We are a specialty provider of workers’ compensation insurance focused
on small to mid-sized employers engaged in hazardous industries, principally
construction, trucking, manufacturing, agriculture and oil and gas. Since commencing
operations in 1986, we have gained significant experience underwriting the complex
workers’ compensation exposures inherent in these industries. We provide
coverage to employers under state and federal workers’ compensation laws.
These laws prescribe wage replacement and medical care benefits that employers
are obligated to provide to their employees who are injured in the course and
scope of their employment. Our workers’ compensation insurance policies
provide benefits to injured employees for, among other things, temporary or
permanent disability, death and medical and hospital expenses. The benefits
payable and the duration of those benefits are set by state or federal law.
The benefits vary by jurisdiction, the nature and severity of the injury and
the wages of the employee. The employer, who is the policyholder, pays the premiums
for coverage.
Hazardous industry employers tend to have less frequent but more severe claims
as compared to employers in other industries due to the nature of their businesses.
Injuries that occur are often severe in nature including death, dismemberment,
paraplegia and quadriplegia. As a result, 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 policyholders.
We employ a proactive, disciplined approach to underwriting employers and providing
comprehensive services intended to lessen the overall incidence and cost of
workplace injuries. We provide safety services at employers’ workplaces
as a vital component of our underwriting process and to 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 premium 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 on equity.
AMERISAFE, Inc. is an insurance holding company, incorporated in Texas in 1985.
We began operations in 1986 by focusing on workers’ compensation insurance
for logging contractors in the southeast United States. Beginning in 1994, we
expanded our focus to include the other hazardous industries we serve today.
Two of our three insurance subsidiaries, American Interstate Insurance Company
and Silver Oak Casualty, are domesticated in Nebraska. Our other insurance subsidiary,
American Interstate Insurance Company of Texas, is domiciled in Texas. All three
insurance subsidiaries carry an A.M. Best rating of “A” (Excellent).
We believe we have the following competitive advantages:
Focus on Hazardous Industries. We have extensive experience insuring employers
engaged in hazardous industries and have a history of profitably underwriting
these industries. Our specialized knowledge of these hazardous industries helps
us better serve our policyholders, which leads to greater employer loyalty and
policy retention.
Focus on Small to Mid-Sized Employers. We believe large insurance companies
generally do not target small to mid-sized employers in hazardous industries
due to their smaller premium sizes, types of operations, mobile workforces and
extensive service needs. We provide these employers enhanced services, including
premium payment plans to better match premium payments with our policyholders’
payroll costs and cash flow.
Specialized Underwriting Expertise. Based on our 30-year history of insuring
employers engaged in hazardous industries, we have developed industry specific
risk analysis and rating tools that support our underwriters in risk selection
and pricing. We are highly disciplined when quoting and binding new and renewal
business. We do not delegate underwriting authority to agencies, marketers or
to any other third parties that sell our insurance.
Comprehensive Safety Services. We provide proactive safety reviews of employers’
worksites, which are often located in rural areas. These safety reviews are
a vital component of our underwriting process and also assist our policyholders
in loss prevention, and encourage safer workplaces by deploying experienced
field safety professionals, or FSPs, to our policyholders’ worksites.
Proactive Claims Management. Our employees manage substantially all of our open
claims in-house, utilizing intensive claims management practices that emphasize
a personalized approach, as well as quality, cost-effective medical treatment.
We also believe our claims management practices allow us to achieve a more favorable
claim outcome, accelerate an employee’s return to work, lessen the likelihood
of litigation and more rapidly close claims, all of which ultimately lead to
lower overall claim costs.
Efficient Operating Platform. Through extensive cost management initiatives,
we maintain one of the most efficient operations in the workers’ compensation
industry. We believe that our expense ratio is substantially lower than that
of our competitors, which gives us a greater opportunity to generate an underwriting
profit.
We intend to produce favorable returns on equity and increase our book value
per share adjusted for dividends paid to shareholders using the following strategies:
Focus on Underwriting Profitability. We intend to maintain our underwriting
discipline throughout market cycles with the objective of remaining profitable.
Our strategy is to focus on underwriting workers’ compensation insurance
in hazardous industries and to maintain adequate rate levels commensurate with
the risks we underwrite. We will also continue to strive for improved risk selection
and pricing, as well as reduced frequency and severity of claims through comprehensive
workplace safety reviews, effective medical cost containment measures and rapid
closing of claims through personal, direct contact with our policyholders and
their employees.
Increase Market Penetration. Based on data received from the National Association
of Insurance Commissioners, the NAIC, we do not have more than 5.5% of the market
share in any state we serve. As a result, we believe we have the opportunity
to increase market penetration in each of the states in which we currently operate.
Competition in our target markets is fragmented by state, employer size and
industry. We believe that our specialized underwriting expertise and safety,
claims and audit services position us to profitably increase our market share
in our existing principal markets, with minimal increase in field service employees.
Prudent and Opportunistic Geographic Expansion. While we actively market our
insurance in 27 states, 50.4% of our voluntary in-force premiums were generated
in the six states where we derived 5.0% or more of our gross premiums written
in 2015. We are licensed in an additional 20 states, the District of Columbia
and the U.S. Virgin Islands. Our existing licenses and rate filings will expedite
our ability to write policies in these markets when we decide it is prudent
to do so.
Capitalize on Development of Information Technology Systems. We believe our
underwriting and agency management system, GEAUX, along with our customized
operational system, ICAMS, and the analytical data warehouse that ICAMS feeds,
significantly enhance our ability to select risk, write profitable business
and cost-effectively administer our billing, claims and audit functions.
Maintain Capital Strength. We plan to manage our capital to achieve our profitability
goals while striving for optimal operating leverage for our insurance company
subsidiaries. To accomplish this objective, we intend to maintain underwriting
profitability throughout market cycles, optimize our use of reinsurance, deploy
appropriate capital management tools including paying dividends to shareholders
and produce an appropriate risk adjusted return on our investment portfolio.
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