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AMERISAFE, Inc. AMSF has to its credit more than three decades of operating history as a specialty provider of workers’ compensation insurance for small to mid-sized employers engaged in high-hazard industries.
The line of business that this insurer follows has been profitable so far because it brings to the company higher premiums owing to inherent workplace dangers associated with such policies. The company also has a competitive edge in terms of focusing on specialized underwriting expertise as witnessed by its combined ratios, which are at more favorable levels than its peers. The company’s combined ratio has stayed below 100% since 2006, save 2011, signifying its underwriting profitability.
The insurer also boasts an efficient operating platform. Through extensive cost-management initiatives, AMERISAFE maintains one of the most efficient operations in the workers’ compensation industry. This enabled the company to maintain its operating return on equity.
AMERISAFE’s loss control and safety programs, and active claims management generated favorable underwriting results.
It has been generating increasing cash flow from operations from the past many years. Favorable cash flow generation along with the absence of any long-term debt facilitates disciplined capital deployment.
The company’s capital allocation policy through acquisitions, continued dividend payments and extraordinary dividends each year since 2014 along with share buyback is commendable.
AMERISAFE also carries strong investment grade ratings from A.M.Best with a stable outlook by virtue of its solid level of risk-adjusted capitalization, consistently profitable operating performance and its established position and experience in the workers’ compensation market for high-hazard risks.
Nevertheless, the company’s product concentration and adverse reserve development rendered volatility to its earnings. Persistent premium rate declines since 2015 are another headwind to the company.
Other companies offering workers compensation insurance include The Travelers Companies, Inc. TRV, The Hartford Financial Services Group, Inc. HIG and Chubb Limited CB.
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The Hartford Financial Services Group, Inc. (HIG) : Free Stock Analysis Report
The Travelers Companies, Inc. (TRV) : Free Stock Analysis Report
Chubb Limited (CB) : Free Stock Analysis Report
AMERISAFE, Inc. (AMSF) : Free Stock Analysis Report
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