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CST: 24/08/2019 12:57:48   

AMERISAFE Announces 2019 Second Quarter Results

23 Days ago

Reports Combined Ratio of 83.9%

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 ratio 83.9%   83.6%       84.0%   84.7%    
Return on average equity 16.3%   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 ratio 58.9%   58.5%       58.7%   59.7%    
Net underwriting expense ratio 23.8%   23.9%       24.1%   23.6%    
Net dividend ratio 1.2%   1.2%       1.2%   1.4%    
Net combined ratio 83.9%   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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