AMERISAFE, Inc. ((AMSF)) has held its Q4 earnings call. Read on for the main highlights of the call.
AMERISAFE, Inc.’s latest earnings call presented a balanced sentiment, reflecting both positive and negative elements. The company reported strong premium growth and profitability metrics, such as a low combined ratio and high return on equity (ROE). However, these positive aspects were tempered by declines in net income, net investment income, and book value, alongside increased expenses and realized losses in the investment portfolio.
Premium Growth
AMERISAFE reported a 3.9% increase in gross premiums written for the fourth quarter and a 3.1% increase for the full year. Voluntary premiums on policies written rose significantly by 8.5% in the fourth quarter and 4.6% for the year, indicating a robust demand for the company’s offerings.
Policy Count and Retention
The in-force policy count grew by 9.6% for the year, driven by strong premium retention and robust new business production. The policy retention rate for the quarter stood at an impressive 94.1%, underscoring the company’s ability to maintain its customer base.
Combined Ratio and ROE
AMERISAFE achieved a combined ratio of 88.7% and a return on equity (ROE) of 20.2%, highlighting the company’s strong profitability and efficient operations in managing its insurance portfolio.
Dividend Increase
The Board of Directors approved a 5.4% increase in the regular dividend to $0.39 per share, reflecting the company’s commitment to returning value to shareholders.
Favorable Reserve Development
The company recognized favorable reserve development from prior accident years totaling $9.7 million in the quarter and $34.9 million for the full year, contributing positively to the financial results.
Decline in Net Income
Net income for the fourth quarter of 2024 was $13.2 million, down from $19.2 million in the same quarter of 2023. For the full year, net income decreased to $55.4 million from $62.1 million in 2023, reflecting challenges in maintaining previous income levels.
Decrease in Net Investment Income
Net investment income saw a decline of 14.4% to $6.9 million for the fourth quarter and a 6.8% decrease to $29.2 million for the full year, primarily due to a decrease in investable assets following the payment of a special dividend.
Realized Losses on Investment Portfolio
The company experienced realized losses of $400,000 in the quarter compared with a gain of $1 million during the fourth quarter of 2023, indicating challenges in the investment portfolio.
Expense Ratio Increase
Total underwriting and other expenses increased by 4% to $19.8 million in the quarter, leading to an expense ratio of 29.7% compared with 28.9% in 2023, reflecting higher operational costs.
Book Value Decline
Book value per share decreased by 11.6% to $13.51 after paying the special dividend in December 2024, highlighting a reduction in shareholder equity.
Forward-Looking Guidance
Looking ahead, AMERISAFE remains focused on top-line growth and is confident in its ability to identify and ensure profitable high-risk opportunities despite broader market challenges. The company aims to maintain its strong premium retention and new business production while navigating industry-wide headwinds.
In conclusion, AMERISAFE’s earnings call presented a mixed outlook with strong growth in premiums and profitability metrics, offset by declines in net income and investment income. The company’s forward-looking guidance suggests a continued focus on growth and profitability, with confidence in overcoming market challenges.