Amerisafe Inc (AMSF) 2013 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the AMERISAFE first quarter earnings release conference call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this conference is being recorded.

I will now turn the call over to your host, Janelle Frost. Please go ahead.

Good morning and welcome to the AMERISAFE first quarter 2013 investor call. If you've 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 risk and uncertainties. Actual results could materially differ because of factors discussed in today's earnings release and the comments made during this call and in the Risk Factors section of our Form 10-Ks, Form 10-Qs, and other reports and filings with the SEC. We do not undertake any duty to update any forward-looking statements.

With that, I will now turn the call over to Allen Bradley, AMERISAFE's Chairman and CEO.

Thanks, Janelle. Good morning, ladies and gentlemen. Thank you for joining us for our first quarter 2013 earnings call. As usual, I'll make a few remarks and then turn the call over to Geoff Banta and Janelle Frost for more details on the operational and financial aspects of the Company.

Since our earnings call in the fourth quarter of 2010, we have commented on positive changes in the workers' compensation marketplace. During that period of time, there has been an improving environment in terms both of pricing as well as the demand for the product. The intense irrational competition, which began during the depths of the soft market, had begun to fade around that time. Through 2011 and 2012, the marketplace improved at a gradual, but a steady pace. The first quarter of 2013 has continued on that path. While competition has not completely disappeared, it is greatly diminished. As a general observation, those competitors remaining in the market today are pricing at more rational levels.

According to The Council of Insurance Agents and Brokers first quarter 2013 pricing survey, 89% of respondents reported rate increases on workers' compensation policies written during the first quarter. Notably, 45% of total respondents indicated that rate increases were coming in at 10% or greater on their workers' compensation accounts. According to that report, and I quote, workers' compensation continued to be a hard line to place, end quote. Additionally, we have noted improvement on another front and that is the frequency of claims. We expect claims frequency in the worker's compensation line nationally to improve over 2011 when the 2012 results are released by the NCCI two weeks from today.

We cannot definitively identify the driver of the lower frequency of claims. However, we suspect that the average experience level of employees in the workplace has risen. Additionally, it appears that the average hours worked by employees has expanded during the recovery thereby muting the impact of inexperienced new workers on the job. Regardless of the cause for the decline in frequency of work related claims, we are encouraged.

With those comments, let me turn the call over to Geoff to talk about operational metrics of the Company.

Thank you, Allen, and good morning, everyone. I'll make a few comments about our operational performance and trends relative to premiums and losses before turning things over to Janelle to present a summary of our consolidated financials.

I'll begin by discussing our topline. Gross premiums written were up nicely in the first quarter by 16.7% year-over-year, an increase of $14.2 million. This is the tenth straight quarter in which our topline has grown and notably our gross premiums written of $99.1 million constituted the highest quarterly total in our history. The first quarter increase in gross premiums written was due mainly to growth in what we refer to as our debt sheet premium, which is the premium we record at the time a policy is bound. Our debt premium in the first quarter was up $12.7 million or 16.1% and represented almost 90% of our total topline increase. We have now had nine straight quarters of growth in debt premium all while increasing our prices, a very positive development for our Company. The other factor in our increased topline was audit and other premium related adjustments, which rose by $606,000 over the year- ago quarter.

Focusing on our renewal business, our first quarter premium retention was a very strong 99.7% versus 97.2% in the first quarter of 2012. This increase was due mainly to a rise in average premium per policy from $37,200 in the first quarter of 2012 to $43,400 in the 2013 first quarter. We also saw a modest rise in policy retention in the first quarter to 92.4% from 91.4% in the year-ago quarter. In terms of pricing, our effective loss cost multiplier for voluntary work comp premium written in the first quarter was 1.72 or 172% of the approved loss cost in the states that use this mechanism for pricing. This pricing represents another healthy year-over-year increase over our first quarter 2012 ELCM, which stood at 1.59.

Relative to losses, our 2013 accident year has begun favorably with reported claims decreasing year-over-year by 8.1% to 1,260 claims from 1,371. This decrease has led to lower year-over-year claims frequency for Q1 '13 and that accident year has also had lower average severities than experienced in the year-ago quarter for accident year 2012. Based upon these and other claim related factors, we have projected a 73.2% loss in LAE ratio for the 2013 accident year, which is 3.3 percentage points lower than our current projection for the 2012 accident year. Even though 2013 has just begun, we are pleased with the favorable loss trends we are seeing early on in this accident year. Regarding prior accident years, operational claim trends as well as actual case development in the first quarter led us to lower our ultimate projection for those accident years by $2.4 million versus $1.6 million in the year-ago quarter.

With that, I will turn to Janelle to present our first quarter financials.

Thank you, Geoff. For the first quarter of 2013, AMERISAFE reported net income of $8.9 million or $0.47 per share compared to $9.6 million or $0.52 per share in the first quarter of 2012. We had minimal realized gains on our investment portfolio this quarter compared to $1.8 million in the first quarter of 2012, which significantly impacted net income. On an operating basis, operating net income was $8.9 million or $0.47 per share in the first quarter of 2013 compared to $8.4 million or $0.45 per share in the first quarter of 2012.

As Geoff discussed, gross premiums written rose 16.7% from the year-ago quarter attributable to $12.9 million of growth in policies written in the quarter and $0.6 million increase in audit and related adjustments. Net premiums earned increased 14.2% from the year-ago quarter. Our net investment income totaled $6.7 million in the first quarter of 2013, a decrease of 3.5% from the first quarter of 2012. Average invested assets were $912 million in the quarter ended March 31, 2013 compared to an average of $863 million for the same period in 2012, an increase of 5.7%.

The tax equivalent yield on our investment portfolio was 4.2% compared to 4.5% in the first quarter of 2012. In total, revenue for the first quarter of 2013 was $86.5 million, up 10% from the year-ago period. Our current accident year loss ratio for the quarter was 73.2% compared to 76.5% a year ago. Our incurred loss and loss adjustment expenses totaled $56 million for the quarter, which included $2.4 million of favorable prior-year development. This compares to loss and loss adjustment expenses of $51.8 million in last year's first quarter, which included $1.6 million of favorable prior year development. In total, our net calendar year loss ratio for the first quarter of 2013 was 70.3% compared to 74.3% for the first quarter of 2012.

Total underwriting and other expenses increased 28.3% to $18.9 million. The 2013 first quarter expense component includes $5.6 million of salaries and benefits, $6.2 million of commissions, and $7.1 million of underwriting and other costs. The expense ratio increased to 23.7% from 21.1% in the same quarter a year ago. In total, our combined ratio was 94.7% for the first quarter of 2013 versus 96% for the same period in 2012. Operating return on average equity for the first quarter of 2013 was 9.2% compared to 9.5% for the first quarter of 2012. Book value per share at March 31, 2013 was $21.20, an increase of 7.2% from the first quarter a year ago.

Finally, we had strong cash flow from operations of $21.8 million, up from $18.1 million in the first quarter of 2012. We have over $75 million of cash and cash equivalents. We paid our first dividend of $0.08 in March of 2013 and the Board of Directors has declared an $0.08 dividend to be paid on June 26, 2013 to shareholders of record as of June 12th.

That concludes my prepared remarks on the financials. I now turn the discussion back to Allen.

Thanks, Janelle. The first quarter was a good quarter for AMERISAFE. We experienced on a year-over-year basis the following changes. First, strong growth in gross written premium. Second, an increase in pricing on that business written during the quarter. Third, a reduction in the current accident year loss ratio. Fourth, an increase in favorable prior year claims development over the prior -- the same quarter a year ago, an improved calendar year combined ratio, and an increase in operating earnings per share.

Additionally, we expect that our expense ratio will trend down over the next three quarters adding additional momentum to our financial performance. AMERISAFE continues to grow its premium base. As we have discussed in the past, we believe that this is the appropriate time in the market cycle to expand our market share. However, make no mistake, AMERISAFE will first focus on improving our underwriting margins and profitability during this period of premium growth. As the old saying goes, volume is vanity, but profit is sanity.

With that, let's open it up for questions.

(Operator Instructions) Matt Carletti, JMP Securities.

Hey, good morning.

Good morning, Matt.

Good morning, Matt.

Just had a few questions. First one on the accident year loss ratio improvement year-over-year, could you just give us a little color around that? And specifically I'm thinking on the lines of are you trying to pick say a level for the year that kind of carries through to book the year or are you trying to ease into it in the sense that if the current trends you're seeing persist, we should see, let's call it a step-down function, as we kind of work through the year? Is there any color you can provide there?

That's a fair question. The selection was our best selection based on the information we have right now looking at the last three years. Those years weigh more heavily in our decision than the current year because it's just too green to tell anything about. If the trends in frequency persist, those are good signs. But it's just -- it's very easy to pick a low number and then look really good. You really want to make sure that your number is putting it in the proper historical perspective at the time that you make that selection realizing that we're in somewhat of a lumpy business and things can change. The changes in frequency have been going on now for several quarters. Will that persist? Will the claims severity not increase at such a level to outstrip the gains in frequency? We're not seeing that change in the severity part right now. So we made this selection more with a view to '10, '11, '12 and without getting overly confident on some of the really positive things we see out there in the marketplace.

Yes, Matt. That was a really great question. And the second scenario you presented there, which Allen pretty much addressed, you know that we're always going to be influenced by the volatility of the business we're in, in high hazard.

Of course.

And so that's going to color our estimate, but the signs, as Allen pointed out, are quite good as we start this year.

One thing I want to point out, Geoff mentioned in his numbers, but just to clearly state it point blank. The absolute claims count went down. The in-force premium is up markedly. That's something we haven't seen in a long time. This is not shifted material.

Right. Kind of building on your comments, Allen, on kind of now is the time to build market share and given the opportunities you're seeing, are there any new tangential high hazard type lines that maybe you haven't had a big presence in or that you're looking to grow specifically or are there new geographies out there that are very attractive now that the market's turning and we might see you grow some market share that way?

Some place where the sun shines a lot. Matt, the numbers that you see do not reflect the expansion of either class codes or geographies and they represent rather a greater penetration in existing service areas. There are some areas that appear to be turning out. Obviously, I think everyone keeps an eye on California because it's such a very large part of the market; it's not something that we're considering launching into at this particular point. We have not seen a prolonged enough stability there to justify it although they do appear to be getting rather healthy rate increases. So I would tell you right now in the immediate term, we are going to stay in the geographies where we are, we're going to stay in the class codes generally that we are writing, we are seeing a lot more opportunity there. We're still seeing some people that from time to time will do something that we can't follow, but the pervasiveness of that is not the same now that it was 12 or certainly not 24 months ago.

And Matt, we're in the enviable position right now in terms of the market as a whole of being able to increase market share just because the supply is decreasing, the supply of high hazard out there as pretty big companies pull out of segments that we historically write and do well in.

In fact, Matt, that's a good point Geoff makes there. Let me read another line from the CIAB first quarter pricing trend in the same paragraph that I quoted earlier. They quote another broker that says, and I quote, another broker that said workers' compensation was driving a lot of underwriting decisions forcing business into monoline or alternative markets. As a monoline carrier, that's not bad news for us.

Yes. Music to your ears. That's great. Thank you. And then a quick numbers one and I'll get out of the way. Geoff, I apologize, I know you mentioned the LCM, but I didn't catch it. What was it in the quarter?

1.72

1.72

1.72, up from 1.59, Matt.

Perfect. Well, thank you for all the answers and congrats on a nice start to the year. And Janelle, congrats on the promotion.

Thank you, Matt.

Mark Hughes, SunTrust.

Good morning.

Good morning.

Good morning, Mark.

Geoff, how are you doing on the large losses that from time-to-time you've mentioned some of the more expensive losses and how they've been trending? How have you seen that lately?

Amazingly positive so far in 2013, Mark. We have seen -- as of the first quarter, we have no incurred losses over $500,000 in 2013. We've only seen that three times in our public history so large losses look good. I certainly wouldn't expect that to continue given the history and the volatility and the markets we're in, but very good results in terms of the large -- what we call the severe claims. Very surprising to me actually for the first quarter.

Right.

Just to clarify, Mark. When he says it's only happened three times in our history, he's talking about it's only three times where we have not had the claims.

Yes, over $500,000.

Right. And presumably you're a larger size now than in those other cases?

Yes. I would say on a premium basis, we will probably be larger this year. Well, we are far larger -- not far larger, we're larger on the in-force prices now than we have ever been in our history.

Allen, you've given the numbers for the increase in average premium per policy of the 17% increase. How much of that would you say is pricing versus volume or extra people, however you want to measure it?

Yes. I wouldn't want to get to a specific number overall. I would tell you that it's 40% to 50% rate and 50% to 60% exposures.

Okay.

What's happening with rates, let me mention that real quick. In the last filing cycle with the NCCI and others, there were -- the filing cycles across the country, there were 39 rate changes or LCM changes depending on what the state uses. Of those 39, 27 were increases, 12 were decreases. But the increases aren't coming up as fast as they have, they're not as volatile as they once were. But with investment yields down and you're seeing more and more insurers reporting lower investment income, I think that's going to give more of a steady upward movement in the pricing as well as in the rates as the losses -- the results in the workers' comp line had been particularly unpleasant.

Great. Well, this will be a comment more than a question. But you've got an 8% decline in claims on an absolute basis, your pricing is up call it roughly 8%, 9%; your severity sounds like it's down and that doesn't seem to translate into 300 basis points of losses. I guess it's how long it endures is the question, but --

That's the question. I mean sometimes these large claims seem to come in a rash of them. It's just -- like I said in my earlier comments, it's more with a view to '10, '11, '12 and how claims behaved then. Rather than betting so much on what we don't know, we thought we would trend more toward what we do know.

Right. How about in the employment in your construction end market, are you seeing payrolls pick up there?

As a matter fact, Mark, in what we call governing class groups of which there are nine major groups, construction is showing the largest growth.

Okay. And then, Janelle, on the next conference call, you're going to have to get Grasher to read the Safe Harbor language.

That's correct. Looking forward to it.

Thank you.

Thanks, Mark.

Randy Binner, FBR Capital Markets.

Great. Good morning. Thank you.

Good morning, Randy.

Good morning. I wanted to start just on the expense ratio and understand the dynamic there a little bit better, it sounds like there were some assessments. Could you just explain a little bit more kind of what drove those and why? Allen, do you think that would moderate down as we go through '13?

I'll let Janelle address that; she's probably a better source.

Sure. Good morning, Randy. Yes, our assessment expense for the quarter did increase. I think quarter-over-quarter is at 2.5 percentage points to the underwriting ratio. In dollar terms, I think it was somewhere around $2.3 million. I'm sorry.

I didn't say anything.

Okay. Sorry. It sounded like you asked a question. So that was indeed this quarter. If you look back over our history, we've had quarters where we've had some -- a little bit of lumpiness in the assessment expense. As a workers' compensation company, we are highly assessed on those premiums and losses for that matter so really depends on which states -- like for example on the loss based assessments, which states there's reserve increases or decreases fall in. The other thing that was a positive on the expense ratio this quarter was actually what we internally call controllable expenses or fixed costs. We're staying relatively level and so as the earned premium grows, we are seeing efficiencies there, which I think lends to Allen's comment about we don't think the 23% loss or a 23.7% loss expense ratio is a true run rate because we do see that we're gaining efficiencies on the controllable expenses.

So just to be clear, these are assessments from state pools that are having trouble, they're becoming -- there's more companies in their pool that are under pressure from the market.

The assessments are a wide range of things. I think what you're referring to is probably the second injury funds and yes, I mean those are large dollars as far as the loss based assessments. So we have a large number of premium based assessments as well.

Okay. Yes, I'm just trying to just to kind of sort out that. I mean you're seeing a lot of market opportunity because other folks are feeling pain, right. So I wouldn't want --

Oh, absolutely.

I'm just trying to figure out that pain is articulating itself through a higher assessment and therefore a higher expense ratio.

We anticipate that you will see -- well, you've already seen -- an uptick in insolvencies, which make demand on things like guaranty associations, guaranty funds, and other things so there's clearly stress. As you look at the historical performance of the workers' comp industry, it does appear that we are in the latter stages of a sustained period of underwriting losses and that's going to -- that money is going to go somewhere, it's not going to just disappear. It's going to go somewhere and it usually ends up reducing capacity and for some people radically so such that they're out of business.

Right. Okay. We'll keep watching that one. And just speaking of kind of historical patterns, have you ever -- is the LCM at 1.72? That seems like kind of historically high to me. Was it that high in the last cycle for you?

No. It was -- Allen, you correct me if I'm wrong. I think it was less than 1.6. I think it was the high 1.5s.

1.54, 1.56, something like that, and let me address that a little bit. The effective LCM is an index that's applied against the loss cost and it's -- as Geoff said, it's 172% of the approved loss cost in those states that use loss cost as a basis for creating rates. Loss cost have not reacted we think as much to the losses; it tends to be trailing because they're retrospectively made. So to a certain extent, our growth and the effective LCM reflects our utilization of discretionary pricing because we are looking for a number, for a rate per 100, which we think will support and produce an underwriting profit. So yes, it is a higher rate. As the loss costs rise, Randy, over the next couple of years, you can expect that number -- the effective LCM to trend back down. But the rate that we're charging, which we don't discuss, will either remain steady or trend up or trend slightly down depending on what our loss experience is in that governing class group.

And Randy, I may get too much into the weeds here. But one of the things I don't think a lot of people understand is -- let's say a state like Georgia issues a loss cost increase of let's say for the sake of argument, 5%. Well, that's an aggregate loss cost increase and when we look at some of the class codes we write, oftentimes we find those decreased. And so a statewide aggregate loss cost increase doesn't always mean good news for us. So as Allen stated, we try to keep our eye on the premium per 100 when all this washes through.

Okay. That's helpful. Let me ask one more. At the risk of overparsing your words, Allen, in response to Matt Carletti's question about California. It sounded like you're kind of -- you're not saying it's too late to get into California, is that right? Is that a fair way of reading it? Has the ship left the port or is that still something that reasonable people could look at?

Oh no, I certainly don't think it's too late. I think one of the things we look for in states is some stability. Volatility is bad because we write the only policy in America that you can buy, Randy, that doesn't have a limit on it. There is no limit of payment. There is one only employer liability portion of work comp policy, but not (inaudible). And so it's built upon rates and assumptions of what you're liable for and if the state changes the rules as to what you have to pay for and doesn't change the rate, that's a really bad thing to happen and we've seen that in California. And we haven't seen a sustained period -- we have not, we're not this familiar with that market as many more, but we haven't seen a sustained period of that so we're a bit hesitant. It clearly is an improving marketplace, there's no question about that and I wouldn't expect to opine as to whether it's at the end of the cycle or somewhere in the middle. I still think it's probably got a ways to go and it may go in terms of rate going up or it may go in terms of changes in the law so that the rates currently charged are adequate, but either one is a positive development for those people that write there. It's just not on a priority list for us.

Got you. Yes, well, they got that Senate Bill 863 out there so we'll see -- I guess we'll see how that plays out. I appreciate the commentary. Thanks.

Thanks, Randy.

Bob Farnam, KBW.

Hi there. Good morning.

Good morning, Bob.

I just have one follow-up on Randy's question on expense ratio. So I'm still trying to get a feeling for what to expect from assessments going forward. So in this type of market conditions, should we expect year-over-year increases in the assessments that would still kind of negatively impact the expense ratio?

I would just say this. We expect the expense ratio to improve over the remainder part of the year. You're going to have premium growing, you're going to have written premium growing, those assessments -- some are based on losses, some are based on premium, but whether or not they actually go up or down remains to be seen. But the impact on a given -- on the expense ratio of the Company through the year will in my opinion decline over the next three quarters. And we've managed expenses closely at this Company for a long time and nothing's changed about that. And we've had a little bit of this lumpiness in the past. I'm just -- I'm not that concerned about the 23.7% for the first quarter.

Very good. Thanks.

Thank you.

(Operator Instructions) Jeff Bernstein, AH Lisanti.

Hi. Good morning, gentlemen. Just a quick question on kind of the macro impact to your business. You were talking about claim frequency declining, average hours work increasing, experience levels of workers increasing. And we've heard a lot about companies being a little shy about adding permanent heads here, but now starting to get some visibility and in particular in construction, contractors after seeing a year of work ramping up, starting to hire. How will the hiring of new workers to your existing clients impact the business? Can you just kind of walk us through how that flows through?

That's a great question and I'm very happy to answer it. With respect to just all things being equal, let's don't talk about AMERISAFE, just talk about the construction industry or for that matter any industry. Well, you were talking about hazardous occupations and you bring new workers onto the job site, the risk of a new worker being injured is much, much higher than an experienced worker. And new people on the job site need orientation, they need training, they need safety devices, they need those sorts of things. And that's something that we should look at and we do look at prior to making a decision about -- particularly if somebody's expanding. One of the reasons, quite frankly, Jeff, we don't write new business that have a non-calculated experience rating modifier -- now I know I'm really in the weeds, but basically a new venture is because if it's a new venture, there's new employees or maybe new management and you're going to pay for the OJT.

So to answer your question directly, normally increasing employment, improving employment picture is going to increase frequency. So what you try to do as an underwriter is you try to go out and identify those trends within your prospective accounts and see what they do in order to try to mitigate against that risk. We are not perfect in that, Jeff, and I remember that because -- what was it, Geoff, we had -- last two or three weeks, we had a gentleman severely injured on his very first day at the job and it's obvious that he did not have the appropriate instruction on how to operate a hyper pressure hose. So I mean it's not a perfect world, but that is a risk and we've identified that risk and we pay attention to it and it's something to be concerned about.

One -- if I could add to Allen's comments. And in our safety department, we do look very, very rigorously at training programs. But one of the things I think you -- one of the macro factors, I don't know if Allen agrees with this, but my opinion is that with unemployment as high as it's been, a help to us might be when workers who have been in that industry come back to that industry --

Sure.

That maybe don't need as much training and we will see some of that. But training is one of the biggest issues we deal with when we go through our safety review with new accounts and renewed accounts.

I definitely agree and that's when you want to know how much experience workers have. I will tell you this, Jeff, when we see expanding work week, that's really good news.

Sure.

That's really good news. That is not the same risk as a new employee coming on even if the total hours are all the same.

So there really isn't much that you can do in terms of differential pricing. I mean obviously, you're going to take the new worker coming on the payroll, hey, that's good for you too, right. That's a new premium that you're going to get, but you are not going to be able to do anything differentially on pricing until such time as that organization re-ups. And then if you're looking at them and you say, hey, by the way, you added about 20% headcount, new workers, we've got to do something on pricing. Is that how that works?

That's fair. That's fair and also the question of turnover.

Yes.

If you have a place that constantly turns over people, that's a higher risk than someone that has a stable workforce.

Got you. But there's no pricing opportunity on an incremental worker?

No, no, it's just -- it's a unit basis.

Yes.

And you can't change the deal in the middle of the year.

That's great. And then you mentioned work week, but also just a wage increase, right, that's 100% incremental to you?

Yes, absolutely. Absolutely.

Great. Thank you.

[inaudible] wages does raise, it also raises benefits too.

Appreciate that. Thank you.

Yes, sir. Thanks, Jeff.

Mark Hughes, SunTrust.

Thank you. That discussion about the LCM and how the loss costs tend to lag when the state calculates them. Is there some reason to think they're lagging more this time around or when your LCM peaked last time, would that have reflected the same sort of dynamic?

I can't give you the actuarial calculations. I mean it's just -- it's way beyond me. I will tell you this. As an observer, we saw more volatility year-to-year in rate changes in the past than we are seeing now, significantly more. And most of the rating bureaus will cap a particular class code to say it cannot move more than 50% -- plus or minus 25% from where it was. You don't see as many times that ever coming into play now and a lot of the rate increases are in the low single digit range. I actually have a list of them here somewhere. But we are not seeing the sort of volatility that we've seen before. Some of the rating bureaus say that's because they've got better information. I think they're just more cautious in their trending and they're not as quick to react to it. But in that -- hence my comments that I think it will lead to a longer, slower, sort of more gradual upward slope in the rates. The rates will go up over a period of time unless frequency and severity fall off the table, and so far the medical side of severity has not been very successful in being managed.

Is that to say that the loss cost may be lagging a little bit more because they're excluding it and not raising enough expense as they might?

Yes. And I can't prove that statistically, but I will tell you that is clearly my impression.

Okay.

Allen hates to talk about this, but sometimes there's a little politics involved as well.

Yes. It's really funny. Of course, you know I had some experience with politics. I've noticed that regulators make press releases when they lower rates, but they don't make them when they raise them. So there's what we refer to as political rate suppression; there's more resistance going up than there is coming down from a regulatory perspective.

Okay. Good. Thank you.

Thank you, Mark.

I'm showing no further questions at this time. I would now turn the call back over to management for closing remarks.

Thank you, Stephanie. There's one additional remark I want to make today and that is -- and Mark Hughes has alluded to it. We have with us today Mr. Mike Grasher, who has joined AMERISAFE April 29. Currently he is an Executive Vice President and on May 15, he will assume the role of Chief Financial Officer. Janelle Frost will be promoted to Chief Operational Officer. We are very excited to have Mike join us and very happy to see Janelle promoted. We think this portends great things for AMERISAFE as a company. So Mike, welcome and as Mark said, you get to do the forward-looking statement disclaimer at the next board -- at the next earnings call. Thank you very much for your interest today and please do give us a call if you're interested in talking some more. Take care.

Thank you, ladies and gentlemen, that does conclude today's conference. You may all disconnect and have a wonderful day.