April 2, 2008

AMERISAFE INC.
AMSF/NASDAQ Initiating Coverage: Hazardous Isnt Unsafe
Investment Rating: Market Outperform
PRICE: $ 13.54 S&P 500: 1,367.53 DJIA: 12,608.92 RUSSELL 2000: 712.27

A recession may adversely affect smaller policyholders. Amerisafe is potential takeover target. Amerisafe has diversified its written policies. Our 12-month target price is $17.52.

Valuation EPS P/E CFPS P/CFPS

\

2007 A $ 2.47 5.5x $ 3.09 4.4x

2008 E $ 2.28 5.9x $ 2.51 5.4x

Stock Data

2009 E $ 2.32 5.8x $ 2.46 5.5x

Market Capitalization
Equity Market Cap (MM): Enterprise Value (MM): Shares Outstanding (MM): Estimated Float (MM): 6-Mo. Avg. Daily Volume: $ 254.85 $ 196.56 18.82 18.53 166,944

52-Week Range: $12.10 - $21.25 12-Month Stock Performance: -26.01% Dividend Yield: Nil Book Value Per Share: $ 11.08 Beta: 0.76

Company Quick View:

Location: DeRidder, Louisiana Industry: Property & Casualty Insurance Description: Amerisafe provides workers compensation insurance for companies operating in hazardous industries. Key Products & Services: Workers compensation for construction, trucking, logging, agriculture, oil and gas, maritime, and sawmills Company Web site: www.amerisafe.com

Analysts: Eric Arbor Minh Quang Le Nathaniel Novak Michael Thackston Li Hsien Yiu

Investment Research Manager: Colin Stenstrom

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April 2, 2008

STOCK PRICE PERFORMANCE Figure 1: 5-year Stock Price Performance

INVESTMENT SUMMARY

Following our initiating coverage research, we have given Amerisafe a Market Outperform rating based on our projections regarding the Companys growth potential over the next year. We project that the stock will increase 25.7% from $13.54 as of April 2, 2008 to $17.52 by the end of the first quarter of 2009. Amerisafe focuses on growth by increasing market share in its states, expanding into new states, and by creating internal efficiencies. We used the following valuation methods to compute our price estimate: enterprise value to EBITDA, price to earnings, price to book value, discounted cash flow, price to earnings growth, and a series of metrics developed by Benjamin Graham.

Ben Graham One of our methods includes the Ben Graham method. Ben Graham is Analysis widely considered to be the father of value investing and modern security analysis. He taught at Colombia University where he became mentor to many investment experts such as Warren Buffet. Ben Graham used a variety of measurements to discover undervalued companies. In our report, we call these measurements hurdles. The Benjamin Graham analysis includes eight hurdles. The more hurdles a company passes, the more likely it is to be a good buy. The first five hurdles tell an investor whether or not a company is undervalued, and the last three tell an investor whether or not the company is consistent. Based on this analysis, Amerisafe appears to be undervalued, because it meets three of the first five criteria. Inconsistent earnings are responsible for Amerisafe missing two of the last three hurdles. Table 7 at the end of the report includes a description of all eight hurdles.

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INVESTMENT THESIS

Amerisafe offers workers compensation insurance policies to small to mid-sized employers involved in hazardous industries throughout the United States. The Company focuses primarily on construction, trucking, logging, agriculture, oil and gas, maritime, and sawmills, because these are hazardous industries; therefore, insured employers in these industries pay higher premiums. The Company is interested in maintaining sustainable growth by insuring companies that have a lower-than-average frequency of claims for their industries. Amerisafe prefers to focus on frequency of claims rather than loss ratio when evaluating clients. Amerisafe functions within Jim Collins hedgehog concept in that the Company strives for excellence in insuring companies operating only in hazardous industries, and it has not expanded into industries that its management and employees do not understand. If a recession does occur, Amerisafe may be adversely affected because its policyholders are small to mid-sized companies, and such companies are traditionally affected the most. The premiums on the workers compensation policies are linked to the amount a company spends on payroll. With the prospect of an official recession an accepted possibility and with the recent results of negative job creation, payrolls across many industries can be expected to decline. A decrease in payrolls would mean lower premiums for Amerisafe. Nevertheless, the workers compensation industry is generally considered to be recession resistant because states require that companies maintain adequate insurance coverage. Smaller companies, however, lack the financial resources of larger rivals and are the first ones banks call in during a credit crunch. Amerisafe is also vulnerable to a downturn because some of the industries it covers are linked: construction, logging, and sawmills, as an example. Amerisafe has carefully chosen the companies for which it writes policies, and these firms may be better prepared for a recession than other small companies may be. A weaker economic situation may help Amerisafe by discouraging new entrants into the workers compensation industry, although a weaker economic situation may increase the competition between existing firms. Amerisafes management has demonstrated restraint in the past by limiting the leverage of the Company. This low amount of long-term debt will help Amerisafe prosper during difficult economic conditions.

A recession may adversely affect smaller policyholders.

Amerisafe is a With a solid balance sheet and a low multiple, Amerisafe is potentially an potential takeover attractive buyout opportunity. The probability of a takeover is increased target. when considering the Companys recession resistant industry, low interest rates, proprietary computer software, and the current corporate strategy toward conservative, sustainable growth. A more aggressive management team may be able to increase the gross policies written within a short period of time, because Amerisafe denies coverage to many of its
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applicants. Such actions would most likely have detrimental consequences to the business in the long term because these additional policies would be written for firms that are considered to have an elevated level of risk of payout. Amerisafe has Amerisafes market share is diversified across multiple industries and diversified its multiple states. A slowdown in the economic growth of a few individual written policies. states will not be disastrous. No state accounts for more than 10% of the premiums written. The Company only offers workers compensation insurance and does not plan to offer other types of insurance. Amerisafes largest industry by premiums written is commercial construction, which has not experienced the significant downturn that the residential market has experienced. Some of the companies that Amerisafe provides coverage for may experience a contraction in payrolls but only for a short period of time because these industries are essential for the American economy to function over the long run. These same industries are not threatened by international outsourcing, which has plagued other sectors such as manufacturing. If some areas were to experience a downturn, Amerisafe could shift the industry portfolio to take advantage of industries that are expanding, such as those that are commodity-based. For example, elevated oil prices may benefit Amerisafe because they encourage exploration and development along the Gulf Coast as the nation searches for more petroleum reserves offshore. The maritime portion of the Companys coverage may potentially expand with more offshore petroleum development, and because water-based transport is highly energy efficient. VALUATION To determine our 12-months target price of $17.52, we used five valuation methods, assigning each an equal weight (20%), to estimate the value of the share. The first method we used is the discounted cash flow method, which values the common stock of a company that is based on the present value of the expected cash flows. With the Companys adjusted beta (1), capital structure, and assumptions of a risk free rate, and market risk premium, we computed the Companys WACC (13.35%). Then we projected cash flows for the next five years, including terminal value with a 1.5% growth rate in perpetuity. In addition to the discounted cash flow method, we applied simpler rules of thumb. The P/E ratio is the most popular method because it is easy to understand. Currently, the P/E ratio of the insurance industry is 8.7x. The PEG ratio expresses how expensive a stock's price is relative to its earnings performance. In the case of Amerisafe, its target price per share in the next 12 months ($15.54) is projected by multiplying its EPS ($2.47) with the industrys PEG (6.28%).
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Another place investors can turn their eyes is to the enterprise value/EBITDA ratio. On the top of the ratio, a company's enterprise value is what investors are paying for it, plus the value of its debt. On the bottom of our ratio, EBITDA is a company's operating cash flow. Hence, the ratio measures a company's takeout value relative to its cash flow. A low ratio indicates that a company might be undervalued by the market amid a rough earnings patch. The final method used in this report is the Price/Book Value. Given reasonably consistent accounting standards across firms, price-book value ratios can be compared across similar firms for signs of undervaluation or overvaluation. Table 1 outlines the methods and respective weights that we used to arrive at Amerisafes target price of $17.52 for next 12 months. Table 1: Weighted Valuation Methods
Methods Enterprise Value/EBITDA Price/earning Price/book value Discounted cash flows Price/earnings growth Target Price Weight 20% 20% 20% 20% 20% 100% Price $18.22 $18.29 $14.87 $20.67 $15.54 $17.52

INDUSTRY ANALYSIS

Workers compensation is a statutory system under which an employer is required to pay for its employees medical, disability, vocational rehabilitation, and death benefit workrelated injuries or illness.

Threat of Entry Entering the hazardous industries insurance business requires a considerable amount of capital because losses are completely based on estimates. As a result, high-barriers to entry exist in this industry. Bargaining Power Suppliers do not have much bargaining power in the hazardous industries of Suppliers insurance business because the industry is fragmented and because of government regulations. Workers compensation insurance policies generally state that the carrier will pay all benefits that the insured employer may become compelled to pay under pertinent workers compensation laws. Each state has different laws and systems that regulate workers compensation that determine the level of medical care provided, and that determine the cost of permanent medical impairment. State laws usually require two types of benefits for injured employees; the first being medical benefits, including expenses related to diagnosis and treatment of the injury, including rehabilitation; and indemnity payments, including wage payments, permanent disability payments, and death benefits to family members still surviving. Virtually all employers are required to purchase workers compensation insurance or, if permitted, may set up their own self-insurance program.
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Bargaining Power Buyers, on the other hand, have bargaining power in the hazardous of Buyers insurance industry. The industry is competitive and some workers compensation insurance companies may lack the financial resources to compete effectively. Many insurance firms in the industry are significantly larger and possess more financial, marketing, and management resources than Amerisafe. Some firms offer other types of insurance in addition to workers compensation and can provide insurance nationwide. Consequently, the purchaser may bargain coverage liability, claims management, safety services, payment terms, premium rates, policy terms, financial ratings, and reputation. Availability of Consumers have options for purchasing workers compensation insurance. Substitutes Companies may choose to be self-insured, or they may opt for state insurance pools and self-insurance funds. Competitive Rivalry The workers compensation industry is extremely competitive. Amerisafe focuses on small to mid-sized companies that can be analyzed thoroughly to determine if the potential policyholder meets the stringent coverage criteria. Competition is based on multiple factors, including premium rates, policy terms, coverage availability, claims management, safety services, payment terms, types of insurance offered, the financial strength of a firm, and financial ratings. Currently, more than 350 insurance companies offer workers compensation; however, the market for workers compensation for hazardous industries is fragmented and is not dominated by a single company. Amerisafe was incorporated in 1985 and is based in DeRidder, Louisiana. The Company began operations in 1986 as an insurance holding firm, concentrating on workers compensation insurance for logging contractors in the southeastern United States. In 1994, Amerisafe expanded its focus to include other hazardous industries such as construction, trucking, agriculture, oil and gas, maritime, and sawmills. Amerisafe is a holding company composed of three insurance subsidiaries: American Interstate Insurance Company, Silver Oak Casualty, and American Interstate Insurance Company of Texas. Amerisafe completed its initial public offering in November 2005, issuing 8 million shares on the NASDAQ under the symbol AMSF.

COMPANY DESCRIPTION

Services Amerisafe provides workers compensation insurance coverage to employers under state and federal workers compensation laws that prescribe wage replacement and medical care benefits employers are obligated to provide to their employees who are injured in the course and scope of their employment. The Companys targeted customers are primarily small to mid-sized employers in hazardous industries, principally construction, trucking, logging, agriculture, oil and gas,
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maritime, and sawmills. For the year ended December 31, 2006, gross premiums written totaled $332.5 million, a 14.3% increase over gross premiums written of $290.9 million in 2005. Figure 2: Allocation of Premiums Written By Amerisafe Among Hazardous Industries in 2007

Amerisafe operates in 30 states and the District of Columbia. To cover this geographically diverse area, the Company has not only established its wholly owned insurance agency subsidiary, Amerisafe General Agency, which is licensed in 24 states, but has also developed and maintained relationships with more than 2,400 qualified independent agencies by paying commissions based on the collected premiums. Figure 3: Amerisafes Sixteen Largest Markets by State

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Strategy Amerisafes current long-term strategy is heavily based on growth. The Company plans to grow both in current markets and expand into new ones. Amerisafes management believes in the specialized underwriting expertise of insuring employers engaged in hazardous industries. Its safety and audit services position the Company to maximize market share within covered areas, with a minimal increase in field service employees. Although Amerisafe actively markets workers compensation insurance in 30 states and the District of Colombia, almost half of the premiums were generated through only six states, which leaves room for expansion. Furthermore, the Company is licensed in an additional 14 states and the U.S. Virgin Islands. This will expedite its ability to write policies in those markets when Company management decides it is prudent to do so. Amerisafes business relies heavily on the competence of those working in the field. Amerisafe wants to insure companies in high-risk industries, but it does not want to insure companies with frequent safety violations and minimal controls. The field employees work diligently to observe, often from a distance, the safety practices and conditions of a potential client. Amerisafes business model is designed to absorb a small number of large claims, rather than a multitude of miniscule claims. Health care costs are expected to have much higher growth than indemnity costs in the future. In a risky environment, everyone is concerned with safety, whereas, in an office few even give it a thought. The worker compensation premiums that Amerisafe collects on policies is calculated based on payroll. For logging it is $17.02 per $100 of payroll, but for divers it is over $100 per $100 of payroll. The typical office worker pays under $0.50 per $100. Amerisafe has a two-pronged attack for increasing underwriting profitability: first, continue to strive for improved risk selection and pricing, and second, plan to reduce the frequency and severity of claims through comprehensive workplace safety reviews, effective medical cost containment measures, and rapidly closing claims through direct contact with policyholders and their employees. Management at Amerisafe believes that using information technology to the Companys advantage will allow for productive growth. Amerisafe uses a proprietary customized information system called ICAMS that allows employees to efficiently select risk, underwrite profitably, and cost-effectively administer billing, claims, and audit functions. Amerisafe has digitized all of the policyholder account information. The data is organized and accessed through ICAMS, Rather than having stacks of paper and folders, all of the monthly reports from policyholders are sent electronically, and the employees in the field can access the database remotely via the Internet. Amerisafe is proactive about data security. The network has built-in redundancy and a copy of the entire database is
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stored offsite. Using the ICAMS enables the Company to accommodate anticipated transaction growth at current staffing levels without a significant increase in cost. This should have a positive effect on Amerisafes expense ratio over time as the Company grows. Market Share The hazardous industries that Amerisafe provides workers compensation for is a fragmented market that is not dominated by an individual firm. Amerisafes external competition varies by state and industry. However, SeaBright, Employers Holdings, and Zenith National are considered Amerisafes principal competitors. New market entrants may provide further competition in this segment, which is considered underserved. Based on data from the National Association of Insurance Commissioners, the current market share of Amerisafe is less than 5% of the workers compensation market in each of its six largest markets, as measured by premiums collected within a given state. Recent In November 2006, Amerisafe completed a secondary offering of Developments 9,071,576 shares that were previously held by shareholders; Amerisafe did not receive any funds from this offering. On June 27, 2007, Amerisafe was added to the Russell 2000 Index. PEER ANALYSIS Employers Holdings, SeaBright, and Zenith National Insurance are comparables of Amerisafe because of similar operations and market capitalization. Table 2 shows the comparison between Amerisafe and their competitors of key operating and financial ratios. Amerisafe and its competitors major business is providing workers compensation insurance for hazardous industries. Amerisafe has the second highest ROE (23.48%) among its competitors, which means it has invested equity more effectively than the competitors have. Having such a high ROE informs Amerisafes common stockholders how successfully their equity is being employed. Table 2: Peer Comparison Key Ratios Comparing Amerisafe and Peers
Company Amerisafe Employers Holdings SeaBright Zenith National Insurance Ticker AMSF EIG SEAB Market Cap 254.82MM 905.07MM 309.27MM P/E 5.50 8.04 7.42 P/ BV 1.22 2.39 1.05 EV/ EBITDA 3.30 4.63 4.54 D/E 0.17 N/A 0.04 Div. Yield N/A 1.36% N/A ROE 24.07% 35.21% 14.69%

ZNT

1400.61MM

6.05

1.30

2.59

0.06

5.26%

23.23%

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Employers Holdings Founded in 1999 and headquartered in Reno, Nevada, Employers (EIG/NYSE) Holdings, Inc. and its subsidiaries provide workers compensation insurance and services to small American businesses engaged in low- to medium-hazard industries, primarily focusing on physicians, dentists, restaurants, and retail stores. Through independent agencies and their partners, Employers Holdings underwriters use local market knowledge to choose specific types of businesses and risks that allow them to provide competitive rates. According to their Web site: Employers Holdings financial strength and stability is recognized by A.M. Best. On June 6, 2007, A.M. Best Company reaffirmed the groups A- rating and positive financial outlook. SeaBright Insurance Holdings (SEAB/NASDAQ) SeaBright Insurance Holdings Inc. provides workers compensation insurance throughout the United States. SeaBright focuses on maritime employers and construction contractors. The Company is licensed in 45 states and the District of Columbia to write workers compensation insurance. SeaBright has an A- rating by A.M. Best. The company was founded in 1986 and is headquartered in Seattle, Washington.

Zenith National Zenith National Insurance Corp. was incorporated in 1971 and is based in Insurance Woodland Hills, California, with net assets of $2.7 billion. Zenith (ZNT/NYSE) provides workers compensation insurance through its wholly owned subsidiaries in the United States. Zenith has roughly 1,400 independent agents and brokers who sell insurance in the six states in which they operate. Zeniths Web site describes the company as experts at managing claims processes, helping injured workers return to work, and fighting fraud. The foundation of its principles revolves around strong corporate governance. Of the two subsidiaries, Zenith Insurance Company is licensed in 45 states and the District of Columbia; ZNAT Insurance Company is licensed to carry out business in Arkansas, California, Iowa, Texas, and Utah. Both subsidiaries principal focal point is property casualty insurance. MANAGEMENT BACKGROUND AND PERFORMANCE Only one of the current executives was involved with Amerisafes founding in the 1980s, and was not involved in an executive capacity. This is the primary reason for current executives holding a small percentage of stock. The volume of shares held by insiders was significantly reduced by a reverse stock split (72 to 1) in October 2005, prior to the Companys IPO.

C. Allen Bradley Chairman of the Board, President, and CEO (56) Mr. Bradley joined Amerisafe in 1994, following a career in a private legal practice and eight years in the Louisiana state legislature. He has functioned in various executive roles, including chief operating officer. In 2003, he was promoted to CEO, and has been chairman of the board since October 2005.
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Geoffrey R. Banta Chief Financial Officer (58) Mr. Banta joined Amerisafe in 2003 as the chief financial officer. His prior experience is in actuarial and management consulting. He is a certified public accountant. Craig P. Leach Executive Vice President, Sales and Marketing (58) Mr. Leach has served in this executive position since 2002. He has a background in sales and marketing positions, beginning with a role at a predecessor to Amerisafe in 1980. David O. Narigon Executive Vice President (55) Mr. Narigon is responsible for overseeing claims, information technology, and premium audits at Amerisafe since joining the Company in 2006. His previous experience includes claims management and expert witness services for the insurance industry. Todd Walker Executive Vice President, General Counsel, and Secretary (51) Mr. Walker joined Amerisafe in 2006. His previous experience includes fulfilling various legal positions for a large public company. An official management succession plan does not exist at this time. Management insists that the development of such a plan is currently a priority with the corporate board. Board of Directors The board of directors at Amerisafe is composed of eight members. The chairman of the board, Mr. Bradley, is the only director that is a current executive with Amerisafe. The founder of Amerisafe, Millard E. Morris, is also a director. All seven non-employee directors are independent of the Company within the meaning of the NASDAQ listing requirements. Return on Return on investment capital is a calculation that measures how Investment Capital profitable management allocations of capital to operations are. Table 3: Return of Invested Capital
2007 2006 2005 Amerisafe ROIC 20.22% 13.05% 6.40% Average Peer ROIC 22.89% 27.55% 20.29%

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SHAREHOLDER ANALYSIS

As of March 6, 2008, Amerisafe has 18.81 million shares outstanding. The stocks float is 18.61 million shares. Generally, Amerisafes investors are institutional investors. The top 10 investors are all institutions. In Table 4, we list the top 10 investors, the percentage of ownership, and the number of shares owned. The institutional investors who have invested recently in Amerisafe have had different investment strategies. For example, both growth (Numeric Investors) and value (Dimensional Fund Advisors) funds have invested in Amerisafe. As Table 5 shows, approximately 3% of outstanding shares are owned by insiders. Generally, Amerisafes investors are institutional investors. The top 10 investors are all institutions. Recent insider transactions as reported by Bloomberg for the past six months are shown in Table 6. Table 4 :Top 10 Investors
Holder Name Neuberger Berman LLC Wells Capital Management INC Wellington Management Co. LLP Golden Capital Management LLC Putnam Investment Management North Pointe Capital LLC Barclays Global Investors UK Deutsche Bank AG Dreman Value Management LLC Ameriprise Financial INC Source 13F 13F 13F 13F 13F 13F 13F 13F 13F 13F Shares Held 1,387,840 1,235,063 1,080,583 714,777 690,241 630,965 618,749 599,554 594,250 513,590 % of share outstanding 7.37% 6.56% 5.74% 3.80% 3.67% 3.35% 3.29% 3.19% 3.16% 2.73%

Table 5: Major Holders

% of Shares Held by All Insiders: % of Shares Held by Institutional & Mutual Fund Owners: % of Float Held by Institutional & Mutual Fund Owners: Number of Institutions Holding Shares: 3% 95% 95% 134

Table 6: Insider Transactions in the Last Six Months

Shares Purchases Sales New Shares Purchased(sold) Total Insider Shares Held % Net Shares Purchased(sold) 56,685 Nil 56,685 574,882 100.00% Trans 13 Nil 13 N/A N/A

Insiders have been purchasing shares after Amerisafe dropped below $15.00 per share, and they continue to accumulate holdings.
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Only one member of the current management was with Amerisafe at the Companys inception in 1986, and this is largely the reason for the top executives holding relatively small amounts of stock. This also means that there is not an insider controlling a massive block of shares. The lack of a dominant inside shareholder could lead to a difficult proxy fight in the future. The articles of incorporation have several provisions that prevent a shareholder-instigated change of management. Amerisafe does not currently pay dividends to either common or preferred shareholders. The lack of dividends is partly due to government regulation that restricts Amerisafe from receiving dividends from its insurance subsidiaries in an effort to maintain mandatory cash reserves and liquidity. Beyond these regulatory controls, Amerisafe is not able to pay common stockholders dividends without the consent of two thirds of the outstanding preferred stockholders. INVESTMENT RISKS Amerisafe is subject to several outside risk factors that may influence performance. To determine Amerisafes risk exposure, we estimated operational risks, financial risks, and regulatory risks.

Operational Risks Estimating Loss Reserves As a provider of workers compensation insurance, Amerisafe has many risk factors that could affect the operations of the business. The loss reserves or estimated liabilities for losses are based on estimates. Estimates used to pay off claims are uncertain and could be subject to change by many external forces, such as legislative changes, economic instability, and legal trends. Furthermore, workers compensation claims are paid over a long period of time, which makes it more difficult to estimate reserves than for other types of insurance that maintain shorter and more definite periods between the time of the loss and the final payment. Calculating Premium Rates Estimates are also tied to selecting premium rates for the employers. If Amerisafe does not price premium rates high enough, the Company may fail to cover losses, expenses, and profit margin. On the other hand, if Amerisafe charges too high an amount for premiums, it could lose business to competition. Decline in Business Activity of Policyholders If policyholders experience a decline in business, it could negatively affect Amerisafes earnings and profitability. Premium rates are calculated based on a percentage of payroll, and this is affected by the level of business and the number of employees of policyholders. The three largest industries (construction, trucking, and logging) account for 68.2% of the gross premiums derived from policyholders.
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Downgrade in A.M. Best Rating Rating agencies evaluate insurance companies based on the insurers ability to pay out claims. Amerisafe currently has an A- rating from A.M. Best, which is believed to be one of the most influential rating agencies in the business. Any downgrade in this rating could result in the loss of existing policyholders and potential future policyholders. Reinsurance Obstacles If Amerisafe is unable to obtain reinsurance on favorable terms, its ability to write policies could be adversely affected. Agreements under the 2008 reinsurance agreements may be terminated by reinsurers upon 90 days notice, effective at the start of each year. These issues add increased risk to the financial condition and operations of the business. Cyclical Nature of the Industry The financial performance of the workers compensation insurance industry has historically fluctuated between soft and hard periods. The soft periods consist of low premium rates and excess underwriting capacity because of increased competition that is followed by hard periods of high premium rates and shortages of underwriting capacity resulting from decreased competition. Because these cyclical movements are largely due to the actions of competitors and general economic factors, the timing or duration of the market cycle cannot be predicted. These trends could cause revenues and net incomes to fluctuate, which may cause the price of common stock to be extremely volatile. Financial Risks Amerisafes financial risks are heavily based on the principal source of operating funds, which are premiums and investment income. The primary uses of the funds are the payment of claims and operating expenses. The Company only uses operating cash flow to pay for these expenses and uses excess cash for its investments. If the cash flows of Amerisafe remain liquid, the Company is poised for growth. However, if the cash flows are not projected correctly, this could be detrimental to the growth of the Company. Amerisafe is also exposed to financial risks with respect to fluctuations in the market value of investment portfolio. The asset allocation of the portfolio is displayed in Figure 4.

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Figure 4:

Compared to peers in the industry, Amerisafes liquidity and leverage ratios appear to be average. Amerisafe has a current ratio of 1.7, indicating it has good short-term financial strength and has no problem meeting short-term obligations. Using the D/E ratio as the leverage ratio, Amerisafes D/E ratio is 0.166, which is slightly higher than the 0.146 industry average. This indicates that Amerisafe has a strong capital structure within the industry. Regulatory Risk Insurance for workers compensation has been mandatory in all 50 states since 1949. In most states, workers compensation is provided by private companies, and state-operated funds exist in 12 states. The U.S. government manages its own workers compensation program. Many of the state funds act as the option of last resort in order to allow private companies to operate. States regulate, to some degree, what insurance companies can charge for workers compensation premiums. Each year, states make a regulatory decision on the premiums for workers compensation based on the rate of accidents within the given state. As hazardous industries reduce the number of accidents by improving safety, states have reduced the pricing of workers compensation premiums. Some states have increased the allowable rates. One of the most influential pieces of regulation within the workers compensation industry was the Occupational Safety and Health Act of 1970 that created OSHA. It is expected that states will continue to regulate the underwriting environment on a yearly basis concerning applicable rates. Amerisafe is not expected to be adversely affected by these changes in the near future. Near-term legislation on the federal level is not expected to affect Amerisafe in any significant way.

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FINANCIAL PERFORMANCE AND PROJECTIONS

We made several assumptions when forecasting Amerisafes future performance. Many of these assumptions are specific to the workers compensation insurance industry. Our forecast values are under the assumption that the industry will continue its downturn through 2010 before possible economic recovery. The financial projections for Amerisafes future revenues include the following assumptions: Amerisafe will continue the growth strategy that focuses on expanding market share. Amerisafe will maintain the current policy for covering corporations that offer low frequency high severity claims. Amerisafe will maintain its current reinvestment strategy with an emphasis on increasing book value. Amerisafe will maintain its current capital structure with no change in the debt structure. Amerisafe will maintain the zero dividend policy.

Operating Assumptions

Investing Assumptions Financing Assumptions

SITE VISIT

The Company headquarters for Amerisafe are in DeRidder, Louisiana. DeRidder is a small town near the western border of Louisiana. The corporate offices are surprisingly modern compared to Main Street DeRidder, which seems old-fashioned. We met with CEO Allen Bradley, CFO Geoffrey Banta, EVP Craig Leach, EVP David Narigon, and EVP Todd Walker. The corporate officers were very welcoming and provided a great deal of useful information. They explained the hallmarks of the Companys business model. Amerisafes management said that they continually look at potential merger and acquisition targets, but no such targets are considered imminent or worthy of immediate disclosure. Our information was acquired from Amerisafe financial statements and SEC filings. We spoke with corporate management and other analysts covering the insurance industry, and we used Bloomberg, Google Finance, Hoovers, Reuters, Standard & Poors, Yahoo! Finance, and Jim Collins book Good to Great as our resources.

SOURCES OF INFORMATION

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BEN GRAHAM ANALYSIS

AMERISAFE INC. (AMSF) Table 7

Hurdle # 1: An Earnings to Price Yield of 2X the Yield on 10 Year Treasury Earnings per share (ttm) $ 2.63 Price: $13.54 Earnings to Price Yield 19.44% 10 Year Treasury (2X) 7.16% YES Hurdle # 2: A P/E Ratio Down to 1/2 of the Stocks Highest in 5 Yrs P/E Ratio as of 12/31/03 P/E Ratio as of 12/31/04 N/A P/E Ratio as of 12/31/05 NM P/E Ratio as of 12/31/06 NM P/E Ratio as of 12/31/07 6.3 Current P/E Ratio 5.1 NO Hurdle # 3: A Dividend Yield of 1/2 the Yield on 10 Year Treasury Dividends per share (ttm) $ Price: $ 13.54 Dividend Yield 0.00% 1/2 Yield on 10 Year Treasury 1.79% NO Hurdle # 4: A Stock Price less than 1.5 BV Stock Price Book Value per share as of 12/31/07 150% of book Value per share as of 12/31/07 YES $ $ $ 13.54 11.09 16.63

Hurdle # 5: Total Debt less than Book Value Interest-bearing debt as of 12/31/07 $ 61,090 Book value as of 12/31/07 $ 208,570 YES Hurdle # 6: Current Ratio of Two or More Current assets as of 12/31/07 Current liabilities as of 12/31/07 Current ratio as of 12/31/07 YES $ 302,812 $ 28,946 10.5

Hurdle # 7: Earnings Growth of 7% or Higher over past 5 years EPS for year ended 12/31/07 $ 2.47 EPS for year ended 12/31/06 $ (1.25) EPS for year ended 12/31/05 $ (1.25) EPS for year ended 12/31/04 $ 2.14 EPS for year ended 12/31/03 $ NO Hurdle # 8: Stability in Growth of Earnings EPS for year ended 12/31/07 $ 2.47 EPS for year ended 12/31/06 $ (1.25) EPS for year ended 12/31/05 $ (1.25) EPS for year ended 12/31/04 $ 2.14 NO
Stock price data as of April 2, 2008

-298% 0% -158% #DIV/0!

17

Amerisafe Inc. (AMSF)

BURKENROAD REPORTS (www.burkenroad.org)

April 2, 2008

AMERISAFE INC. (AMSF)

Annual and Quarterly Earnings
In thousands For the period ended Net premiums earned Net investment income Net realized gains on investments Fee and other income Total revenues Loss and loss adjustment expenses incurred Underwriting and certain other operating costs Commissions Salaries and benefits Interest expense Policyholder dividends Total expenses Income before taxes Income tax expense Net income Preferred stock dividends Net income (loss) available to common stock holders Net income per common share: Basic Diluted Weighted average shares outstanding: Basic Diluted 2005 A $ 256,568 16,882 2,272 561 276,283 204,056 31,113 16,226 16,045 2,844 4 270,288 2006 A $ 299,303 25,383 7,389 645 332,720 199,484 35,024 19,030 17,234 3,496 6,006 280,274 52,446 15,088 37,358 37,358 2007 A 31-Mar E $ 306,906 $ 81,058 30,208 7,894 147 60 1,058 245 338,319 89,258 198,531 53,220 26,267 7,773 20,352 5,375 18,896 4,831 3,545 878 (367) 557 267,224 72,634 71,095 20,876 50,219 50,219 16,624 4,840 11,785 11,785 2008 E 30-Jun E 30-Sep E $ 77,176 $ 71,362 8,409 8,516 60 60 233 216 85,879 80,154 50,671 46,854 7,400 6,843 5,118 4,732 4,600 4,253 886 900 166 247 68,841 63,829 17,038 4,960 12,078 12,078 16,325 4,752 11,572 11,572 31-Dec E $ 69,772 8,593 60 211 78,637 45,810 6,690 4,627 4,158 900 4,504 66,690 11,947 3,478 8,469 8,469 2008 E $ 299,368 33,413 240 905 333,927 196,555 28,706 19,852 17,842 3,564 5,474 271,993 61,934 18,029 43,904 43,904 31-Mar E $ 69,542 8,265 585 210 78,603 45,659 6,668 4,612 4,145 878 477 62,439 16,164 4,706 11,459 11,459 2009 E 30-Jun E 30-Sep E $ 70,135 $ 70,683 8,825 8,992 590 595 212 214 79,762 80,484 46,048 46,408 6,725 6,778 4,651 4,687 4,180 4,213 886 900 151 245 62,641 63,231 17,121 4,984 12,137 12,137 17,253 5,023 12,231 12,231 $ 31-Dec E 71,119 9,170 598 215 81,102 46,694 6,820 4,716 4,239 900 4,591 67,959 13,143 3,826 9,317 9,317 $ 2009 E 281,478 35,253 2,368 851 319,951 184,809 26,991 18,666 16,776 3,564 5,465 256,270 63,681 18,538 45,143 45,143

$ $

5,995 65 5,930 $ 8,593 (2,663) $

$ $

$ $

$ $

$ $

$ $

$ $

$ $

$ $

$ $

$ $

$ $

$ $

(1.25) $ (1.25) $ 2,129 2,129

1.88 $ (1.25) $ 17,580 17,595

2.52 2.47 18,767 19,079

$ $

0.63 0.62 18,824 19,010

$ $

0.64 2.63 18,847 19,150

$ $

0.61 0.60 18,869 19,321

$ $

0.45 0.44 18,892 19,389

$ $

2.33 2.28 18,858 19,232

$ $

0.61 0.59 18,915 19,423

$ $

0.64 0.62 18,938 19,457

$ $

0.65 0.63 18,961 19,491

$ $

0.49 0.48 18,984 19,524

$ $

2.38 2.32 18,949 19,470

SELECTED COMMON-SIZE AMOUNTS (% of total revenue unless otherwise noted) Net premiums earned 92.86% 89.96% Net investment income 6.11% 7.63% Net realized gains on investments 0.82% 2.22% Fee and other income 0.20% 0.19% Total revenues 100.00% 100.00% 79.53% 66.65% Loss and loss adjustment expenses incurred (% of prem Underwriting and certain other operating costs 11.26% 10.53% Commissions 6.32% 6.36% Salaries and benefits (% of premiums earned) 6.25% 5.76% Interest expense 1.03% 1.05% Policyholder dividends 0.00% 1.81% Total expenses 97.83% 84.24% Income before taxes 2.17% 15.76% Income tax expense 0.02% 4.53% Net income 2.15% 11.23% YEAR TO YEAR CHANGE Net premiums earned Net investment income Loss and loss adjustment expenses incurred Underwriting and certain other operating costs Commissions Salaries and benefits

90.71% 8.93% 0.04% 0.31% 100.00% 64.69% 7.76% 6.63% 6.16% 1.05% -0.11% 78.99% 21.01% 6.17% 14.84%

90.81% 8.84% 0.07% 0.27% 100.00% 65.66% 8.71% 6.63% 5.96% 0.98% 0.62% 81.37% 18.63% 5.42% 13.20%

89.87% 9.79% 0.07% 0.27% 100.00% 65.66% 8.62% 6.63% 5.96% 1.03% 0.19% 80.16% 19.84% 5.78% 14.06%

89.03% 10.62% 0.07% 0.27% 100.00% 65.66% 8.54% 6.63% 5.96% 1.12% 0.31% 79.63% 20.37% 5.93% 14.44%

88.73% 10.93% 0.08% 0.27% 100.00% 65.66% 8.51% 6.63% 5.96% 1.14% 5.73% 84.81% 15.19% 4.42% 10.77%

89.65% 10.01% 0.07% 0.27% 100.00% 65.66% 8.60% 6.63% 5.96% 1.07% 1.64% 81.45% 18.55% 5.40% 13.15%

88.47% 10.52% 0.74% 0.27% 100.00% 65.66% 8.48% 6.63% 5.96% 1.12% 0.61% 79.44% 20.56% 5.99% 14.58%

87.93% 11.06% 0.74% 0.27% 100.00% 65.66% 8.43% 6.63% 5.96% 1.11% 0.19% 78.53% 21.47% 6.25% 15.22%

87.82% 11.17% 0.74% 0.27% 100.00% 65.66% 8.42% 6.63% 5.96% 1.12% 0.30% 78.56% 21.44% 6.24% 15.20%

87.69% 11.31% 0.74% 0.27% 100.00% 65.66% 8.41% 6.63% 5.96% 1.11% 5.66% 83.80% 16.20% 4.72% 11.49%

87.98% 11.02% 0.74% 0.27% 100.00% 65.66% 8.44% 6.63% 5.96% 1.11% 1.71% 80.10% 19.90% 5.79% 14.11%

9.30% 38.18% 17.15% 8.06% 14.59% 5.36%

16.66% 50.36% -2.24% 12.57% 17.28% 7.41%

2.54% 19.01% -0.48% -25.00% 6.95% 9.64%

6.82% -99.13% 1.37% 3.32% 9.03% 2.68%

0.09% 13.14% -4.76% 43.86% 0.76% -0.14%

-10.39% 7.47% -14.68% 15.06% -9.72% -8.81%

-6.07% 8.42% 20.85% -12.58% -9.30% -15.50%

-2.46% 10.61% -1.00% 9.29% -2.46% -5.58%

-14.21% 13675.81% -14.21% -14.21% -14.21% -14.21%

-9.12% 4.94% -9.12% -9.12% -9.12% -9.12%

-0.95% 5.59% -0.95% -0.95% -0.95% -0.95%

1.93% 6.71% 1.93% 1.93% 1.93% 1.93%

-5.98% 5.50% -5.98% -5.98% -5.98% -5.98%

18

Amerisafe Inc. (AMSF)

BURKENROAD REPORTS (www.burkenroad.org)

April 2, 2008

AMERISAFE INC. (AMSF)

Annual and Quarterly Balance Sheets
In thousands As of the end of 31-Dec-05 A 31-Dec-06 A 31-Dec-07 A Current Assets: Investments: Fixed maturity securities held-to-maturity $ 465,648 Fixed maturity securities available-for-sale 1,695 Equity securities available-for-sale 66,275 Total investments 533,618 Cash and cash equivalents 49,286 Amounts recoverable from reinsurers 122,562 Premiums receivable, net 123,934 Deferred income taxes 22,413 Accrued interest receivable 4,597 Property and equipment, net 6,321 Deferred policy acquisition costs 16,973 Deferred charges 3,182 Other assets 9,434 $ 892,320 Total assets Liabilities, redeemable preferred stock and shareholders' equity Reserves for loss and loss adjustment expenses $ 484,485 Unearned premiums 124,524 Reinsurance premiums payable 694 Amounts held for others 1,484 Policyholder deposits 38,033 Insurance-related assessments 35,135 Federal income tax payable 1,677 Accounts payable and other liabilities 22,852 Subordinated debt securities 36,090 Total liabilities 744,974 Redeemable preferred stock Preferred stock: Series C 30,000 Preferred stock: Series D 20,000 Total redeemable preferred stock 50,000 Shareholders' equity Common stock 174 Additional paid-in capital 145,206 Retained earnings (deficit) (54,346) Accumulated other comprehensive income 6,312 Total shareholders' equity (deficit) 97,346 Total liabilities, redeemable preferred stock and stockho $ 892,320 31-Mar E 2008 E 30-Jun E 30-Sep E 31-Dec E 31-Dec-08 E 31-Mar E 2009 E 30-Jun E 30-Sep E 31-Dec E 31-Dec-09 E

615,114 23,666 638,780 26,748 109,603 144,384 29,466 5,921 5,687 18,486 3,548 11,523 994,146 519,178 137,761 1,378 1,827 39,141 40,886 3,631 30,470 36,090 810,362 5,000 20,000 25,000

$ $

639,691 32,425 39,629 711,745 47,329 76,915 152,150 26,418 7,079 5,407 18,414 3,553 12,843 $ 1,061,853 537,403 138,402 720 2,972 41,516 42,234 28,946 36,090 828,283 5,000 20,000 25,000

675,807 34,256 25,637 735,700 31,827 102,871 153,049 26,418 9,826 4,992 19,396 4,433 13,374 $ 1,101,885 $ 547,629 145,912 720 2,972 43,474 45,471 34,059 36,090 856,326 5,000 20,000 25,000 188 173,793 45,015 1,563 220,559 $ 1,101,885

675,149 32,615 24,409 732,174 45,984 97,944 155,316 26,418 9,694 4,555 18,467 4,220 13,374 $ 1,108,146 $ 554,488 138,923 720 2,972 41,391 43,293 32,428 36,090 850,305 5,000 20,000 25,000 188 173,997 57,093 1,563 232,841 $ 1,108,146

674,495 30,158 22,570 727,223 47,287 90,566 163,303 26,418 9,497 4,156 17,076 3,902 13,374 $ 1,102,802 $ 556,981 128,458 720 2,972 38,273 40,031 29,659 36,090 833,184 5,000 20,000 25,000 188 174,201 68,665 1,563 244,618 $ 1,102,802

693,845 29,486 22,068 745,399 58,826 88,548 139,701 26,418 9,443 5,238 16,695 3,815 13,374 $ 1,107,458 $ 558,231 125,596 720 2,972 37,421 39,140 28,998 36,090 829,167 5,000 20,000 25,000 188 174,405 77,134 1,563 253,291 $ 1,107,458

$ $

693,845 29,486 22,068 745,399 58,826 88,548 139,701 26,418 9,443 5,238 16,695 3,815 13,374 1,107,458 558,231 125,596 720 2,972 37,421 39,140 28,998 36,090 829,167 5,000 20,000 25,000 188 174,405 77,134 1,563 253,291 1,107,458

718,703 29,389 21,995 770,087 54,455 88,255 132,763 26,418 9,436 4,774 16,640 3,803 13,374 $ 1,120,004 $ 559,229 125,181 720 2,972 37,297 39,010 29,545 36,090 830,044 5,000 20,000 25,000 189 174,615 88,593 1,563 264,960 $ 1,120,004

718,542 29,639 22,182 770,363 60,634 89,008 141,146 26,418 9,456 4,285 16,782 3,835 13,374 $ 1,135,301 $ 560,537 126,248 720 2,972 37,615 39,343 29,469 36,090 832,994 5,000 20,000 25,000 189 174,825 100,730 1,563 277,307 $ 1,135,301

718,385 29,871 22,356 770,612 54,854 89,704 161,750 26,418 9,474 3,839 16,913 3,865 13,374 $ 1,150,803 $ 562,100 127,236 720 2,972 37,909 39,651 29,377 36,090 836,055 5,000 20,000 25,000 189 175,035 112,960 1,563 289,748 $ 1,150,803

748,231 30,055 22,494 800,780 54,780 90,257 142,396 26,418 9,489 5,096 17,017 3,889 13,374 $ 1,163,496 $ 563,825 128,019 720 2,972 38,143 39,895 29,558 36,090 839,222 5,000 20,000 25,000 189 175,246 122,277 1,563 299,275 $ 1,163,496

748,231 30,055 22,494 800,780 54,780 90,257 142,396 26,418 9,489 5,096 17,017 3,889 13,374 $ 1,163,496 $ 563,825 128,019 720 2,972 38,143 39,895 29,558 36,090 839,222 5,000 20,000 25,000 189 175,246 122,277 1,563 299,275 $ 1,163,496

187 188 171,557 173,589 (16,988) 33,230 4,028 1,563 158,784 208,570 994,146 $ 1,061,853

SELECTED COMMON SIZE BALANCE SHEET AMOUNTS ( % of net sales) Amounts recoverable from reinsurers 44.36% 32.94% Premiums receivable, net 44.86% 43.40% Property and equipment, net 2.29% 1.71% Deferred policy acquisition costs 6.14% 5.56% Deferred charges 1.15% 1.07% Unearned premiums 45.07% 41.40% Reinsurance premiums payable 0.25% 0.41% Amounts held for others 0.54% 0.55% Policyholder deposits 13.77% 11.76% Insurance-related assessments 12.72% 12.29% Accounts payable and other liabilities 8.27% 9.16% SELECTED COMMON SIZE BALANCE SHEET AMOUNTS ( % of total assets) Total investments 59.80% 64.25% Cash and cash equivalents 5.52% 2.69% Amounts recoverable from reinsurers 13.74% 11.02% Premiums receivable, net 13.89% 14.52% Reserves for loss and loss adjustment expenses 54.29% 52.22% Unearned premiums 13.96% 13.86% Subordinated debt securities 4.04% 3.63% Total redeemable preferred stock 5.60% 2.51% Total shareholders' equity (deficit) 10.91% 15.97%

22.73% 44.97% 1.60% 5.44% 1.05% 40.91% 0.21% 0.88% 12.27% 12.48% 8.56% 67.03% 4.46% 7.24% 14.33% 50.61% 13.03% 3.40% 2.35% 19.64%

115.25% 171.47% 5.59% 21.73% 4.97% 163.47% 0.81% 3.33% 48.71% 50.94% 38.16% 66.77% 2.89% 9.34% 13.89% 49.70% 13.24% 3.28% 2.27% 20.02%

114.05% 180.86% 5.30% 21.50% 4.91% 161.77% 0.84% 3.46% 48.20% 50.41% 37.76% 66.07% 4.15% 8.84% 14.02% 50.04% 12.54% 3.26% 2.26% 21.01%

112.99% 203.74% 5.19% 21.30% 4.87% 160.26% 0.90% 3.71% 47.75% 49.94% 37.00% 65.94% 4.29% 8.21% 14.81% 50.51% 11.65% 3.27% 2.27% 22.18%

112.60% 177.65% 6.66% 21.23% 4.85% 159.72% 0.92% 3.78% 47.59% 49.77% 36.88% 67.31% 5.31% 8.00% 12.61% 50.41% 11.34% 3.26% 2.26% 22.87%

26.52% 41.84% 1.57% 5.00% 1.14% 37.61% 0.22% 0.89% 11.21% 11.72% 8.68% 67.31% 5.31% 8.00% 12.61% 50.41% 11.34% 3.26% 2.26% 22.87%

112.28% 168.90% 6.07% 21.17% 4.84% 159.26% 0.92% 3.78% 47.45% 49.63% 37.59% 68.76% 4.86% 7.88% 11.85% 49.93% 11.18% 3.22% 2.23% 23.66%

111.59% 176.96% 5.37% 21.04% 4.81% 158.28% 0.90% 3.73% 47.16% 49.33% 36.95% 67.86% 5.34% 7.84% 12.43% 49.37% 11.12% 3.18% 2.20% 24.43%

111.46% 200.97% 4.77% 21.01% 4.80% 158.09% 0.89% 3.69% 47.10% 49.27% 36.50% 66.96% 4.77% 7.79% 14.06% 48.84% 11.06% 3.14% 2.17% 25.18%

111.29% 175.58% 6.28% 20.98% 4.80% 157.85% 0.89% 3.66% 47.03% 49.19% 36.45% 68.83% 4.71% 7.76% 12.24% 48.46% 11.00% 3.10% 2.15% 25.72%

28.21% 44.51% 1.59% 5.32% 1.22% 40.01% 0.23% 0.93% 11.92% 12.47% 9.24% 68.83% 4.71% 7.76% 12.24% 48.46% 11.00% 3.10% 2.15% 25.72%

19

Amerisafe Inc. (AMSF)

BURKENROAD REPORTS (www.burkenroad.org)

April 2, 2008

AMERISAFE INC. (AMSF)

Annual and Quarterly Statements of Cash Flows
2008 E 2009 E For the period ended 2005 A 2006 A 2007 A 31-Mar E 30-Jun E 30-Sep E 31-Dec E 2008 E 31-Mar E 30-Jun E 30-Sep E 31-Dec E 2009 E Cash flows from operating activities: Net income $ 5,930 $ 37,358 $ 50,219 $ 11,785 $ 12,078 $ 11,572 $ 8,469 $ 43,904 $ 11,459 $ 12,137 $ 12,231 $ 9,317 $ 45,143 Adjustments Depreciation 2,159 1,960 1,729 446 463 464 465 1,838 500 519 520 522 2,061 Net amortization/accretion of investments 2,256 2,272 2,778 695 718 714 710 2,836 727 751 752 752 2,982 Deferred income taxes (6,389) (5,824) 4,376 Net realized gains on investments (2,272) (7,389) (147) (60) (60) (60) (60) (240) (585) (590) (595) (598) (2,368) (Gain)loss on sale of asset 2 (82) 1 Share-based compensation 53 922 1,043 Changes in operating assets and liabilities: Premiums receivable (9,793) (20,450) (7,766) (899) (2,268) (7,987) 23,602 12,449 6,938 (8,383) (20,604) 19,353 (2,696) Accrued interest receivable (1,474) (1,324) (1,158) (2,747) 132 197 54 (2,364) 8 (20) (19) (15) (46) Deferred policy acquisition costs and deferred charges (5,057) (1,879) 67 (982) 929 1,391 380 1,719 55 (142) (131) (104) (322) Other assets 424 (2,089) (1,320) (1,411) 212 318 87 (793) 13 (32) (30) (24) (74) Reserve for loss and loss adjustment expenses 51,605 34,693 18,225 10,226 6,859 2,493 1,250 20,828 998 1,308 1,563 1,724 5,594 Unearned premiums 12,783 13,237 641 7,510 (6,989) (10,465) (2,862) (12,806) (415) 1,067 988 784 2,424 Reinsurance balances 76,248 13,643 32,030 (25,956) 4,927 7,378 2,018 (11,633) 293 (752) (696) (553) (1,709) Amounts held for others and policyholder deposits 4,557 1,451 3,225 1,958 (2,082) (3,118) (853) (4,095) (124) 318 294 234 722 Accounts payable and other liabilities 11,063 15,323 (3,512) 8,350 (3,809) (6,030) (1,553) (3,042) 417 257 216 425 1,315 Net cash provided by operations 142,095 81,822 100,431 8,915 11,110 (3,132) 31,707 48,600 20,283 6,438 (5,511) 31,817 53,026 Cash flows from investing activities: Purchases of investments held-to-maturity, net (140,101) (153,445) (65,258) (36,751) (20,000) (56,751) (25,000) (30,000) (55,000) Purchases of investments available-for-sale, net (29,773) 49,887 (14,131) 12,161 2,869 4,296 1,175 20,500 170 (438) (405) (322) (995) Purchases of property and equipment (1,409) (1,330) (1,451) (31) (26) (64) (1,547) (1,669) (36) (30) (74) (1,779) (1,919) Proceeds from sales of property and equipment 3 86 1 Net cash used in investing activities (171,280) (104,802) (80,839) (24,621) 2,842 4,231 (20,372) (37,919) (24,865) (468) (479) (32,100) (57,914) Cash flows from financing activities: Proceeds from stock option exercise 428 810 204 204 204 204 817 210 210 210 210 841 Tax benefit from share-based payments 14 179 Net proceeds from initial public offering 63,236 Series A preferred stock redemption (5,093) Series E preferred stock redemption (5,093) Net cash provided by (used in) financing activities 53,050 442 989 204 204 204 204 817 210 210 210 210 841 Increase (decrease) in cash and temporary cash 23,865 (22,538) 20,581 (15,502) 14,156 1,303 11,540 11,497 (4,372) 6,180 (5,781) (74) (4,046) Cash and temporary investments at beginning of 25,421 49,286 26,748 47,329 31,827 45,984 47,287 47,329 58,826 54,455 60,634 54,854 58,826 Cash and temporary investments at end of period 49,286 26,748 47,329 31,827 45,984 47,287 58,826 58,826 54,455 60,634 54,854 54,780 54,780 In thousands Operating cash flow per share excluding working capital changes Operating cash flow per share including working capital changes $ $ 0.79 66.73 $ $ 1.61 4.65 $ $ 3.09 5.26 $ $ 0.68 0.47 $ $ 0.69 0.58 $ $ 0.66 $ 0.49 1.64 $ $ 2.51 2.53 $ $ 0.62 1.04 $ $ 0.66 0.33 $ $ 0.66 $ 0.51 1.63 $ $ 2.46 2.72

(0.16) $

(0.28) $

20

Amerisafe Inc. (AMSF)

BURKENROAD REPORTS (www.burkenroad.org)

April 2, 2008

AMERISAFE INC. (AMSF)

Ratios
For the period ended Productivity Ratios Receivables turnover Working capital turnover Net fixed asset turnover Total asset turnover # of days Sales in A/R # of days Cash-based expenses in A/P and Accrued XP Payable Liquidity Measures Current ratio Quick ratio Cash ratio Cash flow from operations ratio Working capital Financial Risk (Leverage) Ratios Total debt/equity ratio Debt/equity ratio (excluding deferred taxes) Total LT debt/equity ratio LT debt/equity (excluding deferred taxes) Interest coverage ratio (Earnings = EBIT) Interest coverage ratio (Earnings = EBI) Total debt ratio Debt ratio (excuding deferred taxes) Profitability/Valuation Measures Operating profit margin Return on assets Return on equity EBITDA margin EBITDA/Assets 2005 A 2.32 1.70 41.24 0.34 155.51 131.59 1.64 1.62 1.32 0.63 143,950 2006 A 2.40 2.72 55.12 0.35 158.50 156.01 1.22 1.19 1.10 0.32 55,228 2007 A 2.04 3.74 67.70 0.32 169.44 161.27 1.40 1.37 1.08 0.39 100,737 31-Mar E 0.58 0.96 17.17 0.08 161.37 172.39 1.31 1.28 1.06 0.03 84,859 2008 E 30-Jun E 30-Sep E 0.56 0.90 17.99 0.08 172.00 172.39 1.41 1.37 1.15 0.04 106,236 0.50 0.70 18.40 0.07 197.72 172.39 1.51 1.47 1.25 -0.01 123,268 31-Dec E 0.52 0.67 16.74 0.07 173.00 172.39 1.48 1.44 1.22 0.14 113,226 2008 E 2.16 3.17 70.21 0.30 159.97 159.40 1.48 1.44 1.22 0.21 113,226 31-Mar E 0.58 0.73 15.70 0.07 161.37 172.39 1.43 1.39 1.17 0.09 101,567 2009 E 30-Jun E 30-Sep E 0.58 0.73 17.61 0.07 172.00 172.39 1.49 1.45 1.23 0.03 115,698 0.53 0.65 19.81 0.07 197.72 172.39 1.55 1.51 1.29 -0.02 130,144 31-Dec E 0.53 0.67 18.15 0.07 173.00 172.39 1.46 1.42 1.20 0.13 110,164 2009 E 2.22 2.79 70.84 0.28 173.42 172.80 1.46 1.42 1.20 0.22 110,164

8.17 8.17 5.86 5.86 3.11 3.09 0.89 0.89 3.20% 0.72% 21.77% 3.98% 1.34%

5.26 5.26 3.65 3.65 16.00 11.69 0.84 0.84 18.62% 3.87% 29.94% 19.21% 6.08%

4.09 4.09 2.87 2.87 21.06 15.17 0.80 0.80 21.95% 4.72% 26.82% 22.46% 7.27%

4.00 4.00 2.76 2.76 19.93 14.42 0.80 0.80 20.23% 1.08% 5.49% 20.73% 1.66%

3.76 3.76 2.64 2.64 20.23 14.63 0.79 0.79 21.06% 1.09% 5.33% 21.60% 1.66%

3.51 3.51 2.53 2.53 19.14 13.86 0.78 0.78 21.80% 1.05% 4.85% 22.38% 1.60%

3.37 3.37 2.45 2.45 14.27 10.41 0.77 0.77 22.06% 0.77% 3.40% 22.66% 1.20%

3.37 3.37 2.45 2.45 18.38 13.32 0.77 0.77 21.25% 3.97% 18.46% 21.80% 6.12%

3.23 3.23 2.34 2.34 19.41 14.05 0.76 0.76 22.29% 1.03% 4.42% 22.92% 1.58%

3.09 3.09 2.24 2.24 20.32 14.70 0.76 0.76 22.77% 1.09% 4.48% 23.42% 1.64%

2.97 2.97 2.15 2.15 20.17 14.59 0.75 0.75 22.86% 1.09% 4.31% 23.51% 1.63%

2.89 2.89 2.09 2.09 15.60 11.35 0.74 0.74 22.98% 0.83% 3.16% 23.62% 1.26%

2.89 2.89 2.09 2.09 18.87 13.67 0.74 0.74 22.73% 3.95% 15.96% 23.37% 6.10%

21