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Amerisafe Inc (AMSF) SEC Filing 8-K Material Event for the period ending Wednesday, July 28, 2021

Amerisafe Inc

CIK: 1018979 Ticker: AMSF

Exhibit 99.1

 

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Neal A. Fuller, EVP & CFO

AMERISAFE

337.463.9052

AMERISAFE ANNOUNCES 2021 SECOND QUARTER RESULTS

Reports Combined Ratio of 74.4%

DeRidder, LA – July 28, 2021 - 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, 2021.

 

     Three Months Ended
June 30,
          Six Months Ended
June 30,
       
     2021     2020     % Change     2021     2020     % Change  
     (in thousands, except
per share data)
          (in thousands, except
per share data)
       

Net premiums earned

   $ 69,888     $ 75,964       -8.0   $ 140,634     $ 154,954       -9.2

Net investment income

     6,730       7,324       -8.1     13,313       15,073       -11.7

Net realized gains on investments (pretax)

     1,179       163       NM       1,498       1,155       29.7

Net unrealized gains (losses) on equity securities (pre-tax)

     3,286       5,570       NM       8,797       (3,193     NM  

Net income

     23,767       23,948       -0.8     43,079       34,748       24.0

Diluted earnings per share

   $ 1.23     $ 1.24       -0.8   $ 2.22     $ 1.80       23.3

Operating net income

     20,240       19,419       4.2     34,946       36,358       -3.9

Operating earnings per share

   $ 1.04     $ 1.00       4.0   $ 1.80     $ 1.88       -4.3

Book value per share

   $ 24.19     $ 23.94       1.0   $ 24.19     $ 23.94       1.0

Net combined ratio

     74.4     78.5       79.6     81.1  

Return on average equity

     20.8     21.3       19.0     15.6  

G. Janelle Frost, President and Chief Executive Officer, said, “Approved loss costs declined, and competition remained strong this quarter, even as industry-wide results reported an increasing combined ratio for 2020. AMERISAFE’s combined ratio, however, declined this quarter. Favorable prior year case development and operating expense management countered premium pressures as pricing declined and the economy continued to recover.”


INSURANCE RESULTS

 

     Three Months Ended
June 30,
          Six Months Ended
June 30,
       
     2021     2020     % Change     2021     2020     % Change  
     (in thousands)           (in thousands)        

Gross premiums written

   $ 73,724     $ 80,289       -8.2   $ 155,238     $ 167,360       -7.2
  

 

 

   

 

 

     

 

 

   

 

 

   

Net premiums earned

     69,888       75,964       -8.0     140,634       154,954       -9.2

Loss and loss adjustment expenses incurred

     32,423       37,530       -13.6     71,940       81,177       -11.4

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

     18,455       21,131       -12.7     37,422       42,415       -11.8

Policyholder dividends

     1,117       948       17.8     2,467       1,971       25.2
  

 

 

   

 

 

     

 

 

   

 

 

   

Underwriting profit (pre-tax)

   $ 17,893     $ 16,355       9.4   $ 28,805     $ 29,391       -2.0
  

 

 

   

 

 

     

 

 

   

 

 

   

Insurance Ratios:

            

Current accident year loss ratio

     72.0     72.5       72.0     72.5  

Prior accident year loss ratio

     -25.6     -23.1       -20.8     -20.1  
  

 

 

   

 

 

     

 

 

   

 

 

   

Net loss ratio

     46.4     49.4       51.2     52.4  

Net underwriting expense ratio

     26.4     27.8       26.6     27.4  

Net dividend ratio

     1.6     1.3       1.8     1.3  
  

 

 

   

 

 

     

 

 

   

 

 

   

Net combined ratio

     74.4     78.5       79.6     81.1  
  

 

 

   

 

 

     

 

 

   

 

 

   

 

   

Gross premiums written in the second quarter of 2021 decreased by $6.6 million, or 8.2%, primarily due to lower voluntary premiums on policies written in the quarter which were 8.9% lower compared to the second quarter of 2020.    This reduction in premium is primarily due to a continued decline in approved loss costs, which were lower by 6.5% on average on policies we renewed during the quarter.

 

   

Payroll audits and related premium adjustments increased premiums written by $0.5 million in the second quarter of 2021, the same amount as the second quarter of 2020.

 

   

The current accident year loss ratio for the second quarter was 72.0%, unchanged from the first quarter of 2021, and one half point lower than 2020. During the quarter, the Company experienced favorable case reserve development for prior accident years, which reduced loss and loss adjustment expenses by $17.9 million, primarily from accident years 2015 through 2019.

 

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For the quarter ended June 30, 2021, the underwriting expense ratio was 26.4% compared with 27.8% in the same quarter in 2020. The decrease in the expense ratio was primarily due to lower insurance related assessments compared to the same quarter in 2020.

 

   

The effective tax rate for the quarter ended June 30, 2021 was 18.5%, which was the same as the second quarter of 2020.

INVESTMENT RESULTS

 

     Three Months Ended
June 30,
          Six Months Ended
June 30,
       
     2021     2020     % Change     2021     2020     % Change  
     (in thousands)           (in thousands)        

Net investment income

   $ 6,730     $ 7,324       -8.1   $ 13,313     $ 15,073       -11.7

Net realized gains on investments (pre-tax)

     1,179       163       NM       1,498       1,155       29.7

Net unrealized gains (losses) on equity securities (pre-tax)

     3,286       5,570       NM       8,797       (3,193     NM  

Pre-tax investment yield

     2.3     2.5       2.3     2.5  

Tax-equivalent yield (1)

     2.6     2.9       2.6     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, 2021, decreased 8.1% to $6.7 million from $7.3 million in the second quarter of 2020, due to lower investment yields on fixed-income securities.

 

   

As of June 30, 2021, 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 $0.29 per share on June 25, 2021. On July 27, 2021 the Company’s Board of Directors declared a quarterly cash dividend of $0.29 per share, payable on September 24, 2021 to shareholders of record as of September 10, 2021.

 

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Book value per share at June 30, 2021 was $24.19, an increase of 6.6% from $22.70 at December 31, 2020.

SUPPLEMENTAL INFORMATION

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2021     2020     2021     2020  
     (in thousands, except share and per share data)  

Net income

   $ 23,767     $ 23,948     $ 43,079     $ 34,748  

Less:

        

Net realized gains on investments

     1,179       163       1,498       1,155  

Net unrealized gains (losses) on equity securities

     3,286       5,570       8,797       (3,193

Tax effect (1)

     (938     (1,204     (2,162     428  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating net income (2)

   $ 20,240     $ 19,419     $ 34,946     $ 36,358  
  

 

 

   

 

 

   

 

 

   

 

 

 

Average shareholders’ equity (3)

   $ 457,996     $ 449,876     $ 453,591     $ 446,506  

Less:

        

Average accumulated other comprehensive income

     16,417       16,437       18,941       15,695  
  

 

 

   

 

 

   

 

 

   

 

 

 

Average adjusted shareholders’ equity (2)

   $ 441,579     $ 433,439     $ 434,650     $ 430,811  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted weighted average common shares

     19,380,611       19,335,707       19,384,078       19,335,748  

Return on average equity (4)

     20.8     21.3     19.0     15.6

Operating return on average adjusted equity (2)

     18.3     17.9     16.1     16.9

Diluted earnings per share

   $ 1.23     $ 1.24     $ 2.22     $ 1.80  

Operating earnings per share (2)

   $ 1.04     $ 1.00     $ 1.80     $ 1.88  

 

(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.

 

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CONFERENCE CALL INFORMATION

AMERISAFE has scheduled a conference call for July 29, 2021, 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 323-701-0225 (Conference Code 2203760) at least ten minutes before the call begins.

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 ten 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. Other factors that may affect our results are 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, 2020. 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
June 30,
    Six Months Ended
June 30,
 
     2021     2020     2021     2020  
     (unaudited)     (unaudited)  

Revenues:

        

Gross premiums written

   $ 73,724     $ 80,289     $ 155,238     $ 167,360  

Ceded premiums written

     (2,486     (2,672     (5,003     (5,455
  

 

 

   

 

 

   

 

 

   

 

 

 

Net premiums written

   $ 71,238     $ 77,617     $ 150,235     $ 161,905  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net premiums earned

   $ 69,888     $ 75,964     $ 140,634     $ 154,954  

Net investment income

     6,730       7,324       13,313       15,073  

Net realized gains on investments

     1,179       163       1,498       1,155  

Net unrealized gains (losses) on equity securities

     3,286       5,570       8,797       (3,193

Gain (loss) on disposal of assets

     (2     (29     21       (29

Fee and other income

     76       90       245       291  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     81,157       89,082       164,508       168,251  
  

 

 

   

 

 

   

 

 

   

 

 

 

Expenses:

        

Loss and loss adjustment expenses incurred

     32,423       37,530       71,940       81,177  

Underwriting and other operating costs

     18,455       21,131       37,422       42,415  

Policyholder dividends

     1,117       948       2,467       1,971  

Provision for investment related credit loss expense (benefit)

     (9     82       (117     56  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

     51,986       59,691       111,712       125,619  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before taxes

     29,171       29,391       52,796       42,632  

Income tax expense

     5,404       5,443       9,717       7,884  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 23,767     $ 23,948     $ 43,079     $ 34,748  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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AMERISAFE, INC. AND SUBSIDIARIES

Consolidated Statements of Income (cont.)

(in thousands, except per share amounts)

 

     Three Months Ended
June 30,
     Six Months Ended
June 30,
 
     2021      2020      2021      2020  
     (unaudited)      (unaudited)  

Basic EPS:

           

Net income

   $ 23,767      $ 23,948      $ 43,079      $ 34,748  
  

 

 

    

 

 

    

 

 

    

 

 

 

Basic weighted average common shares

     19,327,422        19,280,684        19,319,608        19,273,347  

Basic earnings per share

   $ 1.23      $ 1.24      $ 2.23      $ 1.80  

Diluted EPS:

           

Net income

   $ 23,767      $ 23,948      $ 43,079      $ 34,748  
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted weighted average common shares:

 

Weighted average common shares

     19,327,422        19,280,684        19,319,608        19,273,347  

Restricted stock and stock options

     53,189        55,023        64,470        62,401  
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted weighted average common shares

     19,380,611        19,335,707        19,384,078        19,335,748  

Diluted earnings per share

   $ 1.23      $ 1.24      $ 2.22      $ 1.80  

 

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AMERISAFE, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands)

 

     June 30,
2021
     December 31,
2020
 
     (unaudited)         

Assets

     

Investments

   $ 1,112,805      $ 1,088,744  

Cash and cash equivalents

     57,541        61,757  

Amounts recoverable from reinsurers

     110,912        105,803  

Premiums receivable, net

     165,158        156,760  

Deferred income taxes

     14,219        13,665  

Deferred policy acquisition costs

     18,857        17,810  

Other assets

     26,771        26,316  
  

 

 

    

 

 

 
   $ 1,506,263      $ 1,470,855  
  

 

 

    

 

 

 

Liabilities and Shareholders’ Equity

     

Liabilities:

     

Reserves for loss and loss adjustment expenses

   $ 744,969      $ 760,561  

Unearned premiums

     138,861        129,260  

Insurance-related assessments

     18,688        17,995  

Other liabilities

     135,379        124,223  

Shareholders’ equity

     468,366        438,816  
  

 

 

    

 

 

 

Total liabilities and shareholders’ equity

   $ 1,506,263      $ 1,470,855  
  

 

 

    

 

 

 

# # #

 

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Ticker: AMSF
CIK: 1018979
Form Type: 8-K Corporate News
Accession Number: 0001193125-21-227476
Submitted to the SEC: Wed Jul 28 2021 4:44:32 PM EST
Accepted by the SEC: Wed Jul 28 2021
Period: Wednesday, July 28, 2021
Industry: Fire Marine And Casualty Insurance
Events:
  1. Earnings Release
  2. Financial Exhibit

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