Q1 2025 AMERISAFE Inc Earnings Call

Operator: Good day and welcome to the Amerisafe First Quarter 2025 Earnings Call. Today's conference is being recorded.

Good day and welcome to the Amerisafe first quarter 2025 earnings call. Today's conference is being recorded at this time I'd like to turn the conference over to Kathryn Shirley. Please go ahead.

Operator: At this time, I'd like to turn the conference over to Kathryn Shirley. Please go ahead.

Kathryn Shirley: Thank you, Operator, and good morning, everyone.

Thank you operator, and good morning, everyone welcome to the Amerisafe 2025 first quarter Investor call.

Kathryn Shirley: Welcome to the Amerisafe 2025 First Quarter Investor If you have not received the earnings release, it is available on our website at Amerisafe.com. This call is being recorded. A replay of today's call will be available. Details on how to access the replay are in the earnings.

Kathryn Shirley: If you've not received the earnings release it is available on our website at Amerisafe Dot com.

Kathryn Shirley: This call is being recorded a replay of today's call will be available.

Kathryn Shirley: Tailed on how to access the replay are in the earnings release.

Kathryn Shirley: During this call, we will be making forward-looking statements intended to fall within the safe harbor provided under the securities law. 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 the risk of results 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-Q and other reports and filings with the Securities and Exchange Commission.

Kathryn Shirley: During this call we will be making forward looking statements intended to fall within the safe Harbor provided under the securities laws.

Kathryn Shirley: These statements are based on current expectations and assumptions that are subject to various risks and uncertainties.

Kathryn Shirley: Actual results may differ materially from the results expressed or implied in these statements.

Underlying assumptions prove to be incorrect or as the risk results 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.

Kathryn Shirley: We do not undertake any duty to update any forward-looking state.

Speaker Change: 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's President and CEO. Thank you, Catherine, and good morning, everyone. We are pleased with this quarter's results, both financially and operationally. We continue on our track of adding incremental growth with an attractive underwriting margin. Importantly, we have done so within our existing geographic footprint and risk appetite and building on the power of relationships with our agents, policyholders, and integrators.

GNL: Thank you Catherine and good morning, everyone. We are pleased with this quarter's results both financially and operationally we continue on our track of adding incremental growth, but an attractive underwriting margin.

GNL: Importantly, we have done so without within our existing geographic footprint and risk appetite and building on the power of relationships with our agents policyholders and injured workers.

Janelle Frost: Before I discuss the results for the quarter, I will comment on the environment in which we all There is strong competition now driven by declining workers' compensation rates and turmoil amongst other property and casualty lines. Then there's the economy. News headlines lately highlight the levels and tariffs, inflation, recession, interest I will not be so bold as to predict what will happen, but we, like most companies, evaluate the risk to our business directly and to our customers. In the most simplistic of terms, those economic conditions which impact payrolls have the potential to influence our premiums. Examples are unemployment, general economic slowdown, project delays, wage inflation.

GNL: Before I discuss the results for the quarter I will comment on the environment in which we operate.

GNL: There is a strong competitive there is strong competition now driven by declining workers' compensation rates and turmoil amongst other property and casualty lines.

GNL: Then there's the economy.

GNL: News headlines lately highlight the level of uncertainty tariffs.

GNL: Tariffs inflation recession interest rates I will not be so bold as to predict what will happen, but we like most companies evaluate the risks to our business directly and to our customers.

GNL: In the most simplistic of terms those economic conditions, which impact payroll has the potential to influence our premium.

GNL: Examples are our unemployment general economic slowdown and project delays wage inflation.

Janelle Frost: If history were my guide, our niche industries fared well in prior mild, shallow recessions.

GNL: History, where my guard our niche industry has fared well in prior mild shallow recessions. This is something we monitor closely but it does not change. The course, we are currently pursuing.

Janelle Frost: This is something we monitor closely, but it does not change the course we are currently pursuing.

Janelle Frost: Now back to our results. Gross written premiums grew 4.6% over the first quarter of 2024, which was driven by consistent new business gains and strong premium retention. Premiums on policies we wrote in the quarter grew 7.1% over the prior year. We continue to see strong retention in policies for which we offer renewal with 93.1% retention in the first as well as other policy count groups. Premium growth was partially offset by slowing payroll audits and other premium adjustments, which contributed $5 million to top line in the quarter versus $6.4 million in the year ago. This was not unexpected, as we've discussed in previous quarters, with the moderation in wage inflation.

GNL: Now back to our results.

GNL: Gross written premiums grew four 6% over the first quarter of 2024, which was driven by consistent new business gains and strong premium retention.

GNL: Premiums on policies, we wrote in the quarter grew seven 1% over the prior year quarter.

GNL: We continue to see strong retention and policies for which we offer renewal with 93, 1% retention in the first quarter as well as further policy count growth.

GNL: Premium growth was partially offset by slowing payroll audits and other premium adjustments, which contributed $5 million to top line in the quarter versus $6 4 million in the year ago quarter.

GNL: This was not unexpected as we have discussed in previous quarters with the moderation in wage inflation.

Janelle Frost: As indicated in our last earnings call, our current accident year loss ratio was in line with the prior accident year at $971. Looking forward, we expect frequency to remain favorable, which we experienced this quarter, and severity trends to be relatively moderate. The company experienced $8.7 million in favorable development on prior accident years, primarily from accident years 2020 and 2021. We attribute our favorable case development to our proactive claims handlers.

GNL: As indicated in our last earnings call. Our current accident year loss ratio was in line with the prior accident year at 971%.

GNL: Looking forward, we expect frequency to remain favorable, which we experienced this quarter and severity trends to be relatively modest.

GNL: The company experienced $8 7 million in favorable development on prior accident years, primarily from accident years 2020 in 2021.

GNL: We attribute our favorable case development to our proactive claims handling.

Andy: And with that, I'll turn the call over to Andy to discuss the financials. Thank you, Janelle, and good morning to everyone. For the first quarter of 2025, Amerisafe reported net income of $8.9 million or $0.47 per diluted share and operating net income of $11.4 million or $0.60 per diluted share. In comparison, during the first quarter of 2024, net income was $16.9 million or $0.88 per diluted share and operating net income of $13.3 million or $0.69 per diluted share. The lower net income was primarily driven by lower valuations across our equity holdings, which resulted in a net unrealized loss on equity securities of $3.2 million during the quarter, compared to an unrealized gain on equity securities of $4.8 million in the first quarter of 2024.

GNL: And with that I'll turn the call over to Andy to discuss the financials. Thank you Danielle and good morning to everyone for the quarter for the first quarter of 2025, Amerisafe reported net income of $8 $9 million or <unk> 47 per diluted share and operating net income of $11 4 million or <unk> 60 per diluted share.

GNL: Arison during the first quarter of 2024 net income was $16 9 million or <unk> 88 per diluted share and operating net income of $13 3 million or <unk> 69 per diluted share.

GNL: The lower net income was primarily driven by lower valuations across our equity holdings, which resulted in a net unrealized loss on equity securities of $3 $2 million during the quarter compared to an unrealized gain on equity securities of $4 8 million in the first quarter of 2024.

Andy: Gross written premiums increased by 4.6% to $83.8 million in the quarter compared with $80.1 million in the first quarter of 2024. Net premiums earned increased 60 basis points to $68.9 million compared to $68.4 million in the first quarter of 2024. Overall, strong new business production and improved premium retention were the primary drivers of continued top-line growth, highlighting our focus on expanding profitable sales despite a competitive market environment. Our total underwriting and other expenses were $20.6 million in the quarter, a $1.9 million increase compared with the $18.7 million recognized in the first quarter of 2024. This increase resulted in an expense ratio of 29.9% compared with 27.3% in the first quarter of 2024.

GNL: Gross written premiums increased by four 6% to $83 8 billion in the quarter compared with $81 million in the first quarter of 2024 net premiums earned increased 60 basis points to $68 9 million compared to $64 million in the first quarter of 2024 overall strong new.

GNL: Business production improved premium retention were the primary drivers of continued topline growth highlighting our focus on expanding profitable sales despite a competitive market environment.

GNL: Our total underwriting and other expenses were $20 6 million in the quarter, a $1 $9 million increased compared with $18 7 million recognized in the first quarter of 2024.

GNL: This increase resulted in an expense ratio of 29, 9% compared with 27, 3% in the first quarter of 2024 the increase in.

Andy: The increase in expenses is primarily driven by ongoing investments in the business to support top line growth. Timing differences between the initial expense outlay and the recognition of premium contribute to an elevated expense ratio. For the quarter, our tax rate was 20.2% compared to 18.4% in the first quarter of 2024, which was largely due to an increase in the proportion of underwriting income versus tax exempt investment.

GNL: <unk> expenses is primarily driven by ongoing investments in the business to support top line growth.

Timing differences between the initial expense.

GNL: And the recognition of premium contribute to an elevated expense ratio.

GNL: For the quarter, our tax rate was 22% compared to 18, 4% in the first quarter of 2024, which was largely due to an increase in the proportion of underwriting income versus tax exempt investment income.

Andy: Turning to our investment portfolio. For the first quarter, net investment income decreased 9.7% to $6.7 million, driven by a decrease in investable assets following the payment of the special debit. For the quarter, the yield on new investments exceeded portfolio roll off by 296 basis points, driving our tax equivalent book yield to 3.85%, or 10 basis points higher than the first quarter of 2024. The investment portfolio is high-quality, carrying an average AA- credit rating with a duration of 4.48 years. The composition of the portfolio is 62% in municipal bonds, 22% in corporate bonds, 3% in U.S.

GNL: Turning to our investment portfolio for the first quarter net investment income decreased nine 7% to $6 7 million driven by a decrease in investable assets following the payment of the special dividend.

GNL: For the quarter the yield on new investments exceeded portfolio rollout by 296 basis points driving our tax equivalent book yield to 385% or 10 basis points higher than the first quarter of 2024.

The investment portfolio is high quality carrying an average double a minus credit rating with a duration of 448 years. The composition of the portfolio is 62% in municipal bonds, 22% in corporate bonds, 3% of U S treasuries and agencies, 7% in equity securities and 6% in cash and other investments.

Andy: treasuries and agencies, 7% in equity securities, and 6% in cash and other investments. Approximately 54% of our bond portfolio is classified as held to maturity securities, which maintain a net unrealized loss of $13.3 million as of quarter end. As a reminder, the 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.

GNL: Approximately 54% of our bond portfolio is classified as held to maturity securities, which maintain a net unrealized loss of $13 3 million as of quarter end. As a reminder, the held to maturity securities are carried at amortized cost and therefore unrealized gains or losses on the 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 $826 million in investments, cash and cash equivalents.

GNL: 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 $826 million in investments cash and cash equivalents and finally, just a couple of other topics.

Andy: And finally, just a couple of other topics. Book value per share was $13.69 and operating return on average equity was 17.1%. Our statutory surplus was $243.6 million at quarter end, up 3.6% from $235.1 million at December 31st, 2024.

Book value per share was $13 69, and operating return on average equity was 17, 1% our.

GNL: Our statutory surplus was $243 6 million at quarter end up three 6% from the from $235 1 million at December 31, 2024, and finally, we will be filing our Form 10-Q with the SEC today April 30, after the market close with that I would like to open the call for the question and answer portion.

Andy: And finally, we will be filing our Form 10-Q with the SEC today, April 30th, after the market close.

Operator: With that, I would like to open the call for the question and answer portion. Operator, we're ready for Q&A. Again, those questions. To ask a question, please press 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 our equipment. Again, press star 1 to ask a question.

GNL: Operator.

GNL: Yeah.

GNL: Yes.

GNL: Operator, we're ready for Q&A.

GNL: My apologies.

GNL: Again no question.

Speaker Change: To ask a question. Please press star one on your telephone keypad.

Speaker Change: If you're using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment again press star one to ask a question. Our first question is going to come from Matt Carlotti at citizens.

Matt Carletti: Our first question is going to come from Matt Carletti. Hey, good morning. Good morning, Matt. Good morning.

Matt Carlotti: Hey, good morning.

Speaker Change: Good morning, Matt.

Matt Carletti: We have a few questions. One is, do you have handy the kind of the audit premium impact on the year ago, second quarter and third quarter too, if you have it, just trying to get a feel for, obviously, voluntary seeing a nice rebound, but kind of what what we're up against in terms of just the kind of reported number. Yeah, we appreciate I appreciate that.

Matt Carlotti: Good morning.

Matt Carlotti: Yes, a few questions one is.

Matt Carlotti: Do you have handy.

Matt Carlotti: The kind of the audit premium impact.

Matt Carlotti: A year ago.

Matt Carlotti: <unk> quarter end third quarter. Two if you have that just trying to get a feel for obviously voluntary is seeing a nice rebound.

Matt Carlotti: But kind of what we're up against in terms of just the kind of reported number.

Matt Carlotti: We appreciate I appreciate that so I'll, just kind of give the four quarters of last year first quarter.

Andy: So I'll just kind of give the four quarters of last year. First quarter six point four. And as I said earlier, second quarter was seven point three million. Third quarter was $4 million and fourth quarter was $2.5 million. Super helpful.

Matt Carlotti: As I said it earlier second quarter was $7 3 million.

Matt Carlotti: Third quarter was 4 million and fourth quarter was $2 5 million.

Speaker Change: Super helpful. Thank you.

Matt Carletti: Thank you.

Matt Carletti: And then kind of staying on top line, you know, as kind of last fall happened and Helene hit and Milton hit, it sure seemed like those were, you know, your construction exposure, trucking exposure, kind of in your wheelhouse there in terms of the rebuild, as well as the states that you have pretty big market shares in.

Matt Carlotti: And then.

Speaker Change: Staying on topline.

Speaker Change: As kind of last fall happened and Helene hit in Milton.

Speaker Change: Seemed like those were.

Speaker Change: Your construction exposure trucking exposure kind of in your wheelhouse there in terms of the rebuild as well as it states that you have pretty big market shares in.

Janelle Frost: I know those things can take time to develop, but are you seeing anything in terms of work activity or otherwise that would lead you to believe that you're kind of benefiting from what's going on to recover from those events? Yeah, you know, Matt, if I look at audit premium, and if I think about the audit premium that we recognized this quarter, that would have been policies that were effective dates starting in the fourth quarter of 2023. So, if I look at the states for the Hurricanes East specifically, and now you talked about Florida, Georgia, the Carolinas, we did see a slight increase in the audit premium for what I would call rebuilding classifications in North Carolina and Georgia, not as much in Florida, but we did see a little bit of a bump there.

Speaker Change: I know those things can take time to develop but are you seeing anything in terms of work activity or otherwise that would lead you to believe that youre benefiting from whats going on to recover from those events.

Speaker Change: Yeah, you know, Matt we I look if I look at audit premium than a or b by the audit premium that we recognized this quarter that would've been policies that were effect effective date, starting in the fourth quarter of 'twenty one story.

Speaker Change: So if I look at the states for the Hurricanes that you specifically I know you talked about Florida, Georgia.

Speaker Change: The Carolinas, we did see a slight increase in the audit premiums for what I would call rebuilding classifications, and North Carolina, and Georgia, not as much in Florida, but we did see a little bit of a bump there.

Matt Carletti: Okay, helpful.

Speaker Change: Okay helpful. And then one last one if I could just.

Matt Carletti: And then one last one, if I could, just, um, can you help us, you know, with the, uh, help us think through kind of the impact of potential tariffs on your business? And I know that might be impossible, given we don't know what that picture's going to look like, but, but, but, but I'm thinking more along the lines of, like, to the extent of, like, uh, medical equipment and medicine and things like that to get your workers back to kind of, you know, maximum medical improvement. Um, if you've done any analysis just on, um, you know, what that income impact should be, or if we shouldn't even be worried about it.

Speaker Change: Can you help us.

Speaker Change: Would be.

Speaker Change: To help us think through kind of the impact of potential tariffs on your business and I know that might be impossible. Given we don't know what that picture will look like but.

Speaker Change: But I'm thinking more along the lines of like to the extent of like.

Speaker Change: Medical equipment, and medicine, and things like that to get your workers back to kind of.

Speaker Change: Maximum medical improvement if you've done any analysis just on.

Speaker Change: What that impact should be or if we shouldnt be worried about it.

Janelle Frost: You know, it's a great question, and I can speculate with everyone else in the industry, I suppose. Again, putting premium to the side, to your point about medical... If you think about the things that could be impacted by tariffs, I would go to pharmacy and probably durable medical. For the workers' compensation industry as a whole, that's probably about 15% of medical costs. So, if there's somehow that, you know, impactful, tariffs somehow are impacting those two, there could be a slight uptick in medical from that perspective. For Amerisafe, we probably run a little bit higher than that 15% just because of the durable medical equipment in particular with the types of injuries that we have.

Speaker Change: No. It's a great question I can I can speculate with everyone else in the industry I suppose.

Speaker Change: It again.

Speaker Change: Putting premium to the side to your point about medical.

Speaker Change: Do you think about the things that could be impacted by tariffs I would go to pharmacy, and probably durable medical equipment for.

Speaker Change: The workers compensation industry as a whole.

Speaker Change: That's probably about 15% of medical costs.

Speaker Change: So if there is somehow that through impactful tariffs somehow impacting those too there could be a slight uptick in medical from that perspective.

Speaker Change: For Amerisafe, we probably run a little bit higher than that 15% just because of the durable medical equipment in particular with the types of injuries that we have.

Janelle Frost: However, you know, I don't know that it'd be that meaningful. I think the real question is going to be, is the cost passed through or not, right? And I think that's the same thing everybody's worried about, even on the construction side with premiums. If the tariffs do, in fact, somehow impact the construction industry, but the construction industry can pass those costs off to the end customer, then it's less impactful to our premiums. If the construction companies as a whole bear the brunt of that or it delays projects, then it could be impactful to premiums. So, that's my speculation for what it's worth.

Speaker Change: However, I don't know that it be that meaningful but I think the real question is going to be.

Speaker Change: Is the cost pass through or not right and I think thats. The same thing everybody is worried about even on the construction side with premiums if if if the tariffs do you in fact somehow impact the construction industry, but the construction injury can pass those costs off to the end customer then it's less impactful to our premiums.

Speaker Change: Construction company that has a whole bear.

Speaker Change: Bear the brunt of that or it delays projects then it could be impactful to premiums.

Speaker Change: That's my speculation for what it's worth.

Matt Carletti: That's super helpful. Thank you for the color. Always appreciate it. You're welcome.

Speaker Change: All right that's super helpful. Thank you for the color I appreciate it.

Speaker Change: Youre welcome.

Operator: And once again, if you have a question, please press star 1.

Speaker Change: And once again, if you have a question. Please press star one on your telephone keypad.

Mark: And our next question is going to come from Mark. Thanks. Good morning.

Speaker Change: And our next call or question is going to come from Mark Hughes from tourists.

Mark Hughes: Yes, thanks, and good morning.

Mark: Good morning, Mark. Janelle, you mentioned competition in your remarks. Was there any change in that competitive dynamic in the first quarter? No, there really hasn't been. We closely monitor what's happening in the other lines of business, even though we're a monoline and we write workers' compensation, certainly what's happening in the rate environment. And even with the distribution network and the other lines of business is impactful to us. And there really hasn't been a shift, good or bad, in the level of competition, not at this point.

Speaker Change: Good morning, Mark.

Mark Hughes: Do you know you mentioned the competition in your remarks was there any change in that competitive dynamic.

Speaker Change: First quarter.

Speaker Change: No there really hasnt been yes, we closely monitor what's happening in the other lines of business, even though we're a mono line and we write workers compensation certainly what happened what's happening in the rate environment, and even with the distribution network and the other lines of business as impactful to us and there really hasnt been a shift that good or bad.

Speaker Change: The level of competition not at this point.

Mark: Yeah, Andy, the you talk about the expense ratio being impacted by elevated costs to support growth.

Andy: Yes, Andy.

Andy: You talked about the expense ratio being impacted by elevated costs to support growth.

Speaker Change: Yeah.

Andy: Did you quantify that and would you expect that to persist into coming quarters? So Mark, as I said earlier, in what I was speaking, it's roughly about $1.9 million increase over last year. And that is related to, again, you know. investing for scale. I think as we see, go through the year, we should see the cost, you know, flatten out or moderate because we do assume we will be below a 30 for the year. But again, you know, the investment does have a timing delay before we see the premium. Yeah.

Speaker Change: Did you quantify that.

Speaker Change: Would you expect that to persist into coming quarters.

Mark Hughes: So mark here.

Speaker Change: So.

Speaker Change: As I said earlier in my.

Speaker Change: What I was speaking, it's roughly about $1 9 million increase.

Speaker Change: The increase over last year.

Speaker Change: And that is related to again.

Speaker Change: Investing for scale I think as we see go through the year, we should see the the costs flatten out or moderate because we do so we will be below 30% for the year, but again the investment does have a timing delay before we see the premium.

Speaker Change: Yes.

Mark: And Janelle, you shared maybe some of the state loss cost updates that you've seen lately. Are you, do you have any specifics on that? And do you notice any kind of trend in those state-by-state numbers? Unfortunately, the trend is still declining rates. Yeah, we're still seeing, I think when we talked about coming into 2025, what we were expecting, you know, mid-single digits, six to six, somewhere between six and eight percent. We're still seeing the same things. If you look, there's a great chart put out there that shows all the approved, or latest approved rate, I'll say decreases, because I think there were two increases out across all of the states.

Speaker Change: And.

Speaker Change: Sure maybe some of the state.

Speaker Change: Loss cost updates that you've seen lately.

Speaker Change: <unk>.

Speaker Change: Do you have any specifics on that and do you notice any kind of trend.

Speaker Change: State by state numbers.

Speaker Change: Unfortunately, the trend is still declining rate.

Speaker Change: Yes, we're still seeing I think we talked about coming into 2025, what we were expecting you know mid single digits $6 six somewhere between six and 8% we're still seeing the same things.

Speaker Change: If you look there is a great chart put out there that shows all the approved our latest approve rate.

Speaker Change: I'll say decreases because I think there were two increases out across all of the states.

Mark: But, you know, it varies in degree. I think the smallest was like half a percentage decrease, and then the largest being nearly 14% decrease. So it still varies, but on average, somewhere in that six to eight percent range.

Speaker Change: But you know it varies in degree I think the smallest was like half a percentage decrease and then the largest being nearly 14% decrease so it still varies but on average somewhere in that 6% to 8% range.

Speaker Change: Decrease in cases of clarifying.

Speaker Change: Okay.

Mark: And then anything on the medical inflation front, you mentioned some of the maybe potential tariff impacts, but on an underlying basis, any changes? We are seeing some increases, particularly coming out of physician care. That seems to be one that we're kind of monitoring a little bit in terms of, I wouldn't even say specific states, just overall, there's certainly an increase there.

Speaker Change: And then anything on.

Speaker Change: The medical inflation from you mentioned some of the maybe potential tariff impacts.

Speaker Change: On an underlying basis.

Speaker Change: Any changes.

Speaker Change: We are seeing some increases, particularly coming out of physician care.

Speaker Change: That seems to be one that we're kind of monitoring a little bit.

Speaker Change: And in terms of I wouldn't even say specific specific states. Just overall there is certainly an increase there I'm assuming that more to do with labor costs than anything else.

Mark: I'm assuming that's more to do with labor costs than anything else. Not tariffs at this point, but we'll wait and see what happens in terms of, like I mentioned before, pharmacy and durable medicine. Is that physician impact, is that utilization, or is that...

Speaker Change: Tariffs at this point, but we'll wait and see what happens in terms of like I mentioned before our pharmacy and durable medical costs medical equipment.

Speaker Change: Physician that impacted that.

Speaker Change: Utilization or is that.

Speaker Change: Got it so you're correct.

Speaker Change: Yeah, no great question.

Mark: and Colin Gleason. And isn't that largely tied to kind of state fee schedules? Isn't there... Yeah, there's fee schedules, and certainly we do medical repricing as well, as does everyone in the industry, you know, going through those bills and looking at the particular codes that we're charged for. But just if we look at what we're being charged, that does seem to be escalating some, and we're obviously negotiating that and using fee schedules as best we can. Yeah, you got those deep pockets.

Speaker Change: And what I was referring to is actual.

Speaker Change: Bills coming in the door, so not necessarily utilization actually what the doctors are.

Speaker Change: Our call it our charging us.

Speaker Change: Yeah.

Speaker Change: And then.

Speaker Change: Isn't that largely tied to kind of state fee schedule there yes.

Speaker Change: Yes.

Speaker Change: And certainly we do medical repricing as well as as as does everyone in the industry.

Speaker Change: Going through those bills on looking at the particular codes that were charged for but just if I. If we look at what were being charged that does seem to be escalating some and we're going.

Speaker Change: And that goes with that and using the fee schedules as best we can.

Speaker Change: Yeah, Hey, guys. Thanks.

Speaker Change: Deep pockets.

Mark: Anything you see in the stat data as you look at the... the industry, your judgments about the lost costs or inflation or reserve adequacy. I know we'll get the NCCI data here pretty soon, but anything you see in the industry numbers that caught your eye at this time. Yeah, you're spot on. You took the words right out of my mouth. You know, NCCI is a couple of weeks away, so we'll certainly see what their opinion is in terms of the industry's overall redundancy. I would suspect that the overall redundancy for the industry should be declining.

Speaker Change: Hey, guys Scot data as you looked at.

Speaker Change: The industry your judgments about.

Speaker Change: Loss cost or inflation or reserve adequacy.

Speaker Change: I know, we will get the NCI data here pretty soon.

Speaker Change: Anything you see in the <unk>.

Speaker Change: The street numbers in country.

Speaker Change: No.

Speaker Change: Yeah, you're spot on you took the words right out of my mouth and decided a couple of weeks away. So we'll certainly see what their opinion is in terms of the industry's overall redone.

Speaker Change: Redundancy Ah I would I would suspect that the overall redundancy for the industry should be declining.

Mark: It's really the degree of declining because, again, lost costs are coming out annually. They're still saying rate decreases, and they're basing that off premium and loss data that they're collecting from the individual carriers. The rate of the decreases may have slowed slightly, therefore I would assume that means the industry's decline, the industry's overall redundancy should be deteriorating. And plus, if you think about the years that the redundancies have been generated from, those what we would call older accident years now, that should be waning a little bit for the industry.

Speaker Change: It's certainly the decree the degree of declining because again lost costs are coming out annually. They are still seeing rate decreases and they're basing that off premium and loss data that they're collecting from the individual carriers. So.

Speaker Change: The rate.

Speaker Change: The rate of the decreases may have slowed slightly therefore, I would assume that means the <unk> the industry's <expletive>.

Speaker Change: Decline the industry overall redundancy should be deteriorating and plus if you think about the year is that the redundancies have been generated from those what we would call older accident years now.

Speaker Change: That should be waning a little bit for the industry. So the question would be does the industry feel as confident in the more current accident years as they did in the pre COVID-19.

Mark: So the question would be, does the industry feel as confident in the more current accident years as they did in those pre-COVID accident years? And I think the industry as a whole would say that's probably not the case. But we'll see what happens. The data tells its own story, so we'll see what has been collected and what's reported.

Speaker Change: Pre COVID-19 accident years in the <unk>.

Speaker Change: The industry as a whole we would say that's probably not the case, but we will see what having as the data. The data tells its own story. So we'll see.

Speaker Change: What what was being collected and what's reported.

Mark: Yeah, I don't remember properly provided wage specifics, maybe. increases in payroll versus increases in wages or average wage. Right.

Speaker Change: Yes.

Speaker Change: Remember properly provided.

Speaker Change: Wage specifics maybe.

Speaker Change: <unk> enrolled versus increase in wages, our average wage.

Mark: Our, you know, our, our indications are that our wage inflation is still trending a little bit above the national average. I think the national average right now is somewhere around 4%. So our wage inflation indications are that we're slightly above that. We do, we do feel like maybe we've had a little bit of increase in new employee count.

Speaker Change: Right.

Speaker Change: You know our our indications are that our wage inflation is still trending a little bit above the national average I think the national average right now is somewhere around 4%.

Speaker Change: Our wage inflation and indications are that we're slightly above that.

Speaker Change: We do we do feel like maybe we've had a little bit of increase in new employee count.

Mark: You know, one quarter, we'll see if I look at it compared to not sequential quarter, but prior year quarter, same quarter, prior year, it would look like we may have a little bit of increase in employee count, but the wage inflation is still trending above the national average. Yeah.

Speaker Change: One quarter, we will see if I look at it compared to not sequential quarter, but prior year quarter same quarter. Prior year. It would look like we may have a little bit of increase in employee count.

Speaker Change: But the wage inflation is still trending above the national average.

Mark: And am I thinking properly that your ELCM is a thing of the past, which is perfectly fine with me? As far as our public disclosure, yes. I believe that that is competitive information.

Speaker Change: And then my.

Speaker Change: Thinking properly that Youre the thing.

Speaker Change: Think of the past.

Speaker Change: Perfect.

Speaker Change: As far as our public disclosure, yes, we believe I believe that that is competitive information.

Mark: Yeah, well, it was a beautiful thing while I was there. Thank you, Mark. I appreciate that.

Speaker Change: Yes.

Speaker Change: Beautiful thing Wildwood.

Speaker Change: Thank you Mark.

Mark: Did you consult Alan on that decision? I did not. He probably would say, come on, Janelle, you've been doing it that long.

Speaker Change: Pat.

Speaker Change: How about that.

Speaker Change: I did not he probably we'd say come on so now you've been doing it that long why why change now.

Mark: Why do I change now? We're all better at data. We're all better at data now than we were way back in the gap. So I do feel like that's competitive. Yeah, understood.

Speaker Change: Yes, we're all better as data were all better data now than we were in the past way back into the gap. So I do feel like that's competitive information.

Mark: And then one final one, large losses in the quarter. Thank you. 2.2. Okay, so kind of below trend. Right. Yeah. Okay. All right. Thank you very much. Thank you.

Speaker Change: Yes, understood and then one final one.

Speaker Change: Large losses in the quarter.

Speaker Change: Two.

Speaker Change: Okay.

Speaker Change: Great.

Speaker Change: Right.

Speaker Change: Yes, Okay, alright, thank you very much.

Speaker Change: Thank you.

Janelle Frost: And this will conclude our Q&A session. I'll now. This quarter was another data point in the success of our strategy and ability to create long-term value for our shareholders. We remain competitive and profitable by executing on our service-focused strategy from the beginning of the agent experience, to risk selection, to protecting our policyholders and their injured workers. This is who we are, turning risk into opportunity through the performance and experience of our employees.

Speaker Change: And this will conclude our Q&A session I will now turn it over to GNL Cross CEO for closing remarks.

Speaker Change: This quarter. It was another data point in our success the success of our strategy and ability to create long term value for our shareholders, we remain competitive and profitable by executing on our service focus strategy from the beginning of the agent experience to risk selection to protecting our policyholders and their injured workers.

Speaker Change: This is who we are turning the risk and the opportunity to the performance and experience of our employees. Thank.

Janelle Frost: Thank you for joining us today. And this concludes today's call. Thank you for your participation.

Speaker Change: Thank you for joining us today.

Speaker Change: Okay.

Speaker Change: And this concludes today's call. Thank you for your participation you may now disconnect.

Operator: You may now.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yes.

[music].

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Yeah.