AMERISAFE, Inc. Q1 FY2026 earnings call

• Pleased with solid start to 2026 with continued growth, disciplined execution, and attractive underwriting performance. - Workers' compensation market is competitive with soft pricing environment and industry headwinds like claims severity and economic uncertainty. - Differentiated approach to servicing high hazard industries supports consistent returns. - Eighth consecutive quarter of premium growth, improved expense ratio, and favorable prior year loss development. - Gross premiums written increased 5.6%. Retention for renewal policies 92.4%. New and renewal voluntary premium increased 8.2%. In-force policy count increased. Audit premium and related adjustments positive. - Current accident year loss ratio 72%, prior accident years had favorable development. - Total underwriting and other expenses $22.3 million, expense ratio 29.7% with third consecutive quarter-over-year improvement. - Net investment income decreased 0.8% but new money yields favorable. - Repurchased shares under share repurchase program. - Book value per share $13.18.

Net premiums earned grew by 9%. Gross premiums written were $88.5 million in Q1 2026 compared to $83.8 million in Q1 2025, increasing 5.6%. Retention for renewal policies was 92.4%. New and renewal voluntary premium increased 8.2%. In-force policy count increased 1.7% in the quarter and 9.5% since Q1 2025. Audit premium and related adjustments added $3.7 million in the quarter. Combined ratio was 93.2%. Operating earnings were $0.50 per share. Current accident year loss ratio was 72% compared to 72% for accident year 2025 at 12 months and 71% in Q1 2025. Prior accident years had $7.6 million or 10.1 points of favorable development, resulting in a net loss ratio of 61.9%. Total underwriting and other expenses were $22.3 million, resulting in an expense ratio of 29.7%. Net income was $8.1 million or $0.43 per diluted share, and operating net income was $9.5 million or $0.50 per diluted share. Net investment income decreased 0.8% to $6.6 million. New money yields were favorable with yield on new investments increasing 174 basis points. Portfolio is high quality with average AA minus credit rating and duration of 4.4 years. Asset allocation: 61% municipal, 24% combined corporate bonds, 3% US treasuries and agencies, 7% equities, 5% in cash. Approximately 43% of portfolio is held to maturity with net unrealized loss of $7.9 million. Repurchased nearly 120,000 shares of common stock. Book value per share at quarter end was $13.18.

• No specific forward-looking guidance revision mentioned, but fundamentals position well to navigate current market conditions and create long-term value.

• Workers' compensation market remains competitive with prolonged soft pricing environment and industry headwinds like claims severity and economic uncertainty. - Large claim losses can be lumpy. - Unrealized gains and losses on held to maturity securities not reflected in book value.

Q: How did you see inflation in the quarter?

A: Medical inflation is real, reserving properly, fee schedules helping contain costs, continued pressure industry-wide.

Q: Observations about industry data on accident years?

A: Industry accident year combined ratios worsening, pressure on accident years 24 and 25, declining rates, medical inflation and severity, frequency decline.

Q: Trend of NCCI lost costs?

A: Mid-single-digit decreases for 2026, states' filings range from down almost 9% to down 1.2%.

Q: Payroll growth statistics?

A: Payroll growth across major classes, predominantly wage growth, headcount growth flat to slightly down.

Q: Voluntary premium growth by industry?

A: Steady across book of business, prolific throughout.

Q: Duration of assets vs liabilities?

A: Portfolio duration 4.4 years, liabilities' average duration between 3-4 years, due to high-touch claims model.

Q: Frequency decline in workers' comp?

A: Workplace safer, economy shift to services, mix of jobs influencing frequency, but frequency can't drop to zero.

Q: Sustainability of top-line growth?

A: Team executing growth strategy, sustainable with mid-single-digit range, momentum, attitude, strategy there.

Q: Why call moved to afternoon?

A: Scheduling conflict, will go back to normal schedule.