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Amerisafe Inc (AMSF) SEC Filing 8-K Material Event for the period ending Wednesday, October 27, 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 THIRD QUARTER RESULTS

Reports Combined Ratio of 71.5%

Declares an Extraordinary Dividend of $4.00 Per Share

DeRidder, LA – October 27, 2021—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, 2021.

 

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

Net premiums earned

   $ 67,626     $ 74,771       -9.6   $ 208,260     $ 229,725       -9.3

Net investment income

     6,049       7,063       -14.4     19,362       22,136       -12.5

Net realized gains (losses) on investments (pretax)

     (8     309       NM       1,490       1,464       1.8

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

     (771     844       NM       8,026       (2,349     NM  

Net income

     19,136       23,353       -18.1     62,215       58,101       7.1

Diluted earnings per share

   $ 0.99     $ 1.21       -18.2   $ 3.21     $ 3.00       7.0

Operating net income

     19,751       22,442       -12.0     54,697       58,800       -7.0

Operating earnings per share

   $ 1.02     $ 1.16       -12.1   $ 2.82     $ 3.04       -7.2

Book value per share

   $ 24.80     $ 24.93       -0.5   $ 24.80     $ 24.93       -0.5

Net combined ratio

     71.5     72.8       76.9     78.4  

Return on average equity

     16.1     19.8       18.1     17.0  

G. Janelle Frost, President and Chief Executive Officer, noted, “We were pleased with this quarter’s results as we were able to maintain strong renewal retention and find new business opportunities in a declining rate environment. In addition, claim severity trends for prior accident years continued to show improvement as our claims handling practices reach favorable outcomes.”


NSURANCE RESULTS

 

     Three Months Ended           Nine Months Ended        
     September 30,           September 30,        
     2021     2020     % Change     2021     2020     % Change  
     (in thousands)           (in thousands)        

Gross premiums written

   $ 67,185     $ 72,648       -7.5   $ 222,423     $ 240,008       -7.3
  

 

 

   

 

 

     

 

 

   

 

 

   

Net premiums earned

     67,626       74,771       -9.6     208,260       229,725       -9.3

Loss and loss adjustment expenses incurred

     29,661       39,789       -25.5     101,601       120,966       -16.0

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

     17,915       13,902       28.9     55,337       56,317       -1.7

Policyholder dividends

     733       714       2.7     3,200       2,685       19.2
  

 

 

   

 

 

     

 

 

   

 

 

   

Underwriting profit (pre-tax)

   $ 19,317     $ 20,366       -5.2   $ 48,122     $ 49,757       -3.3
  

 

 

   

 

 

     

 

 

   

 

 

   

Insurance Ratios:

            

Current accident year loss ratio

     72.0     72.5       72.0     72.5  

Prior accident year loss ratio

     -28.1     -19.3       -23.2     -19.8  
  

 

 

   

 

 

     

 

 

   

 

 

   

Net loss ratio

     43.9     53.2       48.8     52.7  

Net underwriting expense ratio

     26.5     18.6       26.6     24.5  

Net dividend ratio

     1.1     1.0       1.5     1.2  
  

 

 

   

 

 

     

 

 

   

 

 

   

Net combined ratio

     71.5     72.8       76.9     78.4  
  

 

 

   

 

 

     

 

 

   

 

 

   

 

   

Voluntary premiums were $3.2 million lower, or 4.6%, compared with the third quarter of 2020, due to continued reductions in approved state loss costs, which were 7.0% lower on average for policies we renewed during the quarter.

 

   

Payroll audits and related premium adjustments were $3.2 million lower than last year’s third quarter, decreasing premiums written by $2.1 million in the third quarter of 2021, compared with an increase of $1.1 million in the same period in 2020.

 

   

The current accident year loss ratio for the third quarter was 72.0%, unchanged from the first six months 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 $19.0 million, primarily from accident years 2015 through 2019.

 

   

For the quarter ended September 30, 2021, the underwriting expense ratio was 26.5% compared with 18.6% in the same quarter in 2020. The increase in the expense ratio was primarily due to a benefit in last year’s third quarter of $5.7 million from the termination of an assessment related to a multiple injury fund.

 

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The effective tax rate for the quarter ended September 30, 2021 was 22.6%, compared with 18.5% in the third quarter of 2020, due to a higher proportion of income from underwriting and taxable investment income.

INVESTMENT RESULTS

 

     Three Months Ended
September 30,
          Nine Months Ended
September 30,
       
     2021     2020     % Change     2021     2020     % Change  
     (in thousands)           (in thousands)        

Net investment income

   $  6,049     $  7,063       -14.4   $  19,362     $  22,136       -12.5

Net realized gains (losses) on investments (pre-tax)

     (8     309       NM       1,490       1,464       1.8

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

     (771     844       NM       8,026       (2,349     NM  

Pre-tax investment yield

     2.1     2.3       2.2     2.5  

Tax-equivalent yield (1)

     2.5     2.8       2.5     2.8  

 

(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, 2021, decreased 14.4% to $6.0 million from $7.1 million in the third quarter of 2020, due to lower investment yields on fixed-income securities.

 

   

As of September 30, 2021, the carrying value of AMERISAFE’s investment portfolio, including cash and cash equivalents, was $1.2 billion.

CAPITAL MANAGEMENT

In an accompanying news release, the Company announced a special cash dividend of $4.00 per share, payable on November 17, 2021, to shareholders of record as of November 10, 2021.

In addition, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.29 per share, payable on December 17, 2021 to shareholders of record as of December 3, 2021.

Book value per share at September 30, 2021 was $24.80, an increase of 9.3% from $22.70 at December 31, 2020.

 

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SUSTAINABILITY DISCLOSURES

The Company recently published additional sustainability disclosures for investors. These disclosures, which follow the Sustainability Accounting Standards Board (SASB) and Task Force on Climate-related Financial Disclosures (TCFD) format, can be found on our website at www.amerisafe.com under Sustainability.

SUPPLEMENTAL INFORMATION

 

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

Net income

   $ 19,136     $ 23,353     $ 62,215     $ 58,101  

Less:

        

Net realized gains (losses) on investments

     (8     309       1,490       1,464  

Net unrealized gains (losses) on equity securities

     (771     844       8,026       (2,349

Tax effect (1)

     164       (242     (1,998     186  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating net income (2)

   $ 19,751     $ 22,442     $ 54,697     $ 58,800  
  

 

 

   

 

 

   

 

 

   

 

 

 

Average shareholders’ equity (3)

   $ 474,261     $ 472,353     $ 459,486     $ 456,063  

Less:

        

Average accumulated other comprehensive income

     15,924       19,545       18,003       16,062  
  

 

 

   

 

 

   

 

 

   

 

 

 

Average adjusted shareholders’ equity (2)

   $ 458,337     $ 452,808     $ 441,483     $ 440,001  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted weighted average common shares

     19,407,918       19,358,682       19,392,939       19,345,952  

Return on average equity (4)

     16.1     19.8     18.1     17.0

Operating return on average adjusted equity (2)

     17.2     19.8     16.5     17.8

Diluted earnings per share

   $ 0.99     $ 1.21     $ 3.21     $ 3.00  

Operating earnings per share (2)

   $ 1.02     $ 1.16     $ 2.82     $ 3.04  

 

(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 Thursday October 28, 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 323-794-2423 (Conference Code 2096837) 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, agriculture, and manufacturing. 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     Nine Months Ended  
     September 30,     September 30,  
     2021     2020     2021     2020  
     (unaudited)     (unaudited)  

Revenues:

        

Gross premiums written

   $ 67,185     $ 72,648     $ 222,423     $ 240,008  

Ceded premiums written

     (2,407     (2,473     (7,410     (7,928
  

 

 

   

 

 

   

 

 

   

 

 

 

Net premiums written

   $ 64,778     $ 70,175     $ 215,013     $ 232,080  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net premiums earned

   $ 67,626     $ 74,771     $ 208,260     $ 229,725  

Net investment income

     6,049       7,063       19,362       22,136  

Net realized gains (losses) on investments

     (8     309       1,490       1,464  

Net unrealized gains (losses) on equity securities

     (771     844       8,026       (2,349

Gain (loss) on disposal of assets

     —         —         21       (29

Fee and other income

     149       18       394       309  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     73,045       83,005       237,553       251,256  
  

 

 

   

 

 

   

 

 

   

 

 

 

Expenses:

        

Loss and loss adjustment expenses incurred

     29,661       39,789       101,601       120,966  

Underwriting and other operating costs

     17,915       13,902       55,337       56,317  

Policyholder dividends

     733       714       3,200       2,685  

Provision for investment related credit loss expense (benefit)

     15       (69     (102     (13
  

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

     48,324       54,336       160,036       179,955  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before taxes

     24,721       28,669       77,517       71,301  

Income tax expense

     5,585       5,316       15,302       13,200  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 19,136     $ 23,353     $ 62,215     $ 58,101  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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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,
 
     2021      2020      2021      2020  
     (unaudited)      (unaudited)  

Basic EPS:

           

Net income

   $ 19,136      $ 23,353      $ 62,215      $ 58,101  
  

 

 

    

 

 

    

 

 

    

 

 

 

Basic weighted average common shares

     19,344,636        19,299,921        19,328,041        19,282,263  

Basic earnings per share

   $ 0.99      $ 1.21      $ 3.22      $ 3.01  

Diluted EPS:

           

Net income

   $ 19,136      $ 23,353      $ 62,215      $ 58,101  
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted weighted average common shares:

           

Weighted average common shares

     19,344,636        19,299,921        19,328,041        19,282,263  

Restricted stock and stock options

     63,282        58,761        64,898        63,689  
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted weighted average common shares

     19,407,918        19,358,682        19,392,939        19,345,952  

Diluted earnings per share

   $ 0.99      $ 1.21      $ 3.21      $ 3.00  

 

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AMERISAFE, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands)

 

     September 30,
2021
     December 31,
2020
 
     (unaudited)         

Assets

     

Investments

   $ 1,034,187      $ 1,088,744  

Cash and cash equivalents

     123,128        61,757  

Amounts recoverable from reinsurers

     108,394        105,803  

Premiums receivable, net

     154,517        156,760  

Deferred income taxes

     14,738        13,665  

Deferred policy acquisition costs

     18,580        17,810  

Other assets

     26,379        26,316  
  

 

 

    

 

 

 
   $ 1,479,923      $ 1,470,855  
  

 

 

    

 

 

 

Liabilities and Shareholders’ Equity

     

Liabilities:

     

Reserves for loss and loss adjustment expenses

   $ 720,789      $ 760,561  

Unearned premiums

     136,013        129,260  

Insurance-related assessments

     18,907        17,995  

Other liabilities

     124,058        124,223  

Shareholders’ equity

     480,156        438,816  
  

 

 

    

 

 

 

Total liabilities and shareholders’ equity

   $ 1,479,923      $ 1,470,855  
  

 

 

    

 

 

 

# # #

 

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Ticker: AMSF
CIK: 1018979
Form Type: 8-K Corporate News
Accession Number: 0001193125-21-309414
Submitted to the SEC: Wed Oct 27 2021 4:42:13 PM EST
Accepted by the SEC: Wed Oct 27 2021
Period: Wednesday, October 27, 2021
Industry: Fire Marine And Casualty Insurance
Events:
  1. Earnings Release
  2. Financial Exhibit

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