• AMERISAFE Announces 2019 Second Quarter Results

    Source: Nasdaq GlobeNewswire / 31 Jul 2019 16:30:52   America/New_York

    DERIDDER, La., July 31, 2019 (GLOBE NEWSWIRE) -- AMERISAFE, Inc. (Nasdaq: AMSF), a specialty provider of workers’ compensation insurance focused on high hazard industries, today announced results for the second quarter ended June 30, 2019.

     Three Months Ended   Six Months Ended  
     June 30,   June 30,  
     2019 2018 % Change 2019 2018 % Change
            
            
     (in thousands, except per share data)   (in thousands, except per share data)  
    Net premiums earned $  82,951 $  88,995 -6.8% $  167,899 $  176,305 -4.8%
    Net investment income   8,169   7,303 11.9%   16,184   14,512 11.5%
    Net realized losses on investments, pretax  (82)   (1,111) NM    (23)   (1,142) NM 
    Net income  17,890   16,956 5.5%   37,290   33,125 12.6%
    Diluted earnings per share$  0.93 $  0.88 5.7% $  1.93 $  1.72 12.2%
    Operating net income  17,448   17,774 -1.8%   35,096   34,275 2.4%
    Operating earnings per share$  0.90 $  0.92 -2.2% $  1.82 $  1.78 2.2%
    Book value per share$  23.29 $  23.11 0.8% $  23.29 $  23.11 0.8%
    Net combined ratio83.9% 83.6%   84.0% 84.7%  
    Return on average equity16.3% 15.5%   17.4% 15.2%  

     

    G. Janelle Frost, President and Chief Executive Officer, noted, “The workers’ compensation industry remained profitable through 2018, and competition remained strong through the second quarter. AMERISAFE’s response was to execute on our commitment to deliver an exceptional product to our policyholders through our quality insurance services and risk assessment. Remaining committed to our core disciplines has allowed us to provide stable returns for our shareholders, a consistent market for our agent partners, and aided business owners with mitigating risks.”    

    INSURANCE RESULTS

     Three Months Ended   Six Months Ended  
     June 30,   June 30,  
     2019 2018 % Change 2019 2018 % Change
            
            
     (in thousands)   (in thousands)  
                
    Gross premiums written$  87,018 $  93,702 -7.1% $  180,125 $  191,044 -5.7%
    Net premiums earned   82,951   88,995 -6.8%   167,899   176,305 -4.8%
    Loss and loss adjustment expenses incurred  48,868   52,076 -6.2%   98,482   105,238 -6.4%
    Underwriting and certain other operating costs, commissions, salaries and benefits  19,718   21,282 -7.3%   40,385   41,548 -2.8%
    Policyholder dividends   998   1,092 -8.6%   2,098   2,425 -13.5%
    Underwriting profit (pre-tax)$  13,367 $  14,545 -8.1% $  26,934 $  27,094 -0.6%
                
    Insurance Ratios:           
    Current accident year loss ratio 72.5% 71.5%   72.5% 71.5%  
    Prior accident year loss ratio-13.6% -13.0%   -13.8% -11.8%  
    Net loss ratio58.9% 58.5%   58.7% 59.7%  
    Net underwriting expense ratio23.8% 23.9%   24.1% 23.6%  
    Net dividend ratio1.2% 1.2%   1.2% 1.4%  
    Net combined ratio83.9% 83.6%   84.0% 84.7%  
    • Gross premiums written in the second quarter of 2019 decreased by $6.7 million, or 7.1%, compared with the second quarter of 2018, primarily due to lower voluntary premiums on policies written in the quarter, which were 5.3% lower than the second quarter of 2018.

    • Payroll audits and related premium adjustments increased premiums written by $1.8 million in the second quarter of 2019, compared to an increase in premiums written of $3.8 million in the second quarter of 2018. 

    • The current accident year loss ratio for the second quarter was 72.5%, unchanged from the first quarter of 2019, and 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 $11.3 million, primarily coming from accident years 2014 through 2017. 

    • For the quarter ended June 30, 2019, the underwriting expense ratio was 23.8% compared with 23.9% in the same quarter in 2018. The decrease in the expense ratio was due to lower compensation costs and premium based assessments compared with the second quarter of 2018.

    • The effective tax rate for the quarter ended June 30, 2019 was 19.3%, largely unchanged compared with 19.0% for the second quarter of 2018.

    INVESTMENT RESULTS

     Three Months Ended   Six Months Ended  
     June 30,   June 30,  
      2019   2018  % Change  2019   2018  % Change
                
     (in thousands)   (in thousands)  
    Net investment income $  8,169  $ 7,303  11.9% $ 16,184  $ 14,512  11.5%
    Net realized losses on investments (pre-tax)   (82)   (1,111) NM     (23)   (1,142) NM 
    Net unrealized gains (losses) on equity securities (pre-tax)    642     76  NM     2,800     (314) NM 
    Pre-tax investment yield 2.7%   2.5%     2.7%   2.4%   
    Tax-equivalent yield (1) 3.1%   2.9%     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 June 30, 2019, increased 11.9% to $8.2 million from $7.3 million in the second quarter of 2018, due to slightly higher investment yields on fixed-income securities.

    • As of June 30, 2019, 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 $0.25 per share on June 21, 2019. On July 30, 2019 the Company’s Board of Directors declared a quarterly cash dividend of $0.25 per share, payable on September 20, 2019 to shareholders of record as of September 6, 2019.

    Book value per share at June 30, 2019 was $23.29, an increase of 9.5% from $21.26 at December 31, 2018.

    SUPPLEMENTAL INFORMATION

     Three Months Ended Six Months Ended
     June 30, June 30,
      2019   2018   2019   2018 
       
     (in thousands, except share and per share data)
                    
    Net income $  17,890  $  16,956  $  37,290  $  33,125 
    Less:               
    Net realized losses on investments    (82)    (1,111)    (23)    (1,142)
    Net unrealized gains (losses) on equity securities    642     76     2,800     (314)
    Tax effect (1)    (118)    217     (583)    306 
    Operating net income (2) $  17,448  $  17,774  $  35,096  $  34,275 
                    
    Average shareholders’ equity (3)$  439,924  $  438,730  $  429,603  $  435,407 
    Less:               
    Average accumulated other comprehensive income (loss)   7,551     (2,160)    4,654     765 
    Average adjusted shareholders’ equity $  432,373  $  440,890  $  424,949  $  434,642 
                    
    Diluted weighted average common shares    19,306,953     19,266,735     19,316,276     19,275,883 
                    
    Return on average equity (4)  16.3%   15.5%   17.4%   15.2% 
    Operating return on average adjusted equity (2)  16.1%   16.1%   16.5%   15.8% 
    Diluted earnings per share $  0.93  $  0.88  $  1.93  $  1.72 
    Operating earnings per share (2) $  0.90  $  0.92  $  1.82  $  1.78 
    ________________________________               
    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 August 1, 2019, at 10:30 a.m. Eastern Time to discuss the results for the quarter and comment on future periods. To participate in the conference call dial 877-225-7695 or 720-545-0027 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 August 8, 2019. To access the replay, dial 855-859-2056 or 404-537-3406 and use the pass code 7867689#.

    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 Six Months Ended
     June 30, June 30,
      2019   2018   2019   2018 
        
     (unaudited) (unaudited)
    Revenues:       
    Gross premiums written $  87,018  $  93,702  $  180,125  $  191,044 
    Ceded premiums written    (2,204)    (2,369)    (4,634)    (4,699)
    Net premiums written $  84,814  $  91,333  $  175,491  $  186,345 
            
    Net premiums earned $  82,951  $  88,995  $  167,899  $  176,305 
    Net investment income    8,169     7,303     16,184     14,512 
    Net realized gains (losses) on investments   (82)    (1,111)    (23)    (1,142)
    Net unrealized gains (losses) on equity securities   642     76     2,800     (314)
    Fee and other income    73     117     83     194 
    Total revenues    91,753     95,380     186,943     189,555 
            
    Expenses:       
    Loss and loss adjustment expenses incurred    48,868     52,076     98,482     105,238 
    Underwriting and other operating costs   19,718     21,282     40,385     41,548 
    Policyholder dividends   998     1,092     2,098     2,425 
    Total expenses    69,584     74,450     140,965     149,211 
            
    Income before taxes   22,169     20,930     45,978     40,344 
    Income tax expense   4,279     3,974     8,688     7,219 
    Net income$  17,890  $  16,956  $  37,290  $  33,125 
            
            
    AMERISAFE, INC. AND SUBSIDIARIES
    Consolidated Statements of Income (cont.)
    (in thousands, except per share amounts)
            
     Three Months Ended Six Months Ended
     June 30, June 30,
     2019 2018 2019 2018
        
     (unaudited) (unaudited)
    Basic EPS:       
    Net income$  17,890  $  16,956  $  37,290  $  33,125 
            
    Basic weighted average common shares    19,245,592     19,208,601     19,237,401     19,197,925 
    Basic earnings per share $  0.93  $  0.88  $  1.94  $  1.73 
            
    Diluted EPS:       
    Net income $  17,890  $  16,956  $  37,290  $  33,125 
            
    Diluted weighted average common shares:       
      Weighted average common shares    19,245,592     19,208,601     19,237,401     19,197,925 
      Stock options and restricted stock   61,361     58,134     78,875     77,958 
      Diluted weighted average common shares   19,306,953     19,266,735     19,316,276     19,275,883 
            
    Diluted earnings per share $  0.93  $  0.88  $  1.93  $  1.72 
            


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

        
     June 30, December 31,
      2019  2018
     (unaudited)  
    Assets   
    Investments $  1,163,059 $  1,125,490
    Cash and cash equivalents    51,246    40,344
    Amounts recoverable from reinsurers    103,695    112,006
    Premiums receivable, net    175,020    162,478
    Deferred income taxes    19,461    21,852
    Deferred policy acquisition costs    20,550    19,734
    Other assets   38,062    34,027
     $  1,571,093 $  1,515,931
        
    Liabilities and Shareholders’ Equity   
    Liabilities:   
    Reserves for loss and loss adjustment expenses $  795,046 $  798,409
    Unearned premiums    156,889    149,296
    Insurance-related assessments    30,253    28,258
    Other liabilities    139,462    130,206
        
    Shareholders’ equity    449,443    409,762
    Total liabilities and shareholders’ equity $  1,571,093 $  1,515,931
        

     

     

    Neal A. Fuller, EVP & CFO
    AMERISAFE
    337.463.9052

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