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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, 2022
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
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|
75-2069407
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|
(State of Incorporation)
|
|
(I.R.S. Employer Identification Number)
|
|
|
|
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|
2301 Highway 190 West, DeRidder, Louisiana
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|
70634
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|
(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
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Common
|
|
AMSF
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|
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 22, 2022, there were 19,320,422 shares of the
Registrant’s common stock, par value $0.01 per share,
outstanding.
TABLE OF CONTENTS
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;
|
|
|
•
|
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;
|
|
|
•
|
the impact of pandemics on the
business operations of our insurance subsidiaries and
policyholders, the value of our investments, and our revenues,
results of operations and cash flows;
|
|
|
•
|
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,
2021. 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, 2022
|
|
|
December 31, 2021
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
Investments:
|
|
|
|
|
|
|
|
|
|
Fixed maturity securities—held-to-maturity, at amortized cost net
of allowance
for credit losses of $290 and $195 in 2022 and 2021,
respectively,
(fair value $545,425 and $575,850 in 2022 and 2021,
respectively)
|
|
$
|
545,372
|
|
|
$
|
549,231
|
|
|
Fixed maturity securities—available-for-sale, at fair value
(amortized cost $342,784, allowance for credit losses
of $0 in 2022
and amortized cost $324,597, allowance for credit
losses of $0 in 2021)
|
|
|
342,972
|
|
|
|
341,769
|
|
|
Equity securities, at fair value
(cost $48,151 and $44,175 in 2022 and 2021,
respectively)
|
|
|
69,156
|
|
|
|
64,140
|
|
|
Short-term investments
|
|
|
72,820
|
|
|
|
57,431
|
|
|
Total investments
|
|
|
1,030,320
|
|
|
|
1,012,571
|
|
|
Cash and cash equivalents
|
|
|
30,741
|
|
|
|
70,722
|
|
|
Amounts recoverable from reinsurers
(net of allowance for credit losses of $388 and $440
in 2022 and 2021, respectively)
|
|
|
116,233
|
|
|
|
120,561
|
|
|
Premiums receivable
(net of allowance for credit losses of $4,530 and
$4,386 in 2022 and 2021, respectively)
|
|
|
140,601
|
|
|
|
135,100
|
|
|
Deferred income taxes
|
|
|
17,602
|
|
|
|
14,384
|
|
|
Accrued interest receivable
|
|
|
8,949
|
|
|
|
8,080
|
|
|
Property and equipment, net
|
|
|
6,423
|
|
|
|
6,459
|
|
|
Deferred policy acquisition costs
|
|
|
17,877
|
|
|
|
17,059
|
|
|
Federal income tax recoverable
|
|
|
2,973
|
|
|
|
6,414
|
|
|
Other assets
|
|
|
19,662
|
|
|
|
11,374
|
|
|
Total assets
|
|
$
|
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
|
|
|
Amounts held for others
|
|
|
44,200
|
|
|
|
42,915
|
|
|
Policyholder deposits
|
|
|
38,518
|
|
|
|
39,383
|
|
|
Insurance-related assessments
|
|
|
17,622
|
|
|
|
16,850
|
|
|
Accounts payable and other liabilities
|
|
|
38,442
|
|
|
|
37,883
|
|
|
Total liabilities
|
|
|
996,108
|
|
|
|
1,003,401
|
|
|
Shareholders’ equity:
|
|
|
|
|
|
|
|
|
|
Common stock: voting—$0.01 par value authorized
shares—50,000,000
in 2022 and 2021; 20,622,565 and 20,622,304 shares
issued; and 19,320,422
and 19,364,054 shares outstanding in 2022 and 2021,
respectively
|
|
|
206
|
|
|
|
206
|
|
|
Additional paid-in capital
|
|
|
217,605
|
|
|
|
217,458
|
|
|
Treasury stock, at cost (1,302,143 and 1,258,250 shares in 2022 and
2021, respectively)
|
|
|
(24,429
|
)
|
|
|
(22,370
|
)
|
|
Accumulated earnings
|
|
|
201,834
|
|
|
|
190,492
|
|
|
Accumulated other comprehensive income, net
|
|
|
57
|
|
|
|
13,537
|
|
|
Total shareholders’ equity
|
|
|
395,273
|
|
|
|
399,323
|
|
|
Total liabilities and shareholders’ equity
|
|
$
|
1,391,381
|
|
|
$
|
1,402,724
|
|
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,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
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 certain other operating costs
|
|
|
3,990
|
|
|
|
6,927
|
|
|
Commissions
|
|
|
5,208
|
|
|
|
5,474
|
|
|
Salaries and benefits
|
|
|
5,915
|
|
|
|
6,566
|
|
|
Policyholder dividends
|
|
|
1,189
|
|
|
|
1,350
|
|
|
Provision for investment related credit loss expense (benefit)
|
|
|
95
|
|
|
|
(108
|
)
|
|
Total expenses
|
|
|
54,138
|
|
|
|
59,726
|
|
|
Income before income taxes
|
|
|
21,422
|
|
|
|
23,625
|
|
|
Income tax expense
|
|
|
4,091
|
|
|
|
4,313
|
|
|
Net income
|
|
$
|
17,331
|
|
|
$
|
19,312
|
|
|
Earnings per share
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.90
|
|
|
$
|
1.00
|
|
|
Diluted
|
|
$
|
0.89
|
|
|
$
|
0.99
|
|
|
Shares used in computing earnings per share
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
19,332,006
|
|
|
|
19,311,710
|
|
|
Diluted
|
|
|
19,430,824
|
|
|
|
19,408,804
|
|
|
Cash dividends declared per common share
|
|
$
|
0.31
|
|
|
$
|
0.29
|
|
See accompanying notes.
5
AMERISAFE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)
|
|
|
Three Months Ended
|
|
|
|
|
March 31,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
Net income
|
|
$
|
17,331
|
|
|
$
|
19,312
|
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
Unrealized loss on debt securities, net of tax
|
|
|
(13,480
|
)
|
|
|
(5,048
|
)
|
|
Comprehensive income
|
|
$
|
3,851
|
|
|
$
|
14,264
|
|
See accompanying notes.
6
AMERISAFE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
Three Months Ended March 31, 2022 and 2021
(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, 2021
|
|
|
20,622,304
|
|
|
$
|
206
|
|
|
$
|
217,458
|
|
|
|
(1,258,250
|
)
|
|
$
|
(22,370
|
)
|
|
$
|
190,492
|
|
|
$
|
13,537
|
|
|
$
|
399,323
|
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
17,331
|
|
|
|
—
|
|
|
|
17,331
|
|
|
Other comprehensive
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in unrealized
gains on debt
securities, net of tax
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(13,480
|
)
|
|
|
(13,480
|
)
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,851
|
|
|
Common stock issued
|
|
|
261
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Purchase of treasury stock
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(43,893
|
)
|
|
|
(2,059
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(2,059
|
)
|
|
Share-based compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
147
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
147
|
|
|
Dividends to shareholders
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(5,989
|
)
|
|
|
—
|
|
|
|
(5,989
|
)
|
|
Balance at March 31, 2022
|
|
|
20,622,565
|
|
|
$
|
206
|
|
|
$
|
217,605
|
|
|
|
(1,302,143
|
)
|
|
$
|
(24,429
|
)
|
|
$
|
201,834
|
|
|
$
|
57
|
|
|
$
|
395,273
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 on debt
securities, 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
|
|
See accompanying notes.
7
AMERISAFE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
|
|
|
Three Months Ended March 31,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
Operating activities
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
17,331
|
|
|
$
|
19,312
|
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
294
|
|
|
|
270
|
|
|
Net amortization of investments
|
|
|
2,068
|
|
|
|
2,179
|
|
|
Change in investment related allowance for credit losses
|
|
|
95
|
|
|
|
(108
|
)
|
|
Deferred income taxes
|
|
|
364
|
|
|
|
500
|
|
|
Net realized gains on investments
|
|
|
(738
|
)
|
|
|
(319
|
)
|
|
Net unrealized gains on equity securities
|
|
|
(1,040
|
)
|
|
|
(5,511
|
)
|
|
Net realized gains on disposal of assets
|
|
|
—
|
|
|
|
(23
|
)
|
|
Share-based compensation
|
|
|
(9
|
)
|
|
|
571
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Premiums receivable, net
|
|
|
(5,501
|
)
|
|
|
(8,410
|
)
|
|
Accrued interest receivable
|
|
|
(869
|
)
|
|
|
(395
|
)
|
|
Deferred policy acquisition costs
|
|
|
(818
|
)
|
|
|
(874
|
)
|
|
Other assets
|
|
|
(4,714
|
)
|
|
|
(266
|
)
|
|
Reserves for loss and loss adjustment expenses
|
|
|
(16,720
|
)
|
|
|
(803
|
)
|
|
Unearned premiums
|
|
|
7,676
|
|
|
|
8,251
|
|
|
Reinsurance balances
|
|
|
4,281
|
|
|
|
(4,914
|
)
|
|
Amounts held for others and policyholder deposits
|
|
|
420
|
|
|
|
1,069
|
|
|
Federal income taxes payable
|
|
|
3,441
|
|
|
|
3,555
|
|
|
Accounts payable and other liabilities
|
|
|
1,557
|
|
|
|
2,509
|
|
|
Net cash provided by operating activities
|
|
|
7,118
|
|
|
|
16,593
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
Purchases of investments held-to-maturity
|
|
|
(13,665
|
)
|
|
|
(5,281
|
)
|
|
Purchases of investments available-for-sale
|
|
|
(30,076
|
)
|
|
|
(22,118
|
)
|
|
Purchases of equity securities
|
|
|
(4,975
|
)
|
|
|
(1,895
|
)
|
|
Purchases of short-term investments
|
|
|
(24,133
|
)
|
|
|
(42,286
|
)
|
|
Proceeds from maturities of investments held-to-maturity
|
|
|
12,723
|
|
|
|
13,814
|
|
|
Proceeds from sales and maturities of investments
available-for-sale
|
|
|
11,638
|
|
|
|
17,947
|
|
|
Proceeds from sales of equity securities
|
|
|
1,483
|
|
|
|
—
|
|
|
Proceeds from sales and maturities of short-term investments
|
|
|
8,218
|
|
|
|
585
|
|
|
Purchases of property and equipment
|
|
|
(258
|
)
|
|
|
(390
|
)
|
|
Proceeds from sales of property and equipment
|
|
|
—
|
|
|
|
23
|
|
|
Net cash used in investing activities
|
|
|
(39,045
|
)
|
|
|
(39,601
|
)
|
|
Financing activities
|
|
|
|
|
|
|
|
|
|
Finance lease purchases
|
|
|
(12
|
)
|
|
|
(9
|
)
|
|
Purchase of treasury stock
|
|
|
(2,059
|
)
|
|
|
—
|
|
|
Dividends to shareholders
|
|
|
(5,983
|
)
|
|
|
(5,666
|
)
|
|
Net cash used in financing activities
|
|
|
(8,054
|
)
|
|
|
(5,675
|
)
|
|
Change in cash and cash equivalents
|
|
|
(39,981
|
)
|
|
|
(28,683
|
)
|
|
Cash and cash equivalents at beginning of period
|
|
|
70,722
|
|
|
|
61,757
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
30,741
|
|
|
$
|
33,074
|
|
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, agriculture,
manufacturing, telecommunications, and maritime. 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, 2022 and 2021.
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,
2021.
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
2022.
Prospective Accounting Guidance
All issued but not yet effective accounting and reporting standards
as of March 31, 2022 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, 2022, 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,
2021 for additional information regarding the Company’s incentive
plans.
During the three months ended March 31, 2022, the Company
issued 261 shares of restricted common stock to a non-employee
director. The market value of these shares totaled $12.5
thousand. During the three months ended March 31,
2021, the Company did not issue any shares of restricted common
stock to non-employee directors.
During the three months ended March 31, 2022 and 2021, there
were no exercises of options to purchase common
stock. The Company had no stock options outstanding as
of March 31, 2022.
9
Due to changes in variable share price based incentive
compensation, the Company recognized a benefit (negative expense)
for share-based compensation of $9.0 thousand in the quarter ended
March 31, 2022 compared to an expense of $0.6 million in the
same period in 2021.
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,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
|
|
(in thousands, except share and per share amounts)
|
|
|
Basic EPS:
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
17,331
|
|
|
$
|
19,312
|
|
|
Basic weighted average common shares
|
|
|
19,332,006
|
|
|
|
19,311,710
|
|
|
Basic earnings per common 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 common share
|
|
$
|
0.89
|
|
|
$
|
0.99
|
|
Note 4. Investments
The amortized cost, allowance for credit losses, carrying amount,
gross unrecognized gains and losses, and the fair value of those
investments classified as held-to-maturity at March 31, 2022
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
|
|
$
|
458,118
|
|
|
$
|
(45
|
)
|
|
$
|
458,073
|
|
|
$
|
7,160
|
|
|
$
|
(5,936
|
)
|
|
$
|
459,297
|
|
|
Corporate bonds
|
|
|
66,944
|
|
|
|
(241
|
)
|
|
|
66,703
|
|
|
|
137
|
|
|
|
(1,371
|
)
|
|
|
65,469
|
|
|
U.S. agency-based mortgage-backed securities
|
|
|
4,285
|
|
|
|
—
|
|
|
|
4,285
|
|
|
|
167
|
|
|
|
(5
|
)
|
|
|
4,447
|
|
|
U.S. Treasury securities and obligations
of U.S. government agencies
|
|
|
16,215
|
|
|
|
—
|
|
|
|
16,215
|
|
|
|
56
|
|
|
|
(159
|
)
|
|
|
16,112
|
|
|
Asset-backed securities
|
|
|
100
|
|
|
|
(4
|
)
|
|
|
96
|
|
|
|
4
|
|
|
|
—
|
|
|
|
100
|
|
|
Totals
|
|
$
|
545,662
|
|
|
$
|
(290
|
)
|
|
$
|
545,372
|
|
|
$
|
7,524
|
|
|
$
|
(7,471
|
)
|
|
$
|
545,425
|
|
10
The amortized cost, gross unrealized gains and losses, fair value,
and the allowance for credit losses of those investments classified
as available-for-sale at March 31, 2022 are summarized as
follows:
|
|
|
Amortized
Cost
|
|
|
Gross
Unrealized
Gains
|
|
|
Gross
Unrealized
Losses
|
|
|
Fair
Value
|
|
|
Allowance for Credit Losses
|
|
|
|
|
(in thousands)
|
|
|
States and political subdivisions
|
|
$
|
200,313
|
|
|
$
|
4,541
|
|
|
$
|
(2,618
|
)
|
|
$
|
202,236
|
|
|
$
|
—
|
|
|
Corporate bonds
|
|
|
114,642
|
|
|
|
780
|
|
|
|
(1,723
|
)
|
|
|
113,699
|
|
|
|
—
|
|
|
U.S. agency-based mortgage-backed securities
|
|
|
7,117
|
|
|
|
—
|
|
|
|
(155
|
)
|
|