AMERISAFE (NASDAQ:AMSF) reported higher second-quarter premiums and continued policy growth, while executives said the workers’ compensation insurer is navigating a profitable but increasingly competitive market marked by rate pressure and rising medical costs.
On the company’s second-quarter 2026 earnings call, President and CEO Janelle Frost said the workers’ compensation market “remains profitable,” but continues to show “gradual softening.” She cited rate reductions, increasing medical costs, moderating reserve redundancies and heightened competition as factors pressuring industry results.
Premiums rise on retention, audits and policy growth
Net premiums earned increased 11.4% from the prior-year quarter to $77.3 million, up from $69.4 million in the second quarter of 2025, Chief Financial Officer Guillermo Ramos said. Gross written premiums rose 7.9% to $86 million from $79.7 million a year earlier.
Frost said the premium growth was supported by renewal retention of more than 93%, growth in policy count and favorable audit premium activity. Voluntary premiums on policies written in the quarter increased 5.7% compared with the prior-year period.
Audit premiums and related adjustments contributed $4.1 million to premiums written in the quarter, compared with $1.5 million in the second quarter of 2025. Frost said payroll growth among insureds remained healthy and reflected continued economic activity in the industries AMERISAFE serves.
During the question-and-answer portion of the call, Frost said audit activity was “pretty robust” and that wage growth accounted for roughly 4.5% to 4.7% of the quarter’s payroll-related increase. Employee count represented a smaller portion of the increase, she said, adding that the company was not yet seeing a meaningful uptick in new employee counts among its insured base.
Frost said wage inflation across AMERISAFE’s insured group appeared slightly above nationwide averages, which she viewed as favorable for future audit premium. She also noted that, based on industry data, wage inflation has been helping offset workers’ compensation rate declines.
Earnings edge higher as operating income declines
AMERISAFE reported second-quarter net income of $14.6 million, or $0.78 per diluted share, compared with $14 million, or $0.73 per diluted share, in the second quarter of 2025. Operating net income was $8.3 million, or $0.44 per diluted share, down from $10 million, or $0.53 per diluted share, in the prior-year quarter.
Total underwriting and other expenses were $24.6 million, compared with $21.7 million in the year-ago quarter. The expense ratio was 31.8%, up from 31.3% a year earlier. Ramos said the increase was driven by one-time items that the company does not expect to recur.
In response to a question from Truist analyst Mark Hughes, Ramos said the one-time item was a write-off related to an older account. He said the bad debt totaled approximately $700,000. Frost added that the account was larger than AMERISAFE’s typical policy and related to a pre-2023 policy that had been in dispute for some time.
The company’s effective tax rate for the quarter was 20.1%, unchanged from the prior-year period.
Loss ratio holds steady, reserves develop favorably
Frost said the current accident-year loss ratio remained 72%. Claim frequency was up from the prior accident year at the six-month mark and returned closer to 2023 levels, while severity was down from the prior accident year at six months.
AMERISAFE recognized $7.3 million of favorable reserve development during the quarter from accident years 2023 and prior. Frost said favorable development remained “solidly positive” and reflected the quality of the company’s reserve position.
Asked about large losses, Frost said AMERISAFE had recorded seven large losses through the first six months of the year, compared with 10 at the same point last year.
Frost also discussed medical inflation, saying the company sees pressure particularly in hospitalizations and doctors associated with hospitalizations. She said industry medical inflation in 2025 was up 4% before wage adjustment, with severity also up 4%, compared with the 2% to 3% levels many had been expecting in recent years. Frost said AMERISAFE continues to support fee schedules and adherence to them as tools to help contain costs.
Investment income slips after capital returns
Net investment income was $6.5 million in the quarter, down 2.4% from the second quarter of 2025. Ramos said the decline primarily reflected lower average investable assets following capital returns to shareholders through dividends and share repurchases.
Ramos said the investment rate environment remained favorable, with yields on new investments exceeding portfolio roll-off yields by about 91 basis points. The tax-equivalent book yield increased to 3.9%, up six basis points from the second quarter of 2025.
At quarter end, AMERISAFE held approximately $771 million in investments, cash and cash equivalents. Ramos said the portfolio had an average AA- credit rating and a duration of 4.2 years. The portfolio consisted of 60% municipal bonds, 20% corporate bonds, 3% U.S. Treasuries and agencies, 8% equity securities and 9% cash and cash equivalents.
Statutory surplus was $200.8 million at quarter end, compared with $217.8 million at year-end 2025. Book value per share increased 0.7% year to date to $13.49. During the quarter, AMERISAFE repurchased approximately 181,000 shares at an average price of $30.58 per share, returning $5.6 million to shareholders.
Executives point to competition and rate pressure
Chief Risk Officer Vincent Gagliano said competition remains intense and that the company saw “a little more aggression” during the quarter from some regular competitors, particularly package carriers. He said AMERISAFE’s strategy has not changed and continues to emphasize agency relationships, clear communication of risk appetite and selective new business.
Gagliano said renewal retention remains an important part of the company’s strategy, with AMERISAFE focused on retaining the accounts it wants at healthy prices. He said the company still feels good about sustaining a mid-single-digit growth trajectory.
Frost said rate reductions remain a challenge across the industry, even as medical inflation and average severities rise. Discussing recent state rate activity in response to a question from Citizens JMP analyst Matt Carletti, Frost said early indications for 2027 suggest a similar environment, with perhaps a slight decline in the rate of reductions but continued decreases overall.
“As we move through the remainder of 2026, our focus has remained unchanged: profitable growth, operational excellence, strong capital management, and long-term value creation for our shareholders,” Frost said in closing remarks.
About AMERISAFE (NASDAQ:AMSF)
Amerisafe, Inc (NASDAQ: AMSF) is a specialty provider of workers’ compensation insurance products and services in the United States. The company focuses on underwriting and managing workers’ compensation policies for small to mid-sized public and private businesses, particularly in higher-hazard industries such as retail, manufacturing, distribution and wholesale. Through its network of independent agents, Amerisafe delivers tailored coverage solutions that combine robust risk management support with loss prevention programs designed to enhance workplace safety.
In addition to core insurance offerings, Amerisafe provides extensive risk control resources, including safety training, on-site consultations and claims management services.
