DERIDDER, La., Oct. 31, 2019 (GLOBE NEWSWIRE) -- 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, 2019.
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| 2019 | 2018 | % Change | 2019 | 2018 | % Change | ||||||||||
| (in thousands, except per share data) | (in thousands, except per share data) | ||||||||||||||
| Net premiums earned | $ | 82,712 | $ | 85,184 | -2.9% | $ | 250,611 | $ | 261,489 | -4.2% | |||||
| Net investment income | 8,264 | 7,884 | 4.8% | 24,448 | 22,396 | 9.2% | |||||||||
| Net realized losses on investments, pretax | (4) | (329) | NM | (27) | (1,471) | NM | |||||||||
| Net income | 21,386 | 19,701 | 8.6% | 58,676 | 52,826 | 11.1% | |||||||||
| Diluted earnings per share | $ | 1.11 | $ | 1.02 | 8.8% | $ | 3.04 | $ | 2.74 | 10.9% | |||||
| Operating net income | 21,101 | 19,508 | 8.2% | 56,197 | 53,783 | 4.5% | |||||||||
| Operating earnings per share | $ | 1.09 | $ | 1.01 | 7.9% | $ | 2.91 | $ | 2.79 | 4.3% | |||||
| Book value per share | $ | 24.29 | $ | 23.82 | 2.0% | $ | 24.29 | $ | 23.82 | 2.0% | |||||
| Net combined ratio | 78.4% | 81.1% | 82.1% | 83.5% | |||||||||||
| Return on average equity | 18.6% | 17.4% | 17.8% | 15.9% | |||||||||||
G. Janelle Frost, President and Chief Executive Officer, observed, “AMERISAFE continued to produce an attractive return on equity this quarter supported by favorable loss ratios and expense management. Our response to the soft insurance cycle hinged on our providing quality services with disciplined underwriting as competition and declining rates lowered premiums.”
INSURANCE RESULTS
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| 2019 | 2018 | % Change | 2019 | 2018 | % Change | ||||||||||
| (in thousands) | (in thousands) | ||||||||||||||
| Gross premiums written | $ | 82,629 | $ | 85,324 | -3.2% | $ | 262,754 | $ | 276,368 | -4.9% | |||||
| Net premiums earned | 82,712 | 85,184 | -2.9% | 250,611 | 261,489 | -4.2% | |||||||||
| Loss and loss adjustment expenses incurred | 44,325 | 47,598 | -6.9% | 142,807 | 152,836 | -6.6% | |||||||||
| Underwriting and certain other operating costs, | |||||||||||||||
| commissions, salaries and benefits | 19,285 | 20,606 | -6.4% | 59,670 | 62,154 | -4.0% | |||||||||
| Policyholder dividends | 1,265 | 865 | 46.2% | 3,363 | 3,290 | 2.2% | |||||||||
| Underwriting profit (pre-tax) | $ | 17,837 | $ | 16,115 | 10.7% | $ | 44,771 | $ | 43,209 | 3.6% | |||||
| Insurance Ratios: | |||||||||||||||
| Current accident year loss ratio | 72.5% | 71.5% | 72.5% | 71.5% | |||||||||||
| Prior accident year loss ratio | -18.9% | -15.6% | -15.5% | -13.1% | |||||||||||
| Net loss ratio | 53.6% | 55.9% | 57.0% | 58.4% | |||||||||||
| Net underwriting expense ratio | 23.3% | 24.2% | 23.8% | 23.8% | |||||||||||
| Net dividend ratio | 1.5% | 1.0% | 1.3% | 1.3% | |||||||||||
| Net combined ratio | 78.4% | 81.1% | 82.1% | 83.5% | |||||||||||
- Gross premiums written in the third quarter of 2019 decreased by $2.7 million, or 3.2%, compared with the third quarter of 2018, primarily due to lower voluntary premiums on policies written in the quarter, which were 8.6% lower than the third quarter of 2018.
- Payroll audits and related premium adjustments increased premiums written by $2.0 million in the third quarter of 2019, compared to a decrease in premiums written of $2.1 million in the third quarter of 2018.
- The current accident year loss ratio for the third quarter was 72.5%, unchanged from the first half of 2019, and an increase of 1.0 percentage point from the 71.5% ratio for accident year 2018. During the quarter, the Company experienced favorable net loss development for prior accident years, which reduced loss and loss adjustment expenses by $15.6 million, primarily from accident years 2014 through 2017.
- For the quarter ended September 30, 2019, the underwriting expense ratio was 23.3% compared with 24.2% in the same quarter in 2018. The decrease in the expense ratio was due to lower loss based assessments, premium based assessments and commissions compared with the third quarter of 2018.
- The effective tax rate for the quarter ended September 30, 2019 was 19.6%, compared with 19.5% for the third quarter of 2018.
INVESTMENT RESULTS
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| 2019 | 2018 | % Change | 2019 | 2018 | % Change | ||||||||||
| (in thousands) | (in thousands) | ||||||||||||||
| Net investment income | $ | 8,264 | $ | 7,884 | 4.8% | $ | 24,448 | $ | 22,396 | 9.2% | |||||
| Net realized losses on | |||||||||||||||
| investments (pre-tax) | (4) | (329) | NM | (27) | (1,471) | NM | |||||||||
| Net unrealized gains on | |||||||||||||||
| equity securities (pre-tax) | 365 | 573 | -36.3% | 3,165 | 259 | NM | |||||||||
| Pre-tax investment yield | 2.7% | 2.6% | 2.7% | 2.5% | |||||||||||
| Tax-equivalent yield (1) | 3.1% | 3.0% | 3.1% | 3.0% | |||||||||||
(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, 2019, increased 4.8% to $8.3 million from $7.9 million in the third quarter of 2018, due to slightly higher investment yields on fixed-income securities.
- As of September 30, 2019, the carrying value of AMERISAFE’s investment portfolio, including cash and cash equivalents, was $1.2 billion.
CAPITAL MANAGEMENT
In an accompanying press release the Company announced a special cash dividend of $3.50 per share, payable on November 20, 2019, to shareholders of record as of November 13, 2019.
In addition, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.25 per share, payable on December 27, 2019 to shareholders of record as of December 13, 2019.
Book value per share at September 30, 2019 was $24.29, an increase of 14.3% from $21.26 at December 31, 2018.
SUPPLEMENTAL INFORMATION
| Three Months Ended | Nine Months Ended | ||||||||||
| September 30, | September 30, | ||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||
| (in thousands, except share and per share data) | |||||||||||
| Net income | $ | 21,386 | $ | 19,701 | $ | 58,676 | $ | 52,826 | |||
| Less: | |||||||||||
| Net realized losses on investments | (4) | (329) | (27) | (1,471) | |||||||
| Net unrealized gains on equity securities | 365 | 573 | 3,165 | 259 | |||||||
| Tax effect (1) | (76) | (51) | (659) | 255 | |||||||
| Operating net income (2) | $ | 21,101 | $ | 19,508 | $ | 56,197 | $ | 53,783 | |||
| Average shareholders’ equity (3) | $ | 459,086 | $ | 452,194 | $ | 439,246 | $ | 442,210 | |||
| Less: | |||||||||||
| Average accumulated other comprehensive income (loss) | 11,378 | (3,142) | 5,892 | (295) | |||||||
| Average adjusted shareholders’ equity | $ | 447,708 | $ | 455,336 | $ | 433,354 | $ | 442,505 | |||
| Diluted weighted average common shares | 19,302,551 | 19,272,984 | 19,320,199 | 19,281,036 | |||||||
| Return on average equity (4) | 18.6% | 17.4% | 17.8% | 15.9% | |||||||
| Operating return on average adjusted equity (2) | 18.9% | 17.1% | 17.3% | 16.2% | |||||||
| Diluted earnings per share | $ | 1.11 | $ | 1.02 | $ | 3.04 | $ | 2.74 | |||
| Operating earnings per share (2) | $ | 1.09 | $ | 1.01 | $ | 2.91 | $ | 2.79 | |||
(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 November 1, 2019, 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 323-794-2588 (Conference Code 2913228) 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, manufacturing, and agriculture. 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 factors 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, 2018. 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 | Nine Months Ended | ||||||||||
| September 30, | September 30, | ||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||
| (unaudited) | (unaudited) | ||||||||||
| Revenues: | |||||||||||
| Gross premiums written | $ | 82,629 | $ | 85,324 | $ | 262,754 | $ | 276,368 | |||
| Ceded premiums written | (2,170) | (2,283) | (6,804) | (6,982) | |||||||
| Net premiums written | $ | 80,459 | $ | 83,041 | $ | 255,950 | $ | 269,386 | |||
| Net premiums earned | $ | 82,712 | $ | 85,184 | $ | 250,611 | $ | 261,489 | |||
| Net investment income | 8,264 | 7,884 | 24,448 | 22,396 | |||||||
| Net realized losses on investments | (4) | (329) | (27) | (1,471) | |||||||
| Net unrealized gains on equity securities | 365 | 573 | 3,165 | 259 | |||||||
| Fee and other income | 151 | 217 | 234 | 411 | |||||||
| Total revenues | 91,488 | 93,529 | 278,431 | 283,084 | |||||||
| Expenses: | |||||||||||
| Loss and loss adjustment expenses incurred | 44,325 | 47,598 | 142,807 | 152,836 | |||||||
| Underwriting and other operating costs | 19,285 | 20,606 | 59,670 | 62,154 | |||||||
| Policyholder dividends | 1,265 | 865 | 3,363 | 3,290 | |||||||
| Total expenses | 64,875 | 69,069 | 205,840 | 218,280 | |||||||
| Income before taxes | 26,613 | 24,460 | 72,591 | 64,804 | |||||||
| Income tax expense | 5,227 | 4,759 | 13,915 | 11,978 | |||||||
| Net income | $ | 21,386 | $ | 19,701 | $ | 58,676 | $ | 52,826 | |||
| 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, | ||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||
| (unaudited) | (unaudited) | ||||||||||
| Basic EPS: | |||||||||||
| Net income | $ | 21,386 | $ | 19,701 | $ | 58,676 | $ | 52,826 | |||
| Basic weighted average common shares | 19,256,069 | 19,216,545 | 19,243,689 | 19,204,196 | |||||||
| Basic earnings per share | $ | 1.11 | $ | 1.03 | $ | 3.05 | $ | 2.75 | |||
| Diluted EPS: | |||||||||||
| Net income | $ | 21,386 | $ | 19,701 | $ | 58,676 | $ | 52,826 | |||
| Diluted weighted average common shares: | |||||||||||
| Weighted average common shares | 19,256,069 | 19,216,545 | 19,243,689 | 19,204,196 | |||||||
| Stock options and restricted stock | 46,482 | 56,439 | 76,510 | 76,840 | |||||||
| Diluted weighted average common shares | 19,302,551 | 19,272,984 | 19,320,199 | 19,281,036 | |||||||
| Diluted earnings per share | $ | 1.11 | $ | 1.02 | $ | 3.04 | $ | 2.74 | |||
| AMERISAFE, INC. AND SUBSIDIARIES Consolidated Balance Sheets (in thousands) | |||||
| September 30, | December 31, | ||||
| 2019 | 2018 | ||||
| (unaudited) | |||||
| Assets | |||||
| Investments | $ | 1,091,278 | $ | 1,125,490 | |
| Cash and cash equivalents | 125,870 | 40,344 | |||
| Amounts recoverable from reinsurers | 102,866 | 112,006 | |||
| Premiums receivable, net | 170,649 | 162,478 | |||
| Deferred income taxes | 18,480 | 21,852 | |||
| Deferred policy acquisition costs | 20,341 | 19,734 | |||
| Other assets | 45,055 | 34,027 | |||
| $ | 1,574,539 | $ | 1,515,931 | ||
| Liabilities and Shareholders’ Equity | |||||
| Liabilities: | |||||
| Reserves for loss and loss adjustment expenses | $ | 790,812 | $ | 798,409 | |
| Unearned premiums | 154,635 | 149,296 | |||
| Insurance-related assessments | 29,035 | 28,258 | |||
| Other liabilities | 131,328 | 130,206 | |||
| Shareholders’ equity | 468,729 | 409,762 | |||
| Total liabilities and shareholders’ equity | $ | 1,574,539 | $ | 1,515,931 | |