• AMERISAFE Announces 2017 Second Quarter Results

    Source: Nasdaq GlobeNewswire / 27 Jul 2017 16:30:51   America/New_York

    DERIDDER, La., July 27, 2017 (GLOBE NEWSWIRE) -- AMERISAFE, Inc. (Nasdaq:AMSF), a specialty provider of hazardous workers’ compensation insurance, today announced results for the second quarter ended June 30, 2017.

     Three Months Ended  Six Months Ended  
     June 30,  June 30,  
      2017  2016 % Change
      2017  2016 % Change 
     (in thousands, except per share data)  (in thousands, except per share data)  
    Net premiums earned$  82,749 $  90,728 -8.8% $  173,661 $  186,689 -7.0% 
    Net investment income   7,471    6,201 20.5%    14,181    12,245 15.8% 
    Net realized gains (losses) on        
    investments (pre-tax)   (388)   545 NM     (569)   793 NM  
    Net income   15,481    16,639 -7.0%    29,005    40,896 -29.1% 
    Diluted earnings per share$  0.81 $  0.87 -6.9% $  1.51 $  2.13 -29.1% 
    Operating net income   15,733    16,285 -3.4%    29,375    40,381 -27.3% 
    Operating earnings per share$  0.82 $  0.85 -3.5% $  1.53 $  2.11 -27.5% 
    Book value per share$  25.02 $  25.83 -3.1% $  25.02 $  25.83 -3.1% 
    Net combined ratio 81.9% 80.4%   84.4% 75.5%  
    Return on average equity 13.1% 13.7%   12.4% 17.2%  
                     
                     

    G. Janelle Frost, President and Chief Executive Officer, stated, “AMERISAFE’s combined ratio of 81.9% in the second quarter was the result of our emphasis on risk selection with appropriate pricing and prudent reserving.  Our focus has been consistent as competition intensified.  In the second quarter, carriers sought out workers’ compensation premiums to offset deteriorating results in other commercial lines. At the same time, loss costs continued to decline.  Such conditions are why AMERISAFE’s underwriting discipline is critical to providing returns to shareholders and long-term financial stability for our policyholders.”

    Insurance Results

     Three Months Ended  Six Months Ended  
     June 30,  June 30,  
      2017  2016 % Change  2017  2016 % Change 
     (in thousands)  (in thousands)  
             
    Gross premiums written$  87,039 $  103,224 -15.7% $  182,117 $  203,606 -10.6% 
    Net premiums earned   82,749    90,728 -8.8%    173,661    186,689 -7.0% 
    Loss and loss adjustment expenses incurred    46,428    49,171 -5.6%    102,644    95,887 7.0% 
    Underwriting and certain other operating costs,        
      commissions, salaries and benefits   20,183    22,561 -10.5%    41,405    42,695 -3.0% 
    Policyholder dividends   1,163    1,216 -4.4%    2,534    2,306 9.9% 
    Underwriting profit (pre-tax).$  14,975 $  17,780 -15.8% $  27,078 $  45,801 -40.9% 
                     
    Insurance Ratios:        
    Current accident year loss ratio  69.0% 67.9%   69.0% 67.9%  
    Prior accident year loss ratio  -12.9% -13.7%   -9.9% -16.5%  
    Net loss ratio  56.1% 54.2%   59.1% 51.4%  
    Net underwriting expense ratio  24.4% 24.9%   23.8% 22.9%  
    Net dividend ratio  1.4% 1.3%   1.5% 1.2%  
    Net combined ratio 81.9% 80.4%   84.4% 75.5%  
     
     
    • Gross premiums written in the quarter decreased by $16.2 million, or 15.7%, primarily due to lower voluntary premiums written and $4.1 million in lower payroll audits.  Voluntary premium for policies written during the quarter ended June 30, 2017 declined by 11.6% compared with the second quarter of 2016. 

    • Payroll audits and related premium adjustments decreased premiums written by $2.6 million in the second quarter of 2017, compared to an increase of $1.5 million in the second quarter of 2016.

    • The current accident year loss ratio for the second quarter was 69.0%, an increase of 1.1 percentage points from 67.9% in 2016.  During the quarter, the Company experienced favorable loss development for prior accident years which reduced loss and loss adjustment expenses by $10.7 million, mostly attributable to accident years 2015, 2014 and 2013.  These results reflect improved trends for both claims closing and severity of claims and by favorable case reserve development on claims that were closed during the quarter.

    • For the quarter ended June 30, 2017, the underwriting expense ratio was 24.4% compared to 24.9% in the same quarter in 2016.  The decrease in the quarter was due to lower loss based assessments and lower commissions compared with last year’s second quarter. 

    • The effective tax rate for the quarter ended June 30, 2017 was 30.1% compared with 32.4% for the second quarter of 2016.  The decrease in the tax rate resulted from a lower proportion of underwriting income to tax-exempt income relative to the second quarter of 2016.

    Investment Results

     Three Months Ended  Six Months Ended  
     June 30,  June 30,  
      2017  2016 % Change  2017  2016 % Change 
     (in thousands)  (in thousands)  
    Net investment income$  7,471 $  6,201 20.5% $  14,181 $  12,245 15.8% 
    Net realized gains (losses) on         
    investments (pre-tax)    (388)   545 NM     (569)   793 NM  
    Pre-tax investment yield  2.6% 2.1%   2.4% 2.1%  
    Tax-equivalent yield (1) 3.3% 3.2%   3.3% 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 ending June 30, 2017, increased 20.5% to $7.5 million from $6.2 million in the second quarter of 2016, largely due to a significant decline  in value of an investment in a limited partnership hedge fund in last year’s second quarter.  The change in value of this investment is recorded in investment income each quarter.
    • As of June 30, 2017, 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 $0.20 per share on June 23, 2017.  On July 25, 2017 the Company’s Board of Directors declared a quarterly cash dividend of $0.20 per share, payable on September 22, 2017 to shareholders of record as of September 8, 2017.

    Book value per share at June 30, 2017 was $25.02, an increase of 5.5% from $23.72 as of December 31, 2016.  During the quarter, no shares were repurchased under the Company’s share repurchase plan. 

    Supplemental Information

     Three Months Ended Six Months Ended
     June 30, June 30,
      2017  2016   2017  2016 
     (in thousands, except share and per share data)
          
    Net income $  15,481 $  16,639  $  29,005 $  40,896 
    Less: Net realized gains (losses) on investments .   (388)   545     (569)   793 
    Tax effect (1)   136    (191)    199    (278)
    Operating net income (2)  $  15,733 $  16,285  $  29,375 $  40,381 
                  
    Average shareholders’ equity (3) $  474,247 $  487,350  $  468,771 $  474,964 
    Less: Average accumulated other comprehensive income    1,438    6,845     962    5,448 
    Average adjusted shareholders’ equity $  472,809 $  480,505  $  467,809 $  469,516 
                  
    Diluted weighted average common shares.   19,227,960    19,184,984     19,227,997    19,178,893 
          
    Return on average equity (4)  13.1% 13.7%  12.4% 17.2%
    Operating return on average adjusted equity (2)  13.3% 13.6%  12.6% 17.2%
    Diluted earnings per share $  0.81 $  0.87  $  1.51 $  2.13 
    Operating earnings per share (2) $  0.82 $  0.85  $  1.53 $  2.11 
          

    (1) The tax effect of net realized capital gains is calculated assuming an annual tax rate of 35%.

    (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 July 28, 2017, 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 August 4, 2017.  To access the replay, dial 855-859-2056 or 404-537-3406 and use the pass code 46153972#.

    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, 2016.  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 EndedSix Months Ended
     June 30,June 30,
      2017  2016  2017  2016 
     (unaudited)(unaudited)
    Revenues:    
    Gross premiums written $  87,039 $  103,224 $  182,117 $  203,606 
    Ceded premiums written    (2,198)   (2,550)   (4,589)   (5,101)
    Net premiums written $  84,841 $  100,674 $  177,528 $  198,505 
                 
    Net premiums earned $  82,749 $  90,728 $  173,661 $  186,689 
    Net investment income    7,471    6,201    14,181    12,245 
    Net realized gains (losses) on investments   (388)   545    (569)   793 
    Fee and other income   93    89    194    171 
    Total revenues   89,925    97,563    187,467    199,898 
                 
    Expenses:    
    Loss and loss adjustment expenses incurred    46,428    49,171    102,644    95,887 
    Underwriting and other operating costs    20,183    22,561    41,405    42,695 
    Policyholder dividends   1,163    1,216    2,534    2,306 
    Total expenses   67,774    72,948    146,583    140,888 
                 
    Income before taxes    22,151    24,615    40,884    59,010 
    Income tax expense    6,670    7,976    11,879    18,114 
    Net income $  15,481 $  16,639 $  29,005 $  40,896 
                 
         
         
         
         
    AMERISAFE, INC. AND SUBSIDIARIES
    Consolidated Statements of Income (cont.)
    (in thousands, except per share amounts)
         
     Three Months EndedSix Months Ended
     June 30,June 30,
      2017  2016  2017  2016 
     (unaudited)(unaudited)
    Basic EPS:    
    Net income$  15,481 $  16,639 $  29,005 $  40,896 
                 
    Basic weighted average common shares   19,162,049    19,096,718    19,156,250    19,077,328 
    Basic earnings per share $  0.81 $  0.87 $  1.51 $  2.14 
         
    Diluted EPS:    
    Net income $  15,481 $  16,639 $  29,005 $  40,896 
                 
    Diluted weighted average common shares:    
    Weighted average common shares    19,162,049    19,096,718    19,156,250    19,077,328 
    Stock options and performance shares   65,911    88,266    71,747    101,565 
    Diluted weighted average common shares   19,227,960    19,184,984    19,227,997    19,178,893 
         
    Diluted earnings per  share$  0.81 $  0.87 $  1.51 $  2.13 



    AMERISAFE, INC. AND SUBSIDIARIES
    Consolidated Balance Sheets
       
     June 30,December 31,
      2017  2016
     (unaudited) 
    Assets  
    Investments  $  1,120,630 $  1,084,474
    Cash and cash equivalents     53,967    58,936
    Amounts recoverable from reinsurers    84,147    83,666
    Premiums receivable, net    190,646    183,005
    Deferred income taxes     31,943    33,811
    Deferred policy acquisition costs     20,882    19,300
    Other assets     57,272    55,664
     $  1,559,487 $  1,518,856
          
    Liabilities and Shareholders’ Equity  
    Liabilities:  
    Reserves for loss and loss adjustment expenses $  749,759 $  742,776
    Unearned premiums     165,895    162,028
    Insurance-related assessments     31,801    31,742
    Other liabilities    130,640    126,160
       
    Shareholders’ equity     481,392    456,150
    Total liabilities and shareholders’ equity $  1,559,487 $  1,518,856


    Contact:	
    Neal A Fuller, EVP & CFO
    AMERISAFE, Inc.
    337-463-9052
    

    Primary Logo

Share on,