AMSF AMERISAFE Inc

Reports Net Combined Ratio of 80.1%

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, 2022.

Three Months Ended

 

 

March 31,

 

 

2022

 

2021

 

% Change

(in thousands, except per share data)

 

 

Net premiums earned

$

67,556

$

70,746

-4.5%

Net investment income

 

6,113

 

6,583

-7.1%

Net realized gains on investments (pretax)

 

738

 

319

NM

Net unrealized gains on equity securities (pretax)

 

1,040

 

5,511

NM

Net income

 

17,331

 

19,312

-10.3%

Diluted earnings per share

$

0.89

$

0.99

-10.1%

Operating net income

 

15,926

 

14,706

8.3%

Operating earnings per share

$

0.82

$

0.76

7.9%

Book value per share

$

20.46

$

23.16

-11.7%

Net combined ratio

 

80.1%

 

84.6%

Return on average equity

 

17.4%

 

17.4%

G. Janelle Frost, President and Chief Executive Officer, noted, “Providing protection for small to mid-sized businesses and care for their injured workers, while returning value to our shareholders is fundamental to our strategy. This quarter our capital management approach included our regular quarterly dividend and share repurchases. I believe the share repurchases, along with our strong operating results, reinforces the confidence we have in our long-term plans and underlying earnings power of our niche business.”

INSURANCE RESULTS

Three Months Ended

 

 

March 31,

 

 

2022

 

2021

 

% Change

(in thousands)   Gross premiums written

$

77,791

 

$

81,514

 

-4.6

%

Net premiums earned

 

67,556

 

 

70,746

 

-4.5

%

Loss and loss adjustment expenses incurred

 

37,741

 

 

39,517

 

-4.5

%

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

 

15,113

 

 

18,967

 

-20.3

%

Policyholder dividends

 

1,189

 

 

1,350

 

-11.9

%

Underwriting profit (pre-tax)

$

13,513

 

$

10,912

 

23.8

%

  Insurance Ratios: Current accident year loss ratio

 

71.0

%

 

72.0

%

Prior accident year loss ratio

 

-15.1

%

 

-16.1

%

Net loss ratio

 

55.9

%

 

55.9

%

Net underwriting expense ratio

 

22.4

%

 

26.8

%

Net dividend ratio

 

1.8

%

 

1.9

%

Net combined ratio

 

80.1

%

 

84.6

%

• Gross written premiums in the quarter were lower by $3.7 million, or 4.6%, compared with the first quarter of 2021. Voluntary premiums were down 7.6% compared to the first quarter of 2021, driven by loss cost declines in state filings with the average loss cost decline in the first quarter being 8.2%.
• Payroll audits and related premium adjustments were $2.5 million higher than the first quarter of 2021. Audits and other adjustments increased premiums written by $2.8 million in the first quarter of 2022, compared to an increase in premiums written of $0.3 million in the first quarter of 2021.
• The current accident year loss ratio for the first quarter was 71.0%, one point lower than the 72.0% ratio initially set for accident year 2021. During the quarter, the Company experienced favorable net loss development for prior accident years, which reduced loss and loss adjustment expenses by $10.2 million, primarily from accident years 2019 through 2017. There was no change to the reserve estimate on the catastrophic claim the company experienced in the fourth quarter of 2021.
• For the quarter ended March 31, 2022, the underwriting expense ratio was 22.4% compared with 26.8% in the same quarter in 2021. The decrease was due to lower insurance assessments compared with the first quarter of 2021, primarily due to a $3.8 million return of assessments from the Minnesota Workers Compensation Reinsurance Association.
• The effective tax rate for the quarter ended March 31, 2022 was 19.1%, higher than 18.3% in the first quarter of 2021 due to higher underwriting pre-tax profits.

INVESTMENT RESULTS

Three Months Ended

 

 

March 31,

 

 

2022

 

2021

 

% Change

(in thousands) Net investment income

$

6,113

 

$

6,583

 

-7.1

%

Net realized gains on investments (pre-tax)

 

738

 

 

319

 

NM

 

Net unrealized gains on equity securities (pre-tax)

 

1,040

 

 

5,511

 

NM

 

Pre-tax investment yield

 

2.3

%

 

2.3

%

Tax-equivalent yield (1)

 

2.7

%

 

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 March 31, 2022, decreased 7.1% to $6.1 million from $6.6 million in the first quarter of 2021, primarily due to lower investment yields on fixed-income securities.
• As of March 31, 2022, the carrying value of AMERISAFE’s investment portfolio, including cash and cash equivalents, was $1.1 billion.

CAPITAL MANAGEMENT

During the first quarter of 2022, the Company repurchased 43,893 shares at an average cost of $46.90 per share for a total of $2.1 million. The remaining outstanding share repurchase authorization is $22.9 million. No additional shares were repurchased from March 31, 2022 through April 25, 2022.

During the first quarter of 2022, the Company paid a regular quarterly cash dividend of $0.31 per share on March 25, 2022 which represented a 6.9% increase in the quarterly dividend compared with 2021. On April 26, 2022 the Company’s Board of Directors declared a quarterly cash dividend of $0.31 per share, payable on June 24, 2022 to shareholders of record as of June 17, 2022.

Book value per share at March 31, 2022 was $20.46, a decrease of 0.8% from $20.62 at December 31, 2021.

SUPPLEMENTAL INFORMATION

Three Months Ended

March 31,

2022

 

2021

  Net income

$

17,331

 

$

19,312

 

Less: Net realized gains on investments

 

738

 

 

319

 

Net unrealized gains on equity securities

 

1,040

 

 

5,511

 

Tax effect (1)

 

(373

)

 

(1,224

)

Operating net income (2)

$

15,926

 

$

14,706

 

  Average shareholders’ equity (3)

$

397,298

 

$

443,221

 

Less: Average accumulated other comprehensive income

 

6,797

 

 

18,495

 

Average adjusted shareholders’ equity (2)

$

390,501

 

$

424,726

 

  Diluted weighted average common shares

 

19,430,824

 

 

19,408,804

 

  Return on average equity (4)

 

17.4

%

 

17.4

%

Operating return on average adjusted equity (2)

 

16.3

%

 

13.9

%

Diluted earnings per share

$

0.89

 

$

0.99

 

Operating earnings per share (2)

$

0.82

 

$

0.76

 

________________________________

(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 April 28, 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 323-794-2551 (Conference Code 9718445) 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 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 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, 2021. 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 -

AMERISAFE, INC. AND SUBSIDIARIES Consolidated Statements of Income (in thousands)

 

Three Months Ended

March 31,

2022

 

2021

(unaudited) Revenues: Gross premiums written

$

77,791

 

$

81,514

 

Ceded premiums written

 

(2,559

)

 

(2,517

)

Net premiums written

$

75,232

 

$

78,997

 

  Net premiums earned

$

67,556

 

$

70,746

 

Net investment income

 

6,113

 

 

6,583

 

Net realized gains on investments

 

738

 

 

319

 

Net unrealized gains on equity securities

 

1,040

 

 

5,511

 

Fee and other income

 

113

 

 

192

 

Total revenues

 

75,560

 

 

83,351

 

  Expenses: Loss and loss adjustment expenses incurred

 

37,741

 

 

39,517

 

Underwriting and other operating costs

 

15,113

 

 

18,967

 

Policyholder dividends

 

1,189

 

 

1,350

 

Provision for investment related credit loss expense (benefit)

 

95

 

 

(108

)

Total expenses

 

54,138

 

 

59,726

 

  Income before taxes

 

21,422

 

 

23,625

 

Income tax expense

 

4,091

 

 

4,313

 

Net income

$

17,331

 

$

19,312

 

AMERISAFE, INC. AND SUBSIDIARIES Consolidated Statements of Income (cont.) (in thousands, except per share amounts)

 

Three Months Ended

March 31,

2022

 

2021

(unaudited) Basic EPS: Net income

$

17,331

$

19,312

  Basic weighted average common shares

 

19,332,006

 

19,311,710

Basic earnings per share

$

0.90

$

1.00

  Diluted EPS: Net income

$

17,331

$

19,312

  Diluted weighted average common shares: Weighted average common shares

 

19,332,006

 

19,311,710

Restricted stock

 

98,818

 

97,094

Diluted weighted average common shares

 

19,430,824

 

19,408,804

  Diluted earnings per share

$

0.89

$

0.99

AMERISAFE, INC. AND SUBSIDIARIES Consolidated Balance Sheets (in thousands)

 

 

 

 

 

March 31,

 

December 31,

 

2022

 

2021

(unaudited) Assets Investments

$

1,030,320

$

1,012,571

Cash and cash equivalents

 

30,741

 

70,722

Amounts recoverable from reinsurers

 

116,233

 

120,561

Premiums receivable, net

 

140,601

 

135,100

Deferred income taxes

 

17,602

 

14,384

Deferred policy acquisition costs

 

17,877

 

17,059

Other assets

 

38,007

 

32,327

$

1,391,381

$

1,402,724

  Liabilities and Shareholders’ Equity Liabilities: Reserves for loss and loss adjustment expenses

$

728,558

$

745,278

Unearned premiums

 

128,768

 

121,092

Insurance-related assessments

 

17,622

 

16,850

Other liabilities

 

121,160

 

120,181

  Shareholders’ equity

 

395,273

 

399,323

Total liabilities and shareholders’ equity

$

1,391,381

$

1,402,724

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220427005756/en/

Neal A. Fuller, EVP & CFO AMERISAFE 337.463.9052