DERIDDER, La., March 3, 2011 /PRNewswire/ -- AMERISAFE, Inc.
(Nasdaq: AMSF), a specialty provider of hazardous workers'
compensation insurance, today announced results for the fourth
quarter ended December 31, 2010.
|
|
|
Three Months
Ended
December
31,
|
Twelve
Months Ended
December
31,
|
|
|
2010
|
2009
|
%
Change
|
2010
|
2009
|
%
Change
|
|
|
(in
thousands, except per share data)
|
|
Net premiums earned
|
$56,429
|
$56,970
|
(1.0)%
|
$218,881
|
$ 250,896
|
(12.8)%
|
|
Net investment income
|
6,458
|
6,783
|
(4.8)%
|
26,242
|
28,014
|
(6.3)%
|
|
Net realized gains on
investments (pre-tax)
|
165
|
34
|
385.3%
|
2,449
|
2,033
|
20.5%
|
|
Net income
|
7,294
|
6,597
|
10.6%
|
33,353
|
46,431
|
(28.2)%
|
|
Diluted earnings per
share
|
$ 0.39
|
$ 0.28
|
39.3%
|
$ 1.75
|
$
2.22
|
(21.2)%
|
|
Book value per share
|
$17.72
|
$ 16.00
|
10.8%
|
$ 17.72
|
$ 16.00
|
10.8%
|
|
Net combined ratio
|
92.6%
|
96.7%
|
|
93.3%
|
86.9%
|
|
|
Return on average
equity
|
9.1%
|
8.5%
|
|
10.6%
|
16.0%
|
|
|
|
|
|
|
|
|
|
|
|
Commenting on these results, AMERISAFE Chairman and Chief
Executive Officer Allen Bradley
stated, "In the fourth quarter, our gross premiums written showed a
year-over-year increase for the first time since 2008. In
addition, pricing improved slightly from the third quarter.
However, the industry environment remains challenging, with
robust price competition fueled by excess capacity and muted
demand."
Insurance Results
|
|
|
Three Months
Ended
December
31,
|
Twelve
Months Ended
December
31,
|
|
|
2010
|
2009
|
%
Change
|
2010
|
2009
|
%
Change
|
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
Gross premiums
written
|
$52,143
|
$ 49,369
|
5.6%
|
$ 228,424
|
$ 256,454
|
(10.9)%
|
|
Net premiums earned
|
56,429
|
56,970
|
(1.0)%
|
218,881
|
250,896
|
(12.8)%
|
|
Loss and loss adjustment
expenses incurred
|
39,390
|
42,669
|
(7.7)%
|
157,388
|
163,316
|
(3.6)%
|
|
Underwriting and certain other
operating costs, commissions and salaries and benefits
|
12,758
|
12,179
|
4.8%
|
45,959
|
53,957
|
(14.8)%
|
|
Policyholder
dividends
|
108
|
247
|
(56.3)%
|
834
|
770
|
8.3%
|
|
Underwriting profit
(pre-tax)
|
4,173
|
1,875
|
122.6%
|
14,700
|
32,853
|
(55.3)%
|
|
|
|
|
|
|
|
|
|
Insurance Ratios:
|
|
|
|
|
|
|
|
Current accident year loss
ratio
|
83.5%
|
90.2%
|
|
81.8%
|
73.8%
|
|
|
Prior accident year loss
ratio
|
(13.7)%
|
(15.3)%
|
|
(9.9)%
|
(8.7)%
|
|
|
Net loss ratio
|
69.8%
|
74.9%
|
|
71.9%
|
65.1%
|
|
|
Net underwriting expense
ratio
|
22.6%
|
21.4%
|
|
21.0%
|
21.5%
|
|
|
Net dividend ratio
|
0.2%
|
0.4%
|
|
0.4%
|
0.3%
|
|
|
Net combined ratio
|
92.6%
|
96.7%
|
|
93.3%
|
86.9%
|
|
|
|
|
|
|
|
|
|
- Gross premiums written increased for the quarter in comparison
to the same period in the previous year. This growth was
driven by less negative payroll audits and related premium
adjustments for policies written in previous periods. These
adjustments reduced premiums written $2.5
million in the fourth quarter of 2010 compared to a
reduction of $8.2 million in the
fourth quarter of 2009.
- In the fourth quarter, the Company increased the current
accident year loss ratio for 2010 from 81.2% to 81.8%. Claims
frequency increased in 2010. Severity was lower compared to
2009, but considerably higher than in years prior to 2009.
During the quarter the Company experienced favorable case
development for prior accident years, which reduced loss and loss
adjustment expenses by $7.7 million.
Accident years 2006, 2007 and 2008 were the primary
contributors to the favorable development.
- The underwriting expense ratio continued to be competitive in
the fourth quarter. In the quarter, the Company updated
forfeiture assumptions for certain stock options granted in
November 2005, resulting in
additional non-cash compensation expense of $1.2 million. Offsetting this expense were
lower fixed costs.
Geoff Banta, President and Chief
Operating Officer, noted, "After seven straight quarters of premium
declines, we were pleased to see a 5.6% increase in fourth quarter
premium, especially given the fact that we had begun increasing our
pricing late in the third quarter. We will continue to
increase pricing and toughen underwriting in those subsegments of
our business that performed poorly in 2009 and 2010."
Investment
Results
|
|
|
Three Months
Ended
December
31,
|
Twelve
Months Ended
December
31,
|
|
|
2010
|
2009
|
%
Change
|
2010
|
2009
|
%
Change
|
|
|
(in
thousands)
|
|
Net investment income
|
$ 6,458
|
$ 6,783
|
(4.8)%
|
$ 26,242
|
$ 28,014
|
(6.3)%
|
|
Net realized gains (losses) on
investments (pre-tax)
|
165
|
34
|
385.3%
|
2,449
|
2,033
|
20.5%
|
|
Pre-tax investment
yield
|
3.2%
|
3.3%
|
|
3.2%
|
3.5%
|
|
|
Tax equivalent yield
(1)
|
4.4%
|
4.8%
|
|
4.4%
|
4.8%
|
|
|
|
|
|
|
|
|
|
|
(1) The tax equivalent yield is
calculated using the effective interest rate and a 35% marginal tax
rate.
|
|
|
|
|
|
|
|
|
- The carrying value of AMERISAFE's investment portfolio,
including cash and cash equivalents, was $826.5 million and the fair value of the
portfolio was $846.6 million at
December 31, 2010.
Supplemental
Information
|
|
|
Three Months
Ended
December
31,
|
Twelve
Months Ended
December
31,
|
|
|
2010
|
2009
|
2010
|
2009
|
|
Shares repurchased
|
96,142
|
—
|
708,608
|
—
|
|
Average price of shares
repurchased, including commissions
|
$17.98
|
—
|
$17.08
|
—
|
|
Effective tax rate
|
30.5%
|
22.2%
|
21.4%
|
25.5%
|
|
|
|
|
|
|
|
|
- The Board renewed the Company's previously authorized share
repurchase program for one year, to December
31, 2011. As of December 31,
2010, AMERISAFE had spent approximately $12.1 million on its share repurchase program,
leaving $23.3 million of the
authorized amount remaining.
- For the year, the ratio of tax-free investment income to
pre-tax income, coupled with changes in the valuation allowance
resulted in a drop in the effective tax rate from 2009.
Reconciliation of GAAP and
Non-GAAP measures
|
|
|
Three Months
Ended
December
31,
|
Twelve
Months Ended
December
31,
|
|
|
2010
|
2009
|
2010
|
2009
|
|
|
(in
thousands, except share and per share data)
|
|
Net income
|
$
7,294
|
$
6,597
|
$
33,353
|
$ 46,431
|
|
Less: Net realized capital gains
(losses)
|
165
|
34
|
2,449
|
2,033
|
|
Tax effect (1)
|
23
|
11
|
12
|
(11)
|
|
Operating net income
(2)
|
7,106
|
6,552
|
30,892
|
44,409
|
|
|
|
|
|
|
|
Average shareholders' equity
(3)
|
$ 321,713
|
$ 311,346
|
$ 313,820
|
$ 290,345
|
|
Less: Average other
comprehensive income (loss)
|
338
|
2,274
|
1,497
|
1,787
|
|
Adjusted average shareholders'
equity
|
$ 321,375
|
$ 309,072
|
$ 312,323
|
$ 288,558
|
|
Diluted weighted average common
shares
|
18,883,302
|
19,318,883
|
19,095,320
|
19,268,295
|
|
Portion allocable to common
shareholders (4)
|
100.0%
|
94.1%
|
100.0%
|
94.1%
|
|
|
|
|
|
|
|
Return on average equity
(5)
|
9.1%
|
8.5%
|
10.6%
|
16.0%
|
|
Operating return on average
equity (2)
|
8.8%
|
8.5%
|
9.9%
|
15.4%
|
|
Diluted earnings per common
share
|
$
0.39
|
$
0.28
|
$
1.75
|
$
2.22
|
|
Operating earnings per common
share (2)
|
$
0.38
|
$
0.32
|
$
1.62
|
$
2.17
|
|
|
|
|
|
|
|
(1) The tax effect of net
realized capital gains is calculated assuming an annual tax rate of
35% plus the change in valuation allowance for deferred
taxes.
(2) Operating net income,
operating return on average equity and operating earnings per share
are non-GAAP financial measures, and 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, including redeemable preferred stock for the
same period used in determining the numerator. On December
31, 2009, the Company redeemed all outstanding shares of its Series
C and D redeemable preferred stock for $25.9 million.
(4) The portion allocable to
common shareholders relates to the two-class method of calculating
earnings per share.
(5) Return on average
equity is calculated by dividing the annualized net income by the
average shareholders' equity, including redeemable preferred stock
for the applicable period.
|
|
|
|
|
|
|
Conference Call Information
AMERISAFE has scheduled a conference call for March 4, 2011, at 9:30
a.m. Eastern Time. To participate in the conference
call dial 480-629-9692 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 March 11, 2011. To access the replay, dial
303-590-3030 and use the pass code 4403882 #.
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 and
agriculture. AMERISAFE actively markets workers' compensation
insurance in 33 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.
Actual results may differ materially from the results
expressed or implied in these statements as the results of risks,
uncertainties and other factors including, but not limited to, 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,
2009. 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.
Contacts:
|
G. Janelle Frost, EVP &
CFO
|
|
|
AMERISAFE, Inc.
|
|
|
337-463-9052
|
|
|
|
|
|
Ken Dennard, Managing
Partner
|
|
|
Karen Roan, Sr.VP
|
|
|
DRG&L /
713-529-6600
|
|
|
|
- Tables to
follow -
|
|
|
|
AMERISAFE,
INC. AND SUBSIDIARIES
Consolidated
Statements of Income
(in
thousands)
|
|
|
Three Months
Ended
December
31,
|
Twelve
Months Ended
December
31,
|
|
|
2010
|
2009
|
2010
|
2009
|
|
|
(unaudited)
|
|
Revenues:
|
|
|
|
|
Gross premiums
written
|
$ 52,143
|
$ 49,369
|
$ 228,424
|
$ 256,454
|
|
Ceded premiums
written
|
(5,973)
|
(6,043)
|
(20,549)
|
(20,158)
|
|
Net premiums
written
|
$ 46,170
|
$ 43,326
|
$207,875
|
$236,296
|
|
|
|
|
|
|
|
Net premiums earned
|
$ 56,429
|
$ 56,970
|
$ 218,881
|
$ 250,896
|
|
Net investment income
|
6,458
|
6,783
|
26,242
|
28,014
|
|
Net realized gains (losses) on
investments
|
165
|
34
|
2,449
|
2,033
|
|
Fee and other income
|
89
|
185
|
584
|
1,268
|
|
Total revenues
|
63,141
|
63,972
|
248,156
|
282,211
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
Loss and loss adjustment
expenses incurred
|
39,390
|
42,669
|
157,388
|
163,316
|
|
Underwriting and other operating
costs
|
12,758
|
12,179
|
45,959
|
53,957
|
|
Interest expense
|
388
|
399
|
1,548
|
1,810
|
|
Policyholder
dividends
|
108
|
247
|
834
|
770
|
|
Total expenses
|
52,644
|
55,494
|
205,729
|
219,853
|
|
|
|
|
|
|
|
Income before taxes
|
10,497
|
8,478
|
42,427
|
62,358
|
|
Income tax expense
|
3,203
|
1,881
|
9,074
|
15,927
|
|
Net income
|
7,294
|
6,597
|
33,353
|
46,431
|
|
Redemption premium
|
—
|
(875)
|
—
|
(875)
|
|
Net income available to common
shareholders
|
$ 7,294
|
$ 5,722
|
$33,353
|
$45,556
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMERISAFE,
INC. AND SUBSIDIARIES
Consolidated Statements of
Income (cont.)
(in thousands, except share and
per share amounts)
|
|
|
Three Months
Ended
December 31,
|
Twelve
Months Ended
December 31,
|
|
|
2010
|
2009
|
2010
|
2009
|
|
|
(unaudited)
|
|
Basic EPS:
|
|
|
|
|
|
Net income available to common
shareholders
|
$
7,294
|
$
5,722
|
$ 33,353
|
$ 45,556
|
|
|
|
|
|
|
|
Portion allocable to common
shareholders
|
100.0%
|
94.1%
|
100.0%
|
94.1%
|
|
|
|
|
|
|
|
Net income allocable to common
shareholders
|
$
7,294
|
$
5,385
|
$ 33,353
|
$ 42,869
|
|
|
|
|
|
|
|
Basic weighted average common
shares
|
18,417,784
|
18,878,092
|
18,637,167
|
18,860,197
|
|
Basic earnings per
share
|
$
0.40
|
$
0.29
|
$
1.79
|
$
2.27
|
|
|
|
|
|
|
|
Diluted EPS:
|
|
|
|
|
|
Net income allocable to common
shareholders
|
$
7,294
|
$ 5,385
|
$ 33,353
|
$ 42,869
|
|
|
|
|
|
|
|
Diluted weighted average common
shares:
|
|
|
|
|
|
Weighted average
common shares
|
18,417,784
|
18,878,092
|
18,637,167
|
18,860,197
|
|
Stock
options
|
460,428
|
438,165
|
448,790
|
396,254
|
|
Restricted
stock
|
5,090
|
2,626
|
9,363
|
11,844
|
|
Diluted weighted
average common shares
|
18,883,302
|
19,318,883
|
19,095,320
|
19,268,295
|
|
|
|
|
|
|
|
Diluted earnings per common
share
|
$
0.39
|
$
0.28
|
$
1.75
|
$
2.22
|
|
|
|
|
|
|
AMERISAFE,
INC. AND
SUBSIDIARIES
Consolidated Balance
Sheets
(in thousands)
|
|
|
December
31,
|
December
31,
|
|
|
2010
|
2009
|
|
|
(unaudited)
|
|
|
Assets
|
|
|
|
Investments
|
$
765,537
|
$
737,297
|
|
Cash and cash
equivalents
|
60,966
|
63,188
|
|
Amounts recoverable from
reinsurers
|
95,133
|
81,878
|
|
Premiums receivable,
net
|
122,618
|
151,570
|
|
Deferred income taxes
|
31,512
|
28,489
|
|
Deferred policy acquisition
costs
|
17,400
|
18,128
|
|
Deferred charges
|
2,936
|
3,030
|
|
Other assets
|
32,032
|
35,229
|
|
|
$
1,128,134
|
$
1,118,809
|
|
|
|
|
|
Liabilities and shareholders'
equity
|
|
|
|
Liabilities:
|
|
|
|
Reserves for loss and
loss adjustment expenses
|
$
532,204
|
$
534,655
|
|
Unearned
premiums
|
111,494
|
122,500
|
|
Insurance-related
assessments
|
33,898
|
40,072
|
|
Subordinated debt
securities
|
36,090
|
36,090
|
|
Other
liabilities
|
89,225
|
83,075
|
|
|
|
|
|
Total shareholders'
equity
|
325,223
|
302,417
|
|
Total liabilities and
shareholders' equity
|
$
1,128,134
|
$
1,118,809
|
|
|
|
|
|
|
SOURCE AMERISAFE, Inc.