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Amerisafe Inc (AMSF) SEC Filing 8-K Material Event for the period ending Tuesday, February 22, 2022

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 FOURTH QUARTER AND YEAR-END RESULTS

Increases loss ratio as result of catastrophic claim

Reports $65.8 Million of Net Income and Return on Equity of 15.7% in 2021

Increases quarterly dividend by 6.9%

DeRidder, LA – February 22, 2022—AMERISAFE, Inc. (Nasdaq: AMSF), a specialty provider of workers’ compensation insurance focused on high hazard industries, today announced results for the fourth quarter and year ended December 31, 2021.

 

     Three Months Ended
December 31,
          Twelve Months Ended
December 31,
       
     2021     2020     % Change     2021     2020     % Change  
     (in thousands, except per
share data)
          (in thousands, except per
share data)
       

Net premiums earned

   $ 67,733     $ 74,702       -9.3   $ 275,993     $ 304,427       -9.3

Net investment income

     6,073       7,228       -16.0     25,435       29,364       -13.4

Net realized gains (losses) on investments (pretax)

     205       (332     NM       1,695       1,132       NM  

Net unrealized gains on equity securities (pre-tax)

     4,289       6,553       NM       12,315       4,204       NM  

Net income

     3,541       28,501       -87.6     65,756       86,602       -24.1

Diluted earnings per share

   $ 0.18     $ 1.47       -87.8   $ 3.39     $ 4.47       -24.2

Operating net income

     (9     23,586       -100.0     54,688       82,387       -33.6

Operating earnings per share

   $ —       $ 1.22       -100.0   $ 2.82     $ 4.25       -33.6

Book value per share

   $ 20.62     $ 22.70       -9.2   $ 20.62     $ 22.70       -9.2

Net combined ratio

     112.9     70.4       85.7     76.3  

Return on average equity

     3.2     24.8       15.7     19.9  

G. Janelle Frost, President and Chief Executive Officer, stated, “Our specialty is underwriting and servicing high-hazard workers’ compensation and in 2021, our strength in those specialties counterbalanced slow economic growth, strong competition, declining rates, and a variety of pandemic-related uncertainties. We were responsive to the competitive environment, while applying disciplined pricing, and continued our long-held commitment to personalized claims management. Despite experiencing our first catastrophic claim, we are pleased to report a combined ratio of 85.7% and a return on average equity of 15.7% for 2021.”


INSURANCE RESULTS

 

     Three Months Ended           Twelve Months Ended        
     December 31,           December 31,        
     2021     2020     % Change     2021     2020     % Change  
     (in thousands)           (in thousands)        

Gross premiums written

   $ 55,871     $ 63,082       -11.4   $ 278,294     $ 303,090       -8.2
  

 

 

   

 

 

     

 

 

   

 

 

   

Net premiums earned

     67,733       74,702       -9.3     275,993       304,427       -9.3

Loss and loss adjustment expenses incurred

     59,197       36,260       63.3     160,798       157,226       2.3

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

     16,714       15,589       7.2     72,051       71,906       0.2

Policyholder dividends

     515       768       -32.9     3,715       3,453       7.6
  

 

 

   

 

 

     

 

 

   

 

 

   

Underwriting profit (pre-tax)

   $ (8,693   $ 22,085       -139.4   $ 39,429     $ 71,842       -45.1
  

 

 

   

 

 

     

 

 

   

 

 

   

Insurance Ratios:

            

Current accident year loss ratio

     107.4     72.5       80.7     72.5  

Prior accident year loss ratio

     -20.0     -24.0       -22.4     -20.9  
  

 

 

   

 

 

     

 

 

   

 

 

   

Net loss ratio

     87.4     48.5       58.3     51.6  

Net underwriting expense ratio

     24.7     20.9       26.1     23.6  

Net dividend ratio

     0.8     1.0       1.3     1.1  
  

 

 

   

 

 

     

 

 

   

 

 

   

Net combined ratio

     112.9     70.4       85.7     76.3  
  

 

 

   

 

 

     

 

 

   

 

 

   

 

   

Voluntary premiums on policies written in the quarter were 9.4% lower than the fourth quarter of 2020, primarily due to continued declines in approved loss costs in the states in which we write business. For the full year, voluntary premiums decreased by 6.3%.

 

   

Payroll audits and related premium adjustments increased premiums written by $0.1 million in the fourth quarter of 2021, compared to $1.3 million in the fourth quarter of 2020. For the full year 2021, audits and related premium adjustments reduced premiums by $1.2 million, compared to an increase in premiums of $6.4 million in 2020.

 

   

As a result of information just developed on a fourth quarter catastrophic claim, the Company increased its accident year loss ratio from 72.0% to 80.7% for the full year. This claim involved several individuals who were severely injured in the same incident. The Company’s catastrophic reinsurance program covers amounts up to $10 million per individual, but amounts greater than $10 million per individual are retained by the Company. As a result, AMERISAFE has increased its net estimate after reinsurance for this loss by $24 million and has increased its net accident year loss ratio. As with all AMERISAFE claims, this reserve will be evaluated periodically as the claim develops. This is the first catastrophic claim on the Company’s catastrophe reinsurance layer in our history.

 

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During the quarter, the Company experienced favorable net loss reserve development for prior accident years, which reduced loss and loss adjustment expenses by $13.6 million, primarily from accident years 2019 through 2016. For the full year, the company experienced favorable development on prior accident years of $61.9 million, compared with $63.5 million in 2020. The Company currently is estimating that its current accident year loss ratio will be 71.0% for 2022.

 

   

For the quarter ended December 31, 2021, the underwriting expense ratio was 24.7% compared with 20.9% in the same quarter in 2020, as a result of lower earned premium, increased bad debt from NCCI pools and increased loss- based assessments. For the year ended December 31, 2021, the underwriting expense ratio was 26.1%, compared with 23.6% in 2020, largely due to lower earned premium as underwriting and other expenses for the full year were largely unchanged.

 

   

The effective tax rate for the full year 2021 was 17.2% compared with 19.0% for 2020. The rate was lower than last year due to an increase in the proportion of tax-exempt interest income relative to underwriting profit and also due to a reduction in a valuation allowance on deferred state tax assets.

INVESTMENT RESULTS

 

     Three Months Ended
December 31,
          Twelve Months Ended
December 31,
       
     2021     2020     % Change     2021     2020     % Change  
     (in thousands)           (in thousands)        

Net investment income

   $ 6,073     $ 7,228       -16.0   $ 25,435     $ 29,364       -13.4

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

     205       (332     NM       1,695       1,132       NM  

Net unrealized gains on equity securities (pre-tax)

     4,289       6,553       NM       12,315       4,204       NM  

Pre-tax investment yield

     2.2     2.4       2.3     2.5  

Tax-equivalent yield (1)

     2.7     2.9       2.7     2.9  

 

(1)

The tax equivalent yield is calculated using the effective interest rate and the appropriate marginal tax rate.

 

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Net investment income for the quarter ended December 31, 2021, decreased 16.0% to $6.1 million from $7.2 million in the fourth quarter of 2020, due to lower interest rates on fixed income securities. For the full year 2021, net investment income was $25.4 million compared with $29.4 million for 2020, a decrease of 13.4%, due to lower yields on fixed income securities.

 

   

Net unrealized gains on equity securities were $4.3 million in the fourth quarter and $12.3 million for the full year 2021.

 

   

As of December 31, 2021, the carrying value of AMERISAFE’s investment portfolio, including cash and cash equivalents, was $1.1 billion.

CAPITAL MANAGEMENT

In an accompanying announcement, the Company’s Board of Directors increased the regular quarterly dividend by 6.9% from $0.29 per share to $0.31 per share, payable on March 25, 2022 to shareholders of record as of March 11, 2022.

 

 

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SUPPLEMENTAL INFORMATION

 

     Three Months Ended
December 31,
    Twelve Months Ended
December 31,
 
     2021     2020     2021     2020  
     (in thousands, except share and per share data)  

Net income

   $ 3,541     $ 28,501     $ 65,756     $ 86,602  

Less:

        

Net realized gains (losses) on investments

     205       (332     1,695       1,132  

Net unrealized gains on equity securities

     4,289       6,553       12,315       4,204  

Tax effect (1)

     (944     (1,306     (2,942     (1,121
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating net income (2)

   $ (9   $ 23,586     $ 54,688     $ 82,387  
  

 

 

   

 

 

   

 

 

   

 

 

 

Average shareholders’ equity (3)

   $ 439,740     $ 460,363     $ 419,070     $ 434,516  

Less:

        

Average accumulated other comprehensive income

     14,262       20,466       17,278       16,615  
  

 

 

   

 

 

   

 

 

   

 

 

 

Average adjusted shareholders’ equity (2)

   $ 425,478     $ 439,897     $ 401,792     $ 417,901  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted weighted average common shares

     19,420,757       19,380,109       19,408,619       19,363,809  

Return on average equity (4)

     3.2     24.8     15.7     19.9

Operating return on average adjusted equity (2)

     0.0     21.4     13.6     19.7

Diluted earnings per share

   $ 0.18     $ 1.47     $ 3.39     $ 4.47  

Operating earnings per share (2)

   $ —       $ 1.22     $ 2.82     $ 4.25  

 

(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 February 23, 2022, 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 773-305-6853 (Conference Code 7786013) at least ten minutes before the call begins.

 

 

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Investors, analysts and the general public will also have the opportunity to listen to the conference call over the Internet by visiting the “Investor Relations Home” page of the “Investors” section of the Company’s website (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 the same website location.

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, including the impact of the COVID-19 pandemic on the business and operations of the Company and our policyholders and the market value of our investment portfolio. Additional 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. 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     Twelve Months Ended  
     December 31,     December 31,  
     2021     2020     2021     2020  
     (unaudited)     (unaudited)        

Revenues:

        

Gross premiums written

   $ 55,871     $ 63,082     $ 278,294     $ 303,090  

Ceded premiums written

     (3,059     (2,348     (10,469     (10,276
  

 

 

   

 

 

   

 

 

   

 

 

 

Net premiums written

   $ 52,812     $ 60,734     $ 267,825     $ 292,814  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net premiums earned

   $ 67,733     $ 74,702     $ 275,993     $ 304,427  

Net investment income

     6,073       7,228       25,435       29,364  

Net realized gains (losses) on investments

     205       (332     1,695       1,132  

Net unrealized gains on equity securities

     4,289       6,553       12,315       4,204  

Fee and other income

     81       70       496       350  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     78,381       88,221       315,934       339,477  
  

 

 

   

 

 

   

 

 

   

 

 

 

Expenses:

        

Loss and loss adjustment expenses incurred

     59,197       36,260       160,798       157,226  

Underwriting and other operating costs

     16,714       15,589       72,051       71,906  

Policyholder dividends

     515       768       3,715       3,453  

Provision for investment related credit loss expense (benefit)

     23       (14     (79     (27
  

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

     76,449       52,603       236,485       232,558  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before taxes

     1,932       35,618       79,449       106,919  

Income tax expense

     (1,609     7,117       13,693       20,317  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 3,541     $ 28,501     $ 65,756     $ 86,602  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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AMERISAFE, INC. AND SUBSIDIARIES

Consolidated Statements of Income (cont.)

(in thousands, except per share amounts)

 

     Three Months Ended      Twelve Months Ended  
     December 31,      December 31,  
     2021      2020      2021      2020  
     (unaudited)      (unaudited)  

Basic EPS:

           

Net income

   $ 3,541      $ 28,501      $ 65,756      $ 86,602  
  

 

 

    

 

 

    

 

 

    

 

 

 

Basic weighted average common shares

     19,345,324        19,309,055        19,332,391        19,288,996  

Basic earnings per share

   $ 0.18      $ 1.48      $ 3.40      $ 4.49  

Diluted EPS:

           

Net income

   $ 3,541      $ 28,501      $ 65,756      $ 86,602  
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted weighted average common shares:

           

Weighted average common shares

     19,345,324        19,309,055        19,332,391        19,288,996  

Restricted stock and stock options

     75,433        71,054        76,228        74,813  
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted weighted average common shares

     19,420,757        19,380,109        19,408,619        19,363,809  

Diluted earnings per share

   $ 0.18      $ 1.47      $ 3.39      $ 4.47  

 

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AMERISAFE, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands)

 

     December 31,
2021
     December 31,
2020
 
     (unaudited)         

Assets

     

Investments

   $ 1,012,571      $ 1,088,744  

Cash and cash equivalents

     70,722        61,757  

Amounts recoverable from reinsurers

     120,561        105,803  

Premiums receivable, net

     135,100        156,760  

Deferred income taxes

     14,384        13,665  

Deferred policy acquisition costs

     17,059        17,810  

Other assets

     32,327        26,316  
  

 

 

    

 

 

 
   $ 1,402,724      $ 1,470,855  
  

 

 

    

 

 

 

Liabilities and Shareholders’ Equity

     

Liabilities:

     

Reserves for loss and loss adjustment expenses

   $ 745,278      $ 760,561  

Unearned premiums

     121,092        129,260  

Insurance-related assessments

     16,850        17,995  

Other liabilities

     120,181        124,223  

Shareholders’ equity

     399,323        438,816  
  

 

 

    

 

 

 

Total liabilities and shareholders’ equity

   $ 1,402,724      $ 1,470,855  
  

 

 

    

 

 

 

# # #

 

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Ticker: AMSF
CIK: 1018979
Form Type: 8-K Corporate News
Accession Number: 0001193125-22-048625
Submitted to the SEC: Tue Feb 22 2022 4:41:43 PM EST
Accepted by the SEC: Tue Feb 22 2022
Period: Tuesday, February 22, 2022
Industry: Fire Marine And Casualty Insurance
Events:
  1. Earnings Release
  2. Financial Exhibit

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