Last10K.com

Amerisafe Inc (AMSF) SEC Filing 10-Q Quarterly report for the period ending Tuesday, June 30, 2020

Amerisafe Inc

CIK: 1018979 Ticker: AMSF

The following information was filed by Amerisafe Inc (AMSF) on Thursday, July 30, 2020 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2020

or

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

FOR THE TRANSITION PERIOD FROM                 TO

Commission File Number:

001-12251

 

AMERISAFE, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Texas

 

75-2069407

(State of Incorporation)

 

(I.R.S. Employer Identification Number)

 

 

 

2301 Highway 190 West, DeRidder, Louisiana

 

70634

(Address of Principal Executive Offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (337) 463-9052

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common

 

AMSF

 

NASDAQ

 

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).    Yes     No  

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

Non-accelerated filer

 

  

  

Smaller reporting company

 

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes       No  

As of July 27, 2020, there were 19,331,059 shares of the Registrant’s common stock, par value $0.01 per share, outstanding.

 

 


TABLE OF CONTENTS

 

 

 

 

Page

 

 

 

No.

 

 

 

 

FORWARD-LOOKING STATEMENTS

3

 

 

 

 

PART I - FINANCIAL INFORMATION

 

 

 

 

 

Item 1

 

Financial Statements

4

 

 

 

 

Item 2

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

24

 

 

 

 

Item 3

 

Quantitative and Qualitative Disclosures About Market Risk

30

 

 

 

 

Item 4

 

Controls and Procedures

30

 

 

 

 

PART II - OTHER INFORMATION

 

 

 

 

 

Item 2

 

Unregistered Sales of Equity Securities and Use of Proceeds

31

 

 

 

 

Item 6

 

Exhibits

31

 

2


FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and 21E of the Securities Exchange Act of 1934. You should not place undue reliance on these statements. These forward-looking statements include statements that reflect the current views of our senior management with respect to our financial performance and future events with respect to our business and the insurance industry in general. Statements that include the words “expect,” “intend,” “plan,” “believe,” “project,” “forecast,” “estimate,” “may,” “should,” “anticipate” and similar statements of a future or forward-looking nature identify forward-looking statements. Forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. We believe that these factors include, but are not limited to, the following:

 

the impact of epidemics, pandemics and public health outbreaks, including the ongoing COVID-19 pandemic, could adversely affect our business operations;

 

the cyclical nature of the workers’ compensation insurance industry;

 

increased competition on the basis of types of insurance offered, premium rates, coverage availability, payment terms, claims management, safety services, policy terms, overall financial strength, financial ratings and reputation;

 

changes in relationships with independent agencies;

 

general economic conditions, including recession, inflation, performance of financial markets, interest rates, unemployment rates and fluctuating asset values;

 

developments in capital markets that adversely affect the performance of our investments;

 

technology breaches or failures, including those resulting from a malicious cyber attack on the Company or its policyholders and medical providers;

 

decreased level of business activity of our policyholders caused by decreased business activity generally, and in particular in the industries we target;

 

greater frequency or severity of claims and loss activity than our underwriting, reserving or investment practices anticipate based on historical experience or industry data;

 

adverse developments in economic, competitive, judicial or regulatory conditions within the workers’ compensation insurance industry;

 

loss of the services of any of our senior management or other key employees;

 

changes in regulations, laws, rates, rating factors, or taxes applicable to the Company, its policyholders or the agencies that sell its insurance;

 

changes in current accounting standards or new accounting standards;

 

changes in legal theories of liability under our insurance policies;

 

changes in rating agency policies, practices or ratings;

 

changes in the availability, cost or quality of reinsurance and the failure of our reinsurers to pay claims in a timely manner or at all;

 

the effects of U.S. involvement in hostilities with other countries and large-scale acts of terrorism, or the threat of hostilities or terrorist acts; and

 

other risks and uncertainties described from time to time in the Company’s filings with the Securities and Exchange Commission (“SEC”).

The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements in this report, and under the caption “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2019. 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 the securities in our investment portfolio.

3


PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

AMERISAFE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

 

 

 

June 30, 2020

 

 

December 31, 2019

 

 

 

(unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

Fixed maturity securities—held-to-maturity, at amortized cost net of allowance

   for credit losses of $357 and $0 in 2020 and 2019, respectively,

   (fair value $609,281 and $621,343 in 2020 and 2019, respectively)

 

$

576,191

 

 

$

599,421

 

Fixed maturity securities—available-for-sale, at fair value

   (amortized cost $392,117, allowance for credit losses of $0 in 2020

   and amortized cost $425,698, allowance for credit losses of $0 in 2019)

 

 

416,240

 

 

 

441,146

 

Equity securities, at fair value

   (cost $33,227 and $24,457 in 2020 and 2019, respectively)

 

 

33,480

 

 

 

27,903

 

Short-term investments

 

 

72,849

 

 

 

56,548

 

Total investments

 

 

1,098,760

 

 

 

1,125,018

 

Cash and cash equivalents

 

 

110,281

 

 

 

43,813

 

Amounts recoverable from reinsurers

   (net of allowance for credit losses of $388 and $0 in 2020 and 2019, respectively)

 

 

103,524

 

 

 

95,913

 

Premiums receivable

   (net of allowance for credit losses of $5,277 and $5,112 in 2020 and 2019, respectively)

 

 

175,241

 

 

 

157,953

 

Deferred income taxes

 

 

16,704

 

 

 

17,513

 

Accrued interest receivable

 

 

9,297

 

 

 

9,730

 

Property and equipment, net

 

 

6,385

 

 

 

6,331

 

Deferred policy acquisition costs

 

 

19,765

 

 

 

19,048

 

Other assets

 

 

10,016

 

 

 

17,587

 

Total assets

 

$

1,549,973

 

 

$

1,492,906

 

Liabilities and shareholders’ equity

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

Reserves for loss and loss adjustment expenses

 

$

768,767

 

 

$

772,887

 

Unearned premiums

 

 

147,824

 

 

 

140,873

 

Amounts held for others

 

 

41,501

 

 

 

37,937

 

Policyholder deposits

 

 

43,285

 

 

 

44,718

 

Insurance-related assessments

 

 

25,955

 

 

 

22,967

 

Federal income tax payable

 

 

12,098

 

 

 

3,220

 

Accounts payable and other liabilities

 

 

40,712

 

 

 

40,089

 

Payable for investments purchased

 

 

7,035

 

 

 

 

Total liabilities

 

 

1,087,177

 

 

 

1,062,691

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

Common stock:  voting—$0.01 par value authorized shares—50,000,000

   in 2020 and 2019; 20,589,309 and 20,560,833 shares issued and 19,331,059

   and 19,302,583  shares outstanding in 2020 and 2019, respectively

 

 

206

 

 

 

205

 

Additional paid-in capital

 

 

214,894

 

 

 

213,004

 

Treasury stock, at cost (1,258,250 shares in 2020 and 2019)

 

 

(22,370

)

 

 

(22,370

)

Accumulated earnings

 

 

250,888

 

 

 

227,165

 

Accumulated other comprehensive income, net

 

 

19,178

 

 

 

12,211

 

Total shareholders’ equity

 

 

462,796

 

 

 

430,215

 

Total liabilities and shareholders’ equity

 

$

1,549,973

 

 

$

1,492,906

 

 

See accompanying notes.

4


AMERISAFE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except share and per share data)

(unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross premiums written

 

$

80,289

 

 

$

87,018

 

 

$

167,360

 

 

$

180,125

 

Ceded premiums written

 

 

(2,672

)

 

 

(2,204

)

 

 

(5,455

)

 

 

(4,634

)

Net premiums written

 

$

77,617

 

 

$

84,814

 

 

$

161,905

 

 

$

175,491

 

Net premiums earned

 

$

75,964

 

 

$

82,951

 

 

$

154,954

 

 

$

167,899

 

Net investment income

 

 

7,324

 

 

 

8,169

 

 

 

15,073

 

 

 

16,184

 

Net realized gains (losses) on investments

 

 

163

 

 

 

(82

)

 

 

1,155

 

 

 

(23

)

Net unrealized gains (losses) on equity securities

 

 

5,570

 

 

 

642

 

 

 

(3,193

)

 

 

2,800

 

Loss on disposal of assets

 

 

(29

)

 

 

 

 

 

(29

)

 

 

 

Fee and other income

 

 

90

 

 

 

73

 

 

 

291

 

 

 

83

 

Total revenues

 

 

89,082

 

 

 

91,753

 

 

 

168,251

 

 

 

186,943

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss and loss adjustment expenses incurred

 

 

37,530

 

 

 

48,868

 

 

 

81,177

 

 

 

98,482

 

Underwriting and certain other operating costs

 

 

7,786

 

 

 

7,416

 

 

 

16,003

 

 

 

14,968

 

Commissions

 

 

5,812

 

 

 

6,243

 

 

 

11,867

 

 

 

12,611

 

Salaries and benefits

 

 

7,533

 

 

 

6,059

 

 

 

14,545

 

 

 

12,806

 

Policyholder dividends

 

 

948

 

 

 

998

 

 

 

1,971

 

 

 

2,098

 

Provision for investment related credit loss expense

 

 

82

 

 

 

 

 

 

56

 

 

 

 

Total expenses

 

 

59,691

 

 

 

69,584

 

 

 

125,619

 

 

 

140,965

 

Income before income taxes

 

 

29,391

 

 

 

22,169

 

 

 

42,632

 

 

 

45,978

 

Income tax expense

 

 

5,443

 

 

 

4,279

 

 

 

7,884

 

 

 

8,688

 

Net income

 

$

23,948

 

 

$

17,890

 

 

$

34,748

 

 

$

37,290

 

Earnings per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.24

 

 

$

0.93

 

 

$

1.80

 

 

$

1.94

 

Diluted

 

$

1.24

 

 

$

0.93

 

 

$

1.80

 

 

$

1.93

 

Shares used in computing earnings per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

19,280,684

 

 

 

19,245,592

 

 

 

19,273,347

 

 

 

19,237,401

 

Diluted

 

 

19,335,707

 

 

 

19,306,953

 

 

 

19,335,748

 

 

 

19,316,276

 

Cash dividends declared per common share

 

$

0.27

 

 

$

0.25

 

 

$

0.54

 

 

$

0.50

 

 

See accompanying notes.

5


AMERISAFE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net income

 

$

23,948

 

 

$

17,890

 

 

$

34,748

 

 

$

37,290

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on debt securities, net of tax

 

 

5,483

 

 

 

4,980

 

 

 

6,967

 

 

 

10,972

 

Change in deferred tax valuation allowance

 

 

 

 

 

198

 

 

 

 

 

 

 

Comprehensive income

 

$

29,431

 

 

$

23,068

 

 

$

41,715

 

 

$

48,262

 

 

See accompanying notes.

6


AMERISAFE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Three Months Ended June 30, 2020 and 2019

(in thousands, except share data)

(unaudited)

 

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Treasury Stock

 

 

Accumulated

 

 

Accumulated

Other

Comprehensive

 

 

 

 

 

 

 

Shares

 

 

Amounts

 

 

Capital

 

 

Shares

 

 

Amounts

 

 

Earnings

 

 

Income

 

 

Total

 

Balance at March 31, 2020

 

 

20,561,034

 

 

$

205

 

 

$

213,267

 

 

 

(1,258,250

)

 

$

(22,370

)

 

$

232,159

 

 

$

13,695

 

 

$

436,956

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

23,948

 

 

 

 

 

 

23,948

 

Other comprehensive

   income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in unrealized

   gains, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,483

 

 

 

5,483

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

29,431

 

Common stock issued

 

 

28,275

 

 

 

1

 

 

 

1,359

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,360

 

Share-based compensation

 

 

 

 

 

 

 

 

268

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

268

 

Dividends to shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,219

)

 

 

 

 

 

(5,219

)

Balance at June 30, 2020

 

 

20,589,309

 

 

$

206

 

 

$

214,894

 

 

 

(1,258,250

)

 

$

(22,370

)

 

$

250,888

 

 

$

19,178

 

 

$

462,796

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Treasury Stock

 

 

Accumulated

 

 

Accumulated

Other

Comprehensive

 

 

 

 

 

 

 

Shares

 

 

Amounts

 

 

Capital

 

 

Shares

 

 

Amounts

 

 

Earnings

 

 

Income

 

 

Total

 

Balance at March 31, 2019

 

 

20,533,230

 

 

$

205

 

 

$

211,700

 

 

 

(1,258,250

)

 

$

(22,370

)

 

$

235,908

 

 

$

4,962

 

 

$

430,405

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17,890

 

 

 

 

 

 

17,890

 

Other comprehensive

   income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in unrealized

   gains, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,980

 

 

 

4,980

 

Change in deferred tax

   valuation allowance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

198

 

 

 

198

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

23,068

 

Common stock issued

 

 

23,281

 

 

 

 

 

 

560

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

560

 

Share-based compensation

 

 

 

 

 

 

 

 

233

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

233

 

Dividends to shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,823

)

 

 

 

 

 

(4,823

)

Balance at June 30, 2019

 

 

20,556,511

 

 

$

205

 

 

$

212,493

 

 

 

(1,258,250

)

 

$

(22,370

)

 

$

248,975

 

 

$

10,140

 

 

$

449,443

 

 

See accompanying notes.

7


AMERISAFE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Six Months Ended June 30, 2020 and 2019

(in thousands, except share data)

(unaudited)

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Treasury Stock

 

 

Accumulated

 

 

Accumulated

Other

Comprehensive

 

 

 

 

 

 

 

Shares

 

 

Amounts

 

 

Capital

 

 

Shares

 

 

Amounts

 

 

Earnings

 

 

Income

 

 

Total

 

Balance at December 31, 2019

 

 

20,560,833

 

 

$

205

 

 

$

213,004

 

 

 

(1,258,250

)

 

$

(22,370

)

 

$

227,165

 

 

$

12,211

 

 

$

430,215

 

Impact of adoption of

   ASU 2016-13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(594

)

 

 

 

 

 

(594

)

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

34,748

 

 

 

 

 

 

34,748

 

Other comprehensive

   income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in unrealized

   gains, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,967

 

 

 

6,967

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

41,715

 

Common stock issued

 

 

28,476

 

 

 

1

 

 

 

1,359

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,360

 

Share-based compensation

 

 

 

 

 

 

 

 

531

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

531

 

Dividends to shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,431

)

 

 

 

 

 

(10,431

)

Balance at June 30, 2020

 

 

20,589,309

 

 

$

206

 

 

$

214,894

 

 

 

(1,258,250

)

 

$

(22,370

)

 

$

250,888

 

 

$

19,178