Amerisafe (AMSF) AI Stock Analysis

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Amerisafe

(NASDAQ:AMSF)

Rating:72Outperform

Price Target:―

Amerisafe's stock score reflects a solid financial foundation with zero debt and a strong equity position, though it faces challenges in profitability and cash flow growth. Technical indicators show a bearish trend, impacting near-term sentiment. Valuation metrics are fair, and the earnings call highlights both operational strengths and financial challenges.

Positive Factors

Earnings

Analyst reiterates a Market Outperform rating on Amerisafe following strong results.

Premium Growth

Voluntary premium growth accelerated by 9%, reflecting increased policy count and strong retention.

Negative Factors

Financial Performance

Operating EPS was below the initial estimate, driven by a higher expense ratio and slightly lower net investment income.

Amerisafe (AMSF) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$898.03M

Dividend Yield3.18%

Average Volume (3M)87.71K

Price to Earnings (P/E)19.0

Beta (1Y)0.19

Revenue Growth-2.51%

EPS Growth-22.68%

CountryUS

Employees362

SectorFinancial

Sector Strength83

IndustryInsurance - Specialty

Share Statistics

EPS (TTM)0.60

Shares Outstanding19,050,316

10 Day Avg. Volume77,334

30 Day Avg. Volume87,713

Financial Highlights & Ratios

PEG Ratio-1.29

Price to Book (P/B)3.39

Price to Sales (P/S)0.00

P/FCF Ratio53.29

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$65.00

Price Target Upside42.73% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering3

Amerisafe Business Overview & Revenue Model

Company DescriptionAMERISAFE, Inc., an insurance holding company, underwrites workers' compensation insurance in the United States. The company's workers' compensation insurance policies provide benefits to injured employees for temporary or permanent disability, death, and medical and hospital expenses. It serves small to mid-sized employers engaged in hazardous industries, including construction, trucking, logging and lumber, agriculture, manufacturing, telecommunications, and maritime. The company was incorporated in 1985 and is based in DeRidder, Louisiana.

How the Company Makes MoneyAmerisafe generates revenue primarily through underwriting workers' compensation insurance policies. The company's key revenue stream is the collection of premiums from policyholders, which are calculated based on the level of risk associated with the insured's industry and the size of their workforce. Amerisafe's profitability is influenced by its ability to accurately assess risks, set appropriate premium rates, and manage claims efficiently. The company also earns investment income from its portfolio, which consists of premiums collected and held in reserve to pay future claims. Strategic partnerships with independent insurance agencies and brokers help Amerisafe expand its market reach and maintain a steady flow of new business.

Amerisafe Earnings Call Summary

Earnings Call Date:Apr 29, 2025

(Q1-2025)

% Change Since: -8.63%|

Next Earnings Date:Jul 24, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed picture with significant growth in gross written premiums and strong policy retention, indicating positive operational performance. However, the financial results were marred by a significant decrease in net income, increased expenses, and a higher tax rate. The highlights and lowlights are fairly balanced, reflecting both achievements in policy retention and challenges in financial metrics.

Q1-2025 Updates

Positive Updates

Gross Written Premiums Growth

Gross written premiums grew 4.6% over the first quarter of 2024, driven by consistent new business gains and strong premium retention. Premiums on policies written in the quarter grew 7.1% over the prior year quarter.

Strong Policy Retention

The company achieved a 93.1% retention rate in the first quarter, indicating strong policyholder loyalty and satisfaction.

Favorable Development on Prior Accident Years

The company experienced $8.7 million in favorable development on prior accident years, primarily from accident years 2020 and 2021, attributed to proactive claims handling.

Investment Portfolio Performance

The investment portfolio maintained a high quality with an average AA- credit rating and a yield on new investments exceeding portfolio roll off by 296 basis points.

Negative Updates

Decrease in Net Income

Net income for the first quarter of 2025 was $8.9 million, compared to $16.9 million in the first quarter of 2024. The decrease was primarily driven by lower valuations across equity holdings, resulting in a net unrealized loss on equity securities of $3.2 million.

Increased Underwriting and Other Expenses

Total underwriting and other expenses were $20.6 million, a $1.9 million increase compared with the first quarter of 2024, resulting in an expense ratio of 29.9% compared to 27.3% in the previous year.

Decrease in Net Investment Income

Net investment income decreased by 9.7% to $6.7 million, driven by a decrease in investable assets following the payment of a special dividend.

Higher Tax Rate

The company's tax rate increased to 20.2% from 18.4% in the first quarter of 2024, largely due to an increase in the proportion of underwriting income versus tax-exempt investment income.

Company Guidance

During the AMERISAFE First Quarter 2025 Earnings Call, the company reported a 4.6% increase in gross written premiums to $83.8 million compared to the same quarter in 2024, despite challenges from declining workers' compensation rates and economic uncertainties. Premiums on newly written policies grew by 7.1%, while retention rates on renewals remained strong at 93.1%. The current accident year loss ratio was stable at 71%, and favorable development from prior accident years, particularly 2020 and 2021, contributed $8.7 million. Net income for the quarter was $8.9 million, or $0.47 per diluted share, down from $16.9 million in the prior year, primarily due to a $3.2 million net unrealized loss on equity securities. Operating net income was $11.4 million, or $0.60 per diluted share. Total underwriting and other expenses increased to $20.6 million, affecting the expense ratio, which rose to 29.9% from 27.3% in the first quarter of 2024. The company's investment portfolio, with a duration of 4.48 years and an average AA- credit rating, yielded a tax equivalent book yield of 3.85%.

Amerisafe Financial Statement Overview

Summary

Amerisafe demonstrates strong financial stability with zero debt and a healthy equity position, but faces challenges in maintaining profitability margins and cash flow growth. The company is well-positioned in terms of financial health but could benefit from strategies to boost revenue growth and cash flow efficiency.

Income Statement

Positive

Amerisafe's income statement shows a stable revenue base with a gross profit margin of approximately 89.8% in 2024. However, the net profit margin decreased from 20.2% in 2023 to 17.9% in 2024, indicating a slight decline in profitability. The company experienced a modest revenue growth rate of 0.7% from 2023 to 2024, which suggests stability but limited growth potential. EBIT and EBITDA margins are unavailable for 2024, affecting the assessment of operational efficiency.

Balance Sheet

Positive

The balance sheet reflects a strong equity position with zero total debt in 2024, resulting in a debt-to-equity ratio of 0, which is excellent for financial stability. The return on equity (ROE) decreased to 21.5% in 2024 from 21.2% in 2023, but remains robust. The equity ratio is 22.2% in 2024, showing a consistent reliance on equity financing. The absence of debt enhances financial flexibility.

Cash Flow

Positive

Cash flow analysis indicates a decrease in free cash flow from $29.3M in 2023 to $23.3M in 2024, resulting in a negative free cash flow growth rate of -20.2%. The operating cash flow to net income ratio is 0.44 in 2024, highlighting a need for improved cash generation relative to profits. The free cash flow to net income ratio stands at 0.42, suggesting that cash management strategies could be optimized.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
301.18M	309.04M	306.91M	294.69M	316.01M	339.50M
	Gross Profit
271.05M	277.54M	306.91M	244.14M	265.25M	290.75M
	EBIT
59.50M	68.99M	279.35M	67.65M	79.45M	106.92M
	EBITDA
18.07M	0.00	0.00	0.00	0.00	0.00
	Net Income Common Stockholders
47.46M	55.44M	62.11M	55.60M	65.76M	86.60M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
138.06M	351.80M	355.75M	61.47M	70.72M	61.76M
	Total Assets
1.16B	1.16B	1.23B	1.27B	1.40B	1.47B
	Total Debt
0.00	0.00	267.00K	336.00K	395.00K	499.00K
	Net Debt
-44.75M	-44.05M	-38.68M	-61.13M	-70.33M	-61.26M
	Total Liabilities
895.90M	900.45M	936.71M	951.85M	37.88M	38.88M
	Stockholders Equity
260.81M	257.34M	292.45M	317.43M	399.32M	438.82M
Cash Flow		Free Cash Flow
16.59M	23.35M	29.29M	26.11M	36.68M	62.48M
	Operating Cash Flow
14.89M	24.19M	29.84M	28.19M	37.98M	63.40M
	Investing Cash Flow
78.09M	72.37M	43.88M	75.43M	70.96M	43.37M
	Financing Cash Flow
-84.10M	-91.20M	-96.51M	-112.87M	-99.97M	-88.83M

Amerisafe Technical Analysis

Technical Analysis Sentiment

Negative

Last Price45.54

Price Trends

50DMA

48.59

Negative

100DMA

49.43

Negative

200DMA

49.45

Negative

Market Momentum

MACD

-0.42

Negative

RSI

40.26

Neutral

STOCH

47.80

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AMSF, the sentiment is Negative. The current price of 45.54 is below the 20-day moving average (MA) of 47.04, below the 50-day MA of 48.59, and below the 200-day MA of 49.45, indicating a bearish trend. The MACD of -0.42 indicates Negative momentum. The RSI at 40.26 is Neutral, neither overbought nor oversold. The STOCH value of 47.80 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AMSF.

Amerisafe Risk Analysis

Amerisafe disclosed 30 risk factors in its most recent earnings report. Amerisafe reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Amerisafe Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NMIH	78 Outperform	$3.10B	8.48	17.38%	―	11.61%	14.35%
EIG	72 Outperform	$1.17B	11.75	9.84%	2.52%	-0.88%	-12.63%
AMSF	72 Outperform	$898.03M	19.00	16.89%	3.18%	-2.51%	-22.68%
TIPT	65 Neutral	$853.81M	18.52	11.12%	1.05%	15.76%	105.98%
Sector *	64 Neutral	$12.80B	9.71	7.59%	16985.66%	12.07%	-7.53%
ITIC	59 Neutral	$377.31M	12.73	11.69%	0.95%	15.22%	19.19%
JRVR	59 Neutral	$269.85M	―	-11.67%	2.04%	-23.83%	-11.60%

* Financial Sector Average

Performance Comparison

AMSF

Amerisafe

45.54

5.47

13.65%

EIG

Employers Holdings

47.20

6.86

17.01%

ITIC

Investors Title Company

193.09

32.52

20.25%

NMIH

NMI Holdings

39.26

6.24

18.90%

TIPT

Tiptree Financial

22.31

4.93

28.37%

JRVR

James River Group

5.67

-2.00

-26.08%

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.