AMERISAFE, Inc. Stock

Thank you. Good day and welcome to the AMERISAFE second quarter 2026 earnings call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Kathryn Shirley, Chief Administrative Officer. Please go ahead.

Thank you, Operator, and good morning, everyone. Welcome to the AMERISAFE 2026 Second 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 under 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. The underlying assumptions proved to be incorrect, or as the results of risk, 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 statement. I will now turn the call over to Janelle Frost, AMERISAFE's President and CEO.

Thank you, Kathryn, and good morning, everyone. With me on the call today is [ Guillermo Ramos ], our Chief Financial Officer, and Vincent Gagliano, our Chief Risk Officer. We appreciate your interest in AMERISAFE and look forward to discussing our second quarter 2026 results.

The workers' compensation market remains profitable, but the industry continues to observe gradual softening environments. Rate reductions, increasing medical costs, moderating reserve redundancies, and heightened competition continue to pressure industry-wide results. Despite these dynamics, AMERISAFE's specialized underwriting expertise focused on high-hazard industries and disciplined pricing strategies continue to differentiate our results in the marketplace. The second quarter reflected a continued strength in our underlying business.

We delivered our ninth consecutive quarter of premium growth, generated a return on average equity of 23.5%, and continue to grow policy count despite a highly competitive market. Net premiums earned increased 11.4% compared to the prior-year quarter, supported by strong renewal retention of over 93% and policy count and favorable audit premium activity. Gross premiums written increased 7.9%, while voluntary premiums on policies written in the quarter increased 5.7% year over prior-year quarter.

We were also encouraged by payroll audit activity during the quarter. Audit premiums and related adjustments contributed $4.1 million to premiums written, substantially above the prior-year period. Payroll growth among our insureds remains healthy, reflecting continued economic activity across many of the industries we serve. Our current accident year loss ratio remains 72%. Claim frequency was up from the prior accident year at six months, returning closer to 2023 levels.

The severity was down from the prior accident year at six months. As for prior years, we recognized $7.3 million of favorable reserve development during the quarter from accident years '23 and prior. Development remains solidly positive and reflects the continued quality of our reserve position.

Looking ahead, we remain focused on balancing profitable growth, underwriting discipline, operating efficiency, capital strength, and long-term shareholder value creation. While the market environment presents its challenges, we believe AMERISAFE is well positioned due to our strong customer retention, specialized expertise, financial strength, and exceptional employee culture. I'll turn the call over to [ Guillermo ] to discuss the financial results.

Thank you, Janelle, and good morning to everyone. For the second quarter of 2026, AMERISAFE reported net income of $14.6 million, or $0.78 per diluted share, and operating net income of $8.3 million, or $0.44 per diluted share. For reference, in the second quarter of 2025, net income was $14 million, or $0.73 per diluted share, and operating net income was $10 million, or $0.53 per diluted share.

Turning to premiums, gross written premiums increased 7.9% to $86 million from $79.7 million in the second quarter of 2025. Growth benefited from strong audit premium production, which contributed $4.1 million during the quarter, compared with $1.5 million in the second quarter of 2025. Net premiums earned increased 11.4% to $77.3 million from $69.4 million in the second quarter of 2025, reflecting continued success in our organic growth initiatives. Total underwriting and other expenses were $24.6 million compared to $21.7 million in the second quarter of 2025, resulting in an expense ratio of 31.8% compared with 31.3% a year ago. The increase was driven by one-time items, which we don't expect to recur.

Our effective tax rate for the quarter was 20.1%, unchanged from the prior-year quarter. Turning to investments, net investment income was $6.5 million in the quarter, a decrease of 2.4% from the second quarter of 2025, primarily reflecting lower average investable assets due to capital returned to shareholders through dividends and share repurchases. The investment rate environment remained favorable, with yields on the investment exceeding portfolio roll-off yields by approximately 91 basis points. As a result, the tax-equivalent book yield increased 3.9%, up 6 basis points from the second quarter of 2025.

Our portfolio remains conservatively positioned, carrying an average AA- credit rating and a duration of 4.2 years. At quarter end, we held approximately $771 million in investments, cash, and cash equivalents. The portfolio was comprised of 60% municipal bonds, 20% corporate bonds, 3% U.S. Treasuries and agencies, 8% equity securities, and 9% cash and cash equivalents.

Approximately 43% of the portfolio was classified as held-to-maturity and carried a net unrealized loss position of $5.6 million. The unrealized gain on equity securities was $8.1 million compared to $1.8 million in the prior-year quarter, reflecting continued strength in the U.S. equity markets. Statutory surplus was $200.8 million at quarter end compared with $217.8 million at year-end 2025. Book value per share increased to $13.49, up 0.7% year-to-date. During the quarter, we repurchased approximately 181,000 shares at an average price of $30.58 per share, representing a $5.6 million return to shareholders.

Overall, we remain encouraged by the continued momentum in premium growth, the strength of our balance sheet, and our ability to consistently return capital to shareholders while maintaining financial flexibility. Lastly, we will file our Form 10-Q with the SEC tomorrow, July 23, 2026, after the market closes. With that, I would like to turn the call over to the operator for questions. Operator?

Thank you. [Operator Instructions] We'll go ahead and take a question from Mark Hughes with Truist.

How would any kind of general description of the competition this quarter versus earlier quarters? And here I'm thinking of just looking at these results from Travelers and Chubb, where they seem to be growing their workers' comp business, despite a lot of the market data that suggests it's still slowly declining. I think you talked about gradual softening. Are you seeing bigger players stepping up, or is that just some quarterly variability?

Mark, this is Vince. I wouldn't attribute it specifically to bigger players. Competition definitely remains intense. I think that's a word we've used previously. I would say in the quarter, we have seen a little more aggression from some of our regular competitors, particularly with package carriers.

Okay, understood. How about the audit activity? I think you touched on it. Janelle, I don't know if there's any statistics on payroll. I think you provided some in the past. I'm sorry if I missed it if you did on this call, but it seemed like the audit activity was quite strong or stronger this quarter. Any comments there?

Yes, Mark, you're absolutely right. The audit activity was pretty robust this quarter. Pleasant to hear from [ DeBress ]. So that speaks to, I think, the economies of the industries that we insure. We saw roughly 4.5% -- 4.7% of that was wage growth. So that was a little positive number, and the employee count is still, you know, still a smaller percentage of the 5% that we saw in the quarter. So still not, I would say, seeing an uptick in terms of new employee counts for our insured basis, but the wages are still slightly above the nationwide averages that we've been seeing. So I view that as a positive sign.

If you look at what NCCI put out in May, you know, they clearly indicated, to your point, your first question that Vince was talking about with the level of competition, you know, net premiums written for the industry was flat for 2025. So I think carriers that are looking to find ways to grow are going to have to find that in either new business opportunities or if they're banking on payrolls helping boost that.

I think most carriers are thinking, and it appears based on what is out there, that wage inflation is sort of compensating for the loss cost declines that we've been seeing. For 2025, you know, rates were down roughly 5%, wages up 4.3% for the industry as a whole. So I think it's sort of an offset. So carriers that are looking to grow are going to have to find new business opportunities because I think whatever they're going to get from wage inflation is basically going to compensate for the rate decreases that we're seeing, right? So the fact that we're seeing a little bit higher than that from our insured group, I think speaks favorably for future audit premium for AMERISAFE.

Understood. [ Guillermo ], you mentioned a one-time item in the expense ratio. Did you call out what that was and how much it was?

Yes, it was related to a write-off that we had to do, and it was just a one-time from an older account.

Yes, so bad debt, is that the way to think about it?

That is correct.

And can you say how much that was?

The total for the bad debt was approximately $700,000.

As you can imagine, Mark, that's a large account for us. That's not our typical or average policy size. This was an older policy pre-2023 that's been in dispute for some time and concluded in

Yes, very good or very bad, I guess.

I agree, Mark. I agree.

Not so very bad, just nature of the business. And then thinking about either Vince or Janelle, thinking about the growth, you know, your ex-audit still is very healthy. It's been decelerating a little bit. You've talked about more aggression and competition. I know you've talked about some initiatives in the past to be more assertive when it came to renewal pricing. And I wonder if you could talk about kind of where you are in that cycle. You know, some of these strategies that they've been successful and you're kind of in the second half of that ballgame, or is this new strategies that you're developing?

Mark, I'll jump in first and Janelle can clean up whatever mess I create. You know, the strategy's not changed. It all starts with the sales initiatives we launched several years ago and making sure we're working with the right agencies, making sure they understand our risk appetite. Those initiatives are producing fruit and doing well.

I don't know if I could call what part of the ball game they're in. That'd probably be risky. Mark was obviously influenced by World Cup because he said second half rather than innings. It was innings. He's got World Cup fever. I love it.

Yes, so those strategies are still producing, Mark. You know our company so well. We're going to prioritize profitable growth over simply growth, right? So with new business, we continue to be selective and disciplined. Renewal retention is a big part of our strategy, making sure we're retaining the accounts we want at a healthy price, and that continues to go well. So we still feel good about our mid-single-digit growth trajectory in terms of sustaining that going forward.

Very good. And then, Janelle, the count of large losses through the six months?

Okay. And then I'm probably At six months last year, we were at 10.

Yes. I'm not sure if Matt's in the queue, but I'll steal another one too. Anything on the medical inflation? I saw some comments. Something maybe it's on TikTok or just one of these internet memes that is looking at inflation over the last 25 years. And of course, healthcare hospital is always at the top of the list. So just anything on that front that you would call out.

Yes, I'm not on social media, but whatever source that was, we definitely see it in terms of hospitalizations and doctors associated with hospitalizations. We definitely see medical inflation there. You know, we still take a long-term approach to that. I mean, you know, for the industry in 2025, medical inflation, not wage-adjusted, was up 4%. Severity was up 4%. That's, you know, and that's compared to, I think, what most people have been thinking the last couple of years, 2% and 3%. So it's real. It's happening.

Average severities for the most part across accident years are higher for us at six months. If I compare accident year '26 to accident year '25 at six months, our average severity was actually slightly lower. And I would love to say that's a trend, but it's six months, so I'll take it for what it's worth. Everyone recognizes that there's pressure there from a medical inflation standpoint. And that's why, you know, we are such big proponents of fee schedules and having vendors and third parties adherent to those fee schedules because it does help contain costs. When you get things that are outside of fee schedules, that's when you really start experiencing medical inflation.

Yes, thank you very much.

Thank you, Mark.

As a reminder, [Operator Instructions] Our next question comes from Matt Carletti with Citizens JMP.

Janelle, I want to get your thoughts. I know you don't operate in California, but recently the insurance commissioner, Lara, approved an advisory kind of 10% rate increase. I think it's kind of been, if you look over history, California kind of tends to lead the national workers' comp markets. So I want to just kind of get your thoughts on what you make of that. I know California is dealing with some of its own kind of California-specific cumulative trauma issues. Right. How much you might attribute it to that versus broader issues of workers' comp and just kind of your views on what that might mean for some of your markets down the road.

I agree with you, Matt, that certainly the cumulative trauma change seems to be unique to California at this point. Fingers crossed it stays that way, right, for everyone. So that's certainly part of the 10%. But I also believe that some of that is recognition of the industry-wide trends that we're seeing, the ones that I was just talking about, medical inflation, average severity. Things are not getting cheaper and yet rates continue to go down. Now, I will acknowledge the industry remaining profitable, so there is that. But nonetheless, medical inflation is there and present. Average severities are up for the industry as a whole. And yet we still are seeing mid-single-digit rate decreases.

As you mentioned, California being 10%. I want to talk about Nevada going down 32% because they had a structural change. So if I take Nevada out of the equation, New Mexico was down 15%. I mean, so that's the range of what we're seeing. There's still a lot of fluctuation there. But all the '26 rate filings are done for now. So in a couple of months, we're going to start seeing what 2027 is going to look like.

But based on the early indications, it looks like relatively pretty the same. Maybe a slight decline in the rate of reduction. I don't know. But still reduction. So that's not surfacing enough in either the data, the loss experience, or the profitability that is going to move the rate environment at this point, which I think we all want to see. So I think individually, companies are using their flexibility wherever they can to get price, to get rate, to offset all of those things that I just talked about.

Perfect. Super helpful. Thank you very much.

You're welcome.

And once again, [Operator Instructions] We'll pause for just a moment. And that does conclude the question and answer session. I'll now turn the conference back over to Janelle Frost, President and CEO, for closing comments.

To close, we are pleased with the continued strength of our core business. As we move through the remainder of 2026, our focus has remained unchanged: profitable growth, operational excellence, strong capital management, and long-term value creation for our shareholders. Thank you for joining us today.

Well, thank you. That does conclude today's conference. We do thank you for your participation and have an excellent day.

Good day, and welcome to the AMERISAFE First Quarter 2026 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Kathryn Shirley, Chief Administrative Officer. Please go ahead.

Thank you, operator, and good afternoon, everyone. Welcome to the AMERISAFE 2026 first quarter investor. If you have not received the earnings release, it is available on our website at amerisafe.com. Today, 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 under the securities law. 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 results 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-Q 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.

Thank you, Kathryn, and good afternoon. We are pleased with our solid start to 2026, marked by continued growth, disciplined execution and attractive underwriting performance. During the quarter, we grew net premiums earned by 9%. We also delivered a combined ratio of 93.2% and produced operating earnings of $0.50 per share. These results reflect steady operating momentum amongst the competitive backdrop facing the workers' compensation industry.

The workers' compensation market remains competitive and continues to operate in a prolonged soft pricing environment amid persistent industry headwinds, such as claims severity and economic uncertainty. At the same time, workers' compensation remains the most consistently profitable line within the P&C industry, supported by long-term claim development and stable capital structures. In this environment, sustained success depends on appropriately priced risk selection and deep industry experience.

At AMERISAFE, our differentiated approach to servicing high hazard industries continues to support consistent returns across the cycle. Our eighth consecutive quarter of premium growth, continued improvement in our expense ratio and favorable prior year loss development underscores the strength of our operating model and the dedication of our team. We believe these fundamentals position us well to navigate current market conditions while continuing to create long-term value for our shareholders.

I'll now turn the call over to Vincent to walk through the details of our growth and underwriting performance for the quarter.

Thanks, Janelle. In the first quarter of 2026, gross premiums written were $88.5 million compared to $83.8 million in the first quarter of 2025, increasing 5.6%. Retention for policies for which we offered renewal was 92.4% in the quarter, and pricing remains strong, helping offset continued downward pressure in file loss costs. New business opportunities continue to grow despite steady competition. Together, new and renewal voluntary premium increased 8.2% in the quarter, reflecting ongoing investments in distribution effectiveness and recognition of our commitment to delivering outstanding safety and claim services to our policyholders.

In-force policy count increased 1.7% in the quarter and 9.5% since Q1 2025. Audit premium and related adjustments remained positive, adding $3.7 million in the quarter compared to $5 million in the first quarter of 2025. And net earned premiums were $75.1 million in the quarter growing 9% year-over-year. While we don't usually comment on policyholder dividends, I do want to give some color since it was seemingly an outlier for this quarter. If you look at recent quarter history, you'll see that there is some variability in this ratio quarter-to-quarter, albeit in a relatively small range.

In last year's first quarter, the dividend ratio was 0.9%, while in the subsequent quarter, Q2 2025, it was 1.8%. We have not changed our policyholder dividend strategy or plans. And this first quarter result was within our expectations. In the few states where we do offer policyholder dividends as a competitive tool. The ultimate outcome depends upon individual policyholder experience for policies in the quarter being evaluated. With recent policy count growth it is not unexpected that more policyholders could qualify for dividends.

And finally, back to the routine and update on payroll growth. We continue to see positive wage growth in our targeted classes of business, coming in at 4.5% for the quarter, while headcount change was essentially flat. We believe continued payroll growth across our targeted industries indicates relatively healthy business activity despite ongoing economic uncertainty.

Further payroll growth and in particular, wage growth and help offset ongoing pressure on rates, both from competition and filed loss costs. That concludes the overview of premium results.

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

Thank you, Vince.

Next quarter, I'll have the pleasure of passing the financial remarks off to Guillermo Ramos, our new CFO. Until then, bear with me 1 more time as I bloom the financial results with other operational commentary. The current accident year loss ratio was 72% for the quarter compared to 72% for the accident year 2025 at 12 months, but 71% at the first quarter of 2025. As we've discussed over the last 2 quarters, continued rate pressure and general high claim severity are creating modest upward pressure on the current accident year.

That said, large claim losses incurred can be lumpy. We ended the first quarter of the current accident year with no claims with incurred value over $1 million compared to 2 in the first quarter of accident year 2025. As for prior accident years, we had $7.6 million or 10.1 points of favorable development in the quarter compared to $8.7 million or 12.7 points in the prior year quarter resulting in a net loss ratio of 61.9% for the quarter.

The impact of favorable prior year development to the net loss ratio quarter over prior year quarter is influenced by the growth in net premiums earned. To round out the combined ratio, total underwriting and other expenses were $22.3 million for the quarter, resulting in an expense ratio of 29.7% compared to 29.9% a year ago. This marks the third consecutive year-over-year improvement, reflecting disciplined expense management and continued operating leverage as our strategic growth initiatives drive growth in net premiums earned.

During the first quarter of 2026, net income was $8.1 million or $0.43 per diluted share, while operating net income was $9.5 million or $0.50 per diluted share. This compares to net income of $8.9 million or $0.47 per diluted share and operating net income of $11.4 million or $0.60 per diluted share in the first quarter of 2025. The effective tax rate for the quarter was 19.8% compared to 20.2% in the prior year quarter.

Turning to our investment portfolio. Net investment income decreased 0.8% to $6.6 million due to lower average investable assets. However, new many yields were favorable during the quarter with the yield on new investments increasing 174 basis points in comparison to the portfolio roll off, driving our tax equivalent yield to 3.9% or 7 basis points higher than the first quarter of 2025.

The portfolio remains high quality, carrying an average AA- credit rating and a duration of 4.4 years. Asset allocation was largely unchanged with the portfolio composition being 61% municipals, 24% combined corporate bonds, 3% U.S. treasuries and agencies, 7% equities and 5% in cash. Approximately 43% of our portfolio is designated as held to maturity during a net unrealized loss position of $7.9 million at quarter end.

As a reminder, these held-to-maturity securities are carried at amortized costs, and therefore, unrealized gains and losses on these securities are not reflected in our book value.

Also during the quarter, we repurchased nearly 120,000 shares common stock under the company's share repurchase program at an average cost of $33.60 per share for a total of $4 million. The remaining outstanding share repurchase authorization under the program as of March 31 is $12.9 million. Overall, our capital position is strong, supported by high-quality balance sheet, solid reserve position and prudent investment strategy. At quarter end, we held approximately $774 million in cash and invested assets.

Finally, a couple of other topics. Book value per share at quarter end was $13.18 and we will file our 10-Q on Thursday, April 23, after market close.

With that, we'll open the call up for questions.

[Operator Instructions] And we'll take our first question from Mark Hughes with Truist.

Janelle, how did you see inflation in the quarter? It sounds like the medical inflation, claims inflation, it sounds like the large claims were negligible. But any observations, yes about any marginal changes?

No. No marginal changes from what we talked about at year-end, Mark. Medical efficient is real. We are living it. We are reserving properly for it. I still feel I'll stick by what I said at year-end. I still feel fee schedules are doing their job and helping us contain costs. But I also think in CCI recognizing last year, this time last year, the medical inflation was -- medical severity was up 6% eye-opening to the industry. I think CEOs have been talking about it for a while. And we're just a few weeks away from seeing what that number was for 2025 current CCI as well. So I would expect but there's continued pressure on medical inflation industry-wide, not just with our severe claims.

Yes. What do you think they'll say, I guess our observation was it seemed like 2024 and 2025 or not starting off in as good a shape as some of the older accident years? Do you have any observations about what you've seen in the industry data..

Yes. That's a great point, Mark. I think when you look at even in CCI last year and their data had each accident year combined ratio seemed to be worsening, getting closer and closer to that 100% combined ratio for the industry. So I mean, I think they're industry-wide, we're seeing a deterioration in those results. And you're right, accident year '24 and '25 for the industry as a whole. I think there is definitely pressure there. But when you're talking 12 years of declining rates, I think that's a natural progression, right, that there's going to be pressure there.

Even though frequency for the industry has continued to go down, medical inflation and the severity on claims has ticked up I mean in a declining rate environment. So I think there's going to be continued pressure for the industry on those accident year combined ratio. So it would be very interesting to see on an accident year basis, what those projections are reported versus, I guess, projected, but also how much that affects the calendar year, like how much favorable development the industry has experienced from older accident years. To your point, that those accident years '22 and prior versus what's developing or what emergence we've seen out of '24 and '25.

Yes. How about NCCI loss costs. I think you've shared kind of the recent experience in some of the updates you've been getting, what does that trend look like?

Mark, this is Vince. We're still looking at mid-single-digit decreases for the year. Most states have already put in their filings for 2026. Just to give you some sense of the range in our 5 biggest states, they range from down almost 9% to down 1.2% and everything in between with a few outliers.

Understood. And then Janelle, I don't know if you gave any specifics on payroll. I think you might have done that in the past, kind of payroll growth or headcount growth, any statistics there you can share?

Its Vince, I'm going to jump in for Janelle. I've got it right in front of -- we're seeing payroll growth across all of our major classes to varying degrees. But it's predominantly wage growth, as we mentioned in the prepared remarks. Headcount growth has been flat to slightly down, different quarters, it varies quite a bit, but -- across all industries, payroll growth continues to be positive.

[Operator Instructions] And we will take our next question from David Sumar with Citizens JMP.

This is David on for Matt. I just had one question. For the voluntary premium growth, are there any certain industries or areas of the market that are driving growth more than others right now?

No. I would say it's been pretty steady across our book of business, which is 1 of the things that we've actually been happy to see as we've had these strategic initiatives to grow policy count into grow premium that the changes that we've made have been serving us across industries, across states. In other words, we don't see pockets of what's working here. It's not working there. It's been pretty prolific throughout the book of business.

So -- even if you look at the 10-K last year, which last year was when our growth initiatives really started taking root in terms of the numbers we reported. If you look at the 10-K and the shift between industry groups or even the ships among the states, there's really not a lot of change over '24, '25 over '24.

And that held true in the first quarter as well.

We will take our next question from Bob Farnam with Brean Capital.

One question. I have one broad question and one specific question. So the specific question is you talked about the duration of your assets for years. I'm just -- a little over 4 years. So I just wanted to know kind of how does that compare to the duration of your liabilities?

Great question. Yes. So our average duration on our portfolio -- on our molality is between 3 and 4 years. So as you know.

Which is surprising.

SP-3 I'm sorry, go ahead.

Again, I'd say that's kind of surprising. People think of all right, workers' comp writers would have a longer duration of claims. So is that...

Yes. I appreciate you asking as one of my favorite subjects. So the way we handle claims in you -- thank you, Bob. The way we handle claims is different than the industry. We really focus on -- I've talked about this numerous times, but our high-touch model involves our claims adjusters getting in quickly, establishing relationships, getting those reserves put up quickly. And then working with our injured workers, working with medical providers, finding ways to close and settle these claims as quickly as we can to the benefit of the injured worker to the benefit of the policyholder and ultimately to the benefit of AMERISAFE and that helps shorten our duration on our claims on these severe claims.

So we know that we're lower than the average bear as they say in the industry, but that's part of our operating model, and that's how we manage claims.

Cool. All right. And the broader one, I've been covering workers' comp for quite a while. You obviously have as well. And I would have said maybe 5 or 6 years ago, I thought that frequency would have bottomed.

[indiscernible]

And here we go -- and he would keep going. I was like, "All right, we put you down again. read that again. you've done again. When is this going to end? And what do you think is driving -- you could only do so much safety and risk services and things like that, that I just -- I don't know where it is about...

I would agree with you, Bob. I guess partly a degree, it matters on how you're measuring frequency right. So if you're measuring it per $1 million of payroll or $1 million of premium. But every way you look at it right now, it's still on the decline. A couple of things I think factor into that. I agree with you. Is the workplace safer. Absolutely. I think the mix of jobs that we have, although the fact that our economy is shifting is more towards services, I think that impacts the overall frequency because again, you're talking broadly, not just what AMERISAFE rights but broadly, right?

So I think the type of jobs, the types of workforce that we have that's somewhat influencing that number. If you look at if you're looking at really long-term trends, I think our economy has shifted more from manufacturing and those types of jobs to more service-related jobs. So that kind of -- I think that's contributing somewhat to the frequency. But I happen to agree with you, if you would have asked me 3 or 4 years ago, even for the industry. Now you're talking about AMERISAFE specific for the industry, I would have said, well, it's got to reach at some point. I mean people are going to have accidents. We're all humans. But yet whether you measure it on payroll or premium, as of from now, it's down.

Yes. I just remember you talking about it a long time ago and saying, yes, frequency can't drop down to 0. So it's going to end at some point. Man, you guys keep the pricing

[indiscernible]

And we will take our next question from Mark Hughes with Truist.

Yes. Kane, you all have been doing very well on the top line growth and if you touched on this earlier in the call, forgive me. But the -- I think I've asked before about how sustainable this is whether some initiatives you put in place and kind of have potentially run their course or whether there's always something new and you continue to bear fruit with your distribution strategies. I'm just sort of curious if there's any remarks you have about kind of what's keeping the momentum going forward..

Yes. Let me start with the name here at AMERISAFE is executing. We -- and I've talked about this before, 3 years ago, probably at this point, dating back maybe longer now. We started putting together this growth strategy and how we want to be very thoughtful and very measured about that growth strategy. and the team here is just executing. And the fact that, to the question earlier, the fact that it's been prolific across our industry classes across our states, I totally believe it is sustainable. Is it linear? No.

But we're shooting for that mid-single-digit range, and we've been hitting that. And I like I said, kudos to the AMERISAFE employees for really executing and taking this idea of adding small incremental growth and not changing our risk profile and sticking to our knitting and being who we want to be and executing on that PAUSE kudos to them for executing on that. So I truly believe that is sustainable. The momentum there, the attitude is there, the strategy is there.

Yes. And this is a trivial question, but why did you move the call to the afternoon.

Great question, actually scheduling conflicts. So thank you for asking. I apologize if it is inconvenient.

Yes. Okay. So next time, it will be 1030 again?

Yes, we will go back to our normal schedule.

And this concludes today's question-and-answer session. I would now like to turn the call back to Janelle Frost, CEO, for closing comments.

Thoughtful and measured growth with pricing adequacy continues to be the anchor for our performance even amidst the competitive pressures of the workers' compensation market. Our results this quarter reflect the strength of these fundamentals, supported by a strong balance sheet that positions Amerita well across the market. We remain confident in our strategy and committed to consistent execution to deliver sustainable underwriting profitability and long-term shareholder value. Thank you for joining us today.

This does conclude today's call. Thank you for your participation. You may now disconnect.

Good day, and welcome to the AMERISAFE 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.

Thank you, operator, and 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 and 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 statement.

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

Thank you, Kathryn, and 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 risk, 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.

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 seventh 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. And our commitment to servicing our policyholders with outstanding safety and claim services support 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 quarter's 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.

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 value 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 reached the $1 million 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 and 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% in the prior year.

Turning to our investment portfolio. Net investment income increased 2.5% to $7.1 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 book 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% municipal, 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, and the net unrealized loss was $5.5 million at quarter end. As a reminder, held-to-maturity securities are carried at amortized costs, 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. And finally, just a couple of 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 27 after market close.

With that, I'll open the call up for question and answers. Operator?

[Operator Instructions] We'll now take our first question from Matt Carletti with Citizens.

Maybe let's start with kind of what you're observing with kind of frequency of severity. Can you just help us with -- 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? And then as you look at those 25 claims, maybe like similarities within them that you noticed? Or were they pretty broad spread across whether it be areas of your book or injury types, that sort of stuff?

Yes. So I'll start with -- let's talk about overall frequency for a moment. So we obviously had 7 -- I think 7.8 million -- 7.8% increase in reported claims in 2025. Now compare that to, as Vincent mentioned, policy growth of 10.2%. So frequency is right on par with what we expected for the overall book. To your point about the 25 claims, yes, I would call that a frequency of severity. So 25 claims, as you mentioned, that it can be lumpy.

What I can say about the 25 claims, if you look at average severity of those claims is 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 claim came from, it very much mirrors the entire book. So 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 a threshold, right, in reporting those claims. But obviously, over the years, as medical severity upticks or just severity overall upticks year over year over year, the $1 million in 2025 is not the same as $1 million in 2022, for example. We like to keep that measure consistent just so we can compare it. But nonetheless, there were 25. We can -- 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.

That makes sense. Maybe I can just switch to the growth for a minute, which is great. Can you just give us a little more color on -- I mean, obviously, you've talked a bit in the past about very concerted efforts that you're making in terms of driving that growth. Are there particular areas of the book that you're seeing particular success? Or is it more broad-based across the book? And whether that be geographies, areas of exposure, however you want to look at it?

Yes. We're excited because the growth that we're seeing is across the book. 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 47% of our book is still construction followed by trucking, logging lumber, agriculture, no real shifts there.

If you look at the top 10 states, I think if you compare 2024, '25, I think the top 10 are still the same states. There may be a little shift in the 5, 6 and 7. But all in all, the top 10 states are exactly the same.

Vince, do you want to add anything about industry groups or state specific?

Yes, sure. Janelle mentioned the 10-K being released Friday. We -- 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'd call it, the dreaded other category of premium, but there's been enough growth in the underlying components of that in the last couple of years to warrant breaking that out of other.

So 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.

Yes. So 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.

Okay. Okay. That's helpful. One last one, if I could. Maybe Janelle, ask you to put your CFO hat back on. 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?

Yes. No, it's closing and settling claims. So the accident years were roughly $0.5 million in 2022, $1 million in 2021 and then [ $20 million ] in prior with the remainder [indiscernible] something...

[Operator Instructions] We'll now take our next question from Mark Hughes with Truist.

Janelle, the -- 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, but it's just normal volatility. Yes.

Yes. It's definitely, obviously, an increase in frequency of severity enough that we felt using the loss ratio was the appropriate measure.

Yes. So when we think about 2026, if it was just kind of a tough year, it's lumpy, you've always made that point. And every time you had a lump, it's always dropped back down. So what's the 2026 loss pick back to 71%?

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's pressure -- there was pressure on that 71%. And then having that frequency and severity is what pushed us towards, hey, let's move this up to 72%. And as Vincent mentioned in his prepared remarks, the loss costs -- the underlying loss costs are still mid-single digits. That adds pressure to that loss ratio. So at this point, I'm inclined with the 72% to keep the 72% for 2026.

Okay. And then the favorable development was down a little bit year-over-year relative to earned premium. You've been running kind of steady year-over-year heretofore. Was that influenced by this frequency and severity issue? Or was this just -- it kind of maybe changed your mindset a little bit? Or is this...

No, very good point. That is not related to the frequency of severity in 2025. That is just simply the claims that we closed or settled in that particular quarter, which also can sometimes be lumpy. But no, not related to the large claims for 2025.

So you wouldn't necessarily ascribe any being to that. It's just a little variability.

Yes, which I would -- that's not unexpected in my...

Okay. Yes, 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.

Nothing's changed in our reserving practices. The way we -- and I always like to -- I think I said this on every call just because it's so essential to who we are as a company. We rely heavily on those case reserves and nothing has changed in the reserving practices that establishes those case reserves.

Yes. 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 that's kind of bumped more over $1 million?

Yes. The -- certainly, the medical inflation that -- or the medical pressure that we see are the same ones we talked about on the last 2 calls, home health because again, the severity of the industry -- injuries that we deal with, there's normally a home health component of some kind with these claims. So there's still a tremendous amount of cost pressure for home health.

And then DME, which for us is I'm thinking more in terms of prosthetics. So obviously, we unfortunately have a lot of [ NPTs ] or people that have to require prosthetics, and the cost of prosthetics is certainly under pressure.

Yes. Very good. Any -- no inflection though, nothing obvious around medical inflation, the sustained pressure, but...

I wish. I wish that were the case, but no. And 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.

Yes. And competition, I think you said relatively steady.

Yes, Mark, I would say that's a fair description of it.

And then evergreen question about the next construction job are important for your policyholders. Anything changed there?

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. And as Vince mentioned, the wage growth numbers that we're seeing, it's higher than national average. So 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 count. So that bodes well, I think, for our insured base.

And how about anything on the sustainability of growth? I think you 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 this really nice period of strong growth, maybe less achievable in 2026 or there's always -- there's sustained momentum?

Mark, I'll jump in on that. You've hit on 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 1/3, 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 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.

[Operator Instructions] We'll now take a question from Bob Farnam with Brean Capital.

I just have kind of one topic I want to talk about, and that's undocumented workers. So looking at your class codes, you 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. 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?

Yes. Let me think about -- 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. And 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. But 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 we read in the national news? I would say no. And it doesn't change our approach in terms of how we handle the claim.

Okay. Great. I just wanted some color on that, and that works for me.

Yes, something -- it's a great question, and it's definitely something that we are monitoring to see if it could be impactful to the book. But as of end of 2025 and where I sit today, I could say no, it's not impactful.

And 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.

AMERISAFE is well positioned to sustain our growth and underwriting profitability by relying on our expertise in turning risk into opportunity. Thank you for joining us today.

And once again, that does conclude today's conference. We thank you all for your participation. You may now disconnect.

Good day, and welcome to the AMERISAFE Third Quarter 2025 Earnings Call. Today's conference is being recorded.

At this time, I'd like to turn the conference over to Kathryn Shirley. Please go ahead.

Thank you, operator, and good morning, everyone. Welcome to the AMERISAFE 2025 Third 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 under 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 the results of risks, uncertainties and other factors including factors discussed in the earnings release and 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 statement.

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

Thank you, Kathryn, and good morning. We are pleased that our growth strategy in this competitive market is yielding a healthy 20.5% return on average equity and a 90.6% combined ratio for the quarter. Our continued success in the market reflects the strength of the AMERISAFE value proposition.

At our core, we are a profitable underwriter, focused on knowing our risk, pricing them appropriately and servicing our policyholders and their workers. In doing so, we are a better carrier for our agents and create long-term value for our shareholders.

This is our sixth consecutive quarter of top line growth. Voluntary premiums on policies written in the quarter grew 10.6%. Combined with audit premiums, our gross premiums written grew 7.2% and net earned grew 6.2% over the third quarter of 2024. We are seeing the compound benefits of disciplined underwriting, robust new business production and strong renewal performance.

Turning to losses. Our accident year loss ratio was in line with the prior year end quarter at 71%. Frequency remains at historically low levels, while severity continues to not higher on a year-over-year basis. We are confident that our claims handling practices, coupled with upfront risk selection remain consistent and disciplined in the current environment. Thus, the company experienced $8.9 million of favorable reserve development on prior accident years, primarily accident years 2020 and prior.

In addition to announcing the quarterly results, we also announced the Board of Directors declared both a regular quarterly dividend of $0.39 per share, and a $1 special dividend payable on December 12, 2025, to shareholders as of record as of December 5, 2025.

The Board takes a comprehensive approach when evaluating capital deployment, considering both the regular quarterly dividend, share repurchases and any special dividend within the broader framework of AMERISAFE's capital position operating performance and future growth opportunities. This balanced strategy ensures that we continue to reward shareholders while maintaining the flexibility to invest in the business and support long-term value creation.

Our capital management philosophy remains consistent. Profitability drives capital and capital is deployed with discipline. We are proud of our track record. Over the past 13 years, AMERISAFE has declared nearly $50 per share in total dividends, including $12.68 in regular dividends and $37.25 in special dividends per share. Along with managing capital, the continued investment we are making in our people and technology is reflected in our solid top line growth at industry-leading returns, delivering long-term value to our shareholders.

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

Thank you, Janelle, and good morning to everyone. For the third quarter of 2025, AMERISAFE reported net income of $13.8 million or $0.72 per diluted share and operating net income of $10.6 million or $0.55 per diluted share. During the third quarter of 2024, net income was $14.3 million or $0.75 per diluted share and operating net income was $11.1 million or $0.58 per diluted share.

Gross written premiums were $80.3 million in the quarter compared with $74.9 million in Q3 of 2024, increasing 7.2%. Audit premiums increased the top line by $2.5 million compared with $4 million in the prior year quarter. Despite the audit premium headwinds, voluntary premium grew -- growth of 10.6%, fueled by new business production and strong retention is driving top line growth.

Our total underwriting and other expenses were $22.1 million in the quarter compared with $21.3 million in the prior year quarter, which resulted in an expense ratio of 31.1% compared with 31.7% in the prior year quarter. The expense ratio reflects ongoing investment in AMERISAFE's growth as we see elevated opportunity in our target markets. Our effective tax rate was 21% compared with -- to 19.5% in the prior year quarter.

Turning to our investment portfolio. In the third quarter, net investment income decreased 12.3% to $6.6 million, driven by a decrease in average investable assets following the payment of the special dividend in the fourth quarter of 2024. At quarter end, we held approximately $817 million in investments cash and cash equivalents compared to $899 million at September 30, 2024.

The reinvestment rate environment remains fairly strong with some moderation compared to the second quarter of 2025. Yields on new investments exceeded portfolio roll-off by 77 basis points, driving the portfolio tax equivalent book yield to 3.9%, relatively flat versus the third quarter of 2024. The yield on cash held in money market funds ended the quarter at 4% compared to 4.8% at the end of the prior year quarter. The unrealized gain for the equity securities was $4.1 million compared to $3.9 million in the prior year quarter. Both periods were driven by strength in the U.S. equity market.

Our investment portfolio remains high quality, carrying a double an average AA minus credit rating with a duration of 4.3 years. The composition of the portfolio is 61% of municipal bonds, 21% in corporate bonds, 3% in U.S. treasuries and agencies, 7% in equity securities and 8% in cash and other investments. Approximately 45% of the portfolio is classified as held to maturity, which maintains a net unrealized loss position of $7.6 million. As a reminder, these securities are carried at amortized costs, and therefore, unrealized gains and losses are not reflected in our reported book value.

Our capital position is strong with a high-quality balance sheet, solid loss reserve position and conservative investment portfolio. During the third quarter, the company repurchased roughly 31,000 shares at average cost of $43.72 per share totaling $1.3 million.

And finally, a couple of other topics. Book value per share increased to $14.47, up 7.1% year-to-date. Statutory surplus was $259 million compared to $235.1 million at year-end 2024. Lastly, we will be filing our Form 10-Q with the SEC later today, October 30, 2025, after the close of the market.

With that, I'd like to turn the call over to the operator for the question-and-answer portion. Operator?

[Operator Instructions] And our first question is going to come from Matt Carletti.

Janelle, I was hoping maybe to start off, obviously, voluntary premium growth has been kind of solid double digits for a couple of quarters now, which is a great kind of emerging trend. Could you talk a little bit about where you're seeing success where that growth is coming from, if it's kind of any particular areas? Or maybe it's just more broad-based and it's pretty evenly across kind of all aspects of your business?

Thank you for noticing. And I'm also pleased to say it's more broad-based. We have grown policy count in the quarter over second quarter, we grew policy count roughly 2.7%. On a year-to-year basis, it's more like 11% year-over-year for policy count. So we're growing policy count, which is very important.

Our insured payrolls are expanding as well, which is also a positive and particularly in this market when you read all of the headlines about things that are happening in unemployment and wage growth expectations. Our skilled labor jobs in our high-hazard industries are faring pretty well, so that helps support premiums in terms of payroll growth.

We're seeing still very strong retention on a renewal basis for the quarter. Our renewal retention for the policies for which we offered renewal was 93.6%, and very healthy number. I think actually, that was the same number we had prior year quarter, so good. Even in this crazy competitive market that we're in, we're able to maintain those accounts that we want to maintain through a lot of collaborative effort from the AMERISAFE employees. So I can't emphasize that enough.

We have a seasoned sales staff the way we utilize our safety services as part of the risk selection process is truly a value add, not only for our underwriters and helping our underwriters understand the risk and price the risk appropriately. But I'll say a value-add for our policyholders and their agents. The fact that, that is an AMERISAFE contact that they have and that builds relationships with those policyholders and with those agents. So it's critical to what we do, and it's unique to AMERISAFE. So I think that's huge on our part.

And then I can't -- I certainly can't not mention our claims handling experience. From a renewal retention standpoint, I truly believe the way we handle claims benefits us from a renewals perspective. If you've had a claim and it's handled by an AMERISAFE employee, we handle it, I think, the right way, and we treat those injured workers well, and that's meaningful to a policyholder. So all of those things together, I think, is really adding to the growth effort in terms of just the amount of collaboration that we're having.

We've really been focused on ease of doing business, speed to market and it's just compounding and bearing fruit now in those growth numbers. And I'll caveat that by saying all without -- we're not adding -- we haven't added class codes. We haven't added -- we haven't expanded geographically. It's really market penetration and better serving -- better working with our agents.

Great. And then if I kind of try to tie it one step further. So as I look at your business, like, I mean, financially kind of earnings returns have been strong for many years now and really unchanged if you want to look at ROE or something like that. So really strong kind of where the business is. you talked a little bit about the special dividend at the outside of the call and it is a little bit smaller than kind of some of the previous years.

So would I be correct to kind of interpret that maybe an output of that is expression of your guys' confidence in the kind of the durability of that growth or that growth going forward and that that's where you'd prefer to allocate capital versus giving it back to those growth opportunities are there?

Well said, Mr. Carletti, that is exactly what you should infer into the dividend. I mean I'm excited about the dollar dividend by no question. But I think it definitely infers that we believe what we have going here in terms of our growth strategy is not short-lived that I believe it has longevity. And we've said since the very beginning when we started paying out the special dividend, part of the reason that we were returning that capital to shareholders is because we had internally made the decision. It wasn't the right time to really pour that into organic growth because we wanted that growth to be profitable growth.

So now we've had these quarters of top line growth, and it's starting to flow through on the earnings. And so that dividend, we're using that capital and deploying that capital towards that organic growth.

Fantastic. I'm glad I put those puzzle pieces together okay. Thanks for the color.

[Operator Instructions] And our next question is going to come from Mark Hughes from Truist.

Janelle or I'll say, Andy, in the spirit of the question about the special dividend and the growth opportunities. How do you view your leverage now? And how much flexibility do you have on the balance sheet? And this would be underwriting leverage.

It is going up, but it's at $1. I mean from our standpoint, I don't think it's really changed. It's -- I think it's increased a little bit, but it's right at $1.

Yes. And then what would you see as kind of the upper bound kind of comfortably where would you be able to take that.

I would say about $1.5 mark.

Okay. The -- what's the latest on medical inflation.

There's been quite a few articles. AM Best actually put out a segment report on workers' compensation, and they spoke to medical inflation. Certainly, everyone has their eye on it. we're not immune to medical inflation. At the same time, I believe the fee schedules and the fee structure and workers' compensation is probably abating that to some degree for workers' compensation much more than it is for nonworkers' compensation things people are seeing in their health care renewals and those kinds of things. So I do think we have some relief from the fee schedules in terms of medical inflation.

Utilization is something -- and I think we talked about this on the last call, utilization is something NCCI sort of pointed to when they talked about the 6% increase based on medical inflation, something certainly we're keeping our eyes on, particularly home health, I've been talking about for a number of years, and I'll continue to talk about home health.

But even in terms of physician visits, what we've kind of noticed a little bit more PA visits, our physician assistance visits, which sometimes lead to additional visits because a doctor has to sign off on a release of a patient. So we're just keeping our eye on that. I don't know if there's anything that's more anecdotal than in the data yet, but utilization is something we want to keep our eye on since the fee schedules seem to be doing their job, and we know that there is a shortage in the health care industry, so in terms of some services being available. So those are the things we're watching out for.

Yes. What's been latest trend in terms of the approved state loss costs, the most recent ones, any trend there?

Great question. So we have, I think, 4 states that head increases, Missouri, D.C., Nevada, California, and we talked about California on the last call. Those are the ones that I think had increases. On average, what we're seeing and most of the loss costs for 2026 are already in and approved. And what we're seeing is pretty steady state mid-single-digit declines.

I did look at the CIAB study because they survey agents and ask them what they're seeing in terms of their clients' renewals. And I noticed -- and they haven't put their third quarter data out, but in their second quarter data, more than 50%, we're basically seeing no change. So that would say, if that's an accurate depiction of what agents are seeing or what's actually happened in the marketplace, that would lead you to believe that carriers are being relatively disciplined about the loss cost may be down in terms of the absolute loss cost. But what they're using in terms of their average pricing is sort of flat, at least based on that agent survey. So that's a sign of, I would speak to relative discipline in the marketplace.

Yes. You'd mentioned your insured payrolls are expanding. Any specific comments on wage growth how wage growth is compared to in 3Q last few quarters?

Right. So wage growth in the quarter, we saw about 6.7%. As the total was about 8.9%. 6.7% was actual wage changes and a new employee count was 2%. So I was happy to see that 2% in new employee count. If you recall, last quarter, it was actually slightly negative and I wondered, okay, is this a blip? Or is this a data point in terms of is there something happening with integration with our particular employee base, but it sort of bounced back to norms this quarter, so I feel pretty confident about that, that was just a blip last quarter.

Yes. What was the wage last quarter, wage growth?

5.7%. Yes, if I look at the last 4 quarters, it was 5.5%, 6.3%, 5,7%, 6. 7%.

Okay. Very good. How about the large losses in the quarter?

We ended the quarter with 17 large loss is over $1 million.

That's year-to-date?

Year-to-date, yes.

Yes. That's up a little bit, isn't it.

I think at this point last year, we were at 13, if I recall correctly for 2024, but then we had an uptick in the fourth quarter. Again, I I'll go to my favorite saying, unfortunately, these things are lumpy. I never know what quarter they're going to happen in. And I'll also say this, when you -- when we file the Q later today, I believe, you'll look at claim counts.

Reported claim counts on a year-to-date basis are ever so slightly up. And -- but I think it's a pretty remarkable number when you think about how much we've grown policy count, yet the claim counts really haven't varied very much. So I think that speaks to what I was saying earlier about frequency is low. I mean there's no denying there.

Yes. And then anything on the competitive front, Brand X talking more about getting into high hazard?

Great question. It is still extremely competitive. We haven't -- there hasn't been a lot of movement in terms of competitors either increasing or decreasing their appetite. I think we see it occasionally in a particular class, maybe in a given state, but it's usually because maybe they've had a bad experience in that particular state or class code. That's actually one of the selling points for AMERISAFE with our agents is the fact that we are so consistent about our approach. We've been doing this since 1986. And if you look at our footprint and the classes of business that we underwrite, there's a lot of stability there. And that's actually, to me, one of the value propositions for agents for AMERISAFE.

Yes. Any thoughts when we think about audit premium. Obviously, that's led to some just a little bit of a headwind in terms of the written premium but corrected for that, obviously, you've been up double digits. If you're seeing a little more wage growth, is that a positive for audit premium? Or should that continue to moderate, what are the puts and takes there?

That's a really interesting way to look at it. This is just my take on it. I do feel that the wage growth numbers that we're seeing now, speak well to future audit premium. At the same time, I have to be very cognizant of all the things that are happening in the economy right now with inflation and everybody is talking about jobs, jobs, jobs, and we're seeing these headlines of major layoffs.

I feel our industry groups being the skilled labor is somewhat protected from the types of layoffs that we seem to be seeing nationwide. A lot of those are at least being anecdotally been pointed to things like AI is helping us gain efficiencies, et cetera, et cetera, and that's why we're lowering head count. But I do think companies are looking for efficiencies as well.

That being said, with skilled labor jobs, a little bit of a different story there. So if we can maintain the wage growth, it should bear well for future audit premium moderating, I would think, over time.

Yes. Yes. Okay. And then last cantered question. How about the construction end market, the next job being important, any observations there?

Yes. Based on the payrolls that are being reported to us and the fact that I'll point to that new employee count number kind of bouncing back to normal, the economies for our insured base are holding up really well as of right now.

[Operator Instructions] And our next question is going to come from Bob Farnam from Janney.

There was -- Mark Hughes asked the question about the claims count, given the growth in the top line in the graph and the number of policies. Actually, I had a question on your claims staff. I mean did you -- have you increased claims staff to be able to handle an influx of more claims, even though I understand that the frequency down it really hasn't happened yet, but I'm just kind of curious how your claims staff is situated in case claims do start to increase.

No, we have not really increased the number of claims staff, but I'll backtrack on that a little bit to say we run a very lean organization. But at the same time, when our claim counts were dipping down, we also did not decrease our claims staff because of the expertise they bring to the table and we want to keep those inventories really low, that's not something that we felt like we should dial down and dial back -- and then try to dial back up. So the number of claims staff has not changed.

Okay. I figured they have -- I mean I understand they have a lower volume of claims they already handled. So I didn't -- I wasn't surprised that they will be able to handle it in-house, but just curious.

Do you guys -- are you actively looking to expand into any other states? And if so, what's causing you not to at this point? I'm just kind of curious if you're even looking at this point.

We are constantly looking. We have a committee here that is always looking at geographies of where we're not and maybe where we should be or where we are and maybe we're not having a great experience, whatever the case may be. And so I would always say that we are continually considering that, nothing on the near horizon.

Right. Okay. And the last question I had was on the fee schedules. Obviously, it sounds like that's helping to contain medical costs. I just didn't know, on average, how long do fee schedules stay in place before they're renewed? And do you see that fee schedules are renewed, will they have an impact?

Yes, very, very appropriate. They are updated somewhat regularly. And of course, a lot of them are based off -- there's a lot of things based off Medicare and Medicaid. So however, how often that gets updated. And plus it also there's also a political side to that. If I can say if workers' compensation becomes an issue in any given state, legislatively, they will get involved to make some things happen.

And as of right now, and I'll knock on this wooden desk, I say workers' comp doesn't seem to be at the top of anyone's agenda because there are so many other things happening in the P&C space, particularly with homeowners and auto, that legislators are more apt to try to find solutions for and workers' comp has been pretty kind of steady state. So I think employers are relatively happy with the things that are happening. Carriers are pretty much satisfied with the way things are happening. So as of right now, it doesn't seem to be on the top, at least to my knowledge, on the top of any legislative agendas in a large way that would cause the fee schedules to change.

Yes. No, it can make sense. Don't fix what's not broken at this point.

And there appears to be no further questions in the queue at this time. I'd now like to turn the conference back over to Janelle Frost, CEO, for any additional or closing remarks.

Thank you. We are pleased with this quarter's results and the successes we're having in adding small incremental growth while maintaining the standards that make AMERISAFE a profitable underwriter of high hazard workers' compensation. Thank you for joining us today.

And this concludes today's call. Thank you for your participation. You may now disconnect.