind it, particularly in construction and our agriculture book of business, is somehow immigration and undocumented workers affecting those numbers, to be seen, but it was an interesting data point for this particular quarter. So if you think about it in terms of it's let's let's play that through and say, okay. Well, it is immigration or something to do with immigration. So not adding on incremental staff, new workers, extended work hours, could be good for frequency. If indeed those workers do get replay if undocumented workers do get replaced with higher wage earners, that could be a boost in premium dollars.

At the same time, if they're replaced with higher wage earners and they're new to that industry, could also drive up frequency. So I gave you a lot of different scenarios there, but I definitely think that impacts or has the potential to impact construction and our agriculture books in particular.

Mark Hughes: Very good. Appreciate it.

Janelle Frost: Thank you, Mark.

Operator: And ladies and gentlemen, if you did have We will go next to Bob Farnam with Janney.

Bob Farnam: Hey there, good morning. Just I think one more question in line with kind of what Mark was asking about. I just wanted to know in terms of caseload per claim personnel. I didn't know if there's been any changes to the caseloads over the last, you know, year few years.

Janelle Frost: No, sir. Great question, and good morning, Bob. We're still at below 50 claims per on average per adjuster, so no shifts there.

Bob Farnam: Okay. And you've been at the 71% active year loss ratio assumption for a few years now. Given the changes in the loss cost, am I right to assume that there's been some upward pressure there that if anything, that might go up at some point in the future?

Janelle Frost: Yeah. I think that's a good assumption. There's definitely pressure there. To your point, as loss costs continue to be declined, you know, one of the things one of the beauties, I think, of AMERISAFE again, shout out to my claims department in the way we think about reserving. We put those reserves up to ultimate relatively quickly, it does help us in terms of how we price our product and how we think about profitability in on the risk selection side of things. But there's no question in terms of just the absolute claim number of claims and the claims dollars that we're having to spend, that there's pressure on that 71% on a go-forward basis.

Unless something changes in the marketplace. So I was like, I throw that out there just in case. Yeah. Unless something yeah. In case something changes. But if continued trends happen in terms of loss costs themselves, definitely pressure there.

Bob Farnam: Right. Okay. And in terms of capital management, how are you balancing kind of share repurchases versus the special dividend? Is there any thought process behind how much you're allocating to each?

Andy Omiridis: Bob, it's Andy. How are you? Right now, you know, we looked at you know, the buyback. Of course, we want to buy back our stock at the right time. So, you know, we did go to the board, as Janelle said, and it was reauthorized up to $25 million. And then, again, you know, if the inquiry is just how we balance out, does that mean they have any connotations towards the special dividend? We assume there will be a special dividend. The recommendation is there, and, you know, there is capital sufficient. I mean, that's probably the best way I can answer it for you.

Bob Farnam: Alright. Got it. And last question I had here was you're so it sounds like the expense ratio this year is gonna be 30-ish, maybe a little under. Do you have a kind of a long-term target that you want to keep your expense ratio around? I'm not sure if it's at 30 or above or below.

Andy Omiridis: So, you know, for the sake of not being too forward-looking, what we assume is and for this year as well, that we will be within the range that, you know, we have been historically.

Bob Farnam: And the historical range, you don't expect any changes at least for now without getting into more detail.

Andy Omiridis: And if I can add just one other. If you look at the quarter, we're at 31.3. Look at the year, we're at 30.6. So, again, the assumption is that we'll be within historical range.

Bob Farnam: Alright. Thanks. Thanks for the color.

Operator: We'll return next to Mark Hughes with Truist.

Mark Hughes: Yes. Just one follow-up. The policyholder dividends were up a bit in the quarter. What drove that?

Andy Omiridis: Mark, I mean, the pulse. Some of our policyholders did qualify for it. And it isn't linear. It's lumpy. So if you recollect for even from last year, it goes up and down each quarter. So, you know, for com that's all I can say is there's really not any spike. It's just that we had more policies qualified for the policyholder dividends.

Mark Hughes: Yeah. Is that it be interpreted as a competitive issue that on some policies you are motivated to pay out higher dividends from a competitive standpoint, or is it a reflection of better loss experience, and that's what's driving it? How to think about that?

Andy Omiridis: Probably, it's probably a combination of both, Mark. I'll say this about policyholder dividends. For AMERISAFE, it's really made up of three states. Florida, which happens to be our largest state. There's something you can read into that. Wisconsin and Virginia. And so, obviously, in Florida, as you know, is an administrative pricing state, so policyholder dividends is certainly a way to compete. But it also involves loss experience.

Mark Hughes: Yeah. Would one say maybe of Florida rates being flat this year instead of down that there is a little more competition by way of policyholder dividends. Is that a

Andy Omiridis: One did say that.

Mark Hughes: Oh, okay. Alright. I think I just said it. Very good. Okay. Alright. Thank you. Appreciate it.

Andy Omiridis: Thank you, Mark.

Operator: It appears there are no further questions at this time. I'll turn the call back to Janelle Frost, CEO, for any additional or closing remarks.

Janelle Frost: We are pleased with this quarter's continued top-line growth in industry-leading operating ROE of 14.9%. Supported by our investment in our people and technology, and delivering on our commitment to our stakeholders. Thank you for joining us today.

Operator: Thank you. Ladies and gentlemen, that will conclude today's call. We thank you for your participation. You may disconnect at this time.