Amerisafe, Inc. (NASDAQ:AMSF) Q2 2020 Earnings Conference Call - Final Transcript

Jul 31, 2020 • 10:30 am ET

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Amerisafe, Inc. (NASDAQ:AMSF) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day, everyone, and welcome to the AMERISAFE 2020 Second Quarter Earnings Conference Call. Today's call is being recorded. And at this time, I'd like to turn the conference over to Kathryn Shirley, Chief Administrative Officer. Please go ahead.

Executive
Kathryn H. Shirley

Good morning. Welcome to the AMERISAFE 2020 second quarter investor call. If you have not received the earnings release, it is available on our website at www.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 statement. 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 a result of risks, uncertainties and other factors, including the impact of the COVID-19 pandemic on the business and operations of the Company and our policyholders and the market value of the securities in our investment portfolio.

Other factors that may affect our results are discussed in today's earnings release, in the comments made during this call, and in the Risk Factors section of our Form 10-K, Form 10-Qs and other reports and filings with the Securities and Exchange Commission. We do not undertake any duty to update any forward-looking statement.

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

Executive
G. Janelle Frost

Thank you, Kathryn, and good morning, everyone. AMERISAFE and the workers' compensation industry began the year facing rate declines and strong competition. Then a pandemic disrupted the market, the economy and the workforce. This first 212 days of the year, shifted focus for many companies and tested fundamentals.

For AMERISAFE, our fundamentals are crucial in these unprecedented times. We are serving our stakeholders with disciplined underwriting, proactive safety and intensive claims management, which produce consistent returns, quality insurance services, and financial stability. This quarter, those fundamentals led to favorable prior year case development and a combined ratio of 78.5%.

I will begin with our niche focused fundamental. We insure small-to-midsize employers working in hazardous industries. Thus far, in this pandemic, those industries appear to be less impacted than main street businesses such as retail and hospitality. Therefore, in the quarter, our gross premiums written were down 7.7% from the second quarter of 2019.

Voluntary debt premium was down 6.4%, driven by underlying loss cost declines. Policy count written in the quarter was up 2% with strong policy retention of 93.7%. Pricing, as reflected in our ELCM was a 158, down from a 161 in the prior year quarter.

The market remains highly competitive, and there is additional uncertainty on what the second wave of infections will mean for employers. Audit premium and related adjustments added $0.5 million to top line, which was a decrease of $1.3 million from the second quarter of 2019. Audit premiums for policies audited in the quarter remained positive.

We were