Reports Net Combined Ratio of 86.7%
AMERISAFE, Inc. (Nasdaq: AMSF), a specialty provider of
workers’ compensation insurance focused on high hazard industries,
today announced results for the second quarter ended June 30,
2022.
Three Months Ended
Six Months Ended
June 30,
June 30,
2022
2021
% Change
2022
2021
% Change
(in thousands, except per share data) (in thousands,
except per share data) Net premiums earned
$
70,279
$
69,888
0.6
%
$
137,835
$
140,634
-2.0
%
Net investment income
6,485
6,730
-3.6
%
12,598
13,313
-5.4
%
Net realized gains on investments (pre-tax)
1,079
1,179
-8.5
%
1,817
1,498
21.3
%
Net unrealized gains (losses) on equity securities (pre-tax)
(9,942
)
3,286
NM
(8,902
)
8,797
NM
Net income
6,132
23,767
-74.2
%
23,463
43,079
-45.5
%
Diluted earnings per share
$
0.32
$
1.23
-74.0
%
$
1.21
$
2.22
-45.5
%
Operating net income
13,134
20,240
-35.1
%
29,060
34,946
-16.8
%
Operating earnings per share
$
0.68
$
1.04
-34.6
%
$
1.50
$
1.80
-16.7
%
Book value per share
$
19.95
$
24.19
-17.5
%
$
19.95
$
24.19
-17.5
%
Net combined ratio
86.7
%
74.4
%
83.4
%
79.6
%
Return on average equity
6.3
%
20.8
%
12.0
%
19.0
%
G. Janelle Frost, President and Chief Executive Officer,
observed, “Robust payroll audits led to premium growth this
quarter, helping to offset premium declines from underlying loss
costs decreases. In addition, strong renewal retention continued
despite competition not waning in 2022.”
INSURANCE RESULTS
Three Months Ended
Six Months Ended
June 30,
June 30,
2022
2021
% Change
2022
2021
% Change
(in thousands)
(in thousands)
Gross premiums written
$
74,460
$
73,724
1.0
%
$
152,251
$
155,238
-1.9
%
Net premiums earned
70,279
69,888
0.6
%
137,835
140,634
-2.0
%
Loss and loss adjustment expenses incurred
40,326
32,423
24.4
%
78,067
71,940
8.5
%
Underwriting and certain other operating costs, commissions,
salaries and benefits
19,913
18,455
7.9
%
35,026
37,422
-6.4
%
Policyholder dividends
688
1,117
-38.4
%
1,877
2,467
-23.9
%
Underwriting profit (pre-tax)
$
9,352
$
17,893
-47.7
%
$
22,865
$
28,805
-20.6
%
Insurance Ratios: Current accident year loss ratio
71.0
%
72.0
%
71.0
%
72.0
%
Prior accident year loss ratio
-13.6
%
-25.6
%
-14.4
%
-20.8
%
Net loss ratio
57.4
%
46.4
%
56.6
%
51.2
%
Net underwriting expense ratio
28.3
%
26.4
%
25.4
%
26.6
%
Net dividend ratio
1.0
%
1.6
%
1.4
%
1.8
%
Net combined ratio
86.7
%
74.4
%
83.4
%
79.6
%
- Gross written premiums in the quarter were higher by $0.7
million, or 1.0%, compared with the second quarter of 2021.
Voluntary premiums were lower by 5.6% compared to the second
quarter of 2021.
- Payroll audits and related premium adjustments were $5.0
million higher than the second quarter of 2021. Audits and other
adjustments increased premiums written by $5.5 million in the
second quarter of 2022, compared to an increase in premiums written
of $0.5 million in the second quarter of 2021. The increase was due
to payroll audits now occurring on policy years in which payrolls
were less affected by the COVID-19 pandemic.
- The current accident year loss ratio for the second 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 $9.6 million,
primarily from accident years 2020 through 2017.
- For the quarter ended June 30, 2022, the underwriting expense
ratio was 28.3% compared with 26.4% in the same quarter in 2021.
The increase was primarily due to higher insurance assessments
compared with the second quarter of 2021.
- The effective tax rate for the quarter ended June 30, 2022 was
13.9%, lower than 18.5% in the second quarter of 2021 due to a
higher proportion of income from tax-exempt investments.
INVESTMENT RESULTS
Three Months Ended
Six Months Ended
June 30,
June 30,
2022
2021
% Change
2022
2021
% Change
(in thousands)
(in thousands)
Net investment income
$
6,485
$
6,730
-3.6
%
$
12,598
$
13,313
-5.4
%
Net realized gains on investments (pre-tax)
1,079
1,179
-8.5
%
1,817
1,498
21.3
%
Net unrealized gains (losses) on equity securities (pre-tax)
(9,942
)
3,286
NM
(8,902
)
8,797
NM
Pre-tax investment yield
2.5
%
2.3
%
2.4
%
2.3
%
Tax-equivalent yield (1)
2.9
%
2.6
%
2.9
%
2.6
%
_____________________
(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 June 30, 2022,
decreased 3.6% to $6.5 million from $6.7 million in the second
quarter of 2021, due to lower investment yields on fixed-income
securities and slightly lower average invested assets
- Due to increases in interest rates, the market value of our
bond portfolio declined during the quarter.
- Due to declines in the equity markets, the value of our equity
securities were lower by $9.9 million during the quarter, compared
to a gain of $3.3 million in the second quarter of 2021. These
changes in value are reflected in net income.
- As of June 30, 2022, the carrying value of AMERISAFE’s
investment portfolio, including cash and cash equivalents, was $1.1
billion.
CAPITAL MANAGEMENT
During the second quarter of 2022, the Company repurchased
77,699 shares at an average cost of $46.88 per share for a total of
$3.6 million. The remaining outstanding share repurchase
authorization as of June 30, 2022 is $19.3 million.
During the second quarter of 2022, the Company paid a regular
quarterly cash dividend of $0.31 per share on June 24, 2022. On
July 26, 2022 the Board of Directors declared a quarterly cash
dividend of $0.31 per share, payable September 23, 2022 to
shareholders of record as of September 9, 2022.
Book value per share at June 30, 2022 was $19.95, a decrease of
3.2% from $20.62 at December 31, 2021.
SUPPLEMENTAL INFORMATION
Three Months Ended
Six Months Ended
June 30,
June 30,
2022
2021
2022
2021
(in thousands, except share
and per share data)
Net income
$
6,132
$
23,767
$
23,463
$
43,079
Less: Net realized gains on investments
1,079
1,179
1,817
1,498
Net unrealized gains (losses) on equity securities
(9,942
)
3,286
(8,902
)
8,797
Tax effect (1)
1,861
(938
)
1,488
(2,162
)
Operating net income (2)
$
13,134
$
20,240
$
29,060
$
34,946
Average shareholders’ equity (3)
$
390,131
$
457,996
$
392,156
$
453,591
Less: Average accumulated other comprehensive income (loss)
(4,409
)
16,417
2,332
18,941
Average adjusted shareholders’ equity (2)
$
394,540
$
441,579
$
389,824
$
434,650
Diluted weighted average common shares
19,332,168
19,380,611
19,367,085
19,384,078
Return on average equity (4)
6.3
%
20.8
%
12.0
%
19.0
%
Operating return on average adjusted equity (2)
13.3
%
18.3
%
14.9
%
16.1
%
Diluted earnings per share
$
0.32
$
1.23
$
1.21
$
2.22
Operating earnings per share (2)
$
0.68
$
1.04
$
1.50
$
1.80
_____________________
(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 July 29, 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 323-701-0160 (Conference Code 1912102) 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.
AMERISAFE, INC. AND
SUBSIDIARIES
Consolidated Statements of
Income
(in thousands)
Three Months Ended
Six Months Ended
June 30,
June 30,
2022
2021
2022
2021
(unaudited)
(unaudited)
Revenues: Gross premiums written
$
74,460
$
73,724
$
152,251
$
155,238
Ceded premiums written
(2,725
)
(2,486
)
(5,284
)
(5,003
)
Net premiums written
$
71,735
$
71,238
$
146,967
$
150,235
Net premiums earned
$
70,279
$
69,888
$
137,835
$
140,634
Net investment income
6,485
6,730
12,598
13,313
Net realized gains on investments
1,079
1,179
1,817
1,498
Net unrealized gains (losses) on equity securities
(9,942
)
3,286
(8,902
)
8,797
Fee and other income
135
74
248
266
Total revenues
68,036
81,157
143,596
164,508
Expenses: Loss and loss adjustment expenses incurred
40,326
32,423
78,067
71,940
Underwriting and other operating costs
19,913
18,455
35,026
37,422
Policyholder dividends
688
1,117
1,877
2,467
Provision for investment related credit loss expense (benefit)
(14
)
(9
)
81
(117
)
Total expenses
60,913
51,986
115,051
111,712
Income before taxes
7,123
29,171
28,545
52,796
Income tax expense
991
5,404
5,082
9,717
Net income
$
6,132
$
23,767
$
23,463
$
43,079
AMERISAFE, INC. AND
SUBSIDIARIES
Consolidated Statements of
Income (cont.)
(in thousands, except per
share amounts)
Three Months Ended
Six Months Ended
June 30,
June 30,
2022
2021
2022
2021
(unaudited) (unaudited) Basic
EPS: Net income
$
6,132
$
23,767
$
23,463
$
43,079
Basic weighted average common shares
19,273,934
19,327,422
19,302,805
19,319,608
Basic earnings per share
$
0.32
$
1.23
$
1.22
$
2.23
Diluted EPS: Net income
$
6,132
$
23,767
$
23,463
$
43,079
Diluted weighted average common shares: Weighted average
common shares
19,273,934
19,327,422
19,302,805
19,319,608
Restricted stock
58,234
53,189
64,280
64,470
Diluted weighted average common shares
19,332,168
19,380,611
19,367,085
19,384,078
Diluted earnings per share
$
0.32
$
1.23
$
1.21
$
2.22
AMERISAFE, INC. AND
SUBSIDIARIES
Consolidated Balance
Sheets
(in thousands)
June 30,
December 31,
2022
2021
(unaudited)
Assets Investments
$
966,400
$
1,012,571
Cash and cash equivalents
85,318
70,722
Amounts recoverable from reinsurers
118,575
120,561
Premiums receivable, net
143,307
135,100
Deferred income taxes
21,927
14,384
Deferred policy acquisition costs
18,103
17,059
Other assets
28,290
32,327
$
1,381,920
$
1,402,724
Liabilities and Shareholders’ Equity Liabilities:
Reserves for loss and loss adjustment expenses
$
724,891
$
745,278
Unearned premiums
130,224
121,092
Insurance-related assessments
18,566
16,850
Other liabilities
123,250
120,181
Shareholders’ equity
384,989
399,323
Total liabilities and shareholders’ equity
$
1,381,920
$
1,402,724
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220728005665/en/
Neal A. Fuller, EVP & CFO AMERISAFE 337.463.9052
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