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AMERISAFE Announces 2021 Second Quarter Results

Reports Combined Ratio of 74.4%

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, 2021.

Three Months Ended Six Months Ended
June 30, June 30,

2021

2020

% Change

2021

2020

% Change

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

$

69,888

 

$

75,964

 

-8.0

%

$

140,634

 

$

154,954

 

-9.2

%

Net investment income

 

6,730

 

 

7,324

 

-8.1

%

 

13,313

 

 

15,073

 

-11.7

%

Net realized gains on investments (pretax)

 

1,179

 

 

163

 

NM

 

 

1,498

 

 

1,155

 

29.7

%

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

 

3,286

 

 

5,570

 

NM

 

 

8,797

 

 

(3,193

)

NM

 

Net income

 

23,767

 

 

23,948

 

-0.8

%

 

43,079

 

 

34,748

 

24.0

%

Diluted earnings per share

$

1.23

 

$

1.24

 

-0.8

%

$

2.22

 

$

1.80

 

23.3

%

Operating net income

 

20,240

 

 

19,419

 

4.2

%

 

34,946

 

 

36,358

 

-3.9

%

Operating earnings per share

$

1.04

 

$

1.00

 

4.0

%

$

1.80

 

$

1.88

 

-4.3

%

Book value per share

$

24.19

 

$

23.94

 

1.0

%

$

24.19

 

$

23.94

 

1.0

%

Net combined ratio

 

74.4

%

 

78.5

%

 

79.6

%

 

81.1

%

Return on average equity

 

20.8

%

 

21.3

%

 

19.0

%

 

15.6

%

G. Janelle Frost, President and Chief Executive Officer, said, “Approved loss costs declined, and competition remained strong this quarter, even as industry-wide results reported an increasing combined ratio for 2020. AMERISAFE’s combined ratio, however, declined this quarter. Favorable prior year case development and operating expense management countered premium pressures as pricing declined and the economy continued to recover.”

INSURANCE RESULTS

Three Months Ended Six Months Ended
June 30, June 30,

2021

2020

% Change

2021

2020

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

$

73,724

 

$

80,289

 

-8.2

%

$

155,238

 

$

167,360

 

-7.2

%

Net premiums earned

 

69,888

 

 

75,964

 

-8.0

%

 

140,634

 

 

154,954

 

-9.2

%

Loss and loss adjustment expenses incurred

 

32,423

 

 

37,530

 

-13.6

%

 

71,940

 

 

81,177

 

-11.4

%

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

 

18,455

 

 

21,131

 

-12.7

%

 

37,422

 

 

42,415

 

-11.8

%

Policyholder dividends

 

1,117

 

 

948

 

17.8

%

 

2,467

 

 

1,971

 

25.2

%

Underwriting profit (pre-tax)

$

17,893

 

$

16,355

 

9.4

%

$

28,805

 

$

29,391

 

-2.0

%

 
Insurance Ratios:
Current accident year loss ratio

 

72.0

%

 

72.5

%

 

72.0

%

 

72.5

%

Prior accident year loss ratio

 

-25.6

%

 

-23.1

%

 

-20.8

%

 

-20.1

%

Net loss ratio

 

46.4

%

 

49.4

%

 

51.2

%

 

52.4

%

Net underwriting expense ratio

 

26.4

%

 

27.8

%

 

26.6

%

 

27.4

%

Net dividend ratio

 

1.6

%

 

1.3

%

 

1.8

%

 

1.3

%

Net combined ratio

 

74.4

%

 

78.5

%

 

79.6

%

 

81.1

%

  • Gross premiums written in the second quarter of 2021 decreased by $6.6 million, or 8.2%, primarily due to lower voluntary premiums on policies written in the quarter which were 8.9% lower compared to the second quarter of 2020. This reduction in premium is primarily due to a continued decline in approved loss costs, which were lower by 6.5% on average on policies we renewed during the quarter.
  • Payroll audits and related premium adjustments increased premiums written by $0.5 million in the second quarter of 2021, the same amount as the second quarter of 2020.
  • The current accident year loss ratio for the second quarter was 72.0%, unchanged from the first quarter of 2021, and one half point lower than 2020. During the quarter, the Company experienced favorable case reserve development for prior accident years, which reduced loss and loss adjustment expenses by $17.9 million, primarily from accident years 2015 through 2019.
  • For the quarter ended June 30, 2021, the underwriting expense ratio was 26.4% compared with 27.8% in the same quarter in 2020. The decrease in the expense ratio was primarily due to lower insurance related assessments compared to the same quarter in 2020.
  • The effective tax rate for the quarter ended June 30, 2021 was 18.5%, which was the same as the second quarter of 2020.

INVESTMENT RESULTS

Three Months Ended Six Months Ended
June 30, June 30,

2021

2020

% Change

2021

2020

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

$

6,730

 

$

7,324

 

-8.1

%

$

13,313

 

$

15,073

 

-11.7

%

Net realized gains on investments (pre-tax)

 

1,179

 

 

163

 

NM

 

 

1,498

 

 

1,155

 

29.7

%

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

 

3,286

 

 

5,570

 

NM

 

 

8,797

 

 

(3,193

)

NM

 

Pre-tax investment yield

 

2.3

%

 

2.5

%

 

2.3

%

 

2.5

%

Tax-equivalent yield (1)

 

2.6

%

 

2.9

%

 

2.6

%

 

2.9

%

 
(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, 2021, decreased 8.1% to $6.7 million from $7.3 million in the second quarter of 2020, due to lower investment yields on fixed-income securities.
  • As of June 30, 2021, the carrying value of AMERISAFE’s investment portfolio, including cash and cash equivalents, was $1.2 billion.

CAPITAL MANAGEMENT

The Company paid a regular quarterly cash dividend of $0.29 per share on June 25, 2021. On July 27, 2021 the Company’s Board of Directors declared a quarterly cash dividend of $0.29 per share, payable on September 24, 2021 to shareholders of record as of September 10, 2021.

Book value per share at June 30, 2021 was $24.19, an increase of 6.6% from $22.70 at December 31, 2020.

SUPPLEMENTAL INFORMATION

Three Months Ended Six Months Ended
June 30, June 30,

2021

2020

2021

2020

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

$

23,767

 

$

23,948

 

$

43,079

 

$

34,748

 

Less:
Net realized gains on investments

 

1,179

 

 

163

 

 

1,498

 

 

1,155

 

Net unrealized gains (losses) on equity securities

 

3,286

 

 

5,570

 

 

8,797

 

 

(3,193

)

Tax effect (1)

 

(938

)

 

(1,204

)

 

(2,162

)

 

428

 

Operating net income (2)

$

20,240

 

$

19,419

 

$

34,946

 

$

36,358

 

 
Average shareholders’ equity (3)

$

457,996

 

$

449,876

 

$

453,591

 

$

446,506

 

Less:
Average accumulated other comprehensive income

 

16,417

 

 

16,437

 

 

18,941

 

 

15,695

 

Average adjusted shareholders’ equity (2)

$

441,579

 

$

433,439

 

$

434,650

 

$

430,811

 

 
Diluted weighted average common shares

 

19,380,611

 

 

19,335,707

 

 

19,384,078

 

 

19,335,748

 

 
Return on average equity (4)

 

20.8

%

 

21.3

%

 

19.0

%

 

15.6

%

Operating return on average adjusted equity (2)

 

18.3

%

 

17.9

%

 

16.1

%

 

16.9

%

Diluted earnings per share

$

1.23

 

$

1.24

 

$

2.22

 

$

1.80

 

Operating earnings per share (2)

$

1.04

 

$

1.00

 

$

1.80

 

$

1.88

 

 

(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, 2021, 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 323-701-0225 (Conference Code 2203760) 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 ten 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, 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. 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, 2020. 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 Six Months Ended
June 30, June 30,

2021

2020

2021

2020

(unaudited) (unaudited)
Revenues:
Gross premiums written

$

73,724

 

$

80,289

 

$

155,238

 

$

167,360

 

Ceded premiums written

 

(2,486

)

 

(2,672

)

 

(5,003

)

 

(5,455

)

Net premiums written

$

71,238

 

$

77,617

 

$

150,235

 

$

161,905

 

 
Net premiums earned

$

69,888

 

$

75,964

 

$

140,634

 

$

154,954

 

Net investment income

 

6,730

 

 

7,324

 

 

13,313

 

 

15,073

 

Net realized gains on investments

 

1,179

 

 

163

 

 

1,498

 

 

1,155

 

Net unrealized gains (losses) on equity securities

 

3,286

 

 

5,570

 

 

8,797

 

 

(3,193

)

Gain (loss) on disposal of assets

 

(2

)

 

(29

)

 

21

 

 

(29

)

Fee and other income

 

76

 

 

90

 

 

245

 

 

291

 

Total revenues

 

81,157

 

 

89,082

 

 

164,508

 

 

168,251

 

 
Expenses:
Loss and loss adjustment expenses incurred

 

32,423

 

 

37,530

 

 

71,940

 

 

81,177

 

Underwriting and other operating costs

 

18,455

 

 

21,131

 

 

37,422

 

 

42,415

 

Policyholder dividends

 

1,117

 

 

948

 

 

2,467

 

 

1,971

 

Provision for investment related credit loss expense (benefit)

 

(9

)

 

82

 

 

(117

)

 

56

 

Total expenses

 

51,986

 

 

59,691

 

 

111,712

 

 

125,619

 

 
Income before taxes

 

29,171

 

 

29,391

 

 

52,796

 

 

42,632

 

Income tax expense

 

5,404

 

 

5,443

 

 

9,717

 

 

7,884

 

Net income

$

23,767

 

$

23,948

 

$

43,079

 

$

34,748

 

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,

2021

2020

2021

2020

(unaudited) (unaudited)
Basic EPS:
Net income

$

23,767

$

23,948

$

43,079

$

34,748

 
Basic weighted average common shares

 

19,327,422

 

19,280,684

 

19,319,608

 

19,273,347

Basic earnings per share

$

1.23

$

1.24

$

2.23

$

1.80

 
Diluted EPS:
Net income

$

23,767

$

23,948

$

43,079

$

34,748

 
Diluted weighted average common shares:
Weighted average common shares

 

19,327,422

 

19,280,684

 

19,319,608

 

19,273,347

Restricted stock and stock options

 

53,189

 

55,023

 

64,470

 

62,401

Diluted weighted average common shares

 

19,380,611

 

19,335,707

 

19,384,078

 

19,335,748

 
Diluted earnings per share

$

1.23

$

1.24

$

2.22

$

1.80

AMERISAFE, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands)

 
June 30, December 31,

2021

2020

(unaudited)
Assets
Investments

$

1,112,805

$

1,088,744

Cash and cash equivalents

 

57,541

 

61,757

Amounts recoverable from reinsurers

 

110,912

 

105,803

Premiums receivable, net

 

165,158

 

156,760

Deferred income taxes

 

14,219

 

13,665

Deferred policy acquisition costs

 

18,857

 

17,810

Other assets

 

26,771

 

26,316

$

1,506,263

$

1,470,855

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

$

744,969

$

760,561

Unearned premiums

 

138,861

 

129,260

Insurance-related assessments

 

18,688

 

17,995

Other liabilities

 

135,379

 

124,223

 
Shareholders’ equity

 

468,366

 

438,816

Total liabilities and shareholders’ equity

$

1,506,263

$

1,470,855

 

Contacts

Neal A. Fuller, EVP & CFO

AMERISAFE

337.463.9052

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