• AMERISAFE Announces 2019 First Quarter Results

    Source: Nasdaq GlobeNewswire / 01 May 2019 16:30:02   America/New_York

    DERIDDER, La., May 01, 2019 (GLOBE NEWSWIRE) -- AMERISAFE, Inc. (Nasdaq: AMSF), a specialty provider of workers’ compensation insurance focused on high hazard industries, today announced results for the first quarter ended March 31, 2019.

     Three Months Ended  
     March 31,  
      2019   2018  % Change
        
     (in thousands, except per share data)  
    Net premiums earned$  84,948  $  87,310  -2.7%
    Net investment income   8,015     7,209  11.2%
    Net realized gains (losses) on investments, pretax   59     (31) NM 
    Net income   19,400     16,169  20.0%
    Diluted earnings per share$  1.01  $  0.84  20.2%
    Operating net income    17,649     16,502  7.0%
    Operating earnings per share$  0.91  $  0.86  5.8%
    Book value per share$  22.33  $  22.43  -0.4%
    Net combined ratio 84.0%  85.6%  
    Return on average equity 18.5%  15.1%  

    G. Janelle Frost, President and Chief Executive Officer, said, “We are pleased with the first quarter results.  A return on equity of 18.5% and a combined ratio of 84.0% resulted from AMERISAFE’s methodical approach to a prolonged soft cycle in workers’ compensation insurance.  Continued declines in underlying loss costs kept insurers highly competitive, while payroll growth benefited revenue in the quarter.”

    INSURANCE RESULTS

     Three Months Ended  
     March 31,  
      2019   2018  % Change
        
     (in thousands)  
          
    Gross premiums written$93,107  $97,342  -4.4%
    Net premiums earned 84,948   87,310  -2.7%
    Loss and loss adjustment expenses incurred 49,614   53,162  -6.7%
    Underwriting and certain other operating costs,     
    commissions, salaries and benefits 20,667   20,266  2.0%
    Policyholder dividends 1,100   1,333  -17.5%
    Underwriting profit (pre-tax)$13,567  $12,549  8.1%
          
    Insurance Ratios:     
    Current accident year loss ratio 72.5%  71.5%  
    Prior accident year loss ratio -14.1%  -10.6%  
    Net loss ratio 58.4%  60.9%  
    Net underwriting expense ratio 24.3%  23.2%  
    Net dividend ratio 1.3%  1.5%  
    Net combined ratio 84.0%  85.6%  
          
    • Gross premiums written in the first quarter of 2019 decreased by $4.2 million, or 4.4%, compared with the first quarter of 2018, driven by voluntary premiums which were 5.7% lower than the first quarter of 2018.

    • Payroll audits and related premium adjustments increased premiums written by $4.5 million in the first quarter of 2019, compared to an increase in premiums written of $3.3 million in the first quarter of 2018. 

    • The current accident year loss ratio for the first quarter was 72.5%, an increase of 1.0 percentage point from the 71.5% ratio for accident year 2018. During the quarter, the Company experienced favorable net loss development for prior accident years, which reduced loss and loss adjustment expenses by $12.0 million, attributable primarily to accident years 2016, 2015, 2014 and 2012. 

    • For the quarter ended March 31, 2019, the underwriting expense ratio was 24.3% compared with 23.2% in the same quarter in 2018. The increase in the ratio was primarily due to a decrease in net earned premium and due to higher estimates of variable share price based incentive compensation costs compared with the first quarter of 2018.

    • The effective tax rate for the quarter ended March 31, 2019 was 18.5% compared with 16.7% for the first quarter of 2018. The increase is largely due to a higher proportion of underwriting income relative to municipal bond investment income compared with last year’s first quarter.

    INVESTMENT RESULTS

     Three Months Ended  
     March 31,  
      2019   2018  % Change
        
     (in thousands)  
    Net investment income$8,015  $7,209  11.2%
    Net realized gains (losses) on     
    investments (pre-tax) 59   (31) NM 
    Net unrealized gains (losses) on      
    equity securities (pre-tax) 2,158   (390) NM 
    Pre-tax investment yield 2.7%  2.4%  
    Tax-equivalent yield (1) 3.1%  2.9%  
    ________________________________    

    (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, 2019, increased 11.2% to $8.0 million from $7.2 million in the first quarter of 2018, due to higher investment yields on fixed-income securities.

    • Net unrealized gains on equity investments were $2.2 million for the first quarter of 2019, which increased overall net income by $0.09 per share.

    • As of March 31, 2019, the carrying value of AMERISAFE’s investment portfolio, including cash and cash equivalents, was $1.2 billion.  

    CAPITAL MANAGEMENT

    During the first quarter of 2019, the company paid a regular quarterly cash dividend of $0.25 per share on March 22, 2019 which represented a 14% increase in the quarterly dividend compared with 2018.  On April 29, 2019 the Company’s Board of Directors declared a quarterly cash dividend of $0.25 per share, payable on June 21, 2019 to shareholders of record as of June 7, 2019.

    Book value per share at March 31, 2019 was $22.33, an increase of 5.0% from $21.26 at December 31, 2018.

    SUPPLEMENTAL INFORMATION

     Three Months Ended
     March 31,
      2019   2018 
            
        
    Net income$19,400  $16,169 
    Less:   
    Net realized gains (losses) on investments 59   (31)
    Net unrealized gains (losses) on equity securities 2,158   (390)
    Tax effect (1) (466)  88 
    Operating net income (2)$17,649  $16,502 
        
    Average shareholders’ equity (3)$420,084  $428,746 
    Less:   
    Average accumulated other comprehensive income 2,065   688 
    Average adjusted shareholders’ equity$418,019  $428,058 
        
    Diluted weighted average common shares 19,298,036   19,262,237 
        
    Return on average equity (4) 18.5%  15.1%
    Operating return on average adjusted equity (2) 16.9%  15.4%
    Diluted earnings per share$1.01  $0.84 
    Operating earnings per share (2)$0.91  $0.86 
    ________________________________   

    (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%.
    (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 May 2, 2019, at 10:30 a.m. Eastern Time to discuss the results for the quarter.  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 10, 2019. To access the replay, dial 855-859-2056 or 404-537-3406 and use the pass code 3471578#.

    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, 2018. 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 Ended
     March 31,
      2019   2018 
      
     (unaudited)
    Revenues:   
    Gross premiums written$93,107  $97,342 
    Ceded premiums written (2,430)  (2,330)
    Net premiums written$90,677  $95,012 
        
    Net premiums earned$84,948  $87,310 
    Net investment income 8,015   7,209 
    Net realized gains (losses) on investments 59   (31)
    Net unrealized gains (losses) on equity securities 2,158   (390)
    Fee and other income 10   77 
    Total revenues 95,190   94,175 
        
    Expenses:   
    Loss and loss adjustment expenses incurred 49,614   53,162 
    Underwriting and other operating costs 20,667   20,266 
    Policyholder dividends 1,100   1,333 
    Total expenses 71,381   74,761 
        
    Income before taxes 23,809   19,414 
    Income tax expense 4,409   3,245 
    Net income$19,400  $16,169 
        

    AMERISAFE, INC. AND SUBSIDIARIES
    Consolidated Statements of Income (cont.)
    (in thousands, except per share amounts)

     Three Months Ended
     March 31,
      2019   2018 
      
     (unaudited)
    Basic EPS:    
    Net income$19,400  $16,169 
         
    Basic weighted average common shares 19,229,134   19,187,136 
    Basic earnings per share$1.01  $0.84 
         
    Diluted EPS:    
    Net income$19,400  $16,169 
         
    Diluted weighted average common shares:    
    Weighted average common shares 19,229,134   19,187,136 
    Stock options and restricted stock 68,902   75,101 
    Diluted weighted average common shares 19,298,036   19,262,237 
         
    Diluted earnings per share$1.01  $0.84 

    AMERISAFE, INC. AND SUBSIDIARIES
    Consolidated Balance Sheets
    (in thousands)

     March 31, December 31,
     2019 2018
     (unaudited)  
    Assets   
    Investments $1,161,633 $1,125,490
    Cash and cash equivalents 34,895  40,344
    Amounts recoverable from reinsurers 111,182  112,006
    Premiums receivable, net 174,310  162,478
    Deferred income taxes 20,057  21,852
    Deferred policy acquisition costs 20,433  19,734
    Other assets 36,472  34,027
     $1,558,982 $1,515,931
        
    Liabilities and Shareholders’ Equity   
    Liabilities:   
    Reserves for loss and loss adjustment expenses $800,580 $798,409
    Unearned premiums 155,026  149,296
    Insurance-related assessments 28,802  28,258
    Other liabilities 144,169  130,206
        
    Shareholders’ equity 430,405  409,762
    Total liabilities and shareholders’ equity$1,558,982 $1,515,931
        
    Neal A. Fuller, EVP & CFO
    AMERISAFE
    337.463.9052

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