Amerisafe Inc (AMSF) 2022 Q4 法說會逐字稿

Good day, and welcome to the AMERISAFE 2022 Fourth Quarter Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Kathryn Shirley. Please go ahead.

美好的一天，歡迎來到 AMERISAFE 2022 年第四季度收益電話會議。今天的會議正在錄製中。此時，我想將會議轉交給 Kathryn Shirley。請繼續。

Good morning. Welcome to the AMERISAFE 2022 Fourth 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 statements.

早上好。歡迎參加 AMERISAFE 2022 年第四季度投資者電話會議。如果您還沒有收到收益發布，可以在我們的網站 www.amerisafe.com 上找到。此通話正在錄音中。將重播今天的電話會議。有關如何訪問重播的詳細信息，請參閱收益發布。在這次電話會議中，我們將做出前瞻性陳述。

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 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 statements.

這些陳述基於受各種風險和不確定因素影響的當前預期和假設。如果基本假設被證明是不正確的，或者由於風險、不確定性和其他因素，包括今天的收益發布中討論的因素、本次電話會議期間發表的評論和在我們的 10-K 表格、10-Q 表格和其他向美國證券交易委員會提交的報告和文件的風險因素部分。我們不承擔更新任何前瞻性陳述的義務。

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

我現在將把電話轉給 AMERISAFE 的總裁兼首席執行官 Janelle Frost。

Thank you, Kathryn, and good morning, everyone. We are pleased to report continued strong results for the fourth quarter and the full year of 2022. For the year, we reported a combined ratio of 83.6%, gross premiums written decline of less than 1 point despite rate pressure as loss costs continue to trend down, and an operating ROE of 16.5%. Our balance sheet remains strong with roughly $1 billion in investments in cash, a strong reserve position and no outstanding debt.

謝謝你，凱瑟琳，大家早上好。我們很高興地報告第四季度和 2022 年全年的持續強勁業績。全年，我們報告的綜合比率為 83.6%，儘管由於損失成本繼續呈趨勢而面臨費率壓力，但承保毛保費下降不到 1 個百分點下降，運營 ROE 為 16.5%。我們的資產負債表依然強勁，擁有大約 10 億美元的現金投資、強勁的儲備頭寸並且沒有未償債務。

We continue to see strong retention in policies for which we offer renewal with 94.6% retention in fourth quarter. Our overall pricing, as measured by our ELCM, was a 151 for the fourth quarter. As we look ahead, competitive pressures and loss cost declines are expected to remain a headwind, though we expect wage growth to be largely a largely mitigating factor in the near term. Digging into wage growth a little further. When looking at this metric on a year-over-year basis, the results will be muted given the strong wage growth we saw in 2022.

我們繼續看到我們提供續保的保單保留率很高，第四季度保留率為 94.6%。根據我們的 ELCM 衡量，我們第四季度的總體定價為 151。展望未來，競爭壓力和損失成本下降預計仍將是不利因素，但我們預計工資增長在很大程度上將在短期內成為緩解因素。進一步深入研究工資增長。與去年同期相比，考慮到我們在 2022 年看到的強勁工資增長，結果將變得微弱。

Additionally, I'd like to note that payroll growth is primarily coming from existing employees. Moving to losses. The accident year loss ratio remained steady at 71% throughout the year. During the quarter, we experienced $10 million in favorable prior year development, primarily from accident years 2017 to 2020.

此外，我想指出，工資增長主要來自現有員工。走向虧損。全年事故年損失率穩定在71%。在本季度，我們經歷了 1000 萬美元的有利前一年發展，主要是從 2017 年到 2020 年的事故年。

For the full year, we released roughly $40 million in favorable development as active claims handling resulted in lower claim severities. As outlined on our call a year ago, we focused on using the drop in reported claims to find avenues to resolve and close open claims. For 2022, we ended the year with 13 severe claims compared to 19 at year-end 2021 and 18 at year-end 2020.

全年，我們釋放了大約 4000 萬美元的有利發展，因為積極的索賠處理導致索賠嚴重程度降低。正如我們在一年前的電話會議上概述的那樣，我們專注於利用報告索賠的下降來尋找解決和關閉未結索賠的途徑。對於 2022 年，我們在年底提出了 13 起嚴重索賠，而 2021 年底和 2020 年底分別為 19 起和 18 起。

In this instance, I define a severe claim as those with case reserves incurred in excess of $1 million. As it relates to loss trends, frequency and severity are both within our expectations. We expect medical inflation to begin to tick up in the back half of the year as our experience in certain pockets of the health market are exhibiting very early indicators.

在這種情況下，我將嚴重索賠定義為案件準備金超過 100 萬美元的索賠。由於它與損失趨勢相關，頻率和嚴重程度都在我們的預期之內。我們預計醫療通脹將在今年下半年開始上升，因為我們在醫療市場某些領域的經驗顯示出非常早期的指標。

Bringing all the pieces of the loss ratio together and given the information we have now, we expect to hold our accident year loss ratio steady at 71% in the first quarter of 2023. Finally, as it relates to capital management, AMERISAFE's Board of Directors has approved a 9.7% increase in the regular quarterly dividend to $0.34. With our long tenure of experience in high-hazard niche, we are well positioned to retain our policyholders and compete for new business while delivering robust returns to our shareholders.

將損失率的所有部分放在一起，並根據我們現在掌握的信息，我們預計到 2023 年第一季度我們的事故年損失率將穩定在 71%。最後，由於涉及資本管理，AMERISAFE 的董事會已批准將常規季度股息增加 9.7% 至 0.34 美元。憑藉我們在高風險利基市場的長期經驗，我們有能力留住我們的保單持有人並競爭新業務，同時為我們的股東帶來豐厚的回報。

With that, I'd like to turn the call over to Andy to discuss the financials.

有了這個，我想把電話轉給安迪來討論財務問題。

Thank you, Janelle, and good morning to everyone. For the fourth quarter of 2022, AMERISAFE reported net income of $20.8 million or $1.08 per diluted share and operating income -- net income of $16.1 million or $0.84 per diluted share. This compares favorably with Q4 '21 net income of $3.5 million or $0.18 per diluted share and a net operating loss of $9,000 with the difference primarily driven by large claims in the prior year.

謝謝你，珍妮爾，大家早上好。 2022 年第四季度，AMERISAFE 公佈的淨收入為 2080 萬美元或稀釋後每股收益 1.08 美元，營業收入為 1610 萬美元或稀釋後每股收益 0.84 美元。這與 21 年第四季度 350 萬美元或攤薄後每股 0.18 美元的淨收入和 9,000 美元的淨運營虧損相比有利，差異主要是由上一年的大額索賠造成的。

For the full year, net income was $55.6 million and net operating income was $59.3 million compared with $65.8 million and $54.7 million in 2021, respectively. The decline in net income was driven by roughly $20.4 million above move, sorry, in our unrealized equity securities position.

全年淨收入為 5560 萬美元，淨營業收入為 5930 萬美元，而 2021 年分別為 6580 萬美元和 5470 萬美元。淨收入的下降是由於我們未實現的股票頭寸上漲約 2040 萬美元。

Gross written premiums were $55.6 million in the quarter and $276.1 million for the full year, both relatively flat on a year-over-year basis. During the quarter, voluntary premiums decreased 4.5%, which was largely offset by payroll audit and related premium adjustments of $2.3 million. For the full year, voluntary premiums declined by 5.9%, partially offset by audit and related premium adjustments of [$14] million. Rates remain pressured as the industry continues to experience declines in improved loss costs.

本季度總承保保費為 5560 萬美元，全年為 2.761 億美元，同比持平。本季度，自願性保費下降 4.5%，這在很大程度上被薪資審計和 230 萬美元的相關保費調整所抵消。全年，自願性保費下降 5.9%，部分被審計和相關保費調整 [14] 億美元所抵消。隨著該行業繼續經歷改善損失成本的下降，利率仍然面臨壓力。

The accident year loss ratio was 71% for both the fourth quarter and full year. The net loss ratio for the quarter was 55.3% and 56.1% for the full year, which reflects $10.4 million in favorable loss development in the quarter and $40.6 million for the full year. Our total underwriting and other expenses were $17.4 million in the quarter, resulting in an expense ratio of 26.4% compared with 24.7% in the fourth quarter of 2021.

第四季度和全年的事故年損失率為 71%。本季度的淨虧損率為 55.3% 和全年的 56.1%，反映出本季度有利的虧損發展為 1040 萬美元，全年為 4060 萬美元。我們本季度的總承保和其他費用為 1740 萬美元，費用率為 26.4%，而 2021 年第四季度為 24.7%。

For the full year, underwriting and other expenses were $72 million or 26.5% compared with 26.1% in the prior year. The increase in the expense ratio was largely due to lower earned premium as underwriting and other expenses for the full year were largely unchanged.

全年，承銷和其他費用為 7200 萬美元或 26.5%，而上一年為 26.1%。費用率的增加主要是由於全年的承保和其他費用基本保持不變，因此已賺保費較低。

Turning to our investment portfolio. The investment portfolio is high quality, carrying at average AA- credit rating with a duration of 4.2 years. The composition of the portfolio is 60% in municipal bonds, which includes 15% in taxable munis, 22% in corporate bonds, 3% in U.S. treasuries and agencies, 7% in equity securities and 7% in cash and other investments. Approximately 60% of our portfolio is comprised of held-to-maturity securities.

轉向我們的投資組合。投資組合質量高，平均信用評級為AA-，久期4.2年。投資組合的構成為市政債券佔 60%，其中應稅市政債券佔 15%，公司債券佔 22%，美國國債和機構債券佔 3%，股本證券佔 7%，現金和其他投資佔 7%。我們大約 60% 的投資組合由持有至到期的證券組成。

In the fourth quarter, net investment income increased 25.8% to $7.6 million from $6.1 million in the prior year quarter. The increase was driven by yields on money market funds and bank accounts as well as higher reinvestment rates on fixed maturity securities. For the full year, net investment income grew 7% to $27.2 million from $25.4 million in 2021.

第四季度，淨投資收益從去年同期的 610 萬美元增長 25.8% 至 760 萬美元。這一增長是由貨幣市場基金和銀行賬戶的收益率以及固定期限證券的更高再投資率推動的。全年，淨投資收益從 2021 年的 2540 萬美元增長 7% 至 2720 萬美元。

Yield on new investments increased approximately 291 basis points, driving our tax equivalent book yield to 3.38% or 71 basis points higher than the previous year. Our capital position is strong with a high-quality balance sheet, solid loss reserve position and conservative investment portfolio.

新投資的收益率增加了約 291 個基點，使我們的稅收等值賬面收益率比上一年高出 3.38% 或 71 個基點。我們的資本狀況良好，擁有高質量的資產負債表、穩健的損失準備金狀況和保守的投資組合。

In total, operating return on average equity was 16.5%. With that, I would like to open the call for the question-and-answer portion of the call. Operator?

總體而言，平均股本經營回報率為 16.5%。有了這個，我想打開電話的問答部分。操作員？

(Operator Instructions)

（操作員說明）

We'll go to our first question from Mark Hughes with Truist.

我們將與 Truist 一起回答 Mark Hughes 提出的第一個問題。

Your comment about inflation, Janelle, you'd say you're seeing in certain pockets. Could you maybe a amplify on that a little bit? It seems like the medical inflation, at least as the last measure was -- had decelerated a little bit, but you're clearly seeing something different. I wonder if you could talk a little more about that.

你對通貨膨脹的評論，珍妮爾，你會說你在某些口袋裡看到了。你能不能稍微放大一下？似乎醫療通脹有所放緩，至少在上次衡量時是這樣——但你顯然看到了一些不同的東西。我想知道你是否可以多談談這個。

Certainly, certainly. If you think about the medical cost associated with our types of claims, severe injuries, obviously, things such as durable medical equipment, DME, it makes up -- a significant portion of our cost -- medical costs that we pay out. And with supply chain issues and things happening post-pandemic health crisis, we've definitely seen increase in those costs.

當然，當然。如果您考慮與我們的索賠類型相關的醫療費用，嚴重傷害，顯然，耐用醫療設備、DME 等東西，它構成了——我們成本的很大一部分——我們支付的醫療費用。隨著供應鏈問題和大流行後健康危機發生的事情，我們肯定看到這些成本增加了。

Hopefully, with supply chain issues, that will dampen it down to some degree, we've certainly seen inflation on durable medical equipment. And then over the last couple of calls, I've just talked about the absolute cost of particular what I would call home health, nursing, LPN, CNAs that would we like to put in home environment to help with our injured workers that have a long-term health component.

希望由於供應鏈問題，這將在一定程度上抑制它，我們當然已經看到耐用醫療設備的通貨膨脹。然後在過去的幾個電話中，我剛剛談到了我稱之為家庭健康、護理、LPN、CNA 的絕對成本，我們希望將它們放在家庭環境中，以幫助我們受傷的工人長期健康成分。

Obviously, I think we've all read about the wage pressure that the health care industry is experiencing in that regard. And so that's impactful to us. So maybe not medical inflation as a whole, like we follow the same trends that the industry -- that everyone else is following, but there are certainly pockets of those costs that we are keeping our eye on.

顯然，我認為我們都已經了解了醫療保健行業在這方面所面臨的工資壓力。所以這對我們有影響。因此，也許不是整個醫療通脹，就像我們遵循與行業相同的趨勢——其他所有人都在遵循的趨勢，但我們肯定會關注這些成本的一部分。

Understood. And then on loss costs, I think I've asked the question the last couple of quarters. Just the recent state-by-state trends, anything new you're seeing there? Is it still as negative as it had been?

明白了。然後關於損失成本，我想我在過去幾個季度問過這個問題。只是最近各州的趨勢，你在那裡看到了什麼新的東西嗎？還像以前一樣消極嗎？

Right. I think the last number coming out of NCCI was expected to be down loss cost as all for the NCCI states being down 7.3% for 2023. But if I look at the latest chart that just shows the most recent rate filings by state, just to give you an order of magnitude, there are only 2 that are showing increases that's Hawaii and Minnesota.

正確的。我認為來自 NCCI 的最後一個數字預計會降低損失成本，因為 NCCI 各州的所有損失成本在 2023 年下降了 7.3%。但是如果我看一下最新的圖表，它只顯示了各州最新的利率申報，只是為了給你一個數量級，只有 2 個顯示出增長，那就是夏威夷和明尼蘇達。

And then the decrease is range from 9.1% to 16.8%. So that's a very wide swing. And again, the 16.8% was D.C. But using -- I'll use Georgia, as an example, 1 of our larger states. Georgia was down 13.7% in their last rate filing or loss cost filings. I mean so those significant drivers.

然後下降幅度從9.1%到16.8%不等。所以這是一個非常廣泛的擺動。再說一遍，16.8% 是華盛頓特區。但我將以佐治亞州為例，這是我們較大州中的一個。佐治亞州在上次的費率申報或損失成本申報中下降了 13.7%。我的意思是那些重要的驅動程序。

Yes. So fair to say it's not getting any better. If you look at those numbers?

是的。可以這麼說，情況並沒有好轉。如果你看看那些數字？

Yes. As better means -- are we going to see are you seeing the increases, no. Are we seeing a slowing rate of decrease, perhaps.

是的。作為更好的方法——我們是否會看到您是否看到增加，不。也許我們看到下降速度正在放緩。

Yes, yes. Okay. You used the word muted in your script. And I did not pick up what that was referring to. Wonder if you could...

是的是的。好的。您在腳本中使用了靜音這個詞。我沒有明白那指的是什麼。想知道你是否可以...

Yes, the problem. I was referring to wage growth. So just tagging on to the conversation we just had about loss costs. So we have this expectation that all other things being equal, we're going to be facing rate decreases in 2023. What we think will help mitigate that to some degree is the fact that we continue to see wage growth. So that sort of mitigates the -- I don't want to say completely offset.

是的，問題。我指的是工資增長。因此，只需標記我們剛剛進行的關於損失成本的對話。因此，我們預計在所有其他條件相同的情況下，我們將在 2023 年面臨利率下降。我們認為在某種程度上有助於緩解這種情況的是我們繼續看到工資增長這一事實。所以那種減輕 - 我不想說完全抵消。

We'll see what happens in 2023. But certainly, the fact that we've seen wage growth, and it's been relatively strong, I think, does mitigate that factor to some degree. I mean that's what we've sort of experienced in the last 2 quarters, even though we've been down slightly on a voluntary debt basis, with payroll audits and audit premium, we've been relatively flat.

我們將看看 2023 年會發生什麼。但可以肯定的是，我們已經看到工資增長，而且我認為它相對強勁，這確實在一定程度上緩解了這一因素。我的意思是，這就是我們在過去兩個季度所經歷的事情，儘管我們在自願債務的基礎上略有下降，但在工資審計和審計溢價方面，我們一直相對持平。

Yes, yes. Anything you're seeing in your end market construction activity, any kind of change in tone?

是的是的。你在終端市場建設活動中看到了什麼，基調有什麼變化嗎？

It's very interesting. So if I base it just off of the payrolls that are reported to us on a monthly basis, I would say work activity is robust. We're seeing wage growth. We're seeing -- we say about 2% of that is probably coming from new employees. But it hasn't -- the last few quarters have been very strong.

這很有趣。因此，如果我僅根據每月向我們報告的工資單來計算，我會說工作活動很活躍。我們看到工資增長。我們看到 - 我們說其中大約 2% 可能來自新員工。但事實並非如此——過去幾個季度表現非常強勁。

So if I look at just the data that I'm receiving, I would say, all as well. I read the same headlines everybody else reads about is there going to be a recession, is there's a potential for a recession? I think there was a headline in the Wall Street Journal today about real commercial rental properties. We just haven't really seen it, and I'm a knock -- a knock on wood here, we really just haven't seen it come across in our book of business as slowing down.

所以如果我只看我收到的數據，我會說，一切都很好。我讀到的標題和其他人讀到的一樣，都是關於經濟衰退會發生，經濟衰退有可能發生嗎？我想今天《華爾街日報》上有一篇關於真正的商業出租物業的頭條新聞。我們只是還沒有真正看到它，我是一個敲門聲 - 在這裡敲木頭，我們真的只是沒有看到它在我們的業務手冊中出現放緩。

Yes. I appreciate the sound effects there.

是的。我很欣賞那裡的音效。

Thanks.

謝謝。

And then maybe 1 more. Any development on that large fourth quarter claim? Did that help in the fourth quarter?

然後可能還有 1 個。那個第四季度的大索賠有什麼進展嗎？這對第四季度有幫助嗎？

No -- yes, you're right. So if you're looking at the comparative fourth quarter 2021 is when we reported the catastrophic claims. I can -- as I sit here today, I'd say I'm very comfortable with the reserves that we established at the end of the year in 2021, and there's been no development in regards to those reserves.

不——是的，你是對的。因此，如果您查看 2021 年第四季度的比較數據，那是我們報告災難性索賠的時間。我可以——當我今天坐在這裡時，我會說我對我們在 2021 年年底建立的儲備金感到非常滿意，而且這些儲備金沒有任何進展。

Thank you. We will turn the call back over to management.

謝謝。我們會將電話轉回管理層。

Thank you for joining us today. We are pleased with the outcome of 2022, and we look forward to continued success in 2023. Happy (inaudible).

感謝您今天加入我們。我們對 2022 年的成果感到滿意，並期待在 2023 年繼續取得成功。快樂（聽不清）。

This does conclude today's conference call. You may now disconnect.

這確實結束了今天的電話會議。您現在可以斷開連接。