Amerisafe, Inc. · NASDAQ:AMSF
Amerisafe — Non-Deal Roadshow (May 2020)
26 slides from Amerisafe's roadshow presentation, May 18, 2020
Slide 1: Investor meetings May, 2020
investor meetings May, 2020 Exhibit 99.1
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,” or similar words are forward-looking statements within the meaning of the Private Securities Litigat
Slide 3: Overview
Overview AMERISAFE has a 34-year operating history as a specialty provider of workers’ compensation insurance for small to mid-sized employers engaged in high hazard industries. 2020 YTD HIGHLIGHTS GPW: - 6.5% Combined ratio: 83.5% Operating ROE: 16.1% 2019 Premium Distribution by State AMERISAFE ac
Slide 4: Premium Distribution
PREMIUM DISTRIBUTION Historical Premium Distribution of Major Industry Groups (in $ millions) Premium Distribution by Industry as of 12/31/19 *Includes Assigned Risk & Assumed premiums +Other includes a wide variety of high-hazard business including cell phone tower service and repair, window washer
Slide 5: Pillars of distinction
Pillars of distinction AMERISAFE High Hazard Niche Focus Rate more than 3x national average Difficult to serve industry sub-segments Mobile workforce- non-fixed workplace environment Less impacted by soft market cycles Small to Mid-Size Employer Focus Less competition Less price sensitivity More dif
Slide 6: AMERISAFE Customer Overview
AMERISAFE Customer Overview Large Competitors (major national firms); Represents 5% of AMSF policies; 26% of premiums Mid-sized Competitors (regional and smaller national firms); Represents 25% of AMSF policies; 39% of premiums Small Competitors (single-state writers, self-insured funds); Represents
Slide 7: COVID-19 Update
COVID-19 UPDATE We believe our policyholders will be less impacted by March-May Stay-At-Home orders. Our small business niche could have a greater impact to AMSF than class of business. Top Ten Premium States
Slide 8: COVID-19 Update: April 2020 nonfarm payrolls
One month net change in April 2020 nonfarm payrolls (number of jobs) – United States COVID-19 UPDATE
Slide 9: COVID-19 Update: Insured Policyholders
COVID-19 UPDATE Insured Policyholders Most insureds (95%) report payrolls and pay premiums monthly. Premium reports received in April (which represent March activity) were 9% lower than expected. Premium reports received in May (which represent April activity) were 11% lower than expected (through M
Slide 10: Pricing for Profitability
Pricing for Profitability Loss costs – estimated loss/$100 payroll approved by state regulator Loss cost multiplier (LCM) – multiplier applied to loss costs to cover company expenses above loss costs Effective loss cost multiplier (ELCM) – aggregate actual LCM, including the impact of discretionary
Slide 11: Combined Ratio
Combined Ratio Consistently profitable underwriting Average 86.7 % combined ratio over the last fourteen years
Slide 12: Economic model – ROE drivers
Economic model – roe drivers Imperative to execute on the fundamentals of underwriting, safety and claims with investment yields at low levels At current leverage ratios, a 1 point change in Loss Ratio equates to a 28 bps change in yield to maintain ROE YTD Loss Ratio 55.3% + Expense Ratio 26.9% + P
Slide 13: Contributions to Returns
Contributions to Returns As of December, 2018; Source: Willis Towers Watson; A.M. Best Data AMERISAFE continues to outperform the A.M. Best rated workers’ compensation peer group, due primarily to favorable underwriting performance.
Slide 14: Investment Portfolio
INVESTMENT PORTFOLIO Portfolio Allocation (as of 3/31/20) Carrying value of cash and investments was $1.2 billion at March 31, 2020 As of March 31, 2020, fixed-maturity securities had an average composite credit rating of “AA” Municipals include 6% of the portfolio in taxable municipal bonds Value o
Slide 15: Capital management
Capital management Goal: Maintain and Balance Hold prudent capital levels to maintain A.M. Best financial strength rating of “A”, yet achieve attractive returns for shareholders History of Proactive Capital Management $62.0M of preferred and debt retirement $22.4M of share repurchases $447.4M of div
Slide 16: Historical Financial performance
CAGR 14.0% in BV+ Capital Returned CAGR 8.2% in BVPS Historical Financial performance
Slide 17: Current workers' compensation market conditions
Current workers’ compensation market conditions
Slide 18: WC Industry Combined Ratio
WC Industry Combined Ratio Sources: A.M. Best; Workers' Compensation Composite AMSF Average Outperformance 15.1 pts., Since 2000 AMSF Average Outperformance 17.5 pts., Since 2006
Slide 19: Workers' Comp Rate Changes
Workers’ Comp Rate Changes 2013: Q1 – 2019: Q4 Source: The Council of Insurance Agents and Brokers.
Slide 20: WC Insurance Rate Changes
WC Insurance Rate Changes Source: The Council of Insurance Agents & Brokers.
Slide 21: Residual Market Activity
Residual Market Activity 8 ALL POOLS – NET WRITTEN PREMIUM* ALL POLICY YEARS COMBINED *Premium volume shown is the quarterly amount net of uncollectible premium for all states and net of premium ceded for the cost of excess reinsurance for AK and NM. Source: National Council of Compensation Insuranc
Slide 22: Reduction in Combined Ratio Necessary to Offset Yield Decline
Reduction in Combined Ratio Necessary to Offset 1% Decline in Investment Yield to Maintain Constant ROE, by Line* *Based on 2008 Invested Assets and Earned Premiums; **US domestic reinsurance only. Lower Investment Earnings Place a Greater Burden on Underwriting and Pricing Discipline.
Slide 23: Appendix
APPENDIX 23 AMERISAFE
Slide 24: Stock Price and Market Data
Stock Price $62.50 52 Week Range $48.02 – 80.65 Shares Outstanding 19.3 M Market Cap $1.21 B Book Value per Share $22.64 Price-to-Book 2.76x Market data as of May 1, 2020; Financial data as of March 31, 2020
Slide 25: Selected Balance Sheet Data
Selected Balance Sheet Data 3/31/2020 2019 2018 Investments, Cash and cash equivalents $1,178,905 $1,168,831 $1,165,834 Amounts recoverable from reinsurers 105,128 95,913 112,006 Premiums receivable, net 169,127 157,953 162,478 Deferred income taxes 17,750 17,513 21,852 Deferred policy acquisition c
Slide 26: Income Statement
Income Statement (IN THOUSANDS) 2020 YTD 2019 2018 Revenues: Gross premiums written $87,071 $333,460 $351,696 Ceded premiums written (2,783) (8,995) (9,344) Net premiums written $84,288 $324,465 $342,352 Net premiums earned $78,990 $332,888 $350,326 Net investment income 7,749 32,483 30,452 Net real