AMERISAFE Announces 2011 Second Quarter Results
August 02 2011 - 4:30PM
AMERISAFE, Inc. (Nasdaq:AMSF), a specialty provider of hazardous
workers' compensation insurance, today announced results for the
second quarter ended June 30, 2011.
|
Three Months
Ended June 30, |
Six Months
Ended June 30, |
|
2011 |
2010 |
% Change |
2011 |
2010 |
% Change |
|
(in thousands, except per share
data) |
Net premiums earned |
$ 60,261 |
$ 52,982 |
13.7% |
$ 120,350 |
$ 108,040 |
11.4% |
Net investment income |
6,597 |
6,675 |
(1.2)% |
13,143 |
13,215 |
(0.5)% |
Net realized gains on investments
(pre-tax) |
145 |
293 |
(50.3)% |
248 |
2,845 |
(91.3)% |
Net income |
4,569 |
10,424 |
(56.2)% |
11,196 |
21,701 |
(48.4)% |
Diluted earnings per share |
$ 0.24 |
$ 0.54 |
(55.6)% |
$ 0.60 |
$ 1.13 |
(46.9)% |
Book value per share |
$18.31 |
$17.01 |
7.6% |
$ 18.31 |
$ 17.01 |
7.6% |
Net combined ratio |
102.7% |
87.3% |
|
100.5% |
89.4% |
|
Return on average equity |
5.5% |
13.3% |
|
6.8% |
14.0% |
|
Commenting on these results, Allen Bradley, AMERISAFE's Chairman
and Chief Executive Officer, stated, "Our second quarter reflects
the changes in the marketplace, with firming pricing and continuing
increases in reported work activity. At the same time, losses
from prior years continue to be challenging to bring to a
satisfactory resolution. We are convinced that AMERISAFE
is well positioned to take advantage of opportunities in the
marketplace and well provisioned to resolve claims demands from
prior periods."
Insurance Results
|
Three Months
Ended June 30, |
Six Months
Ended June 30, |
|
2011 |
2010 |
% Change |
2011 |
2010 |
% Change |
|
(in thousands) |
|
|
|
|
|
|
|
Gross premiums written |
$ 72,916 |
$ 62,993 |
15.8% |
$ 144,275 |
$ 124,084 |
16.3% |
Net premiums earned |
60,261 |
52,982 |
13.7% |
120,350 |
108,040 |
11.4% |
Loss and loss adjustment expenses
incurred |
46,576 |
33,711 |
38.2% |
90,752 |
71,338 |
27.2% |
Underwriting and certain other operating
costs, commissions and salaries and benefits |
14,938 |
12,347 |
21.0% |
29,501 |
24,844 |
18.7% |
Policyholder dividends |
364 |
210 |
73.3% |
719 |
474 |
51.7% |
Underwriting profit (loss) (pre-tax) |
(1,617) |
6,714 |
(124.1)% |
(622) |
11,384 |
(105.5)% |
|
|
|
|
|
|
|
Insurance Ratios: |
|
|
|
|
|
|
Current accident year loss ratio |
79.3% |
75.5% |
|
78.2% |
74.0% |
|
Prior accident year loss ratio |
(2.0)% |
(11.9)% |
|
(2.8)% |
(8.0)% |
|
Net loss ratio |
77.3% |
63.6% |
|
75.4% |
66.0% |
|
Net underwriting expense ratio |
24.8% |
23.3% |
|
24.5% |
23.0% |
|
Net dividend ratio |
0.6% |
0.4% |
|
0.6% |
0.4% |
|
Net combined ratio |
102.7% |
87.3% |
|
100.5% |
89.4% |
|
- Gross premiums written increased in both the three and six
month periods. Voluntary premiums written increased 1.8% in
the quarter and 2.1% for the six months ended June 30, 2011
compared to the same periods in 2010. Additionally, payroll
audits and related premium adjustments for policies written in
previous periods decreased premiums $0.3 million in the second
quarter and $0.4 million in the six months ended June 30,
2011. In 2010, these premium adjustments reduced premium $9.2
million in the second quarter and $18.1 million for the six months
ended June 30.
- In the second quarter, the Company increased the current
accident year loss ratio for 2011 from 77.0% to 78.2% as a result
of frequency and severity trends in the two most recent accident
years. However, during the quarter the Company experienced
favorable case development for prior accident years which reduced
loss and loss adjustment expenses by $1.2 million. Accident
years 2003, 2006 and 2007 were the primary contributors to the
favorable development while accident year 2010 experienced
unfavorable development.
- The underwriting expense ratio for both the quarter and six
months ended June 30, 2011 was up slightly from the prior year
periods primarily as a result of a lower experience rated
commission from our 2011 first layer reinsurance program. For
the six months ended June 30, 2011, our experience rated commission
offset the expense ratio by 2.2 percentage points compared to 4.4
percentage points for the same period in 2010.
- The effective tax rate for the six months ended June 30, 2011
was 8.8% compared to 19.8% for the same period in 2010. The
ratio of tax-free investment income to pre-tax income resulted in a
drop in the effective tax rate from that of 2010.
Geoff Banta, President and Chief Operating Officer, noted, "This
was the third consecutive quarter in which we experienced
year-over-year growth in our gross premiums written even while we
were increasing our pricing in the last four quarters. In the
second quarter, we grew from a continued rebound in audit premiums,
as well as increased premiums from policies written in the
quarter. We also continued intense management of our expenses
in the quarter to maintain our expense ratio below 25%.
Loss development from accident years prior to 2010 remained
favorable. However, our loss experience in that year and the
current accident year were higher than originally estimated,
causing us to raise our ultimate estimates.
Overall, we are optimistic that the underwriting and pricing
initiatives we have taken in recent quarters have positioned us to
take full advantage of a favorable turn in the
market."
Investment Results
|
Three Months
Ended June 30, |
Six Months
Ended June 30, |
|
2011 |
2010 |
% Change |
2011 |
2010 |
% Change |
|
(in thousands) |
Net investment income |
$ 6,597 |
$ 6,675 |
(1.2)% |
$ 13,143 |
$ 13,215 |
(0.5)% |
Net realized gains on investments
(pre-tax) |
145 |
293 |
|
248 |
2,845 |
|
Pre-tax investment yield |
3.2% |
3.3% |
|
3.2% |
3.3% |
|
Tax equivalent yield (1) |
4.5% |
4.7% |
|
4.5% |
4.7% |
|
________________________________ |
|
|
|
|
|
|
(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 $828.9 million and the
fair value of the portfolio was $856.6 million at June 30,
2011.
- The Company recognized other-than-temporary impairment of $0.2
million on one asset-backed security in the held-to-maturity
portfolio.
Supplemental Information
The Company had no share repurchases in the second
quarter. Since beginning its repurchase plan, the Company
repurchased a total of 867,670 shares of its outstanding common
stock for $15.0 million. As of June 30, 2011, there was $20.4
million remaining in the authorized share repurchase plan.
|
Three Months
Ended June 30, |
Six Months
Ended June 30, |
|
2011 |
2010 |
2011 |
2010 |
|
(in thousands, except share and
per share data) |
Net income |
$ 4,569 |
$ 10,424 |
$ 11,196 |
$ 21,701 |
Less: Net realized capital gains |
145 |
293 |
248 |
2,845 |
Tax effect (1) |
1 |
(9) |
— |
(10) |
Operating net income (2) |
4,423 |
10,140 |
10,948 |
18,866 |
|
|
|
|
|
Average shareholders' equity (3) |
$ 333,890 |
$ 313,501 |
$ 331,218 |
$ 309,408 |
Less: Average other comprehensive income
(loss) |
569 |
258 |
615 |
1,430 |
Adjusted average shareholders' equity |
333,321 |
313,243 |
330,603 |
307,978 |
Diluted weighted average common shares |
18,846,466 |
19,160,004 |
18,774,376 |
19,238,093 |
|
|
|
|
|
Return on average equity (4) |
5.5% |
13.3% |
6.8% |
14.0% |
Operating return on average equity (2) |
5.3% |
13.0% |
6.6% |
12.3% |
Diluted earnings per common share |
$ 0.24 |
$ 0.54 |
$ 0.60 |
$ 1.13 |
Operating earnings per common share (2) |
$ 0.23 |
$ 0.53 |
$ 0.58 |
$ 0.98 |
________________________________ |
|
|
|
|
(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 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 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 August 3, 2011, at
10:30 a.m. Eastern Time. 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 August 10, 2011. To access
the replay, dial 706-645-9291 and use the pass code 81864069#.
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.
The Amerisafe, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=9767
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,
2010. 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 June 30, |
Six Months Ended
June 30, |
|
2011 |
2010 |
2011 |
2010 |
|
(unaudited) |
|
|
|
Revenues: |
|
|
|
|
Gross premiums written |
$ 72,916 |
$ 62,993 |
$ 144,275 |
$ 124,084 |
Ceded premiums written |
(3,388) |
(4,603) |
(6,970) |
(9,242) |
Net premiums
written |
$ 69,528 |
$ 58,390 |
$ 137,305 |
$ 114,842 |
|
|
|
|
|
Net premiums earned |
$ 60,261 |
$ 52,982 |
$ 120,350 |
$ 108,040 |
Net investment income |
6,597 |
6,675 |
13,143 |
13,215 |
Net realized gains on investments |
145 |
293 |
248 |
2,845 |
Fee and other income |
48 |
145 |
269 |
377 |
Total revenues |
67,051 |
60,095 |
134,010 |
124,477 |
|
|
|
|
|
Expenses: |
|
|
|
|
Loss and loss adjustment expenses
incurred |
46,576 |
33,711 |
90,752 |
71,338 |
Underwriting and other operating
costs |
14,938 |
12,347 |
29,501 |
24,844 |
Interest expense |
380 |
385 |
759 |
760 |
Policyholder dividends |
364 |
210 |
719 |
474 |
Total expenses |
62,258 |
46,653 |
121,731 |
97,416 |
|
|
|
|
|
Income before taxes |
4,793 |
13,442 |
12,279 |
27,061 |
Income tax expense |
224 |
3,018 |
1,083 |
5,360 |
Net income |
$ 4,569 |
$ 10,424 |
$ 11,196 |
$ 21,701 |
|
|
AMERISAFE, INC. AND
SUBSIDIARIES |
Consolidated Statements
of Income (cont.) |
(in thousands, except
share and per share amounts) |
|
|
Three Months
Ended June 30, |
Six Months Ended
June 30, |
|
2011 |
2010 |
2011 |
2010 |
|
(unaudited) |
Basic EPS: |
|
|
|
|
Net income |
$ 4,569 |
$ 10,424 |
$ 11,196 |
$ 21,701 |
|
|
|
|
|
Basic weighted average common
shares |
18,392,207 |
18,720,748 |
18,312,843 |
18,804,093 |
Basic earnings per share |
$ 0.25 |
$ 0.56 |
$ 0.61 |
$ 1.15 |
|
|
|
|
|
Diluted EPS: |
|
|
|
|
Net income |
$ 4,569 |
$ 10,424 |
$ 11,196 |
$ 21,701 |
|
|
|
|
|
Diluted weighted average common shares: |
|
|
|
|
Weighted average common
shares |
18,392,207 |
18,720,748 |
18,312,843 |
18,804,093 |
Stock options |
446,975 |
435,082 |
455,461 |
430,707 |
Restricted
stock |
7,284 |
4,174 |
6,072 |
3,293 |
Diluted weighted average
common shares |
18,846,466 |
19,160,004 |
18,774,376 |
19,238,093 |
|
|
|
|
|
Diluted earnings per common share |
$ 0.24 |
$ 0.54 |
$ 0.60 |
$ 1.13 |
|
|
AMERISAFE, INC. AND
SUBSIDIARIES |
Consolidated Balance
Sheets |
(in
thousands) |
|
|
June 30, |
December 31, |
|
2011 |
2010 |
|
(unaudited) |
|
Assets |
|
|
Investments |
$ 766,815 |
$ 765,537 |
Cash and cash equivalents |
62,044 |
60,966 |
Amounts recoverable from reinsurers |
94,187 |
95,133 |
Premiums receivable, net |
140,460 |
122,618 |
Deferred income taxes |
30,657 |
31,512 |
Deferred policy acquisition costs |
19,885 |
17,400 |
Deferred charges |
3,324 |
2,936 |
Other assets |
35,176 |
32,032 |
|
$ 1,152,548 |
$ 1,128,134 |
|
|
|
Liabilities and shareholders'
equity |
|
|
Liabilities: |
|
|
Reserves for loss and loss
adjustment expenses |
$ 527,047 |
$ 532,204 |
Unearned premiums |
128,449 |
111,494 |
Insurance-related
assessments |
36,574 |
33,898 |
Subordinated debt
securities |
36,090 |
36,090 |
Other liabilities |
87,175 |
89,225 |
|
|
|
Total shareholders' equity |
337,213 |
325,223 |
Total liabilities and shareholders'
equity |
$ 1,152,548 |
$ 1,128,134 |
CONTACT: G. Janelle Frost, EVP & CFO
AMERISAFE, Inc.
337-463-9052
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