Last10K.com

Amerisafe Inc (AMSF) SEC Filing 10-Q Quarterly Report for the period ending Wednesday, March 31, 2021

Amerisafe Inc

CIK: 1018979 Ticker: AMSF

Exhibit 99.1

 

LOGO

    

LOGO

Neal A. Fuller, EVP & CFO

AMERISAFE

337.463.9052

 

 

 

 

AMERISAFE ANNOUNCES 2021 FIRST QUARTER RESULTS

Reports Net Combined Ratio of 84.6%

DeRidder, LA – April 29, 2021 - AMERISAFE, Inc. (

Nasdaq: AMSF), a specialty provider of workers’ compensation insurance focused on high hazard industries, today announced results for the first quarter ended March 31, 2021.

 

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

Net premiums earned

   $ 70,746     $ 78,990       -10.4

Net investment income

     6,583       7,749       -15.0

Net realized gains on investments (pretax)

     319       992       -67.8

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

     5,511       (8,763     NM  

Net income

     19,312       10,800       78.8

Diluted earnings per share

   $ 0.99     $ 0.56       76.8

Operating net income

     14,706       16,939       -13.2

Operating earnings per share

   $ 0.76     $ 0.88       -13.6

Book value per share

   $ 23.16     $ 22.64       2.3

Net combined ratio

     84.6     83.5  

Return on average equity

     17.4     10.0  

G. Janelle Frost, President and Chief Executive Officer, stated, “We are optimistic that vaccination rollout will strengthen the economy and add some normalcy back to daily living. However, optimism alone will not change the trajectory of the workers’ compensation market. The soft market continued in the quarter. Competition remained robust, while loss costs continued to decline. We are pleased to report an 84.6% combined ratio in the quarter through disciplined underwriting, competitive pricing, slight policy growth, and favorable case loss development from prior accident years.”


The following information was filed by Amerisafe Inc (AMSF) on Thursday, April 29, 2021 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 MARCH 31, 2021

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 April 26, 2021, 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

20

 

 

 

 

Item 3

 

Quantitative and Qualitative Disclosures About Market Risk

24

 

 

 

 

Item 4

 

Controls and Procedures

25

 

 

 

 

PART II - OTHER INFORMATION

 

 

 

 

 

Item 2

 

Unregistered Sales of Equity Securities and Use of Proceeds

26

 

 

 

 

Item 6

 

Exhibits

26

 

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 cyclical nature of the workers’ compensation insurance industry;

 

the impact of COVID-19 on the business operations of our insurance subsidiaries and policyholders, the value of our investments, and our revenues, results of operations and cash flows;

 

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 (including retail and wholesale brokers and agents);

 

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 service 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, 2020. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate.

3


PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

AMERISAFE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

 

 

 

March 31, 2021

 

 

December 31, 2020

 

 

 

(unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

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

   for credit losses of $166 and $274 in 2021 and 2020, respectively,

   (fair value $603,720 and $621,654 in 2021 and 2020, respectively)

 

$

575,108

 

 

$

585,130

 

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

   (amortized cost $391,687, allowance for credit losses of $0 in 2021

   and amortized cost $387,665, allowance for credit losses of $0 in 2020)

 

 

411,904

 

 

 

414,279

 

Equity securities, at fair value

   (cost $37,682 and $35,787 in 2021 and 2020, respectively)

 

 

50,843

 

 

 

43,437

 

Short-term investments

 

 

87,279

 

 

 

45,898

 

Total investments

 

 

1,125,134

 

 

 

1,088,744

 

Cash and cash equivalents

 

 

33,074

 

 

 

61,757

 

Amounts recoverable from reinsurers

   (net of allowance for credit losses of $452 in 2021 and 2020)

 

 

110,717

 

 

 

105,803

 

Premiums receivable

   (net of allowance for credit losses of $4,803 and $4,791 in 2021 and 2020, respectively)

 

 

165,170

 

 

 

156,760

 

Deferred income taxes

 

 

14,506

 

 

 

13,665

 

Accrued interest receivable

 

 

9,669

 

 

 

9,274

 

Property and equipment, net

 

 

6,302

 

 

 

6,182

 

Deferred policy acquisition costs

 

 

18,684

 

 

 

17,810

 

Other assets

 

 

11,323

 

 

 

10,860

 

Total assets

 

$

1,494,579

 

 

$

1,470,855

 

Liabilities and shareholders’ equity

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

Reserves for loss and loss adjustment expenses

 

$

759,758

 

 

$

760,561

 

Unearned premiums

 

 

137,511

 

 

 

129,260

 

Amounts held for others

 

 

45,022

 

 

 

43,402

 

Policyholder deposits

 

 

40,973

 

 

 

41,524

 

Insurance-related assessments

 

 

18,441

 

 

 

17,995

 

Federal income tax payable

 

 

3,972

 

 

 

417

 

Accounts payable and other liabilities

 

 

41,276

 

 

 

38,880

 

Total liabilities

 

 

1,046,953

 

 

 

1,032,039

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

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

   in 2021 and 2020; 20,589,309 and 20,589,309 shares issued and 19,331,059

   and 19,331,059  shares outstanding in 2021 and 2020, respectively

 

 

206

 

 

 

206

 

Additional paid-in capital

 

 

215,468

 

 

 

215,316

 

Treasury stock, at cost (1,258,250 shares in 2021 and 2020)

 

 

(22,370

)

 

 

(22,370

)

Accumulated earnings

 

 

238,351

 

 

 

224,645

 

Accumulated other comprehensive income, net

 

 

15,971

 

 

 

21,019

 

Total shareholders’ equity

 

 

447,626

 

 

 

438,816

 

Total liabilities and shareholders’ equity

 

$

1,494,579

 

 

$

1,470,855

 

See accompanying notes.

4


AMERISAFE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except share and per share data)

(unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2021

 

 

2020

 

Revenues

 

 

 

 

 

 

 

 

Gross premiums written

 

$

81,514

 

 

$

87,071

 

Ceded premiums written

 

 

(2,517

)

 

 

(2,783

)

Net premiums written

 

$

78,997

 

 

$

84,288

 

Net premiums earned

 

$

70,746

 

 

$

78,990

 

Net investment income

 

 

6,583

 

 

 

7,749

 

Net realized gains on investments

 

 

319

 

 

 

992

 

Net unrealized gains (losses) on equity securities

 

 

5,511

 

 

 

(8,763

)

Fee and other income

 

 

192

 

 

 

201

 

Total revenues

 

 

83,351

 

 

 

79,169

 

Expenses

 

 

 

 

 

 

 

 

Loss and loss adjustment expenses incurred

 

 

39,517

 

 

 

43,647

 

Underwriting and certain other operating costs

 

 

6,927

 

 

 

8,217

 

Commissions

 

 

5,474

 

 

 

6,055

 

Salaries and benefits

 

 

6,566

 

 

 

7,012

 

Policyholder dividends

 

 

1,350

 

 

 

1,023

 

Provision for investment related credit loss benefit

 

 

(108

)

 

 

(26

)

Total expenses

 

 

59,726

 

 

 

65,928

 

Income before income taxes

 

 

23,625

 

 

 

13,241

 

Income tax expense

 

 

4,313

 

 

 

2,441

 

Net income

 

$

19,312

 

 

$

10,800

 

Earnings per share

 

 

 

 

 

 

 

 

Basic

 

$

1.00

 

 

$

0.56

 

Diluted

 

$

0.99

 

 

$

0.56

 

Shares used in computing earnings per share

 

 

 

 

 

 

 

 

Basic

 

 

19,311,710

 

 

 

19,266,016

 

Diluted

 

 

19,408,804

 

 

 

19,352,245

 

Cash dividends declared per common share

 

$

0.29

 

 

$

0.27

 

 

See accompanying notes.

5


AMERISAFE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2021

 

 

2020

 

Net income

 

$

19,312

 

 

$

10,800

 

Other comprehensive income:

 

 

 

 

 

 

 

 

Unrealized gain (loss) on debt securities, net of tax

 

 

(5,048

)

 

 

1,484

 

Comprehensive income

 

$

14,264

 

 

$

12,284

 

 

See accompanying notes.

6


AMERISAFE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Three Months Ended March 31, 2021 and 2020

(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, 2020

 

 

20,589,309

 

 

$

206

 

 

$

215,316

 

 

 

(1,258,250

)

 

$

(22,370

)

 

$

224,645

 

 

$

21,019

 

 

$

438,816

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

19,312

 

 

 

 

 

 

19,312

 

Other comprehensive

   income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in unrealized

   gains, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,048

)

 

 

(5,048

)

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14,264

 

Share-based compensation

 

 

 

 

 

 

 

 

152

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

152

 

Dividends to shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,606

)

 

 

 

 

 

(5,606

)

Balance at March 31, 2021

 

 

20,589,309

 

 

$

206

 

 

$

215,468

 

 

 

(1,258,250

)

 

$

(22,370

)

 

$

238,351

 

 

$

15,971

 

 

$

447,626

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,800

 

 

 

 

 

 

10,800

 

Other comprehensive

   income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in unrealized

   gains, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,484

 

 

 

1,484

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,284

 

Common stock issued

 

 

201

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation

 

 

 

 

 

 

 

 

263

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

263

 

Dividends to shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,212

)

 

 

 

 

 

(5,212

)

Balance at March 31, 2020

 

 

20,561,034

 

 

$

205

 

 

$

213,267

 

 

 

(1,258,250

)

 

$

(22,370

)

 

$

232,159

 

 

$

13,695

 

 

$

436,956

 

 

See accompanying notes.

7


AMERISAFE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Operating activities

 

 

 

 

 

 

 

 

Net income

 

$

19,312

 

 

$

10,800

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

270

 

 

 

247

 

Net amortization of investments

 

 

2,179

 

 

 

2,074

 

Change in investment related allowance for credit losses

 

 

(108

)

 

 

(26

)

Deferred income taxes

 

 

500

 

 

 

(481

)

Net realized gains on investments

 

 

(319

)

 

 

(992

)

Net unrealized (gains) losses on equity securities

 

 

(5,511

)

 

 

8,763

 

Net realized gains on disposal of assets

 

 

(23

)

 

 

 

Share-based compensation

 

 

571

 

 

 

760

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Premiums receivable, net

 

 

(8,410

)

 

 

(11,174

)

Accrued interest receivable

 

 

(395

)

 

 

(488

)

Deferred policy acquisition costs

 

 

(874

)

 

 

(671

)

Other assets

 

 

(266

)

 

 

234

 

Reserves for loss and loss adjustment expenses

 

 

(803

)

 

 

6,396

 

Unearned premiums

 

 

8,251

 

 

 

5,298

 

Reinsurance balances

 

 

(4,914

)

 

 

(9,658

)

Amounts held for others and policyholder deposits

 

 

1,069

 

 

 

836

 

Federal income taxes payable

 

 

3,555

 

 

 

3,211

 

Accounts payable and other liabilities

 

 

2,509

 

 

 

83

 

Net cash provided by operating activities

 

 

16,593

 

 

 

15,212

 

Investing activities

 

 

 

 

 

 

 

 

Purchases of investments held-to-maturity

 

 

(5,281

)

 

 

(26,201

)

Purchases of investments available-for-sale

 

 

(22,118

)

 

 

(21,592

)

Purchases of equity securities

 

 

(1,895

)

 

 

(8,770

)

Purchases of short-term investments

 

 

(42,286

)

 

 

(40,250

)

Proceeds from maturities of investments held-to-maturity

 

 

13,814

 

 

 

22,018

 

Proceeds from sales and maturities of investments available-for-sale

 

 

17,947

 

 

 

47,812

 

Proceeds from sales and maturities of short-term investments

 

 

585

 

 

 

52,959

 

Purchases of property and equipment

 

 

(390

)

 

 

(221

)

Proceeds from sales of property and equipment

 

 

23

 

 

 

 

Net cash provided by (used in) investing activities

 

 

(39,601

)

 

 

25,755

 

Financing activities

 

 

 

 

 

 

 

 

Finance lease purchases

 

 

(9

)

 

 

(12

)

Dividends to shareholders

 

 

(5,666

)

 

 

(5,245

)

Net cash used in financing activities

 

 

(5,675

)

 

 

(5,257

)

Change in cash and cash equivalents

 

 

(28,683

)

 

 

35,710

 

Cash and cash equivalents at beginning of period

 

 

61,757

 

 

 

43,813

 

Cash and cash equivalents at end of period

 

$

33,074

 

 

$

79,523

 

 

See accompanying notes.

8


AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

 

Note 1. Basis of Presentation

AMERISAFE, Inc. (the “Company”) is an insurance holding company incorporated in the state of Texas. The accompanying unaudited consolidated financial statements include the accounts of AMERISAFE and its subsidiaries: American Interstate Insurance Company (“AIIC”) and its insurance subsidiaries, Silver Oak Casualty, Inc. (“SOCI”) and American Interstate Insurance Company of Texas (“AIICTX”), Amerisafe Risk Services, Inc. (“RISK”) and Amerisafe General Agency, Inc. (“AGAI”). AIIC and SOCI are property and casualty insurance companies organized under the laws of the state of Nebraska. AIICTX is a property and casualty insurance company organized under the laws of the state of Texas. RISK, a wholly owned subsidiary of the Company, is a claims and safety service company currently servicing only affiliated insurance companies. AGAI, a wholly owned subsidiary of the Company, is a general agent for the Company. AGAI sells insurance, which is underwritten by AIIC, SOCI and AIICTX, as well as by nonaffiliated insurance carriers. The assets and operations of AGAI are not significant to that of the Company and its consolidated subsidiaries.

The terms “AMERISAFE,” the “Company,” “we,” “us” or “our” refer to AMERISAFE, Inc. and its consolidated subsidiaries, as the context requires.

The Company provides workers’ compensation insurance for small to mid-sized employers engaged in hazardous industries, principally construction, trucking, logging and lumber, manufacturing, agriculture, maritime, and oil and gas. Assets and revenues of AIIC and its subsidiaries represent at least 95% of comparable consolidated amounts of the Company for each of the three months ended March 31, 2021 and 2020.

In the opinion of management of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position, the results of operations and cash flows for the periods presented. The unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q under the Securities Exchange Act of 1934 and therefore do not include all information and footnotes to be in conformity with accounting principles generally accepted in the United States (“GAAP”). The results for the interim periods are not necessarily indicative of the results of operations that may be expected for the year. The unaudited consolidated financial statements contained herein should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2020.

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of our assets, liabilities, revenues and expenses and related disclosures.  Some of the estimates result from judgments that can be subjective and complex and, consequently, actual results in future periods might differ from these estimates.

Adopted Accounting Guidance

 

The Company has not adopted any new accounting guidance in 2021.     

 

Prospective Accounting Guidance

All issued but not yet effective accounting and reporting standards as of March 31, 2021 are either not applicable to the Company or are not expected to have a material impact on the Company.

 

 

Note 2. Restricted Stock and Stock Options

As of March 31, 2021, the Company has two equity incentive plans: the AMERISAFE Non-Employee Director Restricted Stock Plan (the “Restricted Stock Plan”) and the AMERISAFE 2012 Equity and Incentive Compensation Plan (the “2012 Incentive Plan”). See Note 12 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020 for additional information regarding the Company’s incentive plans.

During the three months ended March 31, 2021, the Company did not issue any shares of common stock pursuant to vested performance awards or shares of restricted common stock to non-employee directors.    During the three months ended March 31, 2020, the Company issued 201 shares of restricted common stock to non-employee directors. The market value of these shares was $13.7 thousand.

During the three months ended March 31, 2021 and 2020, there were no exercises of options to purchase common stock.  The Company had no stock options outstanding as of March 31, 2021.

9


The Company recognized share-based compensation expense of $0.6 million in the quarter ended March 31, 2021 and $0.8 million for the same period in 2020.  

 

 

Note 3. Earnings Per Share

The Company computes earnings per share (“EPS”) in accordance with FASB Accounting Standards Codification (“ASC”) Topic 260, Earnings Per Share. The Company has no participating unvested common shares which contain nonforfeitable rights to dividends and applies the treasury stock method in computing basic and diluted earnings per share.

Basic EPS is calculated by dividing net income by the weighted-average number of common shares outstanding during the period.

The diluted EPS calculation includes potential common shares assumed issued under the treasury stock method, which reflects the potential dilution that would occur if any restricted stock becomes vested.

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2021

 

 

2020

 

 

 

(in thousands, except share

and per share amounts)

 

Basic EPS:

 

 

 

 

 

 

 

 

Net income

 

$

19,312

 

 

$

10,800

 

Basic weighted average common shares

 

 

19,311,710

 

 

 

19,266,016

 

Basic earnings per common share

 

$

1.00

 

 

$

0.56

 

Diluted EPS:

 

 

 

 

 

 

 

 

Net income

 

$

19,312

 

 

$

10,800

 

Diluted weighted average common shares:

 

 

 

 

 

 

 

 

Weighted average common shares

 

 

19,311,710

 

 

 

19,266,016

 

Restricted stock and stock options

 

 

97,094

 

 

 

86,229

 

Diluted weighted average common shares

 

 

19,408,804

 

 

 

19,352,245

 

Diluted earnings per common share

 

$

0.99

 

 

$

0.56

 

 

Note 4. Investments

The gross unrecognized gains and losses, amortized cost, allowance for credit losses, carrying amount, and fair value of those investments classified as held-to-maturity at March 31, 2021 are summarized as follows:

 

 

 

Amortized

Cost

 

 

Allowance for Credit Losses

 

 

Carrying

Amount

 

 

Gross

Unrecognized

Gains

 

 

Gross

Unrecognized

Losses

 

 

Fair

Value

 

 

 

(in thousands)

 

States and political subdivisions

 

$

486,376

 

 

$

(44

)

 

$

486,332

 

 

$

26,179

 

 

$

(774

)

 

$

511,737

 

Corporate bonds

 

 

68,518

 

 

 

(116

)

 

 

68,402

 

 

 

2,440

 

 

 

 

 

 

70,842

 

U.S. agency-based mortgage-backed securities

 

 

6,357

 

 

 

 

 

 

6,357

 

 

 

568

 

 

 

 

 

 

6,925

 

U.S. Treasury securities and obligations

   of U.S. government agencies

 

 

13,877

 

 

 

 

 

 

13,877

 

 

 

195

 

 

 

(2

)

 

 

14,070

 

Asset-backed securities

 

 

146

 

 

 

(6

)

 

 

140

 

 

 

6

 

 

 

 

 

 

146

 

Totals

 

$

575,274

 

 

$

(166

)

 

$

575,108

 

 

$

29,388

 

 

$

(776

)

 

$

603,720

 

 

10


 

The gross unrealized gains and losses, and the amortized cost, allowance for credit losses, and fair value of those investments classified as available-for-sale at March 31, 2021 are summarized as follows:

 

 

 

Amortized

Cost