Reports Combined Ratio of 71.5%
Declares an Extraordinary Dividend of $4.00 Per
Share
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.”
INSURANCE 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.
- 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
Nine Months Ended
September 30,
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.
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
Nine Months Ended
September 30,
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.
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.
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.
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
AMERISAFE, INC. AND
SUBSIDIARIES
Consolidated Statements of
Income (cont.)
(in thousands, except per
share amounts)
Three Months Ended
Nine Months Ended
September 30,
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
AMERISAFE, INC. AND
SUBSIDIARIES
Consolidated Balance
Sheets
(in thousands)
September 30,
December 31,
2021
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
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211027005862/en/
Neal A. Fuller, EVP & CFO AMERISAFE 337.463.9052
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