AMERISAFE Fourth Quarter 2025 Earnings Call - Strong premium growth and disciplined underwriting, but rise in large claims lifts accident-year loss ratio to 72%

Janelle Frost, President and Chief Executive Officer, AMERISAFE: Good day. Welcome to AMERISAFE’s Fourth Quarter 2025 earnings call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Ms. Kathryn Shirley. Please go ahead, ma’am.

Kathryn Shirley, Investor Relations / Corporate Communications, AMERISAFE: Thank you, operator, Good morning, everyone. Welcome to the AMERISAFE 2025 fourth 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 intended to fall within the safe harbor provided by the securities laws. 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 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-Qs, 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, President and Chief Executive Officer, AMERISAFE: Thank you, Kathryn. Good morning, everyone. We are pleased to close out 2025 with a strong ROE of 18.5% and a combined ratio of 91.3%. These returns are hard-fought in a competitive environment. We are in a prolonged soft market, with workers’ compensation carriers facing 12 consecutive years of rate decline. Under those constraints, understanding risks, pricing them appropriately, and managing the cost of claims are essential to sustained underwriting profitability. At AMERISAFE, our specialized underwriting for niche industries, our focus on safety services for our policyholders, and personalized claims management are producing consistent returns and are also why we are noted as a disciplined underwriter. I will now turn the call over to Vincent to share the success of our incremental growth strategy.

Vincent, Chief Financial Officer / Senior Executive, AMERISAFE: Thank you, Janelle, and good morning. In the fourth quarter of 2025, gross premium written grew 11.7% compared to 3.9% growth in the fourth quarter of 2024. This is our 7th consecutive quarter of top-line growth. For the full year, GPW increased 6.7%. voluntary premium, the primary component of GPW, increased 10.5% in the quarter and 10.2% for the full year, compared to 4.6% in 2024. This growth is across states and classes and, most importantly, within our existing geographical footprint and risk appetite. As we’ve discussed in numerous prior quarters, our focused efforts on deepening relationships with the right agents who target our classes and recognize our value proposition continue to fuel increased new business opportunities despite steady competition.

Our commitment to servicing our policyholders with outstanding safety and claims services supports strong renewal retention in both policy count and premiums. Retention for policies for which we offered renewal was 93.7% for the quarter, which we feel is a very strong result in this competitive environment. Renewal retention, along with the new business growth, increased in-force policy count by 10.2% for the year. Audit premium and adjustments, another important component of GPW, remains positive, adding $3.5 million in the quarter, compared to $2.5 million in the fourth quarter of 2024. For the full year, Audit premium and adjustments contributed $12.6 million to GPW, compared to $20.2 million in 2024. The year-over-year Audit premium decrease is consistent with the recent moderating trend, as expected and discussed in prior quarters.

The sustained growth in GPW is beginning to meaningfully reflect in net premiums earned, which was $73.6 million in the quarter and $283 million for the year, growing 10.7% and 4.6% respectively. Turning briefly to components of premium, payroll growth remains positive in our classes of business, with the majority continuing to come from wage growth, which was 6.1% in the fourth quarter and consistent with recent prior quarters’ trend. Wage growth is a tailwind for premium growth. Meanwhile, filed rates continue to see downward pressure. Though the average rate of decline has been decreasing overall, we still expect rate change to be in the negative mid-single-digit range based upon 2026 filings to date. That concludes the overview of premium results.

I will hand the call back to Janelle for more information on claims and other financial metrics.

Janelle Frost, President and Chief Executive Officer, AMERISAFE: Thank you, Vincent. Turning back to my CFO days, allow me to share the details of our claims and other pertinent financial results. The current accident year loss ratio was 72% for the full year, which is an increase from 71% in the first 3 quarters and from the previous year. Last quarter on this call, we discussed the upper pressure on the loss ratio from continued rate pressure. In addition, severity is up. We ended the accident year with 25 claims with incurred values over $1 million, compared to 18 at the end of accident year 2024. I do not think it’s shocking when looking at absolute dollars, that the cost of claims continue to increase, and that more claims reach the million-dollar threshold. Nonetheless, severity is up, and we adjusted our accident year loss ratio accordingly.

As for prior accident years, we had $7.6 million of favorable development in the quarter, or a favorable 10.4%, and $33.9 million of favorable development for the full year, or a favorable 12%. Combined with the current accident year, we reported a loss ratio of 64.5% for the quarter and 60% for the year, compared to 56.4% and 58.1%, respectively, in 2024. To round out the combined ratio, the expense ratio was 29.2% for the quarter and 30.4% for the full year. Our total underwriting and other expenses were $21.5 million. We improved operating scale in the quarter as net earned premium increased with our growth strategy.

During the fourth quarter of 2025, net income was $10.4 million, or $0.55 per diluted share. Operating net income was $9.8 million or $0.51 per diluted share. For the full year, net income was $47.1 million, and net operating income was $41.8 million, compared to $55.4 million and $48.4 million, respectively, in 2024. Our effective tax rate for the full year was 19.9%, compared to 19.7% from the prior year. Turning to our investment portfolio, net investment income increased 2.5% to $77.1 million in the fourth quarter and decreased 7.6% to $27 million for the full year.

For the quarter, the yield on new investments increased, driving our tax-equivalent yield to 3.83% or 3 basis points higher than the fourth quarter of 2024. The investment portfolio is high quality, carrying an average AA- credit rating with a duration of 4.3 years. The composition of the portfolio is 60% municipals, 21% corporate bonds, 3% U.S. Treasuries and agencies, 8% equities, and 8% in cash and other investments. Approximately 44% of our bond portfolio is comprised of held-to-maturity securities. The net unrealized loss was $5.5 million at quarter end. As a reminder, held-to-maturity securities are carried at amortized cost. Therefore, unrealized gains and losses on these securities are not reflected in our book value.

Our capital position is strong, with a high-quality balance sheet, solid reserve position, and conservative investment portfolio. At quarter end, AMERISAFE carried roughly $797 million in cash and invested assets. Finally, just a couple other topics. Book value per share was $13.39 after paying the special dividend in December of 2025. We will file our 10-K Friday, February 27th, after market close. With that, I’ll open the call up for question and answers. Operator?

Conference Call Operator: Thank you. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow our signal to reach our equipment. Once again, that is star 1 if you would like to ask a question. We’ll now take our first question from Matt Carletti with Citizens.

Matt Carletti, Analyst, Citizens: Hey, thanks. Good morning, Janelle.

Janelle Frost, President and Chief Executive Officer, AMERISAFE: Good morning, Matt.

Matt Carletti, Analyst, Citizens: Let’s see. Maybe let’s start with kind of what you’re observing with, kind of frequency and severity. Can you just help us with. You know, I know these sorts of claims can be pretty lumpy at times. This kind of, was there a frequency that kind of took place towards the end of the year, or was this a little bit more over the year? Then as you look at those, say, 25 claims, were there any similarities within them that you noticed, or were they pretty broad spread across, whether it be, you know, areas of your book or injury types, that sort of stuff?

Janelle Frost, President and Chief Executive Officer, AMERISAFE: Yeah. I’ll start with, let’s talk about overall frequency, for a moment. We obviously had-.

Matt Carletti, Analyst, Citizens: Mm-hmm.

Janelle Frost, President and Chief Executive Officer, AMERISAFE: seven, I think $7.8 million, 7.8% increase in reported claims in 2025. Compare that to, as Vincent mentioned, policy growth of 10.2%. Frequency is right on par with what we expect to be for the overall book. To your point about the 25 claims, yeah, I would call that a frequency of severity. 25 claims, as you mentioned, that it can be lumpy. What I can say about those 25 claims, if you look at the average severity of those claims, it’s actually lower than 2025 was, even though 2025 only had 18 claims. The claims are consistent in terms of if I look at the cause of loss or even the industry groups which the claims came from, it very much mirrors the entire book.

There wasn’t something specific to a particular class or type of injury that made those claims stand out more so than the rest of our book of business. As I mentioned in my prepared remarks, sometimes we think about, we’ve always used $1 million as our threshold, right, in reporting those claims. You know, obviously over the years, as medical severity upticks or just severity overall upticks year over year over year, $1 million in 2025 is not the same as $1 million in 2022, for example.

Matt Carletti, Analyst, Citizens: Yeah, sure.

Janelle Frost, President and Chief Executive Officer, AMERISAFE: We like to keep that measure consistent just so we can me, compare it. Nonetheless, there were 25. I consider that a frequency of severity enough so that we felt like it was appropriate to take the loss ratio show up a point.

Matt Carletti, Analyst, Citizens: That makes sense. maybe I can just switch to the growth for a minute, which was great. can you just give us a little more color on, I mean, obviously, you’ve talked a bit in the past about, you know, very concerted effort that you’re making in terms of, you know, driving that growth. You know, are there particular areas in the book that you’re seeing particular success, or is it more broad-based across the book? you know, whether that be geographies, you know, areas of exposure, you know, however you want to look at it?

Janelle Frost, President and Chief Executive Officer, AMERISAFE: You know, we’re excited because the growth that we’re seeing is across the book. You know, I mentioned we’re going to file the 10-K on Friday. When you see the 10-K, you’ll notice the industry classes. There’s not a lot of shift in the mix there in terms of, you know, 47% of our book is still construction, followed by trucking, logging, lumber, agriculture. No real shift there. If you look at the top 10 states, I think if you compare 2024 to 2025, I think the top 10 are still the same states. There may be a little shift in the five, six, and seven slots, all in all, the top 10 states are exactly the same. Vince, do you want to add anything about industry groups or states specifically?

Vincent, Chief Financial Officer / Senior Executive, AMERISAFE: Yeah, sure. Janelle mentioned the 10-K being released Friday. The industry groups we report on construction, trucking, logging, agriculture, manufacturing, those are internal groupings of classifications. There’s a grouping that’s going to show up in the 10-K this year called services. It’s, we consider that ancillary to our primary industries. It’s historically been in the, I call it the dreaded other category of premium. There’s been enough growth in the underlying components of that in the last couple of years to warrant breaking that out of other. Services is going to appear on the list. It’s not because there’s necessarily been shocking growth, but it is an area we’re having success in. We’ve also had a little bit of increased success in the agriculture space, and part of that’s dependent upon individual states where we’re seeing growth.

Janelle Frost, President and Chief Executive Officer, AMERISAFE: For example, Vincent mentioned, we’re going to have that services line. It went from 5.3% of the book in 2024 to 5.8%, so not a significant change, whereas agriculture did go from 6% to 7.3% of the book.

Matt Carletti, Analyst, Citizens: Okay. Okay, that’s helpful. One last one, if I could, maybe, Janelle, ask you to put your CFO hat back on.

Janelle Frost, President and Chief Executive Officer, AMERISAFE: Awesome.

Matt Carletti, Analyst, Citizens: Just on the favorable development you saw in the quarter, any color you can give on accident years or kind of what drove it? Was it just kind of claims closures or something else?

Janelle Frost, President and Chief Executive Officer, AMERISAFE: Yes. No, it’s closing and settling claims. The accident years were roughly a half million in 2022, $1 million in 2021, and then 2020 and prior was the remainder.

Matt Carletti, Analyst, Citizens: Got it.

Janelle Frost, President and Chief Executive Officer, AMERISAFE: $6.1 million, something to that effect.

Matt Carletti, Analyst, Citizens: Perfect. Very helpful. Thank you so much.

Janelle Frost, President and Chief Executive Officer, AMERISAFE: Thank you.

Conference Call Operator: As a reminder, that is star one if you would like to ask a question. We’ll now take our next question from Mark Hughes with Truist.

Mark Hughes, Analyst, Truist: Yeah, thanks. Good morning.

Janelle Frost, President and Chief Executive Officer, AMERISAFE: Good morning, Mark.

Vincent, Chief Financial Officer / Senior Executive, AMERISAFE: Good morning.

Mark Hughes, Analyst, Truist: Janelle, is it fair to say the uptick in the current accident year, it’s essentially you got more large claims than you had expected or was assumed in your 71% loss number?

Janelle Frost, President and Chief Executive Officer, AMERISAFE: Yeah.

Mark Hughes, Analyst, Truist: It’s just normal volatility? Yeah.

Janelle Frost, President and Chief Executive Officer, AMERISAFE: Yeah. It’s definitely, I would say, an increase in frequency of severity, enough that we felt, moving the loss ratio was the appropriate measure.

Mark Hughes, Analyst, Truist: Yeah. When we think about 2026, if it was just kind of a tough year, lumpy, you’ve always made that point. Every time you’ve had a lump, it’s always dropped back down.

Janelle Frost, President and Chief Executive Officer, AMERISAFE: Mm-hmm.

Mark Hughes, Analyst, Truist: What’s the 2026 loss pick, back to 71?

Janelle Frost, President and Chief Executive Officer, AMERISAFE: Great question. I don’t know exactly what lies for 2026 as of yet, but I’ll say this, and we talked about it on the call last quarter as well. There was pressure on that 71, and then having that frequency and severity is what, you know, pushed us toward, "Hey, let’s move this up to 72." As Vincent mentioned in his prepared remarks, the loss cost, the underlying loss costs, are still mid-single digit. That adds pressure to that loss ratio. At this point, I’m inclined with the 72, to keep the 72 for 2026.

Mark Hughes, Analyst, Truist: Okay. The favorable development, it was down a little bit year-over-year.

Janelle Frost, President and Chief Executive Officer, AMERISAFE: Mm-hmm.

Mark Hughes, Analyst, Truist: -relative to earned premium. You’d been running kind of steady year-over-year, year to 4. Was that influenced by this frequency and severity issue, or was this just... It kind of...

Janelle Frost, President and Chief Executive Officer, AMERISAFE: Yeah.

Mark Hughes, Analyst, Truist: maybe changed your mindset a little bit, or was this?

Janelle Frost, President and Chief Executive Officer, AMERISAFE: Good point.

Mark Hughes, Analyst, Truist: Yeah.

Janelle Frost, President and Chief Executive Officer, AMERISAFE: No, very good point. That is not related to the frequency and severity in 2025. That is just simply the claims that we closed or settled in that particular quarter, which also can sometimes be lumpy. No, not related to the large claims for 2025.

Mark Hughes, Analyst, Truist: You wouldn’t necessarily ascribe any meaning to that? It’s just little variability.

Janelle Frost, President and Chief Executive Officer, AMERISAFE: Yeah, which I would expect.

Mark Hughes, Analyst, Truist: Uh, I guess the-

Janelle Frost, President and Chief Executive Officer, AMERISAFE: That’s not unexpected.

Mark Hughes, Analyst, Truist: Yeah

Janelle Frost, President and Chief Executive Officer, AMERISAFE: in my mind.

Mark Hughes, Analyst, Truist: Okay. Yeah, the alternative being, you’ve had great reserve development, and maybe it’s just not as easy as it used to be, so to speak.

Janelle Frost, President and Chief Executive Officer, AMERISAFE: Nothing’s changed in our reserving practices. You know, I always like to, I think I say this on every call, just because it’s so essential to who we are as a company. You know, we rely heavily on those Case Reserves. Nothing’s changed in the reserving practices that establishes those Case Reserves.

Mark Hughes, Analyst, Truist: Any observations about underlying medical inflation? I think you said the 25 claims were actually lower severity, even though above $1 million. Is there some more medical involvement, you know, that’s kind of bumped more over $1 million?

Janelle Frost, President and Chief Executive Officer, AMERISAFE: Yeah, certainly, the medical inflation that, or the medical pressure that we see are the same ones we’ve talked about on the last few calls. Home health, ’because, again, the severity of the industry, the industry injuries that we deal with, there’s normally a home health component of some kind with these claims. There’s still a tremendous amount of cost pressure for home health. Then, DME, which is for us, for us, is I’m thinking more in terms of prosthetics. Obviously, we unfortunately have a lot of amputees or people that have to require prosthetics, and the cost of prosthetics is certainly under pressure.

Mark Hughes, Analyst, Truist: Yeah, very good. Any, no inflection, though, nothing obvious around medical inflation, the sustained pressure, but...?

Janelle Frost, President and Chief Executive Officer, AMERISAFE: I wish. I wish that were the case, but no. I, when I say I wish, I wish it was easing on the medical side, but I don’t see that happening. Nothing on a macro basis that I see moving that needle.

Mark Hughes, Analyst, Truist: Yeah. Competition, I think, you said relatively steady?

Vincent, Chief Financial Officer / Senior Executive, AMERISAFE: Yeah, Mark, I would say that’s a fair description of it.

Mark Hughes, Analyst, Truist: The evergreen question about the next construction job, are important for your policyholders. Anything change there?

Janelle Frost, President and Chief Executive Officer, AMERISAFE: No. We, the individual economies, if I want to term it that way, for the industries that we insure, seem to be holding up well. You know, Vince mentioned the wage growth numbers that we’re seeing, it’s higher than national average. We, I feel like that speaks well to... The jobs are there. They have the employees that they need because we’re not really seeing an uptick in employee counts. That bodes well, I think, for our insured base.

Mark Hughes, Analyst, Truist: How about anything on the sustainability of growth? I think you’ve put some new initiatives in place. You’ve been refining your distribution network. I think in some cases, you’ve been experimenting or pushing a little bit more with renewal premium and getting some very satisfactory results. Are we going to be lapping any of that stuff such that, you know, this really nice period of strong growth may be less achievable in 2026, or there’s always sustained momentum?

Vincent, Chief Financial Officer / Senior Executive, AMERISAFE: Mark, I’ll jump in on that. You’ve hit on, you know, the cornerstones of the growth efforts, the increased effectiveness with agencies. I’ll expand on that specifically. In the last 4 years, we’ve reduced our contracted agency count by over a third, but yet we’re getting more opportunities and more binds, and I think that speaks to evidence of that effectiveness in terms of improving those relationships. On the processing side and operations, we’re just really executing well on all of our fundamentals. The collaboration we’ve spoke about in past calls between sales, safety, and underwriting is operating at a high, I’d say, sustainable level.

We still have competition to deal with, but, to the extent we’re in control of the opportunities coming in and our ability to convert them, I think the trend is sustainable.

Mark Hughes, Analyst, Truist: Okay, appreciate that. Thank you.

Janelle Frost, President and Chief Executive Officer, AMERISAFE: You’re welcome.

Conference Call Operator: Oh, as a reminder, star one, if you would like to ask a question. We’ll now take a question from Bob Farnham with Breen Capital.

Bob Farnham, Analyst, Breen Capital: Hey there, and good morning. I just have kind of one topic I want to talk about, and it’s undocumented workers. Looking at

Janelle Frost, President and Chief Executive Officer, AMERISAFE: Sure

Bob Farnham, Analyst, Breen Capital: ... your class codes, you’d think, all right, there may be some proportion of your employees that you’re insuring are undocumented. I’m not sure if that proportion has changed over the last year or so. I’m just trying to get a feel for if that’s the case, and if there’s more documented workers and less undocumented, do you foresee any change in kind of claims patterns because of that?

Janelle Frost, President and Chief Executive Officer, AMERISAFE: Yes. Let me talk about from the premium side, the employee count side. We haven’t seen any shift that we can account or that we can point to and say that is because of undocumented workers. So no major change there. As Vincent mentioned, our agriculture book actually grew in 2025. From a claims perspective, it’s quite interesting. Obviously, we know we have claimants that are undocumented workers. As far as how we handle that claim, how we address that claim, how we try to close and settle that claim, no different than any other claim in our book of business.

What we do find is that on occasion, when it’s an undocumented worker and they have a desire to return to their home country, that can actually accelerate maybe a little bit in terms of being able to close or settle that claim. All in all, undocumented workers, I would consider to be a wash necessarily in terms of, are we collecting the premium for their payrolls? I believe the answer is yes. Has that changed for us, given everything that’s happening and what we read in the national news? I would say no. It doesn’t change our approach in terms of how we handle the claim.

Bob Farnham, Analyst, Breen Capital: Okay, great. That’s. I just wanted to some color on that. That works for me. Thanks.

Janelle Frost, President and Chief Executive Officer, AMERISAFE: Yeah, something. It’s a great question, it’s definitely something that we are monitoring to see if it could be impactful to the book. As of end of 2025 and where I sit today, I could say, no, it’s not impactful.

Bob Farnham, Analyst, Breen Capital: Great. Thank you.

Janelle Frost, President and Chief Executive Officer, AMERISAFE: Thank you, Bob.

Conference Call Operator: It appears there are no further telephone questions. I’d like to hand the conference back to Ms. Frost for any additional or closing comments.

Janelle Frost, President and Chief Executive Officer, AMERISAFE: AMERISAFE is well positioned to sustain our growth in underwriting profitability by relying on our expertise in turning risk into opportunity. Thank you for joining us today.

Conference Call Operator: Once again, that does conclude today’s conference. We thank you all for your participation. You may now disconnect.