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AMERISAFE(AMSF) - 2024 Q4 - Annual Report
AMSFAMERISAFE(AMSF)2025-02-28 21:28

Premiums and Business Performance - The company reported gross premiums written of 294.1millionfortheyearendedDecember31,2024,anincreasefrom294.1 million for the year ended December 31, 2024, an increase from 285.4 million in 2023 and 276.1millionin2022[44].−Thevoluntarybusinessaccountedfor97.2276.1 million in 2022[44]. - The voluntary business accounted for 97.2% of total gross premiums written in 2024, with a policy renewal rate of 94.2%[36][44]. - In 2024, 14.7% of gross premiums written were derived from Florida, followed by Georgia at 10.3% and Pennsylvania at 7.2%[47]. - Independent agencies accounted for 98.4% of voluntary in-force premiums as of December 31, 2024, with no single agency exceeding 2.0%[49]. - As of December 31, 2024, the company had over 9,300 voluntary business policyholders, with the ten largest accounting for only 2.3% of in-force premiums[36]. - The company derived 3.9% of its voluntary in-force premiums from employers engaged in the maritime industry for the year ended December 31, 2024[158]. - In 2024, 85.4% of gross premiums written were derived from policyholders in the construction, trucking, logging and lumber, agriculture, manufacturing, maritime, and telecommunications industries[186]. Underwriting and Risk Management - The company has a disciplined underwriting approach, with a focus on maintaining adequate rate levels and improving risk selection and pricing[27]. - The underwriting strategy focuses on hazardous industries in profitable states, with specific guidelines excluding certain high-risk activities[50]. - The company’s expense ratio was 29.6% in 2024, which is believed to be lower than that of competitors, enhancing the opportunity for underwriting profit[26]. - The company’s proactive claims management practices resulted in an average of 44 open indemnity claims per field case manager as of December 31, 2024, significantly lower than the industry average[25]. - The company conducts annual premium audits for all voluntary business policyholders to verify payroll expenses and job classifications[62]. - The company stopped accepting direct assignments and only participates in pooling arrangements to fulfill its residual market obligations beginning in 2023[155]. Claims and Reserves - As of December 31, 2024, the company's ultimate liability for loss and loss adjustment expenses is estimated at 538.6 million, including 13.0millionformandatorypoolingarrangements[79].−Thegrossunpaidloss,DCC,andAOreservesdecreasedto13.0 million for mandatory pooling arrangements[79]. - The gross unpaid loss, DCC, and AO reserves decreased to 651.3 million in 2024 from 673.9millionin2023,primarilyduetofavorabledevelopmentfromprioraccidentyears[87].−Theaverageunpaidlossandlossadjustmentexpensesperopenclaimincreasedto673.9 million in 2023, primarily due to favorable development from prior accident years[87]. - The average unpaid loss and loss adjustment expenses per open claim increased to 171,487 in 2024 from 168,372in2023[87].−Thetotalincurredrelatedtothecurrentaccidentyearfor2024was168,372 in 2023[87]. - The total incurred related to the current accident year for 2024 was 192.2 million, compared to 189.7millionin2023[86].−Thecompanyrecognized189.7 million in 2023[86]. - The company recognized 34.9 million of favorable development for prior accident years in 2024[87]. - The company’s loss reserves are based on estimates and may be inadequate to cover actual losses, with substantial judgment required to determine the relevance of historical experience[187]. Investment Portfolio - As of December 31, 2024, the carrying value of the investment portfolio was 832.8million,whilethefairvaluewas832.8 million, while the fair value was 819.5 million[94]. - The majority of fixed maturity securities are classified as "held-to-maturity," with changes in non-credit related unrecognized gains and losses not reflected until realized[97]. - The pre-tax investment yield for the twelve months ended December 31, 2024, was 3.4% per annum[99]. - The average composite rating of the investment portfolio, excluding equity holdings, was "AA-" as of December 31, 2024[104]. - The company limits holdings in equity securities to the lesser of 10% of the investment portfolio or 30% of shareholders' equity, on a fair value basis[97]. - The company periodically reviews its investment portfolio with the risk committee of the board of directors for compliance with the investment policy[96]. Reinsurance - The company has a reinsurance treaty program providing coverage for each loss occurrence up to 100.0million,witharetentionof100.0 million, with a retention of 2.0 million for each occurrence[109][111]. - Total amounts recoverable from reinsurers as of December 31, 2024, were 117.3million,netofanallowanceforcreditlossesof117.3 million, net of an allowance for credit losses of 300, resulting in 117.0millionrecoverable[116].−Thecompanyevaluatesthefinancialconditionofreinsurersandmonitorscreditriskconcentrationscontinuouslytominimizeexposuretosignificantlosses[108].−Thecompanyhas26reinsurersparticipatinginits2025reinsuranceprogram,withmostrated"A"orbetterbyA.M.Best[113][114].−Thecompanyremainsliabletopolicyholdersevenifitisunabletorecoveramountsduefromreinsurers,exposingittocreditrisk[210].RegulatoryandCompliance−Thecompanyissubjecttoperiodicexaminationsbystateinsurancedepartments,withrecentexaminationscoveringcalendaryears2018through2021[151].−Thecompanyisrequiredtoparticipateinresidualmarketprograms,whichprovideworkers′compensationinsurancetoemployersunabletoobtaincoverage[154].−Thecompanyissubjecttoextensiveregulation,whichmaylimititsabilitytoobtainpremiumrateincreasesortakeactionstoincreaseprofitability[195].−Thecompanymustmaintainminimumcapitalandsurplusof117.0 million recoverable[116]. - The company evaluates the financial condition of reinsurers and monitors credit risk concentrations continuously to minimize exposure to significant losses[108]. - The company has 26 reinsurers participating in its 2025 reinsurance program, with most rated "A" or better by A.M. Best[113][114]. - The company remains liable to policyholders even if it is unable to recover amounts due from reinsurers, exposing it to credit risk[210]. Regulatory and Compliance - The company is subject to periodic examinations by state insurance departments, with recent examinations covering calendar years 2018 through 2021[151]. - The company is required to participate in residual market programs, which provide workers' compensation insurance to employers unable to obtain coverage[154]. - The company is subject to extensive regulation, which may limit its ability to obtain premium rate increases or take actions to increase profitability[195]. - The company must maintain minimum capital and surplus of 2.0 million under Nebraska law and $5.0 million under Texas law[165]. Employee and Community Engagement - The company has established an endowment to provide scholarships to dependents of employees and community members, emphasizing its commitment to education[131]. - The company invests in employee professional development, including insurance certification programs and leadership training[133]. - The company has launched a new committee to focus on charitable giving and corporate volunteering efforts, enhancing community engagement[130]. - As of December 31, 2024, the company had 362 full-time employees, with an average employee tenure of 10.0 years and 61% of the workforce being female[132].