AMERISAFE(AMSF)2021-07-31 18:03Financial Data and Key Metrics Changes - AMERISAFE reported net income of 1.23 per diluted share, compared to 1.24 per diluted share in the same quarter last year [11] - Operating net income increased to 1.04 per share, an increase of 81.2 million from 69.9 million compared to the previous year [11] - Total underwriting and other expenses were 21.1 million in the second quarter of 2020, leading to an expense ratio of 26.4% compared to 27.8% last year [14] Business Line Data and Key Metrics Changes - The combined ratio for the quarter was 74.4%, attributed to favorable case development from accident years 2019 and prior [6] - Policy count remained flat, with premium for policies written down 8.9% and average loss cost down 6.5% [7] - Renewal retention was strong at 93.9%, compared to 93.7% in the same quarter last year [31] Market Data and Key Metrics Changes - The workers' compensation market saw no substantial changes, with approved loss cost decreases averaging in mid-single digits [6] - Audit premium remained positive despite the full impact of the COVID-19 pandemic on the audited policy period [7] - Frequency for the current accident year returned to pre-pandemic levels, while severity remained within expectations [9] Company Strategy and Development Direction - The company is focused on maintaining competitiveness and discipline in underwriting, with a long-term approach to underwriting discipline and claims management [6] - Management remains optimistic about the potential benefits from the infrastructure bill, which includes significant funding for roads, bridges, and broadband [19] - The company aims to manage capital towards a target operating leverage ratio of 1.1x, currently at 0.62x [15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the vaccination rollout and its potential positive impact on the economy, despite concerns about the Delta variant [20] - The company noted that while there are delays in the supply chain, capital expenditures are ready to be funded [30] - Management acknowledged the potential for wage inflation, with a payroll increase of about 2.9%, primarily driven by wage inflation [29] Other Important Information - The investment portfolio has a high quality with an average AA minus credit rating and a duration of 3.67 [13] - The company paid a quarterly cash dividend of 24.19, up 6.6% from $22.70 at year-end [15] Q&A Session Summary Question: Did you give the ELCM? - Janelle Frost confirmed the ELCM was 1.52 [17] Question: Can you talk about the prospects for new business? - Management remains optimistic about the economy due to vaccination rollouts and potential benefits from the infrastructure bill, although policy count did not grow in the second quarter [19][21] Question: Was this the first quarter that you drew from the 2019 accident year? - Yes, it was the first quarter that drew from 2019, with reported numbers showing deterioration in the workers' compensation industry [23][24] Question: How is renewal premium impacted by wage inflation? - Management noted a payroll increase of about 2.9%, with 80% attributed to wage inflation, and renewal retention remained strong [29][31] Question: How do you see the supply chain affecting future jobs? - Management is monitoring the supply chain closely, noting potential delays but also increased flow from the lumber industry [30]