Amerisafe (AMSF) Risk Analysis

Our revenues and results of operations historically have been subject to significant fluctuations and uncertainties, some of which may be out of our control. Our revenues and results of operations can be affected significantly by: - rising levels of claims costs, including due to increased medical and prescription drug costs, that we cannot anticipate at the time we establish our premium rates;- fluctuations in interest rates, inflationary or deflationary pressures and other changes in the investment environment that affect returns on our invested assets;- changes in the frequency or severity of claims;- the financial stability of our reinsurers and changes in the level of reinsurance capacity and our capital capacity;- new types of claims and new or changing judicial interpretations relating to the scope of liabilities of insurance companies;- volatile and unpredictable developments impacting general economic conditions and the businesses of our policyholders, including man-made, weather-related and other natural catastrophes or terrorist attacks; and - price competition; and - other factors described elsewhere in this "Risk Factors" section. If our revenues and results of operations fluctuate as a result of one or more of these factors, the price of our common stock may become more volatile.

Our certificate of formation and bylaws contain provisions that may make it more difficult for shareholders to replace or remove directors even if our shareholders consider it beneficial to do so. In addition, these provisions could delay or prevent a change of control of our Company that shareholders might consider favorable. Our certificate of formation and bylaws and the laws of the state of Texas, our state of incorporation, contain the following provisions that could have an anti-takeover effect: - our board of directors is classified, meaning that the members of only one of three classes of our directors are elected each year;- directors may only be removed for cause and only by the affirmative vote of the holders of at least 66 2/3% of the Company's outstanding shares of common stock;- shareholders have limited ability to call shareholder meetings and to bring business or director nominations before a meeting of shareholders;- shareholders may not act by written consent, unless the consent is unanimous;- our board of directors may authorize the issuance of preferred stock with such rights, preferences and privileges as our board of directors deems appropriate; and - the affirmative vote of the holders of at least 66 2/3% of the Company's outstanding shares of common stock is required to amend our certificate of formation and our bylaws (if being amended by our shareholders). These provisions may make it difficult for our shareholders to replace management and could have the effect of discouraging a future takeover attempt that is not approved by our board of directors, but which our shareholders might consider favorable. We are incorporated in Texas. Under the Texas Business Organizations Code (TBOC), our ability to enter into a business combination (as defined in the TBOC) with an affiliated shareholder (as defined in the TBOC) is limited. In addition, two of our three insurance company subsidiaries, AIIC and SOCI, are incorporated in Nebraska and the other, AIICTX, is incorporated in Texas. Under Nebraska and Texas insurance law, advance approval by the state insurance department is required for any change of control of an insurer, including our insurance subsidiaries. "Control" is presumed to exist through the direct or indirect ownership of 10% or more of the voting securities of a domestic insurance company or any entity that controls a domestic insurance company. Obtaining these approvals may result in the material delay of, or deter, any transaction that would result in a change of control under applicable laws. See "Business-Regulation-Change of Control" in Item 1 of this report.

The trading price of our common stock may decline for many reasons, some of which may be beyond our control, including, among others: - our results of operations;- changes in expectations as to our future results of operations, including financial estimates and projections by securities analysts and investors;- results of operations that vary from those expected by securities analysts and investors;- developments in the insurance or healthcare industries or the industries of our policyholders;- current and expected economic conditions;- changes in laws and regulations;- announcements of claims against us by third parties; and - future issuances or sales of our common stock.

There is no assurance that securities analysts will continue to cover us. If securities analysts do not cover us, this lack of coverage may adversely affect the trading price of our common stock. The trading market for our common stock relies in part on the research and reports that securities analysts publish about us or our business. If one or more of the analysts who cover us downgrades our common stock, the trading price of our common stock may decline rapidly. If one or more of these analysts ceases to cover us, we could lose visibility in the market, which, in turn, could also cause the trading price of our common stock to decline.