AMERISAFE INC (AMSF)

CIK: 0001018979. SIC: 6331 Fire, Marine & Casualty Insurance. Latest 10-K as of: 2026-02-27.

SIC breadcrumb: Finance, Insurance, And Real Estate > Insurance Carriers > SIC 6331 Fire, Marine & Casualty Insurance

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1018979. Latest filing source: 0001193125-26-082513.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-27. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001018979.json. Derived margins are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Missing metrics are omitted rather than fabricated.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-04-23. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001018979.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001193125-26-173630.

Extracted between Part I Item 2 and the next Item 3/4 or Part II heading after HTML sanitization. Confidence: high. Filing date: 2026-04-23. Report date: 2026-03-31.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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 should be read in conjunction with the accompanying unaudited consolidated financial statements and the related notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q, together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. This discussion includes forward-looking statements that are not guarantees of future performance and are not necessarily indicative of future operating results. See “Cautionary Statement Regarding Forward-Looking Statements” in Part I above for further discussion.

The terms “AMERISAFE,” the “Company,” “we,” “us” or “our” refer to AMERISAFE, Inc. and its consolidated subsidiaries, as the context requires.

Business Overview

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, services, manufacturing, and maritime. Employers engaged in hazardous industries typically pay substantially higher than average rates for workers’ compensation insurance compared to employers in other industries, as measured per payroll dollar. These higher premium rates are due to the nature of the work performed and the inherent workplace danger of our target policyholders. 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 are aimed at promoting safer workplaces. We utilize proactive claims management practices that we believe permit us to effectively manage the overall cost of our claims. In addition, our premium audit services calculate the appropriate premiums for our policyholders 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, safety, claims, and audit services, provide us with the opportunity to earn attractive returns on equity.

We actively market our insurance in 27 states through independent agencies (including retail and wholesale brokers and agents), as well as through our wholly owned insurance agency subsidiary, Amerisafe General Agency, Inc. We are also licensed in an additional 20 states, the District of Columbia, and the U.S. Virgin Islands.

Critical Accounting Policies and Estimates

Understanding our accounting policies is key to understanding our financial statements. Management considers some of these policies to be very important to the presentation of our financial results because they require us to make significant estimates and assumptions. These estimates and assumptions affect the reported amounts of our assets, liabilities, revenues and expenses, and related disclosures. Some of the estimates result from judgments that can be subjective and complex and, consequently, actual results in future periods might differ from these estimates.

Management believes that the most critical accounting policies relate to the reporting of reserves for loss and loss adjustment expenses, including losses that have occurred but have not been reported prior to the reporting date, amounts recoverable from reinsurers, premiums receivable, assessments, deferred policy acquisition costs, deferred income taxes, credit losses on investment securities, and share-based compensation. These critical accounting policies are more fully described in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2025. We have not changed any of these policies from those previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.

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Results of Operations

The following table summarizes our consolidated financial results for the three months ended March 31, 2026 and 2025.

Three Months Ended

March 31,

2026

2025

(dollars in thousands, except percentages and per share data)

(unaudited)

Gross premiums written

$

88,500

$

83,784

Net premiums earned

75,072

68,885

Net investment income

6,597

6,652

Total revenues

80,090

72,597

Total expenses

69,930

61,376

Net income

8,145

8,949

Diluted earnings per common share

$

0.43

$

0.47

Other Key Measures

Net combined ratio (1)

93.2

%

89.1

%

Return on average equity (2)

13.1

%

13.8

%

Book value per share (3)

$

13.18

$

13.69

(1)
The net combined ratio is calculated by dividing the sum of loss and loss adjustment expenses incurred, underwriting and certain other operating costs, commissions, salaries and benefits, and policyholder dividends by net premiums earned in the current period. The net combined ratio is a key measure of underwriting performance traditionally used in the insurance industry. A net combined ratio under 100% generally reflects profitable underwriting results.

(2)
Return on average equity is calculated by dividing the annualized net income by the average shareholders’ equity for the applicable period.

(3)
Book value per share is calculated by dividing shareholders’ equity by the total outstanding shares of our common stock as of the end of the reported period.

Consolidated Results of Operations for Three Months Ended March 31, 2026 Compared to March 31, 2025

Gross Premiums Written. Gross premiums written for the quarter ended March 31, 2026 were $88.5 million, compared to $83.8 million for the same period in 2025, an increase of 5.6%. The increase was attributable to a $6.3 million increase in voluntary premiums on policies written during the period. The increase was partially offset by a $1.4 million decrease in premiums resulting from payroll audits and related premium adjustments for policies written in previous quarters.

Net Premiums Written. Net premiums written for the quarter ended March 31, 2026 were $84.4 million, compared to $79.6 million for the same period in 2025, an increase of 6.1%. The increase was primarily attributable to the increase in gross premiums written. As a percentage of gross premiums earned, ceded premiums were 5.1% for the first quarter of 2026 compared to 5.7% for the first quarter of 2025. The decrease in ceded premiums as a percentage of gross premiums earned is a result of a change in our 2026 reinsurance treaties. For additional information, see Item 1, “Business—Reinsurance” in our Annual Report on Form 10-K for the year ended December 31, 2025.

Net Premiums Earned. Net premiums earned for the first quarter of 2026 were $75.1 million, compared to $68.9 million for the same period in 2025, an increase of 9.0%. The increase was primarily attributable to the increase in net premiums written during the period.

Net Investment Income. Net investment income for the quarter ended March 31, 2026 was $6.6 million, compared to $6.7 million for the same period in 2025, a decrease of 0.8%. The decrease was due to slightly lower average invested asset balances in the period compared to the same period in the prior year. Average invested assets, including cash and cash equivalents, were $790.6 million in the quarter ended March 31, 2026 compared to an average of $835.5 million for the same period in 2025, a decrease of 5.4%. The pre-tax investment yield on our investment portfolio was 3.4% per annum during the quarter ended March 31, 2026 compared to 3.2% per annum for the same period in 2025. The tax-equivalent yield on our investment portfolio was 3.9% per annum for the quarter ended March 31, 2026 compared to 3.8% per annum for the same period in 2025. The tax-equivalent yield is calculated using the effective interest rate and the appropriate marginal tax rate.

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Net Realized Gains (Losses) on Investments. Net realized losses in the quarter ended March 31, 2026 were immaterial, compared to immaterial net realized gains for the same period in 2025. Net realized results for both periods were attributable to the sales of fixed maturity securities classified as available-for-sale and redemption of fixed maturity securities.

Net Unrealized Losses on Equity Securities. The market value of our equity securities decreased by $1.7 million for the three months ended March 31, 2026 compared to a decrease of $3.2 million for the same period in 2025.

Loss and Loss Adjustment Expenses Incurred. Loss and loss adjustment expenses (LAE) incurred totaled $46.4 million for the three months ended March 31, 2026, compared to $40.2 million for the same period in 2025, an increase of $6.3 million, or 15.6%. The current accident year loss and LAE incurred totaled $54.1 million for the three months ended March 31, 2026, compared to $48.9 million for the same period in 2025. As of March 31, 2026, our initial estimate for loss and LAE for accident year 2026 is 72.0% of net premiums earned, reflective of pressure from continued rate decreases and long-term claim frequency and severity trends, as well as medical inflation. As of March 31, 2025, our initial estimate for loss and LAE for accident year 2025 was 71.0% of net premiums earned and was increased to 72.0% in the fourth quarter of 2025 largely due to the frequency of severity observed in that accident year. We recorded favorable prior accident year development of $7.6 million in the first quarter of 2026, compared to favorable prior accident year development of $8.7 million in the same period of 2025, as further discussed below in “Prior Year Development.” Our net loss ratio was 61.9% in the first quarter of 2026, compared to 58.3% for the same period of 2025.

Underwriting and Certain Other Operating Costs, Commissions and Salaries and Benefits. Underwriting and certain other operating costs, commissions and salaries and benefits for the quarter ended March 31, 2026 were $22.3 million, compared to $20.6 million for the same period in 2025, an increase of 8.1%. This increase was primarily due to a $0.9 million decrease in profit sharing reinsurance commission and a $0.6 million increase in commission expense. Our expense ratio was 29.7% in the first quarter of 2026 compared to 29.9% in the first quarter of 2025.

Income Tax Expense. Income tax expense for the three months ended March 31, 2026 was $2.0 million, compared to $2.3 million for the same period in 2025. The effective tax rate for the Company for the quarter ended March 31, 2026 was 19.8% compared to 20.2% in the first quarter of 2025. The decrease in the effective tax rate was due to a higher proportion of income from tax-exempt investments for the three months ended March 31, 2026 compared with the same period of 2025.

Liquidity and Capital Resources

Our principal sources of operating funds are premiums, investment income and proceeds from sales and maturities of investments. Our primary uses of operating funds include payments of claims and operating expenses. Currently, we pay claims using cash flow from operations and invest the remaining funds.

Net cash used in operating activities was $2.7 million for the three months ended March 31, 2026, which rep

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted between Item 7 and the next Item 7A/8 heading after HTML sanitization. Confidence: high. Filing date: 2026-02-27. Report date: 2025-12-31.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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 “Cautionary Statement Regarding Forward-Looking Statements” in Part I above for further discussion.

Overview

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, services, manufacturing, 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 most employers’ workplaces. These safety reviews are a vital component of our underwriting process and also promote safer workplaces. We utilize proactive 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.

We actively market our insurance in 27 states through independent agencies, as well as through our wholly-owned insurance agency subsidiary, Amerisafe General Agency, Inc. We are also licensed in an additional 20 states, the District of Columbia and the U.S. Virgin Islands.

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 18.5% in 2025, 20.2% in 2024 and 20.4% in 2023. We calculate book value per share by dividing ending shareholders’ equity by the number of common shares outstanding. Our book value per share was $13.39 at December 31, 2025, $13.51 at December 31, 2024 and $15.28 at December 31, 2023. We paid cash dividends of $2.56 per share in 2025, $4.48 per share in 2024 and $4.86 per share in 2023.

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, 2025, our investment portfolio, including cash and cash equivalents, was $796.8 million and produced net investment income of $27.0 million in 2025, $29.2 million in 2024 and $31.3 million in 2023.

The use of reinsurance is an important component of our business strategy. We purchase reinsurance to reduce our net liability on individual risks and to protect against catastrophic losses. For more information about our 2026 reinsurance program, see “Business—Reinsurance” in Item 1 of this report. As losses are incurred and recorded, we record amounts recoverable from reinsurers for the portion of the losses ceded to our reinsurers.

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.

36

Our focus on providing workers’ compensation insurance to employers engaged in hazardous industries results in our receiving relatively fewer but more severe claims than many other workers’ compensation insurance companies. Severe claims, which we define as claims having an estimated ultimate cost of more than $1.0 million, usually have a material effect on each accident year’s loss reserves (and our reported results of operations) as a result of both the number of severe claims reported in any year and the timing of claims in the year. As a result of our focus on higher severity, lower frequency business, our reserve for loss and loss adjustment expenses may have greater volatility than other workers’ compensation insurance companies.

For example, for the five-year period ended December 31, 2025 we recorded 91 severe claims, representing an average of 18 severe claims per year for accident years 2021 through 2025. The number of severe claims in any one accident year in this five-year period ranged from a low of 12 in 2023 to a high of 25 in 2025. The average reported case severity for these claims ranged from $2.0 million for the 2025 accident year to $3.8 million for the 2021 accident year. For the five accident years, the case incurred for these severe claims accounted for an average of 18.6 percentage points of our overall loss and loss adjustment expense (LAE) ratio, measured at December 31, 2025.

Further, the ultimate cost of severe claims is more difficult to estimate, principally due to uncertainties as to medical treatment and outcome and the length and degree of disability. Because of these uncertainties, the estimate of the ultimate cost of severe claims can vary significantly as more information becomes available. As a result, at year end, the case reserve for a severe claim reported early in the year may be more accurate than the case reserve established for a severe claim reported late in the year.

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.

As more fully described in “Business—Loss Reserves” in Item 1 of this report, the estimate for loss and loss adjustment expenses is established based upon management’s analysis of historical data, and factors and trends derived from that data, including claims reported, average claim amount incurred, case development, duration, severity and payment patterns, as well as subjective assumptions. This analysis includes reviews of case reserves for individual open severe claims in the current and prior years. Management reviews the outcomes from actuarial analyses to confirm the reasonableness of its reserve estimate.

Substantial judgment is required to determine the relevance of our historical experience and industry information under current facts and circumstances. The interpretation of this historical and industry data can be impacted by external forces, principally frequency and severity of unreported claims, length of time to achieve ultimate settlement of claims, utilization, inflation in medical costs and wages, insurance policy coverage interpretations, jury determinations and legislative changes. Accordingly, our reserves may prove to be inadequate to cover our actual losses. If we change our estimates, these changes would be reflected in our results of operations during the period in which the changes occurred, with increases in our reserves resulting in decreases in our earnings. Additional information regarding our reserves for loss and loss adjustment expenses and the actuarial methods and other factors used in establishing these reserves can be found under the caption “Business—Loss Reserves” in Item 1 of this report.

Our gross reserves for loss and loss adjustment expenses at December 31, 2025, 2024 and 2023 were $613.6 million, $651.3 million and $674.0 million, respectively. As a percentage of gross reserves at year end, reserves for expenses incurred but not reported (IBNR) represented 10.5% in 2025, 16.5% in 2024 and 17.8% in 2023.

In 2025, we decreased our estimates for prior year loss reserves by $33.9 million. 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.

The workers’ compensation insurance industry is cyclical in nature and influenced by many factors, including price competition, medical cost increases, natural and man-made disasters, changes in interest rates, changes in state laws and regulations, and general economic conditions. A hard market in our industry is characterized by decreased competition that results in higher premium rates, more restrictive policy coverage terms, and lower commissions paid to agencies. In contrast, a soft market is characterized by increased competition that results in lower premium rates, expanded policy coverage terms, and higher commissions paid to agencies. Our strategy is to focus on maintaining underwriting profitability throughout the cycle.

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Principal Revenue and Expense Items

Our revenues consist primarily of the following:

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.

Premiums are earned on a daily pro rata basis over the term of the policy. At the end of each reporting period, premiums written that are not earned are classified as unearned premiums and are earned in subsequent periods over the remaining term of the policy. Our insurance policies typically have a term of one year. Thus, for a one-year policy written on July 1, 2025 for an employer with constant payroll during the term of the policy, we would earn half of the premiums in 2025 and the other half in 2026. On a monthly basis, we also recognize net premiums earned from mandatory pooling arrangements.

We estimate the annual premiums to be paid by our policyholders when we issue the policies and record those amounts on our balance sheet as premiums receivable. We conduct premium audits on all of our voluntary business policyholders annually, upon the expiration of each policy, including when the policy is renewed. The purpose of these audits is to verify that policyholders have accurately reported their payroll expenses and employee job classifications, and therefore have paid us the premium required under the terms of the policies. The difference between the estimated premium and the ultimate premium is referred to as “earned but unbilled” premium, or EBUB premium. EBUB premium is subject to significant variability and can either increase or decrease earned premium based upon several factors, including changes in premium growth, industry mix and economic conditions. Due to the timing of audits and other adjustments, the ultimate premium earned is generally not determined for several months after the expiration of the policy.

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.

Net Investment Income and Net Realized Gains and Losses on Investments. We invest our statutory surplus funds and the funds supporting our insurance liabilities in fixed maturity securities, equity securities and alternative investments. In addition, a portion of these funds are held in cash and cash equivalents to pay current claims. Our net investment income includes interest and dividends earned on our invested assets and amortization of premiums and discounts on our fixed maturity securities. We assess the performance of our investment portfolio using a standard tax equivalent yield metric. Investment income that is tax-exempt is increased by our marginal federal tax rate to express yield on tax-exempt securities on the same basis as taxable securities. Net realized gains and losses on our investments are reported separately from our net investment income. Net realized gains occur when our investment securities are sold for more than their cost or amortized cost, as applicable. Net realized losses occur when our investment securities are sold for less than their cost or amortized cost, as applicable. We classify just over a majority of our fixed maturity securities as held-to-maturity. The remainder of our fixed maturity securities are classified as available-for-sale. Net unrealized gains or losses on our securities classified as available-for-sale are reported separately within accumulated other comprehensive income (loss) on our balance sheet. Changes in net unrealized gains or losses on our equity securities are recognized in net income.

Fee and Other Income. We recognize commission income earned on policies issued by other carriers that are sold by our wholly-owned insurance agency subsidiary, Amerisafe General Agency, Inc., as the related services are performed. We also recognize a small portion of interest income from mandatory pooling arrangements in which we participate.

Our expenses consist primarily of the following:

Loss and Loss Adjustment Expenses Incurred. Loss and loss adjustment expenses incurred represents our largest expense item and, for any given reporting period, includes estimates of future claim payments, changes in those estimates from prior reporting periods and costs associated with investigating, defending, and administering claims. These expenses fluctuate based on the amount and types of risks we insure. We record loss and loss adjustment expenses related to estimates of future claim payments based on case-by-case valuations and statistical analyses. We seek to establish all reserves at the most likely ultimate exposure based on our historical claims experience. It is typical for our more serious claims to take several years to settle and we revise our estimates as we receive additional information about the condition of the injured employees. Our ability to estimate loss and loss adjustment expenses accurately at the time of pricing our insurance policies is a critical factor in our profitability. Additional information regarding our reserves for loss and loss adjustment expenses and the actuarial methods and other factors used in establishing these reserves can be found under the caption “Business—Loss Reserves” in Item 1 of this report.

38

Underwriting and Certain Other Operating Costs. Underwriting and certain other operating costs are those expenses that we incur to underwrite and maintain the insurance policies we issue. These expenses include state and local premium taxes and fees and other operating costs, offset by commissions we receive from reinsurers under our reinsurance treaty programs. We pay state and local taxes, licenses and fees, assessments, and contributions to state workers’ compensation security funds based on premiums. In addition, other operating costs include general and administrative expenses, excluding commissions and salaries and benefits, incurred at both the insurance company and corporate level.

Commissions. We pay commissions to our wholly-owned subsidiary insurance agency, Amerisafe General Agency, Inc., and to the independent agencies that sell our insurance based on premiums collected from policyholders.

Salaries and Benefits. We pay salaries and provide benefits to our employees.

Policyholder Dividends. In limited circumstances, we pay dividends to policyholders in particular states as an underwriting incentive.

Income Tax Expense. We incur federal, state, and local income tax expense.

Critical Accounting Policies and Estimates

Understanding our accounting policies is key to understanding our financial statements. Management considers some of these policies to be very important to the presentation of our financial results because they require us to make significant estimates and assumptions. These estimates and assumptions affect the reported amounts of our assets, liabilities, revenues and expenses and related disclosures. Some of the estimates result from judgments that can be subjective and complex and, consequently, actual results in future periods might differ from these estimates.

Management believes that the most critical accounting policies relate to the reporting of reserves for loss and loss adjustment expenses, including losses that have occurred but have not been reported prior to the reporting date, amounts recoverable from reinsurers, premiums receivable, assessments, deferred policy acquisition costs, deferred income taxes, credit losses on investment securities and share-based compensation.

The following is a description of our critical accounting policies.

Reserves for Loss and Loss Adjustment Expenses. We record reserves for estimated losses under insurance policies that we write and for loss adjustment expenses, which include defense and cost containment (DCC) and adjusting and other (AO) expenses, related to the investigation and settlement of policy 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.

Our reserves for loss and DCC expenses are estimated using case-by-case valuations based on our estimate of the most likely outcome of the claim at that time. In addition to these case reserves, we establish reserves on an aggregate basis that have been incurred but not reported (IBNR). Our IBNR reserves are also intended to provide for aggregate changes in case incurred amounts as well as for recently reported claims which an initial case reserve has not been established. The third component of our reserves for loss and loss adjustment expenses is our AO reserve. Our AO reserve is established for those future claims administration costs that cannot be allocated directly to individual claims. The final component of our reserves for loss and loss adjustment expenses is the reserve for mandatory pooling arrangements.

In establishing our reserves, we review the results of analyses using actuarial methods that utilize historical loss data from our more than 40 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.

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On a quarterly basis, we review our reserves for loss and loss adjustment expenses to determine whether adjustments are required. Any resulting adjustments are included in the results for the current period. In establishing our reserves, we do not use loss discounting, which would involve recognizing the time value of money and offsetting estimates of future payments by future expected investment income. Additional information regarding our reserves for loss and loss adjustment expenses and the actuarial methods and other factors used in establishing these reserves can be found under the caption “Business—Loss Reserves” in Item 1 of this report.

Amounts Recoverable from Reinsurers. Amounts recoverable from reinsurers represent the portion of our paid and unpaid loss and loss adjustment expenses that are assumed by reinsurers and related commissions due from reinsurers. These amounts are separately reported on our balance sheet as assets net of an allowance for credit losses and do not reduce our reserves for loss and loss adjustment expenses because reinsurance does not relieve us of liability to our policyholders. We are required to pay claims even if a reinsurer fails to pay us under the terms of a reinsurance contract. We calculate amounts recoverable from reinsurers based on our estimates of the underlying loss and loss adjustment expenses, as well as the terms and conditions of our reinsurance contracts, which could be subject to interpretation. In addition, we bear credit risk with respect to our reinsurers, which can be significant because some of the unpaid loss and loss adjustment expenses for which we have reinsurance coverage remain outstanding for extended periods of time.

Premiums Receivable. Premiums receivable represents premium-related balances due from our policyholders based on annual premiums for policies written, including surcharges and deposits and adjustments for premium audits, endorsements, cancellations, cash transactions and charge offs. The balance is shown net of an allowance for credit losses and includes an estimate for EBUB. The EBUB estimate is subject to significant variability and can either increase or decrease premiums receivable and earned premiums based upon several factors, including changes in premium growth, industry mix and economic conditions. EBUB assumptions include historical development factors, current economic outlook and current trends in particular sectors of our policyholders' business.

Assessments. We are subject to various assessments and premium surcharges related to our insurance activities, including assessments and premium surcharges for state guaranty funds and second injury funds. Our accrual is based on historical assessments as well as updated assessment rates. Assessments based on premiums are recorded as an expense as premiums are earned and generally paid one year after the calendar year in which the policies are written. Assessments based on losses are recorded as an expense as losses are incurred and are generally paid within one year of the calendar year in which the claims are paid by us. State guaranty fund assessments are used by state insurance oversight agencies to pay claims of policyholders of impaired, insolvent or failed insurance companies and the operating expenses of those agencies. Second injury funds are used by states to reimburse insurers and employers for claims paid to injured employees for aggravation of prior conditions or injuries. In some states, these assessments and premium surcharges may be partially recovered through a reduction in future premium taxes.

Deferred Policy Acquisition Costs. We defer commission expenses, premium taxes and certain marketing, sales, underwriting and safety costs that vary with and primarily relate to the successful acquisition of insurance policies. These acquisition costs are capitalized and charged to expense ratably as premiums are earned. In calculating deferred policy acquisition costs, these costs are limited to their estimated realizable value, which gives effect to the premiums to be earned, anticipated losses and settlement expenses and certain other costs we expect to incur as the premiums are earned, less related net investment income. Judgments as to the ultimate recoverability of these deferred policy acquisition costs are highly dependent upon estimated future profitability of unearned premiums. If the unearned premiums were less than our expected claims and expenses after considering investment income, we would reduce the deferred costs.

Deferred Income Taxes. We use the liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities resulting from a tax rate change impacts our net income or loss in the reporting period that includes the enactment date of the tax rate change.

In assessing whether our deferred tax assets will be realized, management considers whether it is more likely than not that we will generate future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, tax planning strategies and projected future taxable income in making this assessment. If necessary, we establish a valuation allowance to reduce the deferred tax assets to the amounts that are more likely than not to be realized.

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Credit Losses on Investment Securities. Investment securities are recorded on the balance sheet as assets net of an allowance for credit losses. For held-to-maturity fixed income securities, the allowance is based on historical default and recovery rates as published by Moody’s analytics for corporate bonds, municipal bonds, and other types of fixed income securities. For available-for-sale fixed income securities, a credit allowance is established if the expected discounted future cash flows no longer exceed the book value of the security. In determining the amount of the credit loss to establish, the Company considers the following factors:

•
The extent to which the fair value is less than the amortized cost basis;

•
Adverse conditions in the security, industry, or geography, including:

•
Changes in technology

•
Discontinuation of a segment of business that may affect future earnings

•
Changes in the quality of the credit enhancement, if any

•
Changes in the payment structure of debt security;

•
Failure of the issuer to make scheduled interest or principal payments; and

•
Any changes to the rating of the security by a rating agency.

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.

41

Results of Operations

The table below summarizes certain operating results and key measures we use in monitoring and evaluating our operations.

Year Ended December 31,

2025

2024

2023

(in thousands)

Income Statement Data

Gross premiums written

$

313,864

$

294,144

$

285,355

Ceded premiums written

(17,230

)

(18,164

)

(16,621

)

Net premiums written

$

296,634

$

275,980

$

268,734

Net premiums earned

$

283,057

$

270,639

$

267,125

Net investment income

26,993

29,212

31,339

Net realized gains (losses) on investments

3,034

(576

)

6,579

Net unrealized gains on equity securities

3,719

9,508

1,228

Fee and other income

449

260

582

Total revenues

317,252

309,043

306,853

Loss and loss adjustment expenses incurred

169,937

157,267

148,263

Underwriting and certain other operating costs (1)

27,625

24,876

27,508

Commissions

25,092

23,750

23,446

Salaries and benefits

33,264

31,503

27,359

Policyholder dividends

2,526

2,657

2,957

Provision for investment related credit loss benefit

(43

)

(66

)

(57

)

Total expenses

258,401

239,987

229,476

Income before taxes

58,851

69,056

77,377

Income tax expense

11,706

13,620

15,269

Net income

$

47,145

$

55,436

$

62,108

Selected Insurance Ratios

Current accident year loss ratio (2)

72.0

%

71.0

%

71.0

%

Prior accident year loss ratio (3)

(12.0

)%

(12.9

)%

(15.5

)%

Net loss ratio

60.0

%

58.1

%

55.5

%

Net underwriting expense ratio (4)

30.4

%

29.6

%

29.3

%

Net dividend ratio (5)

0.9

%

1.0

%

1.1

%

Net combined ratio (6)

91.3

%

88.7

%

85.9

%

As of December 31,

2025

2024

2023

(in thousands)

Balance Sheet Data

Cash and cash equivalents

$

61,926

$

44,045

$

38,682

Investments

734,855

788,778

857,786

Amounts recoverable from reinsurers

108,098

117,019

129,963

Premiums receivable, net

160,944

142,659

132,861

Deferred income taxes

17,572

19,448

20,403

Deferred policy acquisition costs

21,085

19,151

17,975

Total assets

1,130,544

1,157,791

1,229,162

Reserves for loss and loss adjustment expenses

613,583

651,309

673,994

Unearned premiums

135,503

121,926

116,585

Insurance-related assessments

15,979

14,852

16,896

Shareholders’ equity

251,598

257,341

292,451

(1)
Includes policy acquisition expenses, and other general and administrative expenses, excluding commissions and salaries and benefits, related to insurance operations and corporate operating expenses.

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(2)
The current accident year loss ratio is calculated by dividing loss and loss adjustment expenses incurred for the current accident year by the current year’s net premiums earned.

(3)
The prior accident year loss ratio is calculated by dividing the change in loss and loss adjustment expenses incurred for prior accident years by the current year’s net premiums earned.

(4)
The net underwriting expense ratio is calculated by dividing underwriting and certain other operating costs, commissions and salaries, and benefits by the current year’s net premiums earned.

(5)
The net dividend ratio is calculated by dividing policyholder dividends by the current year’s net premiums earned.

(6)
The net combined ratio is the sum of the net loss ratio, the net underwriting expense ratio and the net dividend ratio.

Overview of Operating Results

Year Ended December 31, 2025 Compared to Year Ended December 31, 2024

Gross Premiums Written. Gross premiums written for 2025 were $313.9 million, compared to $294.1 million for 2024, an increase of 6.7%. The increase was attributable to a $27.1 million increase in annual premiums on voluntary policies written during the period, driven mostly by a 10.2% increase in in-force policy count. This increase was partially offset by a $7.6 million decrease in premiums resulting from payroll audits and related premium adjustments for policies written in previous periods.

Net Premiums Written. Net premiums written for 2025 were $296.6 million, compared to $276.0 million for 2024, an increase of 7.5%. The increase was primarily attributable to the increase in gross premiums written. As a percentage of gross premiums earned, ceded premiums were 5.7% for 2025 compared to 6.3% for 2024. Ceded premiums decreased as we purchased levels of reinsurance coverage at generally lower prices in 2025. For additional information, see Item 1, “Business—Reinsurance.”

Net Premiums Earned. Net premiums earned for 2025 were $283.1 million, compared to $270.6 million for 2024, an increase of 4.6%. The increase was primarily attributable to the increase in net premiums written.

Net Investment Income. Net investment income in 2025 was $27.0 million, a decrease of 7.6% from the $29.2 million reported in 2024. The decrease was due to lower average invested asset balances in the period compared to prior year. Average invested assets, including cash and cash equivalents, decreased 8.2%, from an average of $890.4 million for 2024 to an average of $817.2 million for 2025. The average pre-tax net investment yield on our investment portfolio was 3.3% per annum for 2025, compared to 3.4% per annum for 2024. The year-end tax-equivalent yield on our investment portfolio was 3.8% per annum for both 2025 and 2024. The tax-equivalent yield is calculated using the effective interest rate and the appropriate marginal tax rate.

Net Realized Gains (Losses) on Investments. Net realized gains on investments in 2025 totaled $3.0 million compared to net realized losses on investments of $0.6 million in 2024. In 2025, net realized gains on investments 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 2024, net realized losses on investments 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.

Net Unrealized Gains on Equity Securities. Net unrealized gains on equity securities in 2025 were $3.7 million compared to net unrealized gains on equity securities of $9.5 million in 2024.

Loss and Loss Adjustment Expenses Incurred. Loss and LAE incurred totaled $169.9 million for 2025, compared to $157.3 million for 2024, an increase of $12.7 million, or 8.1%. The current accident year losses and LAE incurred were $203.8 million, or 72.0% of net premiums earned, compared to $192.2 million, or 71.0% of net premiums earned for 2024. The Company increased the 2025 accident year loss ratio from 71% to 72% largely due to the frequency of severity observed in accident year 2025 compared with prior accident years. We recorded favorable prior accident year development of $33.9 million in 2025, compared to $34.9 million in 2024. This is discussed in more detail below in “Prior Year Development.” Our net loss ratio was 60.0% for 2025 and 58.1% for 2024.

Underwriting and Certain Other Operating Costs, Commissions and Salaries and Benefits. Underwriting and certain other operating costs, commissions and salaries and benefits for 2025 were $86.0 million, compared to $80.1 million for 2024. The increase was primarily due to a $3.1 million increase in insurance related assessments, a $1.5 million increase in compensation expense, a $1.3 million increase in commission expense and a $0.5 million increase in accounts receivable write-offs. Partially offsetting these amounts were a $0.9 million decrease in professional fees and a $0.6 million decrease in taxes and fees. Our underwriting expense ratio increased to 30.4% in 2025 from 29.6% in 2024.

Income tax expense. Income tax expense for 2025 was $11.7 million, compared to $13.6 million for 2024. The effective tax rate was 19.9% for 2025 and 19.7% for 2024.

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Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

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.

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.”

Net Premiums Earned. Net premiums earned for 2024 were $270.6 million, compared to $267.1 million for 2023, an increase of 1.3%. The increase was primarily attributable to the increase in net premiums written.

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. 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. The average pre-tax net 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.

Net Realized Gains (Losses) on Investments. Net realized losses on investments in 2024 totaled $0.6 million compared to net realized gains on investments of $6.6 million in 2023. In 2024, net realized losses on investments 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 on investments resulted primarily from the sale of equity securities.

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

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.

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 increase was primarily due to 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. Partially 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.

Income tax expense. Income tax expense for 2024 was $13.6 million, compared to $15.3 million for 2023. The effective tax rate was 19.7% for both 2024 and 2023.

44

Prior Year Development

The Company recorded favorable prior accident year loss and loss adjustment expense development of $33.9 million in calendar year 2025, $34.9 million in calendar year 2024 and $41.4 million in calendar year 2023. The table below sets forth the favorable development for accident years 2020 through 2024 and, collectively, all accident years prior to 2020.

Favorable/(Unfavorable) Development for Year

Ended December 31,

2025

2024

2023

(in millions)

2024

$

—

$

—

$

—

2023

1.6

—

—

2022

4.2

2.8

—

2021

5.1

3.7

7.5

2020

6.7

6.3

7.5

Prior to 2020

16.3

22.1

26.4

Total net development

$

33.9

$

34.9

$

41.4

At December 31, 2025, our incurred amounts for certain accident years developed more favorably than management previously expected. Multiple factors can cause loss development both unfavorable and favorable. The favorable loss development we experienced across accident years was largely due to two factors: (1) lower than expected severity of injuries across prior accident years compared to our original and revised estimates; and (2) favorable case reserve development from closed claims and claims where the worker had reached maximum medical improvement. We believe the favorable case reserve development resulted primarily from a continued focus on our proactive claims management process with the Company actively seeking to settle claims, leading to favorable development.

The assumptions we used in establishing our reserves for these accident years were based on our historical claims data. However, as of December 31, 2025, actual results for these accident years have been better than our assumptions would have predicted. We do not presently intend to modify our assumptions for establishing reserves in light of recent results. However, if actual results for current and future accident years are consistent with, or different than, our results in these recent accident years, our historical claims data will reflect this change and, over time, will impact the reserves we establish for future claims.

Our reserves for loss and loss adjustment expenses are inherently uncertain and our focus on providing workers’ compensation insurance to employers engaged in hazardous industries results in our receiving relatively fewer but more severe claims than many other workers’ compensation insurance companies. As a result of this focus on higher severity, lower frequency business, our reserve for loss and loss adjustment expenses may have greater volatility than other workers’ compensation insurance companies. Additional information regarding our reserves for loss and loss adjustment expenses and the actuarial methods and other factors used in establishing these reserves can be found under the caption “Business—Loss Reserves” in Item 1 of this report.

Liquidity and Capital Resources

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 repurchase shares 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 be sufficient to meet our short-term and long-term liquidity needs, including payment of claims and operating expenses and other holding company expenses.

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 $201.0 million in 2025, $172.9 million in 2024 and $177.5 million in 2023. 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, 2025 was $796.8 million.

As discussed above under “Overview,” we purchase reinsurance to reduce our net liability on individual risks and to protect against catastrophic losses. Based on our estimates of future claims, we believe we are sufficiently capitalized to satisfy the deductibles and retentions in our 2026 reinsurance program. We reevaluate our reinsurance program at least annually, taking into consideration a number of factors, including cost of reinsurance, our liquidity requirements, operating leverage and coverage terms.

45

Even if we maintain our existing retention levels, if the cost of reinsurance increases, our cash flow from operations would decrease as we would cede a greater portion of our written premiums to our reinsurers. Conversely, our cash flow from operations would increase if the cost of reinsurance declined relative to our retention.

In December 2025, the Company commuted reinsurance agreements with multiple reinsurers covering a portion of accident year 2023. As a result of the commutation, we recorded pre-tax income of approximately $0.8 million.

In December 2024, the Company commuted reinsurance agreements with Hannover Re and Tokio Millennium Re covering portions of accident years 2012-2014. The Company received a $6.3 million payment effectuated solely through offset against the balance of the funds withheld and recoverable from reinsurers' accounts under the reinsurance agreements in exchange for releasing Hannover Re and Tokio Millennium Re from their reinsurance obligations under the commuted agreements. Hannover Re and Tokio Millennium Re remain obligated to the subsidiaries of the Company under other reinsurance agreements. As a result of the commutation, we recorded a pre-tax loss of approximately $1.5 million.

In December 2024, the Company commuted reinsurance agreements with Hannover Re and Allianz Risk Transfer covering portions of accident years 2014-2016. The Company received a $9.8 million payment effectuated solely through offset against the balance of the funds withheld and recoverable from reinsurers' accounts under the reinsurance agreements in exchange for releasing Hannover Re and Allianz Risk Transfer from their reinsurance obligations under the commuted agreements. Hannover Re and Allianz Risk Transfer remain obligated to the subsidiaries of the Company under other reinsurance agreements. The effect on the Company's net income as a result of the commutation was immaterial.

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, 2025, the present value of these annuities was $105.7 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.

The Company has operating and finance leases for office space and equipment. Our leases have remaining lease terms of two months to 60 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.

Net cash provided by operating activities was $11.1 million in 2025, as compared to $24.2 million in 2024 and $29.8 million in 2023. Major components of cash provided by operating activities in 2025 were net premiums collected of $278.8 million, investment income collected of $27.9 million, and reinsurance recoveries collected of $1.8 million. These amounts were offset in part by claim payments of $205.3 million, $76.5 million of operating expenditures, federal taxes paid of $11.3 million, and dividends to policyholders paid of $3.1 million.

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.

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.

Net cash provided by investing activities was $68.4 million in 2025, as compared to $72.4 million in 2024 and $43.9 million in 2023. In 2025, major components of net cash provided by investing activities included proceeds from sales and maturities of investments of $137.6 million, offset partially by investment purchases of $67.0 million, and purchases of property and equipment of $2.1 million.

In 2024, major components of net cash provided by investing activities included proceeds from sales and maturities of investments of $183.9 million, offset partially by investment purchases of $110.7 million.

46

In 2023, major components of net cash provided by investing activities included proceeds from sales and maturities of investments of $178.1 million, offset partially by investment purchases of $133.7 million.

Net cash used in financing activities was $61.6 million in 2025, as compared to $91.2 million in 2024 and $96.5 million in 2023. Major components of cash used in financing activities in 2025 included cash used for dividends paid to shareholders of $48.6 million, purchases of treasury stock of $12.1 million, and share-based compensation related tax withholding of $0.8 million.

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.

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.

In 2025, the Company renewed a line of credit agreement with Frost Bank for borrowings up to a maximum of $20.0 million. Under the agreement, advances may be made either in the form of loans or letters of credit. Borrowings under the agreement accrue at interest rates based upon prime rate or one-month term SOFR rate and are unsecured. At December 31, 2025, there were no outstanding borrowings. Unless renewed, the agreement will expire in May 2026.

Our board of directors initially authorized the Company’s share repurchase program in February 2010. In July 2025, our board of directors reauthorized this program with a limit of $25.0 million with no expiration date. As of December 31, 2025, $16.9 million was available for future repurchases under the share repurchase program. The repurchases may be effected from time to time pursuant to trading plans meeting the requirements of Rule 10b5-1 under the Exchange Act. The share repurchase program does not obligate the Company to repurchase any shares of the Company's common stock and may be modified, increased, suspended or terminated at the discretion of our board of directors. The board of directors' determination will depend on a variety of factors, including, but not limited to, market conditions and applicable regulatory considerations. It is anticipated that future repurchases will be funded from available capital. There were 291,289 and 113,411 shares repurchased in 2025 and 2024, respectively.

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 $40.1 million in 2026 without seeking regulatory approval. See “Business—Regulation—Dividend Limitations” in Item 1 of this report.

We paid regular quarterly cash dividends of $0.39, $0.37, and $0.34 per share in 2025, 2024 and 2023, respectively. In addition, the Company paid special cash dividends of $1.00, $3.00, and $3.50 per share in 2025, 2024 and 2023, respectively.

On February 24, 2026, we declared a regular quarterly cash dividend of $0.41 per share payable on March 20, 2026 to shareholders of record as of March 13, 2026. Our board of directors intends to continue to consider the payment of a regular cash dividend each calendar quarter.

Investment Portfolio

The principal objectives of our investment portfolio are to preserve capital and surplus and to maintain appropriate liquidity for corporate requirements. Additional objectives are to support our A.M. Best rating of “A” (Excellent) and to maximize after-tax income and risk-adjusted total return. We presently expect to maintain sufficient liquidity from funds generated by operations to meet our anticipated insurance obligations and operating and capital expenditure needs. Excess funds from operations will be invested in accordance with our investment policy and statutory requirements.

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.

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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, 2025, we were in compliance with these requirements.

We employ diversification policies and balance investment credit risk and related underwriting risks to minimize our total potential exposure to any one business sector or security.

As of December 31, 2025, our investment portfolio, including cash and cash equivalents, totaled $796.8 million, a decrease of 4.3% from December 31, 2024. 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.

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 2024 or 2025.

The composition of our investment portfolio, including cash and cash equivalents, as of December 31, 2025 is shown in the following table.

Carrying

Value

Percentage

of Portfolio

Effective

 Interest Rate

(in thousands)

Fixed maturity securities—held-to-maturity:

State and political subdivisions

$

322,407

40.5

%

3.4

%

Corporate bonds

16,701

1.9

%

3.0

%

U.S. agency-based mortgage-backed securities

2,403

0.3

%

4.1

%

U.S. Treasury securities and obligations of U.S. Government agencies

8,567

1.1

%

3.4

%

Asset-backed securities

9

0.0

%

5.9

%

Total fixed maturity securities—held-to-maturity

350,087

43.8

%

3.4

%

Fixed maturity securities—available-for-sale:

State and political subdivisions

158,190

19.9

%

3.9

%

Corporate bonds

138,704

17.4

%

4.8

%

U.S. agency-based mortgage-backed securities

3,641

0.5

%

2.6

%

U.S. Treasury securities and obligations of U.S. Government agencies

12,503

1.6

%

1.5

%

Total fixed maturity securities—available-for-sale

313,038

39.4

%

4.2

%

Equity securities

57,493

7.2

%

1.2

%

Short-term investments

14,237

1.8

%

4.3

%

Cash and cash equivalents

61,926

7.8

%

3.1

%

Total Investments, including cash and cash equivalents

$

796,781

100.0

%

3.5

%

The following table summarizes the gross unrealized losses and fair value of fixed income securities by the length of time that individual securities have been in a continuous unrealized loss position.

Less Than Twelve Months

Twelve Months or Longer

Fair

Value

Unrealized

Losses

Fair

Value

Unrealized

Losses

(in thousands)

December 31, 2025:

Fixed maturity securities—available-for-sale

$

34,429

$

(642

)

$

123,699

$

(6,297

)

December 31, 2024:

Fixed maturity securities—available-for-sale

175,099

(7,984

)

60,615

(4,637

)

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The average pre-tax net investment yield on our investment portfolio was 3.3% and 3.4% per annum during the twelve months ended December 31, 2025 and 2024, respectively.