Exhibit 99.1

 

LOGO   LOGO
 

 

Neal A. Fuller, EVP & CFO

AMERISAFE

337.463.9052

AMERISAFE ANNOUNCES 2018 THIRD QUARTER RESULTS

Declares An Extraordinary Dividend of $3.50 Per Share

Reports Combined Ratio of 81.1%

DeRidder, LA – October 24, 2018 - AMERISAFE, Inc. (Nasdaq: AMSF), a specialty provider of workers’ compensation insurance focused on high hazard industries, today announced results for the third quarter ended September 30, 2018.

 

     Three Months Ended
September 30,
          Nine Months Ended
September 30,
       
     2018     2017     % Change     2018     2017     % Change  
     (in thousands, except
per share data)
          (in thousands, except
per share data)
       

Net premiums earned

   $ 85,184     $ 85,118       0.1   $ 261,489     $ 258,779       1.0

Net investment income

     7,884       7,788       1.2     22,396       21,969       1.9

Net realized losses on investments, pre-tax

     (329     (192     71.4     (1,471     (761     93.3

Net income

     19,701       16,577       18.8     52,826       45,582       15.9

Diluted earnings per share

   $ 1.02     $ 0.86       18.6   $ 2.74     $ 2.37       15.6

Operating net income

     19,508       16,702       16.8     53,783       46,077       16.7

Operating earnings per share

   $ 1.01     $ 0.87       16.1   $ 2.79     $ 2.40       16.3

Book value per share

   $ 23.82     $ 25.72       -7.4   $ 23.82     $ 25.72       -7.4

Net combined ratio

     81.1     81.4       83.5     83.5  

Return on average equity

     17.4     13.6       15.9     12.8  

G. Janelle Frost, President and Chief Executive Officer, noted, “Industry wide loss costs continued to decline this quarter, making workers’ compensation the only commercial line with rate decreases passed on to policyholders. Such an environment sets the stage for carriers to compete for premium dollars. AMERISAFE’s history and current year results reflect our discipline to evaluate and price our risk for long-term stability and profitability. It is because of that discipline that our board is pleased to declare a special dividend of $3.50 to our shareholders, while maintaining adequate capital to protect our policyholders and efficiently operate our company.”


INSURANCE RESULTS

 

     Three Months Ended
September 30,
          Nine Months Ended
September 30,
       
     2018     2017     % Change     2018     2017     % Change  
     (in thousands)           (in thousands)        

Gross premiums written

   $ 85,324     $ 87,035       -2.0   $ 276,368     $ 269,152       2.7
  

 

 

   

 

 

     

 

 

   

 

 

   

Net premiums earned

     85,184       85,118       0.1     261,489       258,779       1.0

Loss and loss adjustment expenses incurred

     47,598       48,394       -1.6     152,836       151,038       1.2

Underwriting and certain other operating costs, commissions, salaries and benefits

     20,606       19,281       6.9     62,154       60,686       2.4

Policyholder dividends

     865       1,573       -45.0     3,290       4,107       -19.9
  

 

 

   

 

 

     

 

 

   

 

 

   

Underwriting profit (pre-tax)

   $ 16,115     $ 15,870       1.5   $ 43,209     $ 42,948       0.6
  

 

 

   

 

 

     

 

 

   

 

 

   

Insurance Ratios:

            

Current accident year loss ratio

     71.5     69.0       71.5     69.0  

Prior accident year loss ratio

     -15.6     -12.1       -13.1     -10.6  
  

 

 

   

 

 

     

 

 

   

 

 

   

Net loss ratio

     55.9     56.9       58.4     58.4  

Net underwriting expense ratio

     24.2     22.7       23.8     23.5  

Net dividend ratio

     1.0     1.8       1.3     1.6  
  

 

 

   

 

 

     

 

 

   

 

 

   

Net combined ratio

     81.1     81.4       83.5     83.5  
  

 

 

   

 

 

     

 

 

   

 

 

   

 

   

Gross premiums written in the quarter decreased by $1.7 million, or 2.0%, due to lower payroll audits and related premium adjustments. Voluntary premium for policies written during the quarter ended September 30, 2018 were nearly flat compared with the third quarter of 2017.

 

   

Payroll audits and related premium adjustments decreased premiums written by $2.1 million in the third quarter of 2018, compared to a decrease in premiums written of $1.1 million in the third quarter of 2017. These adjustments resulted in the 2.0% decrease in gross premiums written in the quarter.

 

   

The current accident year loss ratio for the third quarter was 71.5%, unchanged from the first half of 2018, and an increase of 1.0 percentage point from the 70.5% ratio for the full year 2017. During the quarter, the Company experienced favorable loss development for prior accident years, which reduced loss and loss adjustment expenses by $13.3 million, attributable primarily to accident years 2016, 2015, 2014 and 2013. These results largely reflect favorable case reserve development on claims during the quarter.

 

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For the quarter ended September 30, 2018, the underwriting expense ratio was 24.2% compared with 22.7% in the same quarter in 2017. The increase in the ratio in the quarter was due to higher loss based assessments and commissions compared to 2017.

 

   

The effective tax rate for the quarter ended September 30, 2018 was 19.5% compared with 29.6% for the third quarter of 2017. The decrease is largely due to the new federal corporate tax rate of 21% on underwriting profits and taxable investment income.

INVESTMENT RESULTS

 

     Three Months Ended
September 30,
          Nine Months Ended
September 30,
       
     2018     2017     % Change     2018     2017     % Change  
     (in thousands)           (in thousands)        

Net investment income

   $ 7,884     $ 7,788       1.2   $ 22,396     $ 21,969       1.9

Net realized losses on investments (pre-tax)

     (329     (192     71.4     (1,471     (761     93.3

Net unrealized gains on equity securities (pre-tax)

     573       —         NM       259       —         NM  

Pre-tax investment yield

     2.6     2.6       2.5     2.5  

Tax-equivalent yield (1)

     3.0     3.2       3.0     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 ended September 30, 2018, increased 1.2% to $7.9 million from $7.8 million in the third quarter of 2017, due to slightly higher investment yields on fixed-income securities.

 

   

As of September 30, 2018, the carrying value of AMERISAFE’s investment portfolio, including cash and cash equivalents, was $1.2 billion.

 

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CAPITAL MANAGEMENT AND EXTRAORDINARY DIVIDEND

The company paid a regular quarterly cash dividend of $0.22 per share on September 21, 2018. On October 23, 2018 the Company’s Board of Directors declared a quarterly cash dividend of $0.22 per share, payable on December 28, 2018 to shareholders of record as of December 14, 2018.

In addition, on October 23, 2018 the Company’s Board of Directors declared an extraordinary dividend of $3.50 per share, payable on December 28, 2018 to shareholders of record as of December 14, 2018.

Book value per share at September 30, 2018 was $23.82, an increase of 7.8% from $22.10 at December 31, 2017.

SUPPLEMENTAL INFORMATION

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2018     2017     2018     2017  
     (in thousands, except share and per share data)  

Net income

   $ 19,701     $ 16,577     $ 52,826     $ 45,582  

Less:

        

Net realized losses on investments

     (329     (192     (1,471     (761

Net unrealized gains on equity securities

     573       —         259       —    

Tax effect (1)

     (51     67       255       266  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating net income (2)

   $ 19,508     $ 16,702     $ 53,783     $ 46,077  
  

 

 

   

 

 

   

 

 

   

 

 

 

Average shareholders’ equity (3)

   $ 452,194     $ 488,169     $ 442,210     $ 475,548  

Less:

        

Average accumulated other comprehensive income (loss)

     (3,142     2,725       (295     1,271  
  

 

 

   

 

 

   

 

 

   

 

 

 

Average adjusted shareholders’ equity

   $ 455,336     $ 485,444     $ 442,505     $ 474,277  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted weighted average common shares

     19,272,984       19,236,114       19,281,036       19,235,955  

Return on average equity (4)

     17.4     13.6     15.9     12.8

Operating return on average adjusted equity (2)

     17.1     13.8     16.2     13.0

Diluted earnings per share

   $ 1.02     $ 0.86     $ 2.74     $ 2.37  

Operating earnings per share (2)

   $ 1.01     $ 0.87     $ 2.79     $ 2.40  

 

 

(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% for 2018 and 35% for 2017.

 

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(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 October 25, 2018, 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 November 1, 2018. To access the replay, dial 855-859-2056 or 404-537-3406 and use the pass code 3374675#.

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.

 

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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, 2017. 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 -

 

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AMERISAFE, INC. AND SUBSIDIARIES

Consolidated Statements of Income

(in thousands)

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2018     2017     2018     2017  
     (unaudited)     (unaudited)  

Revenues:

        

Gross premiums written

   $ 85,324     $ 87,035     $ 276,368     $ 269,152  

Ceded premiums written

     (2,283     (1,992     (6,982     (6,581
  

 

 

   

 

 

   

 

 

   

 

 

 

Net premiums written

   $ 83,041     $ 85,043     $ 269,386     $ 262,571  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net premiums earned

   $ 85,184     $ 85,118     $ 261,489     $ 258,779  

Net investment income

     7,884       7,788       22,396       21,969  

Net realized losses on investments

     (329     (192     (1,471     (761

Net unrealized gains on equity securities

     573       —         259       —    

Fee and other income

     216       90       410       284  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     93,528       92,804       283,083       280,271  
  

 

 

   

 

 

   

 

 

   

 

 

 

Expenses:

        

Loss and loss adjustment expenses incurred

     47,598       48,394       152,836       151,038  

Underwriting and other operating costs

     20,606       19,281       62,154       60,686  

Policyholder dividends

     865       1,573       3,290       4,107  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

     69,069       69,248       218,280       215,831  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before taxes

     24,459       23,556       64,803       64,440  

Income tax expense

     4,758       6,979       11,977       18,858  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 19,701     $ 16,577     $ 52,826     $ 45,582  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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AMERISAFE, INC. AND SUBSIDIARIES

Consolidated Statements of Income (cont.)

(in thousands, except per share amounts)

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2018      2017      2018      2017  
     (unaudited)      (unaudited)  

Basic EPS:

           

Net income

   $ 19,701      $ 16,577      $ 52,826      $ 45,582  
  

 

 

    

 

 

    

 

 

    

 

 

 

Basic weighted average common shares

     19,216,545        19,171,912        19,204,196        19,161,529  

Basic earnings per share

   $ 1.03      $ 0.86      $ 2.75      $ 2.38  

Diluted EPS:

           

Net income

   $ 19,701      $ 16,577      $ 52,826      $ 45,582  
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted weighted average common shares:

           

Weighted average common shares

     19,216,545        19,171,912        19,204,196        19,161,529  

Stock options and restricted stock

     56,439        64,202        76,840        74,426  
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted weighted average common shares

     19,272,984        19,236,114        19,281,036        19,235,955  

Diluted earnings per share

   $ 1.02      $ 0.86      $ 2.74      $ 2.37  

 

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AMERISAFE, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

 

     September 30,      December 31,  
     2018      2017  
     (unaudited)         

Assets

     

Investments

   $ 1,190,536      $ 1,130,314  

Cash and cash equivalents

     33,324        55,559  

Amounts recoverable from reinsurers

     109,269        90,133  

Premiums receivable, net

     178,625        174,234  

Deferred income taxes

     19,898        19,262  

Deferred policy acquisition costs

     21,326        20,251  

Other assets

     33,991        28,483  
  

 

 

    

 

 

 
   $ 1,586,969      $ 1,518,236  
  

 

 

    

 

 

 

Liabilities and Shareholders’ Equity

     

Liabilities:

     

Reserves for loss and loss adjustment expenses

   $ 791,129      $ 771,845  

Unearned premiums

     165,167        157,270  

Insurance-related assessments

     29,814        28,246  

Other liabilities

     141,863        135,452  

Shareholders’ equity

     458,996        425,423  
  

 

 

    

 

 

 

Total liabilities and shareholders’ equity

   $ 1,586,969      $ 1,518,236  
  

 

 

    

 

 

 

# # #

 

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