Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October ~~29, 2019,~~26, 2020, there were ~~19,300,309~~19,331,059 shares of the Registrant’s common stock, par value $0.01 per share, outstanding.

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and 21E of the Securities Exchange Act of 1934. You should not place undue reliance on these statements. These forward-looking statements include statements that reflect the current views of our senior management with respect to our financial performance and future events with respect to our business and the insurance industry in general. Statements that include the words “expect,” “intend,” “plan,” “believe,” “project,” “forecast,” “estimate,” “may,” “should,” “anticipate” and similar statements of a future or forward-looking nature identify forward-looking statements. Forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. We believe that these factors include, but are not limited to, the following:

The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements in this report, and under the caption “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2018. If one~~2019. Actual results may differ materially from the results expressed or ~~more events related to~~implied in these ~~or other risks or uncertainties materialize, or~~statements if ~~our~~the underlying assumptions prove to be incorrect ~~actual~~or as the results ~~may differ materially from what we anticipate.~~of risks, uncertainties and other factors including the impact of the COVID-19 pandemic on the business and operations of the Company and our policyholders and the market value of the securities in our investment portfolio.

	September 30, 2019			December 31, 2018			September 30, 2020			December 31, 2019
	(unaudited)						(unaudited)
Assets
Investments:
Fixed maturity securities—held-to-maturity, at amortized cost (fair value $626,603 and $616,772 in 2019 and 2018, respectively)	$	604,161		$	613,878
Fixed maturity securities—available-for-sale, at fair value (amortized cost $424,270 and $479,772 in 2019 and 2018, respectively)		440,217			478,730
Equity securities, at fair value (cost $24,082 and $19,962 in 2019 and 2018, respectively)		25,936			18,651
Fixed maturity securities—held-to-maturity, at amortized cost net of allowance for credit losses of $288 and $0 in 2020 and 2019, respectively, (fair value $607,339 and $621,343 in 2020 and 2019, respectively)							$	572,508		$	599,421
Fixed maturity securities—available-for-sale, at fair value (amortized cost $401,063, allowance for credit losses of $0 in 2020 and amortized cost $425,698, allowance for credit losses of $0 in 2019)								426,237			441,146
Equity securities, at fair value (cost $34,725 and $24,457 in 2020 and 2019, respectively)								35,822			27,903
Short-term investments		20,964			14,231			90,826			56,548
Total investments		1,091,278			1,125,490			1,125,393			1,125,018
Cash and cash equivalents		125,870			40,344			88,168			43,813
Amounts recoverable from reinsurers		102,866			112,006
Premiums receivable, net of allowance		170,649			162,478
Amounts recoverable from reinsurers (net of allowance for credit losses of $379 and $0 in 2020 and 2019, respectively)								97,955			95,913
Premiums receivable (net of allowance for credit losses of $5,264 and $5,112 in 2020 and 2019, respectively)								171,128			157,953
Deferred income taxes		18,480			21,852			17,014			17,513
Accrued interest receivable		10,404			10,197			9,495			9,730
Property and equipment, net		6,430			6,258			6,227			6,331
Deferred policy acquisition costs		20,341			19,734			19,237			19,048
Other assets		28,221			17,572			12,204			17,587
Total assets	$	1,574,539		$	1,515,931		$	1,546,821		$	1,492,906
Liabilities and shareholders’ equity
Liabilities:
Reserves for loss and loss adjustment expenses	$	790,812		$	798,409		$	759,912		$	772,887
Unearned premiums		154,635			149,296			143,228			140,873
Amounts held for others		45,216			41,388			42,749			37,937
Policyholder deposits		45,383			46,795			41,960			44,718
Insurance-related assessments		29,035			28,258			20,902			22,967
Federal income tax payable		1,549			3,412			4,785			3,220
Accounts payable and other liabilities		39,180			38,611			41,105			40,089
Payable for investments purchased								10,270			—
Total liabilities		1,105,810			1,106,169			1,064,911			1,062,691
Shareholders’ equity:
Common stock: voting—$0.01 par value authorized shares—50,000,000 in 2019 and 2018; 20,558,559 and 20,528,230 shares issued and 19,300,309 and 19,269,980 shares outstanding in 2019 and 2018, respectively		205			205
Common stock: voting—$0.01 par value authorized shares—50,000,000 in 2020 and 2019; 20,589,309 and 20,560,833 shares issued and 19,331,059 and 19,302,583 shares outstanding in 2020 and 2019, respectively								206			205
Additional paid-in capital		212,743			211,431			215,140			213,004
Treasury stock, at cost (1,258,250 shares in 2019 and 2018)		(22,370	)		(22,370	)
Treasury stock, at cost (1,258,250 shares in 2020 and 2019)								(22,370	)		(22,370	)
Accumulated earnings		265,536			221,328			269,022			227,165
Accumulated other comprehensive income (loss), net		12,615			(832	)
Accumulated other comprehensive income, net								19,912			12,211
Total shareholders’ equity		468,729			409,762			481,910			430,215
Total liabilities and shareholders’ equity	$	1,574,539		$	1,515,931		$	1,546,821		$	1,492,906

	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30,						September 30,						September 30,						September 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Revenues
Gross premiums written	$	82,629		$	85,324		$	262,754		$	276,368		$	72,648		$	82,629		$	240,008		$	262,754
Ceded premiums written		(2,170	)		(2,283	)		(6,804	)		(6,982	)		(2,473	)		(2,170	)		(7,928	)		(6,804	)
Net premiums written	$	80,459		$	83,041		$	255,950		$	269,386		$	70,175		$	80,459		$	232,080		$	255,950
Net premiums earned	$	82,712		$	85,184		$	250,611		$	261,489		$	74,771		$	82,712		$	229,725		$	250,611
Net investment income		8,264			7,884			24,448			22,396			7,063			8,264			22,136			24,448
Net realized losses on investments		(4	)		(329	)		(27	)		(1,471	)
Net unrealized gains on equity securities		365			573			3,165			259
Net realized gains (losses) on investments														309			(4	)		1,464			(27	)
Net unrealized gains (losses) on equity securities														844			365			(2,349	)		3,165
Loss on disposal of assets														—			(2	)		(29	)		(2	)
Fee and other income		151			217			234			411			18			153			309			236
Total revenues		91,488			93,529			278,431			283,084			83,005			91,488			251,256			278,431
Expenses
Loss and loss adjustment expenses incurred		44,325			47,598			142,807			152,836			39,789			44,325			120,966			142,807
Underwriting and certain other operating costs		6,736			8,011			21,704			23,842			1,334			6,736			17,337			21,704
Commissions		6,153			6,416			18,764			19,526			5,608			6,153			17,475			18,764
Salaries and benefits		6,396			6,179			19,202			18,786			6,960			6,396			21,505			19,202
Policyholder dividends		1,265			865			3,363			3,290			714			1,265			2,685			3,363
Provision for investment related credit loss benefit														(69	)		—			(13	)		—
Total expenses		64,875			69,069			205,840			218,280			54,336			64,875			179,955			205,840
Income before income taxes		26,613			24,460			72,591			64,804			28,669			26,613			71,301			72,591
Income tax expense		5,227			4,759			13,915			11,978			5,316			5,227			13,200			13,915
Net income	$	21,386		$	19,701		$	58,676		$	52,826		$	23,353		$	21,386		$	58,101		$	58,676
Earnings per share
Basic	$	1.11		$	1.03		$	3.05		$	2.75		$	1.21		$	1.11		$	3.01		$	3.05
Diluted	$	1.11		$	1.02		$	3.04		$	2.74		$	1.21		$	1.11		$	3.00		$	3.04
Shares used in computing earnings per share
Basic		19,256,069			19,216,545			19,243,689			19,204,196			19,299,921			19,256,069			19,282,263			19,243,689
Diluted		19,302,551			19,272,984			19,320,199			19,281,036			19,358,682			19,302,551			19,345,952			19,320,199
Cash dividends declared per common share	$	0.25		$	0.22		$	0.75		$	0.66		$	0.27		$	0.25		$	0.81		$	0.75

	Three Months Ended					Nine Months Ended					Three Months Ended				Nine Months Ended
	September 30,					September 30,					September 30,				September 30,
	2019		2018			2019		2018			2020		2019		2020		2019
Net income	$	21,386	$	19,701		$	58,676	$	52,826		$	23,353	$	21,386	$	58,101	$	58,676
Other comprehensive income:
Unrealized gain (loss) on debt securities, net of tax		2,475		(2,118	)		13,447		(7,813	)
Unrealized gain on debt securities, net of tax												734		2,475		7,701		13,447
Comprehensive income	$	23,861	$	17,583		$	72,123	$	45,013		$	24,087	$	23,861	$	65,802	$	72,123

																							Common Stock				Additional Paid-In			Treasury Stock						Accumulated			Accumulated Other Comprehensive
																							Shares		Amounts		Capital			Shares			Amounts			Earnings			Income		Total
Balance at June 30, 2020																								20,589,309	$	206	$	214,894			(1,258,250	)	$	(22,370	)	$	250,888		$	19,178	$	462,796
Comprehensive income:
Net income																								—		—		—			—			—			23,353			—		23,353
Other comprehensive income:
Change in unrealized gains, net of tax																								—		—		—			—			—			—			734		734
Comprehensive income:																																										24,087
Share-based compensation																								—		—		246			—			—			—			—		246
Dividends to shareholders																								—		—		—			—			—			(5,219	)		—		(5,219	)
Balance at September 30, 2020																								20,589,309	$	206	$	215,140			(1,258,250	)	$	(22,370	)	$	269,022		$	19,912	$	481,910

	Common Stock				Additional Paid-In			Treasury Stock						Accumulated			Accumulated Other Comprehensive						Common Stock				Additional Paid-In			Treasury Stock						Accumulated			Accumulated Other Comprehensive
	Shares		Amounts		Capital			Shares			Amounts			Earnings			Income			Total			Shares		Amounts		Capital			Shares			Amounts			Earnings			Income		Total
Balance at June 30, 2019		20,556,511	$	205	$	212,493			(1,258,250	)	$	(22,370	)	$	248,975		$	10,140		$	449,443			20,556,511	$	205	$	212,493			(1,258,250	)	$	(22,370	)	$	248,975		$	10,140	$	449,443
Comprehensive income:
Net income		—		—		—			—			—			21,386			—			21,386			—		—		—			—			—			21,386			—		21,386
Other comprehensive income:
Change in unrealized gains, net of tax		—		—		—			—			—			—			2,475			2,475			—		—		—			—			—			—			2,475		2,475
Comprehensive income:																					23,861																					23,861
Common stock issued		2,048		—		(1	)		—			—			—			—			(1	)		2,048		—		(1	)		—			—			—			—		(1	)
Share-based compensation		—		—		251			—			—			—			—			251			—		—		251			—			—			—			—		251
Dividends to shareholders		—		—		—			—			—			(4,825	)		—			(4,825	)		—		—		—			—			—			(4,825	)		—		(4,825	)
Balance at September 30, 2019		20,558,559	$	205	$	212,743			(1,258,250	)	$	(22,370	)	$	265,536		$	12,615		$	468,729			20,558,559	$	205	$	212,743			(1,258,250	)	$	(22,370	)	$	265,536		$	12,615	$	468,729

	Common Stock				Additional Paid-In			Treasury Stock						Accumulated			Accumulated Other Comprehensive
	Shares		Amounts		Capital			Shares			Amounts			Earnings			Loss			Total
Balance at June 30, 2018		20,528,230	$	205	$	210,895			(1,258,250	)	$	(22,370	)	$	258,744		$	(2,083	)	$	445,391
Comprehensive income:
Net income		—		—		—			—			—			19,701			—			19,701
Other comprehensive income:
Change in unrealized losses, net of tax		—		—		—			—			—			—			(2,118	)		(2,118	)
Comprehensive income:																					17,583
Share-based compensation		—		—		261			—			—			—			—			261
Dividends to shareholders		—		—		—			—			—			(4,239	)		—			(4,239	)
Balance at September 30, 2018		20,528,230	$	205	$	211,156			(1,258,250	)	$	(22,370	)	$	274,206		$	(4,201	)	$	458,996

																						Common Stock				Additional Paid-In		Treasury Stock						Accumulated			Accumulated Other Comprehensive
																						Shares		Amounts		Capital		Shares			Amounts			Earnings			Income			Total
Balance at December 31, 2019																							20,560,833	$	205	$	213,004		(1,258,250	)	$	(22,370	)	$	227,165		$	12,211		$	430,215
Impact of adoption of ASU 2016-13																							—		—		—		—			—			(594	)		—			(594	)
Comprehensive income:
Net income																							—		—		—		—			—			58,101			—			58,101
Other comprehensive income:
Change in unrealized gains, net of tax																							—		—		—		—			—			—			7,701			7,701
Comprehensive income:																																									65,802
Common stock issued																							28,476		1		1,359		—			—			—			—			1,360
Share-based compensation																							—		—		777		—			—			—			—			777
Dividends to shareholders																							—		—		—		—			—			(15,650	)		—			(15,650	)
Balance at September 30, 2020																							20,589,309	$	206	$	215,140		(1,258,250	)	$	(22,370	)	$	269,022		$	19,912		$	481,910

	Common Stock				Additional Paid-In		Treasury Stock						Accumulated			Accumulated Other Comprehensive						Common Stock				Additional Paid-In		Treasury Stock						Accumulated			Accumulated Other Comprehensive
	Shares		Amounts		Capital		Shares			Amounts			Earnings			Income (Loss)			Total			Shares		Amounts		Capital		Shares			Amounts			Earnings			Income (Loss)			Total
Balance at December 31, 2018		20,528,230	$	205	$	211,431		(1,258,250	)	$	(22,370	)	$	221,328		$	(832	)	$	409,762			20,528,230	$	205	$	211,431		(1,258,250	)	$	(22,370	)	$	221,328		$	(832	)	$	409,762
Impact of adoption of ASU 2016-02																							—		—		—		—			—			(1	)		—			(1	)
Comprehensive income:
Impact of adoption of ASU 2016-02		—		—		—		—			—			(1	)		—			(1	)
Net income		—		—		—		—			—			58,676			—			58,676			—		—		—		—			—			58,676			—			58,676
Other comprehensive income:
Change in unrealized losses, net of tax		—		—		—		—			—			—			13,447			13,447			—		—		—		—			—			—			13,447			13,447
Comprehensive income:																				72,123																					72,123
Common stock issued upon exercise of options		5,000		—		20		—			—			—			—			20			5,000		—		20		—			—			—			—			20
Common stock issued		25,329		—		559		—			—			—			—			559			25,329		—		559		—			—			—			—			559
Share-based compensation		—		—		733		—			—			—			—			733			��		—		733		—			—			—			—			733
Dividends to shareholders		—		—		—		—			—			(14,467	)		—			(14,467	)		—		—		—		—			—			(14,467	)		—			(14,467	)
Balance at September 30, 2019		20,558,559	$	205	$	212,743		(1,258,250	)	$	(22,370	)	$	265,536		$	12,615		$	468,729			20,558,559	$	205	$	212,743		(1,258,250	)	$	(22,370	)	$	265,536		$	12,615		$	468,729

	Common Stock				Additional Paid-In		Treasury Stock						Accumulated			Accumulated Other Comprehensive
	Shares		Amounts		Capital		Shares			Amounts			Earnings			Income (Loss)			Total
Balance at December 31, 2017		20,504,165		204		210,081		(1,258,250	)		(22,370	)		233,896			3,612			425,423
Comprehensive income:
Impact of adoption of ASU 2016-01		—		—		—		—			—			614			—			614
Impact of adoption of ASU 2018-02		—		—		—		—			—			(414	)		—			(414	)
Net income		—		—		—		—			—			52,826			—			52,826
Other comprehensive income:
Change in unrealized gains, net of tax		—		—		—		—			—			—			(7,813	)		(7,813	)
Comprehensive income:																				45,013
Common stock issued upon exercise of options		15,000		—		67		—			—			—			—			67
Common stock issued		9,065		1		195		—			—			—			—			196
Share-based compensation		—		—		813		—			—			—			—			813
Dividends to shareholders		—		—		—		—			—			(12,716	)		—			(12,716	)
Balance at September 30, 2018		20,528,230	$	205	$	211,156		(1,258,250	)	$	(22,370	)	$	274,206		$	(4,201	)	$	458,996

	Nine Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2020			2019
Operating activities
Net income	$	58,676		$	52,826		$	58,101		$	58,676
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		684			748			738			684
Net amortization of investments		6,520			8,414			6,206			6,520
Change in investment related allowance for credit losses								(13	)		—
Deferred income taxes		(203	)		1,388			(1,398	)		(203	)
Net realized losses on investments		27			1,471
Net unrealized gains on equity securities		(3,165	)		(259	)
Net realized (gains) losses on investments								(1,464	)		27
Net unrealized (gains) losses on equity securities								2,349			(3,165	)
Net realized losses on disposal of assets		2			—			29			2
Share-based compensation		882			1,074			2,594			882
Changes in operating assets and liabilities:
Premiums receivable, net		(8,171	)		(4,391	)		(13,175	)		(8,171	)
Accrued interest receivable		(207	)		(141	)		235			(207	)
Deferred policy acquisition costs		(607	)		(1,075	)		(189	)		(607	)
Amounts held by others		—			(7,855	)		7,855			—
Other assets		(949	)		2,692			(387	)		(949	)
Reserves for loss and loss adjustment expenses		(7,597	)		19,284			(12,975	)		(7,597	)
Unearned premiums		5,339			7,897			2,355			5,339
Reinsurance balances		9,140			(19,136	)		(2,485	)		9,140
Amounts held for others and policyholder deposits		2,416			2,621			2,054			2,416
Federal income taxes payable								1,565			(1,863	)
Accounts payable and other liabilities		(309	)		5,185			(1,127	)		1,554
Net cash provided by operating activities		62,478			70,743			50,868			62,478
Investing activities
Purchases of investments held-to-maturity		(115,712	)		(71,872	)		(62,190	)		(115,712	)
Purchases of investments available-for-sale		(46,104	)		(82,519	)		(61,023	)		(46,104	)
Purchases of equity securities		(4,120	)		(5,251	)		(10,267	)		(4,120	)
Purchases of short-term investments		(79,224	)		(133,355	)		(96,484	)		(79,224	)
Proceeds from maturities of investments held-to-maturity		120,498			85,322			86,153			120,498
Proceeds from sales and maturities of investments available-for-sale		90,244			79,539			91,493			90,244
Proceeds from sales and maturities of short-term investments		73,039			48,965			62,387			73,039
Proceeds from redemptions of other investments		—			130
Purchases of property and equipment		(858	)		(1,083	)		(663	)		(858	)
Net cash provided by (used in) investing activities		37,763			(80,124	)
Net cash provided by investing activities								9,406			37,763
Financing activities
Proceeds from stock option exercises		20			67			—			20
Finance lease purchases		(35	)		—			(37	)		(35	)
Dividends to shareholders		(14,700	)		(12,921	)		(15,882	)		(14,700	)
Net cash used in financing activities		(14,715	)		(12,854	)		(15,919	)		(14,715	)
Change in cash and cash equivalents		85,526			(22,235	)		44,355			85,526
Cash and cash equivalents at beginning of period		40,344			55,559			43,813			40,344
Cash and cash equivalents at end of period	$	125,870		$	33,324		$	88,168		$	125,870

AMERISAFE, Inc. (the “Company”) is an insurance holding company incorporated in the state of Texas. The accompanying unaudited consolidated financial statements include the accounts of AMERISAFE and its subsidiaries: American Interstate Insurance Company (“AIIC”) and its insurance subsidiaries, Silver Oak Casualty, Inc. (“SOCI”) and American Interstate Insurance Company of Texas (“AIICTX”), Amerisafe Risk Services, Inc. (“RISK”) and Amerisafe General Agency, Inc. (“AGAI”). AIIC and SOCI are property and casualty insurance companies organized under the laws of the state of Nebraska. AIICTX is a property and casualty insurance company organized under the laws of the state of Texas. RISK, a wholly owned subsidiary of the Company, is a claims and safety service company currently servicing only affiliated insurance companies. AGAI, a wholly owned subsidiary of the Company, is a general agent for the Company. AGAI sells insurance, which is underwritten by AIIC, SOCI and AIICTX, as well as by nonaffiliated insurance carriers. The assets and operations of AGAI are not significant to that of the Company and its consolidated subsidiaries.

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

The Company provides workers’ compensation insurance for small to mid-sized employers engaged in hazardous industries, principally construction, trucking, logging and lumber, manufacturing, agriculture, maritime, and ~~agriculture.~~oil and gas. Assets and revenues of AIIC and its subsidiaries represent at least 95% of comparable consolidated amounts of the Company for each of the nine months ended September 30, ~~2019~~2020 and ~~2018.~~2019.

In the opinion of management of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position, the results of operations and cash flows for the periods presented. The unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q under the Securities Exchange Act of 1934 and therefore do not include all information and footnotes to be in conformity with accounting principles generally accepted in the United States (“GAAP”). The results for the interim periods are not necessarily indicative of the results of operations that may be expected for the year. The unaudited consolidated financial statements contained herein should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that 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.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The new guidance requires a lessee to recognize a lease liability and a right of use asset for all leases extending beyond twelve months. This standard was effective for us beginning in the first quarter of 2019. We elected the new transition method under the transition guidance within the new standard. Therefore, prior comparative periods are not adjusted. We also elected the package of practical expedients, which among other things, allows us to carryforward the historical lease classification. We made an accounting policy election not to recognize lease assets and lease liabilities for short-term operating leases. Adoption of the new guidance resulted inOn January 1, 2020, the Company recognizing right-of-use assets of $0.4 million and lease liabilities of $0.3 million. The cumulative effect adjustment to the opening balance of retained earnings was minimal. Adoption of this new guidance did not have a material effect on the Company’s consolidated financial statements as the Company does not have any significant leases.

~~In June 2016, the FASB issued~~adopted ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit ~~Losses.~~Losses (“CECL”). The ~~current~~prior guidance delays the recognition of credit losses until a probable loss has occurred. The new guidance requires credit losses for securities measured at amortized cost to be determined using current expected credit loss estimates. These estimates are ~~to be~~ derived from historical, current and reasonable supporting forecasts, including prepayments and estimates, and ~~will be~~are recorded through a valuation account. The same method ~~will be~~is used for available-for-sale securities, but the valuation account ~~will be~~is limited to the amount by which the fair value is below amortized cost.

The Company implemented the new standard ~~is effective~~using the modified retrospective approach. Results for ~~us in the first quarter of 2020. Implementation of~~reporting periods beginning after January 1, 2020 are presented under the new guidance ~~requires a modified retrospective approach without restatement, which means the first cumulative adjustment required will~~while prior period amounts continue to be ~~a charge to retained earnings, with subsequent changes in the valuation account~~ reported in accordance with previously applicable GAAP. The Company recorded a net decrease to Retained Earnings of $594 thousand as of January 1, 2020, for the ~~income statement.~~cumulative effect of adopting ASU 2016-13. The ~~financial statement~~transition adjustment includes a $243 thousand impact ~~will be determined by the nature~~to establish a credit loss allowance for held-to-maturity securities. The remaining $351 thousand of the ~~portfolio held and~~transition adjustment was due to the ~~economic conditions at~~creation of the ~~time of implementation.~~reinsurance recoverable credit allowance.

~~In establishing a~~The Company believes that under the standard there is no current expected credit allowance necessary for U.S. Government Securities in its judgment as: 1) Treasury securities typically are the most highly rated securities among rating agencies; 2) Treasury securities have a long history of no credit losses; 3) Treasury securities are guaranteed by a sovereign entity (the U.S. Government) that can print its own money and whose currency (the U.S. dollar) is the reserve currency.

The Company believes that under the standard there is no current expected credit allowance necessary for GNMA Securities in its judgment as: 1) GNMA securities typically are the most highly rated securities among rating agencies; 2) GNMA securities have a long history of no credit losses and payments are explicitly guaranteed by the United States; 3) Underlying mortgage loans for GNMA securities are insured by the Federal Housing Administration or guaranteed by the U.S. Department of Veteran Affairs; 4) the U.S. Government can print its own money to retire GNMA obligations.

The Company believes that under the standard there is no current expected credit allowance necessary for FNMA or Freddie Mac (FHLMC) Securities in its judgment as: 1) These securities typically are among the most highly rated securities among rating agencies; 2) There is a long history of no credit losses; 3) Principal and interest payments are guaranteed by the issuing agency; 4) There is an explicit guarantee by the U.S. Government that can print its own money and whose currency (the U.S. dollar) is the reserve currency.

The Company researched various options and methodologies and has chosen to use Moody’s default rates and recovery rates for our held-to-maturity fixed income securities based on the current credit rating of the security and the time period to the stated maturity date. This is a probability of default (PD) and loss given default (LGD) methodology.

The credit rating used for held-to-maturity fixed income securities ~~under~~is the ~~new accounting standard,~~rating for each security as published by Moody’s, S&P, and Fitch to determine the probability of default. If there are two ratings, the lower rating is used. If there are three ratings, the median rating is used. If there is one rating, that rating is used. This methodology provides additional conservatism in determining the credit loss allowance needed.

For corporate fixed income securities, the probability of default (given a rating) comes from Moody’s annual study of Corporate Bond defaults published each February. This study also contains the average recovery rates based on the historical defaults in the Moody’s study. We have chosen to use the 1983-2018 data as more reflective of the current historical pattern of defaults (the study goes back to 1920). The maximum maturity using the default rate is 20 years (any maturity greater than 20 years will use the 20-year rate).

For municipal fixed income securities the probability of default (given a rating) comes from Moody’s annual study of Municipal Bond defaults published each July/August. This study also contains the average recovery rates based on the historical defaults in the Moody’s study. This study covers 1970-2018 data, which we believe is reflective of the current historical pattern of defaults. The maximum maturity using the default rate is 20 years (any maturity greater than 20 years will use the 20-year rate).

The Company did not record a credit allowance for available-for-sale securities. The available-for-sale portfolio is composed of highly rated securities, which carry a low risk of default. The Company’s concentrations in municipal bonds have helped lower default risk, as the historical default rates and recovery rates for municipal bonds has been much better than corporate bonds rated at the same level. The Company creates a watch list of available-for-sale securities that are below book value at the end of each quarter. This watch list excludes US Treasury securities, GNMA Securities, and government agency securities (FNMA, etc.) as 0ne of those securities will have an expected credit loss. The watch list will also exclude those securities that are trading at least at $95 or above (par value $100) as the Company believes any slight difference between $95 and par likely reflect interest rate changes and liquidity only and are not a sign of credit impairment or market expectations for any current expected credit loss.

The list is reviewed by the Management Investment Committee to evaluate any security where the discounted cash flows expected no longer exceed the book value of the security. If the Company intends to sell the security (or more likely than not be required to sell the security before recovery of the loss) the Company will write down the security to fair value through earnings. If the Company intends to hold the security, the Company will establish a credit loss allowance for the security through earnings, and adjust the allowance each quarter through earnings, as the security changes in value.

In determining the amount of the credit loss allowance, the Company will consider all of the following factors:

The calculation of the credit loss allowance will not take into account the amount of time the security has been below book value or when the security might be expected to recover in value.

The Company has researched various options and methodologies and has chosen to use Moody’s default rates and recovery rates for our unsecured reinsurance recoverables based on the current credit rating of the reinsurer and a time period of ten years. This is a probability of default (PD) and loss given default ~~methodology~~(LGD) methodology. The ten-year period is consistent with our current working layer reinsurance treaty where we have a three-year treaty, which must be commuted by the end of the tenth year. We believe this is an appropriate approach to our reinsurance recoverables.

The credit rating used for reinsurance recoverables uses the average rating for each reinsurer as published by Moody’s, S&P, Fitch and A.M. Best to determine the probability of default. The median rating is used if there are three ratings. The probability of default (given a rating) comes from Moody’s annual study of Corporate Bond defaults published each February. This study also contains the average recovery rates based on the ~~securities credit rating and maturity date~~historical defaults in the Moody’s study. We have chosen to use the 1983-2018 data as more reflective of the ~~specific security. The amount is currently estimated~~current historical pattern of defaults (the study goes back to be in the range of $250,000 to $400,000. This estimated amount will change depending on the amount of held-to-maturity fixed income securities, the credit ratings and maturity dates of those securities, at the time of implementation of the new current expected credit loss accounting standard.1920).

~~In establishing a current expected credit allowance~~The Company does 0t hold any debt securities for ~~reinsurance recoverables under the new accounting standard,~~which an other-than-temporary impairment has been recognized. Additionally, the Company ~~will use a probability of default and loss given default methodology based on the~~does 0t hold any financial assets purchased with credit ratings of our reinsurers. The amount is currently estimated to be in the range of $400,000 to $600,000. This estimated amount will change depending on the amount of reinsurance recoverables and the ratings of our reinsurers at the time of implementation of the new current expected credit loss accounting standard.deterioration.

The Company’s internal working group ~~has~~ evaluated the ~~remainder of the balance sheet assets, including available-for-sale securities and net~~existing allowance for doubtful accounts reserving methodology for premiums receivable and determined the ~~implementation of~~calculation was consistent with the new credit loss ~~guidance in relation~~guidance. There was no impact to ~~those assets will have an immaterial impact on~~ the ~~financial statements.~~premiums receivable balance as a result of the adoption of the new standard.

The ~~estimated impacts could change based upon economic changes, events or conditions.~~Company has elected not to establish a credit allowance for investment interest receivable. The Company ~~will~~plans to continue ~~to monitor and evaluate~~use of the ~~financial impact as the implementation date approaches.~~current policy for writing off investment related interest receivable balances over ninety days old.

All ~~other~~ issued but not yet effective accounting and reporting standards as of September 30, ~~2019~~2020 are either not applicable to the Company or are not expected to have a material impact on the Company.

As of September 30, ~~2019,~~2020, the Company has 2 equity incentive plans: the AMERISAFE Non-Employee Director Restricted Stock Plan (the “Restricted Stock Plan”) and the AMERISAFE 2012 Equity and Incentive Compensation Plan (the “2012 Incentive Plan”). In connection with the approval of the 2012 Incentive Plan by the Company’s shareholders, no further grants were made under the AMERISAFE 2005 Incentive Plan. There are 0 outstanding options or restricted stock awards under the 2005 Incentive Plan. See Note 12 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 for additional information regarding the Company’s incentive plans.

During the nine months ended September 30, 2020, the Company issued 23,207 shares of common stock pursuant to vested performance awards and 5,269 shares of restricted common stock to non-employee directors. The market value of these shares totaled $1.8 million. During the nine months ended September 30, 2019, the Company issued 9,391 shares of common stock pursuant to vested performance awards and 11,048 shares of restricted common stock to ~~officers, and~~executive officers. During the nine months ended September 30, 2019, the Company issued 4,890 shares of restricted common stock to non-employee directors. The market value of these shares totaled $1.5 million. During the nine months ended September 30, 2018, the Company issued 3,304 shares of common stock pursuant to vested performance awards to executive officers and 5,761 shares of restricted common stock to non-employee directors. The market value of these shares totaled $0.5 million.

During the nine months ended September 30, ~~2019 and 2018,~~2020, there were 0 exercises of options to purchase common stock. During the nine months ended September 30, 2019, options to purchase 5,000 ~~and 15,000~~ shares of common stock were ~~exercised, respectively.~~exercised. In connection with these exercises, the Company received ~~$19.8~~$20 thousand of stock option ~~proceeds in the current year and $66.9 thousand of stock option proceeds in the same period of 2018.~~proceeds. The Company had 0 stock options outstanding as of September 30, ~~2019.~~2020.

The Company recognized share-based compensation expense of ~~$0.4~~$0.8 million in the quarter ended September 30, ~~2019~~2020 and ~~$0.3~~$0.4 million for the same period in ~~2018.~~2019. The Company recognized share-based compensation expense of ~~$0.9~~$2.6 million in the nine months ended September 30, ~~2019~~2020 and ~~$1.1~~$0.9 million for the same period in ~~2018.~~2019.

The Company computes earnings per share (“EPS”) in accordance with FASB Accounting Standards Codification (“ASC”) Topic 260, Earnings Per Share. The Company has no participating unvested common shares which contain nonforfeitable rights to dividends and applies the treasury stock method in computing basic and diluted earnings per share.

Basic EPS is calculated by dividing net income by the weighted-average number of common shares outstanding during the period.

The diluted EPS calculation includes potential common shares assumed issued under the treasury stock method, which reflects the potential dilution that would occur if any outstanding options were exercised or restricted stock becomes vested.

	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30,				September 30,				September 30,				September 30,
	2019		2018		2019		2018		2020		2019		2020		2019
	(in thousands, except share and per share amounts)								(in thousands, except share and per share amounts)
Basic EPS:
Net income	$	21,386	$	19,701	$	58,676	$	52,826	$	23,353	$	21,386	$	58,101	$	58,676
Basic weighted average common shares		19,256,069		19,216,545		19,243,689		19,204,196		19,299,921		19,256,069		19,282,263		19,243,689
Basic earnings per common share	$	1.11	$	1.03	$	3.05	$	2.75	$	1.21	$	1.11	$	3.01	$	3.05
Diluted EPS:
Net income	$	21,386	$	19,701	$	58,676	$	52,826	$	23,353	$	21,386	$	58,101	$	58,676
Diluted weighted average common shares:
Weighted average common shares		19,256,069		19,216,545		19,243,689		19,204,196		19,299,921		19,256,069		19,282,263		19,243,689
Stock options and restricted stock		46,482		56,439		76,510		76,840		58,761		46,482		63,689		76,510
Diluted weighted average common shares		19,302,551		19,272,984		19,320,199		19,281,036		19,358,682		19,302,551		19,345,952		19,320,199
Diluted earnings per common share	$	1.11	$	1.02	$	3.04	$	2.74	$	1.21	$	1.11	$	3.00	$	3.04

The gross ~~unrealized~~unrecognized gains and losses on, ~~and the~~ amortized cost, allowance for credit losses, carrying amount, and fair value of, those investments classified as held-to-maturity at September 30, ~~2019~~2020 are summarized as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Allowance for Credit Losses			Carrying Amount		Gross Unrecognized Gains		Gross Unrecognized Losses			Fair Value
	(in thousands)									(in thousands)
States and political subdivisions	$	438,055	$	19,978	$	(3	)	$	458,030	$	471,913	$	(38	)	$	471,875	$	30,756	$	(8	)	$	502,623
Corporate bonds		115,982		1,587		(108	)		117,461		70,721		(242	)		70,479		3,106		—			73,585
U.S. agency-based mortgage-backed securities		11,910		607		(1	)		12,516		8,070		—			8,070		644		—			8,714
U.S. Treasury securities and obligations of U.S. government agencies		37,513		406		(21	)		37,898		21,914		—			21,914		326		—			22,240
Asset-backed securities		701		1		(4	)		698		178		(8	)		170		7		—			177
Totals	$	604,161	$	22,579	$	(137	)	$	626,603	$	572,796	$	(288	)	$	572,508	$	34,839	$	(8	)	$	607,339

The gross unrealized gains and losses on, and the amortized cost, allowance for credit losses, and fair value of, those investments classified as available-for-sale at September 30, ~~2019~~2020 are summarized as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Allowance for Credit Losses
	(in thousands)									(in thousands)
States and political subdivisions	$	217,944	$	12,249	$	(2	)	$	230,191	$	257,169	$	18,235	$	(33	)	$	275,371	$	—
Corporate bonds		142,011		3,417		(7	)		145,421		91,162		5,492		(25	)		96,629		—
U.S. agency-based mortgage-backed securities		24,458		20		(55	)		24,423		23,850		460		—			24,310		—
U.S. Treasury securities and obligations of U.S. government agencies		39,857		406		(81	)		40,182		28,882		1,045		—			29,927		—
Totals	$	424,270	$	16,092	$	(145	)	$	440,217	$	401,063	$	25,232	$	(58	)	$	426,237	$	—

The gross unrealized gains and losses on, and the cost of equity securities at September 30, ~~2019~~2020 are summarized as follows:

	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)								(in thousands)
Equity securities:
Domestic common stock	$	24,082	$	1,854	$	—	$	25,936	$	34,725	$	2,232	$	(1,135	)	$	35,822
Total equity securities	$	24,082	$	1,854	$	—	$	25,936	$	34,725	$	2,232	$	(1,135	)	$	35,822

The gross unrealized gains and losses on, and the amortized cost and fair value of, those investments classified as held-to-maturity at December 31, ~~2018~~2019 are summarized as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)									(in thousands)
States and political subdivisions	$	445,922	$	5,109	$	(2,084	)	$	448,947	$	466,270	$	19,570	$	(193	)	$	485,647
Corporate bonds		91,762		62		(455	)		91,369		109,241		1,684		—			110,925
U.S. agency-based mortgage-backed securities		8,102		327		(80	)		8,349		10,967		544		—			11,511
U.S. Treasury securities and obligations of U.S. government agencies		67,042		340		(339	)		67,043		12,723		330		(12	)		13,041
Asset-backed securities		1,050		22		(8	)		1,064		220		—		(1	)		219
Totals	$	613,878	$	5,860	$	(2,966	)	$	616,772	$	599,421	$	22,128	$	(206	)	$	621,343

The gross unrealized gains and losses on, and the amortized cost and fair value of, those investments classified as available-for-sale at December 31, ~~2018~~2019 are summarized as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)									(in thousands)
States and political subdivisions	$	231,848	$	3,515	$	(2,118	)	$	233,245	$	225,895	$	11,906	$	(26	)	$	237,775
Corporate bonds		173,904		243		(933	)		173,214		130,453		3,326		(1	)		133,778
U.S. agency-based mortgage-backed securities		12,835		—		(320	)		12,515		29,499		64		(96	)		29,467
U.S. Treasury securities and obligations of U.S. government agencies		61,185		—		(1,429	)		59,756		39,851		317		(42	)		40,126
Totals	$	479,772	$	3,758	$	(4,800	)	$	478,730	$	425,698	$	15,613	$	(165	)	$	441,146

The gross unrealized gains and losses on, and the cost of equity securities at December 31, ~~2018~~2019 are summarized as follows:

	Cost		Gross Gains		Gross Losses			Fair Value		Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(in thousands)									(in thousands)
Equity securities:
Domestic common stock	$	19,962	$	30	$	(1,341	)	$	18,651	$	24,457	$	3,446	$	—	$	27,903
Total equity securities	$	19,962	$	30	$	(1,341	)	$	18,651	$	24,457	$	3,446	$	—	$	27,903

A summary of the ~~amortized cost~~carrying amounts and fair value of investments in fixed maturity securities, classified as held-to-maturity, ~~at September 30, 2019,~~ by contractual maturity, is as follows:

					September 30, 2020				December 31, 2019
	Amortized Cost		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(in thousands)				(in thousands)
Maturity:
Within one year	$	60,720	$	61,141	$	63,982	$	64,630	$	49,967	$	50,348
After one year through five years		207,941		211,604		182,355		190,897		198,025		202,109
After five years through ten years		101,986		105,588		94,035		99,644		110,460		113,877
After ten years		220,903		235,056		223,896		243,277		229,782		243,279
U.S. agency-based mortgage-backed securities		11,910		12,516		8,070		8,714		10,967		11,511
Asset-backed securities		701		698		170		177		220		219
Totals	$	604,161	$	626,603	$	572,508	$	607,339	$	599,421	$	621,343

A summary of the amortized cost and fair value of investments in fixed maturity securities, classified as available-for-sale, ~~at September 30, 2019,~~ by contractual maturity, is as follows:

					September 30, 2020				December 31, 2019
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(in thousands)				(in thousands)
Maturity:
Within one year	$	38,130	$	38,207	$	61,469	$	62,203	$	27,160	$	27,194
After one year through five years		137,900		140,142		90,936		96,406		144,142		146,469
After five years through ten years		45,985		48,358		56,622		60,484		47,175		49,419
After ten years		177,797		189,087		168,186		182,834		177,722		188,597
U.S. agency-based mortgage-backed securities		24,458		24,423		23,850		24,310		29,499		29,467
Totals	$	424,270	$	440,217	$	401,063	$	426,237	$	425,698	$	441,146

The following table summarizes the fair value and gross unrealized losses on securities classified as available-for-sale, aggregated by major investment category and length of time that the individual securities have been in a continuous unrealized loss position as of September 30, 2020:

At September 30, 2020, we held 8 individual fixed maturity securities classified as available-for-sale that were in an unrealized loss position, of which NaN were in a continuous unrealized loss position for longer than 12 months.

The following table summarizes the fair value and gross unrealized losses on securities, aggregated by major investment category and length of time that the individual securities have been in a continuous unrealized loss ~~position:~~position as of December 31, 2019:

Less Than 12 Months

12 Months or Greater

Total

Fair Value of
Investments
with
Unrealized
Losses

Gross
Unrealized
Losses

Fair Value of
Investments
with
Unrealized
Losses

Gross
Unrealized
Losses

Fair Value of
Investments
with
Unrealized
Losses

Gross
Unrealized
Losses

(in thousands)

September 30, 2019

Held-to-Maturity

Fixed maturity securities:

States and political subdivisions

$
4,277

$
3

$
—

$
—

$
4,277

$
3

Corporate bonds

13,241

67

8,208

41

21,449

108

U.S. agency-based mortgage-backed securities

404

1

—

—

404

1

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

—

—

3,236

21

3,236

21

Asset-backed securities

363

1

169

3

532

4

Total held-to-maturity securities

18,285

72

11,613

65

29,898

137

Available-for-Sale

Fixed maturity securities:

States and political subdivisions

$
4,189

$
2

$
—

$
—

$
4,189

$
2

Corporate bonds

—

—

7,093

7

7,093

7

U.S. agency-based mortgage-backed securities

13,194

35

3,928

20

17,122

55

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

1,008

2

17,048

79

18,056

81

Total available-for-sale securities

18,391

39

28,069

106

46,460

145

Total

$
36,676

$
111

$
39,682

$
171

$
76,358

$
282

	Less Than 12 Months				12 Months or Greater				Total				Less Than 12 Months				12 Months or Greater				Total
	Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses		Fair Value of Investments with Unrealized Losses		Gross Unrealized Losses
	(in thousands)												(in thousands)
December 31, 2018
December 31, 2019
Held-to-Maturity
Fixed maturity securities:
States and political subdivisions	$	28,369	$	59	$	180,550	$	2,025	$	208,919	$	2,084	$	21,074	$	193	$	—	$	—	$	21,074	$	193
Corporate bonds		17,448		36		48,315		419		65,763		455
U.S. agency-based mortgage-backed securities		—		—		2,287		80		2,287		80
U.S. Treasury securities and obligations of U.S. government agencies		2,865		4		46,486		335		49,351		339		—		—		3,243		12		3,243		12
Asset-backed securities		—		—		525		8		525		8		—		—		68		1		68		1
Total held-to-maturity securities		48,682		99		278,163		2,867		326,845		2,966		21,074		193		3,311		13		24,385		206
Available-for-Sale
Fixed maturity securities:
States and political subdivisions	$	16,109	$	81	$	76,255	$	2,037	$	92,364	$	2,118	$	4,140	$	26	$	—	$	—	$	4,140	$	26
Corporate bonds		59,099		279		70,306		654		129,405		933		6,426		1		—		—		6,426		1
U.S. agency-based mortgage-backed securities		—		—		12,515		320		12,515		320		13,007		95		1,152		1		14,159		96
U.S. Treasury securities and obligations of U.S. government agencies		—		—		59,756		1,429		59,756		1,429		—		—		17,068		42		17,068		42
Total available-for-sale securities		75,208		360		218,832		4,440		294,040		4,800		23,573		122		18,220		43		41,793		165
Total	$	123,890	$	459	$	496,995	$	7,307	$	620,885	$	7,766	$	44,647	$	315	$	21,531	$	56	$	66,178	$	371

AtThe following table illustrates the changes in the allowance for credit losses by major security type of the investments classified as held-to-maturity for the quarter ended September 30, 2020.

The following table illustrates the changes in the allowance for credit losses by major security type of the investments classified as held-to-maturity for the nine months ended September 30, 2020.

The Company has established an allowance for credit losses on 400 held-to-maturity securities totaling $0.3 million. The majority of those securities were states and political subdivisions and corporate bonds at 369 and 28, respectively.

The Company has 0 allowance for credit losses on investments classified as available-for-sale for the period ended September 30, 2020.

The credit rating used for held-to-maturity fixed income securities is the rating for each security as published by Moody’s, S&P, and Fitch to determine the probability of default. If there are two ratings, the lower rating is used. If there are three ratings, the median rating is used. If there is one rating, that rating is used. For corporate fixed income securities the probability of default (given a rating) comes from Moody’s annual study of corporate bond defaults published each February. The maximum maturity using the default rate is 20 years (any maturity greater than 20 years will use the 20-year rate). For municipal fixed income securities the probability of default (given a rating) comes from Moody’s annual study of municipal bond defaults published each July/August.

The calculation of the credit loss allowance takes the amortized cost of the fixed income security and assumes default and recovery based on the average recovery rates from the Moody’s default studies. The amortized cost of the security, minus the amount recovered, is the estimated full amount the Company could lose in a default scenario. Then this amount is multiplied by the probability of default to determine the allowance for credit loss. The lower the security is rated, the higher likelihood of default, and therefore a higher allowance for credit loss. The longer to the maturity date of a security, the higher the default risk.

The table below presents the amortized cost of held-to-maturity securities aggregated by credit quality indicator as of September 30, 2020.

Net realized gains in the quarter ended September 30, 2020 were $0.3 million resulting from the call of fixed maturity securities. Net realized losses in the quarter ended September 30, 2019 ~~we held 43 individual~~were immaterial.

Net realized gains in the nine months ended September 30, 2020 were $1.5 million resulting primarily from the sale of fixed maturity securities ~~that were in an unrealized loss position, of which 21 individual~~classified as available-for-sale and from called fixed maturity securities. Net realized losses in the nine months ended September 30, 2019 were immaterial.

During the third quarter of 2020, we recognized through income $0.8 million of net unrealized gains on equity securities ~~were in a continuous unrealized loss position for longer than 12 months.~~

held as of September 30, 2020. During the third quarter of 2019, we recognized through income $0.4 million of net unrealized gains on equity securities held as of September 30, 2019.

During the ~~third quarter of 2018,~~nine months ended September 30, 2020, we recognized through income ~~$0.6~~$2.3 million of net unrealized ~~gains~~losses on equity securities held as of September 30, ~~2018.~~

2020. During the nine months ended September 30, 2019, we recognized through income $3.2 million of net unrealized gains on equity securities held as of September 30, 2019. ~~During the nine months ended September 30, 2018, we recognized through income $0.3 million of net unrealized gains on equity securities held as of September 30, 2018.~~

Investment income is recognized as it is earned. The discount or premium on fixed maturity securities is amortized using the “constant yield” method. Anticipated prepayments, where applicable, are considered when determining the amortization of premiums or discounts. Realized investment gains and losses are determined using the specific identification method.

We regularly review our investment portfolio to evaluate the existence of other-than-temporary declines in the fair value of investments. We consider various factors in determining if a decline in the fair value of an individual security is other-than-temporary. The key factors we consider are:

We reviewed all securities with unrealized losses in accordance with the impairment policy described above. We determined that the unrealized losses in the fixed maturity securities portfolio related primarily to changes in market interest rates since the date of purchase, current conditions in the capital markets and the impact of those conditions on market liquidity and prices generally. We expect to recover the carrying value of these securities as it is not more likely than not that we will be required to sell the securities before the recovery of its amortized cost basis.

~~During the three and nine months ended September 30, 2019 and 2018, there were 0 impairment losses recognized for other-than-temporary declines in the fair value of our investments.~~

Net realized losses in the quarter ended September 30, 2019 were immaterial. Net realized losses in the quarter ended September 30, 2018 were $0.3 million resulting from called fixed maturity securities.

Net realized losses in the nine months ended September 30, 2019 were immaterial. Net realized losses in the nine months ended September 30, 2018 were $1.5 million resulting from the sale of equity and fixed maturity securities classified as available-for-sale and called fixed maturity securities.

In accordance with FASB ASC Topic 740, “Income Taxes,” we provide for the recognition and measurement of deferred income tax benefits based on the likelihood of their realization in future years. ~~As of September 30, 2019, the~~The Company had a valuation allowance of $2.1 million and $0.2 million against its deferred income tax ~~benefits.~~benefits as of September 30, 2020 and 2019, respectively.

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. There were 0 uncertain tax positions ~~recognized~~ for the periods ended September 30, ~~2019~~2020 and ~~2018.~~2019.

Tax years ~~2015~~2017 through ~~2018~~2020 are subject to examination by the federal and state taxing authorities.

We record reserves for estimated losses under insurance policies that we write and for loss adjustment 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 as of a given point in time. The reserves for loss and loss adjustment expenses are estimated using individual case-basis valuations, statistical analyses and estimates based upon experience for unreported claims and their associated loss and loss adjustment expenses. Such estimates may be more or less than the amounts ultimately paid when the claims are settled. The estimates are subject to the effects of trends in loss severity and frequency. Although considerable variability is inherent in these estimates, management believes that the reserves for loss and loss adjustment expenses are adequate. The estimates are continually reviewed internally and periodically evaluated with our independent actuary. Adjustments are made as experience develops and new information becomes known. Any such adjustments are included in income from current operations. See Note 9 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 for additional information regarding the Company’s loss and loss adjustment expense development.

The following table provides the Company’s liability for unpaid loss and loss adjustment expenses, net of related amounts recoverable from reinsurers, for the nine months ended September 30, ~~2019~~2020 and ~~2018:~~2019:

	Nine Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2020			2019
	(in thousands)						(in thousands)
Balance, beginning of period	$	798,409		$	771,845		$	772,887		$	798,409
Less amounts recoverable from reinsurers on unpaid loss and loss adjustment expenses		107,216			84,889			95,343			107,216
Net balance, beginning of period		691,193			686,956			677,544			691,193
Add incurred related to:							��
Current accident year		181,693			186,964			166,551			181,693
Prior accident years		(38,886	)		(34,128	)		(45,585	)		(38,886	)
Total incurred		142,807			152,836			120,966			142,807
Less paid related to:
Current accident year		35,512			37,901			27,986			35,512
Prior accident years		105,590			115,194			105,832			105,590
Total paid		141,102			153,095			133,818			141,102
Net balance, end of period		692,898			686,697			664,692			692,898
Add amounts recoverable from reinsurers on unpaid loss and loss adjustment expenses		97,914			104,432			95,220			97,914
Balance, end of period	$	790,812		$	791,129		$	759,912		$	790,812

The foregoing reconciliation reflects favorable development of the net reserves at September 30, ~~2019~~2020 and September 30, ~~2018.~~2019. The favorable development reduced loss and loss adjustment expenses incurred by $45.6 million and $38.9 million in 2020 and ~~$34.1 million in~~ 2019, ~~and 2018,~~ respectively. The revisions to the Company’s reserves reflect new information gained by claims adjusters in the normal course of adjusting claims and is reflected in the financial statements when the information becomes available. It is typical for more serious claims to take several years or longer to settle and the Company continually revises estimates as more information about claimants’ medical conditions and potential disability becomes known and the claims get closer to being settled. Multiple factors can cause loss development both unfavorable and favorable. The favorable loss development we experienced across accident years was largely due to favorable case reserve development from closed claims and claims where the worker had reached maximum medical improvement.

The table below presents the change in the allowance for credit losses on amounts recoverable from reinsurers for the three and nine months ended September 30, 2020.

Comprehensive income was $24.1 million for the three months ended September 30, 2020, compared to $23.9 million for the three months ended September 30, ~~2019, compared to $17.6 million for the three months ended September 30, 2018.~~2019. Comprehensive income was ~~$72.1~~$65.8 million for the nine months ended September 30, ~~2019,~~2020, compared to ~~$45.0~~$72.1 million for the same period in ~~2018.~~2019. The difference between net income as reported and comprehensive income was due primarily to changes in unrealized gains and losses, net of tax on available-for-sale debt securities.

Comprehensive income includes net income plus unrealized gains (losses) on our available-for-sale investment securities, net of tax. In reporting comprehensive income on a net basis in the statements of comprehensive income, we used a 21 percent tax rate in ~~2019~~2020 and ~~2018.~~2019 The following table illustrates the changes in the balance of each component of accumulated other comprehensive income for each period presented in the interim financial statements.

	Three Months Ended September 30,					Nine Months Ended September 30,						Three Months Ended September 30,					Nine Months Ended September 30,
	2019		2018			2019			2018			2020			2019		2020			2019
	(in thousands)											(in thousands)
Balance, beginning of period	$	10,140	$	(2,083	)	$	(832	)	$	3,612		$	19,178		$	10,140	$	12,211		$	(832	)
Other comprehensive income (loss) before reclassification		2,467		(2,143	)		12,844			(7,964	)
Other comprehensive income before reclassification													1,316			2,467		8,317			12,844
Amounts reclassified from accumulated other comprehensive income		8		25			603			151			(582	)		8		(616	)		603
Net current period other comprehensive income (loss)		2,475		(2,118	)		13,447			(7,813	)
Net current period other comprehensive income													734			2,475		7,701			13,447
Balance, end of period	$	12,615	$	(4,201	)	$	12,615		$	(4,201	)	$	19,912		$	12,615	$	19,912		$	12,615

The sale or other-than-temporary impairment of an available-for-sale security results in amounts being reclassified from accumulated other comprehensive income to current period net income. The effects of reclassifications out of accumulated other comprehensive income by the respective line items of net income are presented in the following table.

Component of Accumulated Other	Three Months Ended						Nine Months Ended						Affected line item in the	Three Months Ended						Nine Months Ended						Affected line item in the
Comprehensive Income	September 30,						September 30,						statement of income	September 30,						September 30,						statement of income
	2019			2018			2019			2018				2020			2019			2020			2019
	(in thousands)													(in thousands)
Unrealized losses on available-for-sale securities	$	(10	)	$	(32	)	$	(764	)	$	(445	)	Net realized losses on investments
Unrealized gains (losses) on available-for-sale securities														$	737		$	(10	)	$	780		$	(764	)	Net realized gains (losses) on investments
		(10	)		(32	)		(764	)		(445	)	Income before income taxes		737			(10	)		780			(764	)	Income before income taxes
		2			7			161			40		Income tax expense		(155	)		2			(164	)		161		Income tax expense
	$	(8	)	$	(25	)	$	(603	)	$	(405	)	Net income	$	582		$	(8	)	$	616		$	(603	)	Net income

The Company carries available-for-sale securities at fair value in our consolidated financial statements and determines fair value measurements and disclosure in accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosures.

The Company determines the fair values of its financial instruments based on the fair value hierarchy established in ASC Topic 820, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard defines fair value, describes three levels of inputs that may be used to measure fair value, and expands disclosures about fair value measurements.

Fair value is defined in ASC Topic 820 as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is the price to sell an asset or transfer a liability and, therefore, represents an exit price, not an entry price. Fair value is the exit price in the principal market (or, if lacking a principal market, the most advantageous market) in which the reporting entity would transact. Fair value is a market-based measurement, not an entity-specific measurement, and, as such, is determined based on the assumptions that market participants would use in pricing the asset or liability. The exit price objective of a fair value measurement applies regardless of the reporting entity’s intent and/or ability to sell the asset or transfer the liability at the measurement date.

ASC Topic 820 requires the use of valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present value amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset, also known as current replacement cost. Valuation techniques used to measure fair value are to be consistently applied.

In ASC Topic 820, inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk, for example, the risk inherent in a particular valuation technique used to measure fair value (such as a pricing model) and/or the risk inherent in the inputs to the valuation technique. Inputs may be observable or unobservable:

Valuation techniques used to measure fair value are intended to maximize the use of observable inputs and minimize the use of unobservable inputs. ASC Topic 820 establishes a fair value hierarchy that prioritizes the use of inputs used in valuation techniques into the following three levels:

In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters.

The fair values of the Company’s investments are based upon prices provided by an independent pricing service. The Company has reviewed these prices for reasonableness and has not adjusted any prices received from the independent provider. Securities reported at fair value utilizing Level 1 inputs represent assets whose fair value is determined based upon observable unadjusted quoted market prices for identical assets in active markets. Level 2 securities represent assets whose fair value is determined using observable market information such as previous day trade prices, quotes from less active markets or quoted prices of securities with similar characteristics. There were no transfers between Level 1 and Level 2 during the nine months ended September 30, ~~2019.~~2020.

At September 30, ~~2019,~~2020, assets measured at fair value on a recurring basis are summarized below:

	September 30, 2019								September 30, 2020
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
	(in thousands)								(in thousands)
Financial instruments carried at fair value, classified as a part of:
Securities available-for-sale—fixed maturity:
States and political subdivisions	$	—	$	230,191	$	—	$	230,191	$	—	$	275,371	$	—	$	275,371
Corporate bonds		—		145,421		—		145,421		—		96,629		—		96,629
U.S. agency-based mortgage-backed securities		—		24,423		—		24,423		—		24,310		—		24,310
U.S. Treasury securities		40,182		—		—		40,182		29,927		—		—		29,927
Total securities available-for-sale—fixed maturity		40,182		400,035		—		440,217		29,927		396,310		—		426,237
Equity securities:
Domestic common stock		25,936		—		—		25,936		35,822		—		—		35,822
Total	$	66,118	$	400,035	$	—	$	466,153	$	65,749	$	396,310	$	—	$	462,059

At September 30, ~~2019,~~2020, assets measured at amortized cost net of allowance for credit losses are summarized below:

	September 30, 2019								September 30, 2020
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
	(in thousands)								(in thousands)
Securities held-to-maturity—fixed maturity:
States and political subdivisions	$	—	$	458,030	$	—	$	458,030	$	—	$	502,623	$	—	$	502,623
Corporate bonds		—		117,461		—		117,461		—		73,585		—		73,585
U.S. agency-based mortgage-backed securities		—		12,516		—		12,516		—		8,714		—		8,714
U.S. Treasury securities		7,891		—		—		7,891		17,190		—		—		17,190
Obligations of U.S. government agencies		—		30,007		—		30,007		—		5,050		—		5,050
Asset-backed securities		—		698		—		698		—		177		—		177
Total held-to-maturity	$	7,891	$	618,712	$	—	$	626,603	$	17,190	$	590,149	$	—	$	607,339

At December 31, ~~2018,~~2019, assets measured at fair value on a recurring basis are summarized below:

	December 31, 2018								December 31, 2019
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
	(in thousands)								(in thousands)
Financial instruments carried at fair value, classified as part of:
Financial instruments carried at fair value, classified as a part of:
Securities available-for-sale—fixed maturity:
States and political subdivisions	$	—	$	233,245	$	—	$	233,245	$	—	$	237,775	$	—	$	237,775
Corporate bonds		—		173,214		—		173,214		—		133,778		—		133,778
U.S. agency-based mortgage-backed securities		—		12,515		—		12,515		—		29,467		—		29,467
U.S. Treasury securities and obligations of U.S. government agencies		59,756		—		—		59,756
U.S. Treasury securities										40,126		—		—		40,126
Total securities available-for-sale—fixed maturity	$	59,756	$	418,974	$	—	$	478,730	$	40,126	$	401,020	$	—	$	441,146
Equity securities:
Domestic common stock		18,651		—		—		18,651		27,903		—		—		27,903
Total	$	78,407	$	418,974	$	—	$	497,381	$	68,029	$	401,020	$	—	$	469,049

At December 31, ~~2018,~~2019, assets measured at amortized cost are summarized below:

	December 31, 2018								December 31, 2019
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
	(in thousands)								(in thousands)
Securities held-to-maturity—fixed maturity:
States and political subdivisions	$	—	$	448,947	$	—	$	448,947	$	—	$	485,647	$	—	$	485,647
Corporate bonds		—		91,369		—		91,369		—		110,925		—		110,925
U.S. agency-based mortgage-backed securities		—		8,349		—		8,349		—		11,511		—		11,511
U.S. Treasury securities		7,111		—		—		7,111		7,873		—		—		7,873
Obligations of U.S. government agencies		—		59,932		—		59,932		—		5,168		—		5,168
Asset-backed securities		—		1,064		—		1,064		—		219		—		219
Total held-to-maturity	$	7,111	$	609,661	$	—	$	616,772	$	7,873	$	613,470	$	—	$	621,343

The Company determines fair value amounts for financial instruments using available third-party market information. When such information is not available, the Company determines the fair value amounts using appropriate valuation methodologies. Nonfinancial instruments such as real estate, property and equipment, deferred policy acquisition costs, deferred income taxes and loss and loss adjustment expense reserves are excluded from the fair value disclosure.

~~At September 30, 2019, the Company did not hold any securities measured at fair value on a nonrecurring basis due to impairment.~~

Cash and Cash Equivalents —The carrying amounts reported in the accompanying consolidated balance sheets for these financial instruments approximate their fair values, which are characterized as Level 1 assets.

Investments —The fair values for fixed maturity and equity securities are based on prices obtained from an independent pricing service. Equity and treasury securities are characterized as Level 1 assets, as their fair values are based on quoted prices in active markets. Fixed maturity securities, other than treasury securities, are characterized as Level 2 assets, as their fair values are determined using observable market inputs.

Short Term Investments —The carrying amounts reported in the accompanying consolidated balance sheets for these financial instruments approximate their fair values. These securities are characterized as Level 2 assets in the fair value hierarchy.

The following table summarizes the carrying ~~values~~amounts and corresponding fair values for financial instruments:

	As of September 30, 2019				As of December 31, 2018				As of September 30, 2020				As of December 31, 2019
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(in thousands)								(in thousands)
Assets:
Fixed maturity securities—held-to-maturity	$	604,161	$	626,603	$	613,878	$	616,772	$	572,508	$	607,339	$	599,421	$	621,343
Fixed maturity securities—available-for-sale		440,217		440,217		478,730		478,730		426,237		426,237		441,146		441,146
Equity securities		25,936		25,936		18,651		18,651		35,822		35,822		27,903		27,903
Short-term investments		20,964		20,964		14,231		14,231		90,826		90,826		56,548		56,548
Cash and cash equivalents		125,870		125,870		40,344		40,344		88,168		88,168		43,813		43,813

The Company’s Board of Directors initiated a share repurchase program in February 2010. In October 2016, the Board reauthorized this program with a limit of $25.0 million with no expiration date. There were 0 shares repurchased under this program in the nine months ended September 30, ~~2019~~2020 and ~~2018.~~2019.

The Company has operating and finance leases for office space and equipment. Our leases have remaining lease terms of four months to 52 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.

On October ~~29, 2019,~~26, 2020, the Company’s Board of Directors declared an extraordinary dividend of $3.50 per share payable on November ~~20, 2019~~18, 2020 to shareholders of record as of November ~~13, 2019.~~11, 2020.

On October ~~29, 2019,~~26, 2020, the Company’s Board of Directors declared a quarterly cash dividend of ~~$0.25~~$0.27 per share payable on December ~~27, 2019~~18, 2020 to shareholders of record as of December ~~13, 2019.~~4, 2020. The Board considers the payment of a regular cash dividend each calendar quarter.

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

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 our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

We begin our discussion with an overview of our Company to give you an understanding of our business and the markets we serve. We then discuss our critical accounting policies. This is followed with a discussion of our results of operations for the three and nine months ended September 30, ~~2019~~2020 and ~~2018.~~2019. This discussion includes an analysis of certain significant period-to-period variances in our consolidated statements of operations. Our cash flows and financial condition are discussed under the caption “Liquidity and Capital Resources.”

AMERISAFE is 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, manufacturing, agriculture, maritime, and ~~agriculture.~~oil and gas. 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 employers’ workplaces. These safety reviews are a vital component of our underwriting process and also 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 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. We are also licensed in an additional 20 states, the District of Columbia and the U.S. Virgin Islands.

The impact of COVID-19 could materially affect the business operations of our insurance subsidiaries and may adversely affect our revenues, results of operations, and cash flows.

Beginning in March 2020, the global pandemic began to impact the global economy creating disruptions in economic activity impacting our business and results of operations, as well as those of our policy holders. We cannot predict the direct or indirect ultimate impact that the economic and financial disruptions related to the COVID-19 pandemic will have on our business. We have identified ongoing risks related to the pandemic which include a decline in demand for insurance products, a reduction in hours worked by our policyholders, an inability to collect premium balances due, potential declines in the market value of our investments and the decline in interest rates on new investments. Additional risks include legislative, judicial and regulatory actions suspending cancellation of policies for non-payment of premiums, extension of grace periods for payment of premium balances, expansion of coverage to pay for losses not contemplated by our insurance policies, and an increase in frequency and severity related to COVID-19 compensable claims.

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 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, the impairment of 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, ~~2018.~~2019.

The following table summarizes our consolidated financial results for the three and nine months ended September 30, ~~2019~~2020 and ~~2018.~~2019.

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018			2020			2019			2020			2019
	(dollars in thousands, except per share data)												(dollars in thousands, except per share data)
	(unaudited)												(unaudited)
Gross premiums written	$	82,629		$	85,324		$	262,754		$	276,368		$	72,648		$	82,629		$	240,008		$	262,754
Net premiums earned		82,712			85,184			250,611			261,489			74,771			82,712			229,725			250,611
Net investment income		8,264			7,884			24,448			22,396			7,063			8,264			22,136			24,448
Total revenues		91,488			93,529			278,431			283,084			83,005			91,488			251,256			278,431
Total expenses		64,875			69,069			205,840			218,280			54,336			64,875			179,955			205,840
Net income		21,386			19,701			58,676			52,826			23,353			21,386			58,101			58,676
Diluted earnings per common share	$	1.11		$	1.02		$	3.04		$	2.74		$	1.21		$	1.11		$	3.00		$	3.04
Other Key Measures
Net combined ratio (1)		78.4	%		81.1	%		82.1	%		83.5	%		72.8	%		78.4	%		78.4	%		82.1	%
Return on average equity (2)		18.6	%		17.4	%		17.8	%		15.9	%		19.8	%		18.6	%		17.0	%		17.8	%
Book value per share (3)	$	24.29		$	23.82		$	24.29		$	23.82		$	24.93		$	24.29		$	24.93		$	24.29

Consolidated Results of Operations for Three Months Ended September 30, ~~2019~~2020 Compared to September 30, ~~2018~~2019

Gross Premiums Written. Gross premiums written for the quarter ended September 30, ~~2019~~2020 were ~~$82.6~~$72.6 million, compared to ~~$85.3~~$82.6 million for the same period in ~~2018,~~2019, a decrease of ~~3.2%~~12.1%. The decrease was attributable to ~~a $7.3~~an $8.3 million decrease in annual premiums on voluntary policies written during the ~~period. Offsetting this~~period, a $0.9 million decrease ~~was a $4.1 million increase~~ in premiums resulting from payroll audits and related premium adjustments for policies written in previous quarters, and a ~~$0.4~~$0.5 million ~~increase~~decrease in assumed premium from mandatory pooling arrangements. The effective loss cost multiplier, or ELCM, for our voluntary business was ~~1.62~~1.59 for the ~~third~~ quarter ended September 30, ~~2019~~2020 compared to ~~1.65~~1.62 for the same period in ~~2018.~~2019.

Net Premiums Written. Net premiums written for the quarter ended September 30, ~~2019~~2020 were ~~$80.5~~$70.2 million, compared to ~~$83.0~~$80.5 million for the same period in ~~2018,~~2019, a decrease of ~~3.1%~~12.8%. The decrease was primarily attributable to the decrease in gross premiums written. As a percentage of gross premiums earned, ceded premiums were 3.2% for the third quarter of 2020 compared to 2.6% for the third quarter of ~~2019 and 2018.~~2019. The increase in ceded premiums as a percentage of gross premiums earned is due to increased pricing for our 2020 reinsurance program. For additional information, see Item 1, “Business—Reinsurance” in our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

Net Premiums Earned. Net premiums earned for the third quarter of ~~2019~~2020 were ~~$82.7~~$74.8 million, compared to ~~$85.2~~$82.7 million for the same period in ~~2018,~~2019, a decrease of ~~2.9%~~9.6%. The decrease was primarily attributable to the decrease in net premiums written during the period.

Net Investment Income. Net investment income for the quarter ended September 30, ~~2019~~2020 was ~~$8.3~~$7.1 million, compared to ~~$7.9~~$8.3 million for the same period in ~~2018, an increase~~2019, a decrease of ~~4.8%~~14.5%. The ~~increase~~decrease was due to ~~slightly higher~~lower investment yields on ~~fixed-income securities.~~fixed income securities and cash balances. Average invested assets, including cash and cash equivalents, were $1.2 billion in the ~~quarter~~quarters ended September 30, ~~2019~~2020 and ~~2018.~~2019. The pre-tax investment yield on our investment portfolio was ~~2.7%~~2.3% per annum during the quarter ended September 30, ~~2019~~2020 compared to ~~2.6%~~2.7% per annum during the same period in ~~2018.~~2019. The tax-equivalent yield on our investment portfolio was ~~3.1%~~2.8% per annum for the quarter ended September 30, ~~2019~~2020 and ~~3.0%~~3.1% for the same period in ~~2018.~~2019. 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~~gains on investments for the three months ended September 30, ~~2019 were immaterial~~2020 totaled $0.3 million compared to immaterial net realized losses ~~of $0.3 million~~ for the same period in ~~2018.~~2019. Net realized ~~losses~~gains in the third quarter of ~~2018~~2020 were attributable to the call of fixed maturity securities.

Net Unrealized Gains (Losses) on Equity Securities. Net unrealized gains on equity securities for the three months ended September 30, ~~2019~~2020 were ~~$0.4~~$0.8 million compared to net unrealized gains of ~~$0.6~~$0.4 million for the same period in ~~2018.~~2019.

Loss and Loss Adjustment Expenses Incurred. Loss and loss adjustment expenses (“LAE”) incurred totaled ~~$44.3~~$39.8 million for the three months ended September 30, ~~2019,~~2020, compared to ~~$47.6~~$44.3 million for the same period in ~~2018,~~2019, a decrease of ~~$3.3~~$4.5 million, or ~~6.9%~~10.2%. The current accident year loss and LAE incurred were ~~$60.0~~$54.2 million, or 72.5% of net premiums earned, compared to ~~$60.9~~$60.0 million, or ~~71.5%~~72.5% of net premiums earned for the same period in ~~2018.~~2019. We recorded favorable prior accident year development of $14.4 million in the third quarter of 2020, compared to favorable prior accident year development of $15.6 million in the ~~third quarter of 2019, compared to favorable prior accident year development of $13.3 million in the~~ same period of ~~2018,~~2019, as further discussed below in “Prior Year Development.” Our net loss ratio was ~~53.6%~~53.2% in the third quarter of ~~2019,~~2020, compared to ~~55.9%~~53.6% for the same period of ~~2018.~~2019.

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 September 30, ~~2019~~2020 were ~~$19.3~~$13.9 million, compared to ~~$20.6~~$19.3 million for the same period in ~~2018,~~2019, a decrease of ~~6.4%~~27.9%. This decrease was primarily due to a ~~$1.0 million~~ decrease in insurance related assessments of $5.3 million and a ~~$0.3~~$0.5 million decrease in commission expense. The decrease in insurance related assessments included an adjustment of $5.7 million due to the early termination of an assessment related to a state multiple injury fund. Offsetting these decreases was an increase of $0.6 million in compensation expense due to a decrease in the estimate of variable share price based incentive compensation recorded in last year’s third quarter. Our expense ratio was 18.6% in the third quarter of 2020 compared to 23.3% in the third quarter of ~~2019 compared to 24.2% in the third quarter of 2018.~~2019.

Income Tax Expense. Income tax expense for the three months ended September 30, ~~2019~~2020 was ~~$5.2~~$5.3 million, compared to ~~$4.8~~$5.2 million for the same period in ~~2018.~~2019. The increase was attributable to an increase in the pre-tax income to ~~$26.6~~$28.7 million in the quarter ended September 30, ~~2019~~2020 from ~~$24.5~~$26.6 million in the same period in ~~2018.~~2019. The effective tax rate for the Company ~~increased~~decreased to ~~19.6%~~18.5% in the quarter ended September 30, ~~2019~~2020 from ~~19.5%~~19.6% in the same period in ~~2018.~~2019. The ~~increase~~decrease in the effective tax rate is due to a ~~lower~~higher proportion of tax-exempt income to underwriting income in ~~the quarter~~2020 relative to ~~the third quarter of 2018.~~2019.

Consolidated Results of Operations for Nine Months Ended September 30, ~~2019~~2020 Compared to September 30, ~~2018~~2019

Gross Premiums Written. Gross premiums written for the ~~first~~ nine months ~~of 2019~~ended September 30, 2020 were ~~$262.8~~$240.0 million, compared to ~~$276.4~~$262.8 million for the same period in ~~2018,~~2019, a decrease of ~~4.9%~~8.7%. The decrease was attributable to ~~a $17.1~~an $18.5 million decrease in annual premiums on voluntary policies written during the ~~period. Offsetting this decreases was~~period and a ~~$3.3~~$3.1 million ~~increase~~decrease in premiums resulting from payroll audits and related premium adjustments for policies written in previous ~~quarters~~quarters. Premiums resulting from payroll audits and related premium adjustments in the current year included a ~~$0.3~~$2.1 million ~~increase~~reduction in ~~assumed premium from mandatory pooling arrangements.~~anticipated future audit premiums. The ELCM for our voluntary business was ~~1.61~~1.58 for the nine months ended September 30, ~~2019~~2020 compared to ~~1.65~~1.61 for the same period in ~~2018.~~2019.

Net Premiums Written. Net premiums written for the nine months ended September 30, ~~2019~~2020 were ~~$256.0~~$232.1 million, compared to ~~$269.4~~$256.0 million for the same period in ~~2018,~~2019, a decrease of ~~5.0%~~9.3%. The decrease was primarily attributable to the decrease in gross premiums written. As a percentage of gross premiums earned, ceded premiums were ~~2.6%~~3.3% for the first nine months of ~~2019 and 2018.~~2020 compared to 2.6% for the same period in 2019. The increase in ceded premiums as a percentage of gross premiums earned is due to increased pricing for our 2020 reinsurance program. For additional information, see Item 1, “Business—Reinsurance” in our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

Net Premiums Earned. Net premiums earned for the ~~first~~ nine months ~~of 2019~~ended September 30, 2020 were ~~$250.6~~$229.7 million, compared to ~~$261.5~~$250.6 million for the same period in ~~2018,~~2019, a decrease of ~~4.2%~~8.3%. The decrease was primarily attributable to the decrease in net premiums written during the period.

Net Investment Income. Net investment income for the first nine months of ~~2019~~2020 was ~~$24.4~~$22.1 million, compared to ~~$22.4~~$24.4 million for the same period in ~~2018, an increase~~2019, a decrease of ~~9.2%~~9.5%. The ~~increase~~decrease was due to ~~slightly higher~~lower investment yields on ~~fixed-income securities.~~fixed income securities and cash balances. Average invested assets, including cash and cash equivalents were $1.2 billion in the nine months ended September 30, ~~2019~~2020 and ~~2018.~~2019. The pre-tax investment yield on our investment portfolio was ~~2.7%~~2.5% per annum during the nine months ended September 30, ~~2019~~2020 compared to ~~2.5%~~2.7% per annum for the same period in ~~2018.~~2019. The tax-equivalent yield on our investment portfolio was ~~3.1%~~2.8% per annum for the first nine months of ~~2019~~2020 compared to ~~3.0%~~3.1% in the same period in ~~2018.~~2019. 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~~gains on investments for the nine months ended September 30, ~~2019~~2020 were ~~immaterial~~$1.5 million compared to immaterial net realized losses ~~of $1.5 million~~ for the same period in ~~2018.~~2019. Net realized ~~losses~~gains in the first nine months of ~~2018~~2020 were attributable to ~~the sale~~sales and calls of ~~equity and~~ fixed maturity securities classified as ~~available-for-sale and called fixed maturity securities.~~available-for-sale.

Net Unrealized Gains (Losses) on Equity Securities. Net unrealized ~~gains~~losses on equity securities for the nine months ended September 30, ~~2019~~2020 were ~~$3.2~~$2.3 million compared to net unrealized gains of ~~$0.3~~$3.2 million for the same period in ~~2018.~~2019.

Loss and Loss Adjustment Expenses Incurred. Loss and LAE incurred totaled ~~$142.8~~$121.0 million for the nine months ended September 30, ~~2019,~~2020, compared to ~~$152.8~~$142.8 million for the same period in ~~2018,~~2019, a decrease of ~~$10.0~~$21.8 million, or ~~6.6%~~15.3%. The current accident year loss and LAE incurred were ~~$181.7~~$166.6 million, or 72.5% of net premiums earned, compared to ~~$187.0~~$181.7 million, or ~~71.5%~~72.5% of net premiums earned, for the same period in ~~2018.~~2019. We recorded favorable prior accident year development of $45.6 million in the first nine months of 2020, compared to favorable prior accident year development of $38.9 million in the ~~first nine months of 2019, compared to favorable prior accident year development of $34.1 million in the~~ same period of ~~2018,~~2019, as further discussed below in “Prior Year Development.” Our net loss ratio was ~~57.0%~~52.7% in the first nine months of ~~2019,~~2020, compared to ~~58.4%~~57.0% for the same period of ~~2018.~~2019.

Underwriting and Certain Other Operating Costs, Commissions and Salaries and Benefits. Underwriting and certain other operating costs, commissions and salaries and benefits for the nine months ended September 30, ~~2019~~2020 were ~~$59.7~~$56.3 million, compared to ~~$62.2~~$59.7 million for the same period in ~~2018,~~2019, a decrease of ~~4.0%~~5.6%. This decrease was primarily due to a ~~$1.7 million~~ decrease in insurance related assessments of $4.1 million, a ~~$0.8~~$1.3 million decrease in commission expense, and a ~~$0.5~~$0.8 million decrease in ~~premium tax expense. Offsetting~~travel and travel related items. The decrease in insurance related assessments included an adjustment of $5.7 million due to the early termination of an assessment related to a state multiple injury fund. Partially offsetting these decreases were a ~~$0.4~~$2.3 million increase in compensation expense due to a lower estimate of variable share price based incentive compensation costs recorded in the prior year and ~~a $0.3 million~~an increase of $0.6 in accounts receivable write-offs. Our expense ratio was ~~23.8%~~24.5% in the first nine months of 2020 compared to 23.8% for the same period in 2019 ~~and 2018.~~partially as a result of lower earned premium.

Income Tax Expense. Income tax expense for the nine months ended September 30, ~~2019~~2020 was ~~$13.9~~$13.2 million, compared to ~~$12.0~~$13.9 million for the same period in ~~2018.~~2019. The ~~increase~~decrease was attributable to ~~an increase~~a decrease in pre-tax income to $71.3 million in the first nine months of 2020 from $72.6 million in the first nine months of ~~2019 from $64.8 million in the first nine months of 2018.~~2019. The effective tax rate for the Company ~~increased~~decreased to 18.5% for the nine months ended September 30, 2020 from 19.2% for the nine months ended September 30, ~~2019 from 18.5% for the nine months ended September 30, 2018.~~2019. The ~~increase~~decrease in the effective tax rate is due to a ~~lower~~higher proportion of tax-exempt income to underwriting income ~~and an increase of $0.2 million for the change in valuation allowance for deferred tax assets~~ for the nine months ended September 30, ~~2019~~2020 compared with the nine months ended September 30, ~~2018.~~2019.

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 provided by operating activities was ~~$62.5~~$50.9 million for the nine months ended September 30, ~~2019,~~2020, which represented ~~a $8.3~~an $11.6 million decrease from ~~$70.7~~$62.5 million in net cash provided by operating activities for the nine months ended September 30, ~~2018.~~2019. This decrease in operating cash flow was due to ~~$16.9~~a $29.1 million decrease in premium collections as a result of lower written premium ~~cash receipts, an $8.5 million increase~~ in ~~federal taxes paid, a $1.6 million increase in underwriting expenses paid~~prior periods, and a ~~$0.8~~$2.2 million ~~increase~~decrease in ~~dividends paid to policyholders.~~investment income. Offsetting these amounts were ~~an $11.9 million decrease in losses paid and~~ a $7.9 million decrease in amounts held by ~~others.~~others, a $4.5 million decrease in underwriting expenses paid a $4.3 million decrease in losses paid, and a $2.7 million decrease in federal taxes paid.

Net cash provided by investing activities was ~~$37.8~~$9.4 million for the nine months ended September 30, ~~2019,~~2020, compared to net cash ~~used in~~provided by investment activities of ~~$80.1~~$37.8 million for the same period in ~~2018.~~2019. Cash provided by sales and maturities of investments totaled ~~$283.8~~$240.0 million for the nine months ended September 30, ~~2019,~~2020, compared to ~~$213.8~~$283.8 million for the same period in ~~2018.~~2019. A total of ~~$245.2~~$230.0 million in cash was used to purchase investments in the nine months ended September 30, ~~2019,~~2020, compared to ~~$293.0~~$245.2 million in purchases for the same period in ~~2018.~~2019.

Net cash used in financing activities in the nine months ended September 30, ~~2019~~2020 was ~~$14.7~~$15.9 million compared to net cash used in financing activities of ~~$12.9~~$14.7 million for the same period in ~~2018.~~2019. In the nine months ended September 30, ~~2019, $14.7~~2020, $15.9 million of cash was used for dividends paid to shareholders compared to ~~$12.9~~$14.7 million in the same period of ~~2018.~~ 2019.

Our investment portfolio, including cash and cash equivalents, totaled $1.2 billion at September 30, ~~2019~~2020 and December 31, ~~2018.~~2019. Purchases of fixed maturity securities are classified as available-for-sale or held-to-maturity at the time of purchase based on the individual security. The ~~reported value of our~~Company has the ability and positive intent to hold certain investments until maturity. Therefore, fixed maturity securities classified as held-to-maturity, as defined by FASB ASC Topic 320, Investments-Debt and Equity Securities, ~~was equal to their~~are recorded at amortized cost ~~and thus was not impacted by changing interest rates.~~net of allowance for credit losses. Our equity securities and fixed maturity securities classified as available-for-sale were reported at fair value.

The composition of our investment portfolio, including cash and cash equivalents, as of September 30, ~~2019,~~2020, is shown in the following table:

	Carrying Value		Percentage of Portfolio			Carrying Amount		Percentage of Portfolio
	(in thousands)					(in thousands)
Fixed maturity securities—held-to-maturity:
States and political subdivisions	$	438,055		36.0	%	$	471,875		38.9	%
Corporate bonds		115,982		9.5	%		70,479		5.8	%
U.S. agency-based mortgage-backed securities		11,910		1.0	%		8,070		0.7	%
U.S. Treasury securities and obligations of U.S. government agencies		37,513		3.1	%		21,914		1.8	%
Asset-backed securities		701		0.1	%		170		—
Total fixed maturity securities—held-to-maturity		604,161		49.7	%		572,508		47.2	%
Fixed maturity securities—available-for-sale:
States and political subdivisions		230,191		18.9	%		275,371		22.7	%
Corporate bonds		145,421		12.0	%		96,629		7.9	%
U.S. agency-based mortgage-backed securities		24,423		2.0	%		24,310		2.0	%
U.S. Treasury securities and obligations of U.S. government agencies		40,182		3.3	%		29,927		2.5	%
Total fixed maturity securities—available-for-sale		440,217		36.2	%		426,237		35.1	%
Equity securities		25,936		2.1	%		35,822		2.9	%
Short-term investments		20,964		1.7	%		90,826		7.5	%
Cash and cash equivalents		125,870		10.3	%		88,168		7.3	%
Total investments, including cash and cash equivalents	$	1,217,148		100.0	%	$	1,213,561		100.0	%

Our debt securities classified as available-for-sale are “marked to market” as of the end of each calendar quarter. As of that date, unrealized gains and losses that are not credit related are recorded to Accumulated Other Comprehensive Income (Loss)~~, except when such securities are deemed~~. Any available-for-sale credit related losses would be recognized as a credit loss allowance on the balance sheet with a corresponding adjustment to earnings, limited by the amount that the fair value is less than the amortized cost basis. Both the credit loss allowance and adjustment to net income can be ~~other-than-temporarily impaired.~~ reversed if conditions change.

For our debt securities classified as held-to-maturity, ~~unrealized~~non-credit related unrecognized gains and losses are not recorded in the financial statements until ~~realized or until~~realized. Effective upon the adoption of CECL, management is required to estimate held-to-maturity expected credit related losses and recognize a ~~decline in fair value, below amortized cost, is deemed~~credit loss allowance on the balance sheet with a corresponding adjustment to ~~be other-than-temporary. The change in fair value of our equity investments is presented as a component of net income.~~earnings. Any adjustment to the estimated expected credit related losses are recognized through earnings and adjustment to the credit loss allowance.

~~During the three and nine months ended September 30, 2019 and 2018, there were no impairment losses recognized for other-than-temporary declines in the fair value of our investments.~~28

The Company recorded favorable prior accident year development of ~~$15.6~~$14.4 million in the three months ended September 30, ~~2019.~~2020. The table below sets forth the favorable development for the three and nine months ended September 30, ~~2019~~2020 and ~~2018~~2019 for accident years ~~2014~~2015 through ~~2018~~2019 and, collectively, for all accident years prior to ~~2014.~~2015.

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018		2020		2019		2020		2019
	(in millions)								(in millions)
Accident Year
2019									$	—	$	—	$	—	$	—
2018	$	—	$	—	$	—	$	—		2.6		—		8.5		—
2017		1.9		—		3.2		—		4.8		1.9		10.5		3.2
2016		6.5		2.4		15.9		5.6		0.9		6.5		6.8		15.9
2015		3.3		4.9		8.3		14.3		1.3		3.3		8.0		8.3
2014		2.0		3.1		6.3		7.4
Prior to 2014		1.9		2.9		5.2		6.8
Prior to 2015										4.8		3.9		11.8		11.5
Total net development	$	15.6	$	13.3	$	38.9	$	34.1	$	14.4	$	15.6	$	45.6	$	38.9

The table below sets forth the number of open claims as of September 30, ~~2019~~2020 and ~~2018,~~2019, and the number of claims reported and closed during the three and nine months then ended.

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Open claims at beginning of period		4,978			5,022			5,190			4,982			4,621			4,978			5,053			5,190
Claims reported		1,472			1,536			4,032			4,181			1,252			1,472			3,358			4,032
Claims closed		(1,414	)		(1,273	)		(4,186	)		(3,878	)		(1,112	)		(1,414	)		(3,650	)		(4,186	)
Open claims at end of period		5,036			5,285			5,036			5,285			4,761			5,036			4,761			5,036

The number of open claims at September 30, ~~2019~~2020 decreased by ~~249~~275 claims as compared to the number of open claims at September 30, ~~2018.~~2019. At September 30, ~~2019,~~2020, our incurred amounts for certain accident years, particularly 2014 through ~~2017,~~2018, developed more favorably than management previously expected. The revisions to the Company’s reserves reflect new information gained by claims adjusters in the normal course of adjusting claims and is reflected in the financial statements when the information becomes available. It is typical for more serious claims to take several years or longer to settle and the Company continually revises estimates as more information about claimants’ medical conditions and potential disability becomes known and the claims get closer to being settled. Multiple factors can cause both favorable and unfavorable loss development. The favorable loss development we experienced across accident years was largely due to favorable case reserve development from closed claims and claims where the worker had reached maximum medical improvement.

The assumptions we used in establishing our reserves were based on our historical claims data. However, as of September 30, ~~2019,~~2020, actual results for certain 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. For additional information, see Item 1, “Business—Loss Reserves” in our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

Market risk is the risk of potential economic loss principally arising from adverse changes in the fair value of financial instruments. The major components of market risk affecting us are credit risk, interest rate risk, and equity price risk. We currently have no exposure to foreign currency risk.

Since December 31, ~~2018,~~2019, there have been no material changes in the quantitative or qualitative aspect of our market risk profile. For additional information regarding the Company’s exposure to certain market risks, see Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report to provide reasonable assurance that information we are required to disclose in reports that are filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms specified by the SEC. We note that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving the stated goals under all potential future conditions.

Because of its inherent limitations, management does not expect that our disclosure controls and procedures and our internal controls over financial reporting will prevent or detect all misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with policies and procedures may deteriorate. Any control system, no matter how well designed and operated, is based upon certain assumptions and can only provide reasonable, not absolute assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to errors or fraud will not occur or that all control issues and instances of fraud, if any within the Company, have been detected.

There have not been any changes in our internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

The Board of Directors initially authorized the Company’s share repurchase program in February 2010. In October 2016, the Board reauthorized this program with no expiration date. As of September 30, ~~2019,~~2020, we had repurchased a total of 1,258,250 shares of our outstanding common stock for $22.4 million. The Company had $25.0 million available for future purchases at September 30, ~~2019~~2020 under this program. There were no shares repurchased during the three months ended September 30, ~~2019~~2020 and ~~2018.~~2019. The purchases may be effected from time to time depending upon market conditions and subject to applicable regulatory considerations. It is anticipated that future purchases will be funded from available capital.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Texas		75-2069407
(State of Incorporation)		(I.R.S. Employer Identification Number)

2301 Highway 190 West, DeRidder, Louisiana		70634
(Address of Principal Executive Offices)		(Zip Code)

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common		AMSF		NASDAQ

		Page
		No.

FORWARD-LOOKING STATEMENTS		3

PART I - FINANCIAL INFORMATION

Item 1	Financial Statements	4

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2224

Item 3	Quantitative and Qualitative Disclosures About Market Risk	2730

Item 4	Controls and Procedures	2830

PART II - OTHER INFORMATION

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	2931

Item 6	Exhibits	2931

Exhibit No.		Description

31.1		Certification of G. Janelle Frost filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Neal A. Fuller filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification of G. Janelle Frost and Neal A. Fuller filed pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		XBRL Instance Document – The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

		AMERISAFE, INC.

~~November 1, 2019~~October 30, 2020		/s/ G. Janelle Frost
		G. Janelle Frost
		President, Chief Executive Officer and Director
		(Principal Executive Officer)

~~November 1, 2019~~October 30, 2020		/s/ Neal A. Fuller
		Neal A. Fuller
		Executive Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

	September 30, 2019			Balance Sheet Classification
	(in thousands)
Operating leases:
Operating lease right-of-use assets	$	469		Other assets

Operating lease liabilities	$	469		Accounts payable and other liabilities

Finance leases:
Finance lease right-of-use assets	$	185
Finance lease accumulated amortization right-of-use assets		(164	)
Property and equipment, net	$	21		Property and equipment, net

Finance lease liabilities	$	67		Accounts payable and other liabilities