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AMERISAFE INC (AMSF)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered underwriting profitability with a net combined ratio of 86.1% and net income of $13.2M ($0.69 diluted EPS); year-over-year EPS declined on lower net unrealized gains, while underwriting results remained disciplined .
  • Top line momentum continued: gross premiums written rose 3.9% YoY; voluntary premiums were up 8.5% YoY, driven by strong retention (94.1% policy retention; 88% premium retention) and new business production .
  • Capital actions remained supportive: the regular dividend was raised 5.4% to $0.39 per share; book value per share ended at $13.51 after paying a $3.00 special dividend in December 2024 .
  • Management reiterated a 71% accident-year loss ratio outlook for 2025 and highlighted continued favorable reserve development ($9.7M in Q4) from prior accident years, underscoring claims execution strength .
  • Potential stock reaction catalysts: dividend increase and continued policy growth against competitive rate headwinds; headwinds include moderating audit premiums and lower investment income from smaller portfolio post-special dividend .

What Went Well and What Went Wrong

What Went Well

  • Strong underwriting execution: Q4 net combined ratio of 86.1% (vs. 85.5% LY) with favorable prior-year reserve development reducing LAE by $9.7M; AY loss ratio held at 71% .
  • Sales-driven culture delivered: voluntary premiums +8.5% YoY; in-force policy count grew 9.6% for the year, supported by 94.1% policy retention and 88% premium retention in the quarter .
  • Strategic message from CEO: “Risk selection, appropriate product pricing and claims handling resulted in combined ratios of 86.1% this quarter and 88.7% for the year,” emphasizing disciplined growth in a competitive market .

What Went Wrong

  • Earnings declined YoY: diluted EPS fell to $0.69 from $1.00, driven primarily by lower net unrealized gains and realized losses vs. prior year .
  • Investment income down: net investment income decreased 14.4% YoY to $6.9M in Q4 due to reduced investable assets following the special dividend; pre-tax investment yield ticked down to 3.2% .
  • Expense ratio ticked up: underwriting expense ratio rose to 29.7% (vs. 28.9% LY), with prior-year franchise tax true-up not repeating; combined ratio slightly higher YoY .

Financial Results

Income Statement and Ratios

MetricQ4 2023Q3 2024Q4 2024
Total Revenues ($USD Millions)$80.1 $78.7 $74.0
Net Premiums Earned ($USD Millions)$65.7 $67.1 $66.5
Net Investment Income ($USD Millions)$8.1 $7.5 $6.9
Net Income ($USD Millions)$19.2 $14.3 $13.2
Diluted EPS ($)$1.00 $0.75 $0.69
Net Combined Ratio (%)85.5% 90.9% 86.1%
Net Loss Ratio (%)55.5% 58.4% 56.4%
Net Underwriting Expense Ratio (%)28.9% 31.7% 29.7%

Insurance Results Detail

MetricQ4 2023Q3 2024Q4 2024
Gross Premiums Written ($USD Millions)$60.3 $74.9 $62.7
Loss & LAE Incurred ($USD Millions)$36.5 $39.2 $37.5
Underwriting & Other Op Costs ($USD Millions)$19.0 $21.3 $19.8
Policyholder Dividends ($USD Millions)$0.7 $0.5 $0.0
Underwriting Profit (Pre-tax) ($USD Millions)$9.5 $6.1 $9.2

KPIs

KPIQ2 2024Q3 2024Q4 2024
Voluntary Premiums YoY Growth (%)+2.7% +8.8% +8.5%
Audit Premium Adjustments ($USD Millions)+$7.3 +$4.0 +$2.5
Favorable PY Reserve Development ($USD Millions)$8.1 $8.5 $9.7
Accident-Year Loss Ratio (%)71.0% 71.0% 71.0%
Policy Retention (%)—93.6% 94.1%
Premium Retention (%)——88%
Pre-tax Investment Yield (%)3.3% 3.4% 3.2%
Tax-Equivalent Yield (%)3.8% 3.8% 3.8%
Book Value per Share ($)$15.78 $16.50 $13.51

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Accident-Year Loss Ratio TargetFY 2025~71% (implied continuity) 71% maintained Maintained
Effective Tax RateFY 2025Not providedNo explicit guidance; FY 2024 actual 19.7% N/A
Regular Dividend per ShareQ1 2025$0.37 $0.39 (payable Mar 21, 2025) Raised
Other Quantitative Guidance (Revenue, Margins, OpEx, OI&E)FY 2025Not providedNot providedN/A

Notes: Management did not issue explicit numeric guidance for revenue/margins/OpEx; tone suggests focus on profitable top-line growth with continued underwriting discipline .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024 & Q3 2024)Current Period (Q4 2024)Trend
Agent engagement & sales-driven cultureEmployee-led initiatives improving underwriting efficiency and agent experience; voluntary premiums +2.7% (Q2); +8.8% (Q3) Continued momentum: voluntary premiums +8.5%; strong retention; culture emphasized across functions Improving
Rate environment (loss cost declines)Persistent NCCI declines; moderation vs 2023; medical inflation/watch on fee schedules (e.g., Florida) Still competitive; mid single-digit average declines; comp remains attractive to carriers Ongoing headwind
Audit premium dynamicsPositive and additive, moderating YoY; +$7.3M (Q2), +$4.0M (Q3) +$2.5M; expected deceleration but remain positive in 2025 Moderating
Reserve developmentFavorable development: $8.1M (Q2), $8.5M (Q3) Favorable $9.7M; mix across 2015–2022 accident years Consistently favorable
Investment portfolio & yieldsPortfolio size reduced; tax-equivalent yield ~3.8% (Q2/Q3) Lower NII post-special dividend; tax-equivalent yield 3.8% NII down, yields stable
Macros: hurricanes & reconstructionAnticipated benefits to construction/trucking footprint (Q3) Some increase seen in Southeast payrolls, but not quantifiable as hurricane-driven yet Watchlist
Competitive dynamicsMonoline value proposition vs package writers; strong retention in competitive market (Q3) Competition remains intense; focus on appetite clarity and agent effectiveness Persistent

Management Commentary

  • CEO on underwriting discipline: “Risk selection, appropriate product pricing and claims handling resulted in combined ratios of 86.1% this quarter and 88.7% for the year.”
  • CEO on growth drivers: “Voluntary premiums... rose by 8.5% in the fourth quarter... strong premium retention and robust new business production.”
  • CFO on investment income: “Net investment income... decreased 14.4% to $6.9 million... due to the decrease in investable assets following the payment of the special dividend in December.”
  • CEO on 2025 outlook: “Our accident year loss ratio remained steady at 71%... and we anticipate maintaining that level in 2025.”

Q&A Highlights

  • Policy count growth and retention: Sequential policy count growth of 2.6% in Q4; retention remained strong at 94.1% policy retention and 88% premium retention .
  • Reserve development details: Q4 favorable development of $9.7M spread across 2015–2022 accident years; 2019 and prior largely closed (~99% of pre-2019 claims closed) .
  • Reinsurance/ceded premium: Elevated cession tied to growth and Q4 true-ups; expected around ~6% of GPW over time, noting non-linearity by quarter .
  • Audit premiums and wage trends: Audit premiums expected to remain positive in 2025 but decelerate as wage inflation moderates; Q4 average wage growth ~4% vs ~7% in earlier quarters .
  • Competitive landscape: Workers’ comp remains attractive; competition intense; AMSF emphasizes monoline value (safety/claims services) and appetite clarity with agents .

Estimates Context

  • We attempted to retrieve S&P Global consensus for Q4 2024 EPS and revenue, but the request hit the daily limit and was unavailable at the time of analysis (Primary EPS Consensus Mean, Revenue Consensus Mean, and # of estimates unavailable).*
  • Without consensus data, we cannot formally classify the quarter versus Street estimates; directional drivers suggest underwriting solid, while lower NII and reduced unrealized gains pressured reported EPS .
  • If obtained later, estimates may need to reflect: continued policy growth and retention, moderating audit contributions, and lower NII due to smaller portfolio post-special dividend .

*Values retrieved from S&P Global.

Key Takeaways for Investors

  • Underwriting discipline intact: combined ratio of 86.1% with consistent 71% accident-year loss ratio and recurring favorable reserve development; this underpins earnings quality and ROE durability .
  • Growth amidst rate pressure: voluntary premium growth and high retention offset declining loss costs; agent engagement and appetite clarity remain core execution levers .
  • Capital returns: regular dividend increase to $0.39 and prior special dividend signal confidence; monitor book value implications from capital actions and mark-to-market dynamics .
  • Investment headwinds: NII down post-special dividend; portfolio remains high quality (AA- avg, ~4.4-year duration); earnings leverage to reinvestment yields is modest near term .
  • 2025 setup: management to maintain 71% AY loss ratio; audit premiums likely remain positive but decelerate; competition persistent as comp remains attractive industry-wide .
  • Watch items: Southeast reconstruction activity, medical inflation/fee schedules, NCCI loss cost trajectory mid-single-digit declines, and ceded premium normalization around ~6% of GPW .
  • Actionable: Favor the name on underwriting stability and disciplined growth; near-term EPS variability driven by investment income/unrealized gains, while dividend support offers carry for investors .