AMERISAFE, Inc.

Please stand by. We're about to begin. Good day and welcome to the AmeriSafe 2021 Fourth Quarter and Full Year Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Katherine Shirley, Chief Administrative Officer. Please go ahead.

Good morning and welcome to the AmeriSafe 2021 Fourth Quarter Investor Call. If you have not received the earnings release, it is available on our website at 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 risk, uncertainties, and other factors, including factors 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. I'm going to change the usual order of my comments and discuss losses incurred first. For our long-time listeners, you will appreciate my words when I say this is a lumpy business. In the fourth quarter, we had a catastrophic claim involving severe injuries to insured workers as a result of a single accident. Due to the nature of the injuries and information available, we have increased our current accident year loss ratio to 80.7% for the full year. As currently reserved, this claim impacts our catastrophe reinsurance layer. To recap our reinsurance, we are responsible for the first 2 million of each loss occurrence. We are then covered by reinsurers for the next 8 million up to 10 million in the working layer. Then we have catastrophe coverage for the next $60 million in excess of $10 million. The catastrophe coverage does have a $10 million maximum any one life provision, meaning within the layer the most reinsurers will cover per injured worker is $10 million. While the multi-claimant aspect of this claim is unusual for us, dealing with severe injuries is not. This is what we do and have expertly been doing for 36 years. Each quarter, we disclose the number of severe claims in the context of those with case-incurred losses in excess of a million dollars. In 2021, we had 19 severe claims compared to 18 at year-end 2020. We averaged 18 severe claims per year over the last five years. We provide severe claim count as additional insight into our high-hazard niche, and we do so without giving claim-specific information. Out of respect for the injured workers and their families, and to protect medical privacy, we will not share specifics regarding this accident nor the injuries sustained in this catastrophic claim. However, the risk profile of this policy is in our core appetite. The 80.7% loss ratio includes our best estimate for the catastrophic claim and no change in any other loss assumptions regarding the accident year. Frequency trends for accident year 2021 have not returned to pre-pandemic levels, although they are higher than accident year 2020. Severity was also within our expectations, stands the catastrophic claim. As for prior accident years, we recognize $13.6 million of favorable prior year development stemming from accident years 2016 through 2019. The loss ratio for the full year was 58.3%, comprised of 80.7% for the accident year 2021, and a favorable prior year loss ratio of 22.4%. Turning to premiums, DEC premium was down 9.4% for the quarter and 6.3% for the full year. Loss cost declines to continue to be a headwind, averaging a 6.9% decrease in the quarter and a 7% average decrease for the full year. Competition remains strong, and we continue to respond while maintaining underwriting discipline. As such, our renewal policy retention for the quarter was 93.5%. and we were able to grow policy account slightly in 2021 with the addition of new business. New business growth in 2022 is expected to be aided by a stronger economy with fewer COVID variant spikes and improving agent relations. Our aggregate pricing for the quarter as reflected by our ELCM was a 153. To recap each quarter of the year, our ELCM was a 154 in the first quarter, a 152 in the second quarter, and 153 in the third and fourth quarters. Audit premium and related premium adjustments increased gross premiums written 0.1 million in the quarter and decreased gross premiums written 1.2 million for the full year. Audit premium alone was positive in the quarter, rebounding from being slightly negative in the third quarter. Looking ahead, payrolls reported in the fourth quarter reflected growth of roughly 4%. Approximately 70% of that was due to wage growth and 30% to employee count. In total, gross premiums written were down 11.4% in the fourth quarter and 8.2% for the full year. I'll now turn the call over to Neil to discuss the financials.