AMERISAFE, Inc. (NASDAQ:AMSF) Q2 2023 Earnings Call Transcript July 28, 2023 3:00 AM ET

Company Participants

Kathryn Shirley - Chief Administrative Officer

Janelle Frost - President & CEO

Anastasios Omiridis - CFO

Conference Call Participants

Matthew Carletti - JMP

Mark Hughes - Truist Securities

Operator

Good day, and welcome to the AMERISAFE 2023 Second Quarter Earnings Call. Today's conference is being recorded.

At this time, I would like to hand the call over to Kathryn Shirley. Please go ahead.

Kathryn Shirley

Good morning. Welcome to the AMERISAFE 2023 Second Quarter Investor Call. If you have not received the earnings release, it is available on our website at amerisafe.com. This call is being recorded. A replay of today's call will be available. Details on how to access the replay are in the earnings release.

During this call, we will be making forward-looking statements. These statements are based on current expectations and assumptions that are subject to various risks and uncertainties. Actual results may differ materially from the results expressed or implied in these statements if the underlying assumptions prove to be incorrect or as the result of risks, uncertainties and other factors, including factors discussed in the earnings release, in the comments made during today's call, and in the Risk Factors section of our Form 10-K, Form 10-Q, and other reports and filings with the Securities and Exchange Commission. We do not undertake any duty to update any forward-looking statements.

I will now turn the call over to Janelle Frost, AMERISAFE's President and CEO.

Janelle Frost

Thank you, Kathryn, and good morning, everyone. The state of the workers' compensation market overall remains profitable despite continued rate softening. The line is reporting an industry-wide combined ratio below 100%, reserves remain redundant and approved loss cost declines are expected to continue. AMERISAFE is a disciplined underwriter in the high-hazard workers' compensation market that has demonstrated the ability to maintain strong margins throughout many market cycles. In the second quarter, we reported a combined ratio of 85.4% and a return on average equity of 18.6%.

During the quarter, our top line decreased 3.7%, driven by continued rate declines and wage inflation slightly slowing, when compared with a strong year-over-year growth in the second quarter of 2022. We continue to see strong retention in policies for which we offer renewal, with 93% retention for the second quarter, largely in line with the recent experience, despite continued competition. As we look ahead, competitive pressures and rate declines are expected to remain a headwind, offset by strong payrolls.