AMERISAFE INC

Previous wording

We begin our discussion with an overview of our Company to give you an understanding of our business and the markets we serve. We then discuss our critical accounting policies. This is followed with a discussion of our results of operations for the three and six months ended June 30, 2024 and 2023. This discussion includes an analysis of certain significant period-to-period variances in our consolidated statements of operations. Our cash flows and financial condition are discussed under the caption “Liquidity and Capital Resources.”

Current wording

We begin our discussion with an overview of our Company to give you an understanding of our business and the markets we serve. We then discuss our critical accounting policies. This is followed with a discussion of our results of operations for the three and nine months ended September 30, 2024 and 2023. This discussion includes an analysis of certain significant period-to-period variances in our consolidated statements of operations. Our cash flows and financial condition are discussed under the caption “Liquidity and Capital Resources.”

Previous wording

The following table summarizes our consolidated financial results for the three and six months ended June 30, 2024 and 2023.

Current wording

The following table summarizes our consolidated financial results for the three and nine months ended September 30, 2024 and 2023.

Previous wording

Gross Premiums Written. Gross premiums written for the six months ended June 30, 2024 were $156.5 million, compared to $154.2 million for the same period in 2023, an increase of 1.5%. The increase was attributable to a $1.6 million increase in annual premiums on voluntary policies written during the period and a $0.7 million increase in residual market premiums.

Current wording

Gross Premiums Written. Gross premiums written for the quarter ended September 30, 2024 were $74.9 million, compared to $70.8 million for the same period in 2023, an increase of 5.8%. The increase was attributable to a $5.5 million increase in annual premiums on voluntary policies written during the period partially offset by a $1.6 million decrease in premiums resulting from payroll audits and related premium adjustments for policies written in previous quarters.

Previous wording

Net Premiums Written. Net premiums written for the quarter ended June 30, 2024 were $72.4 million, compared to $67.7 million for the same period in 2023, an increase of 6.9%. The increase was primarily attributable to the increase in gross premiums written. As a percentage of gross premiums earned, ceded premiums were 5.5% for the second quarter of 2024 compared to 5.7% for the second quarter of 2023. The decrease in ceded premiums as a percentage of gross premiums earned is a result of a change in our 2024 reinsurance treaties. For additional information, see Item 1, “Business—Reinsurance” in our Annual Report on Form 10-K for the year ended December 31, 2023.

Current wording

Net Premiums Written. Net premiums written for the quarter ended September 30, 2024 were $71.0 million, compared to $66.7 million for the same period in 2023, an increase of 6.4%. The increase was primarily attributable to the increase in gross premiums written. As a percentage of gross premiums earned, ceded premiums were 5.6% for the third quarter of 2024 compared to 5.8% for the third quarter of 2023. The decrease in ceded premiums as a percentage of gross premiums earned is a result of a change in our 2024 reinsurance treaties. For additional information, see Item 1, “Business—Reinsurance” in our Annual Report on Form 10-K for the year ended December 31, 2023.

Previous wording

Net Premiums Earned. Net premiums earned for the second quarter of 2024 were $68.6 million, compared to $65.6 million for the same period in 2023, an increase of 4.6%. The increase was primarily attributable to the increase in net premiums written during the period.

Current wording

Net Premiums Earned. Net premiums earned for the third quarter of 2024 were $67.1 million, compared to $66.6 million for the same period in 2023, an increase of 0.6%. The increase was primarily attributable to the increase in net premiums written during the period.

Previous wording

Net Investment Income. Net investment income for the quarter ended June 30, 2024 was $7.4 million, compared to $7.7 million for the same period in 2023, a decrease of 3.6%. The decrease was due to lower investment yields on fixed income securities and cash balances compared to prior year. Average invested assets, including cash and cash equivalents, were $888.7 million in the quarter ended June 30, 2024 compared to an average of $964.1 million for the same period in 2023, a decrease of 7.8%. The pre-tax investment yield on our investment portfolio was 3.3% per annum during the quarter ended June 30, 2024 compared to 3.2% per annum during the same period in 2023. The tax-equivalent yield on our investment portfolio was 3.8% per annum for the quarter ended June 30, 2024 and 3.6% for the same period in 2023. The tax-equivalent yield is calculated using the effective interest rate and the appropriate marginal tax rate.

Current wording

Net Investment Income. Net investment income for the quarter ended September 30, 2024 was $7.5 million, compared to $8.1 million for the same period in 2023, a decrease of 7.6%. The decrease was due to lower average invested asset balances in the period compared to prior year. Average invested assets, including cash and cash equivalents, were $893.3 million in the quarter ended September 30, 2024 compared to an average of $961.2 million for the same period in 2023, a decrease of 7.1%. The pre-tax investment yield on our investment portfolio was 3.4% per annum during the quarters ended September 30, 2024 and 2023. The tax-equivalent yield on our investment portfolio was 3.8% per annum for the quarters ended September 30, 2024 and 2023. The tax-equivalent yield is calculated using the effective interest rate and the appropriate marginal tax rate.

Previous wording

Net Realized Gains (Losses) on Investments. Net realized losses on investments for the three months ended June 30, 2024 were $0.1 million compared to net realized gains of $0.1 million for the same period in 2023. Net realized losses in the second quarter of 2024 were mostly attributable to sale of equity securities. Net realized gains in the second quarter of 2023 were mostly attributable to sales of fixed maturity securities classified as available-for-sale.

Current wording

Net Realized Gains (Losses) on Investments. Net realized gains on investments for the three months ended September 30, 2024 were $0.2 million compared to net realized gains of $5.1 million for the same period in 2023. Net realized gains in the third quarter of 2024 were mostly attributable to the redemption of fixed maturity securities. Net realized gains in the third quarter of 2023 were mostly attributable to sales of equity and fixed maturity securities classified as available-for-sale.

Previous wording

Net Unrealized Gains (Losses) on Equity Securities. The market value of our equity securities decreased by $0.1 million for the three months ended June 30, 2024 compared to an increase of $2.0 million for the same period in 2023.

Current wording

Net Unrealized Gains (Losses) on Equity Securities. The market value of our equity securities increased by $3.9 million for the three months ended September 30, 2024 compared to a decrease of $7.3 million for the same period in 2023.

Previous wording

Loss and Loss Adjustment Expenses Incurred. Loss and loss adjustment expenses (LAE) incurred totaled $40.6 million for the three months ended June 30, 2024, compared to $35.6 million for the same period in 2023, an increase of $5.0 million, or 14.0%. The current accident year loss and LAE incurred were $48.7 million compared to $46.6 million for the same period in 2023. Our initial estimate of the loss and LAE ratio for accident year 2024 remains unchanged at 71.0% of net premiums earned, consistent with the estimate initially set for accident year 2023, and is based on long-term claim frequency and severity trends, as well as medical inflation. We recorded favorable prior accident year development of $8.1 million in the second quarter of 2024, compared to favorable prior accident year development of $10.9 million in the same period of 2023, as further discussed below in “Prior Year Development.” Our net loss ratio was 59.2% in the second quarter of 2024, compared to 54.3% for the same period of 2023.

Current wording

Loss and Loss Adjustment Expenses Incurred. Loss and loss adjustment expenses (LAE) incurred totaled $39.2 million for the three months ended September 30, 2024, compared to $37.2 million for the same period in 2023, an increase of $2.0 million, or 5.4%. The current accident year loss and LAE incurred were $47.6 million compared to $47.3 million for the same period in 2023. Our initial estimate of the loss and LAE ratio for accident year 2024 remains unchanged at 71.0% of net premiums earned, consistent with the estimate initially set for accident year 2023, and is based on long-term claim frequency and severity trends, as well as medical inflation. We recorded favorable prior accident year development of $8.5 million in the third quarter of 2024, compared to favorable prior accident year development of $10.2 million in the same period of 2023, as further discussed below in “Prior Year Development.” Our net loss ratio was 58.4% in the third quarter of 2024, compared to 55.8% for the same period of 2023.

Previous wording

Underwriting and Certain Other Operating Costs, Commissions and Salaries and Benefits. Underwriting and certain other operating costs, commissions and salaries and benefits for the quarter ended June 30, 2024 were $20.4 million, compared to $20.0 million for the same period in 2023. This increase was primarily due to a $0.6 million increase in insurance related assessments, a $0.5 million increase in professional fees and a $0.3 million increase in compensation expense. Partially offsetting these amounts was an increase of $0.9 million in profit sharing reinsurance commission. Our expense ratio was 29.8% in the second quarter of 2024 compared to 30.4% in the second quarter of 2023.

Current wording

Underwriting and Certain Other Operating Costs, Commissions and Salaries and Benefits. Underwriting and certain other operating costs, commissions and salaries and benefits for the quarter ended September 30, 2024 were $21.3 million, compared to $22.4 million for the same period in 2023. This decrease was primarily due to a $1.6 million decrease in profit sharing reinsurance commission recorded in prior year partially offset by a $0.7 million increase in compensation expense. Our expense ratio was 31.7% in the third quarter of 2024 compared to 33.6% in the third quarter of 2023.

Previous wording

Income Tax Expense. Income tax expense for the three months ended June 30, 2024 was $2.8 million, compared to $3.9 million for the same period in 2023. The effective tax rate for the Company for quarter ended June 30, 2024 was 20.0% compared to 20.1% in the second quarter of 2023. The decrease in the effective tax rate is due to a higher proportion of income from tax-exempt investments for the three months ended June 30, 2024 compared with the same period of 2023.

Current wording

Income Tax Expense. Income tax expense for the three months ended September 30, 2024 was $3.5 million, compared to $2.4 million for the same period in 2023. The effective tax rate for the Company for quarter ended September 30, 2024 was 19.5% compared to 19.2% in the third quarter of 2023. The increase in the effective tax rate is due to a lower proportion of income from tax-exempt investments for the three months ended September 30, 2024 compared with the same period of 2023.

Previous wording

Consolidated Results of Operations for Six Months Ended June 30, 2024 Compared to June 30, 2023

Current wording

Consolidated Results of Operations for Nine Months Ended September 30, 2024 Compared to September 30, 2023

Previous wording

Gross Premiums Written. Gross premiums written for the quarter ended June 30, 2024 were $76.4 million, compared to $71.7 million for the same period in 2023, an increase of 6.6%. The increase was attributable to a $2.5 million increase in payroll audits and related premium adjustments for policies written in previous quarters and a $1.8 million increase in annual premiums on voluntary policies written during the period and a $0.4 million increase in residual market premiums.

Current wording

Gross Premiums Written. Gross premiums written for the nine months ended September 30, 2024 were $231.4 million, compared to $225.0 million for the same period in 2023, an increase of 2.8%. The increase was attributable to a $7.1 million increase in annual premiums on voluntary policies written during the period and a $0.9 million increase in residual market premiums. These increases were partially offset by a $1.5 million decrease in premiums resulting from payroll audits and related premium adjustments for policies written in previous quarters.

Previous wording

Net Premiums Written. Net premiums written for the six months ended June 30, 2024 were $148.5 million, compared to $146.0 million for the same period in 2023, an increase of 1.7%. The increase was primarily attributable to an increase in gross premiums written. As a percentage of gross premiums earned, ceded premiums were 5.5% for the first six months of 2024 compared to 5.7% in the same period of 2023. The decrease in ceded premiums as a percentage of gross premiums earned is a result of a change in our 2024 reinsurance treaties. For additional information, see Item 1, “Business—Reinsurance” in our Annual Report on Form 10-K for the year ended December 31, 2023.

Current wording

Net Premiums Written. Net premiums written for the nine months ended September 30, 2024 were $219.5 million, compared to $212.8 million for the same period in 2023, an increase of 3.2%. The increase was primarily attributable to an increase in gross premiums written. As a percentage of gross premiums earned, ceded premiums were 5.5% for the first nine months of 2024 compared to 5.7% in the same period of 2023. The decrease in ceded premiums as a percentage of gross premiums earned is a result of a change in our 2024 reinsurance treaties. For additional information, see Item 1, “Business—Reinsurance” in our Annual Report on Form 10-K for the year ended December 31, 2023.

Previous wording

Net Premiums Earned. Net premiums earned for the six months ended June 30, 2024 were $137.1 million, compared to $134.8 million for the same period in 2023, an increase of 1.7%. The increase was primarily attributable to the increase in net premiums written during the period.

Current wording

Net Premiums Earned. Net premiums earned for the nine months ended September 30, 2024 were $204.1 million, compared to $201.4 million for the same period in 2023, an increase of 1.3%. The increase was primarily attributable to the increase in net premiums written during the period.

Previous wording

Net Investment Income. Net investment income for the first six months of 2024 was $14.8 million, compared to $15.2 million for the same period in 2023, a decrease of 2.3%. The decrease was due to lower investment yields on fixed income securities and cash balances. Average invested assets, including cash and cash equivalents were $895.2 million in the six months ended June 30, 2024 compared to an average of $962.6 million in the same period in 2023, a decrease of 7.0%. The pre-tax investment yield on our investment portfolio was 3.3% per annum during the six months ended June 30, 2024 compared to 3.2% per annum for the same period in 2023. The tax-equivalent yield on our investment portfolio was 3.8% per annum for the first six months of 2024 compared to 3.6% in the same period in 2023. The tax-equivalent yield is calculated using the effective interest rate and the appropriate marginal tax rate.

Current wording

Net Investment Income. Net investment income for the first nine months of 2024 was $22.3 million, compared to $23.3 million for the same period in 2023, a decrease of 4.1%. 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 balances compared to prior year. Average invested assets, including cash and cash equivalents were $895.5 million in the nine months ended September 30, 2024 compared to an average of $962.1 million in the same period in 2023, a decrease of 6.9%. The pre-tax investment yield on our investment portfolio was 3.3% per annum during the nine months ended September 30, 2024 and 2023. The tax-equivalent yield on our investment portfolio was 3.8% per annum for the first nine months of 2024 and 2023. The tax-equivalent yield is calculated using the effective interest rate and the appropriate marginal tax rate.

Previous wording

Net Realized Gains (Losses) on Investments. Net realized losses on investments for the six months ended June 30, 2024 were $0.3 million compared to net realized gains of $0.3 million for the same period in 2023. Net realized losses in the first six months of 2024 were attributable to sales of equity securities. Net realized gains in the first six months of 2023 were attributable to sales of equity and fixed maturity securities classified as available-for-sale.

Current wording

Net Realized Gains (Losses) on Investments. Net realized losses on investments for the nine months ended September 30, 2024 were $0.2 million compared to net realized gains of $5.5 million for the same period in 2023. Net realized losses in the first nine months of 2024 were attributable to the sale of equity and fixed maturity securities classified as available-for-sale. Net realized gains in the first nine months of 2023 were attributable to the sale of equity securities.

Previous wording

Net Unrealized Gains (Losses) on Equity Securities. The market value of our equity securities increased by $4.7 million for the six months ended June 30, 2024 compared to an increase of $3.4 million for the same period in 2023.

Current wording

Net Unrealized Gains (Losses) on Equity Securities. The market value of our equity securities increased by $8.6 million for the nine months ended September 30, 2024 compared to a decrease of $3.9 million for the same period in 2023.

Previous wording

Loss and Loss Adjustment Expenses Incurred. Loss and LAE incurred totaled $80.6 million for the six months ended June 30, 2024, compared to $74.7 million for the same period in 2023, an increase of $6.0 million, or 8.0%. The current accident year loss and LAE incurred were $97.3 million compared to $95.7 million for the same period in 2023. Our initial estimate of the loss and LAE ratio for accident year 2024 remains unchanged at 71.0% of net premiums earned, consistent with the estimate initially set for accident year 2023, and is based on long-term claim frequency and severity trends, as well as medical inflation. We recorded favorable prior accident year development of $16.7 million in the first six months of 2024, compared to favorable prior accident year development of $21.0 million in the same period of 2023, as further discussed below in “Prior Year Development.” Our net loss ratio was 58.8% in the first six months of 2024, compared to 55.4% for the same period of 2023.

Current wording

Loss and Loss Adjustment Expenses Incurred. Loss and LAE incurred totaled $119.8 million for the nine months ended September 30, 2024, compared to $111.8 million for the same period in 2023, an increase of $8.0 million, or 7.1%. The current accident year loss and LAE incurred were $144.9 million compared to $143.0 million for the same period in 2023. Our initial estimate of the loss and LAE ratio for accident year 2024 remains unchanged at 71.0% of net premiums earned, consistent with the estimate initially set for accident year 2023, and is based on long-term claim frequency and severity trends, as well as medical inflation. We recorded favorable prior accident year development of $25.2 million in the first nine months of 2024, compared to favorable prior accident year development of $31.2 million in the same period of 2023, as further discussed below in “Prior Year Development.” Our net loss ratio was 58.7% in the first nine months of 2024, compared to 55.5% for the same period of 2023.

Previous wording

Underwriting and Certain Other Operating Costs, Commissions and Salaries and Benefits. Underwriting and certain other operating costs, commissions and salaries and benefits for the six months ended June 30, 2024 were $39.1 million, compared to $37.0 million for the same period in 2023, an increase of 5.9%. This increase was primarily due to a decrease in profit sharing reinsurance commission of $2.3 million and an increase in compensation expense of $1.5 million. Offsetting these amounts was a decrease in insurance related assessments of $1.4 million. Our expense ratio was 28.5% in the first six months of 2024 compared to 27.4% for the same period of 2023.

Current wording

Underwriting and Certain Other Operating Costs, Commissions and Salaries and Benefits. Underwriting and certain other operating costs, commissions and salaries and benefits for the nine months ended September 30, 2024 were $60.4 million, compared to $59.3 million for the same period in 2023, an increase of 1.8%. This increase was primarily due to an increase in compensation expense of $2.2 million, a decrease in profit sharing reinsurance commission of $0.8 million and an increase in professional fees of $0.4 million. Offsetting these amounts were a decrease in insurance related assessments of $1.6 million and a $0.5 million decrease in taxes and fees. Our expense ratio was 29.6% in the first nine months of 2024 compared to 29.5% for the same period of 2023.

Previous wording

Income Tax Expense. Income tax expense for the six months ended June 30, 2024 was $6.6 million, compared to $8.1 million for the same period in 2023. The effective tax rate for the Company decreased to 19.1% for the six months ended June 30, 2024 from 19.8% for the six months ended June 30, 2023. The decrease in the effective tax rate is due to a higher proportion of income from tax-exempt investments for the six months ended June 30, 2024 compared with the six months ended June 30, 2023.

Current wording

Income Tax Expense. Income tax expense for the nine months ended September 30, 2024 was $10.0 million, compared to $10.5 million for the same period in 2023. The effective tax rate for the Company decreased to 19.2% for the nine months ended September 30, 2024 from 19.7% for the nine months ended September 30, 2023. The decrease in the effective tax rate is due to a higher proportion of income from tax-exempt investments for the nine months ended September 30, 2024 compared with the nine months ended September 30, 2023.

Previous wording

Net cash provided by operating activities was $4.9 million for the six months ended June 30, 2024, which represented a $15.8 million decrease from $20.7 million in net cash provided by operating activities for the six months ended June 30, 2023. This decrease in operating cash flow was due to a $12.7 million decrease in reinsurance recoveries, a $1.8 million increase in federal taxes paid, a $1.3 million decrease in net investment income and a $0.7 million increase in underwriting expenses paid. Partially offsetting these decreases were a $0.6 million increase in premium collections and a $0.3 million decrease in losses paid.

Current wording

Net cash provided by operating activities was $13.4 million for the nine months ended September 30, 2024, which represented a $12.5 million decrease from $25.9 million in net cash provided by operating activities for the nine months ended September 30, 2023. This decrease in operating cash flow was due to a $12.8 million decrease in reinsurance recoveries, a $2.3 million increase in underwriting expenses paid, a $2.1 million decrease in net investment income and a $0.8 million increase in federal taxes paid. Partially offsetting these decreases were a $2.9 million increase in premium collections, a $1.8 million decrease in losses paid and a $0.6 million decrease in dividends paid to policyholders.

Previous wording

Net cash provided by investing activities was $5.8 million for the six months ended June 30, 2024, compared to net cash used in investment activities of $34.3 million for the same period in 2023. Cash provided by sales and maturities of investments totaled $65.6 million for the six months ended June 30, 2024, compared to $59.7 million for the same period in 2023. A total of $59.1 million in cash was used to purchase investments in the six months ended June 30, 2024, compared to $94.0 million in purchases for the same period in 2023. A total of $0.8 million in cash was used to purchase property and equipment in the six months ended June 30, 2024 compared to immaterial purchases for the same period in 2023.

Current wording

Net cash provided by investing activities was $38.6 million for the nine months ended September 30, 2024, compared to net cash used in investment activities of $7.4 million for the same period in 2023. Cash provided by sales and maturities of investments totaled $125.8 million for the nine months ended September 30, 2024, compared to $116.4 million for the same period in 2023. A total of $86.4 million in cash was used to purchase investments in the nine months ended September 30, 2024, compared to $123.3 million in purchases for the same period in 2023. A total of $0.8 million in cash was used to purchase property and equipment in the nine months ended September 30, 2024 compared to $0.5 million for the same period in 2023.

Previous wording

Net cash used in financing activities in the six months ended June 30, 2024 was $18.8 million compared to net cash used in financing activities of $13.9 million for the same period in 2023. In the six months ended June 30, 2024, $14.2 million of cash was used for dividends paid to shareholders compared to $13.1 million in the same period of 2023. In the six months ended June 30, 2024, there were repurchases of outstanding shares of our common stock of $4.1 million compared to none for the same period in 2023. Share-based compensation related payroll tax withholding was $0.4 million in the six months ended June 30, 2024 compared to $0.8 million in the same period in 2023.

Current wording

Net cash used in financing activities in the nine months ended September 30, 2024 was $27.0 million compared to net cash used in financing activities of $20.7 million for the same period in 2023. In the nine months ended September 30, 2024, $21.3 million of cash was used for dividends paid to shareholders compared to $19.7 million in the same period of 2023. In the nine months ended September 30, 2024, there were repurchases of outstanding shares of our common stock of $5.1 million compared to none for the same period in 2023. Share-based compensation related payroll tax withholding was $0.5 million in the nine months ended September 30, 2024 compared to $0.9 million in the same period in 2023.

Previous wording

Our investment portfolio, including cash and cash equivalents, totaled $884.2 million at June 30, 2024, a decrease of 1.4% from December 31, 2023. Purchases of fixed maturity securities are classified as available-for-sale or held-to-maturity at the time of purchase based on the individual security. The Company has the ability and positive intent to hold certain investments until maturity. Therefore, fixed maturity securities classified as held-to-maturity, as defined by FASB ASC Topic 320, Investments-Debt and Equity Securities, are recorded at amortized cost net of allowance for credit losses. Our equity securities and fixed maturity securities classified as available-for-sale are reported at fair value.

Current wording

Our investment portfolio, including cash and cash equivalents, totaled $899.2 million at September 30, 2024, an increase of 0.3% from December 31, 2023. Purchases of fixed maturity securities are classified as available-for-sale or held-to-maturity at the time of purchase based on the individual security. The Company has the ability and positive intent to hold certain investments until maturity. Therefore, fixed maturity securities classified as held-to-maturity, as defined by FASB ASC Topic 320, Investments-Debt and Equity Securities, are recorded at amortized cost net of allowance for credit losses. Our equity securities and fixed maturity securities classified as available-for-sale are reported at fair value.

Previous wording

The Company recorded favorable prior accident year development of $8.1 million in the three months ended June 30, 2024. The table below sets forth the favorable development for the three and six months ended June 30, 2024 and 2023 for accident years 2019 through 2023 and, collectively, for all accident years prior to 2019.

Current wording

The Company recorded favorable prior accident year development of $8.5 million in the three months ended September 30, 2024. The table below sets forth the favorable development for the three and nine months ended September 30, 2024 and 2023 for accident years 2019 through 2023 and, collectively, for all accident years prior to 2019.

Previous wording

The table below sets forth the number of open claims as of June 30, 2024 and 2023, and the number of claims reported and closed during the three and six months then ended.

Current wording

The table below sets forth the number of open claims as of September 30, 2024 and 2023, and the number of claims reported and closed during the three and nine months then ended.

Previous wording

The number of open claims at June 30, 2024 decreased by 272 claims as compared to the number of open claims at June 30, 2023. At June 30, 2024, our incurred amounts for certain accident years, primarily 2020 through 2022, developed more favorably than management previously expected. The revisions to the Company’s reserves reflect new information gained by claims adjusters in the normal course of adjusting claims and is reflected in the financial statements when the information becomes available. It is typical for more serious claims to take several years or longer to settle and the Company continually revises estimates as more information about claimants’ medical conditions and potential disability becomes known and the claims get closer to being settled. Multiple factors can cause both favorable and unfavorable loss development. The favorable loss development we experienced across accident years was largely due to favorable case reserve development from closed claims and claims where the worker had reached maximum medical improvement.

Current wording

The number of open claims at September 30, 2024 decreased by 314 claims as compared to the number of open claims at September 30, 2023. At September 30, 2024, our incurred amounts for certain accident years, primarily 2017 through 2022, developed more favorably than management previously expected. The revisions to the Company’s reserves reflect new information gained by claims adjusters in the normal course of adjusting claims and is reflected in the financial statements when the information becomes available. It is typical for more serious claims to take several years or longer to settle and the Company continually revises estimates as more information about claimants’ medical conditions and potential disability becomes known and the claims get closer to being settled. Multiple factors can cause both favorable and unfavorable loss development. The favorable loss development we experienced across accident years was largely due to favorable case reserve development from closed claims and claims where the worker had reached maximum medical improvement.