AMERISAFE, Inc.

Good day, everyone, and welcome to the AmeriSafe 2020 Fourth Quarter and Full Year Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Catherine Shirley, Chief Administrator Officer. Please go ahead.

Good morning. Welcome to the AmeriSafe 2020 Fourth 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 results 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 factor section of our Form 10-K, Form 10-Qs, and other reports and filings with the Securities and Exchange Commission. We do not undertake any duty to update any forward-looking statements. I will now turn the call over to Janelle Frost, AmeriSafe's president and CEO.

Thank you, Katherine, and good morning, everyone. It is my pleasure during this call to use the words looking back, and I emphasis on back, at 2020. The year presented us with a global health crisis, social unrest, political divisions, a competitive workers' compensation market, natural disasters, and an economic shutdown. The strength of the human spirit was tested as we were forced to interact and work differently. Looking back at 2020 for the industry, approved loss costs continued to decline. The industry experienced a decline of insured payrolls as unemployment in certain sectors dramatically increased. At the same time, there was significant drop in non-COVID-19 reported claims. The analysis of the impact of COVID-19 on the industry has only just begun. Taking account the many factors of 2020, NCCI anticipated a one percentage point deterioration in the industry's combined ratio through the third quarter. If the estimate is accurate, then workers' compensation will remain a profitable property and casualty line. This will keep competition robust in 2021. Looking back at 2020 for AmeriSafe, we successfully met the year's challenges through our employees' dedication to service and the strong foundation built over years of discipline in underwriting and claims management. The sectors we focus on were less impacted during the pandemic, with our insurers' high-hazard work deemed essential and much of the work taking place outdoors. As a result, the impact to the industry due to unemployment was less impactful to our book. For Amerisafe, audit premium in the quarter remained positive, and this included policy periods impacted by the pandemic. However, audit premium in the fourth quarter of 2020 was less robust than prior year's fourth quarter. Thus, audit premium combined with other adjustments decreased top line $2.8 million by comparison. Looking forward into 2021, the economic recovery in sectors we insure will be impactful to this component of premium. Also, premium for policies written in the quarter was down 7.9%. This decrease aligned with lost cost decreases averaging at 7.4%. Our ELCM for the quarter was a 157, down from 159 in the fourth quarter of 2019. I believe this drop in ELCM illustrates our commitment to remain competitive while remaining disciplined in a declining rate environment. Policy count was relatively flat, with strong retention of 94.4% for those policies for which we offered renewal. We continued to work with our agent network as pandemic-related disruptions hampered new business prospecting and policy count growth. During 2020, we implemented some county expansion and filed for additional pricing tiers in states to help achieve our goal of policy growth. Altogether, these various elements of premium resulted in gross premiums written decreasing 10.8% from the prior year quarter. Continuing to look back at 2020, AmeriSafe, like the industry, also saw fewer reported claims. However, our niche tends toward low-frequency, high-severity claims. The ultimate impact to claim severity due to the pandemic and the strain on the healthcare system is far from being known. As a result, we did not change our current accident year loss ratio of 72.5% in the fourth quarter. We also had significant favorable case development from accident years 2014 through 2018, which resulted in 17.9 million or 24 basis points of favorable prior year losses incurred. We continue to positively be surprised by the amount of favorable case reserve development we see across our accident years, including the more recent accident years. As we look forward to 2021, our initial pick for 2021 will be 72% down a half percentage point from accident year 2020. I'll now turn the call over to Neil to discuss expenses, investments, capital, and other financial metrics.