• AMERISAFE Announces 2018 Third Quarter Results

    Source: Nasdaq GlobeNewswire / 24 Oct 2018 21:30:15   Europe/London

    Declares An Extraordinary Dividend of $3.50 Per Share
    Reports Combined Ratio of 81.1%

    DERIDDER, La., Oct. 24, 2018 (GLOBE NEWSWIRE) -- AMERISAFE, Inc. (Nasdaq: AMSF), a specialty provider of workers’ compensation insurance focused on high hazard industries, today announced results for the third quarter ended September 30, 2018.

          
     Three Months Ended  Nine Months Ended 
     September 30,  September 30, 
      2018  2017 % Change
      2018  2017 % Change
     (in thousands, except per share data)  (in thousands, except per share data) 
    Net premiums earned$85,184 $85,118 0.1% $261,489 $258,779 1.0%
    Net investment income 7,884  7,788 1.2%  22,396  21,969 1.9%
    Net realized losses on investments, pre-tax (329) (192)71.4%  (1,471) (761)93.3%
    Net income 19,701  16,577 18.8%  52,826  45,582 15.9%
    Diluted earnings per share$1.02 $0.86 18.6% $2.74 $2.37 15.6%
    Operating net income 19,508  16,702 16.8%  53,783  46,077 16.7%
    Operating earnings per share$1.01 $0.87 16.1% $2.79 $2.40 16.3%
    Book value per share$23.82 $25.72 -7.4% $23.82 $25.72 -7.4%
    Net combined ratio 81.1% 81.4%   83.5% 83.5% 
    Return on average equity 17.4% 13.6%   15.9% 12.8% 
            

    G. Janelle Frost, President and Chief Executive Officer, noted, “Industry wide loss costs continued to decline this quarter, making workers’ compensation the only commercial line with rate decreases passed on to policyholders. Such an environment sets the stage for carriers to compete for premium dollars.  AMERISAFE’s history and current year results reflect our discipline to evaluate and price our risk for long-term stability and profitability. It is because of that discipline that our board is pleased to declare a special dividend of $3.50 to our shareholders, while maintaining adequate capital to protect our policyholders and efficiently operate our company.” 

    INSURANCE RESULTS

          
     Three Months Ended  Nine Months Ended 
     September 30,  September 30, 
      2018  2017 % Change  2018  2017 % Change
     (in thousands)  (in thousands) 
            
    Gross premiums written$85,324 $87,035 -2.0% $276,368 $269,152 2.7%
    Net premiums earned 85,184  85,118 0.1%  261,489  258,779 1.0%
    Loss and loss adjustment expenses incurred 47,598  48,394 -1.6%  152,836  151,038 1.2%
    Underwriting and certain other operating costs, commissions, salaries and benefits 20,606  19,281 6.9%  62,154  60,686 2.4%
    Policyholder dividends 865  1,573 -45.0%  3,290  4,107 -19.9%
    Underwriting profit (pre-tax)$16,115 $15,870 1.5% $43,209 $42,948 0.6%
                    
    Insurance Ratios:       
    Current accident year loss ratio 71.5% 69.0%   71.5% 69.0% 
    Prior accident year loss ratio -15.6% -12.1%   -13.1% -10.6% 
    Net loss ratio 55.9% 56.9%   58.4% 58.4% 
    Net underwriting expense ratio 24.2% 22.7%   23.8% 23.5% 
    Net dividend ratio 1.0% 1.8%   1.3% 1.6% 
    Net combined ratio 81.1% 81.4%   83.5% 83.5% 
            
    • Gross premiums written in the quarter decreased by $1.7 million, or 2.0%, due to lower payroll audits and related premium adjustments. Voluntary premium for policies written during the quarter ended September 30, 2018 were nearly flat compared with the third quarter of 2017.

    • Payroll audits and related premium adjustments decreased premiums written by $2.1 million in the third quarter of 2018, compared to a decrease in premiums written of $1.1 million in the third quarter of 2017.  These adjustments resulted in the 2.0% decrease in gross premiums written in the quarter.

    • The current accident year loss ratio for the third quarter was 71.5%, unchanged from the first half of 2018, and an increase of 1.0 percentage point 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 $13.3 million, attributable primarily to accident years 2016, 2015, 2014 and 2013.  These results largely reflect favorable case reserve development on claims during the quarter.

    • For the quarter ended September 30, 2018, the underwriting expense ratio was 24.2% compared with 22.7% in the same quarter in 2017. The increase in the ratio in the quarter was due to higher loss based assessments and commissions compared to 2017.

    • The effective tax rate for the quarter ended September 30, 2018 was 19.5% compared with 29.6% for the third quarter of 2017. The decrease is largely due to the new federal corporate tax rate of 21% on underwriting profits and taxable investment income.

    INVESTMENT RESULTS

          
     Three Months Ended  Nine Months Ended 
     September 30,  September 30, 
      2018  2017 % Change 2018  2017 % Change
     (in thousands)  (in thousands) 
    Net investment income$7,884 $7,788 1.2% $22,396 $21,969 1.9%
    Net realized losses on investments (pre-tax) (329) (192)71.4%  (1,471) (761)93.3%
    Net unrealized gains on equity securities (pre-tax) 573  - NM  259  - NM
    Pre-tax investment yield 2.6% 2.6%   2.5% 2.5% 
    Tax-equivalent yield (1) 3.0% 3.2%   3.0% 3.2% 
    ________________________________      


    (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 September 30, 2018, increased 1.2% to $7.9 million from $7.8 million in the third quarter of 2017, due to slightly higher investment yields on fixed-income securities.

    • As of September 30, 2018, the carrying value of AMERISAFE’s investment portfolio, including cash and cash equivalents, was $1.2 billion.  

    CAPITAL MANAGEMENT AND EXTRAORDINARY DIVIDEND

    The company paid a regular quarterly cash dividend of $0.22 per share on September 21, 2018.  On October 23, 2018 the Company’s Board of Directors declared a quarterly cash dividend of $0.22 per share, payable on December 28, 2018 to shareholders of record as of December 14, 2018.

    In addition, on October 23, 2018 the Company’s Board of Directors declared an extraordinary dividend of $3.50 per share, payable on December 28, 2018 to shareholders of record as of December 14, 2018.

    Book value per share at September 30, 2018 was $23.82, an increase of 7.8% from $22.10 at December 31, 2017.

    SUPPLEMENTAL INFORMATION

       
     Three Months EndedNine Months Ended
     September 30,September 30,
      2018  2017  2018  2017 
     (in thousands, except share and per share data)
         
    Net income$19,701 $16,577 $52,826 $45,582 
    Less:    
    Net realized losses on investments (329) (192) (1,471) (761)
    Net unrealized gains on equity securities 573  -  259  - 
    Tax effect (1) (51) 67  255  266 
    Operating net income (2)$19,508 $16,702 $53,783 $46,077 
                 
    Average shareholders’ equity (3)$452,194 $488,169 $442,210 $475,548 
    Less:    
    Average accumulated other comprehensive income (loss) (3,142) 2,725  (295) 1,271 
    Average adjusted shareholders’ equity$455,336 $485,444 $442,505 $474,277 
                 
    Diluted weighted average common shares 19,272,984  19,236,114  19,281,036  19,235,955 
         
    Return on average equity (4) 17.4% 13.6% 15.9% 12.8%
    Operating return on average adjusted equity (2) 17.1% 13.8% 16.2% 13.0%
    Diluted earnings per share$1.02 $0.86 $2.74 $2.37 
    Operating earnings per share (2)$1.01 $0.87 $2.79 $2.40 
    ________________________________    


    (1)The tax effect of net realized losses on investments and net unrealized gains (losses) on equity securities is calculated with an effective 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 October 25, 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 November 1, 2018. To access the replay, dial 855-859-2056 or 404-537-3406 and use the pass code 3374675#.

    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.

    ABOUT AMERISAFE

    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 -

       
    AMERISAFE, INC. AND SUBSIDIARIES
    Consolidated Statements of Income
    (in thousands)
       
     Three Months EndedNine Months Ended
     September 30,September 30,
      2018  2017  2018  2017 
     (unaudited)(unaudited)
    Revenues:    
    Gross premiums written$85,324 $87,035 $276,368 $269,152 
    Ceded premiums written (2,283) (1,992) (6,982) (6,581)
    Net premiums written$83,041 $85,043 $269,386 $262,571 
                 
    Net premiums earned$85,184 $85,118 $261,489 $258,779 
    Net investment income 7,884  7,788  22,396  21,969 
    Net realized losses on investments (329) (192) (1,471) (761)
    Net unrealized gains on equity securities 573  -  259  - 
    Fee and other income 216  90  410  284 
    Total revenues 93,528  92,804  283,083  280,271 
                 
    Expenses:    
    Loss and loss adjustment expenses incurred 47,598  48,394  152,836  151,038 
    Underwriting and other operating costs 20,606  19,281  62,154  60,686 
    Policyholder dividends 865  1,573  3,290  4,107 
    Total expenses 69,069  69,248  218,280  215,831 
                 
    Income before taxes 24,459  23,556  64,803  64,440 
    Income tax expense 4,758  6,979  11,977  18,858 
    Net income$19,701 $16,577 $52,826 $45,582 
                 
         
    AMERISAFE, INC. AND SUBSIDIARIES
    Consolidated Statements of Income (cont.)
    (in thousands, except per share amounts)
         
     Three Months EndedNine Months Ended
     September 30,September 30,
      2018  2017  2018  2017 
     (unaudited)(unaudited)
    Basic EPS:    
    Net income$19,701 $16,577 $52,826 $45,582 
                 
    Basic weighted average common shares 19,216,545  19,171,912  19,204,196  19,161,529 
    Basic earnings per share$1.03 $0.86 $2.75 $2.38 
         
    Diluted EPS:    
    Net income$19,701 $16,577 $52,826 $45,582 
                 
    Diluted weighted average common shares:    
    Weighted average common shares 19,216,545  19,171,912  19,204,196  19,161,529 
    Stock options and restricted stock 56,439  64,202  76,840  74,426 
    Diluted weighted average common shares 19,272,984  19,236,114  19,281,036  19,235,955 
         
    Diluted earnings per share$1.02 $0.86 $2.74 $2.37 
         


       
    AMERISAFE, INC. AND SUBSIDIARIES
    Consolidated Balance Sheets
       
     September 30,December 31,
     20182017
     (unaudited) 
    Assets  
    Investments$1,190,536 $1,130,314
    Cash and cash equivalents 33,324  55,559
    Amounts recoverable from reinsurers 109,269  90,133
    Premiums receivable, net 178,625  174,234
    Deferred income taxes 19,898  19,262
    Deferred policy acquisition costs 21,326  20,251
    Other assets 33,991  28,483
     $1,586,969 $1,518,236
       
    Liabilities and Shareholders’ Equity  
    Liabilities:  
    Reserves for loss and loss adjustment expenses$791,129 $771,845
    Unearned premiums 165,167  157,270
    Insurance-related assessments 29,814  28,246
    Other liabilities 141,863  135,452
       
    Shareholders’ equity 458,996  425,423
    Total liabilities and shareholders’ equity$1,586,969 $1,518,236
       

     

    Neal A. Fuller, EVP & CFO
    AMERISAFE
    337.463.9052

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