DERIDDER, La., Oct. 31, 2013 (GLOBE NEWSWIRE) -- AMERISAFE, Inc. (Nasdaq:AMSF), a specialty provider of hazardous workers' compensation insurance, today announced results for the third quarter ended September 30, 2013.
| Summary of Results (dollars in thousands, except per share data) | ||||||
| Three Months Ended | Nine Months Ended | |||||
| September 30, | September 30, | |||||
| 2013 | 2012 | % Change | 2013 | 2012 | % Change | |
| Net premiums earned | $81,596 | $72,425 | 12.7% | $243,288 | $211,948 | 14.80% |
| Net investment income | 6,947 | 6,801 | 2.1% | $20,266 | 20,320 | (0.3%) |
| Net realized gains (losses) on investments | (654) | 985 | NM | (1,921) | 2,913 | NM |
| Net income | 9,699 | 7,121 | 36.2% | 26,194 | 20,127 | 30.1% |
| Diluted earnings per share | 0.52 | 0.38 | 36.8% | 1.39 | 1.08 | 28.7% |
| Operating net income | 10,124 | 6,481 | 56.2% | 27,443 | 18,234 | 50.5% |
| Operating earnings per share | 0.54 | 0.35 | 54.3% | 1.47 | 0.98 | 50.0% |
| Book value per share | 21.67 | 20.46 | 5.9% | 21.67 | 20.46 | 5.9% |
| Net combined ratio | 92.5% | 98.5% | 93.6% | 99.4% | ||
| Return on average equity | 9.8% | 7.7% | 8.9% | 7.4% | ||
Commenting on these results, Allen Bradley, AMERISAFE's Chairman and Chief Executive Officer, stated, "In line with our expectations, evidence of stressed balance sheets and a more challenging workers' compensation marketplace due to the weak pricing environment of prior years is beginning to surface. For us, the evidence represents an opportunity to expand our margins, our book of business and long term profitability for shareholders. We believe third quarter results reflect these attributes. With our focus on risk selection and pricing, AMERISAFE remains well positioned in a business that requires disciplined growth. As such, we remain confident in our ability to deliver attractive returns to our shareholders."
| Insurance Results (in thousands) | ||||||
| Three Months Ended | Nine Months Ended | |||||
| September 30, | % | September 30, | % | |||
| 2013 | 2012 | Change | 2013 | 2012 | Change | |
| Gross Premium Written | $86,137 | $77,283 | 11.5% | $281,075 | $247,683 | 13.5% |
| Net Premium Earned | 81,596 | 72,425 | 12.7% | 243,288 | 211,948 | 14.8% |
| Loss & LAE | 57,046 | 53,851 | 5.9% | 169,860 | 162,414 | 4.6% |
| Underwriting & Other | 18,472 | 16,495 | 12.0% | 57,012 | 46,557 | 22.5% |
| Policyholder dividends | 38 | 945 | NM | 980 | 1,659 | NM |
| Underwriting profit (pre-tax) | 6,040 | 1,134 | NM | 15,436 | 1,318 | NM |
| Insurance Ratios: | ||||||
| Current accident year loss ratio | 73.2% | 76.5% | 73.2% | 76.5% | ||
| Prior accident year loss ratio | (3.3%) | (2.1%) | (3.4%) | 0.1% | ||
| Net loss ratio | 69.9% | 74.4% | 69.8% | 76.6% | ||
| Net underwriting expense ratio | 22.6% | 22.8% | 23.4% | 22.0% | ||
| Net dividend ratio | 0.0% | 1.3% | 0.4% | 0.8% | ||
| Net combined ratio | 92.5% | 98.5% | 93.6% | 99.4% | ||
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Gross premiums written continued to grow in the third quarter. Voluntary premiums written increased 14.3% in the quarter and 14.4% for the nine months ended September 30, 2013 compared to the same periods in 2012. Additionally, payroll audits and related premium adjustments for policies written in previous periods increased premiums $0.7 million in the third quarter and $10.4 million in the nine months ended September 30, 2013. In 2012, these premium adjustments grew premium $3.1 million in the third quarter and $13.0 million for the nine months ended September 30.
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The current accident year loss ratio for the third quarter remained at 73.2%. During the quarter, the Company experienced favorable loss development, which reduced loss and loss adjustment expenses by $2.7 million, primarily attributable to accident years 2009 and prior.
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For the third quarter, the underwriting expense ratio declined to 22.6% from 22.8% a year ago primarily driven by the growth in premium earned. For the nine months, the expense ratio rose to 23.4% compared to 22.0% for the same time period in 2012. The increase in the underwriting expense ratio during the nine-month period mainly resulted from higher premium taxes and premium based assessments.
- The effective tax rate for the three and nine months ended September 30, 2013 was 22.1% and 23.4% compared to 20.9% and 17.7%, respectively, for the year ago periods. The increase resulted from a lower ratio of tax-free investment income to pre-tax income in 2013 compared to 2012.
President and Chief Operating Officer, Janelle Frost noted, "The combined ratio this quarter reflects our continued underwriting discipline and prudent approach to the market. Loss and loss adjustment expenses benefited from favorable development of prior accident years, and the current accident year ratio remained consistent with the first half of the year as frequency trends remained positive. Pricing also increased quarter over quarter which spurred top line growth of 11.5% percent. In addition, our expense ratio decreased in part due to management of operating costs at lower levels than growth in earned premium. In all, we are pleased with the operating results this quarter.
| Investment Results (in thousands) | ||||||
| Three Months Ended | Nine Months Ended | |||||
| September 30, | September 30, | |||||
| 2013 | 2012 | % Change | 2013 | 2012 | % Change | |
| Net investment income | $6,947 | $6,801 | 2.2% | $20,266 | $20,320 | (0.3%) |
| Net realized gains (losses) on investments (pre-tax) | (654) | 985 | NM | (1,921) | 2,913 | NM |
| Pre-tax investment yield | 2.9% | 3.1% | 2.9% | 3.1% | ||
| Tax equivalent yield (1) | 3.9% | 4.5% | 3.9% | 4.5% | ||
| (1) The tax equivalent yield is calculated using the effective interest rate and a 35% marginal tax rate. | ||||||
- As of September 30, 2013, the carrying value of AMERISAFE's investment portfolio, including cash and cash equivalents, was $978.3 million and the fair value of the portfolio was $1.0 billion.
Capital Management
- The Company paid its third consecutive quarterly dividend of $0.08 per share on September 27th, 2013. On October 28th, the Company's Board of Directors declared a quarterly cash dividend of $0.08 per share, payable on December 27th, 2013 to shareholders of record as of December 13th, 2013.
- During the quarter, no shares were repurchased under the share repurchase plan. Since beginning this plan, the Company repurchased a total of 1,258,250 shares for $22.4 million, or an average per share price of $17.78. On October 28th, the Company's Board of Directors voted to extend the current authorization from December 31, 2013 to December 31, 2014 and increase the authorization from $24.4 million to $25.0 million.
| Supplemental Information | ||||
| Three Months Ended | Nine Months Ended | |||
| September 30, | September 30, | |||
| 2013 | 2012 | 2013 | 2012 | |
| Net income | $9,699 | $7,121 | $26,194 | $20,127 |
| Less: Net realized capital gains (loss) | (654) | 985 | (1,921) | 2,913 |
| Tax effect (1) | 229 | (345) | 672 | (1,020) |
| Operating net income (2) | 10,124 | 6,481 | 27,443 | 18,234 |
| Avg shareholders' equity (3) | $396,614 | $367,794 | $390,967 | $360,788 |
| Less: Avg OCI | (2,149) | 3,390 | 154 | 3,165 |
| Adjusted average shareholders' equity | 398,763 | 364,404 | 390,813 | 357,623 |
| Diluted weighted average common shares | 18,758,346 | 18,580,083 | 18,730,729 | 18,583,079 |
| Diluted earnings per common share | $0.52 | $0.38 | $1.39 | $1.08 |
| Operating earnings per common share (2) | $0.54 | $0.35 | $1.47 | $0.98 |
| Return on average equity (4) | 9.8% | 7.7% | 8.9% | 7.4% |
| Operating return on average equity (2) | 10.2% | 7.1% | 9.4% | 6.8% |
| (in thousands, except share and per share data) | ||||
| (1) The tax effect of net realized capital gains is calculated assuming an annual tax rate of 35%. | ||||
| (2) Operating net income, operating return on average equity and operating earnings per share are non-GAAP financial measures. Management believes investor's 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 adjusted shareholders' equity. | ||||
| (4) Return on average equity is calculated by dividing the annualized net incomeby the average shareholders' equity. | ||||
Conference Call Information
AMERISAFE has scheduled a conference call for November 1, 2013, at 10:30 a.m. Eastern Time to discuss the results for the quarter and the outlook for future periods. To participate in the conference call dial 720-545-0027 at least 10 minutes before the call begins and ask for the AMERISAFE conference call. A replay of the call will be available approximately two hours after the live broadcast ends and will be accessible through November 8, 2013. To access the replay, dial 855-859-2056 or 404-537-3406 and use the conference ID 77177695.
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 and will remain available for approximately 60 days 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, manufacturing and agriculture among others. AMERISAFE actively markets workers' compensation insurance in 30 states and the District of Columbia.
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 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, 2012. 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 | Nine Months Ended | |||
| September 30, | September 30, | |||
| 2013 | 2012 | 2013 | 2012 | |
| (unaudited) | (unaudited) | |||
| Revenues: | ||||
| Gross premiums written | $86,137 | $77,283 | $281,075 | $247,683 |
| Ceded premiums written | (4,519) | (4,032) | (13,576) | (11,907) |
| Net premiums written | $81,618 | $73,251 | $267,499 | $235,776 |
| Net premiums earned | $81,596 | $72,425 | $243,288 | $211,948 |
| Net investment income | 6,947 | 6,801 | 20,266 | 20,320 |
| Net realized gains (losses) on investments | (654) | 985 | (1,921) | 2,913 |
| Fee and other income | 114 | 163 | 393 | 484 |
| Total revenues | 88,003 | 80,374 | 262,026 | 235,665 |
| Expenses: | ||||
| Loss and LAE | 57,046 | 53,851 | 169,860 | 162,414 |
| Underwriting & Other | 18,472 | 16,495 | 57,012 | 46,557 |
| Interest expense | -- | 80 | -- | 566 |
| Policyholder dividends | 38 | 945 | 980 | 1,659 |
| Total expenses | 75,556 | 71,371 | 227,852 | 211,196 |
| Income before taxes | 12,447 | 9,003 | 34,174 | 24,469 |
| Income tax expense | 2,748 | 1,882 | 7,980 | 4,342 |
| Net income | $9,699 | $7,121 | $26,194 | $20,127 |
| AMERISAFE, INC. AND SUBSIDIARIES | ||||
| Consolidated Statements of Income (cont.) | ||||
| Three Months Ended | Nine Months Ended | |||
| September 30, | September 30, | |||
| 2013 | 2012 | 2013 | 2012 | |
| (in thousands, except share and per share amounts) | ||||
| Basic EPS: | ||||
| Net income, as reported | $9,699 | $7,121 | $26,194 | $20,127 |
| Less allocated income to unvested shares | 27 | 6 | 74 | 12 |
| Net income available to common shareholders | $9,672 | $7,115 | $26,120 | $20,115 |
| Basic weighted average common shares | 18,395,971 | 18,173,062 | 18,343,901 | 18,154,768 |
| Basic earnings per common share | $0.53 | $0.39 | $1.42 | $1.11 |
| Diluted EPS: | ||||
| Net income available to common shareholders - diluted | $9,673 | $7,116 | $26,122 | $20,116 |
| Diluted weighted average common shares: | ||||
| Weighted average common shares | 18,395,971 | 18,173,062 | 18,343,901 | 18,154,768 |
| Stock options and performance shares | 362,375 | 407,021 | 386,828 | 428,311 |
| Diluted weighted average common shares | 18,758,346 | 18,580,083 | 18,730,729 | 18,583,079 |
| Diluted earnings per common share | $0.52 | $0.38 | $1.39 | $1.08 |
| AMERISAFE, INC. AND SUBSIDIARIES | ||
| Consolidated Balance Sheet | ||
| (in thousands) | ||
| September 30, | December 31, | |
| 2013 | 2012 | |
| (unaudited) | ||
| Assets | ||
| Investments | $861,516 | $808,116 |
| Cash and cash equivalents | 116,778 | 92,676 |
| Amounts recoverable from reinsurers | 77,835 | 101,352 |
| Premiums receivable, net | 172,002 | 141,950 |
| Deferred income taxes | 34,672 | 29,521 |
| Deferred policy acquisition costs | 21,085 | 18,419 |
| Other assets | 28,671 | 28,912 |
| Total Assets | $1,312,559 | $1,220,946 |
| Liabilities and Shareholders' Equity | ||
| Liabilities: | ||
| Reserves for loss and loss adjustment expenses | $609,042 | $570,450 |
| Unearned premiums | 164,739 | 140,528 |
| Insurance-related assessments | 28,887 | 22,244 |
| Other liabilities | 109,179 | 106,502 |
| Total shareholders' equity | 400,712 | 381,222 |
| Total liabilities and shareholders' equity | $1,312,559 | $1,220,946 |