AMSF

Reports $55.6 Million of Net Income, Return on Equity of 15.5% and Net Combined Ratio of 83.6% in 2022

AMERISAFE, Inc. (Nasdaq: AMSF), a specialty provider of workers’ compensation insurance focused on high hazard industries, today announced results for the fourth quarter and year ended December 31, 2022.

Three Months Ended Twelve Months Ended December 31, December 31,

 

2022

 

 

2021

 

% Change

 

2022

 

 

2021

 

% Change (in thousands, except per share data) (in thousands, except per share data) Net premiums earned

$

66,073

 

$

67,733

 

-2.5

%

$

271,698

 

$

275,993

 

-1.6

%

Net investment income

 

7,642

 

 

6,073

 

25.8

%

 

27,223

 

 

25,435

 

7.0

%

Net realized gains on investments (pre-tax)

 

1,038

 

 

205

 

406.3

%

 

3,440

 

 

1,695

 

102.9

%

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

 

4,892

 

 

4,289

 

NM

 

 

(8,092

)

 

12,315

 

NM

 

Net income

 

20,778

 

 

3,541

 

486.8

%

 

55,602

 

 

65,756

 

-15.4

%

Diluted earnings per share

$

1.08

 

$

0.18

 

500.0

%

$

2.88

 

$

3.39

 

-15.0

%

Operating net income (loss)

 

16,093

 

 

(9

)

NM

 

 

59,277

 

 

54,688

 

8.4

%

Operating earnings per share

$

0.84

 

$

-

 

NM

 

$

3.07

 

$

2.82

 

8.9

%

Book value per share

$

16.57

 

$

20.62

 

-19.6

%

$

16.57

 

$

20.62

 

-19.6

%

Net combined ratio

 

82.0

%

 

112.9

%

 

83.6

%

 

85.7

%

Return on average equity

 

24.1

%

 

3.2

%

 

15.5

%

 

15.7

%

G. Janelle Frost, President and Chief Executive Officer commented, “AMERISAFE’s financial results this quarter are reflective of our focus on underwriting margins and sustainability in providing long-term returns to our shareholders. Despite industrywide pressure as competition increases and rates decrease, our focus on risk selection, appropriate product pricing and claims handling resulted in combined ratios of 82.0% this quarter and 83.6% for the year. Based on these results and our capital strength, AMERISAFE has demonstrated it is well-positioned for solid performance in the current market and to create long-term shareholder value into the future.”

INSURANCE RESULTS

Three Months Ended Twelve Months Ended December 31, December 31,

 

2022

 

 

2021

 

% Change

 

2022

 

 

2021

 

% Change (in thousands) (in thousands)   Gross premiums written

$

55,647

 

$

55,871

 

-0.4

%

$

276,110

 

$

278,294

 

-0.8

%

Net premiums earned

 

66,073

 

 

67,733

 

-2.5

%

 

271,698

 

 

275,993

 

-1.6

%

Loss and loss adjustment expenses incurred

 

36,524

 

 

59,197

 

-38.3

%

 

152,316

 

 

160,798

 

-5.3

%

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

 

17,421

 

 

16,714

 

4.2

%

 

72,032

 

 

72,051

 

0.0

%

Policyholder dividends

 

182

 

 

515

 

-64.7

%

 

2,699

 

 

3,715

 

-27.3

%

Underwriting profit (pre-tax)

$

11,946

 

$

(8,693

)

NM

 

$

44,651

 

$

39,429

 

13.2

%

  Insurance Ratios: Current accident year loss ratio

 

71.0

%

 

107.4

%

 

71.0

%

 

80.7

%

Prior accident year loss ratio

 

-15.7

%

 

-20.0

%

 

-14.9

%

 

-22.4

%

Net loss ratio

 

55.3

%

 

87.4

%

 

56.1

%

 

58.3

%

Net underwriting expense ratio

 

26.4

%

 

24.7

%

 

26.5

%

 

26.1

%

Net dividend ratio

 

0.3

%

 

0.8

%

 

1.0

%

 

1.3

%

Net combined ratio

 

82.0

%

 

112.9

%

 

83.6

%

 

85.7

%

• Voluntary premiums on policies written in the quarter were 4.5% lower than the fourth quarter of 2021, primarily due to continued declines in approved loss costs in the states in which we write business partially offset by an increase in payrolls. For the full year, voluntary premiums decreased by 5.9%.
• Payroll audits and related premium adjustments increased premiums written by $2.3 million in the fourth quarter of 2022, compared to an increase of $0.1 million in the fourth quarter of 2021. For the full year 2022, audits and related premium adjustments increased premiums by $14.0 million, compared to a decrease in premiums of $1.2 million in 2021.
• The loss ratio for the fourth quarter was 55.3% and 56.1% for the full year. During the quarter, the Company experienced favorable net loss reserve development for prior accident years, which reduced loss and loss adjustment expenses by $10.4 million, primarily from accident years 2017 through 2020. For the full year, the company experienced favorable development on prior accident years of $40.6 million, compared with $61.9 million in 2021. The Company attributes its lower claim severities for prior years to active claims handling.
• For the quarter ended December 31, 2022, the underwriting expense ratio was 26.4% compared with 24.7% in the same quarter in 2021, as a result of lower earned premium and increased guaranty fund assessments. For the year ended December 31, 2022, the underwriting expense ratio was 26.5%, compared with 26.1% in 2021, largely due to lower earned premium as underwriting and other expenses for the full year were largely unchanged.
• The effective tax rate for the full year 2022 was 17.8% compared with 17.2% for 2021. The rate was slightly higher than last year due to a decrease in the proportion of tax-exempt interest income relative to underwriting profit.

INVESTMENT RESULTS

Three Months Ended Twelve Months Ended December 31, December 31,

 

2022

 

 

2021

 

% Change

 

2022

 

 

2021

 

% Change (in thousands) (in thousands) Net investment income

$

7,642

 

$

6,073

 

25.8

%

$

27,223

 

$

25,435

 

7.0

%

Net realized gains on investments (pre-tax)

 

1,038

 

 

205

 

406.3

%

 

3,440

 

 

1,695

 

102.9

%

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

 

4,892

 

 

4,289

 

NM

 

 

(8,092

)

 

12,315

 

NM

 

Pre-tax investment yield

 

3.1

%

 

2.2

%

 

2.7

%

 

2.3

%

Tax-equivalent yield (1)

 

3.4

%

 

2.7

%

 

3.4

%

 

2.7

%

________________________________

(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 and full year ended December 31, 2022 increased 25.8% to $7.6 million and 7.0% to $27.2 million, respectively, due to higher yields on fixed income securities.
• Net unrealized gains on equity securities were $4.9 million in the fourth quarter. The full year loss of ($8.1) million is reflective of declines in the equity markets in the first half of the year.
• As of December 31, 2022, the carrying value of AMERISAFE’s investment portfolio, including cash and cash equivalents, was $1.0 billion.

CAPITAL MANAGEMENT

In an accompanying announcement, the Company’s Board of Directors increased the regular quarterly dividend by 6.5% from $0.31 per share to $0.34 per share, payable on March 24, 2023, to shareholders of record as of March 10, 2023.

NON-GAAP FINANCIAL MEASURES

This release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the U.S. Securities and Exchange Commission (the SEC) and includes a reconciliation of non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with GAAP in the Supplemental Information in this release.

Management believes that investors' understanding of core operating performance is enhanced by AMERISAFE's disclosure of these financial measures which include operating net income, operating return on average adjusted equity and operating earnings per share.

SUPPLEMENTAL INFORMATION

Three Months Ended Twelve Months Ended December 31, December 31,

 

2022

 

 

2021

 

 

2022

 

 

2021

 

(in thousands, except share and per share data)   Net income

$

20,778

 

$

3,541

 

$

55,602

 

$

65,756

 

Less: Net realized gains on investments

 

1,038

 

 

205

 

 

3,440

 

 

1,695

 

Net unrealized gains (losses) on equity securities

 

4,892

 

 

4,289

 

 

(8,092

)

 

12,315

 

Tax effect (1)

 

(1,245

)

 

(944

)

 

977

 

 

(2,942

)

Operating net income (2)

$

16,093

 

$

(9

)

$

59,277

 

$

54,688

 

  Average shareholders’ equity (3)

$

345,226

 

$

439,740

 

$

358,378

 

$

419,070

 

Less: Average accumulated other comprehensive income (loss)

 

(16,896

)

 

14,262

 

 

(146

)

 

17,278

 

Average adjusted shareholders’ equity (2)

$

362,122

 

$

425,478

 

$

358,524

 

$

401,792

 

  Diluted weighted average common shares

 

19,209,279

 

 

19,420,757

 

 

19,321,717

 

 

19,408,619

 

  Return on average equity (4)

 

24.1

%

 

3.2

%

 

15.5

%

 

15.7

%

Operating return on average adjusted equity (2)

 

17.8

%

 

0.0

%

 

16.5

%

 

13.6

%

Diluted earnings per share

$

1.08

 

$

0.18

 

$

2.88

 

$

3.39

 

Operating earnings per share (2)

$

0.84

 

$

-

 

$

3.07

 

$

2.82

 

________________________________

(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 February 21, 2023, at 11:00 a.m. Eastern Time to discuss the results for the quarter and comment on future periods. To participate in the conference call, dial 323-701-0225 (Conference Code 3095655) 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 the “Investor Relations Home” page of the “Investors” section of the Company’s website (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 the same website location.

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, including the impact of a pandemic on the business and operations of the Company and our policyholders and the market value of our investment portfolio. Additional 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. 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 Twelve Months Ended December 31, December 31,

 

2022

 

 

2021

 

 

2022

 

 

2021

 

(unaudited) (unaudited) Revenues: Gross premiums written

$

55,647

 

$

55,871

 

$

276,110

 

$

278,294

 

Ceded premiums written

 

(2,690

)

 

(3,059

)

 

(10,527

)

 

(10,469

)

Net premiums written

$

52,957

 

$

52,812

 

$

265,583

 

$

267,825

 

  Net premiums earned

$

66,073

 

$

67,733

 

$

271,698

 

$

275,993

 

Net investment income

 

7,642

 

 

6,073

 

 

27,223

 

 

25,435

 

Net realized gains on investments

 

1,038

 

 

205

 

 

3,440

 

 

1,695

 

Net unrealized gains (losses) on equity securities

 

4,892

 

 

4,289

 

 

(8,092

)

 

12,315

 

Fee and other income

 

116

 

 

81

 

 

468

 

 

496

 

Total revenues

 

79,761

 

 

78,381

 

 

294,737

 

 

315,934

 

  Expenses: Loss and loss adjustment expenses incurred

 

36,524

 

 

59,197

 

 

152,316

 

 

160,798

 

Underwriting and other operating costs

 

17,421

 

 

16,714

 

 

72,032

 

 

72,051

 

Policyholder dividends

 

182

 

 

515

 

 

2,699

 

 

3,715

 

Provision for investment related credit loss expense (benefit)

 

(16

)

 

23

 

 

44

 

 

(79

)

Total expenses

 

54,111

 

 

76,449

 

 

227,091

 

 

236,485

 

  Income before taxes

 

25,650

 

 

1,932

 

 

67,646

 

 

79,449

 

Income tax expense

 

4,872

 

 

(1,609

)

 

12,044

 

 

13,693

 

Net income

$

20,778

 

$

3,541

 

$

55,602

 

$

65,756

 

 

AMERISAFE, INC. AND SUBSIDIARIES

Consolidated Statements of Income (cont.)

(in thousands, except per share amounts)

  Three Months Ended Twelve Months Ended December 31, December 31,

2022

2021

2022

2021

(unaudited) (unaudited) Basic EPS: Net income

$

20,778

$

3,541

$

55,602

$

65,756

  Basic weighted average common shares

 

19,131,271

 

19,345,324

 

19,233,241

 

19,332,391

Basic earnings per share

$

1.09

$

0.18

$

2.89

$

3.40

  Diluted EPS: Net income

$

20,778

$

3,541

$

55,602

$

65,756

  Diluted weighted average common shares: Weighted average common shares

 

19,131,271

 

19,345,324

 

19,233,241

 

19,332,391

Restricted stock and restricted stock units

 

78,008

 

75,433

 

88,476

 

76,228

Diluted weighted average common shares

 

19,209,279

 

19,420,757

 

19,321,717

 

19,408,619

  Diluted earnings per share

$

1.08

$

0.18

$

2.88

$

3.39

 

AMERISAFE, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands)

  December 31, December 31,

2022

2021

(unaudited) Assets Investments

$

888,987

$

1,012,571

Cash and cash equivalents

 

61,469

 

70,722

Amounts recoverable from reinsurers

 

125,677

 

120,561

Premiums receivable, net

 

121,713

 

135,100

Deferred income taxes

 

22,794

 

14,384

Deferred policy acquisition costs

 

17,401

 

17,059

Other assets

 

31,238

 

32,327

$

1,269,279

$

1,402,724

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

$

696,037

$

745,278

Unearned premiums

 

114,976

 

121,092

Insurance-related assessments

 

17,653

 

16,850

Other liabilities

 

123,181

 

120,181

  Shareholders’ equity

 

317,432

 

399,323

Total liabilities and shareholders’ equity

$

1,269,279

$

1,402,724

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230220005059/en/

Andy Omiridis, EVP & CFO AMERISAFE 337.463.9052