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CST: 24/08/2019 14:01:59   

AMERISAFE Announces 2019 First Quarter Results

114 Days ago

Reports Combined Ratio of 84.0%

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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