AMERISAFE INC

Previous wording

The financial and business analysis below provides information which the Company believes is relevant to an assessment and understanding of its consolidated financial position, results of operations and cash flows. The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the notes thereto included in Item 8 of this report. This discussion includes forward-looking statements that are subject to risks, uncertainties and other factors described in Item 1A of this report. These factors could cause our actual results in 2024 and beyond to differ materially from those expressed in, or implied by, those forward-looking statements.

Current wording

The financial and business analysis below provides information which the Company believes is relevant to an assessment and understanding of its consolidated financial position, results of operations and cash flows. The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the notes thereto included in Item 8 of this report. This discussion includes forward-looking statements that are not guarantees of future performance and are not necessarily indicative of future operating results. See “Forward-Looking Statements” in Part I above for further discussion.

Previous wording

AMERISAFE is a holding company that markets and underwrites workers’ compensation insurance through its insurance subsidiaries. Workers’ compensation insurance covers statutorily prescribed benefits that employers are obligated to provide to their employees who are injured in the course and scope of their employment. Our business strategy is focused on providing this coverage to small to mid-sized employers engaged in hazardous industries, principally construction, trucking, logging and lumber, agriculture, manufacturing, telecommunications, and maritime. Employers engaged in hazardous industries pay substantially higher than average rates for workers’ compensation insurance compared to employers in other industries, as measured per payroll dollar. The higher premium rates are due to the nature of the work performed and the inherent workplace danger of our target employers. Hazardous industry employers also tend to have less frequent but more severe claims as compared to employers in other industries due to the nature of their businesses. We provide proactive safety reviews of employers’ workplaces. These safety reviews are a vital component of our underwriting process and also promote safer workplaces. We utilize intensive claims management practices that we believe permit us to reduce the overall cost of our claims. In addition, our audit services ensure that our policyholders pay the appropriate premiums required under the terms of their policies and enable us to monitor payroll patterns that cause underwriting, safety or fraud concerns. We believe that the higher premiums typically paid by our policyholders, together with our disciplined underwriting and safety, claims and audit services, provide us with the opportunity to earn attractive returns for our shareholders.

Current wording

We are a holding company that markets and underwrites workers’ compensation insurance through its insurance subsidiaries. Workers’ compensation insurance covers statutorily prescribed benefits that employers are obligated to provide to their employees who are injured in the course and scope of their employment. Our business strategy is focused on providing this coverage to small to mid-sized employers engaged in hazardous industries, principally construction, trucking, logging and lumber, agriculture, manufacturing, maritime, and telecommunications. Employers engaged in hazardous industries pay substantially higher than average rates for workers’ compensation insurance compared to employers in other industries, as measured per payroll dollar. The higher premium rates are due to the nature of the work performed and the inherent workplace danger of our target employers. Hazardous industry employers also tend to have less frequent but more severe claims as compared to employers in other industries due to the nature of their businesses. We provide proactive safety reviews of most employers’ workplaces. These safety reviews are a vital component of our underwriting process and also promote safer workplaces. We utilize intensive claims management practices that we believe permit us to effectively manage the overall cost of our claims. In addition, our audit services ensure that our policyholders pay the appropriate premiums required under the terms of their policies and enable us to monitor payroll patterns that cause underwriting, safety or fraud concerns. We believe that the higher premiums typically paid by our policyholders, together with our disciplined underwriting and safety, claims and audit services, provide us with the opportunity to earn attractive returns for our shareholders.

Previous wording

Two of the key financial measures that we use to evaluate our performance are return on average equity and growth in book value per share adjusted for dividends paid to shareholders. We calculate return on average equity by dividing annual net income by the average of annual shareholders’ equity. Our return on average equity was 20.4% in 2023, 15.5% in 2022 and 15.7% in 2021 . We calculate book value per share by dividing ending shareholders’ equity by the number of common shares outstanding. Our book value per share was $15.28 at December 31, 2023, $16.57 at December 31, 2022 and $20.62 at December 31, 2021. We paid cash dividends of $4.86 per share in 2023, $5.24 per share in 2022 and $5.16 per share in 2021.

Current wording

Two of the key financial measures that we use to evaluate our performance are return on average equity and growth in book value per share adjusted for dividends paid to shareholders. We calculate return on average equity by dividing annual net income by the average of annual shareholders’ equity. Our return on average equity was 20.2% in 2024, 20.4% in 2023 and 15.5% in 2022. We calculate book value per share by dividing ending shareholders’ equity by the number of common shares outstanding. Our book value per share was $13.51 at December 31, 2024, $15.28 at December 31, 2023 and $16.57 at December 31, 2022. We paid cash dividends of $4.48 per share in 2024, $4.86 per share in 2023 and $5.24 per share in 2022.

Previous wording

Investment income is an important element of our net income. Because the period of time between our receipt of premiums and the ultimate settlement of claims is often several years or longer, we are able to invest cash from premiums for significant periods of time. As a result, we are able to generate more investment income from our premiums as compared to insurance companies that operate in other lines of business that pay claims more quickly. At December 31, 2023, our investment portfolio, including cash and cash equivalents, was $896.5 million and produced net investment income of $31.3 million in 2023, $27.2 million in 2022 and $25.4 million in 2021.

Current wording

Investment income is an important element of our net income. Because the period of time between our receipt of premiums and the ultimate settlement of claims is often several years or longer, we are able to invest cash from premiums for significant periods of time. As a result, we are able to generate more investment income from our premiums as compared to insurance companies that operate in other lines of business that pay claims more quickly. At December 31, 2024, our investment portfolio, including cash and cash equivalents, was $832.8 million and produced net investment income of $29.2 million in 2024, $31.3 million in 2023 and $27.2 million in 2022.

Previous wording

Our most significant balance sheet liability is our reserve for loss and loss adjustment expenses. We record reserves for estimated losses under insurance policies that we write and for loss adjustment expenses related to the investigation and settlement of claims. Our reserves for loss and loss adjustment expenses represent the estimated cost of all reported and unreported loss and loss adjustment expenses incurred and unpaid at any given point in time based on known facts and circumstances. Reserves are based on estimates of the most likely ultimate cost of individual claims. These estimates are inherently uncertain. In addition, there are no policy limits on the liability for workers’ compensation claims as there are for other forms of insurance. Therefore, estimating reserves for workers’ compensation claims may be more uncertain than estimating reserves for other types of insurance claims with shorter or more definite periods between occurrence of the claim and final determination of the loss and with policy limits on liability for claim amounts.

Current wording

Our most significant balance sheet liability is our reserve for loss and loss adjustment expenses. We record reserves for estimated losses under insurance policies that we write and for loss adjustment expenses related to the investigation and settlement of claims. Reserves are based on estimates of the most likely ultimate cost of individual claims. Our reserves for loss and loss adjustment expenses represent the estimated cost of all reported and unreported loss and loss adjustment expenses incurred and unpaid at any given point in time based on known facts and circumstances. These estimates are inherently uncertain. In addition, there are no policy limits on the liability for workers’ compensation claims as there are for other forms of insurance. Therefore, estimating reserves for workers’ compensation claims may be more uncertain than estimating reserves for other types of insurance claims with shorter or more definite periods between occurrence of the claim and final determination of the loss and with policy limits on liability for claim amounts.

Previous wording

For example, for the five-year period ended December 31, 2023 we had recorded 82 severe claims, or an average of 16 severe claims per year for accident years 2019 through 2023. The number of severe claims in any one accident year in this five-year period ranged from a low of 9 in 2023 to a high of 20 in 2021 and 2022. The average reported case severity for these claims ranged from $2.28 million for the 2023 accident year to $3.91 million for the 2021 accident year. For the five accident years, the case incurred for these severe claims accounted for an average of 16.6 percentage points of our overall loss and loss adjustment expense (LAE) ratio, measured at December 31, 2023.

Current wording

For example, for the five-year period ended December 31, 2024 we recorded 86 severe claims, representing an average of 17 severe claims per year for accident years 2020 through 2024. The number of severe claims in any one accident year in this five-year period ranged from a low of 14 in 2023 to a high of 20 in 2021. The average reported case severity for these claims ranged from $2.28 million for the 2023 accident year to $3.96 million for the 2021 accident year. For the five accident years, the case incurred for these severe claims accounted for an average of 18.2 percentage points of our overall loss and loss adjustment expense (LAE) ratio, measured at December 31, 2024.

Previous wording

A key assumption used by management in establishing loss reserves is that average per claim case incurred loss and loss adjustment expenses will increase year over year. We believe this increase primarily reflects medical and wage inflation and utilization. However, changes in per average claim case incurred loss and loss adjustment expenses can also be affected by frequency of severe claims in the applicable accident years.

Current wording

A key assumption used by management in establishing loss reserves is that average per claim case incurred loss and loss adjustment expenses will increase year over year. We believe this increase primarily reflects medical and wage inflation and utilization. However, changes in average per claim case incurred loss and loss adjustment expenses can also be affected by the frequency of severe claims in the applicable accident years.

Previous wording

Our gross reserves for loss and loss adjustment expenses at December 31, 2023, 2022 and 2021 were $674.0 million, $696.0 million and $745.3 million, respectively. As a percentage of gross reserves at year end, IBNR represented 17.8% in 2023, 17.1% in 2022 and 16.1% in 2021.

Current wording

Our gross reserves for loss and loss adjustment expenses at December 31, 2024, 2023 and 2022 were $651.3 million, $674.0 million and $696.0 million, respectively. As a percentage of gross reserves at year end, IBNR represented 16.5% in 2024, 17.8% in 2023 and 17.1% in 2022.

Previous wording

In 2023, we decreased our estimates for prior year loss reserves by $41.4 million. In 2022, we decreased our estimates for prior year loss reserves by $40.6 million. In 2021, we decreased our estimates for prior year loss reserves by $61.9 million.

Current wording

In 2024, we decreased our estimates for prior year loss reserves by $34.9 million. In 2023, we decreased our estimates for prior year loss reserves by $41.4 million. In 2022, we decreased our estimates for prior year loss reserves by $40.6 million.

Previous wording

Net Premiums Earned. Net premiums earned is the earned portion of our net premiums written. Net premiums written is equal to gross premiums written less premiums ceded to reinsurers. Gross premiums written includes the estimated annual premiums from each insurance policy we write in our voluntary and assigned risk businesses during a reporting period based on the policy effective date or the date the policy is bound, whichever is later.

Current wording

Net Premiums Earned. Net premiums earned is the earned portion of our net premiums written. Net premiums written is equal to gross premiums written less premiums ceded to reinsurers. Gross premiums written includes the estimated annual premiums from each insurance policy we write in our voluntary business and assumed premiums from mandatory pooling arrangements during a reporting period based on the policy effective date or the date the policy is bound, whichever is later.

Previous wording

We review the estimate of EBUB premiums on a quarterly basis using historical data and applying various assumptions based on the current market and economic conditions, and we record an adjustment to premium, related losses, and expenses as warranted.

Current wording

We review the estimate of EBUB premiums on a quarterly basis using historical data and applying various assumptions based on the current market and economic conditions, and we record an adjustment to premiums, related losses, and expenses as warranted.

Previous wording

In establishing our reserves, we review the results of analyses using actuarial methods that utilize historical loss data from our more than 38 years of underwriting workers’ compensation insurance. The actuarial analysis of our historical data provides the factors we use in estimating our loss reserves. These factors are primarily measures over time of the number of claims paid and reported, average paid and incurred claim amounts, claim closure rates and claim payment patterns. In evaluating the results of our analyses, management also uses substantial judgment in considering other factors that are not considered in these actuarial analyses, including changes in business mix, claims management, regulatory issues, medical trends, employment and wage patterns, insurance policy coverage interpretations, judicial determinations and other subjective factors. Due to the inherent uncertainty associated with these estimates, and the cost of incurred but unreported claims, our actual liabilities may vary significantly from our original estimates.

Current wording

In establishing our reserves, we review the results of analyses using actuarial methods that utilize historical loss data from our more than 39 years of underwriting workers’ compensation insurance. The actuarial analysis of our historical data provides the factors we use in estimating our loss reserves. These factors are primarily measures over time of the number of claims paid and reported, average paid and incurred claim amounts, claim closure rates and claim payment patterns. In evaluating the results of our analyses, management also uses substantial judgment in considering other factors that are not considered in these actuarial analyses, including changes in business mix, claims management, regulatory issues, medical trends, employment and wage patterns, insurance policy coverage interpretations, judicial determinations and other subjective factors. Due to the inherent uncertainty associated with these estimates, and the cost of incurred but unreported claims, our actual liabilities may vary significantly from our original estimates.

Previous wording

Share-Based Compensation. In accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718, Compensation-Stock Compensation, we recognize compensation costs for restricted stock, performance-based stock and stock option awards over the applicable vesting periods.

Current wording

Share-Based Compensation. In accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718, Compensation-Stock Compensation, we recognize compensation costs for restricted stock, restricted stock units, performance-based stock and stock option awards over the applicable vesting periods.

Previous wording

Gross Premiums Written. Gross premiums written for 2022 were $276.1 million, compared to $278.3 million for 2021, a decrease of 0.8%. The decrease was attributable to a $16.0 million decrease in annual premiums on voluntary policies written during the period primarily driven by continued declines in state approved loss costs. Assumed premium from mandatory pooling arrangements decreased $1.7 million. The decreases were partially offset by a $15.2 million increase in premiums resulting from payroll audits and related premium adjustments for policies written in previous quarters.

Current wording

Gross Premiums Written. Gross premiums written for 2024 were $294.1 million, compared to $285.4 million for 2023, an increase of 3.1%. The increase was attributable to an $11.7 million increase in annual premiums on voluntary policies written during the period and a $1.0 million increase in residual market premiums. These increases were partially offset by a $3.9 million decrease in premiums resulting from payroll audits and related premium adjustments for policies written in previous periods.

Previous wording

Net Premiums Written. Net premiums written for 2022 were $265.6 million, compared to $267.8 million for 2021, a decrease of 0.8%. The decrease was primarily attributable to the decrease in gross premiums written. As a percentage of gross premiums earned, ceded premiums were 3.7% for 2022 and 2021, respectively. For additional information, see Item 1, “Business—Reinsurance.”

Current wording

Net Premiums Written. Net premiums written for 2024 were $276.0 million, compared to $268.7 million for 2023, an increase of 2.7%. The increase was primarily attributable to the increase in gross premiums written. As a percentage of gross premiums earned, ceded premiums were 6.3% for 2024 compared to 5.9% for 2023. Ceded premiums increased as we purchased higher levels of reinsurance coverage at generally higher prices in 2024. For additional information, see Item 1, “Business—Reinsurance.”

Previous wording

Net Investment Income. Net investment income in 2022 was $27.2 million, an increase of 7.0% from the $25.4 million reported in 2021. The increase was due to higher interest rates on cash and fixed income securities in 2022 compared with 2021. The average pre-tax investment yield on our investment portfolio was 2.7% per annum for 2022 versus 2.3% per annum for 2021. The year-end tax-equivalent yield on our investment portfolio was 3.4% per annum for 2022, compared to 2.7% per annum for 2021. The tax-equivalent yield is calculated using the effective interest rate and the appropriate marginal tax rate. Average invested assets, including cash and cash equivalents, decreased 8.7%, from an average of $1,151.8 million for 2021 to an average of $1,051.2 million for 2022.

Current wording

Net Investment Income. Net investment income in 2024 was $29.2 million, a decrease of 6.8% from the $31.3 million reported in 2023. 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 compared to prior year. The average pre-tax investment yield on our investment portfolio was 3.4% per annum for 2024 and 2023. The year-end tax-equivalent yield on our investment portfolio was 3.8% per annum for 2024, compared to 3.7% per annum for 2023. The tax-equivalent yield is calculated using the effective interest rate and the appropriate marginal tax rate. Average invested assets, including cash and cash equivalents, decreased 6.9%, from an average of $955.8 million for 2023 to an average of $890.4 million for 2024.

Previous wording

Net Realized Gains (Losses) on Investments. Net realized gains on investments in 2022 totaled $3.4 million, compared to gains of $1.7 million in 2021. In 2022, net realized gains resulted primarily from the sale of equity securities. In 2021, net realized gains of $1.7 million resulted from the sale of fixed maturity securities classified as available-for-sale.

Current wording

Net Realized Gains (Losses) on Investments. Net realized losses on investments in 2024 totaled $0.6 million compared to gains of $6.6 million in 2023. In 2024, net realized losses resulted primarily from the sale of equity and fixed maturity securities classified as available-for-sale as well as the redemption of fixed maturity securities. In 2023, net realized gains resulted primarily from the sale of equity securities.

Previous wording

Net Unrealized Gains (Losses) on Equity Securities. Net unrealized losses on equity securities in 2022 were $8.1 million compared to net unrealized gains of $12.3 million in 2021 due to declines in the equity markets.

Current wording

Net Unrealized Gains (Losses) on Equity Securities. Net unrealized gains on equity securities in 2024 were $9.5 million compared to net unrealized gains of $1.2 million in 2023.

Previous wording

Loss and Loss Adjustment Expenses Incurred. Loss and LAE incurred totaled $152.3 million for 2022, compared to $160.8 million for 2021, a decrease of $8.5 million, or 5.3%. The current accident year losses and LAE incurred were $192.9 million, or 71.0% of net premiums earned, compared to $222.7 million, or 80.7% of net premiums earned for 2021. We recorded favorable prior accident year development of $40.6 million in 2022, compared to $61.9 million in 2021. This is discussed in more detail below in “Prior Year Development.” Our net loss ratio was 56.1% for 2022 and 58.3% for 2021.

Current wording

Loss and Loss Adjustment Expenses Incurred. Loss and LAE incurred totaled $157.3 million for 2024, compared to $148.3 million for 2023, an increase of $9.0 million, or 6.1%. The current accident year losses and LAE incurred were $192.2 million, or 71.0% of net premiums earned, compared to $189.7 million, or 71.0% of net premiums earned for 2023. We recorded favorable prior accident year development of $34.9 million in 2024, compared to $41.4 million in 2023. This is discussed in more detail below in “Prior Year Development.” Our net loss ratio was 58.1% for 2024 and 55.5% for 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 2022 were $72.0 million, compared to $72.1 million for 2021. The Company experienced a $1.7 million decrease in insurance related assessments and a $1.4 million decrease in accounts receivable write-offs mostly on assumed premium from mandatory pooling arrangements. The decrease in insurance related assessments included a benefit of $3.8 million in 2022 due to the return of assessments from the Minnesota Workers' Compensation Reinsurance Association. Offsetting these amounts were a $0.9 million decrease in profit sharing reinsurance commission, an increase of $0.6 million in systems cost, and an increase of $0.6 million in compensation expense. Our underwriting expense ratio increased to 26.5% in 2022 from 26.1% in 2021.

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 2024 were $80.1 million, compared to $78.3 million for 2023. The Company experienced a $3.3 million increase in compensation expense, a $0.7 million decrease in profit sharing reinsurance commission, a $0.7 million increase in accounts receivable write-offs, a $0.4 million increase in travel and travel related items, and a $0.3 million increase in commission expense. Offsetting these amounts were a $2.2 million decrease in insurance related assessments, a $0.4 million increase in ceding commission related to our current year reinsurance agreement, a $0.4 million increase in deferred policy acquisition costs, and a $0.3 million decrease in systems costs. Our underwriting expense ratio increased to 29.6% in 2024 from 29.3% in 2023.

Previous wording

The Company recorded favorable prior accident year loss and loss adjustment expense development of $41.4 million in calendar year 2023, $40.6 million in calendar year 2022 and $61.9 million in calendar year 2021. The table below sets forth the favorable development for accident years 2018 through 2022 and, collectively, all accident years prior to 2018.

Current wording

The Company recorded favorable prior accident year loss and loss adjustment expense development of $34.9 million in calendar year 2024, $41.4 million in calendar year 2023 and $40.6 million in calendar year 2022. The table below sets forth the favorable development for accident years 2019 through 2023 and, collectively, all accident years prior to 2019.

Previous wording

The table below sets forth the number of open claims as of December 31, 2023, 2022 and 2021, and the numbers of claims reported and closed during the years then ended.

Current wording

The table below sets forth the number of open claims as of December 31, 2024, 2023 and 2022, and the number of claims reported and closed during the years then ended.

Previous wording

Our principal sources of operating funds are premiums, investment income, and proceeds from maturities of investments. Our primary uses of operating funds include payments for claims and operating expenses. We pay claims, operating expenses, shareholder dividends and repurchases using cash flow from operations and invest our excess cash in fixed maturity and equity securities. We expect that our projected cash flow from operations will provide us sufficient liquidity to fund future operations, including payment of claims and operating expenses and other holding company expenses, for at least the next 18 months.

Current wording

Our principal sources of operating funds are premiums, investment income, and proceeds from maturities of investments. Our primary uses of operating funds include payments for claims and operating expenses. We pay claims, operating expenses, shareholder dividends and repurchases using cash flow from operations and invest our excess cash in fixed maturity and equity securities. We expect that our projected cash flow from operations will provide us sufficient liquidity to fund future operations, including payment of claims and operating expenses and other holding company expenses, for at least the next 12 months.

Previous wording

We forecast claim payments based on our historical trends. We seek to manage the funding of claim payments by actively managing available cash and forecasting cash flows on a short- and long-term basis. Cash payments, net of reinsurance, for claims were $177.5 million in 2023, $194.8 million in 2022 and $189.6 million in 2021. We fund claim payments out of cash flow from operations, principally premiums, net of amounts ceded to our reinsurers, and net investment income. Our investment portfolio at December 31, 2023 was $896.5 million.

Current wording

We forecast claim payments based on our historical trends. We seek to manage the funding of claim payments by actively managing available cash and forecasting cash flows on a short- and long-term basis. Cash payments, net of reinsurance, for claims were $172.9 million in 2024, $177.5 million in 2023 and $194.8 million in 2022. We fund claim payments out of cash flow from operations, principally premiums, net of amounts ceded to our reinsurers, and net investment income. Our investment portfolio at December 31, 2024 was $832.8 million.

Previous wording

We manage risk on certain long-duration claims by settling these claims through the purchase of annuities from unaffiliated life insurance companies. In the event these companies are unable to meet their obligations under these annuity contracts, we could be liable to the claimants, but our reinsurers remain obligated to indemnify us for all or part of these obligations in accordance with the terms of our reinsurance contracts. As of December 31, 2023, the present value of these annuities was $106.9 million, as estimated by our annuity providers. Substantially all of the annuities are issued or guaranteed by life insurance companies that have an A.M. Best rating of “A” (Excellent) or better. For additional information, see Note 16 to our consolidated financial statements in Item 8 of this report.

Current wording

We manage risk on certain long-duration claims by settling these claims through the purchase of annuities from unaffiliated life insurance companies. In the event these companies are unable to meet their obligations under these annuity contracts, we could be liable to the claimants, but our reinsurers remain obligated to indemnify us for all or part of these obligations in accordance with the terms of our reinsurance contracts. As of December 31, 2024, the present value of these annuities was $109.7 million, as estimated by our annuity providers. Substantially all of the annuities are issued or guaranteed by life insurance companies that have an A.M. Best rating of “A” (Excellent) or better. For additional information, see Note 16 to our consolidated financial statements in Item 8 of this report.

Previous wording

The Company has operating and finance leases for office space and equipment. Our leases have remaining lease terms of one month to 47 months, some of which include options to extend the leases for up to five years. The Company, in determining the present value of lease payments, utilizes either the rate implicit in the lease if that rate is readily determinable or the Company’s incremental secured borrowing rate commensurate with the term of the underlying lease.

Current wording

The Company has operating and finance leases for office space and equipment. Our leases have remaining lease terms of one month to 49 months, some of which include options to extend the leases for up to five years. The Company, in determining the present value of lease payments, utilizes either the rate implicit in the lease if that rate is readily determinable or the Company’s incremental secured borrowing rate commensurate with the term of the underlying lease.

Previous wording

Net cash provided by operating activities was $29.8 million in 2023, as compared to $28.2 million in 2022, and $38.0 million in 2021. Major components of cash provided by operating activities in 2023 were net premiums collected of $261.0 million, investment income collected of $34.5 million, and reinsurance recoveries collected of $16.0 million. These amounts were offset in-part by claim payments of $172.9 million, $73.9 million of operating expenditures, federal taxes paid of $14.0 million, and dividends to policyholders paid of $3.5 million.

Current wording

Net cash provided by operating activities was $24.2 million in 2024, as compared to $29.8 million in 2023, and $28.2 million in 2022. Major components of cash provided by operating activities in 2024 were net premiums collected of $263.2 million, investment income collected of $31.6 million, and reinsurance recoveries collected of $0.3 million. These amounts were offset in part by claim payments of $182.4 million, $71.5 million of operating expenditures, federal taxes paid of $11.8 million, and dividends to policyholders paid of $4.2 million.

Previous wording

Net cash provided by investing activities was $43.9 million in 2023, as compared to net cash provided by investing activities of $75.4 million in 2022 and net cash provided by investing activities of $71.0 million in 2021. In 2023, major components of net cash provided by investing activities included proceeds from sales and maturities of investments of $178.1 million, offset by investment purchases of $133.7 million.

Current wording

Net cash provided by investing activities was $72.4 million in 2024, as compared to net cash provided by investing activities of $43.9 million in 2023 and net cash provided by investing activities of $75.4 million in 2022. In 2024, major components of net cash provided by investing activities included proceeds from sales and maturities of investments of $183.9 million, offset by investment purchases of $110.7 million.

Previous wording

Net cash used in financing activities was $96.5 million in 2023, as compared to $112.9 million in 2022 and $100.0 million in 2021. Major components of cash used in financing activities in 2023 included cash used for dividends paid to shareholders of $93.3 million, purchases of treasury stock of $2.2 million, and share-based compensation related tax withholding of $0.9 million.

Current wording

Net cash used in financing activities was $91.2 million in 2024, as compared to $96.5 million in 2023 and $112.9 million in 2022. Major components of cash used in financing activities in 2024 included cash used for dividends paid to shareholders of $85.4 million, purchases of treasury stock of $5.1 million, and share-based compensation related tax withholding of $0.6 million.

Previous wording

The Board of Directors initially authorized the Company’s share repurchase program in February 2010. In October 2016, the Board reauthorized this program with a limit of $25.0 million with no expiration date. As of December 31, 2023, we had repurchased a total of 1,569,440 shares of our outstanding common stock for $36.9 million. The Company had $10.4 million available for future purchases at December 31, 2023 under this program. There were 46,741 and 264,449 shares repurchased in 2023 and 2022, respectively. The purchases may be effected from time to time depending upon market conditions and subject to applicable regulatory considerations. It is anticipated that future purchases will be funded from available capital.

Current wording

Our board of directors initially authorized the Company’s share repurchase program in February 2010. In October 2016, the Board reauthorized this program with a limit of $25.0 million with no expiration date. As of December 31, 2024, we had repurchased a total of 1,682,851 shares of our outstanding common stock for $42.1 million. The Company had $5.3 million available for future repurchases at December 31, 2024 under this program. There were 113,411 and 46,741 shares repurchased in 2024 and 2023, respectively. The repurchases may be effected from time to time depending upon market conditions and subject to applicable regulatory considerations. It is anticipated that future repurchases will be funded from available capital.

Previous wording

AMERISAFE is a holding company that transacts business through its operating subsidiaries, including AIIC, SOCI and AIICTX. AMERISAFE’s primary assets are the capital stock of these insurance subsidiaries. The ability of AMERISAFE to fund its operations depends upon the surplus and earnings of its subsidiaries and their ability to pay dividends to AMERISAFE. Payment of dividends by our insurance subsidiaries is restricted by state insurance laws, including laws establishing minimum solvency and liquidity thresholds. Based upon the prescribed calculation, the insurance subsidiaries could pay to AMERISAFE dividends of up to $52.6 million in 2024 without seeking regulatory approval. See “Business—Regulation—Dividend Limitations” in Item 1 of this report.

Current wording

We are a holding company that transacts business through its operating subsidiaries, including AIIC, SOCI and AIICTX. Our primary assets are the capital stock of these insurance subsidiaries. Our ability to fund our operations depends upon the surplus and earnings of our subsidiaries and their ability to pay dividends to us. Payment of dividends by our insurance subsidiaries is restricted by state insurance laws, including laws establishing minimum solvency and liquidity thresholds. Based upon the prescribed calculation, the insurance subsidiaries could pay us dividends of up to $50.8 million in 2025 without seeking regulatory approval. See “Business—Regulation—Dividend Limitations” in Item 1 of this report.

Previous wording

The Company paid regular quarterly cash dividends of $0.34, $0.31, and $0.29 per share in 2023, 2022 and 2021, respectively. In addition, the Company paid extraordinary cash dividends of $3.50 in 2023 and $4.00 per share in both 2022 and 2021.

Current wording

We paid regular quarterly cash dividends of $0.37, $0.34, and $0.31 per share in 2024, 2023 and 2022, respectively. In addition, the Company paid extraordinary cash dividends of $3.00 in 2024, $3.50 per share in 2023, and $4.00 in 2022.

Previous wording

On February 19, 2024, the Company declared a regular quarterly cash dividend of $0.37 per share payable on March 22, 2024 to shareholders of record as of March 8, 2024. The Board intends to continue to consider the payment of a regular cash dividend each calendar quarter. On an annualized basis, the cash dividend is expected to be $1.48 per share in 2024.

Current wording

On February 25, 2025, we declared a regular quarterly cash dividend of $0.39 per share payable on March 21, 2025 to shareholders of record as of March 7, 2025. Our board of directors intends to continue to consider the payment of a regular cash dividend each calendar quarter. On an annualized basis, the cash dividend is expected to be $1.56 per share in 2025.

Previous wording

We allocate our portfolio into four categories: cash and cash equivalents, short-term investments, fixed maturity securities and equity securities. Cash and cash equivalents include cash on deposit, money market funds and municipal securities, corporate securities and certificates of deposit with a maturity date, at the time of purchase, of 90 days or less. Short-term investments include municipal securities, corporate securities and certificates of deposit with an original maturity greater than 90 days but less than one year. Our fixed maturity securities include obligations of the U.S. Treasury or U.S. agencies, obligations of states and their subdivisions, U.S. Dollar-denominated obligations of the U.S. or Canadian corporations, U.S. agency mortgage-backed securities, commercial mortgage-backed securities and asset-backed securities.

Current wording

We allocate our investment portfolio into four categories: cash and cash equivalents, short-term investments, fixed maturity securities and equity securities. Cash and cash equivalents include cash on deposit, money market funds and municipal securities, corporate securities and certificates of deposit with a maturity date, at the time of purchase, of 90 days or less. Short-term investments include municipal securities, corporate securities and certificates of deposit with an original maturity greater than 90 days but less than one year. Our fixed maturity securities include obligations of the U.S. Treasury or U.S. agencies, obligations of states and their subdivisions, U.S. Dollar-denominated obligations of the U.S. or Canadian corporations, U.S. agency mortgage-backed securities, commercial mortgage-backed securities and asset-backed securities.

Previous wording

Under Nebraska and Texas law, as applicable, each of AIIC, SOCI and AIICTX is required to invest only in securities that are either interest-bearing, interest-accruing or eligible for dividends, and must limit its investment in the securities of any single issuer, other than direct obligations of the United States, to five percent of the insurance company’s assets. As of December 31, 2023, we were in compliance with these requirements.

Current wording

Under Nebraska and Texas law, as applicable, each of AIIC, SOCI and AIICTX is required to invest only in securities that are either interest-bearing, interest-accruing or eligible for dividends, and must limit its investment in the securities of any single issuer, other than direct obligations of the U.S., to five percent of the insurance company’s assets. As of December 31, 2024, we were in compliance with these requirements.

Previous wording

As of December 31, 2023, our investment portfolio, including cash and cash equivalents, totaled $896.5 million, a decrease of 5.7% from December 31, 2022. The majority of our fixed maturity securities are classified as held-to-maturity, as defined by FASB ASC Topic 320, Investments-Debt and Equity Securities. As such, the reported book value of those securities is equal to their amortized cost net of allowance for credit losses and does not fluctuate based on changing interest rates. The remainder of our fixed maturity securities are classified as available-for-sale and reported at fair market value, less an allowance for credit losses, if any. Investments in equity securities are reported at fair market value.

Current wording

As of December 31, 2024, our investment portfolio, including cash and cash equivalents, totaled $832.8 million, a decrease of 7.1% from December 31, 2023. The majority of our fixed maturity securities are classified as held-to-maturity, as defined by FASB ASC Topic 320, Investments-Debt and Equity Securities. As such, the reported book value of those securities is equal to their amortized cost net of allowance for credit losses and does not fluctuate based on changing interest rates. The remainder of our fixed maturity securities are classified as available-for-sale and reported at fair market value, less an allowance for credit losses, if any. Investments in equity securities are reported at fair market value.

Previous wording

We follow FASB ASC Topic 820, Fair Value Measurements and Disclosures, which defines fair value, establishes a fair value hierarchy and requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. As disclosed in Note 18 of the financial statements, our securities available-for-sale are classified using Level 1, 2 and 3 inputs. We did not elect the fair value option prescribed under FASB ASC Topic 825, Financial Instruments, for any financial assets in 2022 or 2023.

Current wording

We follow FASB ASC Topic 820, Fair Value Measurements and Disclosures, which defines fair value, establishes a fair value hierarchy and requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. As disclosed in Note 18 to our financial statements, our securities available-for-sale are classified using Level 1, 2 and 3 inputs. We did not elect the fair value option prescribed under FASB ASC Topic 825, Financial Instruments, for any financial assets in 2023 or 2024.

Previous wording

The pre-tax investment yield on our investment portfolio was 3.4% and 2.7% per annum during the twelve months ended December 31, 2023 and 2022, respectively.

Current wording

The pre-tax investment yield on our investment portfolio was 3.4% per annum during the twelve months ended December 31, 2024 and 2023.