Q4 2023 AMERISAFE Inc Earnings Call
Operator: Good day, and welcome to the Amerisafe 2023 4th Quarter Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the presentation over to Ms. Kathryn Shirley, Chief Administrative Officer. Please go ahead, ma'am.
Good day and welcome to the Amerisafe 2023 fourth quarter earnings Conference call Today's conference is being recorded.
Primarily through the presentation of Richard Ms. Kathryn Shirley Chief administrative officer. Please go ahead ma'am.
Kathryn Housh Shirley: Good morning. Welcome to the Amerisafe 2023 fourth quarter investor call. If you have not received the earnings release, it is available on our website at www.amerisafe.com. This call is being recorded. A replay of today's call will be available. Details on how to access the replay are included in the earnings release.
Good morning, welcome to the Amerisafe 2023 fourth quarter Investor call. If you have not received the earnings release. It is available on our website at Amerisafe Dot com.
This call is being recorded a replay of today's call will be available.
Sales on how to access the replay are in the earnings release. During this call we will be making forward looking statements. These statements are based on current expectations and assumptions that are subject to various risks and uncertainty actual results may differ materially from the results expressed or implied in these statements if the underlying.
Kathryn Housh Shirley: During this call, we will be making forward-looking statements. These statements are based on current expectations and assumptions that are subject to various risks and uncertainties. Actual results may differ materially from the results expressed or implied in these statements if the underlying assumptions prove to be incorrect or as a result of risk, uncertainties, and other factors, including factors discussed in the earnings release, in the comments made during today's call, and in the risk factors section of our Form 10-K, Form 10-Qs, and other reports and filings with the Securities and Exchange Commission. We do not undertake any duty to update any forward-looking statement
[noise] assumptions prove to be incorrect or as a result of risks uncertainties and other factors, including factors discussed in the earnings release and the comments made during today's call and in the risk factors section of our Form 10-K form 10, Qs and other reports and filings with the Securities and Exchange Commission, we do not.
Not undertake any duty to update any forward looking statement.
Janelle Frost: I will now turn the call over to Janelle Frost, Amerisafe's President and CEO. Thank you, Kathryn, and good morning, everyone. We are pleased to report solid operating earnings results for both the fourth quarter and full year of 2023. For the year, we reported a combined ratio of 85.9%, gross premium written growth of 3.3%, and operating ROE of 17.7. These results come during a period in the workers' compensation industry of multi-year rate decreases, somewhat offset by recent wage inflation. However, competition has not lessened, as workers' compensation is one of the more profitable property and casualty lines. Remaining true to our disciplined approach of underwriting high-hazard risk while being responsive to our agents and caring for the needs of injured workers and their employers is evident in our consistent results year after year and serves all of our stakeholders.
I will now turn the call over to Jay Altra, Amerisafe, President and CEO.
Thank you Catherine and good morning, everyone.
We are pleased to report solid operating earnings our results for both the fourth quarter and full year of 2023.
For the year, we reported a combined ratio of 85, 9% gross premium written growth of three 3% and operating ROE of 17, 7%.
These results come during a period in the workers compensation industry of multi year rate decreases somewhat offset by recent wage inflation.
Competition has not lessened as workers' compensation is one of the more profitable of the park property in casualty lines.
Remaining true to our disciplined approach of underwriting high hazard risk, while being responsive to our agents and caring for the needs of injured workers and their employers is evident in our consistent results year after year and serve all of our stakeholders.
Janelle Frost: Gross written premiums for the quarter were $60.3 million, increasing 8.4%. During the quarter, premiums for policies written in the quarter increased 4.7%, which was further improved by payroll audit and related premiums of 4.8 million. At Amerisafe, we continue to see strong retention in policies for which we offer renewal, with 93.9% retention in the fourth quarter. For the full year, our accident year loss ratio was in line with the prior year at 71%. The company experienced $41.1 million of favorable development on prior accident years in 2023, which we attribute to lower claims severities and proactive claims handling. In addition, we ended the year with nine severe claims, of those with cases incurred in excess of a million dollars.
Gross written premiums for the quarter were $60 3 million, increasing eight 4%.
During the quarter premiums for policies written in the quarter increased four 7%, which was further improved by payroll audit and related premium adjustments of $4 8 million.
At Amerisafe, we continue to see strong retention and Polish for which we offer renewal with 93, 9% retention in the fourth quarter.
For the full year, our accident year loss ratio was in line with the prior year at 71%.
Company experienced $41 1 million of favorable development on prior accident years in 'twenty, two 'twenty, three which we attribute to lower claims severities and proactive claims handling.
In addition, we ended the year with nine severe claims.
Of those with case incurred in excess of a million dollars.
Janelle Frost: As of December 31st, 2023, our open claim count was down 6.4% from 2022. This metric demonstrates the success of our focus on resolving and closing claims and the decline in reported claims. Our balance sheet is conservatively positioned, with roughly $897 million in investments and cash, a solid reserve position, and no outstanding debt. Despite challenging market conditions, our tenure ensuring high hazard risk positions the company for continued solid results. Amerisafe's strong retention, coupled with our focus on profitable growth, is delivering robust returns to our shareholders. Finally, as it relates to capital management, Amerisafe's Board of Directors has approved an 8.8% increase in our regular dividend to $37,000. With that, I'll turn the call over to Andy to discuss the finances. Thank you, Janelle, and good morning to everyone.
As of December 31, 2023, our open claim count was down six 4% from 2022.
This metric demonstrates the success of our focus on resolving in closing claims and the decline in reported claims.
Our balance sheet is conservatively positioned with roughly 897 million in investments and cash a solid reserve position and no outstanding debt.
Despite challenging market conditions, our tenure, ensuring high hazard risk positions the company for continued solid results.
Amerisafe strong retention, coupled with our focus on profitable growth is delivering robust returns to our shareholders.
Finally, as it relates to capital management Amerisafe. Its board of Directors has approved eight 8% increase in our regular dividend to 37 cents.
With that I'll turn the call over to Andy to discuss the financials. Thank you Tim and good morning to everyone for the fourth quarter of 2023, Amerisafe reported net income of $19 2 million or $1 per diluted share and operating net income of $14 3 million or <unk> 74 per diluted share during the fourth quarter of 2020.
Andy: For the fourth quarter of 2023, Amerisafe reported net income of $19.2 million, or $1 per diluted share, and operating net income of $14.3 million, or $0.74. During the fourth quarter of 2022, net income was $20.8 million. $1.08 per diluted share and operating net income of $16.1 million, or $0.84 per diluted share. The lower net income was primarily driven by certain items in the quarter driving the expense ratio higher as well as less tax exempt interest income driving a higher tax rate compared with the fourth quarter of 2020. For the full year, net income was $62.1 million, and net operating income was $55.9 million compared with $55.6 million and $59.3 million in Our total underwriting and other expenses were $19 million in the quarter, a 9% increase compared with the $17.4 million recognized in the prior year quarter.
Two net income was $20 8 million or $1.08 per diluted share and operating net income of $16 1 million or <unk> 84 per diluted share. The lower net income was primarily driven by certain items in the quarter driving the expense ratio higher as well as less tax exempt interest income driving a higher tax rate.
Compared with the fourth quarter of 2022.
For the full year net income was $62 1 million and net operating income was $55 9 million compared with $55 6 million and $59 3 million in the prior year respectively.
Our total underwriting and other expenses were $19 million in the quarter, a 9% increase compared with the $17 4 million recognized in the prior year quarter.
Andy: This increase resulted in an expense ratio of 28.9 compared with 26.4 in the fourth quarter of 2022. The increase was primarily due to wage inflation and an increase in insurance-related assessments. For the full year, the expense ratio was 29.3 compared with 26.5 in 2022. For the year, our tax rate was 19.7% compared to 17.8% in the prior year, largely due to a low proportion of tax-exempt income versus underwriting income in the quarter compared with the last year.
This increase resulted in expense ratio of $28 nine compared with $2026 four in the fourth quarter of 2020 to the.
The increase was primarily due to wage inflation and an increase in insurance related assessments with the full year. The expense ratio was $29 three compared with 26 and a half in 2022.
For the year, our tax rate was 19, 7% compared to 17, 8% in the prior year largely due to a lower proportion of tax exempt income versus underwriting income in the quarter compared with the last year.
Andy: Turning to our investment portfolio, in the fourth quarter, net investment income increased 5.7% to 8.1 million from 7.6 million in the prior year quarter. For the full year, net investment income was $31.3 million compared with $27.2 million in 2020. The increase was driven by the yield on new investments, which exceeded that of portfolio roll-off by approximately 200 basis points and drove the portfolio tax equivalent book yield to 3.69%, or 31 basis points higher than the previous year. Realized gains for the portfolio and security sold were $1.1 million in the quarter compared with $1 million during the fourth quarter of 2022.
Turning to our investment portfolio in the fourth quarter net investment income increased five 7% to $8 1 million from $7 6 million in the prior year quarter.
For the full year net investment income was $31 3 million compared with $27 2 million in 2022. The increase was driven by the yield on new investments of which exceeded that of portfolio roll off by by approximately 200 basis points and drove the portfolio tax equivalent book yield to 369% or 31.
One basis points higher than the previous year realized gains for the portfolio on securities sold were $1 1 million in the quarter compared with $1 million during the fourth quarter of 2022 the.
The investment portfolio is high quality carrying an average double a minus credit rating with a duration of four two years. The composition of the portfolio is 61% in municipal bonds, 25% in corporate bonds and 4% in U S treasuries and agencies, 6% in equity securities and 4% in cash and other investments.
Andy: The investment portfolio is high quality, carrying an average AA- credit rating with a duration of 4.2 years. The composition of the portfolio is 61% in municipal bonds, 25% in corporate bonds, 4% in U.S. Treasuries and agencies, 6% in equity securities, and 4% in cash and other investments. Approximately 60% of our bond portfolio is comprised of held to maturity securities. During the fourth quarter, interest rates moved noticeably lower, which improved the net unrealized loss position of held to maturity securities to $10.5 million from $35.1 million in the third quarter. As a reminder, these health and maturity securities are carried at amortized cost, and therefore, unrealized gains or losses on these securities are not reflected in our book value. However, our capital position is strong with a high quality balance. For the year, the company returned $93.3 million to shareholders through a combination of regular and special dividends, plus an additional $2.2 million of shares were repurchased.
Approximately 60% of our bond portfolio is comprised of held to maturity securities. During the fourth quarter interest rates moves noticed noticeably lower which improve the net unrealized loss position of held to maturity securities to $10 5 million from $35 1 million in the third quarter.
As a reminder, these held to maturity securities are carried at amortized cost and therefore unrealized gains or losses on these securities are not reflected in our book value or.
Our capital position is strong with a high quality balance sheet for.
For the for the for the year the company returned $93 $3 million to shareholders through a combination of regular and special dividends plus an additional $2 2 million of shares were repurchased and finally, just a couple of other topics book value per share was $15 and 28 after paying the special dividend in December.
Andy: And finally, just a couple of other topics. Book value per share was $15.28 after paying the special dividend in December 2023, a decrease of 7.8% from year-end 2022. An operating return on average equity was 17.4% for the quarter and 17.7% for the full year. Our statutory surplus was $254.9 million at year end, up from $252.5 million at the prior year.
2023, a decrease of seven 8% from year end 2022, and operating return on average equity was 17, 4% for the quarter and 17, 7% for the full year, our statutory surplus was $254 9 million at year end up from $252 five.
At at the prior yearend and finally Tomorrow February 23, 2024th we will be filing our 10-K with the SEC after market close with that I would like to open the call for the question and answer portion of the call operator.
Operator: And finally, tomorrow, February 23rd, 2024, we will be filing our 10K with the SEC after market close. With that, I would like to open the call for the question and answer portion of the call. Yes, sir. Thank you. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach your equipment.
Yes, Sir thank you and if he would like to ask a question by pressing star one on your telephone keypad. If you are using a speaker phone. Please make sure. Your mute function is turned off to a lot of your signal to reach our equipment.
Once again that is star one if you would like to ask a question.
Well pause for just a moment.
Operator: Once again, that is star 1 if you would like to ask a question. And we'll pause for just a moment. And once again, that is star one.
And once again that is star one if you would like to ask a question.
We'll take our first question from Matt <unk> with JMP Securities.
Matthew J. Carletti: If you would like to ask a question, we'll take our first question from Matt Carletti with JMP Securities. Hey, good morning. Good morning, Matt. Maybe I could start with the top line, specifically the voluntary premiums, which showed some modest growth, and I think you commented that policies in force also grew. And so the question is just, can you give us a little bit of color on, are there certain geographies or kind of underlying sectors of the economy, exposures that you have that you're seeing certain success with, or is it more just broad based? I'll start with your question about geographies.
Hey, good morning.
Good morning, Matt.
Maybe if I could start with.
The topline specifically the voluntary premiums.
<unk> showed some modest growth and I think you'd commented that policies in force also grew and so the question is just can you give us a bit of color on are there certain.
Geographies or kind of underlying sectors of the economy exposures that you have that you are.
Seeing certain success with or is it more just broad based.
I'll start with your question about geographies, all I'll steer away a little bit from that and I don't think I'm not directly answering your question, but for competitive reasons I want to be careful about speaking about geographies that I feel like we're being more successful in at the moment.
Janelle Frost: I'll steer away a little bit from that, and I don't think I'm directly answering your question, but, for competitive reasons, I want to be careful about speaking about geographies that I feel like we're more successful in at the moment. Fair enough. But I will say, I think it's more broad-based, to be honest, Matt.
Fair enough, but I will say I think it's more broad based to be honest, Matt you know we've talked a lot over the last few quarters about our internal focus on ease of doing business with our agents.
Janelle Frost: We've talked a lot over the last few quarters about our internal focus on the ease of doing business with our agents. We've had really strong retention for a number of years, which we are very appreciative of, and I think really speaks to the service level of the Amerisafe employees. At the same time, you know, agents are trying to, you know, Shop new business does come at fewer and fewer opportunities in this market where everyone's getting a rate decrease.
We've had really strong retention for a number of years, which we are very appreciative of and I think really speak to the service level of the Amerisafe employees at the same time, you know agents are trying to.
Shopping new business does come out.
Fewer and fewer opportunities during this market, where everyone's getting a rate decrease.
So we really have been focusing on ease of doing business with our agents streamlining processes, making sure. We have the right work flows and just focusing on those agent relationships. So that when the opportunities do present themselves from a new business perspective, we are at the ready and I do think just a common comb.
Janelle Frost: So we really have been focusing on the ease of doing business with our agents, streamlining processes, making sure we have the right workflows, and just focusing on those agent relationships so that when opportunities do present themselves from a new business perspective, we are ready. And I do think just a combination of those things happening over a period of time has been successful in growing some new business, along with our strong retention. And you were spot on about the policy count. We're very excited that we were able to grow our policy count in 2020. Great
A combination of those things happening over a period of time, we've been successful in growing new business, along with our strong retention and you were spot on about the policy count. We're very excited that we were able to grow policy count in 2023.
Great and then if I shift to thinking about where kind of margins are in the business.
And as we look forward I mean, you mentioned frequency was down I think I caught about a 6% number.
You know, we we know there's pressure on pricing, but we know there's wage inflation and that's good for margins.
Janelle Frost: And then if I shift to thinking about what kind of margins are in the business as we look forward. I mean, you mentioned frequency was down. I think I caught about a 6% number. We know there's pressure on pricing, but we know there's wage inflation, and that's good for margins. I guess you throw severity in there too. I guess I'm asking you to look at your crystal ball a little bit and kind of how you feel about sustainability of acting at your margins when you kind of put all those pieces of the puzzle together and any other ones that I'm forgetting. No, you hit all the right elements.
And I guess, you throw severity and there too I guess I guess I'm asking I look at your Crystal ball, a little bit and kind of how do you feel about sustainability of accident year margins. When you kind of put all those pieces of the puzzle together and any other ones that I'm forgetting.
No that does you you you hit all the right elements and certainly we have the realities of multiple years of rate decreases you know and I think if we look at a 2024 nothing on a macro basis that seems to be changing that directionally I feel I still think it's going to be you know.
Higher single digit rate decreases going into 2024, and I like how amerisafe is positioned because we are very disciplined in our approach in our underwriting approach and that we individually underwrite every single account and that's built into that margin is built into how we're underwriting those accounts today and then.
Janelle Frost: Certainly, we have the realities of multiple years of rate decreases, and I think if we look at 2024, nothing on a macro basis seems to be changing that directionally. I still think it's going to be higher single-digit rate decreases going into 2024. I like how Amerisafe is positioned because we are very disciplined in our approach and our underwriting approach, and that we individually underwrite every single account. That margin is built into how we are underwriting those accounts today and in our pricing for those accounts. So I feel really good about that. From the loss perspective, you're absolutely right. Frequency is down.
Our pricing.
For those accounts I feel really good about that from the last perspective, you're absolutely right frequency is down frequency is down for the industry frequency is down for amerisafe.
Which we are appreciative of but.
Keep in mind, the things that we write are more severity driven than frequency driven so severity has been relatively modest within our expectations. There is certainly a concern in the industry across the industry. Every article you pick up some talks about medical inflation and concerns about medical inflation.
Janelle Frost: Frequency is down for the industry, and frequency is down for Amerisafe, which we are appreciative of, but keep in mind the things that we write are more severity-driven than frequency-driven. So severity has been relatively modest within our expectations. There's certainly a concern in the industry, across the industry. Every article you pick up talks about medical inflation and concerns about medical inflation.
To the credit of the industry right now fee schedules are helping contain cost I read an article recently that the CMS is predicting medical inflation to be somewhere between two and a half and 3.5% going in 2024 and the years to come.
If the industry can hold on to that that would be fantastic, but there's going to be pressure no question on medical inflation. So I feel really really good about R. R.
Janelle Frost: But to the credit of the industry, right now, fee schedules are helping contain costs. I read an article recently that the CMS is predicting medical inflation to be somewhere between 2.5% and 3.5% going into 2024. If the industry can hold on to that, that would be fantastic. But there's going to be pressure, no question, on medical inflation.
<unk> margins going forward, because I know, we're maintaining that discipline.
Great and then one last quick one if I could E LCM for the quarter.
146.
146 awesome. Thanks, so much I appreciate it.
Thank you Matt.
I will now take our next question from Mark Hughes with true.
Janelle Frost: So I feel really good about our..., our bargains going forward because I know we're maintaining that. Great. And then one last quick one, if I could, ELCM for the quarter. 146. Awesome. Thanks so much. I appreciate it.
Yeah.
Yeah. Thanks, Good morning, good morning, Andy.
Good morning, Mark Good morning, Mark.
Yes.
So <unk>.
Frequency down 6% and then I think did you say severity was within your expectations did you give a number.
The first I did not.
Mark Hughes: Thank you, Matt. We will now take our next question from Mark Hughes with Truist. Yeah, thanks. Good morning, Janelle.
I did not fit within our expectations built into the 71% that we've been carrying for accident year 2023.
Yeah.
Janelle Frost: Good morning, Andy. Good morning, Mark. The, uh, so, you know, frequency down 6% and then, I think, did you say severity was within your expectations? Did you give a number for that? Yes. I missed the first couple.
Have you ever historically outlined your expectations on severities.
<unk>.
Low single digits.
Oh, that's great.
Mark I don't know if you think about it in terms again I was just.
Talking to amount of as you think about in terms of medical inflation. You know, we've always took a long term approach to that and it's always been mid single digit range in terms of medical inflation and the other side of that is just how many.
Janelle Frost: I did not, but within our expectations, built into the 71% that we've been carrying for the exiting year 2023. Yeah. And have you ever historically outlined your expectations? Severities, low single digits. That's a great question, Mark.
Yeah, given the types of injuries.
Injuries that we deal with you know I don't know any in any given year, how many of those are going to be.
The horrific catastrophic claims.
Janelle Frost: I mean, if you think about it in terms of medical inflation, again, I was just talking to Matt about if you think about it in terms of medical inflation, you know, we've always taken a long-term approach to that, and it's always been in the mid-single-digit range in terms of medical inflation. The other side of that is just how many... You know, given the types of injuries that we deal with, I don't know how many in any given year, how many of those are going to be horrific catastrophic claims. You know, I mentioned in my prepared remarks that we had 9 claims with million dollar and excess of million dollar cases incurred this year, which is a little bit lower than prior years. So, you know. I hate to go back to my favorite term when I'm talking about severe claims, but we're just in a lumpy business. I don't know when the accident's going to happen or the severity of the injuries.
I mentioned in my prepared remarks, we had nine claims with million dollar in excess of a million dollars.
Case incurred this year, which is a little bit lower than prior years.
Yeah.
I hate to go back to my favorite time, when I'm talking about severe claims, but we're just in a lumpy business I don't I don't know when the accident is going to happen or the severity of those accidents.
Yeah. So do you have any movement.
The reserves on the large accident came at the end of 2020 no no. We have not no. We have not we are we feel very comfortable with the reserves that we initially recorded for that claim.
Yeah.
Yeah.
The audit premium is holding in there pretty well one might have thought that with the economy slowing those be.
Tapering a bit is there any.
Janelle Frost: Yeah, did you have any movement in the reserves on the large accident that came at the end of was it 2020? No, no, we have not. No, we have not.
A particular area Youre seeing.
Better audit premium.
You know mark across our book, we're seeing strong audit premium yeah weak across our book I can tell you we had about seven 4% of what I would call payroll growth.
Janelle Frost: We feel very comfortable with the reserves that we initially recorded for that claim. Yeah, um, This is a, The audit premium is holding in there pretty well. One might have thought, you know, with the economy slowing, that would be, Papering a bit, is there any, uh...
$5 six of that was wage growth.
And if you look at and be a BLS data I think the wage growth number projected leased for construction or maybe the country wide width is four one as of the last quarter or so where we're running slightly higher than that but it doesn't really surprised me, giving the skilled labor jobs that we insure.
Janelle Frost: Particular area you're seeing, a better audit premium. You know, Mark, across our book, we're seeing strong audit premiums. You know, we, across our book, I can tell you, we had about 7.4% of what I would call payroll growth. 5.6 of that was wage growth. And if you look at BLS data, I think the wage growth number projected, at least for construction, or maybe the countrywide, was 4.1 as of the last quarter. So we're running slightly higher than that. That doesn't really surprise me, given the skilled labor jobs that we ensure. And we're still not seeing a large influx of new employees now. What the labor market will do in 2024, you know, I don't know, but construction jobs are up. So we feel pretty confident in that being a large part of our book of business that that should be pretty resilient in 2020. Yeah, I was going to ask you that question. You used the formulation of, you know, kind of the next job, but it sounds like you see construction holding in there pretty well. We do! We do! Boop.
And we're still not seeing a large influx of new employees now.
What the labor market will do in 2024, you know that I don't know, but construction jobs are up so we feel pretty confident that being a large part of our book of business that that should be pretty resilient in 2024.
Yeah, I was going to ask you. A question you used a formulation of kind of the next job, but it sounds like you see construction holding in there pretty well.
We do we do.
Okay.
Seven four and $5 six in the fourth quarter or the full year.
That was fourth quarter.
And it was right in line with third quarter. If you recall third quarter was seven 5%. So in line not no real deterioration between the two quarters.
Oh, Yeah, no you didn't.
<unk>.
Bill.
Loss cost going to be down high single digits again.
I do and again, that's jenelle generic opinion, but I do I mean based on the things that we've seen come in the approved loss costs. It has already come in the door. This year and I do think that and I just don't see anything on a macro basis, that's going to change that I mean, we'll get into industry wide results in may and we will.
Janelle Frost: And with the 7.4 and 5.6, is that the fourth quarter or is that the full year? That was the fourth quarter. And it was right in line with the third quarter.
Janelle Frost: If you recall, the third quarter was 7.5%. So in line, no real deterioration between the two quarters. Yeah, and do you think the, uh, still..., projected loss costs are going to be down high single digits again? I do, and again, that's Janelle's opinion, but I do.
See what that looks like but just based on you know following other companies in their reporting I don't think anyone's had any large surprises in terms of losses concerns.
I think we can all list of things, we worry about but haven't really seen it in the results. So I don't know that that will.
Change the perspective on loss costs.
Janelle Frost: I mean, based on the things that we've seen come in, the approved loss costs that have already come in the door this year, I do think that, and I just don't see anything on a macro basis that's going to change that. I mean, we'll get industry-wide results in May, and we'll see what that looks like, but just based on, you know, following other companies and their reporting, I don't think anyone's had any large surprises in terms of losses. Concerns, you know, I think we can all list the things we worry about but haven't really seen any results, so I don't know that that will Change the Perspective on Loss. Yeah, you mentioned growth being helped by the ease of doing business. Anything on the competitive front, or your change in your own appetite in terms of... markets, class codes, anything like that?
Yeah, and you mentioned the growth being.
Being helped by your ease of doing business.
Anything on the competitive front or your change in your own appetite in terms of.
And Margaret Costco did anything like that.
No I agree.
Looking for clarity on that no. We really we have not changed our underwriting approach we have not changed our mix of business. We haven't changed our risk tolerance. This is really just about trying to further our relationships with our agents.
Yeah, Yeah, okay.
Yes, I think that was good for me appreciate it.
Thank you Mark.
Once again that is star one if he would like to ask a question well take our next question from Bob Farnam with Janney.
Hey, there good morning.
Janelle Frost: No, I appreciate the clarity. I was looking for clarification on that. No, we really have not changed our underwriting approach. We have not changed our mix of business. We haven't changed our risk tolerance. This is really just about trying to further our relationships with our agents. Yeah, yeah. Okay, and much more.
Bob.
I have additional questions approved loss costs. So.
This year, you've got Florida down 15%.
Change comes up in Louisiana down, 9% or so I'm curious.
To the classes of business that you right are they are they comparable to the overall the statewide averages or are they better or worse in terms of kind of loss cost do you think that that's a really good appoint Bob they are they run it run a book of business, sometimes it varies a little higher sometimes a little lower but on average I think using.
Mark Hughes: Thank you. Thank you. Yeah, I think that was good for me.
Janelle Frost: Appreciate it. Thank you, Mark. www.amerisafe.com And once again, that is star number one if you would like to ask a question We'll take our next question from Bob Farnham Westini. Hey there, good morning. I have I have additional questions on the approved loss costs. So this year, you got Florida down 15%. You have a change coming up in Louisiana down 9% or so. I'm curious
Industry wide, if you're trying to model out I think using the industry ride approved loss costs. It does track with our own experience.
Okay.
And this is probably more of a kind of a philosophical question, but as the FDA approved loss costs.
Bob Farnham: Do the classes of business that you write, are they comparable to the overall, the statewide averages, or are they better or worse in terms of... That's a really good point, Bob. Our book of business sometimes varies a little higher, sometimes a little lower. But on average, I think using the Industry Ride, if you're trying to model out, I think using the Industry Ride to prove loss cost does track with our own experience. Okay, and this is probably more of a kind of philosophical question, but as as the approved gloss causes continue to go down, at some point, they're going to go beyond where they should go down. So you're going to kind of miss the inflection point, I believe.
Continue to go down at some point Youre going to go beyond where they should go down so you're going to kind of watch and point I believe so yes.
You ensure that your strong profitability remains.
Kind of.
Loss costs have gone too far.
You know it goes back to what I was just saying earlier. The fact that we are individually underwriting our accounts and we and we have we've had a very consistent book of business for a long period of time so.
So I think my underwriters have a true expertise in understanding how much rate or how much how many dollars of payroll we need to cover our loss and to cover and to cover the margin that we want and that individual book of business.
Janelle Frost: So yes, how do you ensure that your strong profitability remains if some of the underlying loss costs have gone too far? You know, it goes back to what I was just saying earlier, the fact that we are individually underwriting our accounts, and we've had a very consistent book of business for a long period of time. So I think my underwriters have a true expertise in understanding how much rate or how many dollars of payroll we need to cover our losses and to cover the margin that we want in that individual book of business. Hence why, you know, we always try to report; we have been reporting the ELCM; I was just trying to give you a measure. It's not an absolute cost, but the fact that, you know, we're not chasing that 10, 20, you know, or 10, 15 percent down in terms of the rate that, the approved rates.
Hence why you know we always trying to report the we had been reporting the ELC them. It was just trying to give you a measure it's not absolute cost, but the fact that you know we're not chasing that 10, 20 or 10, 15% down in terms of the rate that the approved rates. We have I think we have the expertise to us.
Understand that rate per $100 of payroll and what it takes for an individual risk.
We're highly relying on our expertise versus the industry wide averages.
Right.
Just a refresh my memory.
Janelle Frost: We have, I think we have the expertise to understand that rate per $100 of payroll and what it takes for an individual risk. We're highly relying on our expertise versus the industry-wide average. All right. Just to refresh my memory, the ELCM... Does that include or not include kind of scheduled credits and debits? The ELCM would include that, so it's sort of the aggregate. You know, if I took all my states and merged them together, it would be inclusive. Yeah, that's what I thought.
Yes.
Does that include or not include kind of scheduled credits and debits.
Yes. It would include that so its sort of the aggregate yeah. If I took all my face an aggregated them together it would be inclusive of that yes, that's what I thought okay. Thank you.
Thank you Bob.
It appears there are no further telephone questions I'd like to turn the conference back over to Mr. Ross for any additional or closing comments.
Thank you for joining US today, we are pleased with both the quarter and full year results reported. These results are reflected of the dedication of amerisafe employees to fulfilling commitments to our policyholders agents and shareholders I believe I believe our consistent returns year in and year out clearly reflect our unwavering focus on turning to <unk>.
Bob Farnham: Okay, thank you. Thank you, Bob. It appears there are no further telephone questions. I'd like to turn the conference back over to Ms.
Janelle Frost: Frost for any additional or closing comments. Thank you for joining us today. We are pleased with both the quarter and full year results reported. These results reflect the dedication of Amerisafe employees to fulfilling commitments to our policy holders, agents, and shareholders. I believe our consistent returns year in and year out clearly reflect our unwavering focus on turning risk into opportunity and ratingyoudoor.com.
Risk into opportunity.
Okay.
And once again that does conclude today's conference. We thank you all for your participation you may now disconnect.
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Operator: And once again, that does conclude today's conference. We thank you all for your participation. You may now disconnect. Thank you for watching!
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