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    AMERISAFE (AMSF)

    AMSF Q4 2024: Guides 71% Loss Ratio, Sees 2.6% Policy Growth

    Reported on May 8, 2025 (After Market Close)
    Pre-Earnings Price$50.80Last close (Feb 27, 2025)
    Post-Earnings Price$50.98Open (Feb 28, 2025)
    Price Change
    $0.18(+0.35%)

    What went well

    • Strong Policy Growth and Retention: The firm demonstrated 9.6% annual policy count growth with 2.6% sequential growth in Q4, complemented by robust renewals—94.1% policy retention on a policy basis and 88% on a premium basis—indicating strong customer loyalty and sustained demand.
    • Focused Core Strategy: By concentrating on its specialized ES&G workers' comp book, which represents over 80% of in-force policies, the company emphasizes its core expertise rather than diluting its focus with additional class codes, supporting profitable growth.
    • Efficient Claims Management: The company’s claims process is highly effective, with approximately 99% of claims pre-2019 closed, underscoring its ability to control loss costs, optimize claims resolution, and contribute positively to profitability.

    What went wrong

    • Lower Sequential Policy Growth: Fourth quarter policy count growth was only 2.6% compared to a 9.6% full-year increase, indicating potential deceleration in new business momentum.
    • Decline in Average Policy Size: The average policy size for 2024 was slightly lower than in 2023, with fourth quarter payroll growth dropping from about 7% in earlier quarters to 4%, suggesting softer premium quality.
    • Elevated Ceded Premium: Ceded premium levels were higher in the quarter, which could pressure underwriting margins despite being partially driven by overall growth, potentially impacting profitability.

    Q&A Summary

    1. Loss Ratio Outlook
      Q: What is the loss ratio expectation for 2025?
      A: Management expects to maintain a loss ratio at 71% moving into 2025, underscoring stable underwriting discipline.

    2. Policy Growth
      Q: How did policy count and size perform?
      A: Yearly policy count grew 9.6%, but in Q4 growth was 2.6%; average policy size was slightly lower than last year yet remained strong.

    3. Medical Inflation
      Q: What are the trends in medical inflation?
      A: Medical cost trends are moderating, with rate filings showing mid-single-digit decreases, a notable 6.5% increase in Nevada contrasted with a 19% decrease in Maine, indicating a modest improvement versus prior highs.

    4. Large Claims
      Q: How many large claims occurred this year?
      A: The year ended with 18 claims exceeding $1 million, which is only modestly above our 5-year average of roughly 15, reflecting consistent severity management.

    5. Renewals
      Q: How did renewal rates impact the quarter?
      A: With a policy retention rate of 94.1% and premium retention of 88%, our active renewal strategy has significantly bolstered top-line performance.

    6. Reserve Gains
      Q: How were reserve gains distributed across past accident years?
      A: Q4 favorable development totaled $9.7 million, derived from prior years (from $1.0M in 2022 to $5.6M from 2019 and earlier), demonstrating prudent reserve management.

    7. Ceded Premium
      Q: Why was ceded premium higher in Q4?
      A: The elevated ceded premium was primarily due to the strong growth in business volume and subsequent true-ups, with expectations to stabilize around 6% in 2025.

    8. Competition
      Q: Are competitors getting more aggressive in pricing?
      A: Competition remains robust in the workers’ comp space, yet our focused risk appetite and consistent results help us maintain a competitive edge.

    9. New Business
      Q: Is new business expanding beyond existing risks?
      A: We continue to grow within our core high-hazard market by enhancing agent relations, rather than expanding into new classes, which aligns with our disciplined strategy.

    10. Claims Closure
      Q: How efficient is our claims closure process?
      A: Nearly 99% of claims reported prior to 2019 are closed, reflecting our hands‑on claim management approach that minimizes open liabilities.

    11. Construction Outlook
      Q: What is the construction industry’s outlook?
      A: Our construction segment is buoyed by strong payroll growth and a resilient market, despite broader industry challenges.

    12. Audit Premium
      Q: What is the trend in audit premium?
      A: Audit premiums are expected to moderate but remain positive in 2025, reflecting a natural deceleration from earlier elevated rates.

    13. Hurricane Impact
      Q: Did hurricanes drive Q4 growth?
      A: While there was some regional uptick in areas like Florida and Georgia, no definitive hurricane‐related business surge was identified; the results reflect normal market conditions.

    14. Business Focus
      Q: Will additional class codes be added?
      A: We continue to focus solely on our core classes, particularly ES&G, with over 80% of in-force policies in that segment, rather than diversifying into new classes.

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