Amerisafe signals durable organic growth strategy as voluntary premiums rise 10.6% while maintaining 90.6% combined ratio

Earnings Call Insights: AMERISAFE, Inc. (AMSF) Q3 2025

MANAGEMENT VIEW

* CEO Janelle Frost highlighted, "We are pleased that our growth strategy in this competitive market is yielding a healthy 20.5% return on average equity and a 90.6% combined ratio for the quarter. Our continued success in the market reflects the strength of the AMERISAFE value proposition." Frost emphasized disciplined underwriting, robust new business production, and strong renewal performance, noting, "This is our sixth consecutive quarter of top line growth. Voluntary premiums on policies written in the quarter grew 10.6%. Combined with audit premiums, our gross premiums written grew 7.2% and net earned grew 6.2% over the third quarter of 2024." She described the company's claims handling practices and risk selection as consistent, stating, "Our accident year loss ratio was in line with the prior year end quarter at 71%. Frequency remains at historically low levels, while severity continues to not higher on a year-over-year basis." Frost also announced a regular quarterly dividend of $0.39 per share and a $1 special dividend, citing AMERISAFE's balanced capital deployment strategy and nearly $50 per share in total dividends declared over the past 13 years.
* CFO Anastasios Omiridis stated, "For the third quarter of 2025, AMERISAFE reported net income of $13.8 million or $0.72 per diluted share and operating net income of $10.6 million or $0.55 per diluted share." Omiridis reported gross written premiums of $80.3 million, a 7.2% increase, and total underwriting and other expenses of $22.1 million, resulting in an expense ratio of 31.1%. He remarked on the company's investment portfolio and capital position, noting a book value per share increase to $14.47, up 7.1% year-to-date, and statutory surplus of $259 million.

OUTLOOK

* Management reiterated confidence in the durability of the current growth strategy. Frost explained, "I believe it has longevity. And we've said since the very beginning when we started paying out the special dividend, part of the reason that we were returning that capital to shareholders is because we had internally made the decision. It wasn't the right time to really pour that into organic growth because we wanted that growth to be profitable growth. So now we've had these quarters of top line growth, and it's starting to flow through on the earnings. And so that dividend, we're using that capital and deploying that capital towards that organic growth."
* Omiridis commented on underwriting leverage, stating, "It is going up, but it's at $1. I mean from our standpoint, I don't think it's really changed. It's -- I think it's increased a little bit, but it's right at $1." He identified $1.5 as a comfortable upper bound for leverage.

FINANCIAL RESULTS

* AMERISAFE reported net income of $13.8 million or $0.72 per diluted share and operating net income of $10.6 million or $0.55 per diluted share. Gross written premiums totaled $80.3 million, increasing 7.2% from the prior-year quarter. Audit premiums contributed $2.5 million, while voluntary premium growth was 10.6%. The expense ratio was 31.1%. Net investment income was $6.6 million, and the investment portfolio at quarter end stood at $817 million. Book value per share reached $14.47, and statutory surplus was $259 million. The company repurchased approximately 31,000 shares at an average cost of $43.72 per share.

Q&A

* Matthew Carletti, Citizens JMP Securities: Asked about sources of voluntary premium growth and whether it was broad-based or specific to segments. Frost responded that growth was broad-based, supported by a 2.7% quarter-over-quarter increase in policy count and 11% year-over-year policy count growth. She attributed growth to strong renewal retention, expansion in insured payrolls, and the company's approach to claims handling.
* Carletti further inquired about the special dividend and capital allocation, suggesting it signals management's confidence in durable growth. Frost agreed, stating, "that is exactly what you should infer into the dividend. ... we're using that capital and deploying that capital towards that organic growth."
* Mark Hughes, Truist Securities: Inquired about underwriting leverage, medical inflation, loss cost trends, wage growth, large losses, competition, audit premium outlook, and construction segment performance. Omiridis explained leverage is around $1 and could comfortably go to $1.5. Frost discussed wage growth of 6.7% in the quarter, with new employee count up 2%. Large losses over $1 million totaled 17 year-to-date, up from 13 last year. She described the competitive environment as "extremely competitive" but stable in terms of competitors' appetite. Frost also addressed audit premium outlook and construction trends, noting insured base economies are holding up.
* Robert Farnam, Janney Montgomery Scott: Asked about claims staffing, state expansion, and fee schedules. Frost indicated claims staff levels have remained unchanged despite growth; geographic expansion is always under consideration but not imminent. She noted fee schedules are updated regularly and currently not a legislative focus.

SENTIMENT ANALYSIS

* Analysts were positive in tone, with Carletti and Hughes expressing approval of growth trends and capital strategy, while seeking clarity on competitive positioning and underlying drivers. Carletti remarked, "I'm glad I put those puzzle pieces together okay."
* Management maintained a confident and measured tone throughout, emphasizing consistency, long-term strategy, and prudent capital deployment. Frost repeatedly referenced "confidence," "consistency," and "disciplined growth." This tone was consistent with prior quarters, though the current call included greater emphasis on the durability and longevity of growth.
* Compared to the previous quarter, analyst sentiment remained positive but pressed for details on the sustainability of growth and capital allocation, while management confidence appeared more pronounced as multi-quarter growth trends solidified.

QUARTER-OVER-QUARTER COMPARISON

* Voluntary premium growth remained strong, though slightly below the 12.8% reported last quarter; policy count growth was also robust. The accident year loss ratio was consistent at 71%. Book value per share and statutory surplus continued to rise.
* Management increased focus on the durability of growth and capital deployment for organic expansion, reflected in the announcement of a $1 special dividend and strategic commentary.
* Analysts continued to focus on growth drivers, market conditions, and capital allocation, with questions evolving from incremental growth to the sustainability and scalability of current trends.
* The tone of the management commentary grew more assertive regarding the company's value proposition and ability to maintain profitable growth in a competitive market.

RISKS AND CONCERNS

* Frost acknowledged medical inflation as a monitored risk, though mitigated by fee schedules in workers' compensation. Utilization trends and home health services are areas of focus, with no significant data-driven concerns identified yet.
* Large loss frequency is up year-to-date, though overall claim frequency remains low relative to policy count growth. Frost described large losses as "lumpy."
* Competitive pressures remain high but stable. Audit premium growth may moderate, depending on wage trends and broader economic conditions.
* Fee schedules are updated regularly and could be influenced by legislative changes, but no immediate risks identified.

FINAL TAKEAWAY

AMERISAFE management underscores that disciplined underwriting, robust new business, and strong retention have delivered another quarter of profitable growth, with a 20.5% return on equity and 90.6% combined ratio. The company continues to deploy capital toward organic growth while maintaining shareholder rewards through dividends and buybacks. Management expresses confidence that current momentum is sustainable and positions AMERISAFE for long-term value creation in a competitive environment.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/amsf/earnings/transcripts]

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