AMERISAFE INC Q4 FY2024 earnings call

• Key priority was top-line growth with gross premiums written up 3.9% Q4 and 3.1% full year. Voluntary premiums up 8.5% Q4 and 4.6% full year. Enforced policy count grew 9.6%.
• Combined ratio 88.7%, ROE 20.2%. Accident year loss ratio steady at 71% in 2024, expected to remain at 71% in 2025.
• Favorable development of $9.7 million in Q4 and $34.9 million full year 2024. Board approved 5.4% increase in regular dividend to $0.39 per share.

For the fourth quarter of 2024, AMERISAFE reported net income of $13.2 million or $0.69 per diluted share and operating net income of $12.8 million or $0.67 per diluted share. Full year 2024 net income was $55.4 million and net operating income was $48.4 million. Gross premiums written grew 3.9% in the fourth quarter and 3.1% for the full year. First written premiums were $62.7 million in the quarter and $294.1 million for the year. Net premiums earned were $66.5 million in the quarter and $270.6 million for the year. Total underwriting and other expenses were $19.8 million in the quarter, a 4% increase from the prior year, resulting in an expense ratio of 29.7%. Net investment income decreased 14.4% to $6.9 million in the fourth quarter and 6.8% to $29.2 million for the full year. The investment portfolio is high quality with an average AA- credit rating, composition includes 62% municipal bonds, 22% corporate bonds, etc.

• Remain focused on top-line growth, confident in identifying profitable high-risk/hazard risks to offset market challenges.
• Anticipate accident year loss ratio to maintain 71% in 2025.
• Board approved 5.4% increase in regular dividend to $0.39 per share.

• Industry-wide headwinds including rate reductions.
• Net unrealized loss on held-to-maturity securities due to rate increase.
• Competitive market conditions affecting premium growth.

Q: Could you put policy count growth in context of recent quarters and talk about average size per policy trend?

A: Policy term growth in Q4 was 2.6%. Average policy size in 2024 slightly lower than 2023, with average wages slowing in Q4 2024 but still trending higher than national averages.

Q: Was renewal rate strategy a contributor to top line? Any impact on top line?

A: Renewal strategy was impactful, policy retention 94.1% on policy basis and 88% on premium basis.

Q: Any growth from hurricane-related reconstruction?

A: No immediate impact seen yet, as audit premiums from affected policies not yet audited, though some monthly reporting shows slight increase in affected areas but not quantifiable as hurricane-related.

Q: How much of open claim inventory is related to claims ten years or older?

A: 99% of claims reported prior to 2019 are closed, very small percent of older claims remain open, mostly due to medical reasons in some states.

Q: Thoughts on construction industry prospects?

A: Economy supporting construction work, some buffer against industry impacts like tariffs, but immigration could influence labor force, though small to midsize employers may be insulated to some extent.

Q: Any early thoughts on LostPic for 2025?

A: Anticipate LostPic to hold at 71% in 2025