• AMERISAFE Announces 2018 First Quarter Results

    Source: Nasdaq GlobeNewswire / 25 Apr 2018 16:30:29   America/New_York

    DERIDDER, La., April 25, 2018 (GLOBE NEWSWIRE) -- AMERISAFE, Inc. (Nasdaq:AMSF), a specialty provider of hazardous workers’ compensation insurance, today announced results for the first quarter ended March 31, 2018.

     Three Months Ended  
     March 31,  
      2018  2017 % Change 
     (in thousands, except per share data)  
    Net premiums earned$87,310 $90,912 -4.0% 
    Net investment income 7,209  6,710 7.4% 
    Net realized losses on investments, pretax (31) (181)NM  
    Net unrealized losses on equity securities, pretax (390) - NM  
    Net income 16,169  13,524 19.6% 
    Diluted earnings per share$0.84 $0.70 20.0% 
    Operating net income 16,502  13,642 21.0% 
    Operating earnings per share$0.86 $0.71 21.1% 
    Book value per share$22.43 $24.29 -7.7% 
    Net combined ratio 85.6% 86.6%  
    Return on average equity 15.1% 11.7%  

    G. Janelle Frost, President and Chief Executive Officer, noted, “Our results this quarter demonstrate our ability to maintain discipline while navigating a competitive workers’ compensation environment.  Pricing pressure continued as approved loss costs declined and carriers aggressively search for premium.  AMERISAFE, however, focused on retaining and serving our valued policyholders through risk selection, proactive safety expertise, and claims management.”

    Insurance Results

     Three Months Ended  
     March 31,  
      2018   2017 % Change 
     (in thousands)  
    Gross premiums written$  97,342  $  95,078 2.4% 
    Net premiums earned 87,310   90,912 -4.0% 
    Loss and loss adjustment expenses incurred 53,162   56,216 -5.4% 
    Underwriting and certain other operating costs,   
    commissions, salaries and benefits 20,266   21,222 -4.5% 
    Policyholder dividends   1,333     1,371 -2.8% 
    Underwriting profit (pre-tax)$  12,549  $  12,103 3.7% 
    Insurance Ratios:    
    Current accident year loss ratio 71.5%  69.0%  
    Prior accident year loss ratio -10.6%  -7.2%  
    Net loss ratio 60.9%  61.8%  
    Net underwriting expense ratio 23.2%  23.3%  
    Net dividend ratio 1.5%  1.5%  
    Net combined ratio 85.6%  86.6%  
    • Gross premiums written in the quarter increased by $2.3 million, or 2.4%, due to higher voluntary premiums written and higher payroll audits and related premium adjustments. 
    • Voluntary premium for policies written during the quarter ended March 31, 2018 increased by $1.4 million, or 1.6%, compared with the first quarter of 2017.
    • Payroll audits and related premium adjustments increased premiums written by $3.3 million in the first quarter of 2018, compared to $2.2 million in the first quarter of 2017.
    • The current accident year loss ratio for the first quarter was 71.5%, an increase of 1.0 percentage points from the 70.5% ratio for the full year 2017.  During the quarter, the Company experienced favorable loss development for prior accident years, which reduced loss and loss adjustment expenses by $9.3 million, largely attributable to accident years 2015 and 2014.  These results reflect improved trends for both claims closing, severity of claims and favorable case reserve development on claims that were closed during the quarter.
    • For the quarter ended March 31, 2018, the underwriting expense ratio was 23.2% compared to 23.3% in the same quarter in 2017.  The decrease in the quarter was due to lower compensation and insurance assessment expense compared with last year’s first quarter. 
    • The effective tax rate for the quarter ended March 31, 2018 was 16.7% compared with 27.8% for the first quarter of 2017.  The decrease is due to the new federal corporate tax rate of 21% on underwriting profits and taxable bond income.

    Investment Results

     Three Months Ended  
     March 31,  
      2018  2017 % Change 
     (in thousands)  
    Net investment income$7,209 $6,710 7.4% 
    Net realized losses on    
    investments (pre-tax) (31) (181)NM 
    Net unrealized losses on equity    
    securities (pre-tax) (390) - NM 
    Pre-tax investment yield 2.4% 2.3%  
    Tax-equivalent yield (1) 2.9% 3.4%  

    (1) The tax equivalent yield is calculated using the effective interest rate and the appropriate marginal tax rate. 

    • Net investment income for the quarter ended March 31, 2018, increased 7.4% to $7.2 million from $6.7 million in the first quarter of 2017, largely due to the decrease in value of an investment in a limited partnership hedge fund in last year’s first quarter.
    • As of March 31, 2018, the carrying value of AMERISAFE’s investment portfolio, including cash and cash equivalents, was $1.2 billion.  

    Capital Management
    The Company paid a regular quarterly cash dividend of $0.22 per share on March 23, 2018.  The $0.22 per share cash dividend reflects a 10% increase from the regular quarterly cash dividend of $0.20 paid in 2017.  On April 24, 2018, the Company’s Board of Directors declared a quarterly cash dividend of $0.22 per share, payable on June 22, 2018 to shareholders of record as of June 8, 2018.

    Book value per share at March 31, 2018 was $22.43, an increase of 1.5% from $22.10 as of December 31, 2017.  During the quarter, no shares were repurchased under the Company’s share repurchase plan. 

    Supplemental Information

     Three Months Ended
     March 31,
      2018  2017 
    Net income$16,169 $13,524 
    Net realized losses on investments (31) (181)
    Net unrealized losses on equity securities (390) - 
    Tax effect (1)   88    63 
    Operating net income (2)$  16,502 $  13,642 
    Average shareholders’ equity (3)$428,746 $461,626 
    Average accumulated other comprehensive income (loss)   688    (16)
    Average adjusted shareholders’ equity$  428,058 $  461,642 
    Diluted weighted average common shares 19,262,237  19,230,125 
    Return on average equity (4) 15.1% 11.7%
    Operating return on average adjusted equity (2) 15.4% 11.8%
    Diluted earnings per share$0.84 $0.70 
    Operating earnings per share (2)$0.86 $0.71 

    (1) The tax effect of net realized losses on investments and net unrealized losses on equity securities is calculated assuming an annual tax rate of 21% for 2018 and 35% for 2017.

    (2) Operating net income, operating return on average adjusted equity and operating earnings per share are non-GAAP financial measures.  Management believes that investors’ understanding of core operating performance is enhanced by AMERISAFE’s disclosure of these financial measures.

    (3) Average shareholders’ equity is calculated by taking the average of the beginning and ending shareholders’ equity.

    (4) Return on average equity is calculated by dividing the annualized net income by the average shareholders’ equity.

    Conference Call Information
    AMERISAFE has scheduled a conference call for April 26, 2018, at 10:30 a.m. Eastern Time to discuss the results for the quarter, as well as the outlook for future periods.  To participate in the conference call dial 877-225-7695 (Domestic) or 720-545-0027 (International) at least ten minutes before the call begins and ask for the AMERISAFE conference call.  A replay of the call will be available approximately two hours after the live broadcast ends and will be accessible through May 4, 2018.  To access the replay, dial 855-859-2056 or 404-537-3406 and use the pass code 5252258#.

    Investors, analysts and the general public will also have the opportunity to listen to the conference call over the Internet by visiting http://www.amerisafe.com.  To listen to the live call on the web, please visit the website at least fifteen minutes before the call begins to register, download and install any necessary audio software.  For those who cannot listen to the live webcast, an archive will be available shortly after the call at http://www.amerisafe.com.

    AMERISAFE, Inc. is a specialty provider of workers’ compensation insurance focused on small to mid-sized employers engaged in hazardous industries, principally construction, trucking, logging and lumber, manufacturing, and agriculture.  AMERISAFE actively markets workers’ compensation insurance in 27 states. 

    Forward Looking Statements
    Statements made in this press release that are not historical facts, including statements accompanied by words such as “will,” “believe,” “anticipate,” “expect,” “estimate,” or similar words are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding AMERISAFE’s plans and performance.  These statements are based on management’s estimates, assumptions and projections as of the date of this release and are not guarantees of future performance and include statements regarding management’s views and expectations of the workers’ compensation market, the Company’s growth opportunities, underwriting margins and actions by competitors.  Actual results may differ materially from the results expressed or implied in these statements if the underlying assumptions prove to be incorrect or as the results of risks, uncertainties and other factors including the factors set forth in the Company’s filings with the Securities and Exchange Commission, including AMERISAFE’s Annual Report on Form 10-K for the year ended December 31, 2017.  AMERISAFE cautions you not to place undue reliance on the forward-looking statements contained in this release.  AMERISAFE does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of this release.

    - Tables to follow -

    Consolidated Statements of Income
    (in thousands)

     Three Months Ended 
     March 31, 
      2018  2017  
    Gross premiums written$97,342 $95,078  
    Ceded premiums written   (2,330)   (2,391) 
    Net premiums written$  95,012 $  92,687  
    Net premiums earned$87,310 $90,912  
    Net investment income 7,209  6,710  
    Net realized losses on investments (31) (181) 
    Net unrealized losses on equity securities (390) -  
    Fee and other income   77    101  
    Total revenues   94,175    97,542  
    Loss and loss adjustment expenses incurred 53,162  56,216  
    Underwriting and other operating costs 20,266  21,222  
    Policyholder dividends   1,333    1,371  
    Total expenses   74,761    78,809  
    Income before taxes 19,414  18,733  
    Income tax expense   3,245    5,209  
    Net income$  16,169 $  13,524  
     Three Months Ended 
     March 31, 
      2018  2017  
    Basic EPS:   
    Net income$  16,169 $  13,524  
    Basic weighted average common shares 19,187,136  19,150,400  
    Basic earnings per share$0.84 $0.71  
    Diluted EPS:   
    Net income$  16,169 $  13,524  
    Diluted weighted average common shares:   
    Weighted average common shares 19,187,136  19,150,400  
    Stock options and restricted stock   75,101    79,725  
    Diluted weighted average common shares 19,262,237  19,230,125  
    Diluted earnings per  share$0.84 $0.70  

    Consolidated Balance Sheets

     March 31,December 31,
    Investments$1,134,793 $1,130,314
    Cash and cash equivalents 36,072  55,559
    Amounts recoverable from reinsurers 94,173  90,133
    Premiums receivable, net 186,798  174,234
    Deferred income taxes 20,499  19,262
    Deferred policy acquisition costs 21,287  20,251
    Other assets   37,043     26,722
     $  1,530,665  $  1,516,475
    Liabilities and Shareholders’ Equity  
    Reserves for loss and loss adjustment expenses$777,298 $771,845
    Unearned premiums 164,972  157,270
    Insurance-related assessments 28,389  28,246
    Other liabilities 127,938  135,452
    Shareholders’ equity   432,068     425,423
    Total liabilities and shareholders’ equity$  1,530,665  $  1,518,236


    Neal A Fuller, EVP & CFO

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