AMERISAFE, Inc. Q2 FY2025 earnings call

Key Points

• Gerry Frost highlighted growth in voluntary premiums (12.8%), in-force policy count growth (3.4%), and 93.8% renewal retention. Workers' compensation remains profitable, though approved loss costs are down mid-single digits with California having an 8.7% increase. AMERISAFE has a strong balance sheet. There was $8.6 million of favorable development in claims.
• Board approved a $25 million share repurchase program and declared a $0.39 per share quarterly cash dividend.
• Andy Omiridis discussed net income of $14 million ($0.73 per diluted share) and operating net income of $10 million ($0.53 per diluted share) for Q2 2025. Gross written premiums were $79.7 million, up 4.3% from Q2 2024. Expense ratio was 31.3% vs 29.8% prior year. Net investment income decreased 10.2% to $6.7 million. Book value per share increased to $13.96, up 3.3% year-to-date, and statutory surplus was $257 million.

Voluntary premiums for policies written in the quarter grew 12.8%. In-force policy count grew 3.4% with 93.8% renewal retention. Gross written premiums were $79.7 million in the quarter, an increase of 4.3% compared to Q2 of 2024. Audit premiums moderated but voluntary premium growth on policies written was 12.8% driven by new business production and strong retention.

Guidance

• Anticipate full year expense ratio to be in line with previous years.
• Board reauthorized a $25 million share repurchase program.
• Board declared a $0.39 per share quarterly cash dividend payable on September 26, 2025.

Risks

• Competitive market conditions.
• Workers' compensation approved loss costs trends, with California's 8.7% increase being a significant outlier.
• Medical severity increase of 6% in 2024 as a potential risk factor.

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

A: Gerry Frost mentioned team focus on ease of doing business, agent effectiveness, safety inspections, risk selection, with in-force policy count 83%-85% within hazard groups ES and G.

Q: How about the average policy size?

A: Gerry Frost noted slight change, with wage inflation around 5% and loss costs down mid-single digits, average premium size maybe slightly down.

Q: What's the vibe in construction?

A: Gerry Frost said wage growth seen, but no increase in new employee count, with potential impact on claim counts.

Q: In terms of case load per claim personnel?

A: Gerry Frost stated they're still below 50 claims per adjuster on average.

Q: How are you balancing share repurchases versus special dividend?

A: Andy Omiridis said they look to buy back stock at the right time and there's capital sufficiency for both.

Q: What's the long-term target for expense ratio?

A: Andy Omiridis said they assume to be within historical range.

Q: What drove policyholder dividends up?

A: Andy Omiridis said it's lumpy, with more policies qualifying, and Gerry Frost added it's a combination of competition and loss experience.