Q3 2024 AMERISAFE Inc Earnings Call
Good day and welcome to the Amerisafe third quarter 'twenty 'twenty four earnings Conference call. Today's conference is being recorded at this time I'd like to turn the conference over to Kathryn Shirley Chief Administrative officer. Please go ahead.
Operator: Good day and welcome to the Amerisafe 3rd quarter 2024 earnings conference call. Today's conference is being recorded.
Kathryn Shirley: At this time, I'd like to turn the conference over to Kathryn Shirley, Chief Administrative Officer. Please go ahead. The details on how to access the replay are in the earnings release.
Speaker Change: Good morning, welcome to the Amerisafe 'twenty 'twenty four third quarter Investor call. If you have not received the earnings release. It is available on our website at Amerisafe Dot com.
Speaker Change: Call is being recorded a replay of today's call will be available.
Speaker Change: Tails on how to access the replay are in the earnings release.
Kathryn 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.
Speaker Change: During this call we will be making forward looking statements.
Speaker Change: These statements are based on current expectations and assumptions that are subject to various risks and uncertainties.
Speaker Change: Actual results may differ materially from the results expressed or implied in these segments.
Kathryn Shirley: If the underlying assumptions prove to be incorrect, or as the results of risk, uncertainties, and other factors, including factors discussed in the earnings release, in the comments late during today's call, and in the risk factor section of Reform 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 statements.
Speaker Change: Underlying 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 Securities and Exchange Commission.
Speaker Change: We do not undertake any duty to update any forward looking statement I will now turn the call over to GNL for Amerisafe, President and CEO.
Janelle Frost: I will now turn the call over to Janelle Frost, Amerisafe president and CEO. Thank you, Kathryn, and good morning, everyone. We are pleased with Amerisafe's quarterly financial results, particularly in response to a competitive marketplace driven by declining rates and industry-wide profitability. The workers' compensation industry has benefited from multi-year declines in frequency, moderate severity, and growing wages. Amerisafe's trends have been no different.
GNL: Thank you Catherine and good morning, everyone. We're pleased with Amerisafe quarterly financial results, particularly in response to a competitive marketplace driven by declining rates and industry wide profitability the.
GNL: The workers compensation industry has benefited from multi year declines in frequency moderate severity and growing wages amerisafe trends have been no different.
Janelle Frost: However, I would argue our specialist nature and the history of underwriting disciplines better positioned Amerisafe for consistent returns and a strong balance sheet throughout market cycles, which brings stability to our policyholders and agents and value to our shareholders. As such, our board of directors declared a special dividend of $3 for shareholders of record as of December 6, 2024. This special dividend reflects long-term operational excellence and our commitment to shareholder returns. The special dividend is an addition to our regular quarterly dividend of $0.37.
GNL: However, I would argue our specialist nature and the history of underwriting discipline and better position Amerisafe for consistent returns and a strong balance sheet throughout market cycles, which brings stability to our policyholders and agents and value to our shareholders.
GNL: As such our board of directors declared a special dividend of $3 for shareholders of record as of December six 2024.
GNL: This special dividend reflects long term operational excellence.
GNL: And our commitment to shareholder returns the.
GNL: Special dividend is in addition to our regular quarterly dividend of 37 cents.
Janelle Frost: Our capital strength is created by our long-term profitability and our current strategic priorities centered on achieving targeted, profitable growth. This quarter, similar to the second, we have maintained positive momentum in terms of production and top-line performance. For policies written in the quarter, premium grew 8.8% over last year's third quarter. I have spoken over the last few quarters about the effectiveness of our agent engagement and creating internal efficiencies to enhance agent experience. Through employee-led initiatives and collaboration, we are seeing wins. And, as the saying goes, success breeds success. Working with agents and without changing our appetite, we are improving our ability to incrementally add new business among strong competition.
GNL: Our capital strength is created by our long term profitability and our current strategic priorities centered on achieving targeted profitable growth.
GNL: This quarter similar to the second we have maintained positive momentum in terms of production and topline performance.
GNL: For policies written in the quarter premium grew eight 8% over last year's third quarter.
GNL: I've spoken over the last few quarters about the effectiveness of our agent engagement and creating internal efficiencies to enhance agent experience.
GNL: Through employee led initiatives and collaboration we are seeing wins and as the saying goes success breeds success.
GNL: Working with agents and without changing our appetite we are improving our ability to incrementally add new business among strong competition.
Janelle Frost: New business growth coupled with a strong renewal retention of 93.6% led to higher enforced policy count and growth-written premium growth of 5.8%. While audit premiums remain positive and additive to premiums earned, their contribution is moderating compared to the same period last year. Paywall growth and wage inflation are leveling off within the industries we ensure. Regarding losses, our accident year loss ratio was consistent with last year at 71%. Loss cost trends remains stable. I believe the threat to the current loss trends for the industry are medical inflation and the viability of current fee schedules. That being said, we have not noted any significant changes.
GNL: New business growth, coupled with a strong renewal retention of 93, 6% led to higher enforced policy count and gross written premium growth of five 8%.
GNL: Wow audit premiums remained positive and additive to premiums earned their contribution is moderating compared to the same period last year payroll growth and wage inflation are leveling off within the industries that we insure.
GNL: Regarding losses, our accident year loss ratio was consistent with last year at 71%.
GNL: Loss cost trends remain stable.
GNL: I believe the threat to the current loss trends for the industry are medical inflation and the viability of current fee schedules.
GNL: That being said, we have not noted any significant changes.
Janelle Frost: The company also saw 85.5 million in favorable development on prior accident years, stemming from favorable case development in accident years 2017 through 2022.
The company also saw 85, $8 5 million in favorable development on prior accident years stemming from favorable case development in accident years 2017 through 2022.
Janelle Frost: To summarize, we are pleased to see premium growth in the quarter and continued favorable loss experience through our claims management efforts.
GNL: To summarize we are pleased to see premium growth in the quarter and continued favorable loss experience through our claims management effort I will now turn the call over to Andy to discuss expenses investments and other financial metrics.
Andy: I will now turn the call over to Andy to discuss expenses, investment, and other financial metrics. Thank you, Janelle. Good morning, everyone. For the third quarter of 2024, Amerisafe reported net income of 14.3 million, or 75 cents per diluted share, and operating net income of 11.1 million, or 58 cents per diluted share. During the third quarter of 2023, net income was 10 million or 52 cents per diluted share, and operating net income was 11.7 million or 61 cents per diluted share. First written premiums were 74.9 million in the quarter compared with 70.8 million in Q3 of 2023.
Andy: You Danielle and good morning to everyone for the third quarter of 2020 for Amerisafe reported net income of $14 3 million or <unk> 75 per diluted share and operating net income of $11 1 billion or <unk> 58 per diluted share during the third quarter of 2023, net income was $10 million or 52 cents per.
Andy: Diluted share and operating net income was $11 7 million or 61 cents per diluted share.
Andy: Written premiums were $74 9 million in the quarter compared with $70 8 million in Q3 of 2023.
Andy: The increase in the top line was driven by a combination of increased sales efforts with agents, which drove increased new business and strong retention. Autopremium increase the top line by 4 million and remain a material contributor to overall premiums in the third quarter of 2023. Autopremium for 5.6 million. Our total underwriting and other expenses were 21.3 million in the quarter, as compared to 22.4 million in the prior year. Resulting in an expense ratio of 31.7% versus 33.6% in the prior year. As we continue to invest in our business, expense outlays may proceed growth and earn premiums, leading to quarterly expense ratio fluctuations.
Andy: The increase in the top line was driven by a combination of increased sales efforts with agents, which drove increased new business and strong retention.
Andy: Premiums increased the top line by $4 million and remain a material contributor to overall premiums in the third quarter of 2023 audit premiums were $5 6 million.
Andy: Our total underwriting and other expenses were $21 3 million in the quarter as compared to $22 4 million in the prior year, resulting in an expense ratio of 31, 7% versus 33, 6% in the prior year as we continue to invest in our business expense at least May proceed growth in earned premiums leading to.
Andy: Quarterly expense ratio fluctuations. However, we expect our full year expense ratio to be within historical range right.
Andy: However, we expect our full-year expense ratio to be within historical range ranges. During the quarter, our claims handling practices drove better than expected outcomes, resulting in favorable prior year development of 8.5 million or 12.6% loss ratio ratio points. These reserves were primarily released from actually years 2017 through 2022. For the quarter, our tax rate was 19.5% in line with the prior year.
<unk>.
Andy: During the quarter, our claims handling practices drove better than expected outcomes, resulting in favorable prior year development update and a half million or 12, 6% loss ratio ratio points. These reserves were primarily released from accident years 2017 through 2022.
Andy: For the quarter, our tax rate was 19, 5% in line with the prior year turning to the investment portfolio in the second quarter net investment income decreased seven 6% to $75 million due to the reduced portfolio size, partially offset by increased reimbursement rates for the quarter yield on new investments increased approximately 109.
Andy: Turning to the investment portfolio. In the second quarter of net investment income decreased 7.6% to 7.5 million due to the reduced portfolio size, partially offset by increased reinvestment rates. For the quarter, yield on new investments increased approximately 119 basis points in relation to roll-off. Driving our tax equivalent will yield to 3.84% or 7 basis points prior than the third quarter of 2023. Net unreal gains for the portfolio and equity securities was 3.9 million in the quarter due to a strong equity market returns compared to an unrealized loss of 7.3 million in the third quarter of 2023.
Andy: Seven basis points in relation to roll off driving our tax equivalent book yield to 384% or seven basis points prior to that.
Andy: Higher than the third quarter of 2023.
Andy: Net unrealized gains for the portfolio and equity Securities was $3 9 million in the quarter due to a strong equity market returns compared to an unrealized loss of $7 3 million in the third quarter of 2023.
Andy: The investment portfolio is high quality, carrying an average double A minus credit rating with a duration of 4.1 years. The composition of the portfolio is 59% in municipal bonds, 24% in corporate bonds, 3% in US Treasuries and agencies, 6% in equity securities, and 8% in cash and other investments. As a reminder, these health and maturity securities are carried at amortized costs, and therefore unrealized gains or losses on these securities are not reflected in our book value. Our capital position is strong, with the high quality balance sheet solid, loss reserved position, and conservative investment portfolio. At quarter end, Amerisafe carried roughly $900 million in investments, cash, and cash equivalents.
Andy: The investment portfolio is high quality carrying an average double a minus credit rating with a duration of four one years. The composition of the portfolio is 59% in municipal bonds, 24% in corporate bonds, 3% in U S treasuries and agencies, 6% in equity securities and 8% in cash and other investments.
Andy: Approximately 56% of the of our bond portfolio is comprised of held to maturity Securities. 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.
Andy: Our capital position is strong with a high quality balance sheet solid loss reserve position and conservative investment portfolio at quarter end Amerisafe carried roughly $900 million in investments cash and cash equivalents couple of other topics book value per share was $16 50, an operating return on average equity was 14, 2%.
Andy: A couple of other topics. Book value per share was $16.50, and operating return on average equity was 14.2%. Our statutory surplus was 294.1 million at quarter end, up from $254.9 million at December 31, 2023. During the quarter, roughly 22,000 shares were repurchased at an average price of $46,079 for a total of 1 million. Since the inception of the initial share repurchase program in 2010, we have repurchased roughly 1.7 million shares at an average cost of $24.99 per share for a total of 42 million. And finally, Friday, October 25, 2024, we will be filing our Form 10-Q with the SEC aftermarket close.
Andy: Our statutory surplus was $294 1 million at quarter end up from $2 $54 9 million at December 31, 2023.
Andy: During the quarter, roughly 22000 shares were repurchased repurchased at an average price of $46 79.
Andy: For a total of $1 million since the inception of the initial share repurchase program. In 2010, we have repurchased roughly one 7 million shares at an average cost of $24 99 per share for a total of $42 million and finally Friday October 25, 2024, we will be filing our Form 10-Q with the SEC after market.
Operator: With that, I would like to open the call for the question-and-answer portion of the call operator.
Andy: 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, you may signal by pressing star 1 on your telephone keypad. If you are using a speaker phone, please make sure your mute function is turned off to allow your signal to reach our equipment. Once again, star 1 for questions.
Speaker Change: Thank you if you would like to ask a question you may signal by pressing star one on your telephone keypad, if you're using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment. Once again star one for questions well go first to Matt Carlotti with citizens JMP.
Matthew Carletti: We will go fast first to Matt Carletti with Citizens JMP. Hey, thanks. Good morning.
Andy: Yeah.
Matt Carlotti: Hey, Thanks, good morning.
Janelle Frost: Good morning, Matt. Shavella, I hope I could start with the top line. I mean, obviously, that's been a nice acceleration for a few quarters now, particularly the voluntary, you know, kind of the underlying growth. You've talked a lot for several quarters about kind of the efforts you're making at the agency level.
Speaker Change: Morning, Matt.
Matt Carlotti: And Chanel I was hoping I could start with the top line I mean, obviously, that's been a nice acceleration for a few quarters now.
Matt Carlotti: Particularly the voluntary kind of the underlying growth.
Matt Carlotti: You've talked a lot for several quarters about kind of the efforts you're making at the agency level can you just give us an idea of.
Janelle Frost: Can you just give us an idea of maybe what inning you're in there? I mean, I know Ray only joined you a little over a year ago, so I imagine he's still, you know, getting going and what he wants to do, but any sort of high-level perspective, the helpful.
Matt Carlotti: What inning, you're in there I mean, I know rate only joined you're a little over a year ago, So I'd imagine you'd still.
Matt Carlotti: Getting going and what he wants to do but any sort of high level perspective would be helpful.
Janelle Frost: Absolutely. You know, Matt, we have really done considerable efforts internally to find ways to better respond to this workers' comp environment that we find ourselves in. We have a tremendous amount of focus, as you mentioned. We've talked about it over the last few quarters about our agent engagement, our agent experience. How we're handling the effectiveness of our underwriting in terms of our time and process and just a number of things.
Speaker Change: Absolutely you know, Matt we have really done considerable efforts internally to find ways to better respond to the workers' comp environment that we find ourselves in.
Speaker Change: We have a tremendous amount of focus as you mentioned, we've talked about it over the last few quarters about our agent engagement our agent experience.
Speaker Change: How we're handling the effectiveness of our underwriting in terms of our time and process and there's a number of things I think the thing I'm. Most proud of is that it's really an employee led initiatives. So from that regard and talking about how how much trajectory is there we let related to that I I use the comment in my opening.
Janelle Frost: I think the thing I'm most proud of is that it's really an employee-led initiative. So from that regard and talking about how much trajectory is there related to that, I use the comment in my opening remarks about success, brief success. I think as we get these wins, the momentum builds for us, but I want to be very clear about the underwriting discipline that surrounds that. We are trying to be more efficient. We are attempting to be more effective at the same time, not changing our appetite. All of the things that you think about when you think about a merit safe and our underwriting discipline and our pre-quote safety, all of those things are still in place and still working effectively.
Speaker Change: Remarks about success breeds success.
Speaker Change: As we get these wins the momentum builds for us, but I wouldnt be very clear about the underwriting discipline that surrounds that we're trying to be more efficient we're attempting to be more effective at the same time not changing our appetite.
Speaker Change: All of the things that you think about when you think about amerisafe and our underwriting discipline and our pre quote safety all of those things are still in place, it's still working effectively and I would even argue maybe working more effectively for us.
Janelle Frost: And I would even argue, maybe working more effectively for us. If you look at our pre-quote number, it's still well north of 90%. Those things are still happening. We're just finding ways to engage our agents a little bit differently, and more importantly, clarifying our appetite so that we are working effectively with those agents. So they understand the types of accounts that we want to underwrite and the types of business that we feel like we can get the appropriate price for. So I think it's a combination of all of those things. I love that it's starting to show in the top line numbers that we are releasing publicly.
Speaker Change: If you look at our pre quote number it's still well north of 90% of those things are still happening. We're just finding ways to engage our agents a little bit differently and more importantly, clarifying our appetite. So that we are working effectively with those agents. So they understand the types of accounts that we want to underwrite and the types of business that we feel like.
Speaker Change: We can get the appropriate price for it. So I think it's a combination of all of those things I loved that is starting to show in the top line numbers that we released it publicly I think internally we've been filling those small wins for a number of quarters now, but it's nice to see it coming to fruition and.
Matthew Carletti: I think internally we've been filling those small wins for a number of quarters now, but it's nice to see it coming to fruition in the numbers that we report public.
Speaker Change: The numbers that we report publicly.
Speaker Change: Okay great.
Matthew Carletti: That's super helpful.
Speaker Change: Very helpful.
Matthew Carletti: It's kind of staying on top line, but maybe a little more new answer in the weeds. You know, they think about the hurricanes that have occurred in the past couple of months. I look at kind of your footprint and see, you know, Florida's 13% of the book, Georgia 11%, North Carolina 6%, kind of all top five states; construction's half your book. And what have you seen in past events like am I right in thinking that as reconstruction efforts take place, that sort of footprint in near exposure to construction, you tend to benefit from the work activity?
Speaker Change: Kind of staying on top line, but maybe a little more nuanced during the week.
Speaker Change: Yes, as I think about the hurricanes that occurred in the past couple of months.
Speaker Change: I look at kind of your footprint can see Florida is 13% of the book, Georgia, North Carolina, six kind of all top five states constructions half your book.
Speaker Change: What have you seen an impact events like am I right in thinking that is reconstruction efforts take place that sort of footprint and your exposure to construction you tend to benefit from the work activity.
Janelle Frost: Yes, I think you're right on that. Obviously, being in Louisiana, our first thought is we feel for those people. We understand, we know what that feels like, and we hope for a quick recovery. From a business perspective, a quick recovery for us could mean, to your point. And it could be somewhat of a boost for us.
Speaker Change: Yeah to your I think you're right on Matt obviously being in Louisiana. Our first thought is we felt we feel for those people. We understand we know we know what that feels like and we hope for a quick recovery from a business perspective, a quick recovery for ice could mean to your point it could be a somewhat of a boost for us we are our southeastern footprint is very.
Janelle Frost: We are South Eastern footprint is very important. And the mix of business there is very much like our overall book; a lot of construction, trucking, getting those materials in and out. I think would be somewhat beneficial to us.
Speaker Change: Important and the mix of business. There is very much like our overall book a lot of construction trucking getting those materials in and out I think would be somewhat beneficial to us.
Matthew Carletti: Great.
Speaker Change: Great and then lastly, just a.
Matthew Carletti: And then lastly, just my typical numbers question: do you have the LCM for the quarter, Andy? I do. 157 is the ELTM for the quarter.
Speaker Change: Typical numbers question do you have the LCM for the quarter Andy.
Speaker Change: I do 157 is the LCM for the quarter.
Matthew Carletti: Wonderful. Thank you.
Speaker Change: Wonderful. Thank you. Thank you for the color and congrats on nice quarter.
Matthew Carletti: Thank you for the color, and congrats on that quarter.
Mark Hughes: Thank you, Matt. As a reminder, star one if you would like to ask a question. We'll go next to Mark Hughes with Trist. Yeah, thank you.
Speaker Change: Thank you Matt.
Speaker Change: As a reminder, star one if you would like to ask a question. We'll go next to Mark Hughes with Trust.
Mark Hughes: Yes. Thank you good morning.
Mark Hughes: Good morning. Good morning, Mary. Janelle, I'll ask the question another way. Why now on the engagement you've been talking about this for a while, you have seen some building momentum, but this seemed like another step up. Was there something in the broader market environment, some new steps that you implemented that led to the uptake this quarter? Yes, I would love to answer that question. Say yes, the competition level has changed. Unfortunately, that is not the case. The competition level is still quite strong, quite intense. I believe Amerisave is trying to; we're positioning ourselves a little bit differently in that marketplace.
Speaker Change: Good morning, Mike.
Mark Hughes: Now I'll ask the question another way why now on the engagement you've been.
Mark Hughes: Talking about this for a while you have seen some building momentum, but does seem like another step up was there.
Mark Hughes: And the broader market environment.
Speaker Change: New steps that you implemented that led to that.
Speaker Change: Uptick this quarter.
Speaker Change: Yes, I would love to I would love to answer that question and say, yes. The competition level has changed unfortunately that is not the case the competition level is still quite strong quite intense I believe amerisafe is trying to we are positioning ourselves a little bit differently in that marketplace again really reinforcing what our appetite is and trying to figure out how we.
Janelle Frost: Again, really reinforcing what our appetite is and trying to figure out how we work best with our agents. And again, as I talked about with Matt, these efforts have been going on for over a year now. I love that it's starting to gain ground, and we're being able to see it in the top line growth. But internally, being focused on small incremental growth, adding to our policy count has been a strategic priority for us for a little while now. I'll say this. I believe that the policy count focus is extremely important to what we're trying to achieve here.
Speaker Change: Work best with our agents.
Speaker Change: And again as I talked about with Matt. These efforts have been going on for over a year now I I love that it's starting to gain ground and were being able to see it in the top line growth, but internally.
Speaker Change: Being focused on small incremental growth, adding to our policy count.
Speaker Change: Has been a strategic priority for us for a little a little while now and I'll say this I I believe that the.
Speaker Change: The policy Count focus is extremely important to what we're trying to achieve here is we've always I think we've always.
Janelle Frost: If we've always, I say we've always, our real attention has been quite strong; this quarter 93.6%. And that is, if you look at premium dollars, that's 80% of our premium dollars. So that's extremely important to us.
Speaker Change: Our renewal retention has been quite strong this quarter at 93, 6% and that is if you look at premium dollars that 80% of our premium dollars. So that that's extremely important to us where I felt like we were lacking and I've talked about this for at least a year now where I felt like we were lagging where we could put forth a better effort.
Janelle Frost: Where I felt like we were lacking, and I've talked about this for at least a year now, where I felt like we were lacking, where we could put forth a better effort was on the new business side. How do we add incremental new business to help build up that renewal retention? I think we're getting, well, the top line would say we're achieving some success there. It is; it's not a silver bullet. It is the small blocking and tackling, but it's making a difference, and it's making a difference with our agents. You say you haven't changed your appetite or underwriting.
Speaker Change: Was on the new business side, how do we add incremental new business to mirror to help build up that renewal retention I think we're getting well the topline was hey, we're achieving some success. There. It is it's not a silver bullet. It is the small blocking and tackling, but it's making a difference and it's making a difference.
Speaker Change: Our agents.
Speaker Change: Is there are some you said you haven't changed your appetite or underwriting.
Janelle Frost: Are you finding that there are certain end markets or customer sizes or hazard classes that are responding better to this engagement initiative? That's a really good question. I was actually looking right before the call. If I look at our mix of business, so you mentioned hazard classes, so I'll use that as an example. Hazard classes A through G. If you look at our overall enforced policy count, we hover between 84 and 85 percent of our book is in that EF and G classes. That is true today at 9, or today. It was true at 9:30, and if I look back over the last 10 years, it was true then.
Speaker Change: Are you finding that there is there are certain end markets or customer sizes are.
Speaker Change: As their classes.
Speaker Change: Are responding better to this engagement.
Speaker Change: The initiative.
Speaker Change: Yeah. That's a really good question I was actually looking right before the call. If I look at our mix of business. So getting you mentioned hazard classes I'll use that as an example hazard classes <unk>. If you look at our overall in force policy Count we hover between between 84% 85% of our book is in that E F and G class.
Speaker Change: <unk> that is true today at night or today. It was true at 930, and if I look back over the last 10.
Speaker Change: 10 years. It was true then is still summer when that 84% to 85%.
Janelle Frost: It's still somewhere when the 84 to 85 percent of our enforced policy count is in those classes at EF and G. From that aspect, we're still writing the same hazard groups, same classes of business. We haven't veered that much. If you look at the 10K and you look at how much of our book comes from construction or trucking or logging and lumber, those percentages haven't varied a lot. I think the premium dollars have shifted ever so slightly, but some of that is really where wages are coming from, not necessarily our mix of business, which is why I was using policy count as the proxy.
Speaker Change:
Speaker Change: Percentage of our in force policy Count is in those classes of E F and G. So from that aspect, we're still riding the same.
Speaker Change: Hazard groups same classes of business, we haven't veered that much and if you look at the 10-K and you look at how much of our book comes from construction or trucking or are logging in lumber. This percentage it hasn't varied a lot I think that the premium dollars have shifted ever so slightly but some of that is really where wages are key.
Speaker Change: Coming from not necessarily our mix of business, which is why I was using policy count as the proxy.
Janelle Frost: I don't know that we're achieving more success in any particular policy group than we were previously. I think we're just being more effective about it. Any nuance in the issue of multi-liner package writers that obviously bundle comp, whereas your monoline, have you seen the, I assume your engagement maybe involves some changes there that the brokers are more open to giving you the comp business, but do you see any evolution in that question of package versus monoline? I would say globally the answer to that mark is probably no. We haven't really seen it. We haven't seen package carriers pull away from comp.
Speaker Change: I don't know that we are achieving more success and any particular policy group than we were previously I think we're just being more effective about it.
Speaker Change: Yeah Okay.
Speaker Change: Any nuance in the issue of.
Multiline or package writers.
Speaker Change: That obviously bundled comp whereas your.
Speaker Change: All lines have you seen the.
Speaker Change: You assume your engagement maybe involves some changes there that the brokers are.
We are open to giving you the comp business, but do you see any.
Speaker Change: Evolution in that question of package versus model one.
Speaker Change: I.
Speaker Change: You know I would say globally. The answer that Mark is probably no. We havent really seen that we haven't seen package carriers.
Speaker Change: Sort of pull away from comp what we're selling is the value proposition of amerisafe.
Janelle Frost: What we're selling is the value proposition of AmeraSave. Our safety services, our claim services, the fact that we're not in and out of those markets, and we add stability for an agent. We're adding stability to their clients. I think it's really where we're ringing a little bit true, but I'm not naive to think that what's happening in the other PNC lines is not impactful to us. It certainly is, and from an agent perspective, going back to really refining with the agent's understanding our appetite, it's extremely important right now because most agents, when their commercial clients are coming in the door, they are really focused on where they're going to place their property, where they're going to place their liability, where they're going to place the commercial auto.
Speaker Change: Our safety services, our claim services. The fact that we're not in and out of those markets and we add stability for an agent, we're adding stability to their clients I think is really where we're bringing a little bit true but.
Speaker Change: Yeah, I'm not naive to think that what's happening in the other P&C lines are not impactful to us. It certainly is and from an agent perspective going back to really refining where the agent understanding our appetite is extremely important right now because most agents when their commercial clients are coming in the door. They are really <unk>.
Speaker Change: <unk> on where they're going to where theyre going to place their property, where they're going to place their liability, where theyre going to place the commercial auto.
Janelle Frost: Workers' comp is not probably top of mine unless that particular client has had an issue of some kind, and if they've had an issue of some kind, that's usually a win for AmeraSave, right? Because we, I think from a service perspective, we do rise to the top. Making sure that agents understand our appetite and that we're remaining top of mind for them is extremely important. However, from a competition standpoint, I would say that really hasn't. I haven't seen a shift happen in the marketplace yet.
Speaker Change: Workers comp is not probably top of mind unless that particular client has had an issue of some kind and if they've had an issue of some kind that's usually a win for amerisafe right. Because we are I think from a service perspective, we do rise to the top.
Speaker Change: So making sure that agents understand our appetite and that will remain a top of mind for them is extremely important however from a competition standpoint, I would say that really hasnt I haven't seen a shift happening in the marketplace yet still hopeful.
Mark Hughes: Still hopeful, but haven't seen it happen yet.
Speaker Change: Haven't seen it happen yet.
Mark Hughes: Yeah, I had a couple of more.
Speaker Change: Yeah.
Speaker Change: A couple of more I can get back in the queue, if theres anybody else in line or should I keep going.
Mark Hughes: I can get back in the queue if there's anybody else in line, or should I keep going, do you know?
Speaker Change: Keep going Marc.
Mark Hughes: Keep going, Mark. Okay, you mentioned the medical inflation, the risk of medical inflation, maybe based on the viability of current fee schedules. I think you said you're not being any change yet. Not notice any change yet.
Speaker Change: Okay.
Speaker Change: You mentioned the.
Speaker Change: Medical inflation, the risk of medical inflation, maybe based on the viability of current fee schedules I think you said youre not.
Speaker Change: Any change yet not notice any change yet.
Janelle Frost: If you've seen in the past, the breakdown in the fee schedule, where does it start to go off the rails? And is that, you know, is that even possible? Yeah. Right. Last quarter, we, I believe in Ernie's call, I should have looked back, I believe in Ernie's call last quarter, we briefly touched on Florida. Florida had some, some rate change, changes come through in regards to, we, reimbursement rates for surgeries and physicians. That hasn't, it's, it's effective, one, one, twenty, twenty-five, so it should be built into the Florida rate. Going into next, for next year, which we haven't seen yet.
Speaker Change: Have you seen in the past.
Speaker Change: A breakdown in the key schedules, you know where does it start to.
Speaker Change: To go off the rails.
Speaker Change: And is that does that.
Speaker Change: Even possible.
Speaker Change: Right.
Speaker Change: Last quarter, we I believe in the earnings call I shouldn't look back I believe in their earnings call last quarter, we briefly touched on Florida, Florida had some.
Speaker Change: Some rate change changes come through in regards to reimbursement rates for surgeries and physicians.
Speaker Change: That hasn't it's effective 112025, so it should be built into the Florida rate.
Speaker Change:
Speaker Change: Going into next for next year on which we haven't seen yet to fill.
Janelle Frost: So, fingers crossed that Florida, because Florida, if you call Florida, it had like a 15% rate decline for 2024. So, hopefully those, those, those fee changes will be reflected in the rate change for Florida going into it for the 20, 25 policy year. So, that's an example of, I think, a fee schedule change that was built into the rate. Typically, if it's something major, or if there's an expansion of benefits that come through state legislatures, they'll have like a law; there'll be a law-only filing for a rate change. Otherwise, depending on the effective date, they'll just build it into the rate filing.
Speaker Change: Fingers crossed that Florida, because before if you would call, Florida had like a 15% rate decline for 2024, so hopefully those those.
Speaker Change: Those fee changes will be reflected in the rate change for Florida going into for the 2025 policy year. So that's.
Speaker Change: That's an example of.
Speaker Change: I think.
Speaker Change: Schedule change that was built into the rate typically if it's it's something major or if theres an expansion of benefits that come through.
Speaker Change: State legislatures, they'll have like a law there'll be a lot only filing for a rate change otherwise depending on when the effective date they'll just built into the rate filing so it'll be interesting to see going in when we start seeing the 2025 loss cost changes are the approved loss cost changes coming through with the states. If there are any others, Florida.
Janelle Frost: So, it will be interesting to see going in when we start seeing the 2025. Laws cost changes, or the proof of law cost changes coming through with the states, if there are any others. Florida is one that I think caught everyone's attention last quarter. I don't know of any larger ones as of yet that are happening, but the pressure will come from the provider side. So, with, and I'll use Florida as my example, when the providers start pushing back, saying these rates are not adequate for our reimbursement, that's typically when the changes happen.
Speaker Change: The one that I think caught everyone's attention last quarter I don't know of any larger ones as of yet that are happening, but the pressure will come from the provider side, so with and I'll use Florida. As My example, when the providers start pushing back saying these rates are not adequate for our reimbursement that's typically when the changes.
Speaker Change: And harkening back to the broader P&C line. However, I will say this I don't know of.
Mark Hughes: Harkening back to the broader P and C line. However, I will say this: I don't know of workers' comp being on the top of any department insurance department's list right now in terms of rates and things happening in the marketplace because of all the catastrophes that we've seen and the impacts to the other lines of business. I think workers' comp is probably not the top priority from that regard. So, I don't anticipate any major changes, at least that are popped up on my radar. Yeah, correct me. A lot of the fee schedules are tied to the government reimbursement.
Speaker Change: Workers' comp being that on the top of any department insurance Department's list right now in terms of rates and things happening in the marketplace because of all the catastrophes that we've seen and the impacts to the other lines of business I think workers' comp is probably not the top priority from that regard so I don't anticipate.
Speaker Change: Paid any major changes at least that.
Speaker Change: Popped up on my radar.
Speaker Change: Yeah.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: Correct me a lot of the fee schedule, they're tied to a government reimbursement I don't know that they're correct youre correct theyre going to change.
Mark Hughes: I don't know that they're correct. You're correct. If they're going to change direction or be so inflamed. I think the latest was between two and three percent coming out of the schedule, so that's pretty in line with the industry and relatively benign if you think about it, which going back to my open marks. I mean, that's one of the things that's driving the profitability and workers' comp, right? Severity has been relatively moderate.
Speaker Change: Change direction or be so right I think the latest was between 2% and 3%.
Speaker Change: Coming out of the first scheduled so that's pretty in line with the industry and relatively benign if you think about it which going back to my opening remarks, I mean, that's one of the things that's driving the profitability and workers' comp severity has been relatively moderate.
Speaker Change: Yeah.
Mark Hughes: How many new, I'm sorry, how many large claims year-to-date? We ended the quarter with 13 claims in excess of a million. Okay, and that's below one. Everyone, yeah, that's pretty much on track with where we were last year or the last, if you look at the last few accident years, it's in that range. So nothing from that aspect that gives me pause.
Speaker Change: Any new Oh.
I'm sorry, how many large claims year to date.
Speaker Change: We ended the quarter with 13 claims in excess of $1 million.
Speaker Change: Okay.
Speaker Change: So.
Speaker Change: Below.
Speaker Change: Yeah, that's pretty much on track with where we were I think last year. The last if you look at the last few accident years, it's in that range. So nothing from that aspect that gives me pause.
Mark Hughes: Yeah, you've mentioned that NCCI lost cost numbers for 2025. Any change in trajectory on those where you've seen them lately, anything caught your eye or that kind of study she got. I think we're still anticipating a per-single-digit decline. I was looking this morning at the chart that shows, I think it's the rate changes back to 2024. And it's funny when you look at that chart, because sometimes I lose track of how many years we've actually been at. So, from 2018 on, the rate of the declines, and this is all NCCI states, not just Amerisafe classes, so 2018 forward, it has been greater than a 5% decline.
Speaker Change: Yeah, you mentioned the N CCI loss cost numbers for 2025 any change in trajectory on those where you've seen them lately.
Maybe you can talk to you or I or is it kind of steady as she died.
Speaker Change: I think we're still anticipating upper single digit declines.
Speaker Change: Was looking this morning at the chart that shows I think it's the right changes back to 2000 22004.
And it's funny when you look at that chart the signs I lose track of how many years, we're actually been at.
Speaker Change: From 2000, I'd say 18 on the <unk> the rate of the declines and this is all in CCI states not just amerisafe classes.
Speaker Change: So 2018 forward it has been greater than a 5% decline.
Speaker Change: So when.
Mark Hughes: So when you think about it from that perspective, that is a large number of rate, a big number of rate decreases over the quintal years. Yeah, the cumulative figure, exactly right.
When you think about it from that perspective that is a large number of re out a big number of rate decreases over sequential years.
Speaker Change: Yeah the accumulative.
Speaker Change: I think you're exactly right.
Mark Hughes: I'm mad at asked about the top line growth here, and is this just the beginning? I mean, do you? Does this carry through for the next four quarters? That would, that would be the natural tempo. You know, you hit this new level of effectiveness and engagement, and so therefore one would kind of assume that it's going to have some staying power for the near-to-medium term. Yes, I do not have a crystal ball, but I can assure you, our strategic priority is to add incremental profitable growth each quarter. Yeah, yeah, okay.
Speaker Change: Imagine asked about the.
Speaker Change: So top line growth here and is this just the beginning I mean do you does this carry through for the next four quarters as that would be the natural tempo you you hit this new level of effectiveness in engagements and so therefore, one would kind of assume that it's going to have some.
Speaker Change: Some staying power for the <unk>.
Speaker Change: Near to medium term.
Speaker Change: Yes, I do not have a crystal ball, but I can assure you our strategic priority is to add incremental profitable growth each quarter.
Speaker Change: Yeah Yeah.
Mark Hughes: And then the new money yields last question. New money yields were about 5%, and the portfolio yield 2.84. I think you said 3.84. 3.84. I'm sorry. Thank you.
Speaker Change: And then the new money yield last question.
Speaker Change: New money yields were.
Speaker Change: About 5%.
Speaker Change: And the portfolio yield to eight four I think you said 384.
Speaker Change: Replanting program soon.
Speaker Change: Yeah.
Speaker Change: Yes.
Mark Hughes: Okay, thank you for indulging me. I appreciate it.
Speaker Change: Okay. Thank you for indulging me I appreciate it.
Mark Hughes: Thank you, Mark.
Mark Hughes: You Mark nice talking to you.
Operator: May I talk to you? Yeah.
Mark Hughes: Yes.
Operator: Thank you. With no additional questions in here, thank you.
Speaker Change: Thank you with no additional questions in queue I would like to turn the call back over to Janelle Frost for any additional or closing remarks.
Janelle Frost: I would like to turn the call back over to Janelle Frost for any additional or closing remarks. A mere safe, longstanding presence in the high hazard workers' compensation space positions us well for delivering long-term value to our stakeholders and stability to our policyholders, agents, and employees.
Janelle Frost: Amerisafe long standing presence in the high hazard workers' compensation space positions us well for delivering long term value to our stakeholders and stability to our policyholders agents and employees. Thank you for joining us today.
Janelle Frost: Thank you for joining us today.
Speaker Change: Yeah.
Janelle Frost: Thank you.
Thank you that will conclude today's call. We appreciate your participation.
Operator: That will conclude today's call. We appreciate your participation. © 2018 AceShowbiz.com
Speaker Change: Okay.
Speaker Change: Right.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: <unk>.