DERIDDER, La., July 28, 2016 (GLOBE NEWSWIRE) — AMERISAFE, Inc. (Nasdaq:AMSF), a specialty provider of hazardous workers’ compensation insurance, today announced results for the second quarter ended June 30, 2016.

                   
  Three Months Ended     Six Months Ended      
  June 30,     June 30,      
    2016       2015     % Change
    2016       2015     % Change
   
                                                   
  (in thousands, except per share data)     (in thousands, except per share data)      
Net premiums earned $ 90,728     $ 95,569       -5.1 %   $ 186,689     $ 190,356       -1.9 %    
Net investment income   6,201       6,890       -10.0 %     12,245       13,723       -10.8 %    
Net realized gains (losses) on investments  (pre-tax)   545       (2,617 )     NM       793       (2,558 )     NM      
Net income   16,639       14,319       16.2 %     40,896       29,449       38.9 %    
Diluted earnings per share $ 0.87     $ 0.75       16.0 %   $ 2.13     $ 1.54       38.3 %    
Operating net income   16,285       16,020       1.7 %     40,381       31,112       29.8 %    
Operating earnings per share $ 0.85     $ 0.84       1.2 %   $ 2.11     $ 1.63       29.4 %    
Book value per share $ 25.83     $ 24.87       3.9 %   $ 25.83     $ 24.87       3.9 %    
Net combined ratio   80.4 %     83.6 %         75.5 %     84.2 %        
Return on average equity   13.7 %     12.3 %         17.2 %     12.8 %        
                   

G. Janelle Frost, President and Chief Executive Officer, said, “The workers’ compensation market is increasingly competitive.  Our industry was profitable in 2015 which has spurred interest for companies which previously de-emphasized workers’ compensation.  AMERISAFE remains unwavering both in our disciplined underwriting focus on our market niche and in producing consistent, superior results.  This quarter’s combined ratio of 80.4% is a result of that commitment.”

Insurance Results

                 
  Three Months Ended     Six Months Ended    
  June 30,     June 30,    
    2016       2015     % Change     2016       2015     % Change  
                                         
  (in thousands)     (in thousands)    
                 
Gross premiums written  $   103,224     $   106,022       -2.6 %   $   203,606     $   206,811       -1.5 %  
Net premiums earned   90,728       95,569       -5.1 %     186,689       190,356       -1.9 %  
Loss and loss adjustment expenses incurred    49,171       57,304       -14.2 %     95,887       117,310       -18.3 %  
Underwriting and certain other operating costs, commissions, salaries and benefits   22,561       22,082       2.2 %     42,695       42,452       0.6 %  
Policyholder dividends      1,216        438       NM        2,306         653       NM    
Underwriting profit (pre-tax) $   17,780     $  15,745       12.9 %   $   45,801     $   29,941       53.0 %  
                                                 
Insurance Ratios:                
Current accident year loss ratio    67.9 %     69.8 %         67.9 %     69.8 %      
Prior accident year loss ratio    -13.7 %     -9.8 %         -16.5 %     -8.2 %      
Net loss ratio    54.2 %     60.0 %         51.4 %     61.6 %      
Net underwriting expense ratio    24.9 %     23.1 %         22.9 %     22.3 %      
Net dividend ratio    1.3 %     0.5 %         1.2 %     0.3 %      
Net combined ratio    80.4 %     83.6 %         75.5 %     84.2 %      
                                                 
  • Gross premiums written in the quarter decreased by $2.8 million, or 2.6% due to lower payroll audits of $3.0 million, offset in part by positive premium growth for voluntary policies.  Payroll audits and related premium adjustments increased premiums written by $1.5 million in the second quarter of 2016, compared with $4.5 million in the second quarter of 2015.
  • Voluntary premium for policies written during the quarter ended June 30, 2016 increased 1.1% compared with the second quarter of 2015.
  • The current accident year loss ratio for the second quarter was 67.9%, a decrease of 1.9 percentage points from 69.8% in the second quarter of 2015.  During the quarter, the Company experienced favorable loss development for prior accident years which reduced loss and loss adjustment expenses by $12.4 million, mostly attributable to accident years 2014, 2013 and accident years 2009 and prior.  These results reflect improved trends for both closing claims and claims severity and were driven by favorable case reserve development on claims that were closed during the quarter.
  • For the quarter ended June 30, 2016, the underwriting expense ratio was 24.9% compared to 23.1% in the same quarter in 2015.  The increase in the quarter was due to lower earned premiums as well as higher bad debt and compensation expense compared with last year’s second quarter. 
  • The effective tax rate for the quarter ended June 30, 2016 was 32.4% compared with 28.8% for the second quarter of 2015.  The increase in the tax rate resulted from a higher proportion of underwriting income to tax-exempt income relative to the second quarter of 2015.

Investment Results

                   
    Three Months Ended     Six Months Ended    
    June 30,     June 30,    
      2016       2015     % Change     2016       2015     % Change  
                                               
    (in thousands)     (in thousands)    
Net investment income    $ 6,201     $ 6,890       -10.0 %   $ 12,245     $ 13,723       -10.8 %  
Net realized gains (losses) on investments (pre-tax)      545       (2,617 )     NM       793       (2,558 )     NM    
Pre-tax investment yield      2.1 %     2.4 %         2.1 %     2.5 %      
Tax-equivalent yield (1)      3.3 %     3.6 %         3.3 %     3.6 %      
________________________________              
(1) The tax equivalent yield is calculated using the effective interest rate and a 35% marginal tax rate. 
 
  • Net investment income for the quarter ending June 30, 2016, declined 10.0% to $6.2 million from $6.9 million in the second quarter of 2015, largely due to the decline in value of an investment in a limited partnership hedge fund where the change in value is recorded in investment income each quarter.
  • As of June 30, 2016, the carrying and fair 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 $0.18 per share on June 24, 2016.  On July 26, 2016 the Company’s Board of Directors declared a quarterly cash dividend of $0.18 per share, payable on September 23, 2016 to shareholders of record as of September 9, 2016.

During the quarter, no shares were repurchased under the Company’s share repurchase plan. 

Supplemental Information

         
  Three Months Ended Six Months Ended
  June 30, June 30,
    2016       2015       2016       2015  
                               
  (in thousands, except share and per share data)
         
Net income  $ 16,639     $ 14,319     $ 40,896     $ 29,449  
Less: Net realized gains (losses) on investments   545       (2,617 )     793       (2,558 )
Tax effect (1)      (191 )       916         (278 )       895  
Operating net income (2)   $   16,285     $   16,020     $   40,381     $   31,112  
                               
Average shareholders’ equity (3)  $ 487,350     $ 467,226     $ 474,964     $ 459,883  
Less: Average other comprehensive income      6,845         2,840         5,448         2,431  
Average adjusted shareholders’ equity $   480,505     $   464,386     $   469,516     $   457,452  
                               
Diluted weighted average common shares     19,184,984       19,080,065       19,178,893       19,069,949  
                               
Return on average equity (4)    13.7 %     12.3 %     17.2 %     12.8 %
Operating return on average adjusted equity (2)    13.6 %     13.8 %     17.2 %     13.6 %
Diluted earnings per share $ 0.87     $ 0.75     $ 2.13     $ 1.54  
Operating earnings per share (2)  $ 0.85     $ 0.84     $ 2.11     $ 1.63  
________________________________        
(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 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 Friday July 29, 2016, at 10:30 a.m. Eastern Time to discuss the results for the quarter, as well as the outlook for future periods.  To participate in the conference call dial 877-225-7695 (Domestic) or 720-545-0027 (International) at least ten 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 August 5, 2016.  To access the replay, dial 855-859-2056 or 404-537-3406 and use the pass code 40448258#.

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, manufacturing, agriculture and oil and gas.  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 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, 2015.  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,  
      2016       2015       2016       2015    
                                   
    (unaudited) (unaudited)  
Revenues:            
Gross premiums written    $   103,224     $   106,022     $   203,606     $   206,811    
Ceded premiums written       (2,550 )       (2,549 )       (5,101 )       (5,085 )  
Net premiums written    $   100,674     $   103,473     $   198,505     $   201,726    
                                   
Net premiums earned    $   90,728     $   95,569     $   186,689     $   190,356    
Net investment income        6,201         6,890         12,245         13,723    
Net realized gains (losses) on investments       545         (2,617 )       793         (2,558 )  
Fee and other income        89         94         171         203    
Total revenues        97,563         99,936         199,898         201,724    
                                   
Expenses:                                  
Loss and loss adjustment expenses incurred        49,171         57,304         95,887         117,310    
Underwriting and other operating costs        22,561         22,082         42,695         42,452    
Policyholder dividends        1,216         438         2,306         653    
Total expenses        72,948         79,824         140,888         160,415    
                                   
Income before taxes        24,615         20,112         59,010         41,309    
Income tax expense        7,976         5,793         18,114         11,860    
Net income    $   16,639     $   14,319     $   40,896     $   29,449    
                                   

 

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,  
      2016       2015       2016       2015    
                                   
    (unaudited) (unaudited)  
Basic EPS:            
Net income    $   16,639     $   14,319     $   40,896     $   29,449    
                                   
Basic weighted average common shares        19,096,718         18,917,229         19,077,328         18,882,693    
Basic earnings per share    $   0.87     $   0.76     $   2.14     $   1.56    
             
Diluted EPS:            
Net income    $   16,639     $   14,319     $   40,896     $   29,449    
                                   
Diluted weighted average common shares            
Weighted average common shares        19,096,718         18,917,229         19,077,328         18,882,693    
Stock options and performance shares       88,266         162,836         101,565         187,256    
Diluted weighted average common shares       19,184,984         19,080,065         19,178,893         19,069,949    
             
Diluted earnings per share    $   0.87     $   0.75     $   2.13     $   1.54    
             

 

 

AMERISAFE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands)
       
    June 30, December 31,
      2016       2015  
                 
    (unaudited)  
Assets      
Investments    $   1,108,909     $   1,045,152  
Cash and cash equivalents         70,155         69,481  
Amounts recoverable from reinsurers        94,256         91,077  
Premiums receivable, net         208,235         185,364  
Deferred income taxes         26,531         29,905  
Deferred policy acquisition costs         20,675         20,412  
Other assets         66,008         60,654  
    $   1,594,769     $   1,502,045  
                 
Liabilities and Shareholders’ Equity                
Liabilities:                
Reserves for loss and loss adjustment expenses    $   725,549     $   718,033  
Unearned premiums         179,800         167,983  
Insurance-related assessments        36,478         32,329  
Other liabilities         156,995         129,719  
                 
Shareholders’ equity         495,947         453,981  
Total liabilities and shareholders’ equity     $   1,594,769     $   1,502,045  
                 
CONTACT: Contact: Neal A Fuller, EVP & CFO
AMERISAFE, Inc.
337-463-9052
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