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AMERISAFE Announces 2013 First Quarter Results

AMERISAFE, Inc. Logo

DERIDDER, La., May 1, 2013 (GLOBE NEWSWIRE) -- AMERISAFE, Inc. (Nasdaq:AMSF), a specialty provider of hazardous workers' compensation insurance, today announced results for the first quarter ended March 31, 2013.

Three Months Ended March 31,
2013 2012 % Change
(in thousands, except per share data)
Net premiums earned $ 79,709 $ 69,790 14.2%
Net investment income 6,670 6,914 (3.5)%
Net realized gains on investments (pre-tax) 24 1,791 NM
Net income 8,851 9,561 (7.4)%
Diluted earnings per share 0.47 0.52 (9.6)%
Operating net income 8,835 8,397 5.2%
Operating earnings per share 0.47 0.45 4.4%
Book value per share 21.20 19.78 7.2%
Net combined ratio 94.7% 96.0%
Return on average equity 9.2% 10.8%

Commenting on these results, Allen Bradley, AMERISAFE's Chairman and Chief Executive Officer, stated, "The workers' compensation market continued to firm in the first quarter of 2013 as underwriters refocused on underwriting profitability. We expect workers' compensation pricing improvement to continue through at least the remainder of the year. AMERISAFE is pleased with our first quarter results in terms of premium growth and underwriting profitability."

Insurance Results

Three Months Ended March 31,
2013 2012 % Change
(in thousands)
Gross premiums written $ 99,123 $ 84,924 16.7%
Net premiums earned 79,709 69,790 14.2%
Loss and loss adjustment expenses incurred 56,001 51,843 8.0%
Underwriting and certain other operating costs, commissions and salaries and benefits 18,877 14,715 28.3%
Policyholder dividends 554 384 44.3%
Underwriting profit (pre-tax) 4,277 2,848 50.2%
Insurance Ratios:
Current accident year loss ratio 73.2% 76.5%
Prior accident year loss ratio (2.9)% (2.2)%
Net loss ratio 70.3% 74.3%
Net underwriting expense ratio 23.7% 21.1%
Net dividend ratio 0.7% 0.6%
Net combined ratio 94.7% 96.0%

  • Voluntary premium for policies written during the quarter increased by 16.1% compared to prior year quarter. During the first quarter of 2013, gross premiums written increased by $6.0 million due to positive payroll audits and related premium adjustments for policies written in previous periods. Payroll audits and related premium adjustments increased premiums written by $5.4 million in the first quarter of 2012.
  • In the 2013 period, the Company experienced favorable loss development for prior accident years which reduced loss and loss adjustment expenses by $2.4 million, primarily attributable to accident years 2008 and 2009.
  • For the quarter ended March 31, 2013, the underwriting expense ratio was 2.6 percentage points higher than the prior year. The primary contributors were a 2.5 percentage point increase in assessment expenses related to both premium-based and loss-based assessments in various states. Also, experienced rated commissions decreased $1.0 million which increased the underwriting expense ratio 1.8 percentage points. The underwriting expense ratio was reduced 1.2 percentage points for maintaining general operating costs as earned premium increased.
  • The effective tax rate for the three months ended March 31, 2013 was 20.1% compared to 16.4% for the first quarter of 2012. The increase was driven by the lower ratio of tax-exempt investment income to pre-tax income in the first quarter of 2013 compared to the first quarter of 2012.

Geoff Banta, President and Chief Operating Officer, noted, "We are pleased with our continued quarter-over-quarter growth in premium at increased pricing levels. We also experienced another quarter of decline in frequency of claims, which we believe is the result of our focused approach to pricing, loss control and underwriting selection. As a result of these factors, we have projected a 73.2% loss ratio for the 2013 accident year, which is 3.3 percentage points lower than our projection for 2012."

Investment Results

Three Months Ended March 31,
2013 2012 % Change
(in thousands)
Net investment income 6,670 6,914 (3.5)%
Net realized gains on investments (pre-tax) 24 1,791
Pre-tax investment yield 2.9% 3.2%
Tax equivalent yield (1) 4.2% 4.5%
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(1) The tax equivalent yield is calculated using the effective interest rate and a 35% marginal tax rate.

  • As of March 31, 2013, the carrying value of AMERISAFE's investment portfolio, including cash and cash equivalents, was $918.7 million and the fair value of the portfolio was $959.4 million.

Quarterly Dividend

The Company paid its first quarterly dividend of $0.08 on March 28, 2013. On April 30, 2013, the Company's Board of Directors declared a quarterly cash dividend of $0.08 per share, payable on June 26, 2013 to shareholders of record as of June 12, 2013.

Supplemental Information

During the quarter, no shares were repurchased under the share repurchase plan. Since beginning the plan, the Company has repurchased a total of 1,258,250 shares for $22.4 million for an average per share price of $17.78, including commissions.

Three Months Ended March 31,
2013 2012
(in thousands, except share data)
Net income $ 8,851 $ 9,561
Less: Net realized capital gains 24 1,791
Tax effect (1) (8) (627)
Operating net income (2) 8,835 8,397
Average shareholders' equity (3) $ 385,460 $ 354,245
Less: Average other comprehensive income (loss) 2,707 2,189
Adjusted average shareholders' equity 382,753 352,056
Diluted weighted average common shares 18,689,842 18,535,979
Return on average equity (4) 9.2% 10.8%
Operating return on average equity (2) 9.2% 9.5%
Diluted earnings per common share $ 0.47 $ 0.52
Operating earnings per common share (2) $ 0.47 $ 0.45
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(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 adjusted 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.
(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 May 2, 2013, at 10:30 a.m. Eastern Time to discuss the results for the quarter and the outlook for future periods. To participate in the conference call dial 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 May 9, 2013. To access the replay, dial 855-859-2056 or 404-537-3406 and use the pass code 32185771#.

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, manufacturing and agriculture. AMERISAFE actively markets workers' compensation insurance in 30 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 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, 2012. 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 March 31,
2013 2012
(unaudited)
Revenues:
Gross premiums written $ 99,123 $ 84,924
Ceded premiums written (4,481) (3,904)
Net premiums written $ 94,642 $ 81,020
Net premiums earned $ 79,709 $ 69,790
Net investment income 6,670 6,914
Net realized gains on investments 24 1,791
Fee and other income 109 159
Total revenues 86,512 78,654
Expenses:
Loss and loss adjustment expenses incurred 56,001 51,843
Underwriting and other operating costs 18,877 14,715
Interest expense 279
Policyholder dividends 554 384
Total expenses 75,432 67,221
Income before taxes 11,080 11,433
Income tax expense 2,229 1,872
Net income $ 8,851 $ 9,561
AMERISAFE, INC. AND SUBSIDIARIES
Consolidated Statements of Income (cont.)
(in thousands, except per share amounts)
Three Months Ended
March 31,
2013 2012
(unaudited)
Basic EPS:
Net income $8,851 $9,561
Less: Portion allocable to unvested shares 15 5
Net income available to common shareholders $8,836 $9,556
Basic weighted average common shares 18,281,353 18,140,749
Basic earnings per share $0.48 $0.53
Diluted EPS:
Net income available to common shareholders $8,836 $9,556
Diluted weighted average common shares:
Weighted average common shares 18,281,353 18,140,749
Stock options and performance shares 408,489 395,239
Diluted weighted average common shares 18,689,842 18,535,979
Diluted earnings per common share $0.47 $0.52
AMERISAFE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands)
March 31,
2013
December 31,
2012
(unaudited)
Assets
Investments $843,417 $808,116
Cash and cash equivalents 75,294 92,676
Amounts recoverable from reinsurers 99,301 101,352
Premiums receivable, net 167,147 141,950
Deferred income taxes 30,699 29,521
Deferred policy acquisition costs 20,038 18,419
Other assets 29,507 28,912
$1,265,403 $1,220,946
Liabilities and shareholders' equity
Liabilities:
Reserves for loss and loss adjustment expenses $577,988 $570,450
Unearned premiums 155,460 140,528
Insurance-related assessments 25,351 22,244
Other liabilities 116,906 106,502
Total shareholders' equity 389,698 381,222
Total liabilities and shareholders' equity $1,265,403 $1,220,946

CONTACT: G. Janelle Frost, EVP & CFO AMERISAFE, Inc. 337-463-9052

Source:AMERISAFE, Inc.