Reports Return on Equity of 21.3% and
Net Combined Ratio of 82.2%
AMERISAFE, Inc. (Nasdaq: AMSF), a specialty provider of
workers’ compensation insurance focused on high hazard industries,
today announced results for the first quarter ended March 31,
2023.
Three Months Ended
March 31,
2023
2022
% Change
(in thousands, except per share data) Net premiums earned
$
69,181
$
67,556
2.4%
Net investment income
7,433
6,113
21.6%
Net realized gains on investments (pre-tax)
258
738
-65.0%
Net unrealized gains on equity securities (pre-tax)
1,369
1,040
NM
Net income
17,339
17,331
0.0%
Diluted earnings per share
$
0.90
$
0.89
1.1%
Operating net income
16,054
15,926
0.8%
Operating earnings per share
$
0.83
$
0.82
1.2%
Book value per share
$
17.38
$
20.46
-15.1%
Net combined ratio
82.2%
80.1%
Return on average equity
21.3%
17.4%
G. Janelle Frost, President and Chief Executive Officer
commented, “AMERISAFE’s first quarter results reflect the company’s
disciplined approach to risk selection and adequate pricing within
the high-hazard workers’ compensation market. Continued competition
and rate decreases were more than offset by positive audit premiums
resulting in top-line growth of 6.0%, combined ratio of 82.2% and
annualized ROE of 21.3%. With the support of a strong balance
sheet, AMERISAFE is well-positioned for solid performance in the
current market, and we remain confident in our ability to create
long-term value for shareholders.”
INSURANCE RESULTS
Three Months Ended
March 31,
2023
2022
% Change
(in thousands)
Gross premiums written
$
82,487
$
77,791
6.0%
Net premiums earned
69,181
67,556
2.4%
Loss and loss adjustment expenses incurred
39,009
37,741
3.4%
Underwriting and certain other operating costs,commissions,
salaries and benefits
16,982
15,113
12.4%
Policyholder dividends
931
1,189
-21.7%
Underwriting profit (pre-tax)
$
12,259
$
13,513
-9.3%
Insurance Ratios: Current accident year loss ratio
71.0%
71.0%
Prior accident year loss ratio
-14.6%
-15.1%
Net loss ratio
56.4%
55.9%
Net underwriting expense ratio
24.5%
22.4%
Net dividend ratio
1.3%
1.8%
Net combined ratio
82.2%
80.1%
- Voluntary premium on policies written in the quarter decreased
1.1% compared with the first quarter of 2022, primarily due to
continued declines in approved loss costs in the states we write
business. The average decline in approved loss costs for the first
quarter of 2023 was 6.8% versus the first quarter of 2022.
- Payroll audits and related premium adjustments increased
premiums written by $8.9 million in the first quarter of 2023,
compared to an increase of $2.8 million in the first quarter of
2022.
- The loss ratio for the first quarter was 56.4%, compared to
55.9% in the first quarter of 2022. During the quarter, the Company
experienced favorable net loss reserve development for prior
accident years, which reduced loss and loss adjustment expenses by
$10.1 million, primarily from accident years 2016 through
2020.
- For the quarter ended March 31, 2023, the underwriting expense
ratio was 24.5%, which included a $3.3 million increase in profit
sharing reinsurance commission, versus a 22.4% in the same quarter
of 2022, which included a $3.8 million return of assessments from
the Minnesota Workers Compensation Reinsurance Association. The
balance of the increase in expense for the first quarter of 2023
versus the first quarter of 2022 is primarily due to an increase in
commissions and professional fees.
- The effective tax rate for the quarter ended March 31, 2023 was
19.5% compared with 19.1% for March 31, 2022. The rate was slightly
higher than last year due to a decrease in the proportion of
tax-exempt interest income relative to underwriting profit.
INVESTMENT RESULTS
Three Months Ended
March 31,
2023
2022
% Change
(in thousands) Net investment income
$
7,433
$
6,113
21.6%
Net realized gains on investments (pre-tax)
258
738
-65.0%
Net unrealized gains on equity securities (pre-tax)
1,369
1,040
NM
Pre-tax investment yield
3.1%
2.3%
Tax-equivalent yield (1)
3.5%
2.7%
________________________________
(1) The tax equivalent yield is calculated using the effective
interest rate and the appropriate marginal tax rate.
- Net investment income for the quarter ended March 31, 2023,
increased 21.6% to $7.4 million from $6.1 million in the first
quarter of 2022, due to higher yields on cash and fixed-income
securities.
- Net unrealized gains on equity securities were $1.4 million in
the first quarter as a result of generally favorable equity market
returns during the quarter.
- As of March 31, 2023, the carrying value of AMERISAFE’s
investment portfolio, including cash and cash equivalents, was
$961.1 million.
CAPITAL MANAGEMENT
During the first quarter of 2023, the Company paid a regular
quarterly cash dividend of $0.34 per share on March 24, 2023 which
represented a 9.7% increase in the quarterly dividend compared with
2022. On April 25, 2023 the Company’s Board of Directors declared a
quarterly cash dividend of $0.34 per share, payable on June 23,
2023 to shareholders of record as of June 16, 2023.
Book value per share at March 31, 2023 was $17.38, an increase
of 4.9% from $16.57 at December 31, 2022.
SUPPLEMENTAL INFORMATION
Three Months Ended
March 31,
2023
2022
(in thousands, except share andper share data) Net
income
$
17,339
$
17,331
Less: Net realized gains on investments
258
738
Net unrealized gains on equity securities
1,369
1,040
Tax effect (1)
(342
)
(373
)
Operating net income (2)
$
16,054
$
15,926
Average shareholders’ equity (3)
$
325,144
$
397,298
Less: Average accumulated other comprehensive income (loss)
(11,656
)
6,797
Average adjusted shareholders’ equity (2)
$
336,800
$
390,501
Diluted weighted average common shares
19,235,411
19,430,824
Return on average equity (4)
21.3
%
17.4
%
Operating return on average adjusted equity (2)
19.1
%
16.3
%
Diluted earnings per share
$
0.90
$
0.89
Operating earnings per share (2)
$
0.83
$
0.82
________________________________
(1)
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%.
(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 April 27, 2023, at
10:30 AM Eastern Time to discuss the results for the quarter and
comment on future periods. To participate in the conference call,
dial 323-794-2423 (Conference Code 595703) at least ten minutes
before the call begins.
Investors, analysts and the general public will also have the
opportunity to listen to the conference call over the Internet by
visiting the “Investor Relations Home” page of the “Investors”
section of the Company’s website (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 the same website location.
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, agriculture, and manufacturing. 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 on the
business and operations of the Company and our policyholders and
the market value of our investment portfolio. Additional factors
that may affect our results are set forth in the Company’s filings
with the Securities and Exchange Commission, including AMERISAFE’s
Annual Report on Form 10-K. 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,
2023
2022
(unaudited) Revenues: Gross premiums written
$
82,487
$
77,791
Ceded premiums written
(4,179
)
(2,559
)
Net premiums written
$
78,308
$
75,232
Net premiums earned
$
69,181
$
67,556
Net investment income
7,433
6,113
Net realized gains on investments
258
738
Net unrealized gains on equity securities
1,369
1,040
Fee and other income
197
113
Total revenues
78,438
75,560
Expenses: Loss and loss adjustment expenses incurred
39,009
37,741
Underwriting and other operating costs
16,982
15,113
Policyholder dividends
931
1,189
Provision for investment related credit loss expense (benefit)
(19
)
95
Total expenses
56,903
54,138
Income before taxes
21,535
21,422
Income tax expense
4,196
4,091
Net income
$
17,339
$
17,331
AMERISAFE, INC. AND
SUBSIDIARIES
Consolidated Statements of
Income (cont.)
(in thousands, except per
share amounts)
Three Months Ended
March 31,
2023
2022
(unaudited) Basic EPS: Net
income
$
17,339
$
17,331
Basic weighted average common shares
19,131,356
19,332,006
Basic earnings per share
$
0.91
$
0.90
Diluted EPS: Net income
$
17,339
$
17,331
Diluted weighted average common shares: Weighted average
common shares
19,131,356
19,332,006
Restricted stock and RSUs
104,055
98,818
Diluted weighted average common shares
19,235,411
19,430,824
Diluted earnings per share
$
0.90
$
0.89
AMERISAFE, INC. AND
SUBSIDIARIES
Consolidated Balance
Sheets
(in thousands)
March 31,
December 31,
2023
2022
(unaudited)
Assets Investments
$
919,856
$
888,987
Cash and cash equivalents
41,210
61,469
Amounts recoverable from reinsurers
118,142
125,677
Premiums receivable, net
137,051
121,713
Deferred income taxes
21,658
22,794
Deferred policy acquisition costs
18,629
17,401
Other assets
31,708
31,238
$
1,288,254
$
1,269,279
Liabilities and Shareholders’ Equity Liabilities:
Reserves for loss and loss adjustment expenses
$
686,652
$
696,037
Unearned premiums
124,103
114,976
Insurance-related assessments
17,594
17,653
Other liabilities
127,050
123,181
Shareholders’ equity
332,855
317,432
Total liabilities and shareholders’ equity
$
1,288,254
$
1,269,279
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230426005113/en/
Andy Omiridis, EVP & CFO AMERISAFE 337.463.9052
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