AMERISAFE Announces 2019 Second Quarter Results
July 31 2019 - 4:30PM
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, 2019.
|
Three Months Ended |
|
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
|
June 30, |
|
|
|
2019 |
|
2018 |
|
% Change |
|
2019 |
|
2018 |
|
% Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except per share data) |
|
|
|
(in thousands, except per share data) |
|
|
Net premiums earned |
$ |
82,951 |
|
$ |
88,995 |
|
-6.8% |
|
$ |
167,899 |
|
$ |
176,305 |
|
-4.8% |
Net investment
income |
8,169 |
|
7,303 |
|
11.9% |
|
16,184 |
|
14,512 |
|
11.5% |
Net realized losses on
investments, pretax |
(82) |
|
(1,111) |
|
NM |
|
(23) |
|
(1,142) |
|
NM |
Net income |
17,890 |
|
16,956 |
|
5.5% |
|
37,290 |
|
33,125 |
|
12.6% |
Diluted earnings per
share |
$ |
0.93 |
|
$ |
0.88 |
|
5.7% |
|
$ |
1.93 |
|
$ |
1.72 |
|
12.2% |
Operating net income |
17,448 |
|
17,774 |
|
-1.8% |
|
35,096 |
|
34,275 |
|
2.4% |
Operating earnings per
share |
$ |
0.90 |
|
$ |
0.92 |
|
-2.2% |
|
$ |
1.82 |
|
$ |
1.78 |
|
2.2% |
Book value per share |
$ |
23.29 |
|
$ |
23.11 |
|
0.8% |
|
$ |
23.29 |
|
$ |
23.11 |
|
0.8% |
Net combined ratio |
83.9% |
|
83.6% |
|
|
|
84.0% |
|
84.7% |
|
|
Return on average equity |
16.3% |
|
15.5% |
|
|
|
17.4% |
|
15.2% |
|
|
G. Janelle Frost, President and Chief Executive Officer, noted,
“The workers’ compensation industry remained profitable through
2018, and competition remained strong through the second quarter.
AMERISAFE’s response was to execute on our commitment to deliver an
exceptional product to our policyholders through our quality
insurance services and risk assessment. Remaining committed to our
core disciplines has allowed us to provide stable returns for our
shareholders, a consistent market for our agent partners, and aided
business owners with mitigating risks.”
INSURANCE RESULTS
|
Three Months Ended |
|
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
|
June 30, |
|
|
|
2019 |
|
2018 |
|
% Change |
|
2019 |
|
2018 |
|
% Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross premiums written |
$ |
87,018 |
|
$ |
93,702 |
|
-7.1% |
|
$ |
180,125 |
|
$ |
191,044 |
|
-5.7% |
Net premiums earned |
82,951 |
|
88,995 |
|
-6.8% |
|
167,899 |
|
176,305 |
|
-4.8% |
Loss and loss adjustment
expenses incurred |
48,868 |
|
52,076 |
|
-6.2% |
|
98,482 |
|
105,238 |
|
-6.4% |
Underwriting and certain other
operating costs, commissions, salaries and benefits |
19,718 |
|
21,282 |
|
-7.3% |
|
40,385 |
|
41,548 |
|
-2.8% |
Policyholder
dividends |
998 |
|
1,092 |
|
-8.6% |
|
2,098 |
|
2,425 |
|
-13.5% |
Underwriting profit
(pre-tax) |
$ |
13,367 |
|
$ |
14,545 |
|
-8.1% |
|
$ |
26,934 |
|
$ |
27,094 |
|
-0.6% |
|
|
|
|
|
|
|
|
|
|
|
|
Insurance
Ratios: |
|
|
|
|
|
|
|
|
|
|
|
Current accident year loss
ratio |
72.5% |
|
71.5% |
|
|
|
72.5% |
|
71.5% |
|
|
Prior accident year loss
ratio |
-13.6% |
|
-13.0% |
|
|
|
-13.8% |
|
-11.8% |
|
|
Net loss ratio |
58.9% |
|
58.5% |
|
|
|
58.7% |
|
59.7% |
|
|
Net underwriting expense
ratio |
23.8% |
|
23.9% |
|
|
|
24.1% |
|
23.6% |
|
|
Net dividend ratio |
1.2% |
|
1.2% |
|
|
|
1.2% |
|
1.4% |
|
|
Net combined ratio |
83.9% |
|
83.6% |
|
|
|
84.0% |
|
84.7% |
|
|
- Gross premiums written in the second quarter of 2019 decreased
by $6.7 million, or 7.1%, compared with the second quarter of 2018,
primarily due to lower voluntary premiums on policies written in
the quarter, which were 5.3% lower than the second quarter of
2018.
- Payroll audits and related premium adjustments increased
premiums written by $1.8 million in the second quarter of 2019,
compared to an increase in premiums written of $3.8 million in the
second quarter of 2018.
- The current accident year loss ratio for the second quarter was
72.5%, unchanged from the first quarter of 2019, and an increase of
1.0 percentage point from the 71.5% ratio for accident year 2018.
During the quarter, the Company experienced favorable net loss
development for prior accident years, which reduced loss and loss
adjustment expenses by $11.3 million, primarily coming from
accident years 2014 through 2017.
- For the quarter ended June 30, 2019, the underwriting expense
ratio was 23.8% compared with 23.9% in the same quarter in 2018.
The decrease in the expense ratio was due to lower compensation
costs and premium based assessments compared with the second
quarter of 2018.
- The effective tax rate for the quarter ended June 30, 2019 was
19.3%, largely unchanged compared with 19.0% for the second quarter
of 2018.
INVESTMENT RESULTS
|
Three Months Ended |
|
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
|
June 30, |
|
|
|
|
2019 |
|
|
|
2018 |
|
|
% Change |
|
|
2019 |
|
|
|
2018 |
|
|
% Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
(in thousands) |
|
|
Net investment income |
$ |
8,169 |
|
|
$ |
7,303 |
|
|
11.9% |
|
$ |
16,184 |
|
|
$ |
14,512 |
|
|
11.5% |
Net realized losses
on investments (pre-tax) |
|
(82 |
) |
|
|
(1,111 |
) |
|
NM |
|
|
(23 |
) |
|
|
(1,142 |
) |
|
NM |
Net unrealized gains (losses)
on equity securities (pre-tax) |
|
642 |
|
|
|
76 |
|
|
NM |
|
|
2,800 |
|
|
|
(314 |
) |
|
NM |
Pre-tax investment yield |
|
2.7% |
|
|
|
2.5% |
|
|
|
|
|
2.7% |
|
|
|
2.4% |
|
|
|
Tax-equivalent yield (1) |
|
3.1% |
|
|
|
2.9% |
|
|
|
|
|
3.1% |
|
|
|
2.9% |
|
|
|
________________________________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 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, 2019,
increased 11.9% to $8.2 million from $7.3 million in the second
quarter of 2018, due to slightly higher investment yields on
fixed-income securities.
- As of June 30, 2019, 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 $0.25 per
share on June 21, 2019. On July 30, 2019 the Company’s Board of
Directors declared a quarterly cash dividend of $0.25 per share,
payable on September 20, 2019 to shareholders of record as of
September 6, 2019.
Book value per share at June 30, 2019 was $23.29, an increase of
9.5% from $21.26 at December 31, 2018.
SUPPLEMENTAL INFORMATION
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
(in thousands, except share and per share
data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
17,890 |
|
|
$ |
16,956 |
|
|
$ |
37,290 |
|
|
$ |
33,125 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net realized losses on investments |
|
(82 |
) |
|
|
(1,111 |
) |
|
|
(23 |
) |
|
|
(1,142 |
) |
Net unrealized gains (losses) on equity securities |
|
642 |
|
|
|
76 |
|
|
|
2,800 |
|
|
|
(314 |
) |
Tax effect (1) |
|
(118 |
) |
|
|
217 |
|
|
|
(583 |
) |
|
|
306 |
|
Operating net income
(2) |
$ |
17,448 |
|
|
$ |
17,774 |
|
|
$ |
35,096 |
|
|
$ |
34,275 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average shareholders’ equity
(3) |
$ |
439,924 |
|
|
$ |
438,730 |
|
|
$ |
429,603 |
|
|
$ |
435,407 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average accumulated other comprehensive income (loss) |
|
7,551 |
|
|
|
(2,160 |
) |
|
|
4,654 |
|
|
|
765 |
|
Average adjusted shareholders’
equity |
$ |
432,373 |
|
|
$ |
440,890 |
|
|
$ |
424,949 |
|
|
$ |
434,642 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average
common shares |
|
19,306,953 |
|
|
|
19,266,735 |
|
|
|
19,316,276 |
|
|
|
19,275,883 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average equity
(4) |
|
16.3% |
|
|
|
15.5% |
|
|
|
17.4% |
|
|
|
15.2% |
|
Operating return on average
adjusted equity (2) |
|
16.1% |
|
|
|
16.1% |
|
|
|
16.5% |
|
|
|
15.8% |
|
Diluted earnings per
share |
$ |
0.93 |
|
|
$ |
0.88 |
|
|
$ |
1.93 |
|
|
$ |
1.72 |
|
Operating earnings per share
(2) |
$ |
0.90 |
|
|
$ |
0.92 |
|
|
$ |
1.82 |
|
|
$ |
1.78 |
|
________________________________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 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%.
- 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.
- Average shareholders’ equity is calculated by taking the
average of the beginning and ending shareholders’ equity.
- 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 1, 2019, 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 877-225-7695 or 720-545-0027 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 8, 2019. To
access the replay, dial 855-859-2056 or 404-537-3406 and use the
pass code 7867689#.
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, 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 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, 2018. 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, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
|
|
(unaudited) |
|
(unaudited) |
Revenues: |
|
|
|
|
|
|
|
Gross premiums written |
$ |
87,018 |
|
|
$ |
93,702 |
|
|
$ |
180,125 |
|
|
$ |
191,044 |
|
Ceded premiums
written |
|
(2,204 |
) |
|
|
(2,369 |
) |
|
|
(4,634 |
) |
|
|
(4,699 |
) |
Net premiums
written |
$ |
84,814 |
|
|
$ |
91,333 |
|
|
$ |
175,491 |
|
|
$ |
186,345 |
|
|
|
|
|
|
|
|
|
Net premiums earned |
$ |
82,951 |
|
|
$ |
88,995 |
|
|
$ |
167,899 |
|
|
$ |
176,305 |
|
Net investment
income |
|
8,169 |
|
|
|
7,303 |
|
|
|
16,184 |
|
|
|
14,512 |
|
Net realized gains (losses) on
investments |
|
(82 |
) |
|
|
(1,111 |
) |
|
|
(23 |
) |
|
|
(1,142 |
) |
Net unrealized gains (losses)
on equity securities |
|
642 |
|
|
|
76 |
|
|
|
2,800 |
|
|
|
(314 |
) |
Fee and other
income |
|
73 |
|
|
|
117 |
|
|
|
83 |
|
|
|
194 |
|
Total revenues |
|
91,753 |
|
|
|
95,380 |
|
|
|
186,943 |
|
|
|
189,555 |
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
Loss and loss adjustment
expenses incurred |
|
48,868 |
|
|
|
52,076 |
|
|
|
98,482 |
|
|
|
105,238 |
|
Underwriting and other
operating costs |
|
19,718 |
|
|
|
21,282 |
|
|
|
40,385 |
|
|
|
41,548 |
|
Policyholder dividends |
|
998 |
|
|
|
1,092 |
|
|
|
2,098 |
|
|
|
2,425 |
|
Total expenses |
|
69,584 |
|
|
|
74,450 |
|
|
|
140,965 |
|
|
|
149,211 |
|
|
|
|
|
|
|
|
|
Income before taxes |
|
22,169 |
|
|
|
20,930 |
|
|
|
45,978 |
|
|
|
40,344 |
|
Income tax expense |
|
4,279 |
|
|
|
3,974 |
|
|
|
8,688 |
|
|
|
7,219 |
|
Net income |
$ |
17,890 |
|
|
$ |
16,956 |
|
|
$ |
37,290 |
|
|
$ |
33,125 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
|
|
|
|
(unaudited) |
|
(unaudited) |
Basic EPS: |
|
|
|
|
|
|
|
Net income |
$ |
17,890 |
|
|
$ |
16,956 |
|
|
$ |
37,290 |
|
|
$ |
33,125 |
|
|
|
|
|
|
|
|
|
Basic weighted average common
shares |
|
19,245,592 |
|
|
|
19,208,601 |
|
|
|
19,237,401 |
|
|
|
19,197,925 |
|
Basic earnings per
share |
$ |
0.93 |
|
|
$ |
0.88 |
|
|
$ |
1.94 |
|
|
$ |
1.73 |
|
|
|
|
|
|
|
|
|
Diluted EPS: |
|
|
|
|
|
|
|
Net income |
$ |
17,890 |
|
|
$ |
16,956 |
|
|
$ |
37,290 |
|
|
$ |
33,125 |
|
|
|
|
|
|
|
|
|
Diluted weighted average
common shares: |
|
|
|
|
|
|
|
Weighted average common shares |
|
19,245,592 |
|
|
|
19,208,601 |
|
|
|
19,237,401 |
|
|
|
19,197,925 |
|
Stock options and restricted stock |
|
61,361 |
|
|
|
58,134 |
|
|
|
78,875 |
|
|
|
77,958 |
|
Diluted weighted average common shares |
|
19,306,953 |
|
|
|
19,266,735 |
|
|
|
19,316,276 |
|
|
|
19,275,883 |
|
|
|
|
|
|
|
|
|
Diluted earnings per
share |
$ |
0.93 |
|
|
$ |
0.88 |
|
|
$ |
1.93 |
|
|
$ |
1.72 |
|
|
|
|
|
|
|
|
|
AMERISAFE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (in
thousands)
|
|
|
|
|
June 30, |
|
December 31, |
|
2019 |
|
2018 |
|
(unaudited) |
|
|
Assets |
|
|
|
Investments |
$ |
1,163,059 |
|
$ |
1,125,490 |
Cash and cash
equivalents |
|
51,246 |
|
|
40,344 |
Amounts recoverable from
reinsurers |
|
103,695 |
|
|
112,006 |
Premiums receivable,
net |
|
175,020 |
|
|
162,478 |
Deferred income
taxes |
|
19,461 |
|
|
21,852 |
Deferred policy acquisition
costs |
|
20,550 |
|
|
19,734 |
Other assets |
|
38,062 |
|
|
34,027 |
|
$ |
1,571,093 |
|
$ |
1,515,931 |
|
|
|
|
Liabilities and
Shareholders’ Equity |
|
|
|
Liabilities: |
|
|
|
Reserves for loss and loss
adjustment expenses |
$ |
795,046 |
|
$ |
798,409 |
Unearned premiums |
|
156,889 |
|
|
149,296 |
Insurance-related
assessments |
|
30,253 |
|
|
28,258 |
Other liabilities |
|
139,462 |
|
|
130,206 |
|
|
|
|
Shareholders’
equity |
|
449,443 |
|
|
409,762 |
Total liabilities and
shareholders’ equity |
$ |
1,571,093 |
|
$ |
1,515,931 |
|
|
|
|
Neal A. Fuller, EVP & CFO
AMERISAFE
337.463.9052
AMERISAFE (NASDAQ:AMSF)
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