AMSF
AMSF
Hold 2026-03-17
Model
DDM
Price at Report
$33.21
Base IV
$40.68
Bear IV
$30.56
Bull IV
$49.83
Entry Zone: 32-37 · Sell Above: 42
Bore Family Office
Valuation Report — AMERISAFE, Inc. (AMSF) • March 17, 2026
3-Stage DDM (Ke) • Discount Rate: 6.42% • Current Price: $33.21
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
AMERISAFE, Inc. is a specialty insurance holding company focused exclusively on workers' compensation insurance for small-to-mid-size employers in high-hazard industries: logging, trucking, agriculture, construction, and maritime. Founded in 1986 and headquartered in DeRidder, Louisiana, AMERISAFE operates in 27 states and serves niche markets that are typically underserved by standard admitted insurers due to elevated occupational injury risk.
The company's competitive moat lies in deep underwriting expertise within its niche segments — loss control programs, claims management, and industry-specific actuarial knowledge create superior loss ratios vs. generalist competitors. AMERISAFE has historically maintained combined ratios well below 85%, generating strong underwriting profit supplemented by investment income. The balance sheet is debt-free with $76M in cash and $720M in long-term investments. The company is known for returning capital through regular quarterly dividends plus annual special dividends funded from excess capital and reserve releases.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Workers' Compensation Insurance (Core) | $317M | 100% | +2.7% | — | Single business line; premium revenue $317M FY2025; combined ratio historically <85% |
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $316 | $295 | $307 | $309 | $317 |
| EBITDA ($M) | $128 | $117 | $130 | $125 | $118 |
| Operating Income ($M) | $127 | $116 | $128 | $124 | $117 |
| Net Income ($M) | $66 | $56 | $62 | $55 | $47 |
| EPS (diluted) | $3.39 | $2.88 | $3.23 | $2.89 | $2.47 |
| Free Cash Flow ($M) | $37 | $26 | $29 | $23 | $9 |
| Annual DPS | $1.160 | $1.240 | $1.360 | $1.480 | $1.560 |
| Total Debt ($M) | $0 | $0 | $0 | $0 | $0 |
| Rev YoY Growth | — | -6.7% | +4.1% | +0.7% | +2.7% |
| EBITDA Margin | 40.4% | 39.7% | 42.2% | 40.6% | 37.2% |
| Operating Margin | 40.1% | 39.3% | 41.7% | 40.2% | 36.9% |
| Net Margin | 20.8% | 18.9% | 20.2% | 17.9% | 14.9% |
⚙️ WACC Build (DCF)
| Input | Value | Notes |
|---|---|---|
| Risk-Free Rate (Rf) | 4.25% | 10-yr US Treasury yield |
| Beta (β) | 0.394 | Market beta (Finnhub) |
| Equity Risk Premium (ERP) | 5.5% | Damodaran US ERP |
| Cost of Equity (Ke) | 6.42% | Ke = Rf + β × ERP |
| Pre-Tax Cost of Debt | 0.00% | Interest exp / gross debt |
| After-Tax Cost of Debt (Kd) | 0.00% | × (1 − 20%) |
| Weight Equity (We) | 100.0% | Mkt cap $0.0B |
| Weight Debt (Wd) | 0.0% | Gross debt see we/wd |
| WACC | 6.42% | DCF discount rate |
📈 DDM Scenarios
$31
🔴 Bear
$41
📊 Base
$50
🚀 Bull
$33.21
Current Price
$50
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | Ke | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 1.0% | 1.0% | 1.0% | 6.42% | $31 | ▼8.0% |
| 📊 Base | 3.2% | 2.5% | 2.0% | 6.42% | $41 | ▲22.5% |
| 🚀 Bull | 5.0% | 3.5% | 2.5% | 6.42% | $50 | ▲50.0% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: 1.0% | Stage 2: 1.0% | Terminal: 1.0%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $1.656 | $1.556 | $1.56 |
| Year 2 | Stage 1 | $1.673 | $1.477 | $3.03 |
| Year 3 | Stage 1 | $1.690 | $1.402 | $4.44 |
| Year 4 | Stage 1 | $1.707 | $1.331 | $5.77 |
| Year 5 | Stage 1 | $1.724 | $1.263 | $7.03 |
| Year 6 | Stage 2 | $1.741 | $1.198 | $8.23 |
| Year 7 | Stage 2 | $1.758 | $1.137 | $9.36 |
| Year 8 | Stage 2 | $1.776 | $1.080 | $10.44 |
| Year 9 | Stage 2 | $1.794 | $1.025 | $11.47 |
| Year 10 | Stage 2 | $1.812 | $0.972 | $12.44 |
| Terminal | — | TV=$33.76 | PV(TV)=$18.12 (59% of IV) |
Base Scenario
Stage 1: 3.2% | Stage 2: 2.5% | Terminal: 2.0%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $1.692 | $1.590 | $1.59 |
| Year 2 | Stage 1 | $1.747 | $1.542 | $3.13 |
| Year 3 | Stage 1 | $1.803 | $1.496 | $4.63 |
| Year 4 | Stage 1 | $1.860 | $1.450 | $6.08 |
| Year 5 | Stage 1 | $1.920 | $1.406 | $7.49 |
| Year 6 | Stage 2 | $1.968 | $1.355 | $8.84 |
| Year 7 | Stage 2 | $2.017 | $1.305 | $10.14 |
| Year 8 | Stage 2 | $2.067 | $1.257 | $11.40 |
| Year 9 | Stage 2 | $2.119 | $1.210 | $12.61 |
| Year 10 | Stage 2 | $2.172 | $1.166 | $13.78 |
| Terminal | — | TV=$50.12 | PV(TV)=$26.90 (66% of IV) |
Bull Scenario
Stage 1: 5.0% | Stage 2: 3.5% | Terminal: 2.5%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $1.722 | $1.618 | $1.62 |
| Year 2 | Stage 1 | $1.808 | $1.597 | $3.21 |
| Year 3 | Stage 1 | $1.899 | $1.575 | $4.79 |
| Year 4 | Stage 1 | $1.993 | $1.554 | $6.34 |
| Year 5 | Stage 1 | $2.093 | $1.533 | $7.88 |
| Year 6 | Stage 2 | $2.166 | $1.491 | $9.37 |
| Year 7 | Stage 2 | $2.242 | $1.450 | $10.82 |
| Year 8 | Stage 2 | $2.321 | $1.411 | $12.23 |
| Year 9 | Stage 2 | $2.402 | $1.372 | $13.60 |
| Year 10 | Stage 2 | $2.486 | $1.334 | $14.94 |
| Terminal | — | TV=$65.00 | PV(TV)=$34.89 (70% of IV) |
🔲 Sensitivity Table
| Ke \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 4.4% | $65 | $75 | $91 | $119 | $178 |
| 4.9% | $55 | $62 | $72 | $88 | $114 |
| 5.4% | $48 | $53 | $60 | $70 | $84 |
| 5.9% | $42 | $46 | $51 | $58 | $67 |
| 6.4% | $38 | $41 | $44 | $49 | $55 |
| 6.9% | $34 | $37 | $39 | $43 | $47 |
| 7.4% | $31 | $33 | $35 | $38 | $41 |
| 7.9% | $29 | $30 | $32 | $34 | $37 |
| 8.4% | $27 | $28 | $29 | $31 | $33 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
🏦 Comparable Valuation
| Company | P/E (fwd) | P/Book | Div Yield | Combined Ratio | ROE |
|---|---|---|---|---|---|
| AMSF (AMERISAFE) | 14.9× | 2.5× | 7.95% | ~75% | 18% |
| KINGSWAY (KFS) | 12.1× | 1.8× | 0.0% | ~92% | 12% |
| STATE AUTO (STFC) — acquired | N/A | N/A | N/A | N/A | N/A |
| ICW GROUP (private) | N/A | N/A | N/A | ~82% | ~15% |
| EMPLOYERS HOLDINGS (EIG) | 11.3× | 1.9× | 2.5% | ~83% | 14% |
| Industry Avg (specialty P&C) | 13.5× | 2.1× | 2.8% | ~88% | 13% |
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|---|
| Annual DPS | $2.640 |
| Current Yield | 7.95% |
| Consecutive Growth Years | 10 |
| 1-yr DPS CAGR | +5.4% |
| 3-yr DPS CAGR | +8.8% |
| 5-yr DPS CAGR | +7.2% |
| 10-yr DPS CAGR | — |
| Payout Ratio (DPS/EPS) | 104.5% ⚠️ |
| FCF Payout Ratio | 63.4% |
| Sustainability Verdict | Watch |
Regular quarterly dividend of $0.41/share ($1.64/yr) is SAFE — covered by earnings ($2.47 EPS → 66% payout on regular DPS). The special dividend component is VARIABLE — funded from reserve releases and excess capital. Dec 2025 special of $1.39 was notably lower than Dec 2024's $3.37 and Dec 2023's $3.84, reflecting normalized reserve development. Total payout ratio of 104% (GAAP) is misleading — the special dividend IS the excess capital return, not a sustainability risk. Book value ($13.18/share) and investment portfolio ($720M) are the backstop. Watch label reflects declining EPS trend, not dividend impairment.
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2022 | $2.88 | — | — | — | Actual |
| 2023 | $3.23 | — | — | — | Actual |
| 2024 | $2.89 | — | — | — | Actual |
| 2025 | $2.47 | — | — | — | Actual |
| 2026 | $2.11 | $2.22 | $2.31 | 4 | Estimate |
| 2027 | $2.11 | $2.27 | $2.41 | 4 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2022 | $0.3B | — | — | — | Actual |
| 2023 | $0.3B | — | — | — | Actual |
| 2024 | $0.3B | — | — | — | Actual |
| 2025 | $0.3B | — | — | — | Actual |
| 2026 | $0.3B | $0.3B | $0.4B | 4 | Estimate |
| 2027 | $0.4B | $0.4B | $0.4B | 4 | Estimate |
(c) Individual Analyst Price Targets
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Matthew J. Carletti | JMP Securities | Buy | $60 | +80.7% |
| Matthew Carletti | Citizens | Buy | $55 | +65.6% |
| Mark Hughes | Truist Securities | Hold | $36 | +8.4% |
💡 Investment Thesis
- Extreme valuation discount — 52-wk low territory: At $33.21, AMERISAFE trades at only 11.3× normalized EPS and near 52-week low ($32.00). The stock has corrected 38% from its 52-week high ($53.27) on declining EPS — but analyst consensus PT of $50.33 (+52%) suggests market overreaction to temporary margin compression in a normalizing insurance cycle.
- Fortress balance sheet, no debt: AMSF carries zero long-term debt with $76M cash and $720M investment portfolio (predominantly investment-grade bonds). Net cash of $76M vs $634M market cap = 12% of market cap in cash. This underpins dividend safety even as EPS temporarily declines.
- Niche underwriting moat: High-hazard workers' comp is genuinely difficult to underwrite without deep industry expertise. AMERISAFE's combined ratio has averaged ~75% over 10 years — far superior to general P&C peers. This moat is structural, not cyclical.
- Special dividend optionality: When reserve releases are strong, AMERISAFE returns capital via special dividends. Even in a below-average year (Dec 2025: $1.39 special), total DPS was $2.64 = 7.95% yield at current prices. If loss ratios normalize and reserves build, special dividends could return to $3–4+.
- Buy-rated by two of three analysts: Citizens ($55 PT) and JMP Securities ($60 PT) see this as significantly undervalued; only Truist has a Hold at $36. At $33.21, even the bear-case Hold analyst is only 8% above current price.
⚖️ DDM Verdict: Hold — AMERISAFE, Inc. (AMSF)
Current price: $33.21 | Analyst Avg PT: $50.33
$31
🔴 Bear
$41
📊 Base
$50
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$37 | Begin position |
| Tier 2 — Add | ≤$36 | Add on weakness |
| Tier 3 — Full | ≤$32 | Full allocation |
| Sell Alert | ≥$42 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
Accumulate AMERISAFE at current levels ($33.21) — this is a high-conviction deep-value setup in a quality specialty insurer. The stock is trading near its 52-week low while analyst consensus PT is $50.33 (+52% upside). Base case DDM value anchored to regular DPS growth of 3.2%/yr delivers intrinsic value of ~$50+. The 7.95% total yield (regular + special) provides significant downside protection. Starter position immediately at $33–35; full position at $30–33. Becomes a Hold above $48; becomes a Reduce above $58 (only on exceptional special dividend returns).
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| Model Choice | DDM chosen — AMERISAFE has 10+ years of regular dividend growth and predictable dividend policy. Special dividends modeled separately (treated as upside to base DDM). Regular DPS is the stable base; special dividends are bonus income from reserve releases. |
| Ke Build | Rf=4.25%, β=0.394 (Finnhub; specialty insurance is very defensive), ERP=5.5% → Ke=6.42%. AMERISAFE is one of the lowest-beta insurance companies — workers' comp specialty has minimal market correlation. This low Ke means small changes in growth rates have large intrinsic value impact. |
| DPS Base | Used $1.64 (forward regular DPS: $0.41/qtr × 4). Special dividends EXCLUDED from DDM base — they are variable/unpredictable. Total DPS including Q4 2025 special: $2.64 (7.95% yield). The spread between $1.64 regular and $2.64 total represents embedded upside not captured in the DDM — creates inherent conservatism. |
| Growth Rates | Base 3.2%/yr regular DPS growth — consistent with 5-yr historical CAGR of 7.2% (now moderating) and analyst consensus implied rate. Regular DPS has grown every year for 10+ years (from $0.23/share in 2013). Bear 1% prices in EPS pressure continuing; Bull 5% assumes hard market return. |
| Special Dividend Note | Annual special dividends from reserve releases: $4.31 (Dec 2022), $3.84 (Dec 2023), $3.37 (Dec 2024), $1.39 (Dec 2025). Declining trend reflects reserve development normalization. At $1.39 (latest), specials still contribute 4.2% yield on top of regular. Total yield of 7.95% on a $634M market cap company with zero debt is exceptional. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.