Amerisafe, Inc. · NASDAQ:AMSF
Amerisafe — Sidoti & Company Annual New York Conference 2011
26 slides from Amerisafe's conference presentation, Mar 21, 2011
Slide 1: Sidoti & Company Annual New York Conference
Exhibit 99.1 Sidoti & Company, LLC th Annual New York Conference March 22, 2011 G. Janelle Frost Chief Financial Officer C. Allen Bradley Chairman & Chief Executive Officer
Slide 2: Forward Looking Statements
Forward Looking Statements Statements made in this presentation that are not historical facts, including statements accompanied by words such as “will,” “believe,” “anticipate,” “expect,” “estimate,” “preliminary,” or similar words are forward-looking statements within the meaning of the Private Sec
Slide 3: Market Statistics
Market data as of March 15, 2011; Financial data as of December 31, 2010 Nasdaq: AMSF Market Statistics: Stock Price $21.82 52 week range $15.50 - $22.19 Shares Outstanding 18.2 M Market Cap $397 M Book Value per Share $17.72 Price-to-Book 1.23
Slide 4: Overview
Overview AMERISAFE has a 25-year operating history as a specialty provider of workers’ compensation insurance for small to mid-sized employers engaged in high hazard industries 2010 Highlights GPW: $228.4 million Combined ratio: 93.3% Operating ROE: 9.9% Premium Distribution by State AMERISAFE activ
Slide 5: Premium Distribution
Premium Distribution Premium Distribution by Industry as of 12/31/10 Historical Premium Distribution of Major Industry Groups (in $ millions) Construction Trucking Agriculture Oil and Gas Construction Trucking Agriculture 24.1% 6.8% Logging 4.2% Other 26.9% 4.0% 34.0%
Slide 6: AMERISAFE Differentiators
AMERISAFE Differentiators Focus on High Hazard Industries Niche Focus on Small to Mid-Sized Employers Specialized Underwriting Expertise Comprehensive Safety Services Intensive Claims Management Integrated High-Touch Service
Slide 7: High Hazard Niche Focus
High Hazard Niche Focus High hazard industry workers’ comp rates are more than 3 times the national average Difficult to serve industry sub-segments Less impacted by soft market cycles Represents a broad spectrum of risk quality; favors expertise in risk selection and pricing Higher severity losses
Slide 8: Small to Mid-Sized Employers Competition
Large Competitors (major national firms); Represents 3% of AMSF policies; 22% of premiums Small to Mid-Sized Employers Competition is fragmented, and favors multi-state writers of small to mid-sized employers Intensity of Competition Annual premium > $100,000 Annual premium $35,000 to $100,000 Annua
Slide 9: Specialized Underwriting Expertise
Specialized Underwriting Expertise Industry-specific risk analysis and proprietary rating tools developed over 25-year history Underwriters have in-depth knowledge of insureds’ industry practices and loss exposures No delegation of underwriting authority to agents or MGA’s Track record of maintainin
Slide 10: Comprehensive Safety Services
Comprehensive Safety Services Pre-quotation, worksite safety inspections were performed on approximately 90% of new voluntary policyholders in 2010 Voluntary policies inspected prior to renewal Detailed safety reports provided to underwriters after safety visits Field Safety Professionals have in-de
Slide 11: Intensive Claims Management
Intensive Claims Management Field Case Managers (FCMs) located in service areas; visit claimants personally On average, only 56 indemnity claims per FCM as of 12/31/10 FCMs focus on timely resolution of claims 4,000 4,500 5,000 5,500 6,000 6,500 Total Open Claims at Period End
Slide 12: Strong Financial Performance
-9.2% 13.6% 20.7% 21.0% 11.3% 4.7% Strong Financial Performance 14.3% 15.3% 14.5% 12.1% 9.6% 8.4% $7.42 $9.23 $11.66 $13.86 $16.00 $17.72 -10.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% $(3.00) $- $3.00 $6.00 $9.00 $12.00 $15.00 $18.00 Pre-tax Underwriting ROE Pre-tax Investing ROE BVPS
Slide 13: Investment Portfolio
Investment Book Value ($millions) Fair Value ($millions) Unrealized Gain (Loss) Investment Portfolio Carrying value of cash and investments was $826.5 million at December 31, 2010 Municipals $466.9 $479.1 $12.2 U.S. Agency MBS $62.1 $65.9 $3.8 Commercial MBS $51.5 $54.1 $2.6 U.S. Treasuries $14.8 $1
Slide 14: Combined Ratio
71.9% 74.2% 79.5% 66.6% 64.7% 60.9% 65.1% 71.9% Combined Ratio 27.3% 24.8% 24.7% 23.8% 21.3% 19.3% 21.5% 21.0% 99.6% 99.5% 104.2% 92.4% 85.9% 81.4% 86.9% 93.3% 0% 20% 40% 60% 80% 100% 120% Loss Expense Dividend
Slide 15: Current Workers Compensation Market Conditions
Current Workers Compensation Market Conditions
Slide 16: WC Premiums Continue Declines
WC Premiums Continue Declines ($ Billions) P Preliminary Source: NCCI Holdings, Inc. 2010 State of the Workers Compensation Line 0.0 10.0 20.0 30.0 40.0 50.0 2009p Net Written Premium 31.0 31.3 29.8 30.5 29.1 26.3 28.2 26.9 25.9 25.0 28.6 32.1 37.7 42.3 46.5 47.8 46.5 44.3 39.3 34.1
Slide 17: History of Rates/Loss Cost Changes
History of Rates/Loss Cost Changes Source: NCCI Holdings, Inc. 2010 State of the Workers Compensation Line Cumulative 1990-1993 +36.3% Cumulative 2004-2010 -26.7% Cumulative 1994-1999 -27.8% Cumulative 2000-2003 +17.1% Calendar Year *States approved through 4/23/2010 Countrywide approved changes in
Slide 18: Effect of Recessions on Payroll
Recessions in the 1970s and 1980s saw smaller exposure impacts because of continued wage inflation, a factor not present during the 2007-2009 recession Effect of Recessions* on Payroll (Workers Comp Exposure) *Data is an estimate and represents maximum recorded decline over 12-month period using ann
Slide 19: Calendar Year Reserve Deficiencies
Calendar Year Reserve Deficiencies ($ Billions) Source: NCCI Holdings, Inc. 2010 State of the Workers Compensation Line Workers Compensation Loss and LAE Reserve Deficiency Private Carriers 2009 Tabular Discount is $5.3 Billion Calendar Year
Slide 20: WC Required Returns
WC Required Returns Percent * Based on NCCI’s 2009 Internal Rate of Return model Source: NCCI Holdings, Inc. 2010 State of the Workers Compensation Line Workers Compensation Combined Ratios for Given Cost of Capital* Assumptions: 3.4% Pre-Tax Investment Yield 2.7% After-Tax Investment Yield WC Reser
Slide 21: Workers Comp Underwriting Results Are Deteriorating Markedly
94% 106% 104% 100% 100% 104% 92% 86% 81% 87% 93% 110% Workers Comp Underwriting Results Are Deteriorating Markedly WC Industry Combined Ratio 118% 122% 111% 110% 107% 103% 98% 104% 104% 110% 60% 70% 80% 90% 100% 110% 120% 130% WC Ind. AMSF Sources: A.M. Best; Insurance Information Institute.
Slide 22: Investment Considerations
Investment Considerations Consistent growth in book value Strong and growing balance sheet Consistent high returns Efficient expense structure Specialized underwriting expertise developed over 25-year history Prudent reserving policy
Slide 23: Appendix
Appendix
Slide 24: Selected Balance Sheet Data
Selected Balance Sheet Data (in thousands) Investments, Cash and cash equivalents 799,973 800,485 826,503 Amounts recoverable from reinsurers 67,763 81,878 95,133 Premiums receivable, net 156,567 151,570 122,618 Deferred income taxes 33,580 28,489 31,512 Deferred policy acquisition costs 20,289 18,1
Slide 25: Income Statement
Income Statement (in thousands) Revenues: Gross premiums written $256,454 $228,424 Ceded premiums written (20,158) (20,549) Net premiums written $236,296 $207,875 Net premiums earned $250,896 $218,881 Net investment income 28,014 26,242 Net realized gains on investments 2,033 2,449 Fee and other inc
Slide 26: Return on Equity Drivers
Return on Equity Drivers Year to Date 12/31/2010 Loss Ratio 71.9% + Expense Ratio 21.0% + Policyholder Dividend Ratio 0.4% = Combined Ratio 93.3% Underwriting Profit 6.7% x Operating Leverage 0.7 = ROE from Underwriting 4.7% Pre-tax Investment Yield 3.2% x Investment Leverage 2.59 = ROE from Investi
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