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What changed in AMERISAFE INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of AMERISAFE INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+286 added−274 removedSource: 10-K (2025-02-28) vs 10-K (2024-02-23)

Top changes in AMERISAFE INC's 2024 10-K

286 paragraphs added · 274 removed · 256 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

109 edited+2 added−3 removed167 unchanged
Biggest changeA deficiency means that the current estimate is higher than the original estimate. 12 Analysis of Loss and Loss Adjustment Expense Reserve Development Year Ended December 31, 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 (in thousands) Reserve for loss and loss adjustment expenses, net of reinsurance recoverables $ 565,858 $ 628,268 $ 653,175 $ 664,520 $ 686,956 $ 691,193 $ 677,544 $ 654,854 $ 626,012 $ 583,482 $ 554,248 Net reserve estimated as of: One year later 542,141 580,454 601,868 629,750 641,360 626,192 614,060 592,937 585,421 542,086 Two years later 494,327 529,149 567,098 584,149 576,358 562,709 552,143 552,345 544,024 Three years later 462,770 504,437 530,582 528,659 527,722 514,889 517,763 518,432 Four years later 452,097 484,964 498,494 494,513 498,173 493,631 491,301 Five years later 440,750 467,382 473,137 473,097 485,768 475,184 Six years later 431,715 451,232 458,115 464,296 470,837 Seven years later 421,534 440,039 450,531 451,432 Eight years later 411,947 433,298 440,705 Nine years later 405,921 425,002 Ten years later 398,512 Net cumulative redundancy $ 167,346 $ 203,266 $ 212,470 $ 213,088 $ 216,119 $ 216,009 $ 186,243 $ 136,422 $ 81,988 $ 41,396 Cumulative amount of reserve paid, net of reserve recoveries, through: One year later 129,658 135,711 135,601 129,937 138,593 131,108 129,803 137,348 143,892 130,290 Two years later 198,610 203,855 202,063 202,928 205,705 199,284 207,382 203,243 214,641 Three years later 233,254 240,098 247,751 241,165 247,609 242,983 245,749 244,417 Four years later 253,081 267,143 272,144 268,049 271,213 267,293 270,359 Five years later 269,179 279,944 289,001 282,368 286,865 283,863 Six years later 276,534 293,197 298,074 290,057 299,720 Seven years later 284,522 299,782 303,762 300,918 Eight years later 290,332 304,276 310,185 Nine years later 293,803 309,450 Ten years later 296,760 Net reserve— December 31 $ 565,858 $ 628,268 $ 653,175 $ 664,520 $ 686,956 $ 691,193 $ 677,544 $ 654,854 $ 626,012 $ 583,482 $ 554,248 Reinsurance recoverables 48,699 59,334 64,858 78,256 84,889 107,216 95,343 105,707 119,266 112,555 119,746 Gross reserve— December 31 $ 614,557 $ 687,602 $ 718,033 $ 742,776 $ 771,845 $ 798,409 $ 772,887 $ 760,561 $ 745,278 $ 696,037 $ 673,994 Net re-estimated reserve $ 398,512 $ 425,002 $ 440,705 $ 451,432 $ 470,837 $ 475,184 $ 491,301 $ 518,432 $ 544,024 $ 542,086 Re-estimated reinsurance recoverables 38,769 45,816 46,168 51,194 62,864 64,651 77,912 83,149 107,946 110,824 Gross re-estimated reserve $ 437,281 $ 470,818 $ 486,873 $ 502,626 $ 533,701 $ 539,835 $ 569,213 $ 601,581 $ 651,970 $ 652,910 Gross cumulative redundancy (deficiency) $ 177,276 $ 216,784 $ 231,160 $ 240,150 $ 238,144 $ 258,574 $ 203,674 $ 158,980 $ 93,308 $ 43,127 Investments We derive net investment income from our invested assets.
Biggest changeA deficiency means that the current estimate is higher than the original estimate. 12 Analysis of Loss and Loss Adjustment Expense Reserve Development Year Ended December 31, 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 (in thousands) Reserve for loss and loss adjustment expenses, net of reinsurance recoverables $ 628,268 $ 653,175 $ 664,520 $ 686,956 $ 691,193 $ 677,544 $ 654,854 $ 626,012 $ 583,482 $ 554,248 $ 538,567 Net reserve estimated as of: One year later 580,454 601,868 629,750 641,360 626,192 614,060 592,937 585,421 542,086 519,362 Two years later 529,149 567,098 584,149 576,358 562,709 552,143 552,345 544,024 507,200 Three years later 504,437 530,582 528,659 527,722 514,889 517,763 518,432 511,928 Four years later 484,964 498,494 494,513 498,173 493,631 491,301 490,020 Five years later 467,382 473,137 473,097 485,768 475,184 469,239 Six years later 451,232 458,115 464,296 470,837 456,159 Seven years later 440,039 450,531 451,432 453,357 Eight years later 433,298 440,705 436,802 Nine years later 425,002 427,282 Ten years later 413,636 Net cumulative redundancy $ 214,632 $ 225,893 $ 227,718 $ 233,599 $ 235,034 $ 208,305 $ 164,833 $ 114,084 $ 76,282 $ 34,886 Cumulative amount of reserve paid, net of reserve recoveries, through: One year later 135,711 135,601 129,937 138,593 131,108 129,803 137,348 143,892 130,290 120,079 Two years later 203,855 202,063 202,928 205,705 199,284 207,382 203,243 214,641 189,753 Three years later 240,098 247,751 241,165 247,609 242,983 245,749 244,417 246,598 Four years later 267,143 272,144 268,049 271,213 267,293 270,359 261,784 Five years later 279,944 289,001 282,368 286,865 283,863 278,997 Six years later 293,197 298,074 290,057 299,720 288,403 Seven years later 299,782 303,762 300,918 301,861 Eight years later 304,276 310,185 301,951 Nine years later 309,450 310,269 Ten years later 310,544 Net reserve— December 31 $ 628,268 $ 653,175 $ 664,520 $ 686,956 $ 691,193 $ 677,544 $ 654,854 $ 626,012 $ 583,482 $ 554,248 $ 538,567 Reinsurance recoverables 59,334 64,858 78,256 84,889 107,216 95,343 105,707 119,266 112,555 119,746 112,742 Gross reserve— December 31 $ 687,602 $ 718,033 $ 742,776 $ 771,845 $ 798,409 $ 772,887 $ 760,561 $ 745,278 $ 696,037 $ 673,994 $ 651,309 Net re-estimated reserve $ 413,636 $ 427,282 $ 436,802 $ 453,357 $ 456,159 $ 469,239 $ 490,020 $ 511,928 $ 507,200 $ 519,362 Re-estimated reinsurance recoverables 41,202 42,200 46,877 58,129 61,093 71,826 77,979 102,132 100,033 103,954 Gross re-estimated reserve $ 454,838 $ 469,482 $ 483,679 $ 511,486 $ 517,252 $ 541,065 $ 567,999 $ 614,060 $ 607,233 $ 623,316 Gross cumulative redundancy $ 232,764 $ 248,551 $ 259,097 $ 260,359 $ 281,157 $ 231,822 $ 192,562 $ 131,218 $ 88,804 $ 50,678 Investments We derive net investment income from our invested assets.
Item 1. Business. Overview We are a specialty provider of workers’ compensation insurance focused on small to mid-sized employers engaged in hazardous industries, principally construction, trucking, logging and lumber, agriculture, manufacturing, telecommunications, and maritime. Since commencing operations in 1986, we have gained significant experience underwriting the complex workers’ compensation exposures inherent in these industries.
Item 1. Business. Overview We are a specialty provider of workers’ compensation insurance focused on small to mid-sized employers engaged in hazardous industries, principally construction, trucking, logging and lumber, agriculture, manufacturing, maritime, and telecommunications. Since commencing operations in 1986, we have gained significant experience underwriting the complex workers’ compensation exposures inherent in these industries.
Reinsurance involves an insurance company transferring to, or ceding, a portion of the exposure on a risk to a reinsurer. The reinsurer assumes the exposure in return for a portion of our premium.
Reinsurance involves an insurance company transferring or ceding a portion of the exposure on a risk to a reinsurer. The reinsurer assumes the exposure in return for a portion of our premium.
Under the 2019 Act, insurance companies must offer coverage for losses due to certified acts of terrorism in their workers’ compensation policies. Moreover, the workers’ compensation laws of the various states generally do not permit the exclusion of coverage for losses arising from acts of terrorism, including terrorism that involves the use of nuclear, biological, chemical or radiological agents.
Under the 2019 Act, insurance companies must offer coverage for losses due to certified acts of terrorism in their workers’ compensation policies. Moreover, the workers’ compensation laws of various states generally do not permit the exclusion of coverage for losses arising from acts of terrorism, including terrorism that involves the use of nuclear, biological, chemical or radiological agents.
Dividend Limitations Under Nebraska law, without the prior approval of the Nebraska Director of Insurance, AIIC and SOCI cannot pay dividends to their shareholder that exceed the greater of (a) 10% of statutory surplus as of the previous year end or (b) or statutory net income, excluding realized investment gains, for the preceding 12-month period.
Dividend Limitations Under Nebraska law, without the prior approval of the Nebraska Director of Insurance, AIIC and SOCI cannot pay dividends to their shareholder that exceed the greater of (a) 10% of statutory surplus as of the previous year end or (b) statutory net income, excluding realized investment gains, for the preceding 12-month period.
Best Rating Allied World Assurance Company Holdings, Ltd A Arch Reinsurance Company A+ Hannover Reinsurance Ireland Limited A+ Houston Casualty Company A++ Lloyd’s Syndicate 1414 ASC A Lloyd’s Syndicate 1955 ASL A Lloyd’s Syndicate 2987 BRT A Lloyd’s Syndicate 3000 MKL A Lloyd’s Syndicate 4472 LIB A Lloyd's Syndicate 0510 KLN A Lloyd's Syndicate 0609 AUW A Lloyd's Syndicate 1084 CSL A Lloyd's Syndicate 1686 AXS A Lloyd's Syndicate 1880 TOK A Lloyd's Syndicate 1945 SII A Lloyd's Syndicate 1969 APL A Lloyd's Syndicate 2001 AML A Lloyd's Syndicate 2121 ARG A Lloyd's Syndicate 2988 BRT A Lloyd's Syndicate 4711 ASP A Markel Global Reinsurance Company A Minnesota Workers' Compensation Reinsurance Association NR MS Amlin AG A Munich Reinsurance America, Inc A+ State National Insurance Company A WCF National Insurance Company A Due to the nature of reinsurance, we have recoverables from reinsurers that apply to prior accident years.
Best Rating Allied World Assurance Company Holdings, Ltd A Arch Reinsurance Company A+ Hannover Reinsurance Ireland Limited A+ Houston Casualty Company A++ Lloyd’s Syndicate 1414 ASC A Lloyd’s Syndicate 1955 ASL A Lloyd’s Syndicate 2987 BRT A Lloyd’s Syndicate 3000 MKL A Lloyd’s Syndicate 4472 LIB A Lloyd's Syndicate 0510 KLN A Lloyd's Syndicate 609 AUW A Lloyd's Syndicate 1084 CSL A Lloyd's Syndicate 1686 AXS A Lloyd's Syndicate 1880 TOK A Lloyd's Syndicate 1945 SII A Lloyd's Syndicate 1969 APL A Lloyd's Syndicate 2001 AML A Lloyd's Syndicate 2121 ARG A Lloyd's Syndicate 2988 BRT A Lloyd's Syndicate 4711 ASP A Markel Global Reinsurance Company A Minnesota Workers' Compensation Reinsurance Association NR MS Amlin AG A Munich Reinsurance America, Inc A+ State National Insurance Company A WCF National Insurance Company A Due to the nature of reinsurance, we have recoverables from reinsurers that apply to prior accident years.
Our existing licenses and rate filings will expedite our ability to write policies in these markets when we decide it is prudent to do so. Capitalize on Development of Information Technology Systems.
Our existing licenses and rate filings will expedite our ability to write policies in these markets if and when we decide it is prudent to do so. Capitalize on Development of Information Technology Systems.
As a provider of workers’ compensation insurance for employers engaged in the maritime industry, we are subject to the United States Longshore and Harbor Workers’ Compensation Act (USL&H) and the Merchant Marine Act of 1920, or Jones Act.
As a provider of workers’ compensation insurance for employers engaged in the maritime industry, we are subject to the United States Longshore and Harbor Workers’ Compensation Act (USL&H) and the Merchant Marine Act of 1920 (Jones Act).
Statutory Accounting Principles Statutory accounting principles (SAP) are a basis of accounting developed to assist insurance regulators in monitoring and regulating the solvency of insurance companies. SAP is primarily concerned with measuring an insurer’s surplus as regards to policyholders.
Statutory Accounting Principles Statutory accounting principles (SAP) are a basis of accounting developed to assist insurance regulators in monitoring and regulating the solvency of insurance companies. SAP is primarily concerned with measuring an insurer’s surplus in regards to policyholders.
Proactive Claims Management. Our employees manage substantially all of our claims in-house, utilizing intensive claims management practices that emphasize a personalized approach, as well as quality, cost-effective medical treatment. As of December 31, 2023, open indemnity claims per field case manager (FCM) averaged 44 claims, which we believe is significantly less than the industry average.
Proactive Claims Management. Our employees manage substantially all of our claims in-house, utilizing intensive claims management practices that emphasize a personalized approach, as well as quality, cost-effective medical treatment. As of December 31, 2024, open indemnity claims per field case manager (FCM) averaged 44 claims, which we believe is significantly less than the industry average.
In addition, we believe that our insurance is competitively priced and our premium rates are typically lower than those for policyholders assigned to the state insurance pools, allowing us to provide a viable alternative for policyholders in those pools. 18 Human Capital Throughout our 38-year history, the retention, growth and development of our employees has been critical to our success.
In addition, we believe that our insurance is competitively priced and our premium rates are typically lower than those for policyholders assigned to the state insurance pools, allowing us to provide a viable alternative for policyholders in those pools. 18 Human Capital Throughout our 39-year history, the retention, growth and development of our employees has been critical to our success.
The resulting factor is the proportion of premium we must accept as a percentage of all of premiums in policies included in that state’s residual market program.
The resulting factor is the proportion of premium we must accept as a percentage of all premiums on policies included in that state’s residual market program.
In addition, state law prohibits us from limiting our workers’ compensation insurance losses arising from any one catastrophe or any one claimant. We have reinsurance protection in our current reinsurance treaty program that provides coverage of up to $100.0 million for losses arising from acts of terrorism. This coverage is effective through December 31, 2024.
In addition, state law prohibits us from limiting our workers’ compensation insurance losses arising from any one catastrophe or any one claimant. We have reinsurance protection in our current reinsurance treaty program that provides coverage of up to $100.0 million for losses arising from acts of terrorism. This coverage is effective through December 31, 2025.
The Company’s 2024 catastrophe excess of loss layer for loss occurrences greater than $10.0 million includes coverage for losses caused by nuclear, biological, chemical and radiological attacks, subject to the deductibles, retentions, definitions and aggregate limits. Technology We view our information systems as an integral part of our operations.
The Company’s 2025 catastrophe excess of loss layer for loss occurrences greater than $10.0 million includes coverage for losses caused by nuclear, biological, chemical and radiological attacks, subject to the deductibles, retentions, definitions and aggregate limits. Technology We view our information systems as an integral part of our operations.
Includes premiums from our participation in mandatory pooling arrangements under residual market programs implemented by some of the states in which we operate. Gross premiums written during the years ended December 31, 2023, 2022 and 2021, and the allocation of those premiums among the hazardous industries we target are presented in the table below.
Includes premiums from our participation in mandatory pooling arrangements under residual market programs implemented by some of the states in which we operate. Gross premiums written during the years ended December 31, 2024, 2023 and 2022, and the allocation of those premiums among the hazardous industries we target are presented in the table below.
For insured losses in 2024, each insurance group is responsible for a statutory deductible under the 2019 Act that is equal to 20% of its direct earned property and casualty insurance premiums. For losses occurring in 2024, the U.S. federal government will reimburse 80% of an insurance group’s covered losses over the statutory deductible.
For insured losses in 2025, each insurance group is responsible for a statutory deductible under the 2019 Act that is equal to 20% of its direct earned property and casualty insurance premiums. For losses occurring in 2025, the U.S. federal government will reimburse 80% of an insurance group’s covered losses over the statutory deductible.
The Company has also established an endowment to provide scholarships to dependents of our employees and members of the community in which we do business, recognizing the importance of educating future generations. The unique differences of each individual are representative of our exceptional workforce, where service to each other is the foundation of service to our customers.
The Company has also established an endowment to provide scholarships to dependents of our employees and members of the communities in which we do business, recognizing the importance of educating future generations. The unique differences of each individual are representative of our exceptional workforce, where service to each other is the foundation of service to our customers.
Property and casualty insurance companies are also subject to certain risk-based capital requirements by the NAIC. Under those requirements, the amount of capital and surplus maintained by a property and casualty insurance company is determined based on the various risk factors related to it. As of December 31, 2023, AIIC, SOCI and AIICTX exceeded the minimum risk-based capital requirements.
Property and casualty insurance companies are also subject to certain risk-based capital requirements by the NAIC. Under those requirements, the amount of capital and surplus maintained by a property and casualty insurance company is determined based on the various risk factors related to it. As of December 31, 2024, AIIC, SOCI and AIICTX exceeded the minimum risk-based capital requirements.
Based on data received from the National Association of Insurance Commissioners (NAIC) we do not have more than 4.8% of the market share in any state we serve. As a result, we believe we have the opportunity to increase market penetration in each of the states in which we currently operate.
Based on data received from the National Association of Insurance Commissioners (NAIC) we do not have more than 4.2% of the market share in any state we serve. As a result, we believe we have the opportunity to increase market penetration in each of the states in which we currently operate.
While we actively market our insurance in 27 states, 51.0% of our voluntary in-force premiums were generated in the six states where we derived 5.0% or more of our gross premiums written in 2023. We are licensed in an additional 20 states, the District of Columbia and the U.S. Virgin Islands.
While we actively market our insurance in 27 states, 51.5% of our voluntary in-force premiums were generated in the six states where we derived 5.0% or more of our gross premiums written in 2024. We are licensed in an additional 20 states, the District of Columbia and the U.S. Virgin Islands.
In establishing our reserves, we review the results of analyses using actuarial methodologies that utilize historical loss data from our 38 years of underwriting workers’ compensation insurance. In evaluating the results of those analyses, our management also uses substantial judgment in considering other factors that are not considered in these actuarial analyses.
In establishing our reserves, we review the results of analyses using actuarial methodologies that utilize historical loss data from our 39 years of underwriting workers’ compensation insurance. In evaluating the results of those analyses, our management also uses substantial judgment in considering other factors that are not considered in these actuarial analyses.
For our paid and incurred development methods, we varied both the cumulative paid and incurred loss development factors (LDFs) by an increase and decrease of 30%, both individually and in combination with one another. The results of this sensitivity analysis, using December 31, 2023 data, are summarized below.
For our paid and incurred development methods, we varied both the cumulative paid and incurred loss development factors (LDFs) by an increase and decrease of 30%, both individually and in combination with one another. The results of this sensitivity analysis, using December 31, 2024 data, are summarized below.
Based on our 38-year history of insuring employers engaged in hazardous industries, we have developed industry specific risk analysis and rating tools that support our underwriters in risk selection and pricing. We are 2 highly disciplined when quoting and binding new and renewal business.
Based on our 39-year history of insuring employers engaged in hazardous industries, we have developed industry specific risk analysis and rating tools that support our underwriters in risk selection and pricing. We are 2 highly disciplined when quoting and binding new and renewal business.
Includes crop maintenance and harvesting, grain and produce operations, nursery operations, meat processing, and livestock feed and transportation. Manufacturing. Includes a diverse group of businesses such as the production of goods for use or sale using labor and machines, tools, chemical and biological processing or formulation. 4 Telecommunications.
Includes crop maintenance and harvesting, grain and produce operations, nursery operations, meat processing, and livestock feed and transportation. Manufacturing. Includes a diverse group of businesses such as the production of goods for use or sale using labor and machines, tools, and chemical and biological processing or formulation. 4 Maritime.
As of December 31, 2023, we averaged 44 open indemnity claims per FCM, which we believe is significantly less than the industry average. Locating our FCMs in the field also allows us to build professional relationships with local medical providers.
As of December 31, 2024, we averaged 44 open indemnity claims per FCM, which we believe is significantly less than the industry average. Locating our FCMs in the field also allows us to build professional relationships with local medical providers.
We are also subject to regulations related to the USL&H Act and the Jones Act. 22 The USL&H Act, which is administered by the U.S. Department of Labor, generally covers exposures on the navigable waters of the United States and in adjoining waterfront areas, including exposures resulting from stevedoring.
We are also subject to regulations related to the USL&H Act and the Jones Act. 22 The USL&H Act, which is administered by the U.S. Department of Labor, generally covers exposures on the navigable waters of the U.S. and in adjoining waterfront areas, including exposures resulting from stevedoring.
If we commute the reinsurers’ obligations, we are entitled to receive a portion of the premiums that were paid to the reinsurers prior to the effective dates of the applicable commutations, subject to certain adjustments provided in the agreement. We have 26 reinsurers participating in our reinsurance treaty program in 2024.
If we commute the reinsurers’ obligations, we are entitled to receive a portion of the premiums that were paid to the reinsurers prior to the effective dates of the applicable commutations, subject to certain adjustments provided in the agreement. We have 26 reinsurers participating in our reinsurance treaty program in 2025.
The Company generally secures large reinsurance recoverable balances with various forms of collateral, including funds withheld accounts, irrevocable letters of credit and secured trusts. The table below summarizes our amounts recoverable from reinsurers as of December 31, 2023. Reinsurer A.M.
The Company generally secures large reinsurance recoverable balances with various forms of collateral, including funds withheld accounts, irrevocable letters of credit and secured trusts. The table below summarizes our amounts recoverable from reinsurers as of December 31, 2024. Reinsurer A.M.
The initial estimate of the case incurred amount can vary significantly from the amount ultimately paid, especially in circumstances involving severe injuries with comprehensive medical treatment. Changes in case incurred amounts is an important component of our historical claim data.
The initial estimate of the case incurred amount can vary significantly from the amount ultimately paid, especially in circumstances involving severe injuries with comprehensive medical treatment. Changes in case incurred amounts are an important component of our historical claim data.
If security is required because of a ratings downgrade, the form of security must be mutually agreed to between the reinsurer and us. 16 The table below sets forth the reinsurers participating in our 2024 reinsurance program: Reinsurer A.M.
If security is required because of a ratings downgrade, the form of security must be mutually agreed to between the reinsurer and us. 16 The table below sets forth the reinsurers participating in our 2025 reinsurance program: Reinsurer A.M.
Prior to 2023, our assigned risk business fulfilled our statutory obligation to participate in residual market plans in three states. Beginning in 2023, the Company participated in the mandatory pooling arrangements in these states. See “—Regulation—Residual Market Programs” below.
Prior to 2023, our assigned risk business fulfilled our statutory obligation to participate in residual market plans in three states. Beginning in 2023, the Company participated in the mandatory pooling arrangements in these states instead of the assigned risk business. See “—Regulation—Residual Market Programs” below.
The investments in Louisiana result from companies being allowed an investment credit against Louisiana premium taxes for varying levels of Louisiana assets. The table below summarizes the top five geographic exposures as of December 31, 2023.
The investments in Louisiana result from companies being allowed an investment credit against Louisiana premium taxes for varying levels of Louisiana assets. The table below summarizes the top five geographic exposures as of December 31, 2024.
The “gross cumulative redundancy (deficiency)” represents, as of December 31, 2023, the difference between the latest re-estimated liability and the amounts as originally estimated. A redundancy means that the original estimate was higher than the current estimate.
The “gross cumulative redundancy (deficiency)” represents, as of December 31, 2024, the difference between the latest re-estimated liability and the amounts as originally estimated. A redundancy means that the original estimate was higher than the current estimate.
IRIS identifies 13 industry ratios and specifies “usual values” for each ratio. Departure from the usual values on four or more of the ratios can lead to inquiries from individual state insurance commissioners as to certain aspects of an insurer’s business. The 2023 IRIS results for AIIC, SOCI, and AIICTX were within expected values for all 13 industry ratios.
IRIS identifies 13 industry ratios and specifies “usual values” for each ratio. Departure from the usual values on four or more of the ratios can lead to inquiries from individual state insurance commissioners as to certain aspects of an insurer’s business. The 2024 IRIS results for AIIC and SOCI were within expected values for all 13 industry ratios.
We make substantial investments in improving our systems on an ongoing basis. We provide our field premium auditors, field safety professionals and field case managers with computer and communication equipment to efficiently complete services. We deploy technology and equipment to enable remote work when needed and to ensure continuity of home office and field operations.
We make substantial investments in improving our systems on an ongoing basis. We provide our field premium auditors, FSPs and field case managers with computer and communication equipment to efficiently complete services. We deploy technology and equipment to enable remote work when needed and to ensure continuity of home office and field operations.
These actuarial methodologies and subjective factors are described in more detail below. Our process and methodology for estimating reserves applies to both our voluntary and assigned risk business, but does not include our reserves for mandatory pooling arrangements. We record reserves for mandatory pooling arrangements as those reserves are reported to us by the pool administrators.
These actuarial methodologies and subjective factors are described in more detail below. Our process and methodology for estimating reserves applies to our voluntary business, but does not include our reserves for mandatory pooling arrangements. We record reserves for mandatory pooling arrangements as those reserves are reported to us by the pool administrators.
Our underwriting and field safety professionals (FSPs) participate in both a long-term and a short-term incentive compensation programs that are paid quarterly. In addition, employee bonus programs in other areas of the Company help ensure our employees’ performance is appropriately rewarded when the Company performs well.
Our underwriting and FSPs participate in both a long-term and a short-term incentive compensation programs that are paid quarterly. In addition, employee bonus programs in other areas of the Company help ensure our employees’ performance is appropriately rewarded when the Company performs well.
We began operations in 1986 by focusing on workers’ compensation insurance for logging contractors in the southeast United States. Beginning in 1994, we expanded our focus to include the other hazardous industries we serve today. Two of our three insurance subsidiaries, American Interstate Insurance Company (AIIC) and Silver Oak Casualty, Inc. (SOCI), are domiciled in Nebraska.
We began operations in 1986 by focusing on workers’ compensation insurance for logging contractors in the southeast U.S. Beginning in 1994, we expanded our focus to include the other hazardous industries we serve today. Two of our three insurance subsidiaries, American Interstate Insurance Company (AIIC) and Silver Oak Casualty, Inc. (SOCI), are domiciled in Nebraska.
Accordingly, statutory accounting focuses on valuing assets and liabilities of insurers at financial reporting dates in accordance with appropriate insurance law and regulatory provisions applicable in each insurer’s domiciliary state. Generally accepted accounting principles (GAAP) are concerned with a company’s solvency, but are also concerned with other financial measurements, principally income and cash flows.
Accordingly, SAPs focus on valuing assets and liabilities of insurers at financial reporting dates in accordance with appropriate insurance law and regulatory provisions applicable in each insurer’s domiciliary state. Generally accepted accounting principles (GAAP) are concerned with a company’s solvency, but are also concerned with other financial measurements, principally income and cash flows.
Loss Development The table below shows the net loss development for business written each year from 2013 through 2023. The table reflects the changes in our loss and loss adjustment expense reserves in subsequent years from the prior loss estimates based on experience as of the end of each succeeding year on a generally accepted accounting principles (GAAP) basis.
Loss Development The table below shows the net loss development for business written each year from 2014 through 2024. The table reflects the changes in our loss and loss adjustment expense reserves in subsequent years from the prior loss estimates based on experience as of the end of each succeeding year on a generally accepted accounting principles (GAAP) basis.
Our specialized knowledge of these hazardous industries helps us better serve our policyholders, which leads to greater employer loyalty and policy retention. Our policy renewal rate on voluntary business that we elected to quote for renewal was 94.1% in 2023. Focus on Small to Mid-Sized Employers.
Our specialized knowledge of these hazardous industries helps us better serve our policyholders, which leads to greater employer loyalty and policy retention. Our policy renewal rate on voluntary business that we elected to quote for renewal was 94.2% in 2024. Focus on Small to Mid-Sized Employers.
Through cost management initiatives, we maintain one of the more efficient operations in the workers’ compensation industry. In 2023, our expense ratio was 29.3%. We believe that our expense ratio is generally lower than that of our competitors, which gives us a greater opportunity to generate underwriting profit.
Through cost management initiatives, we maintain one of the more efficient operations in the workers’ compensation industry. In 2024, our expense ratio was 29.6%. We believe that our expense ratio is generally lower than that of our competitors, which gives us a greater opportunity to generate underwriting profit.
For the twelve months ended December 31, 2023, the pre-tax investment yield of our investment portfolio was 3.4% per annum.
For the twelve months ended December 31, 2024, the pre-tax investment yield of our investment portfolio was 3.4% per annum.
The table below shows the composition of our fixed maturity securities by remaining time to maturity as of December 31, 2023.
The table below shows the composition of our fixed maturity securities by remaining time to maturity as of December 31, 2024.
These initial inspections allow our underwriting professionals to make decisions on both insurability and pricing. In certain circumstances, we will agree to provide workers’ compensation insurance only if the employer agrees to implement and maintain the safety management practices that we recommend. In 2023, 93.4% of our new voluntary business policyholders were inspected prior to our offering a premium quote.
These initial inspections allow our underwriting professionals to make decisions on both insurability and pricing. In certain circumstances, we will agree to provide workers’ compensation insurance only if the employer agrees to implement and maintain the safety management practices that we recommend. In 2024, 92.5% of our new voluntary business policyholders were inspected prior to our offering a premium quote.
Our wholly owned subsidiary, Amerisafe General Agency, Inc., is licensed as an insurance agent in 30 states.
Our wholly-owned subsidiary, Amerisafe General Agency, Inc., is licensed as an insurance agent in 31 states.
Federal Law and Regulations For the year ended December 31, 2023, we derived 3.3% of our voluntary in-force premiums from employers engaged in the maritime industry.
Federal Law and Regulations For the year ended December 31, 2024, we derived 3.9% of our voluntary in-force premiums from employers engaged in the maritime industry.
Our quarterly reports on Form 10-Q, periodic reports on Form 8-K and amendments to those reports that we file or furnish pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available through our website, free of charge, as soon as reasonably practicable after they have been electronically filed or furnished to the Securities and Exchange Commission (SEC).
Our quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports that we file or furnish pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available through our website, free of charge, as soon as reasonably practicable after they have been electronically filed or furnished to the U.S.
Our recoveries from state-managed trust funds for the years ended December 31, 2023, 2022 and 2021 were $2.9 million, $3.6 million and $5.1 million, respectively. Our cash paid for assessments to state-managed trust funds for the years ended December 31, 2023, 2022 and 2021 was $1.8 million, $0.1 million and $0.8 million, respectively.
Our recoveries from state-managed trust funds for the years ended December 31, 2024, 2023 and 2022 were $4.0 million, $2.9 million and $3.6 million, respectively. Our cash paid for assessments to state-managed trust funds for the years ended December 31, 2024, 2023 and 2022 was $1.0 million, $1.8 million and $0.1 million, respectively.
These safety reviews are a vital component of our underwriting process and also assist our policyholders in loss prevention, and encourage safer workplaces by deploying experienced field safety professionals (FSPs) to our policyholders’ worksites. In 2023, 93.4% of our new voluntary business policyholders had pre-quotation safety inspections. Additionally, we perform periodic on-site safety surveys for our voluntary business policyholders.
These safety reviews are a vital component of our underwriting process and also assist our policyholders in loss prevention, and encourage safer workplaces by deploying experienced field safety professionals (FSPs) to our policyholders’ worksites. In 2024, 92.5% of our new voluntary business policyholders had pre-quotation safety inspections. Additionally, we perform periodic on-site safety surveys for our voluntary business policyholders.
For example, as of December 31, 2013, it was estimated that $565.9 million would be sufficient to settle all claims not already settled that had occurred on or prior to December 31, 2013, whether reported or unreported. The next section of the table sets forth the re-estimates in later years of incurred losses, including payments, for the years indicated.
For example, as of December 31, 2014, it was estimated that $628.3 million would be sufficient to settle all claims not already settled that had occurred on or prior to December 31, 2014, whether reported or unreported. The next section of the table sets forth the re-estimates in later years of incurred losses, including payments, for the years indicated.
Virgin Islands. We operate on a geographically diverse basis with 13.4% or less of our gross premiums written in 2023 derived from any one state. The table below identifies, for the years ended December 31, 2023, 2022 and 2021, the states in which the percentage of our gross premiums written exceeded 3.0% for any of the three years presented.
Virgin Islands. We operate on a geographically diverse basis with 14.7% or less of our gross premiums written in 2024 derived from any one state. The table below identifies, for the years ended December 31, 2024, 2023 and 2022, the states in which the percentage of our gross premiums written exceeded 3.0% for any of the three years presented.
The program applies to insured losses arising out of acts that are certified as “acts of terrorism” by the Secretary of the Treasury in consultation with the Secretary of Homeland Security and the Attorney General of the United States.
The program applies to insured losses arising out of acts that are certified as “acts of terrorism” by the Secretary of the Treasury in consultation with the Secretary of Homeland Security and the Attorney General of the U.S.
Neither our independent agencies nor our insurance agency subsidiary has authority to underwrite or bind coverage. We do not pay contingent commissions. As of December 31, 2023, independent agencies accounted for 98.2% of our voluntary in-force premiums. No single independent agency accounted for more than 1.8% of our voluntary in-force premiums at that date.
Neither our independent agencies nor our insurance agency subsidiary has authority to underwrite or bind coverage. We do not pay contingent commissions. As of December 31, 2024, independent agencies accounted for 98.4% of our voluntary in-force premiums. No single independent agency accounted for more than 2.0% of our voluntary in-force premiums at that date.
The results of this sensitivity analysis, using December 31, 2023 data, are summarized below.
The results of this sensitivity analysis, using December 31, 2024 data, are summarized below.
Percentage of Gross Premiums Written Year Ended December 31, State 2023 2022 2021 Florida 13.4 % 11.8 % 11.7 % Georgia 10.9 % 11.0 % 12.5 % Pennsylvania 7.6 % 7.8 % 6.8 % Louisiana 7.5 % 8.2 % 7.8 % North Carolina 5.9 % 6.9 % 6.0 % Illinois 5.1 % 4.5 % 4.9 % Wisconsin 4.3 % 4.3 % 4.7 % Virginia 3.7 % 4.1 % 4.4 % South Carolina 3.3 % 3.6 % 3.3 % Minnesota 3.2 % 3.7 % 3.7 % Alaska 3.0 % 3.2 % 3.2 % Alabama 2.8 % 3.2 % 3.1 % Total 70.7 % 72.3 % 72.1 % Sales and Marketing We sell our workers’ compensation insurance through independent agencies (including retail and wholesale brokers and agents).
Percentage of Gross Premiums Written Year Ended December 31, State 2024 2023 2022 Florida 14.7 % 13.4 % 11.8 % Georgia 10.3 % 10.9 % 11.0 % Pennsylvania 7.2 % 7.6 % 7.8 % Illinois 6.6 % 5.1 % 4.5 % Louisiana 6.0 % 7.5 % 8.2 % North Carolina 5.9 % 5.9 % 6.9 % Texas 3.9 % 2.6 % 2.4 % Wisconsin 3.8 % 4.3 % 4.3 % Virginia 3.7 % 3.7 % 4.1 % Alaska 3.4 % 3.0 % 3.2 % Minnesota 3.1 % 3.2 % 3.7 % South Carolina 3.0 % 3.3 % 3.6 % Alabama 2.9 % 2.8 % 3.2 % Total 74.5 % 73.3 % 74.7 % Sales and Marketing We sell our workers’ compensation insurance through independent agencies (including retail and wholesale brokers and agents).
In 2023, 93.4% of our new voluntary business policyholders were inspected prior to our offering a premium quote. 6 After the pre-quotation safety inspection has been completed, our underwriting professionals review the results of the inspection to determine if a quote should be made and, if so, prepare the quote.
In 2024, 92.5% of our new voluntary business policyholders were inspected prior to our offering a premium quote. 6 After the pre-quotation safety inspection has been completed, our underwriting professionals review the results of the inspection to determine if a quote should be made and, if so, prepare the quote.
We believe that the higher premiums typically paid by our policyholders, together with our disciplined underwriting, safety, claims, and audit services, provide us with the opportunity to earn attractive returns on equity. AMERISAFE, Inc. is an insurance holding company, incorporated in Texas in 1985.
We believe that the higher rates typically paid by our policyholders, together with our disciplined underwriting, safety, claims, and audit services, provide us with the opportunity to earn attractive returns on equity. We are an insurance holding company, incorporated in Texas in 1985.
As of December 31, 2023, our best estimate of our ultimate liability for loss and loss adjustment expenses, net of amounts recoverable from reinsurers, was $554.2 million, which includes $13.0 million in reserves for mandatory pooling arrangements as reported by the pool administrators.
As of December 31, 2024, our best estimate of our ultimate liability for loss and loss adjustment expenses, net of amounts recoverable from reinsurers, was $538.6 million, which includes $13.0 million in reserves for mandatory pooling arrangements as reported by the pool administrators.
The layers over $10.0 million provide coverage for terrorism including the use and/or dispersal of nuclear, biological, chemical and radiological agents with an annual aggregate limit of $90.0 million. Layers two through four provide coverage through December 31, 2024. The aggregate limit for all other claims under all layers is $180.0 million.
The layers over $10.0 million provide coverage for terrorism including the use and/or dispersal of nuclear, biological, chemical and radiological agents with an annual aggregate limit of $90.0 million. The aggregate limit for all other claims under all layers is $180.0 million.
Our gross premiums are derived from: • Voluntary Business. Includes direct premiums from workers’ compensation insurance policies that we issue to employers who seek to purchase insurance directly from us and who we voluntarily agree to insure. • Assigned Risk Business.
Includes direct premiums from workers’ compensation insurance policies that we issue to employers who seek to purchase insurance directly from us and who we voluntarily agree to insure. • Assigned Risk Business.
The final component of our reserves for loss and loss adjustment expenses is the reserve for mandatory pooling arrangements. The mandatory pooling arrangement reserve includes the amount reported to us by the pool administrators. In establishing reserves, we rely on the analysis of the more than 239,000 claims in our 38-year history.
The final component of our reserves for loss and loss adjustment expenses is the reserve for mandatory pooling arrangements. The mandatory pooling arrangement reserve includes the amount reported to us by the pool administrators. In establishing reserves, we rely on the analysis of the approximate 240,000 claims in our 39-year history.
Obtaining these approvals may result in the material delay of, or deter, any such transaction. These laws may discourage potential acquisition proposals and may delay, deter or prevent a change of control of AMERISAFE, including through transactions, and in particular unsolicited transactions, that some or all of the shareholders of AMERISAFE might consider to be desirable.
These laws may discourage potential acquisition proposals and may delay, deter or prevent a change of control of AMERISAFE, including through transactions, and in particular unsolicited transactions, that some or all of the shareholders of AMERISAFE might consider to be desirable.
AIICTX is primarily subject to regulation and supervision by the Texas Department of Insurance and Workers’ Compensation Commission.
AIICTX is primarily subject to regulation and supervision by the Texas Department of Insurance.
To encourage a culture of giving back to the communities in which we operate, all Company employees may take advantage of paid time off for volunteer activities. In 2022, AMERISAFE launched a new committee to help the Company focus our charitable giving and corporate volunteering efforts. The committee comprises employees at various levels of the Company, different departments and locations.
To encourage a culture of giving back to the communities in which we operate, all Company employees may take advantage of paid time off for volunteer activities. In 2022, we launched a new committee to help the Company focus our charitable giving and corporate volunteering efforts.
As of December 31, 2023, our insurance was sold through more than 2,200 independent agencies and our wholly-owned insurance agency subsidiary, Amerisafe General Agency, which is licensed in 30 states. We are selective in establishing and maintaining relationships with independent agencies.
As of December 31, 2024, our insurance was sold through more than 1,700 independent agencies and our wholly-owned insurance agency subsidiary, Amerisafe General Agency, which is licensed in 31 states. We are selective in establishing and maintaining relationships with independent agencies.
In 2022 and prior, we utilized both methods, depending on management’s evaluation of the most cost-efficient method to adopt in each state that allows a choice of assigned risk or participation in a pooling arrangement. Beginning in 2023, we stopped accepting direct assignments.
Prior to 2023, we utilized both methods, depending on management’s evaluation of the most cost-efficient method to adopt in each state that allows a choice of assigned risk or participation in a pooling arrangement. Beginning in 2023, we stopped accepting direct assignments and only participate in pooling arrangements to fulfill our residual market obligations.
As of December 31, 2023, the carrying value of our investment portfolio, including cash and cash equivalents, was $896.5 million and the fair value of the portfolio was $886.0 million. Our Board of Directors has established an investment policy governing our investments, which is reviewed at least annually.
As of December 31, 2024, the carrying value of our investment portfolio, including cash and cash equivalents, was $832.8 million and the fair value of the portfolio was $819.5 million. Our board of directors has established an investment policy governing our investments, which is reviewed at least annually.
If there are two ratings, the lower rating is used. Credit Rating Percentage of Total Carrying Value “AAA” 12.5 % “AA” 56.4 % “A” 15.5 % “BBB” 15.6 % “BB and below” 0.0 % “Unrated securities” 0.0 % Total 100.0 % As of December 31, 2023, the average composite rating of our investment portfolio, excluding our equity holdings, was “AA-”.
If there are two ratings, the lower rating is used. Credit Rating Percentage of Total Carrying Value “AAA” 13.4 % “AA” 57.0 % “A” 14.8 % “BBB” 14.8 % “BB and below” 0.0 % “Unrated securities” 0.0 % Total 100.0 % As of December 31, 2024, the average composite rating of our investment portfolio, excluding our equity holdings, was “AA-”.
The Jones Act is a federal law, the maritime employer provisions of which provide injured offshore workers, or seamen, with a remedy against their employers for injuries arising from negligent acts of the employer or co-workers during the course of employment on a ship or vessel.
The Jones Act is a federal law that, among other things, provides injured offshore workers, or seamen, with a remedy against their employers for injuries arising from negligent acts of the employer or co-workers during the course of employment on a ship or vessel.
Resultant Change in Net Loss and DCC Reserve Change in Paid LDFs Change in Incurred LDFs Amount ($) Percentage (in thousands) 30% increase 30% increase 31,059 5.9 % 30% increase No change — (— )% 30% increase 30% decrease (30,841 ) (5.9 )% No change 30% increase 31,059 5.9 % No change 30% decrease (30,841 ) (5.9 )% 30% decrease 30% increase 31,059 5.9 % 30% decrease No change — (— )% 30% decrease 30% decrease (30,841 ) (5.9 )% For our paid and incurred weighted severity methods, we varied our year-end selected trend factor (for medical costs, defense costs, wage inflation, etc.) by an increase and decrease of 300 basis points.
Resultant Change in Net Loss and DCC Reserve Change in Paid LDFs Change in Incurred LDFs Amount ($) Percentage (in thousands) 30% increase 30% increase 21,105 4.2 % 30% increase No change — (— )% 30% increase 30% decrease (20,780 ) (4.1 )% No change 30% increase 21,105 4.2 % No change 30% decrease (20,780 ) (4.1 )% 30% decrease 30% increase 21,105 4.2 % 30% decrease No change — (— )% 30% decrease 30% decrease (20,780 ) (4.1 )% For our paid and incurred weighted severity methods, we varied our year-end selected trend factor (for medical costs, defense costs, wage inflation, etc.) by an increase and decrease of 300 basis points.
Resultant Change in Net Loss and DCC Reserve Change in Severity Trend Amount ($) Percentage (in thousands) 300 basis point increase 9,214 1.8 % 300 basis point decrease (7,869 ) (1.5 )% Reconciliation of Loss Reserves The table below shows the reconciliation of loss reserves on a gross and net basis for the years ended December 31, 2023, 2022 and 2021, reflecting changes in losses incurred and paid losses.
Resultant Change in Net Loss and DCC Reserve Change in Severity Trend Amount ($) Percentage (in thousands) 300 basis point increase 27,265 5.4 % 300 basis point decrease (23,509 ) (4.7 )% Reconciliation of Loss Reserves The table below shows the reconciliation of loss reserves on a gross and net basis for the years ended December 31, 2024, 2023 and 2022, reflecting changes in losses incurred and paid losses.
During the year ended December 31, 2022, 4,104 new claims were reported, and 4,423 claims were closed. In 2022, our gross reserves decreased to $696.0 million from $745.3 million at December 31, 2021. The decrease in reserves was attributable primarily to favorable development from prior accident years.
During the year ended December 31, 2023, 3,948 new claims were reported, and 4,220 claims were closed. In 2023, our gross reserves decreased to $674.0 million from $696.0 million at December 31, 2022. The decrease in reserves was attributable primarily to favorable development of $41.4 million from prior accident years.
The table below shows the carrying values of various categories of securities held in our investment portfolio, the percentage of the total carrying value of our investment portfolio represented by each category and the effective interest rate for the year ended December 31, 2023 based on the carrying value of each category as of December 31, 2023: Carrying Value Percentage of Portfolio Effective Interest Rate (in thousands) Fixed maturity securities—held-to-maturity: State and political subdivisions $ 416,878 46.5 % 2.4 % Corporate bonds 52,179 5.9 % 0.6 % U.S. agency-based mortgage-backed securities 3,297 0.4 % 1.7 % U.S.
The table below shows the carrying values of various categories of securities held in our investment portfolio, the percentage of the total carrying value of our investment portfolio represented by each category and the effective interest rate for the year ended December 31, 2024 based on the carrying value of each category as of December 31, 2024: Carrying Value Percentage of Portfolio Effective Interest Rate (in thousands) Fixed maturity securities—held-to-maturity: State and political subdivisions $ 368,026 44.2 % 2.3 % Corporate bonds 33,763 4.1 % 0.5 % U.S. agency-based mortgage-backed securities 2,781 0.3 % 1.6 % U.S.
AIIC and SOCI underwent an examination by the Nebraska Department of Insurance in 2022 and 2023 which covered calendar years 2018 through 2021. AIICTX underwent an examination by the Texas Department of Insurance in 2022 and 2023 which covered calendar years 2018 through 2021. The examinations were completed in 2023 with no material findings.
AIIC and SOCI underwent an examination by the Nebraska Department of Insurance in 2022 and 2023 which covered calendar years 2018 through 2021. AIICTX underwent an examination by the Texas Department of Insurance in 2022 and 2023 which covered calendar years 2018 through 2021.
Additional information regarding our reserve for unpaid loss and loss adjustment expenses (LAE) as of December 31, 2023, 2022, and 2021 is set forth below: 2023 2022 2021 (in thousands) Gross case loss and DCC reserves $ 535,116 $ 559,570 $ 605,888 AO reserves 19,117 17,589 19,625 Gross IBNR reserves 119,761 118,878 119,765 Gross unpaid loss, DCC and AO reserves 673,994 696,037 745,278 Reinsurance recoverables on unpaid loss and LAE (119,746 ) (112,555 ) (119,266 ) Net unpaid loss, DCC and AO reserves $ 554,248 $ 583,482 $ 626,012 10 We performed sensitivity analyses to show how our net loss and DCC expense reserve, including IBNR, would be impacted by changes in certain critical assumptions.
Additional information regarding our reserve for unpaid loss and loss adjustment expenses (LAE) as of December 31, 2024, 2023, and 2022 is set forth below: 2024 2023 2022 (in thousands) Gross case loss and DCC reserves $ 523,695 $ 535,116 $ 559,570 AO reserves 20,299 19,117 17,589 Gross IBNR reserves 107,315 119,761 118,878 Gross unpaid loss, DCC and AO reserves 651,309 673,994 696,037 Reinsurance recoverables on unpaid loss and LAE (112,742 ) (119,746 ) (112,555 ) Net unpaid loss, DCC and AO reserves $ 538,567 $ 554,248 $ 583,482 10 We performed sensitivity analyses to show how our net loss and DCC expense reserve, including IBNR, would be impacted by changes in certain critical assumptions.
The decrease in reserves was attributable primarily to favorable development from prior accident years. In 2023, we recognized $41.4 million of favorable development for prior accident years. As of December 31, 2022, we had 4,275 open claims, with an average of $162,816 in unpaid loss and loss adjustment expenses per open claim.
The decrease in reserves was attributable primarily to favorable development from prior accident years. In 2024, we recognized $34.9 million of favorable development for prior accident years. As of December 31, 2023, we had 4,003 open claims, with an average of $168,372 in unpaid loss and loss adjustment expenses per open claim.
Corporate Website Information Our corporate website is located at www.amerisafe.com. Our annual report to shareholders, annual proxy statement and related proxy card will be made available on our website at the same time they are mailed to shareholders.
Our annual report to shareholders, annual proxy statement and related proxy card will be made available on our website at the same time they are mailed to shareholders.
For the year ended December 31, 2023, our assigned risk business accounted for 0.1% of our gross premiums written, and our assumed premiums from mandatory pooling arrangements accounted for 2.7% of our gross premiums written. Targeted Industries We provide workers’ compensation insurance primarily to employers in the following targeted hazardous industries: Construction.
For the year ended December 31, 2024, our assumed premiums from mandatory pooling arrangements accounted for 2.9% of our gross premiums written. Targeted Industries We provide workers’ compensation insurance primarily to employers in the following targeted hazardous industries: Construction.
The 2019 Act reauthorized a federal program until 2027 that provides federal reimbursement to insurance companies for a portion of their losses arising from certain acts of terrorism and requires insurance companies to offer coverage for these acts.
This legislation was designed to ensure the availability of insurance coverage for losses resulting from certain acts of terrorism in the U.S. The 2019 Act reauthorized a federal program until 2027 that provides federal reimbursement to insurance companies for a portion of their losses arising from certain acts of terrorism and requires insurance companies to offer coverage for these acts.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeNew standards or changes in SAP accounting standards or interpretations, especially as it relates to our significant revenues, assets, liabilities, statutory surplus, risk-based capital ratios and dividend paying ability could have a material impact on our statutory earnings, dividend paying ability or financial condition.
Biggest changeNew standards or changes in SAP accounting standards or interpretations, especially as it relates to our significant revenues, assets, liabilities, statutory surplus, risk-based capital ratios and dividend paying ability could have a material impact on our statutory earnings, dividend paying ability or financial condition. 27 As an insurance holding company, we are dependent on the results of operations of our insurance subsidiaries, and our ability to pay dividends and repurchase shares depends on the regulatory and financial capacity of our subsidiaries to pay dividends to us.
These funds are supported by either assessments or premium surcharges based on case incurred losses. In addition, as a condition to conducting business in some states, insurance companies are required to participate in residual market programs to provide insurance to those employers who cannot procure coverage from an insurance carrier on a negotiated basis.
These funds are supported either by assessments or premium surcharges based on case incurred losses. In addition, as a condition to conducting business in some states, insurance companies are required to participate in residual market programs to provide insurance to those employers who cannot procure coverage from an insurance carrier on a negotiated basis.
A significant adverse result, or multiple adverse results involving similar issues, could require us to pay significant amounts or to change the manner in which we administer claims, which could have a material adverse effect on our operations or results of operations. We may have exposure to losses from terrorism for which we are required by law to provide coverage.
A significant adverse result, or multiple adverse results involving similar issues, could require us to pay significant amounts or change the manner in which we administer claims, which could have a material adverse effect on our operations or results of operations. We may have exposure to losses from terrorism for which we are required by law to provide coverage.
Our ability to undertake these efforts successfully, and as a result set premium rates accurately, is subject to a number of risks and uncertainties, principally: • insufficient reliable data; • incorrect or incomplete analysis of available data; • uncertainties generally inherent in estimates and assumptions; • the complexity inherent in implementing appropriate rating formulae or other pricing methodologies; • costs of ongoing medical treatment; • uncertainties inherent in accurately estimating retention, investment yields, and the duration of our liability for loss and loss adjustment expenses; and • unanticipated court decisions, legislation or regulatory action.
Our ability to undertake these efforts successfully, and as a result set premium rates accurately, is subject to a number of risks and uncertainties, principally: • insufficient reliable data; • incorrect or incomplete analysis of available data; • uncertainties generally inherent in estimates and assumptions; • the complexity inherent in implementing appropriate rating formulae or other pricing methodologies; • increase of costs of ongoing medical treatment; • uncertainties inherent in accurately estimating retention, investment yields, and the duration of our liability for loss and loss adjustment expenses; and • unanticipated court decisions, legislation or regulatory action.
Our articles of incorporation and bylaws contain the following provisions that could have an anti-takeover effect: • election of our directors is classified, meaning that the members of only one of three classes of our directors are elected each year; • shareholders have limited ability to call shareholder meetings and to bring business before a meeting of shareholders; 30 • shareholders may not act by written consent, unless the consent is unanimous; and • our Board of Directors may authorize the issuance of preferred stock with such rights, preferences and privileges as the Board deems appropriate.
Our articles of incorporation and bylaws contain the following provisions that could have an anti-takeover effect: • election of our directors is classified, meaning that the members of only one of three classes of our directors are elected each year; • shareholders have limited ability to call shareholder meetings and to bring business before a meeting of shareholders; • shareholders may not act by written consent, unless the consent is unanimous; and • our board of directors may authorize the issuance of preferred stock with such rights, preferences and privileges as our board of directors deems appropriate.
In order to set premium rates appropriately, we must: • collect and properly analyze a substantial volume of data; • develop, test and apply appropriate rating formulae; • closely monitor and timely recognize changes in trends; and • project both frequency and severity of losses with reasonable accuracy. We must also implement our pricing accurately in accordance with our assumptions.
In order to set premium rates appropriately, we must: • collect and properly analyze a substantial volume of data; • develop, test and apply appropriate rating formulae; • closely monitor and timely recognize changes in trends; and • project both frequency and severity of losses with reasonable accuracy. 25 We must also implement our pricing accurately in accordance with our assumptions.
In the ordinary course of our business, we are involved in various legal and other administrative proceedings involving claims arising from our insurance operations. These claims involve issues such as eligibility for workers' compensation insurance coverage or benefits, the extent of injuries, wage determinations, disability ratings, and bad faith and extra-contractual liability. We defend these claims.
In the ordinary course of our business, we are involved in various legal and other administrative proceedings involving claims arising from our insurance operations. These claims involve issues such as eligibility for workers' compensation insurance coverage or benefits, the extent of injuries, wage determinations, disability ratings, and bad faith and extra-contractual liability.
For example, when initiating coverage on a policyholder, we estimate future claims expense based, in part, on prior claims information provided by the policyholder’s previous insurance carriers. If this prior claims information is not accurate, we may underprice our policy by using claims estimates that are too low.
For example, when initiating coverage on a new policyholder, we estimate future claims expense based, in part, on prior claims information provided by the policyholder’s previous insurance carriers. If this prior claims information is not accurate, we may underprice our policy by using claims estimates that are too low.
Any downgrade in our rating would likely adversely affect our business through the loss of certain existing and potential policyholders and the loss of relationships with certain independent agencies. 27 Risks Related to Regulation and Litigation Because we are subject to extensive state and federal regulation, legislative changes may negatively impact our business.
Any downgrade in our rating would likely adversely affect our business through the loss of certain existing and potential policyholders and the loss of relationships with certain independent agencies. Risks Related to Regulation and Litigation Because we are subject to extensive state and federal regulation, legislative changes may negatively impact our business.
For example, in order to enforce applicable laws and regulations or to protect policyholders, insurance regulatory agencies have relatively broad discretion to impose a variety of sanctions, including examinations, corrective orders, suspension, revocation or denial of licenses, and the takeover of one or more of our insurance subsidiaries.
For example, in order to enforce applicable laws and regulations or to protect policyholders, insurance regulatory agencies have relatively broad discretion to 28 impose a variety of sanctions, including examinations, corrective orders, suspension, revocation or denial of licenses, and the takeover of one or more of our insurance subsidiaries.
If there are unfavorable changes affecting our 26 assumptions, our reserves may need to be increased. When a reserve estimate is increased, the change decreases pre-tax income by a corresponding amount. The effects of emerging claims and coverage issues on our business are uncertain.
If there are unfavorable changes affecting our assumptions, our reserves may need to be increased. When a reserve estimate is increased, the change decreases pre-tax income by a corresponding amount. The effects of emerging claims and coverage issues on our business are uncertain.
Any significant decline in our investment income would adversely affect our revenues and net income. A decline in the level of business activity of our policyholders, particularly those engaged in the construction, trucking, logging and lumber, agriculture, manufacturing, telecommunications, and maritime industries, could negatively affect our earnings and profitability.
Any significant decline in our investment income would adversely affect our revenues and net income. 26 A decline in the level of business activity of our policyholders, particularly those engaged in the construction, trucking, logging and lumber, agriculture, manufacturing, maritime, and telecommunications industries, could negatively affect our earnings and profitability.
Many of our existing and potential competitors are significantly larger and possess greater financial, marketing and management resources than we do. Moreover, a number of these competitors offer other types of insurance in addition to workers’ compensation and can provide insurance nationwide. We only offer workers’ compensation insurance.
Many of our existing and potential competitors are significantly larger and possess greater financial, marketing and management resources than we do. Moreover, a number of these competitors offer other types of insurance in addition to workers’ compensation and can provide insurance nationwide.
In any of these events, if our 29 reinsurance broker is unable to reallocate the terminated reinsurance among the remaining reinsurers in the program, it could take a significant period of time to identify and negotiate agreements with one or more replacement reinsurers.
In any of these events, if our reinsurance broker is unable to reallocate the terminated reinsurance among the remaining reinsurers in the program, it could take a significant period of time to identify and negotiate agreements with one or more replacement reinsurers.
Changes in these standards, issued and promulgated by the Financial Accounting Standards Board (FASB) could impact the recognition of revenues, expenses, taxes, investments, loss reserves and other aspects of the Company’s assets and liabilities. Such changes could significantly impact our reported earnings or financial condition.
Changes in these standards, issued and promulgated by the Financial Accounting Standards Board (FASB) could impact the recognition of revenues, expenses, taxes, investments, loss reserves and other aspects of our assets and liabilities. Such changes could significantly impact our reported earnings or financial condition.
The effect of assessments and premium surcharges or changes in them could reduce our profitability in any given period or limit our ability to grow our business. Legal or other administrative proceedings could have a material adverse effect on our operations or results of operations.
The effects of assessments and premium surcharges or changes in them could reduce our profitability in any given period or limit our ability to grow our business. Legal or other administrative proceedings could have a material adverse effect on our operations or results of operations.
The trading market for our common stock relies in part on the research and reports that securities analysts publish about us or our business. If one or more of the analysts who cover our company downgrades our common stock, the trading price of our common stock may decline rapidly.
The trading market for our common stock relies in part on the research and reports that securities analysts publish about us or our business. If one or more of the analysts who cover us downgrades our common stock, the trading price of our common stock may decline rapidly.
Succession planning and employee education and development for key positions is essential. If we are unable to attract and retain key employees and provide them with opportunities to learn and grow, our operations may be adversely impacted.
Succession planning and employee education 32 and development for key positions is essential. If we are unable to attract and retain key employees and provide them with opportunities to learn and grow, our operations may be adversely impacted.
Although the financial performance of an individual insurance company is dependent on its own specific business characteristics, the profitability of most workers’ compensation 24 insurance companies generally tends to follow this cyclical market pattern.
Although the financial performance of an individual insurance company is dependent on its own specific business characteristics, the profitability of most workers’ compensation insurance companies generally tends to follow this cyclical market pattern.
Changes in GAAP accounting standards, guidelines and interpretations have the ability to impact our financial results especially as it relates to our significant accounting policies which are described in Note 1 of our Consolidated Financial Statements.
Changes in GAAP accounting standards, guidelines and interpretations have the ability to impact our financial results especially as it relates to our significant accounting policies which are described in Note 1 to our Consolidated Financial Statements.
Obtaining these approvals may result in the material delay of, or deter, any transaction that would result in a change of control. The trading price of our common stock may decline.
Obtaining these approvals may result in the material delay of, or deter, any transaction that would result in a change of control. 31 The trading price of our common stock may decline.
See “Business—Regulation” in Item 1 of this report. Accordingly, the assessments levied on us may increase as we increase our written premium. Some states also have laws that establish second injury funds to reimburse insurers and employers for claims paid to injured employees for aggravation of prior conditions or injuries.
See “Business—Regulation” in Item 1 of this report. Accordingly, the assessments levied on us may increase as we increase our written premiums. Some states also have laws that establish second injury funds to reimburse insurers and employers for claims paid to injured employees for aggravation of prior conditions or injuries.
In 2023, 85.4% of our gross premiums written were derived from policyholders in the construction, trucking, logging and lumber, agriculture, manufacturing, telecommunications, and maritime industries. Because premium rates are calculated, in general, as a percentage of a policyholder’s payroll expense, premiums fluctuate depending upon the level of business activity and number of employees of our policyholders.
In 2024, 85.4% of our gross premiums written were derived from policyholders in the construction, trucking, logging and lumber, agriculture, manufacturing, maritime, and telecommunications industries. Because premium rates are calculated, in general, as a percentage of a policyholder’s payroll expense, premiums fluctuate depending upon the level of business activity and number of employees of our policyholders.
We have no current plans to focus our efforts on offering other types of insurance. As a result, negative developments in the economic, competitive or regulatory conditions affecting the workers’ compensation insurance industry could have an adverse effect on our financial condition and results of operations.
We only offer workers’ compensation insurance, and we have no current plans to focus our efforts on offering other types of insurance. As a result, negative developments in the economic, competitive or regulatory conditions affecting the workers’ compensation insurance industry could have an adverse effect on our financial condition and results of operations.
We may be unable to comply fully with the wide variety of applicable laws and regulations that are continually undergoing revision. In addition, we follow practices based on our interpretations of laws and regulations that we believe are generally followed by our industry. These practices may be different from interpretations of insurance regulatory agencies.
We may be unable to comply fully with the wide variety of applicable laws and regulations that are periodically undergoing revision. In addition, we follow practices based on our interpretations of laws and regulations that we believe are generally followed by our industry. These practices may be different from interpretations of insurance regulatory agencies.
Our 2024 reinsurance program provides us with reinsurance coverage for each loss occurrence up to $100.0 million, subject to applicable limitations, deductibles, retentions and aggregate limits. Our retention is $2.0 million for each loss occurrence. Losses in the layer between $2.0 million and $10.0 million are ceded to a multi-year reinsurance treaty.
Our 2025 reinsurance program provides us with reinsurance coverage for each loss occurrence up to $100.0 million, subject to applicable limitations, deductibles, retentions and aggregate limits. Our retention is $2.0 million for each loss occurrence. Losses in the layer between $2.0 million and $10.0 million are ceded to a multi-year reinsurance treaty.
We may need to raise additional capital or curtail our growth if the capital of our insurance subsidiaries is insufficient to support future operating requirements and/or cover claims. If we had to raise additional capital, equity or debt financing might not be available to us or might be available only on terms that are not favorable.
We may need to raise additional capital or curtail our growth if the capital of our insurance subsidiaries is insufficient to support future operating requirements and/or cover claims. If we had to raise additional capital, equity or debt financing might not be available to us or might be available only on terms that are unfavorable to us.
Consequently, we could set our premium rates too low, which would negatively affect our results of operations and our profitability, or we could set our premium rates too high, which could reduce our competitiveness and lead to lower revenues. 25 If we cannot sustain our relationships with independent agencies, we may be unable to operate profitably.
Consequently, we could set our premium rates too low, which could negatively affect our results of operations and our profitability, or we could set our premium rates too high, which could reduce our competitiveness and lead to lower revenues. If we cannot sustain our relationships with independent agencies, we may be unable to operate profitably.
No assurance can be given that we will maintain our current competitive position in the markets in which we currently operate or that we will establish a competitive position in new markets into which we may expand. If we do not appropriately establish our premium rates, our results of operations will be adversely affected.
No assurance can be given that we will maintain our current competitive position in the markets in which we currently operate or that we will establish a competitive position in new markets into which we may enter. If we do not appropriately establish our premium rates, our results of operations will be adversely affected.
Securities analysts may discontinue coverage of our common stock or may issue negative reports, which may adversely affect the trading price of our common stock. There is no assurance that securities analysts will continue to cover our company. If securities analysts do not cover our company, this lack of coverage may adversely affect the trading price of our common stock.
Securities analysts may discontinue coverage of our common stock or may issue negative reports, which may adversely affect the trading price of our common stock. There is no assurance that securities analysts will continue to cover us. If securities analysts do not cover us, this lack of coverage may adversely affect the trading price of our common stock.
If one or more of these analysts ceases to cover our company, we could lose visibility in the market, which, in turn, could also cause the trading price of our common stock to decline. Future sales of our common stock may affect the trading price of our common stock.
If one or more of these analysts ceases to cover us, we could lose visibility in the market, which, in turn, could also cause the trading price of our common stock to decline. Future sales of our common stock may affect the trading price of our common stock.
Our profitability can be affected significantly by: • rising levels of claims costs, including medical and prescription drug costs, that we cannot anticipate at the time we establish our premium rates; • fluctuations in interest rates, inflationary or deflationary pressures and other changes in the investment environment that affect returns on our invested assets; • changes in the frequency or severity of claims; • the financial stability of our reinsurers and changes in the level of reinsurance capacity and our capital capacity; • new types of claims and new or changing judicial interpretations relating to the scope of liabilities of insurance companies; • volatile and unpredictable developments, including man-made, weather-related and other natural catastrophes or terrorist attacks; and • price competition.
Our profitability can be affected significantly by: • rising levels of claims costs, including medical and prescription drug costs, that we cannot anticipate at the time we establish our premium rates; • fluctuations in interest rates, inflationary or deflationary pressures and other changes in the investment environment that affect returns on our invested assets; • changes in the frequency or severity of claims; • the financial stability of our reinsurers and changes in the level of reinsurance capacity and our capital capacity; • new types of claims and new or changing judicial interpretations relating to the scope of liabilities of insurance companies; • volatile and unpredictable developments impacting general economic conditions and the businesses of our policyholders, including man-made, weather-related and other natural catastrophes or terrorist attacks; and • price competition.
Our 2024 reinsurance treaty program affords limited coverage for up to $100.0 million for losses arising from terrorism, subject to applicable deductibles, retentions, definitions and aggregate limits.
Our 2025 reinsurance treaty program affords limited coverage for up to $100.0 million for losses arising from terrorism, subject to applicable deductibles, retentions, definitions and aggregate limits.
General economic conditions may be adversely affected by global health pandemics, U.S. involvement in hostilities with other countries and large-scale acts of terrorism, or the threat of hostilities or terrorist acts. Interest rates are highly sensitive to many factors, including governmental monetary policies and domestic and international economic and political conditions.
General economic conditions may be adversely affected by many things out of our control, including global health pandemics, U.S. involvement in hostilities with other countries and large-scale acts of terrorism, or the threat of hostilities or terrorist acts. Interest rates are highly sensitive to many factors, including governmental monetary policies and domestic and international economic and political conditions.
Although we price our insurance to account for obligations we may have under these pooling arrangements, we may not be successful in estimating our liability for these obligations. Accordingly, mandatory pooling arrangements may cause a decrease in our profits. 28 At December 31, 2023, we participated in mandatory pooling arrangements in 25 states and the District of Columbia.
Although we price our insurance to account for obligations we may have under these pooling arrangements, we may not be successful in estimating our liability for these obligations. Accordingly, mandatory pooling arrangements may cause a decrease in our profits. At December 31, 2024, we participated in mandatory pooling arrangements in 26 states and the District of Columbia.
We market a substantial portion of our workers’ compensation insurance through independent agencies. As of December 31, 2023, independent agencies produced 98.2% of our voluntary in-force premiums. No independent agency accounted for more than 1.8% of our voluntary in-force premiums at that date. Independent agencies are not obligated to promote our insurance and may sell insurance offered by our competitors.
We market a substantial portion of our workers’ compensation insurance through independent agencies. As of December 31, 2024, independent agencies produced 98.4% of our voluntary in-force premiums. No independent agency accounted for more than 2.0% of our voluntary in-force premiums at that date. Independent agencies are not obligated to promote our insurance and may sell insurance offered by our competitors.
Our reserves for loss and loss adjustment expenses represent the estimated cost of all reported and unreported loss and loss adjustment expenses incurred and unpaid at any given point in time based on known facts and circumstances. Reserves are based on estimates of the most likely ultimate cost of individual claims. These estimates are inherently uncertain.
Our reserves for loss and loss adjustment expenses represent the estimated cost of all reported and unreported loss and loss adjustment expenses incurred and unpaid at any given point in time based on known facts and circumstances. These estimates are inherently uncertain.
For the year ended December 31, 2023 we had $31.3 million of net investment income. Our investment portfolio is managed under investment guidelines approved by our Board of Directors, and is made up predominately of fixed maturity securities and cash and cash equivalents.
For the year ended December 31, 2024, we had $29.2 million of net investment income. Our investment portfolio is managed under investment guidelines approved by our board of directors and is made up predominately of fixed maturity securities and cash and cash equivalents.
If we are unable to realize our investment objectives, our financial condition and results of operations may be adversely affected. Investment income is an important component of our net income. As of December 31, 2023, our investment portfolio, including cash and cash equivalents, had a carrying value of $896.5 million.
If we are unable to realize our investment objectives, our financial condition and results of operations may be adversely affected. Investment income is an important component of our net income. As of December 31, 2024, our investment portfolio, including cash and cash equivalents, had a carrying value of $832.8 million.
AMERISAFE is a holding company whose insurance subsidiaries are governed by SAP determined and promulgated by the NAIC and state departments of insurance.
We are a holding company whose insurance subsidiaries are governed by SAP determined and promulgated by the NAIC and state departments of insurance.
As of February 15, 2024, there were 19,135,008 shares of our common stock outstanding. 31 General Risk Factors Technology breaches or failures, including those resulting from a malicious cyber attack on us, or our policyholders or service providers, could disrupt or otherwise negatively impact our business.
As of February 14, 2025, there were 19,050,315 shares of our common stock outstanding. General Risk Factors Technology breaches or failures, including those resulting from a malicious cyber attack on us, or our policyholders or service providers, could disrupt or otherwise negatively impact our business.
The availability, amount, and cost of reinsurance are subject to market conditions and our experience with insured losses. As a result, any material changes in market conditions or our loss experience could adversely affect our financial performance.
The availability, amount and cost of reinsurance are subject to market conditions and our experience with insured losses. As a result, any material changes in market conditions or our loss experience could adversely affect our financial performance. A downgrade in the A.M. Best rating of one or more of our significant reinsurers could adversely affect our financial condition.
However in recent years, certain federal agencies and regulatory bodies have increased interest in more federal workers’ compensation oversight. Increased federal involvement has the potential to change the workers’ compensation structure impacting workers’ benefits and the method of administration. As a result, potential changes in the level of oversight to the workers’ compensation industry could adversely affect our operations.
Increased federal involvement has the potential to change the workers’ compensation structure impacting workers’ benefits and the method of administration. As a result, potential changes in the level of federal oversight of the workers’ compensation industry could adversely affect our operations.
Our strategy is subject to various risks, including risks associated with our ability to: • profitably increase our business in existing markets; • identify profitable new geographic markets for entry; • attract and retain qualified personnel for expanded operations; • identify, recruit and integrate new independent agencies; and • augment our internal operations and systems as we expand our business. 32 We may require additional capital in the future, which may not be available to us or may be available only on unfavorable terms.
Our strategy is subject to various risks, including risks associated with our ability to: • profitably increase our business in existing markets; • identify profitable new geographic markets for entry; • attract and retain qualified personnel for expanded operations; • identify, recruit and integrate new independent agencies; and • augment our internal operations and systems as we expand our business.
We record reserves for estimated losses under insurance policies we write and for loss adjustment expenses related to the investigation and settlement of claims.
We record reserves for estimated losses under insurance policies we write and for loss adjustment expenses related to the investigation and settlement of claims. Reserves are based on estimates of the most likely ultimate cost of individual claims.
Negative trends in business investment, consumer confidence and spending, significant declines and volatility of the capital markets, and availability of credit and the rate of unemployment can adversely affect our business.
As a result, our operations may be disrupted and our business may be adversely affected. Economic conditions could adversely affect our financial condition and results of operations. Negative trends in business investment, consumer confidence and spending, significant declines and volatility of the capital markets, and availability of credit and the rate of unemployment can adversely affect our business.
The extensive regulation of our business may increase the cost of our insurance and may limit our ability to obtain premium rate increases or to take other actions to increase our profitability. The workers’ compensation system is largely regulated by state regulation.
The extensive regulation of our business may increase our costs and may limit our ability to obtain premium rate increases or to take other actions to increase our profitability. The workers’ compensation system is largely regulated by state regulation. However in recent years, certain federal agencies and regulatory bodies have increased interest in more federal workers’ compensation oversight.
If we fail to accurately assess the risks that we assume, we may fail to charge adequate premium rates to cover our losses and expenses, which could reduce our net income and cause us to become unprofitable.
Establishing adequate rates is necessary to generate sufficient revenue to offset losses, loss adjustment expenses and other underwriting expenses, and to earn an underwriting profit. If we fail to accurately assess the risks, we may fail to charge adequate premium rates to cover our losses and expenses, which could reduce our net income and cause us to become unprofitable.
Reinsurance is an arrangement in which an insurance company, called the ceding company, transfers insurance risk by sharing premiums with another insurance company, called the reinsurer. Conversely, the reinsurer receives or assumes reinsurance from the ceding company.
We purchase reinsurance to reduce our net liability on individual risks and to protect against catastrophic losses. Reinsurance is an arrangement in which an insurance company, called the ceding company, transfers insurance risk by sharing premiums with another insurance company, called the reinsurer. Conversely, the reinsurer receives or assumes risk from the ceding company.
If any of our current reinsurers were to terminate participation in our reinsurance treaty program, we could be exposed to an increased risk of loss.
However, these options may result in losses to our Company, and there can be no assurance that we could implement any of these options. If any of our current reinsurers were to terminate participation in our reinsurance treaty program, we could be exposed to an increased risk of loss.
AMERISAFE’s primary assets are the capital stock of these operating subsidiaries. The ability of AMERISAFE to pay dividends to our shareholders depends upon the surplus and earnings of our subsidiaries and their ability to pay dividends to AMERISAFE.
We are a holding company that transacts business through our operating subsidiaries, including AIIC. Our primary assets are the capital stock of these operating subsidiaries. Our ability to pay dividends to our shareholders and repurchase shares depends upon the surplus and earnings of our subsidiaries and their ability to pay dividends to us.
Accordingly, events constituting acts of terrorism may not be covered by, or may exceed the capacity of, our reinsurance and could adversely affect our business and financial condition. Risks Related to Our Reinsurers A downgrade in the A.M. Best rating of one or more of our significant reinsurers could adversely affect our financial condition.
Accordingly, events constituting acts of terrorism may not be covered by, or may exceed the capacity of, our reinsurance and could adversely affect our business and financial condition. 29 Risks Related to Our Reinsurers If we are unable to obtain reinsurance on favorable terms, our ability to write policies could be adversely affected.
As a result, AMERISAFE may not be able to receive dividends from its insurance subsidiaries and may not receive dividends in amounts necessary to pay dividends on our capital stock. A downgrade in our A.M. Best rating would likely reduce the amount of business we are able to write.
As a result, we may not be able to receive dividends from our insurance subsidiaries or may not receive dividends in amounts necessary to pay dividends on our capital stock or repurchase shares.
Risks Related to Our Common Stock Our revenues and results of operations may fluctuate as a result of factors beyond our control, which fluctuation may cause the price of our common stock to be volatile. The revenues and results of operations of our insurance subsidiaries historically have been subject to significant fluctuations and uncertainties.
If we are unable to collect amounts recoverable from our reinsurers, our financial condition could be adversely impacted. 30 Risks Related to Our Common Stock Our revenues and results of operations may fluctuate as a result of factors beyond our control, which fluctuation may cause the price of our common stock to be volatile.
As of December 31, 2023, we had $130.0 million of recoverables from reinsurers. Of this amount, $48.4 million was unsecured. As of December 31, 2023, our largest recoverable from reinsurers included $65.0 million from Hannover Reinsurance Ireland Limited (Hannover), $19.7 million from Arch Reinsurance Company and $9.1 million from Allianz Risk Transfer AG. Each of these reinsurers have an A.M.
As of December 31, 2024, we had $117.0 million of recoverables from reinsurers. Of this amount, $47.5 million was unsecured. As of December 31, 2024, our largest recoverable from reinsurers included $51.3 million from Hannover Reinsurance Ireland Limited (Hannover), $25.5 million from Arch Reinsurance Company and $8.6 million from Minnesota Workers' Compensation Reinsurance Association.
Item 1A. Risk Fac tors. In evaluating our Company, the factors described below should be considered carefully. The occurrence of one or more of these events could significantly and adversely affect our business, prospects, financial condition, results of operations and cash flows.
Important factors that can cause our actual results to differ materially from those anticipated in the forward-looking statements are included below. 24 The occurrence of one or more of the risks discussed below could significantly and adversely affect our business, prospects, financial condition, results of operations and cash flows and you could lose part or all of your investment.
Removed
Establishing adequate rates is necessary to generate sufficient revenue to offset losses, loss adjustment expenses and other underwriting expenses, and to earn an underwriting profit.
Added
Item 1A. Risk Fac tors. Investing in our securities involves a high degree of risk and uncertainties.
Removed
As an insurance holding company, AMERISAFE is dependent on the results of operations of its insurance subsidiaries, and our Company’s ability to pay dividends depends on the regulatory and financial capacity of its subsidiaries to pay dividends to AMERISAFE. AMERISAFE is a holding company that transacts business through its operating subsidiaries, including AIIC.
Added
In evaluating the Company, the factors described below should be considered carefully together with the other risks described in this annual report, including, but not limited to, under the captions "Business" in Item 1, "Risk Factors" in Item 1A, "Cybersecurity" in Item 1C, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 7 and "Quantitative and Qualitative Disclosures About Market Risk" in Item 7A of this report.
Removed
However, these options may result in losses to our company, and there can be no assurance that we could implement any of these options. If we are unable to obtain reinsurance on favorable terms, our ability to write policies could be adversely affected. We purchase reinsurance to reduce our net liability on individual risks and to protect against catastrophic losses.
Added
Forward-looking statements are all statements other than statements of historical facts. You should not place undue reliance on these statements. We undertake no obligation to update any forward-looking statements, which speak only as of the date made.
Removed
Best rating of “A” (Excellent) or better. An immaterial amount of reinsurance recoverable due at December 31, 2023 was over 90 days old. If we are unable to collect amounts recoverable from our reinsurers, our financial condition would be adversely impacted.
Added
We caution readers that forward-looking statements are not guarantees of future performance and actual results may differ materially from those anticipated, expected, projected or assumed in the forward-looking statements.
Removed
In addition, the stock market experiences significant volatility from time to time that is often unrelated to the operating performance of companies whose shares are traded. These market fluctuations could adversely affect the trading price of our common stock, regardless of our actual operating performance.
Added
The risks that follow are organized under headings as determined to be most applicable, but such risks also may be relevant to other headings.
Removed
As a result, our operations may be disrupted and our business may be adversely affected. We do not currently maintain life insurance policies with respect to our executive officers. Economic conditions could adversely affect our financial condition and results of operations.
Added
Moreover, the risk factors described herein are not all of the risks we may face and there may be other risks not presently known to us or that we currently believe are immaterial or general risks that apply to all companies operating in the U.S., which may emerge or become material.
Added
In addition to the ability of our operating subsidiaries to pay dividends to us, the timing and amount of dividends, and any share repurchases is at the discretion of our board of directors and management, respectively.
Added
Repurchases of our common stock under our repurchase program are discretionary up to the limit approved by our board of directors, and our share repurchase program may be modified, increased, suspended or terminated at any time at the discretion of our board of directors.
Added
Our dividend payments and share repurchases may change, and there can be no assurance that we will continue to declare dividends or repurchase shares at all or in any particular amounts. A downgrade in our A.M. Best rating would likely reduce the amount of business we are able to write.
Added
Hannover and Arch Reinsurance Company have an A.M. Best rating of “A+” (Superior). Minnesota Workers’ Compensation Reinsurance Association is unrated by A.M. Best. An immaterial amount of reinsurance recoverable due at December 31, 2024 was over 90 days old.
Added
Our revenues and results of operations historically have been subject to significant fluctuations and uncertainties.
Added
If we are unable to successfully execute on our strategy, our business, financial condition or results of operations could be adversely affected. We may require additional capital in the future, which may not be available to us or may be available only on unfavorable terms.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings. In the ordinary course of our business, we are involved in the adjudication of claims resulting from workplace injuries. We are not involved presently in any legal or administrative proceedings that we believe are likely to have a materially adverse effect on our business, financial condition or results of operations.
Biggest changeWe are not involved presently in any legal or administrative proceedings outside of the ordinary course of business that we believe are likely to have a materially adverse effect on our business, financial condition or results of operations.
Added
Item 3. Legal Proceedings. In the ordinary course of our business, we are involved in the adjudication of claims resulting from workplace injuries.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOur insurance company subsidiaries are regulated insurance companies and therefore are subject to significant regulatory restrictions limiting their ability to declare and pay dividends. See “Business—Regulation—Dividend Limitations” in Item 1 of this report. Our existing revolving credit agreement contains covenants that restrict our ability to pay dividends on our common stock.
Biggest changeOur ability to pay dividends in the future depends on, among other things, the ability of our operating subsidiaries to pay dividends to us. Our insurance company subsidiaries are regulated insurance companies and therefore are subject to significant regulatory restrictions limiting their ability to declare and pay dividends. See “Business—Regulation—Dividend Limitations” in Item 1 of this report.
As of February 15, 2024, 19,135,008 shares of common stock were outstanding. As of that date, there were no shares of preferred stock outstanding. Share Repurchases The Company’s Board of Directors initiated a share repurchase program in February 2010. In October 2016, the Board reauthorized this program with a limit of $25.0 million with no expiration date.
As of that date, there were no shares of preferred stock outstanding. Share Repurchases The Company’s board of directors initiated a share repurchase program in February 2010. In October 2016, the Board reauthorized this program with a limit of $25.0 million with no expiration date.
Dividend Policy In 2023, 2022 and 2021, the Company paid regular quarterly cash dividends of $0.34, $0.31, and $0.29 per share, respectively. In addition, the Company paid extraordinary cash dividends of $3.50 in 2023 and $4.00 in both 2022 and 2021.
Dividend Policy In 2024, 2023 and 2022, the Company paid regular quarterly cash dividends of $0.37, $0.34, and $0.31 per share, respectively. In addition, the Company paid extraordinary cash dividends of $3.00 in 2024, $3.50 in 2023 and $4.00 in 2022.
It is anticipated that any future purchases will be funded from available capital. 35 The following table summarizes the Company’s purchases of its common stock, par value $0.01 per share, during the three months ended December 31, 2023: Period Total Number of Shares Purchased Average Price Paid per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in thousands) October 1, 2023 to October 31, 2023 — $ — — $ 12,612 November 1, 2023 to November 30, 2023 500 47.44 500 12,589 December 1, 2023 to December 31, 2023 46,241 46.44 46,241 10,441 Total 46,741 46,741 (1) Average price paid per share includes commissions and excise tax .
It is anticipated that any future repurchases will be funded from available capital. 35 The following table summarizes the Company’s purchases of its common stock, par value $0.01 per share, during the three months ended December 31, 2024: Period Total Number of Shares Purchased Average Price Paid per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in thousands) October 1, 2024 to October 31, 2024 — $ — — $ 5,318 November 1, 2024 to November 30, 2024 — — — 5,318 December 1, 2024 to December 31, 2024 — — — 5,318 Total — — (1) Average price paid per share includes commissions and excise tax .
On February 19, 2024 the Company declared a regular quarterly cash dividend of $0.37 per share payable on March 22, 2024 to shareholders of record as of March 8, 2024. The Board intends to continue to consider the payment of a regular cash dividend each calendar quarter.
On February 25, 2025 the Company declared a regular quarterly cash dividend of $0.39 per share payable on March 21, 2025 to shareholders of record as of March 7, 2025. The Board intends to continue to consider the payment of a regular cash dividend each calendar quarter.
The Company had $10.4 million available for future purchases at December 31, 2023 under this program. There were 46,741 shares repurchased under this program in 2023 for $2.2 million, or an average price of $46.45, including commissions and excise tax.
The Company had $5.3 million available for future purchases at December 31, 2024 under this program. There were 113,411 shares repurchased under this program in 2024 for $5.1 million, or an average price of $45.17, including commissions and excise tax.
There were 264,449 shares repurchased under this program in 2022 for $12.4 million, or an average price of $46.84, including commissions. There were no shares repurchased under this program in 2021. Since the beginning of this plan, the Company has repurchased a total of 1,569,440 shares for $36.9 million, or an average price of $23.53, including commissions and excise tax.
There were 46,741 shares repurchased under this program in 2023 for $2.2 million, or an average price of $46.45, including commissions and excise tax. There were 264,449 shares repurchased under this program in 2022 for $12.4 million, or an average price of $46.84, including commissions.
On an annualized basis, the cash dividend is expected to be $1.48 per share in 2024. AMERISAFE is a holding company and has no direct operations. Our ability to pay dividends in the future depends on the ability of our operating subsidiaries to pay dividends to us.
On an annualized basis, the regular cash dividend is expected to be $1.56 per share in 2025. The declaration and payment of dividends is at the discretion of the board. We are a holding company and have no direct operations.
For more information on our credit agreement, see “Liquidity and Capital Resources” in Item 7 of this report. Description of Capital Stock AMERISAFE is authorized to issue 60,000,000 shares of capital stock, consisting of: • 10,000,000 shares of preferred stock, par value $0.01 per share; and • 50,000,000 shares of common stock, par value $0.01 per share.
Description of Capital Stock AMERISAFE is authorized to issue 60,000,000 shares of capital stock, consisting of: • 10,000,000 shares of preferred stock, par value $0.01 per share; and • 50,000,000 shares of common stock, par value $0.01 per share. As of February 14, 2025, 19,050,315 shares of common stock were outstanding.
Item 5. Market for Registrant’s Common Equity, Related Stoc kholder Matters, and Issuer Purchases of Equity Securities. Market Information and Holders Our common stock is traded on the NASDAQ Global Select Market under the symbol “AMSF.” As of February 15, 2024, there were 19 holders of record of our common stock.
Market Information and Holders Our common stock is traded on the NASDAQ Global Select Market under the symbol “AMSF.” As of February 14, 2025, there were 20 holders of record of our common stock which does not include beneficial holders whose shares are held by banks, brokers, and other financial institutions.
Removed
The purchases may be affected from time to time depending upon market conditions and subject to applicable regulatory considerations.
Added
Item 5. Market for Registrant’s Common Equity, Related Stoc kholder Matters, and Issuer Purchases of Equity Securities.
Added
Our existing revolving credit agreement contains covenants that limit our ability to pay dividends on our common stock. For more information on our credit agreement, see “Liquidity and Capital Resources” in Item 7 of this report.
Added
Since the beginning of this plan, the Company has repurchased a total of 1,682,851 shares for $42.1 million, or an average price of $24.99, including commissions and excise tax.
Added
The repurchases may be effected from time to time at the discretion of management and will depend on a variety of factors, including but not limited to, market conditions and applicable regulatory considerations. See “Forward-Looking Statements” in Part I above for further discussion. The share repurchase program may be modified, increased, suspended or terminated at the discretion of the board.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

73 edited+11 added−8 removed103 unchanged
Biggest changeYear Ended December 31, 2023 2022 2021 (in thousands) Income Statement Data Gross premiums written $ 285,355 $ 276,110 $ 278,294 Ceded premiums written (16,621 ) (10,527 ) (10,469 ) Net premiums written $ 268,734 $ 265,583 $ 267,825 Net premiums earned $ 267,125 $ 271,698 $ 275,993 Net investment income 31,339 27,223 25,435 Net realized gains on investments 6,579 3,440 1,695 Net unrealized gains (losses) on equity securities 1,228 (8,092 ) 12,315 Fee and other income 582 468 496 Total revenues 306,853 294,737 315,934 Loss and loss adjustment expenses incurred 148,263 152,316 160,798 Underwriting and certain other operating costs (1) 27,508 24,039 24,813 Commissions 23,446 21,483 21,284 Salaries and benefits 27,359 26,510 25,954 Policyholder dividends 2,957 2,699 3,715 Provision for investment related credit loss expense (benefit) (57 ) 44 (79 ) Total expenses 229,476 227,091 236,485 Income before taxes 77,377 67,646 79,449 Income tax expense 15,269 12,044 13,693 Net income $ 62,108 $ 55,602 $ 65,756 Selected Insurance Ratios Current accident year loss ratio (2) 71.0 % 71.0 % 80.7 % Prior accident year loss ratio (3) (15.5 )% (14.9 )% (22.4 )% Net loss ratio 55.5 % 56.1 % 58.3 % Net underwriting expense ratio (4) 29.3 % 26.5 % 26.1 % Net dividend ratio (5) 1.1 % 1.0 % 1.3 % Net combined ratio (6) 85.9 % 83.6 % 85.7 % As of December 31, 2023 2022 2021 (in thousands) Balance Sheet Data Cash and cash equivalents $ 38,682 $ 61,469 $ 70,722 Investments 857,786 888,987 1,012,571 Amounts recoverable from reinsurers 129,963 125,677 120,561 Premiums receivable, net 132,861 121,713 135,100 Deferred income taxes 20,403 22,794 14,384 Deferred policy acquisition costs 17,975 17,401 17,059 Total assets 1,229,162 1,269,279 1,402,724 Reserves for loss and loss adjustment expenses 673,994 696,037 745,278 Unearned premiums 116,585 114,976 121,092 Insurance-related assessments 16,896 17,653 16,850 Shareholders’ equity 292,451 317,432 399,323 (1) Includes policy acquisition expenses, and other general and administrative expenses, excluding commissions and salaries and benefits, related to insurance operations and corporate operating expenses. 43 (2) The current accident year loss ratio is calculated by dividing loss and loss adjustment expenses incurred for the current accident year by the current year’s net premiums earned.
Biggest changeYear Ended December 31, 2024 2023 2022 (in thousands) Income Statement Data Gross premiums written $ 294,144 $ 285,355 $ 276,110 Ceded premiums written (18,164 ) (16,621 ) (10,527 ) Net premiums written $ 275,980 $ 268,734 $ 265,583 Net premiums earned $ 270,639 $ 267,125 $ 271,698 Net investment income 29,212 31,339 27,223 Net realized gains (losses) on investments (576 ) 6,579 3,440 Net unrealized gains (losses) on equity securities 9,508 1,228 (8,092 ) Fee and other income 260 582 468 Total revenues 309,043 306,853 294,737 Loss and loss adjustment expenses incurred 157,267 148,263 152,316 Underwriting and certain other operating costs (1) 24,876 27,508 24,039 Commissions 23,750 23,446 21,483 Salaries and benefits 31,503 27,359 26,510 Policyholder dividends 2,657 2,957 2,699 Provision for investment related credit loss expense (benefit) (66 ) (57 ) 44 Total expenses 239,987 229,476 227,091 Income before taxes 69,056 77,377 67,646 Income tax expense 13,620 15,269 12,044 Net income $ 55,436 $ 62,108 $ 55,602 Selected Insurance Ratios Current accident year loss ratio (2) 71.0 % 71.0 % 71.0 % Prior accident year loss ratio (3) (12.9 )% (15.5 )% (14.9 )% Net loss ratio 58.1 % 55.5 % 56.1 % Net underwriting expense ratio (4) 29.6 % 29.3 % 26.5 % Net dividend ratio (5) 1.0 % 1.1 % 1.0 % Net combined ratio (6) 88.7 % 85.9 % 83.6 % As of December 31, 2024 2023 2022 (in thousands) Balance Sheet Data Cash and cash equivalents $ 44,045 $ 38,682 $ 61,469 Investments 788,778 857,786 888,987 Amounts recoverable from reinsurers 117,019 129,963 125,677 Premiums receivable, net 142,659 132,861 121,713 Deferred income taxes 19,448 20,403 22,794 Deferred policy acquisition costs 19,151 17,975 17,401 Total assets 1,157,791 1,229,162 1,269,279 Reserves for loss and loss adjustment expenses 651,309 673,994 696,037 Unearned premiums 121,926 116,585 114,976 Insurance-related assessments 14,852 16,896 17,653 Shareholders’ equity 257,341 292,451 317,432 (1) Includes policy acquisition expenses, and other general and administrative expenses, excluding commissions and salaries and benefits, related to insurance operations and corporate operating expenses. 43 (2) The current accident year loss ratio is calculated by dividing loss and loss adjustment expenses incurred for the current accident year by the current year’s net premiums earned.
However, changes in per average claim case incurred loss and loss adjustment expenses can also be affected by frequency of severe claims in the applicable accident years.
However, changes in average per claim case incurred loss and loss adjustment expenses can also be affected by the frequency of severe claims in the applicable accident years.
We review the estimate of EBUB premiums on a quarterly basis using historical data and applying various assumptions based on the current market and economic conditions, and we record an adjustment to premium, related losses, and expenses as warranted. Net Investment Income and Net Realized Gains and Losses on Investments.
We review the estimate of EBUB premiums on a quarterly basis using historical data and applying various assumptions based on the current market and economic conditions, and we record an adjustment to premiums, related losses, and expenses as warranted. Net Investment Income and Net Realized Gains and Losses on Investments.
Investments in equity securities are reported at fair market value. 48 We follow FASB ASC Topic 820, Fair Value Measurements and Disclosures, which defines fair value, establishes a fair value hierarchy and requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
Investments in equity securities are reported at fair market value. We follow FASB ASC Topic 820, Fair Value Measurements and Disclosures, which defines fair value, establishes a fair value hierarchy and requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
Share-Based Compensation. In accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718, Compensation-Stock Compensation , we recognize compensation costs for restricted stock, performance-based stock and stock option awards over the applicable vesting periods. 42 Results of Operations The table below summarizes certain operating results and key measures we use in monitoring and evaluating our operations.
In accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718, Compensation-Stock Compensation , we recognize compensation costs for restricted stock, restricted stock units, performance-based stock and stock option awards over the applicable vesting periods. 42 Results of Operations The table below summarizes certain operating results and key measures we use in monitoring and evaluating our operations.
For additional information, see Note 16 to our consolidated financial statements in Item 8 of this report. The Company has operating and finance leases for office space and equipment. Our leases have remaining lease terms of one month to 47 months, some of which include options to extend the leases for up to five years.
For additional information, see Note 16 to our consolidated financial statements in Item 8 of this report. The Company has operating and finance leases for office space and equipment. Our leases have remaining lease terms of one month to 49 months, some of which include options to extend the leases for up to five years.
We expect that our projected cash flow from operations will provide us sufficient liquidity to fund future operations, including payment of claims and operating expenses and other holding company expenses, for at least the next 18 months. We forecast claim payments based on our historical trends.
We expect that our projected cash flow from operations will provide us sufficient liquidity to fund future operations, including payment of claims and operating expenses and other holding company expenses, for at least the next 12 months. We forecast claim payments based on our historical trends.
Based on our estimates of future claims, we believe we are sufficiently capitalized to satisfy the deductibles and retentions in our 2024 reinsurance program. We reevaluate our reinsurance program at least annually, taking into consideration a number of factors, including cost of reinsurance, our liquidity requirements, operating leverage and coverage terms.
Based on our estimates of future claims, we believe we are sufficiently capitalized to satisfy the deductibles and retentions in our 2025 reinsurance program. We reevaluate our reinsurance program at least annually, taking into consideration a number of factors, including cost of reinsurance, our liquidity requirements, operating leverage and coverage terms.
Thus, for a one-year policy written on July 1, 2023 for an employer with constant payroll during the term of the policy, we would earn half of the premiums in 2023 and the other half in 2024. On a monthly basis, we also recognize net premiums earned from mandatory pooling arrangements.
Thus, for a one-year policy written on July 1, 2024 for an employer with constant payroll during the term of the policy, we would earn half of the premiums in 2024 and the other half in 2025. On a monthly basis, we also recognize net premiums earned from mandatory pooling arrangements.
We purchase reinsurance to reduce our net liability on individual risks and to protect against catastrophic losses. Our reinsurance program for 2024 includes 26 reinsurers that provide coverage to us in excess of a certain specified loss amount, or retention level.
We purchase reinsurance to reduce our net liability on individual risks and to protect against catastrophic losses. Our reinsurance program for 2025 includes 26 reinsurers that provide coverage to us in excess of a certain specified loss amount, or retention level.
As of December 31, 2023, we were in compliance with these requirements. We employ diversification policies and balance investment credit risk and related underwriting risks to minimize our total potential exposure to any one business sector or security.
As of December 31, 2024, we were in compliance with these requirements. We employ diversification policies and balance investment credit risk and related underwriting risks to minimize our total potential exposure to any one business sector or security.
Our 2024 reinsurance program provides us with reinsurance coverage for each loss occurrence up to $100.0 million, subject to applicable limitations, deductibles, retentions and aggregate limits. However, for any loss occurrence involving only one claimant, our reinsurance coverage is limited to $20.0 million, subject to applicable deductibles, retentions and aggregate limits.
Our 2025 reinsurance program provides us with reinsurance coverage for each loss occurrence up to $100.0 million, subject to applicable limitations, deductibles, retentions and aggregate limits. However, for any loss occurrence involving only one claimant, our reinsurance coverage is limited to $20.0 million, subject to applicable deductibles, retentions and aggregate limits.
In establishing our reserves, we review the results of analyses using actuarial methods that utilize historical loss data from our more than 38 years of underwriting workers’ compensation insurance. The actuarial analysis of our historical data provides the factors we use in estimating our loss reserves.
In establishing our reserves, we review the results of analyses using actuarial methods that utilize historical loss data from our more than 39 years of underwriting workers’ compensation insurance. The actuarial analysis of our historical data provides the factors we use in estimating our loss reserves.
However, as of December 31, 2023, actual results for these accident years have been better than our assumptions would have predicted. We do not presently intend to modify our assumptions for establishing reserves in light of recent results.
However, as of December 31, 2024, actual results for these accident years have been better than our assumptions would have predicted. We do not presently intend to modify our assumptions for establishing reserves in light of recent results.
As disclosed in Note 18 of the financial statements, our securities available-for-sale are classified using Level 1, 2 and 3 inputs. We did not elect the fair value option prescribed under FASB ASC Topic 825, Financial Instruments, for any financial assets in 2022 or 2023.
As disclosed in Note 18 to our financial statements, our securities available-for-sale are classified using Level 1, 2 and 3 inputs. We did not elect the fair value option prescribed under FASB ASC Topic 825, Financial Instruments, for any financial assets in 2023 or 2024.
The increase in the effective tax rate is due to a lower proportion of tax-exempt income to underwriting income in 2022 relative to 2021. 45 Prior Year Development The Company recorded favorable prior accident year loss and loss adjustment expense development of $41.4 million in calendar year 2023, $40.6 million in calendar year 2022 and $61.9 million in calendar year 2021.
The increase in the effective tax rate is due to a lower proportion of tax-exempt income to underwriting income in 2023 relative to 2022. 45 Prior Year Development The Company recorded favorable prior accident year loss and loss adjustment expense development of $34.9 million in calendar year 2024, $41.4 million in calendar year 2023 and $40.6 million in calendar year 2022.
The composition of our investment portfolio, including cash and cash equivalents, as of December 31, 2023 is shown in the following table.
The composition of our investment portfolio, including cash and cash equivalents, as of December 31, 2024 is shown in the following table.
We calculate return on average equity by dividing annual net income by the average of annual shareholders’ equity. Our return on average equity was 20.4% in 2023, 15.5% in 2022 and 15.7% in 2021 . We calculate book value per share by dividing ending shareholders’ equity by the number of common shares outstanding.
We calculate return on average equity by dividing annual net income by the average of annual shareholders’ equity. Our return on average equity was 20.2% in 2024, 20.4% in 2023 and 15.5% in 2022. We calculate book value per share by dividing ending shareholders’ equity by the number of common shares outstanding.
We fund claim payments out of cash flow from 46 operations, principally premiums, net of amounts ceded to our reinsurers, and net investment income. Our investment portfolio at December 31, 2023 was $896.5 million. As discussed above under “Overview,” we purchase reinsurance to reduce our net liability on individual risks and to protect against catastrophic losses.
We fund claim payments out of cash flow from 46 operations, principally premiums, net of amounts ceded to our reinsurers, and net investment income. Our investment portfolio at December 31, 2024 was $832.8 million. As discussed above under “Overview,” we purchase reinsurance to reduce our net liability on individual risks and to protect against catastrophic losses.
Our reserves for loss and loss adjustment expenses represent the estimated cost of all reported and unreported loss and loss adjustment expenses incurred and unpaid at any given point in time based on known facts and circumstances. Reserves are based on estimates of the most likely ultimate cost of individual claims. These estimates are inherently uncertain.
Our reserves for loss and loss adjustment expenses represent the estimated cost of all reported and unreported loss and loss adjustment expenses incurred and unpaid at any given point in time based on known facts and circumstances. These estimates are inherently uncertain.
We seek to manage the funding of claim payments by actively managing available cash and forecasting cash flows on a short- and long-term basis. Cash payments, net of reinsurance, for claims were $177.5 million in 2023, $194.8 million in 2022 and $189.6 million in 2021.
We seek to manage the funding of claim payments by actively managing available cash and forecasting cash flows on a short- and long-term basis. Cash payments, net of reinsurance, for claims were $172.9 million in 2024, $177.5 million in 2023 and $194.8 million in 2022.
As of December 31, 2023, the present value of these annuities was $106.9 million, as estimated by our annuity providers. Substantially all of the annuities are issued or guaranteed by life insurance companies that have an A.M. Best rating of “A” (Excellent) or better.
As of December 31, 2024, the present value of these annuities was $109.7 million, as estimated by our annuity providers. Substantially all of the annuities are issued or guaranteed by life insurance companies that have an A.M. Best rating of “A” (Excellent) or better.
Overview of Operating Results Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Gross Premiums Written . Gross premiums written for 2023 were $285.4 million, compared to $276.1 million for 2022, an increase of 3.3%.
Overview of Operating Results Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Gross Premiums Written . Gross premiums written for 2024 were $294.1 million, compared to $285.4 million for 2023, an increase of 3.1%.
The number of severe claims in any one accident year in this five-year period ranged from a low of 9 in 2023 to a high of 20 in 2021 and 2022. The average reported case severity for these claims ranged from $2.28 million for the 2023 accident year to $3.91 million for the 2021 accident year.
The number of severe claims in any one accident year in this five-year period ranged from a low of 14 in 2023 to a high of 20 in 2021. The average reported case severity for these claims ranged from $2.28 million for the 2023 accident year to $3.96 million for the 2021 accident year.
As of December 31, 2023, our investment portfolio, including cash and cash equivalents, totaled $896.5 million, a decrease of 5.7% from December 31, 2022. The majority of our fixed maturity securities are classified as held-to-maturity, as defined by FASB ASC Topic 320, Investments-Debt and Equity Securities.
As of December 31, 2024, our investment portfolio, including cash and cash equivalents, totaled $832.8 million, a decrease of 7.1% from December 31, 2023. The majority of our fixed maturity securities are classified as held-to-maturity, as defined by FASB ASC Topic 320, Investments-Debt and Equity Securities.
Favorable/(Unfavorable) Development for Year Ended December 31, 2023 2022 2021 (in millions) 2022 $ — $ — $ — 2021 7.5 — — 2020 7.5 6.2 — 2019 8.0 13.1 14.1 2018 3.5 8.9 18.3 Prior to 2018 14.9 12.4 29.5 Total net development $ 41.4 $ 40.6 $ 61.9 The table below sets forth the number of open claims as of December 31, 2023, 2022 and 2021, and the numbers of claims reported and closed during the years then ended.
Favorable/(Unfavorable) Development for Year Ended December 31, 2024 2023 2022 (in millions) 2023 $ — $ — $ — 2022 2.8 — — 2021 3.7 7.5 — 2020 6.3 7.5 6.2 2019 3.0 8.0 13.1 Prior to 2019 19.1 18.4 21.3 Total net development $ 34.9 $ 41.4 $ 40.6 The table below sets forth the number of open claims as of December 31, 2024, 2023 and 2022, and the number of claims reported and closed during the years then ended.
Gross premiums written includes the estimated annual premiums from each insurance policy we write in our voluntary and assigned risk businesses during a reporting period based on the policy effective date or the date the policy is bound, whichever is later. Premiums are earned on a daily pro rata basis over the term of the policy.
Gross premiums written includes the estimated annual premiums from each insurance policy we write in our voluntary business and assumed premiums from mandatory pooling arrangements during a reporting period based on the policy effective date or the date the policy is bound, whichever is later. Premiums are earned on a daily pro rata basis over the term of the policy.
Twelve Months Ended December 31, 2023 2022 2021 Open claims at beginning of period 4,275 4,594 4,758 Claims reported 3,948 4,104 4,310 Claims closed (4,220 ) (4,423 ) (4,474 ) Open claims at end of period 4,003 4,275 4,594 At December 31, 2023, our incurred amounts for certain accident years developed more favorably than management previously expected.
Twelve Months Ended December 31, 2024 2023 2022 Open claims at beginning of period 4,003 4,275 4,594 Claims reported 3,827 3,948 4,104 Claims closed (4,032 ) (4,220 ) (4,423 ) Open claims at end of period 3,798 4,003 4,275 At December 31, 2024, our incurred amounts for certain accident years developed more favorably than management previously expected.
Our book value per share was $15.28 at December 31, 2023, $16.57 at December 31, 2022 and $20.62 at December 31, 2021. We paid cash dividends of $4.86 per share in 2023, $5.24 per share in 2022 and $5.16 per share in 2021. Investment income is an important element of our net income.
Our book value per share was $13.51 at December 31, 2024, $15.28 at December 31, 2023 and $16.57 at December 31, 2022. We paid cash dividends of $4.48 per share in 2024, $4.86 per share in 2023 and $5.24 per share in 2022. Investment income is an important element of our net income.
For the five accident years, the case incurred for these severe claims accounted for an average of 16.6 percentage points of our overall loss and loss adjustment expense (LAE) ratio, measured at December 31, 2023.
For the five accident years, the case incurred for these severe claims accounted for an average of 18.2 percentage points of our overall loss and loss adjustment expense (LAE) ratio, measured at December 31, 2024.
The average pre-tax investment yield on our investment portfolio was 2.7% per annum for 2022 versus 2.3% per annum for 2021. The year-end tax-equivalent yield on our investment portfolio was 3.4% per annum for 2022, compared to 2.7% per annum for 2021. The tax-equivalent yield is calculated using the effective interest rate and the appropriate marginal tax rate.
The average pre-tax investment yield on our investment portfolio was 3.4% per annum for 2024 and 2023. The year-end tax-equivalent yield on our investment portfolio was 3.8% per annum for 2024, compared to 3.7% per annum for 2023. The tax-equivalent yield is calculated using the effective interest rate and the appropriate marginal tax rate.
Our gross reserves for loss and loss adjustment expenses at December 31, 2023, 2022 and 2021 were $674.0 million, $696.0 million and $745.3 million, respectively. As a percentage of gross reserves at year end, IBNR represented 17.8% in 2023, 17.1% in 2022 and 16.1% in 2021. In 2023, we decreased our estimates for prior year loss reserves by $41.4 million.
Our gross reserves for loss and loss adjustment expenses at December 31, 2024, 2023 and 2022 were $651.3 million, $674.0 million and $696.0 million, respectively. As a percentage of gross reserves at year end, IBNR represented 16.5% in 2024, 17.8% in 2023 and 17.1% in 2022. In 2024, we decreased our estimates for prior year loss reserves by $34.9 million.
The table below sets forth the favorable development for accident years 2018 through 2022 and, collectively, all accident years prior to 2018.
The table below sets forth the favorable development for accident years 2019 through 2023 and, collectively, all accident years prior to 2019.
Net cash provided by investing activities was $43.9 million in 2023, as compared to net cash provided by investing activities of $75.4 million in 2022 and net cash provided by investing activities of $71.0 million in 2021.
Net cash provided by investing activities was $72.4 million in 2024, as compared to net cash provided by investing activities of $43.9 million in 2023 and net cash provided by investing activities of $75.4 million in 2022.
In 2021, major components of net cash provided by investing activities included proceeds from sales and maturities of investments of $343.4 million, offset by investment purchases of $271.2 million. Net cash used in financing activities was $96.5 million in 2023, as compared to $112.9 million in 2022 and $100.0 million in 2021.
In 2022, major components of net cash provided by investing activities included proceeds from sales and maturities of investments of $293.0 million, offset by investment purchases of $215.5 million. Net cash used in financing activities was $91.2 million in 2024, as compared to $96.5 million in 2023 and $112.9 million in 2022.
At December 31, 2023, our investment portfolio, including cash and cash equivalents, was $896.5 million and produced net investment income of $31.3 million in 2023, $27.2 million in 2022 and $25.4 million in 2021. The use of reinsurance is an important component of our business strategy.
At December 31, 2024, our investment portfolio, including cash and cash equivalents, was $832.8 million and produced net investment income of $29.2 million in 2024, $31.3 million in 2023 and $27.2 million in 2022. The use of reinsurance is an important component of our business strategy.
Under Nebraska and Texas law, as applicable, each of AIIC, SOCI and AIICTX is required to invest only in securities that are either interest-bearing, interest-accruing or eligible for dividends, and must limit its investment in the securities of any single issuer, other than direct obligations of the United States, to five percent of the insurance company’s assets.
Dollar-denominated obligations of the U.S. or Canadian corporations, U.S. agency mortgage-backed securities, commercial mortgage-backed securities and asset-backed securities. 48 Under Nebraska and Texas law, as applicable, each of AIIC, SOCI and AIICTX is required to invest only in securities that are either interest-bearing, interest-accruing or eligible for dividends, and must limit its investment in the securities of any single issuer, other than direct obligations of the U.S., to five percent of the insurance company’s assets.
This is discussed in more detail below in “Prior Year Development.” Our net loss ratio was 56.1% for 2022 and 58.3% for 2021. Underwriting and Certain Other Operating Costs, Commissions and Salaries and Benefits. Underwriting and certain other operating costs, commissions and salaries and benefits for 2022 were $72.0 million, compared to $72.1 million for 2021.
This is discussed in more detail below in “Prior Year Development.” Our net loss ratio was 58.1% for 2024 and 55.5% for 2023. Underwriting and Certain Other Operating Costs, Commissions and Salaries and Benefits. Underwriting and certain other operating costs, commissions and salaries and benefits for 2024 were $80.1 million, compared to $78.3 million for 2023.
We utilize intensive claims management practices that we believe permit us to reduce the overall cost of our claims. In addition, our audit services ensure that our policyholders pay the appropriate premiums required under the terms of their policies and enable us to monitor payroll patterns that cause underwriting, safety or fraud concerns.
In addition, our audit services ensure that our policyholders pay the appropriate premiums required under the terms of their policies and enable us to monitor payroll patterns that cause underwriting, safety or fraud concerns.
In 2023, major components of net cash provided by investing activities included proceeds from sales and maturities of investments of $178.1 million, offset by investment purchases of $133.7 million. In 2022, major components of net cash provided by investing activities included proceeds from sales and maturities of investments of $293.0 million, offset by investment purchases of $215.5 million.
In 2024, major components of net cash provided by investing activities included proceeds from sales and maturities of investments of $183.9 million, offset by investment purchases of $110.7 million. 47 In 2023, major components of net cash provided by investing activities included proceeds from sales and maturities of investments of $178.1 million, offset by investment purchases of $133.7 million.
Carrying Value Percentage of Portfolio Effective Interest Rate (in thousands) Fixed maturity securities—held-to-maturity: State and political subdivisions $ 416,878 46.5 % 2.4 % Corporate bonds 52,179 5.9 % 0.6 % U.S. agency-based mortgage-backed securities 3,297 0.4 % 1.7 % U.S. Treasury securities and obligations of U.S.
Carrying Value Percentage of Portfolio Effective Interest Rate (in thousands) Fixed maturity securities—held-to-maturity: State and political subdivisions $ 368,026 44.2 % 2.3 % Corporate bonds 33,763 4.1 % 0.5 % U.S. agency-based mortgage-backed securities 2,781 0.3 % 1.6 % U.S. Treasury securities and obligations of U.S.
In 2022, we decreased our estimates for prior year loss reserves by $40.6 million. In 2021, we decreased our estimates for prior year loss reserves by $61.9 million.
In 2023, we decreased our estimates for prior year loss reserves by $41.4 million. In 2022, we decreased our estimates for prior year loss reserves by $40.6 million.
Net cash provided by operating activities was $29.8 million in 2023, as compared to $28.2 million in 2022, and $38.0 million in 2021. Major components of cash provided by operating activities in 2023 were net premiums collected of $261.0 million, investment income collected of $34.5 million, and reinsurance recoveries collected of $16.0 million.
Net cash provided by operating activities was $24.2 million in 2024, as compared to $29.8 million in 2023, and $28.2 million in 2022. Major components of cash provided by operating activities in 2024 were net premiums collected of $263.2 million, investment income collected of $31.6 million, and reinsurance recoveries collected of $0.3 million.
Less Than Twelve Months Twelve Months or Longer Fair Value Unrealized Losses Fair Value Unrealized Losses (in thousands) December 31, 2023: Fixed maturity securities—available-for-sale $ 40,293 $ (207 ) $ 184,313 $ (11,588 ) December 31, 2022: Fixed maturity securities—available-for-sale 196,433 (10,625 ) 63,424 (7,849 ) The pre-tax investment yield on our investment portfolio was 3.4% and 2.7% per annum during the twelve months ended December 31, 2023 and 2022, respectively.
Less Than Twelve Months Twelve Months or Longer Fair Value Unrealized Losses Fair Value Unrealized Losses (in thousands) December 31, 2024: Fixed maturity securities—available-for-sale $ 175,099 $ (7,984 ) $ 60,615 $ (4,637 ) December 31, 2023: Fixed maturity securities—available-for-sale 40,293 (207 ) 184,313 (11,588 ) 49 The pre-tax investment yield on our investment portfolio was 3.4% per annum during the twelve months ended December 31, 2024 and 2023.
We record reserves for estimated losses under insurance policies that we write and for loss adjustment expenses related to the investigation and settlement of claims.
We record reserves for estimated losses under insurance policies that we write and for loss adjustment expenses related to the investigation and settlement of claims. Reserves are based on estimates of the most likely ultimate cost of individual claims.
These amounts were offset in-part by claim payments of $189.6 million, $74.2 million of operating expenditures, federal taxes paid of $18.2 million, and dividends to policyholders paid of $3.9 million.
These amounts were offset in part by claim payments of $206.3 million, $64.6 million of operating expenditures, federal taxes paid of $7.8 million, and dividends to policyholders paid of $3.4 million.
In 2022, net realized gains resulted primarily from the sale of equity securities. In 2021, net realized gains of $1.7 million resulted from the sale of fixed maturity securities classified as available-for-sale. Net Unrealized Gains (Losses) on Equity Securities .
In 2024, net realized losses resulted primarily from the sale of equity and fixed maturity securities classified as available-for-sale as well as the redemption of fixed maturity securities. In 2023, net realized gains resulted primarily from the sale of equity securities. Net Unrealized Gains (Losses) on Equity Securities .
The current accident year losses and LAE incurred were $192.9 million, or 71.0% of net premiums earned, compared to $222.7 million, or 80.7% of net premiums earned for 2021. We recorded favorable prior accident year development of $40.6 million in 2022, compared to $61.9 million in 2021.
The current accident year losses and LAE incurred were $192.2 million, or 71.0% of net premiums earned, compared to $189.7 million, or 71.0% of net premiums earned for 2023. We recorded favorable prior accident year development of $34.9 million in 2024, compared to $41.4 million in 2023.
The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the notes thereto included in Item 8 of this report. This discussion includes forward-looking statements that are subject to risks, uncertainties and other factors described in Item 1A of this report.
The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the notes thereto included in Item 8 of this report. This discussion includes forward-looking statements that are not guarantees of future performance and are not necessarily indicative of future operating results.
Excess funds from operations will be invested in accordance with our investment policy and statutory requirements. We allocate our portfolio into four categories: cash and cash equivalents, short-term investments, fixed maturity securities and equity securities.
We presently expect to maintain sufficient liquidity from funds generated by operations to meet our anticipated insurance obligations and operating and capital expenditure needs. Excess funds from operations will be invested in accordance with our investment policy and statutory requirements. We allocate our investment portfolio into four categories: cash and cash equivalents, short-term investments, fixed maturity securities and equity securities.
Hazardous industry employers also tend to have less frequent but more severe claims as compared to employers in other industries due to the nature of their businesses. We provide proactive safety reviews of employers’ workplaces. These safety reviews are a vital component of our underwriting process and also promote safer workplaces.
The higher premium rates are due to the nature of the work performed and the inherent workplace danger of our target employers. Hazardous industry employers also tend to have less frequent but more severe claims as compared to employers in other industries due to the nature of their businesses. We provide proactive safety reviews of most employers’ workplaces.
Our fixed maturity securities include obligations of the U.S. Treasury or U.S. agencies, obligations of states and their subdivisions, U.S. Dollar-denominated obligations of the U.S. or Canadian corporations, U.S. agency mortgage-backed securities, commercial mortgage-backed securities and asset-backed securities.
Our fixed maturity securities include obligations of the U.S. Treasury or U.S. agencies, obligations of states and their subdivisions, U.S.
Government agencies 13,671 1.5 % 0.9 % Total fixed maturity securities—available-for-sale 317,064 35.3 % 1.4 % Equity securities 57,147 6.4 % 2.1 % Cash and cash equivalents 38,682 4.3 % 5.1 % Total Investments, including cash and cash equivalents $ 896,468 100.0 % 3.4 % The following table summarizes the gross unrealized losses and fair value of fixed income securities by the length of time that individual securities have been in a continuous unrealized loss position.
Government agencies 13,950 1.7 % 1.0 % Total fixed maturity securities—available-for-sale 307,750 37.0 % 1.5 % Equity securities 58,629 7.0 % 1.4 % Short-term investments 9,338 1.1 % 0.2 % Cash and cash equivalents 44,045 5.3 % 4.4 % Total Investments, including cash and cash equivalents $ 832,823 100.0 % 3.5 % The following table summarizes the gross unrealized losses and fair value of fixed income securities by the length of time that individual securities have been in a continuous unrealized loss position.
Average invested assets, including cash and cash equivalents, decreased 8.7%, from an average of $1,151.8 million for 2021 to an average of $1,051.2 million for 2022. Net Realized Gains (Losses) on Investments. Net realized gains on investments in 2022 totaled $3.4 million, compared to gains of $1.7 million in 2021.
Average invested assets, including cash and cash equivalents, decreased 6.9%, from an average of $955.8 million for 2023 to an average of $890.4 million for 2024. Net Realized Gains (Losses) on Investments. Net realized losses on investments in 2024 totaled $0.6 million compared to gains of $6.6 million in 2023.
In December 2023, the Company renewed a line of credit agreement with Frost Bank for borrowings up to a maximum of $20.0 million. Under the agreement, advances may be made either in the form of loans or letters of credit. Borrowings under the agreement accrue at interest rates based upon prime rate or one-month term SOFR rate and are unsecured.
Under the agreement, advances may be made either in the form of loans or letters of credit. Borrowings under the agreement accrue at interest rates based upon prime rate or one-month term SOFR rate and are unsecured. At December 31, 2024, there were no outstanding borrowings. Unless renewed, the agreement will expire in May 2025.
Government agencies 11,186 1.2 % 0.9 % Asset-backed securities 35 0.0 % 6.7 % Total fixed maturity securities—held-to-maturity 483,575 54.0 % 1.6 % Fixed maturity securities—available-for-sale: State and political subdivisions 131,895 14.7 % 0.7 % Corporate bonds 166,753 18.6 % 3.6 % U.S. agency-based mortgage-backed securities 4,745 0.5 % 1.7 % U.S. Treasury securities and obligations of U.S.
Government agencies 8,478 1.0 % 1.3 % Asset-backed securities 13 0.0 % 5.9 % Total fixed maturity securities—held-to-maturity 413,061 49.6 % 1.6 % Fixed maturity securities—available-for-sale: State and political subdivisions 148,206 17.8 % 1.1 % Corporate bonds 141,535 17.0 % 3.6 % U.S. agency-based mortgage-backed securities 4,059 0.5 % 1.6 % U.S. Treasury securities and obligations of U.S.
At December 31, 2023, there were no outstanding borrowings. Unless renewed, the agreement will expire in December 2024. The Board of Directors initially authorized the Company’s share repurchase program in February 2010. In October 2016, the Board reauthorized this program with a limit of $25.0 million with no expiration date.
Our board of directors initially authorized the Company’s share repurchase program in February 2010. In October 2016, the Board reauthorized this program with a limit of $25.0 million with no expiration date. As of December 31, 2024, we had repurchased a total of 1,682,851 shares of our outstanding common stock for $42.1 million.
As a result of our focus on higher severity, lower frequency business, our reserve for loss and loss adjustment expenses may have greater volatility than other workers’ compensation insurance companies.
As a result of our focus on higher severity, lower frequency business, our reserve for loss and loss adjustment expenses may have greater volatility than other workers’ compensation insurance companies. For example, for the five-year period ended December 31, 2024 we recorded 86 severe claims, representing an average of 17 severe claims per year for accident years 2020 through 2024.
The Board intends to continue to consider the payment of a regular cash dividend each calendar quarter. On an annualized basis, the cash dividend is expected to be $1.48 per share in 2024. Investment Portfolio The principal objectives of our investment portfolio are to preserve capital and surplus and to maintain appropriate liquidity for corporate requirements.
On an annualized basis, the cash dividend is expected to be $1.56 per share in 2025. Investment Portfolio The principal objectives of our investment portfolio are to preserve capital and surplus and to maintain appropriate liquidity for corporate requirements. Additional objectives are to support our A.M. Best rating of “A” (Excellent) and to maximize after-tax income and risk-adjusted total return.
Major components of cash used in financing activities in 2022 included cash used for dividends paid to shareholders of $100.4 million and purchases of treasury stock of $12.4 million. 47 Major components of cash used in financing activities in 2021 included cash used for dividends paid to shareholders of $99.9 million.
Major components of cash used in financing activities in 2022 included cash used for dividends paid to shareholders of $100.4 million and purchases of treasury stock of $12.4 million. In 2024, the Company renewed a line of credit agreement with Frost Bank for borrowings up to a maximum of $20.0 million.
In addition, the Company paid extraordinary cash dividends of $3.50 in 2023 and $4.00 per share in both 2022 and 2021. On February 19, 2024, the Company declared a regular quarterly cash dividend of $0.37 per share payable on March 22, 2024 to shareholders of record as of March 8, 2024.
We paid regular quarterly cash dividends of $0.37, $0.34, and $0.31 per share in 2024, 2023 and 2022, respectively. In addition, the Company paid extraordinary cash dividends of $3.00 in 2024, $3.50 per share in 2023, and $4.00 in 2022.
These amounts were offset in-part by claim payments of $206.3 million, $64.6 million of operating expenditures, federal taxes paid of $7.8 million, and dividends to policyholders paid of $3.4 million. Major components of cash provided by operating activities in 2021 were net premiums collected of $290.2 million and investment income collected of $35.5 million.
These amounts were offset in part by claim payments of $182.4 million, $71.5 million of operating expenditures, federal taxes paid of $11.8 million, and dividends to policyholders paid of $4.2 million.
Net unrealized losses on equity securities in 2022 were $8.1 million compared to net unrealized gains of $12.3 million in 2021 due to declines in the equity markets. Loss and Loss Adjustment Expenses Incurred. Loss and LAE incurred totaled $152.3 million for 2022, compared to $160.8 million for 2021, a decrease of $8.5 million, or 5.3%.
Net unrealized gains on equity securities in 2024 were $9.5 million compared to net unrealized gains of $1.2 million in 2023. Loss and Loss Adjustment Expenses Incurred. Loss and LAE incurred totaled $157.3 million for 2024, compared to $148.3 million for 2023, an increase of $9.0 million, or 6.1%.
Workers’ compensation insurance covers statutorily prescribed benefits that employers are obligated to provide to their employees who are injured in the course and scope of their employment. Our business strategy is focused on providing this coverage to small to mid-sized employers engaged in hazardous industries, principally construction, trucking, logging and lumber, agriculture, manufacturing, telecommunications, and maritime.
Our business strategy is focused on providing this coverage to small to mid-sized employers engaged in hazardous industries, principally construction, trucking, logging and lumber, agriculture, manufacturing, maritime, and telecommunications. Employers engaged in hazardous industries pay substantially higher than average rates for workers’ compensation insurance compared to employers in other industries, as measured per payroll dollar.
As a percentage of gross premiums earned, ceded premiums were 3.7% for 2022 and 2021, respectively. For additional information, see Item 1, “Business—Reinsurance.” Net Premiums Earned . Net premiums earned for 2022 were $271.7 million, compared to $276.0 million for 2021, a decrease of 1.6%. The decrease was attributable to the decrease in net premiums written during the period.
Net premiums written for 2024 were $276.0 million, compared to $268.7 million for 2023, an increase of 2.7%. The increase was primarily attributable to the increase in gross premiums written. As a percentage of gross premiums earned, ceded premiums were 6.3% for 2024 compared to 5.9% for 2023.
The decreases were partially offset by a $15.2 million increase in premiums resulting from payroll audits and related premium adjustments for policies written in previous quarters. Net Premiums Written. Net premiums written for 2022 were $265.6 million, compared to $267.8 million for 2021, a decrease of 0.8%. The decrease was primarily attributable to the decrease in gross premiums written.
The increase was attributable to an $11.7 million increase in annual premiums on voluntary policies written during the period and a $1.0 million increase in residual market premiums. These increases were partially offset by a $3.9 million decrease in premiums resulting from payroll audits and related premium adjustments for policies written in previous periods. Net Premiums Written.
We manage risk on certain long-duration claims by settling these claims through the purchase of annuities from unaffiliated life insurance companies.
Hannover Re and Allianz Risk Transfer remain obligated to the subsidiaries of the Company under other reinsurance agreements. The effect on the Company's net income as a result of the commutation was immaterial. We manage risk on certain long-duration claims by settling these claims through the purchase of annuities from unaffiliated life insurance companies.
The increase in the effective tax rate is due to a lower proportion of tax-exempt income to underwriting income in 2023 relative to 2022. 44 Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Gross Premiums Written . Gross premiums written for 2022 were $276.1 million, compared to $278.3 million for 2021, a decrease of 0.8%.
Income tax expense for 2024 was $13.6 million, compared to $15.3 million for 2023. The effective tax rate was 19.7% for both 2024 and 2023. Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Gross Premiums Written . Gross premiums written for 2023 were $285.4 million, compared to $276.1 million for 2022, an increase of 3.3%.
Based upon the prescribed calculation, the insurance subsidiaries could pay to AMERISAFE dividends of up to $52.6 million in 2024 without seeking regulatory approval. See “Business—Regulation—Dividend Limitations” in Item 1 of this report. The Company paid regular quarterly cash dividends of $0.34, $0.31, and $0.29 per share in 2023, 2022 and 2021, respectively.
Payment of dividends by our insurance subsidiaries is restricted by state insurance laws, including laws establishing minimum solvency and liquidity thresholds. Based upon the prescribed calculation, the insurance subsidiaries could pay us dividends of up to $50.8 million in 2025 without seeking regulatory approval. See “Business—Regulation—Dividend Limitations” in Item 1 of this report.
The purchases may be effected from time to time depending upon market conditions and subject to applicable regulatory considerations. It is anticipated that future purchases will be funded from available capital. AMERISAFE is a holding company that transacts business through its operating subsidiaries, including AIIC, SOCI and AIICTX. AMERISAFE’s primary assets are the capital stock of these insurance subsidiaries.
We are a holding company that transacts business through its operating subsidiaries, including AIIC, SOCI and AIICTX. Our primary assets are the capital stock of these insurance subsidiaries. Our ability to fund our operations depends upon the surplus and earnings of our subsidiaries and their ability to pay dividends to us.
Offsetting these amounts were a $0.9 million decrease in profit sharing reinsurance commission, an increase of $0.6 million in systems cost, and an increase of $0.6 million in compensation expense. Our underwriting expense ratio increased to 26.5% in 2022 from 26.1% in 2021. Income Tax Expense. Income tax expense for 2022 was $12.0 million, compared to $13.7 million for 2021.
Offsetting these amounts were a $2.2 million decrease in insurance related assessments, a $0.4 million increase in ceding commission related to our current year reinsurance agreement, a $0.4 million increase in deferred policy acquisition costs, and a $0.3 million decrease in systems costs. Our underwriting expense ratio increased to 29.6% in 2024 from 29.3% in 2023. 44 Income tax expense.
The Company experienced a $1.7 million decrease in insurance related assessments and a $1.4 million decrease in accounts receivable write-offs mostly on assumed premium from mandatory pooling arrangements. The decrease in insurance related assessments included a benefit of $3.8 million in 2022 due to the return of assessments from the Minnesota Workers' Compensation Reinsurance Association.
The Company experienced a $3.3 million increase in compensation expense, a $0.7 million decrease in profit sharing reinsurance commission, a $0.7 million increase in accounts receivable write-offs, a $0.4 million increase in travel and travel related items, and a $0.3 million increase in commission expense.
Net Investment Income. Net investment income in 2022 was $27.2 million, an increase of 7.0% from the $25.4 million reported in 2021. The increase was due to higher interest rates on cash and fixed income securities in 2022 compared with 2021.
Net Investment Income. Net investment income in 2024 was $29.2 million, a decrease of 6.8% from the $31.3 million reported in 2023. The decrease was due to lower average invested asset balances in the period compared to prior year as well as lower investment yields on fixed income securities and cash compared to prior year.
Removed
These factors could cause our actual results in 2024 and beyond to differ materially from those expressed in, or implied by, those forward-looking statements. Overview AMERISAFE is a holding company that markets and underwrites workers’ compensation insurance through its insurance subsidiaries.
Added
See “Forward-Looking Statements” in Part I above for further discussion. Overview We are a holding company that markets and underwrites workers’ compensation insurance through its insurance subsidiaries. Workers’ compensation insurance covers statutorily prescribed benefits that employers are obligated to provide to their employees who are injured in the course and scope of their employment.
Removed
Employers engaged in hazardous industries pay substantially higher than average rates for workers’ compensation insurance compared to employers in other industries, as measured per payroll dollar. The higher premium rates are due to the nature of the work performed and the inherent workplace danger of our target employers.
Added
These safety reviews are a vital component of our underwriting process and also promote safer workplaces. We utilize intensive claims management practices that we believe permit us to effectively manage the overall cost of our claims.
Removed
For example, for the five-year period ended December 31, 2023 we had recorded 82 severe claims, or an average of 16 severe claims per year for accident years 2019 through 2023.
Added
Ceded premiums increased as we purchased higher levels of reinsurance coverage at generally higher prices in 2024. For additional information, see Item 1, “Business—Reinsurance.” Net Premiums Earned . Net premiums earned for 2024 were $270.6 million, compared to $267.1 million for 2023, an increase of 1.3%. The increase was primarily attributable to the increase in net premiums written.
Removed
The decrease was attributable to a $16.0 million decrease in annual premiums on voluntary policies written during the period primarily driven by continued declines in state approved loss costs. Assumed premium from mandatory pooling arrangements decreased $1.7 million.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+0 added−0 removed9 unchanged
Biggest changeHypothetical Change in Interest Rates Fair Value Estimated Change in Fair Value Carrying Value Estimated Change in Carrying Value Hypothetical Percentage Increase (Decrease) in Shareholders’ Equity 200 basis point increase $ 713,431 $ (76,725 ) $ 770,453 $ (30,187 ) (10.2 )% 100 basis point increase 752,950 (37,206 ) 786,012 (14,627 ) (5.0 )% No change 790,156 — 800,640 — 0.0 % 100 basis point decrease 823,626 33,469 814,174 13,534 4.6 % 200 basis point decrease 854,846 64,690 827,611 26,972 9.1 % Equity Price Risk Equity price risk is the risk that we may incur losses due to adverse changes in the market prices of the equity securities we hold in our investment portfolio.
Biggest changeHypothetical Change in Interest Rates Fair Value Estimated Change in Fair Value Carrying Value Estimated Change in Carrying Value Hypothetical Percentage Increase (Decrease) in Shareholders’ Equity 200 basis point increase $ 631,032 $ (76,439 ) $ 687,398 $ (33,412 ) (12.9 )% 100 basis point increase 669,647 (37,823 ) 704,036 (16,775 ) (6.5 )% No change 707,471 — 720,811 — 0.0 % 100 basis point decrease 741,160 33,690 736,708 15,897 6.1 % 200 basis point decrease 770,983 63,513 751,958 31,147 12.0 % Equity Price Risk Equity price risk is the risk that we may incur losses due to adverse changes in the market prices of the equity securities we hold in our investment portfolio.
We address the credit risk related to the issuers of our fixed maturity securities by primarily investing in fixed maturity securities that are rated as investment grade by one or more of Moody’s, Standard & Poor’s or Fitch. We also independently monitor 49 the financial condition of all issuers of our fixed maturity securities.
We address the credit risk related to the issuers of our fixed maturity securities by primarily investing in fixed maturity securities that are rated as investment grade by one or more of Moody’s, Standard & Poor’s or Fitch. We also independently monitor the financial condition of all issuers of our fixed maturity securities.
In order to minimize our exposure to equity price risk, we independently monitor the financial condition of our equity securities and diversify our investments. In addition, we limit the percentage of equity securities held in our investment portfolio to the lesser of 10% of the investment portfolio or 30% of shareholders’ equity.
In order to minimize our exposure to equity price risk, we independently monitor the financial 50 condition of our equity securities and diversify our investments. In addition, we limit the percentage of equity securities held in our investment portfolio to the lesser of 10% of the investment portfolio or 30% of shareholders’ equity.
The table below summarizes the interest rate risk associated with our fixed maturity securities by illustrating the sensitivity of the fair value and carrying value of our fixed maturity securities as of December 31, 2023 to selected hypothetical changes in interest rates, and the associated impact on our shareholders’ equity.
The table below summarizes the interest rate risk associated with our fixed maturity securities by illustrating the sensitivity of the fair value and carrying value of our fixed maturity securities as of December 31, 2024 to selected hypothetical changes in interest rates, and the associated impact on our shareholders’ equity.
At December 31, 2023, the effective duration of the total investment portfolio, including cash and short-term investments, was 4.2 years.
At December 31, 2024, the effective duration of the total investment portfolio, including cash and short-term investments, was 4.4 years.
Interest Rate Risk Interest rate risk is the risk that we may incur losses due to adverse changes in interest rates. As of December 31, 2023, we had fixed maturity securities with a fair value of $790.2 million and a carrying value of $800.6 million.
Interest Rate Risk Interest rate risk is the risk that we may incur losses due to adverse changes in interest rates. As of December 31, 2024, we had fixed maturity securities with a fair value of $707.5 million and a carrying value of $720.8 million.
As of December 31, 2023, the equity securities in our investment portfolio had a fair value of $57.1 million, representing 6.4% of our investment portfolio and less than 19.5% of shareholders’ equity on that date. 50
As of December 31, 2024, the equity securities in our investment portfolio had a fair value of $58.6 million, representing 7.0% of our investment portfolio and less than 22.8% of shareholders’ equity on that date. 51

Other AMSF 10-K year-over-year comparisons