AMERISAFE, Inc.

Good day, everyone, and welcome to the Amerisafe 2020 Second Quarter Earnings Conference Call. Today's call is being recorded, and at this time, I'd like to turn the conference over to Kathryn Shirley, Chief Administrative Officer. Please go ahead.

Good morning. Welcome to the Amerisafe 2020 Second Quarter Investor Call. If you have not received the earnings release, it is available on our website at www.amerisafe.com. This call is being recorded. A replay of today's call will be available. Details on how to access the replay are in the earnings release. During this call, we will be making forward-looking statements. These statements are based on current expectations and assumptions that are subject to various risks and uncertainties. Actual results may differ materially from the results expressed or implied in these statements If the underlying assumptions prove to be incorrect or as the result of risks, uncertainties, and other factors, including the impact of the COVID-19 pandemic on the business and operations of the company and our policyholders and the market value of the securities in our investment portfolio. Other factors that may affect our results are discussed in today's earnings release. In the comments made during this call and in the risk factors section of our Form 10-K, and other reports and filings with the Securities and Exchange Commission. We do not undertake any duty to update any forward-looking statement. I will now turn the call over to Janelle Frost, AmeriSafe's President and CEO.

Thank you, Kathryn, and good morning, everyone. AmeriSafe and the workers' compensation industry began the year facing rate declines and strong competition. Then a pandemic disrupted the market, the economy, and the workforce. This first 212 days of the year shifted focus for many companies and tested fundamentals. For Amerisafe, our fundamentals are crucial in these unprecedented times. We are serving our stakeholders with disciplined underwriting, proactive safety, and intensive claims management, which produce consistent returns, quality insurance services, and financial stability. This quarter, those fundamentals led to favorable prior year case development and a combined ratio of 78.5%. I will begin with our niche focus fundamental. We ensure small to midsize employers working in hazardous industries. Thus far in this pandemic, those industries appear to be less impacted than Main Street businesses, such as retail and hospitality. Therefore, in the quarter, our gross premiums written were down 7.7% from the second quarter of 2019. Voluntary debt premium was down 6.4%, driven by underlying loss cost declines. Policy count written in the quarter was up 2%, with strong policy retention of 93.7%. Pricing, as reflected in our ELCM, was a 158, The market remains highly competitive, and there is additional uncertainty on what the second wave of infections will mean for employers. Audit premium and related adjustments added $0.5 million to top line, which was a decrease of $1.3 million from the second quarter of 2019. Audit premiums for policies audited in the quarter remained positive. We were pleased during the quarter that our insurers were reporting payrolls, which meant they were working. However, in anticipation of the pandemic and subsequent recession's impact on policy's estimated annual premium, we did record a decline of $1.4 million in the Estimate for Anticipated Future Audit premium, known in the accounting terms as earned but unbilled premium. EBUB is not often a quarterly topic because the estimate does not meaningfully fluctuate. However, you can find a description in the Critical Accounting Policy section of our 10-day. Back to our fundamentals, our disciplined underwriting, proactive safety, and intensive claims management led to a loss ratio of 49.4%, down 9.5 points from the second quarter of 2019. The current accident year loss ratio remains 72.5%, same as the first quarter of 2020 and the full year of 2019. For the current accident year, frequency declined with fewer reported claims and severity was within our expectations. We had 10 COVID-19 claims reported with minimal incurred losses. The primary driver of the declining loss ratio was favorable case development from prior accident years. We continue our focus on achieving maximum medical improvement, returning injured workers to work, and closing claims. The result was $17.5 million of favorable development, primarily attributable to accident years 2015 through 2018. I will now turn the call over to Neil to discuss expenses and other key financial measures.