AMERISAFE, Inc.

Good day, everyone, and welcome to the AmeriSafe 2021 First Quarter Earnings Conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Vincent Gagliano, Chief Risk Officer. Please go ahead.

Good morning. Welcome to the AmeriSafe 2021 First 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 factors discussed in today's earnings release, in the comments made during this call, and in the risk factors 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, Vincent, and good morning, everyone. Since our February earnings call, the level of competition in workers' compensation has not changed. Approved loss costs continue to decrease, albeit at a slower rate of decline. There are reports of agents seeing slight rate increases in workers' compensation. However, I believe this is isolated to particular states and industry groups. AmeriSafe has not experienced the ability to raise rates within our classes of business. Overall, insurance carriers are reporting shrinking workers' compensation premiums in part due to pricing and in part due to declining payrolls. Certain industries have not yet rebounded from the pandemic-related unemployment levels and continue to experience lower payrolls. Economic conditions impacted our insurance payrolls, but I conclude to a lesser degree given the industries we insure. Our high-hazard industries were deemed essential during the pandemic, and much of the work was performed outdoors. Driven by increasingly positive economic conditions, we have some optimism for the second half of the year. The increasing number of vaccinations provide optimism for public health and for the economic outlook. In addition, the potential for an infrastructure bill being passed could positively impact the industries we insure. For example, the current proposed bill includes spending on highways, bridges, and roads, which are right in AmeriSafe's wheelhouse. We also saw other positive signs in the quarter. We wrote 4.4% more policies in the quarter compared to the first quarter of 2020. We saw improvement in our new business and continued to experience strong policy retention of 93.4% for those policies for which we offered renewal. Offsetting the policy growth was average loss cost declines of 7.7%. Our ELCM for the quarter was a 154 compared to 157 in the first quarter of 2020. continuing our pattern of being slightly lower each quarter from the prior year. As a result of voluntary premiums written in the quarter, we were down 3% compared to the first quarter of 2020. Additionally, we experienced less robust audit premium in other adjustments. The first quarter of 2021, audit and other premium adjustments were $300,000 compared to $3.6 million in the first quarter of 2020. Still, audit premium for the quarter was positive. which speaks to my earlier comment on our insurers' ability to work during the pandemic. It is an important distinction that generally, audit premium in the first quarter of 2021 reflects the difference in estimated payroll activity for annual policies written in the fourth quarter of 2019. Therefore, the audit premium we recognized are audits conducted during the quarter, which was impacted by the slowing of work activity during the pandemic-related recession. Overall, gross premiums written for the quarter were down 6.4% from the first quarter of 2020. Moving on to losses, the loss in LAE ratio for the quarter was 55.9%. Our loss estimate for accident year 2021 is 72%, down one-half percentage point from the accident year 2020. We spoke about this estimate in our February call. The decline in the estimate is in recognition of favorable severity trends we experienced in more recent accident years. I acknowledge frequency declined, particularly in 2020. However, our book of business is low frequency, high severity. Based on three months of data and our assumptions regarding 2021, we believe the estimate for 2021 to be appropriate. In the quarter, we also experienced favorable case development, particularly in accident years 2015, 2016, 2017, and 2018. This favorable case development resulted in 11.4 million of favorable loss development, decreasing the loss in LAE ratio by 16.1 percentage points. We continue to closely monitor the impact of the pandemic on the cost of claims. Delayed procedures, changes in methods of delivery, and the potential for medical inflation are just some of the factors which influence severity, both on the current accident year and any open claims from prior accident years. We continue to focus on getting injured workers to maximum medical improvement, back to work, and settling claims quickly. I'll now turn the call over to Neil to discuss expenses, the balance sheet, and other financial metrics.