Amerisafe (AMSF) Reveals Financial Performance during Q2 of 2025, as Discussed in their Earnings Call

Amerisafe (AMSF) Reveals Financial Performance during Q2 of 2025, as Discussed in their Earnings Call

Amerisafe, a leading insurance provider, has announced its Q2 2025 financial results, showcasing a robust performance with a 12.8% growth in voluntary premiums. This growth can be attributed to several key factors: new business growth, strong renewal retention, increased policy count, stable and strong premium retention, and robust new business production.

Expanding the Customer Base and Retaining Policies

The growth in premiums was sustained across policies due to strong renewal retention and new business growth. The company's efforts to attract and retain customers have proven successful, contributing directly to more premiums written.

Higher Policy Count and Agent Effectiveness

The higher policy count also played a significant role in the premium growth, as more policies equated to more premiums. Additionally, the company's agent force has become more effective, with a decrease in the number of agents from 2,200 at the end of 2023 to almost 1,500 agents by Q2 2025.

Stable Policy Retention and Premium Retention

Maintaining the existing customer base and premium volume was crucial in the growth story. The company's focus on stable policy retention and premium retention ensured that the existing policies continued to generate premiums, contributing to the overall growth.

Payroll Audits and Premium Adjustments

Payroll audits and related premium adjustments added to the premium growth, contributing an additional $1.5 million compared to the prior year quarter.

Favorable Loss Reserve Development

Favorable development of $8.6 million in net loss reserves also helped reduce loss expenses, indirectly supporting premium growth.

Other Highlights from Q2 2025 Results

• Operating Return on Equity: The company is pleased with this quarter's continued top-line growth in industry-leading operating ROE of 14.9%.
• Book Value Per Share: Book value per share increased to $13.96 in Q2 2025.
• Investments and Cash: Investments, cash, and cash equivalents totaled $887 million as of Q2 2025, with an average AA-minus credit rating and 4.5-year duration; the tax-equivalent book yield was 3.85%.
• Current Year Loss Ratio: The current accident year loss ratio was 71% in Q2 2025, with lower frequency than in Q2 2024 and severity trends remaining within expectations.
• Net Income: Net income was $14 million, or $0.73 per diluted share (GAAP), in Q2 2025, with operating net income of $10 million, or $0.53 per diluted share.
• Policyholder Dividends: Policyholder dividends increased due to more policies qualifying, and management described the program as "lumpy" rather than a result of competitive repricing alone.
• Share Repurchases: The company repurchased 63,000 shares at an average cost of $44.55 per share in Q2 2025, totaling $2.8 million.
• Net Unrealized and Realized Gains on Equity Securities: Net unrealized gains on equity securities were $1.8 million in Q2 2025 and $3.1 million in realized gains, both primarily from equities.
• Net Investment Income: Net investment income decreased 10.2% to $6.7 million, attributed to reduced investable assets after a special dividend payment.

The call, held on Friday, July 25, 2025, at 10:30 a.m. ET, included Chief Executive Officer Janelle Frost and Chief Financial Officer Andy Omiridis.

Amerisafe leadership reaffirmed a "high-quality balance sheet, solid loss reserve position, and conservative investment portfolio" as the operational foundation for responding to potential market turns. The company's statutory surplus was $257 million at the end of Q2 2025, compared to $235 million at year-end 2024.

However, the company did not disclose new business production year over year in Q2 2025 due to competitor sensitivity. The expense ratio was 31.3%, compared to 29.8% in the prior-year period, due to investment in growth, insurance-based assessments, and a premium-earning timing mismatch.

In the agriculture book of business, there is a potential impact from immigration and undocumented workers, but it is not yet clear. The construction industry is still seeing wage growth, but there was no increase in new employee count in this past quarter. Instead, there may be extended work hours for existing employees.

The company is considering both share repurchases and special dividends for capital management, with the assumption of being within the historical expense ratio range. The portfolio consisted of 62% municipal bonds, 21% corporate bonds, 4% U.S. treasuries/agencies, 7% equity securities, and 6% cash/other, with 50% classified as held-to-maturity at amortized cost.

1. The robust growth in voluntary premiums experienced by Amerisafe in Q2 2025 is not only due to new business growth and strong renewal retention but also the increase in policy count.
2. The company's efforts in attracting and retaining customers, as well as the decrease in the number of agents, have played a significant role in the premium growth.
3. Maintaining the existing customer base and premium volume, achieved through stable policy retention and premium retention, has contributed to the overall growth seen in Amerisafe's financial results.
4. Payroll audits and related premium adjustments have added to the premium growth, contributing an additional $1.5 million compared to the prior year quarter.
5. Favorable development of $8.6 million in net loss reserves helped reduce loss expenses, indirectly supporting premium growth, and demonstrates the strong financial standing of Amerisafe.

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