{"url_path":"/sec/amsf/10-k/2026/item-7a","section_key":"item-7a","section_title":"Item 7A Quantitative and Qualitative Disclosures About Market Risk.","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-02-27","source_url":"https://www.sec.gov/Archives/edgar/data/1018979/0001193125-26-082513-index.html","accession_number":"0001193125-26-082513","cik":"0001018979","ticker":"AMSF","issuer_name":"AMERISAFE INC","edgar_url":"https://www.sec.gov/Archives/edgar/data/1018979/0001193125-26-082513-index.html","primary_entity_key":"0001018979","primary_entity_name":"AMERISAFE INC"},"word_count":751,"has_tables":true,"body_markdown":"Item 7A. Quantitative and Qualitative Disclosures About Market Risk.\n\nMarket 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.\n\nCredit Risk\n\nCredit risk is the potential loss arising principally from adverse changes in the financial condition of the issuers of our fixed maturity securities and the financial condition of our reinsurers.\n\nWe address the credit risk related to the issuers of our fixed maturity securities by primarily investing in fixed maturity securities that are rated as investment grade by one or more of Moody’s, Standard & Poor’s or Fitch. We also independently monitor the financial condition of all issuers of our fixed maturity securities. To limit our risk exposure, we employ diversification policies that limit our credit exposure to any single issuer or business sector.\n\nWe are also subject to credit risk with respect to our reinsurers. Although our reinsurers are obligated to reimburse us to the extent we cede risk to them, we are ultimately liable to our policyholders on all risks we have reinsured. As a result, reinsurance contracts do not limit our ultimate obligations to pay claims and, in some cases, we might not be able to collect amounts recoverable from our reinsurers. We address this credit risk by initially selecting reinsurers with an A.M. Best rating of “A-” (Excellent) or better and by performing, along with our reinsurance broker, periodic credit reviews of our reinsurers. If one of our reinsurers suffers a credit downgrade, we may consider various options to lessen the risk of asset impairment, including commutation, novation or letters of credit. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” in Item 7 of this report.\n\nInterest Rate Risk\n\n \n\nInterest rate risk is the risk that we may incur losses due to adverse changes in interest rates. As of December 31, 2025, we had fixed maturity securities with a fair value of $657.6 million and a carrying value of $663.1 million. These securities are all subject to interest rate risk, but because we classify the majority of our fixed maturity securities as held-to-maturity, changes in interest rates have a smaller effect on the carrying value of our portfolio. We manage our exposure to interest rate risk by investing in a portfolio of securities with moderate effective duration. At December 31, 2025, the effective duration of the total investment portfolio, including cash and short-term investments, was 4.3 years.\n\n \n\nThe table below summarizes the interest rate risk associated with our fixed maturity securities by illustrating the sensitivity of the fair value and carrying value of our fixed maturity securities as of December 31, 2025 to selected hypothetical changes in interest rates, and the associated impact on our shareholders’ equity. The change in carrying value is less than the change in fair value due to our held-to-maturity portfolio.\n\nHypothetical Change in Interest Rates\n\n \n\nFair\nValue\n\n \n\n \n\nEstimated\nChange in\nFair Value\n\n \n\n \n\nCarrying\nValue\n\n \n\n \n\nEstimated\nChange in\nCarrying Value\n\n \n\n \n\nHypothetical\nPercentage\nIncrease\n(Decrease) in\nShareholders’\nEquity\n\n \n\n200 basis point increase\n\n \n\n$\n\n585,567\n\n \n\n \n\n$\n\n(72,047\n\n)\n\n \n\n$\n\n628,933\n\n \n\n \n\n$\n\n(34,192\n\n)\n\n \n\n \n\n(13.6\n\n)%\n\n100 basis point increase\n\n \n\n \n\n621,874\n\n \n\n \n\n \n\n(35,740\n\n)\n\n \n\n \n\n645,717\n\n \n\n \n\n \n\n(17,408\n\n)\n\n \n\n \n\n(6.9\n\n)%\n\nNo change\n\n \n\n \n\n657,614\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n663,125\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n0.0\n\n%\n\n100 basis point decrease\n\n \n\n \n\n688,842\n\n \n\n \n\n \n\n31,228\n\n \n\n \n\n \n\n679,925\n\n \n\n \n\n \n\n16,800\n\n \n\n \n\n \n\n6.7\n\n%\n\n200 basis point decrease\n\n \n\n \n\n715,981\n\n \n\n \n\n \n\n58,367\n\n \n\n \n\n \n\n695,691\n\n \n\n \n\n \n\n32,566\n\n \n\n \n\n \n\n12.9\n\n%\n\n \n\nEquity Price Risk\n\n \n\nEquity price risk is the risk that we may incur losses due to adverse changes in the market prices of the equity securities we hold in our investment portfolio. Equity securities are carried at fair value with unrealized gains and losses recorded within net income. Accordingly, adverse changes in the market prices of our equity securities result in a decrease in the value of our total assets, shareholders’ equity, and net income. In order to minimize our exposure to equity price risk, we independently monitor the financial\n\n49\n\n \n\ncondition of our equity securities and diversify our investments. In addition, we limit the percentage of equity securities held in our investment portfolio to the lesser of 10% of the investment portfolio or 30% of shareholders’ equity. As of December 31, 2025, the equity securities in our investment portfolio had a fair value of $57.5 million, representing 7.2% of our investment portfolio and less than 22.9% of shareholders’ equity on that date.\n\n \n\n \n\n \n\n50"}