• Gross Premiums Increase: 3.9% for Q4 and 3.1% for the full year 2024.
• Voluntary Premiums Increase: 8.5% for Q4 and 4.6% for the full year 2024.
• Combined Ratio: 88.7%.
• Return on Equity (ROE): 20.2%.
• Accident Year Loss Ratio: 71%, consistent with the prior year.
• Favorable Development from Prior Accident Years: $9.7 million in Q4 and $34.9 million for the full year 2024.
• Net Income: $13.2 million for Q4 and $55.4 million for the full year 2024.
• Operating Net Income: $12.8 million for Q4 and $48.4 million for the full year 2024.
• Net Premiums Earned: $66.5 million for Q4 and $270.6 million for the full year 2024.
• Underwriting and Other Expenses: $19.8 million for Q4, a 4% increase from Q4 2023.
• Expense Ratio: 29.7% for Q4 and 29.6% for the full year 2024.
• Net Investment Income Decrease: 14.4% to $6.9 million for Q4 and 6.8% to $29.2 million for the full year 2024.
• Book Value Per Share: $13.51 after paying the special dividend in December 2024.
• Operating Return on Average Equity: 17.5% for Q4 and 17.1% for the full year 2024.

• Warning! GuruFocus has detected 2 Warning Sign with AMSF.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• AMERISAFE Inc (NASDAQ:AMSF) reported a 3.9% increase in gross premiums for the fourth quarter and a 3.1% increase for the full year 2024.
• Voluntary premiums on policies written rose by 8.5% in the fourth quarter and 4.6% for the year, with a 9.6% growth in enforced policy count.
• The company achieved a combined ratio of 88.7% and a return on equity (ROE) of 20.2%, indicating strong profitability.
• AMERISAFE Inc (NASDAQ:AMSF) recognized favorable development from prior accident years, amounting to $9.7 million in the quarter and $34.9 million for the full year.
• The board of directors approved a 5.4% increase in regular dividends to $0.39 per share, reflecting confidence in the company's financial health.

Negative Points

• Net income for the fourth quarter decreased to $13.2 million from $19.2 million in the same quarter of the previous year, primarily due to lower net unrealized gains on equity securities.
• Operating net income also declined to $12.8 million from $14.3 million in the fourth quarter of 2023.
• Total underwriting and other expenses increased by 4% in the fourth quarter, resulting in a higher expense ratio of 29.7% compared to 28.9% in the previous year.
• Net investment income decreased by 14.4% in the fourth quarter and 6.8% for the full year, attributed to a decrease in investable assets following a special dividend payment.
• Book value per share decreased by 11.6% from year-end 2023, following the special dividend payment in December 2024.

Q & A Highlights

Q: Can you provide context on the 9.6% policy growth for the year and how it compares to recent quarters? A: The 9.6% growth was for the entire year, not just the quarter. In the fourth quarter, policy growth was 2.6%. The average policy size for 2024 was slightly lower than 2023, but still strong, supported by payroll growth. However, there was a slowdown in average wages in the fourth quarter.

Q: How did renewal rates impact the quarter, and what was the policy retention rate? A: Renewal rates were impactful for both the quarter and the full year. Policy retention was strong at 94.1% on a policy basis and 88% on a premium basis, contributing positively to the top line.

Q: Can you discuss the reserve gains from older accident years and any observations about post-COVID years? A: We had $9.7 million in favorable development this quarter, with $1 million from 2022, $1.5 million from 2021, and $1.6 million from 2020. The years 2021 and 2022 are shaping up to be good accident years, showing favorable development.

Q: Have you seen any growth related to reconstruction following recent hurricanes? A: We haven't seen significant growth attributed to hurricane-related reconstruction yet. While there has been some increase in monthly reporting from affected areas like Florida, Georgia, and the Carolinas, it's not clearly linked to storm-related business.

Q: Are you expanding into new class codes, or focusing on existing ones? A: We are focusing on existing class codes, particularly in hazard groups E, F, and G, which make up over 80% of our enforced policies. Our strategy is to penetrate existing markets more effectively rather than adding new classes.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.