Reports Return on Equity of 11.8% for the Quarter
AMERISAFE, Inc. (NASDAQ:AMSF), a specialty provider of workers' compensation insurance focused on high-hazard industries, today announced results for the third quarter ended September 30, 2023.
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||
2023 |
|
2022 |
|
% Change |
|
2023 |
|
2022 |
|
% Change |
|||||||||||
| (in thousands, except per share data) | (in thousands, except per share data) | ||||||||||||||||||||
| Net premiums earned | $ |
66,634 |
|
$ |
67,790 |
|
-1.7 |
% |
$ |
201,413 |
|
$ |
205,625 |
|
-2.0 |
% |
|||||
| Net investment income |
|
8,105 |
|
|
6,983 |
|
16.1 |
% |
|
23,262 |
|
|
19,581 |
|
18.8 |
% |
|||||
| Net realized gains on investments | |||||||||||||||||||||
| (pre-tax) |
|
5,133 |
|
|
585 |
|
NM |
|
|
5,466 |
|
|
2,402 |
|
NM |
|
|||||
| Net unrealized losses on equity | |||||||||||||||||||||
| securities (pre-tax) |
|
(7,309 |
) |
|
(4,082 |
) |
NM |
|
|
(3,892 |
) |
|
(12,984 |
) |
NM |
|
|||||
| Net income |
|
9,961 |
|
|
11,361 |
|
-12.3 |
% |
|
42,927 |
|
|
34,824 |
|
23.3 |
% |
|||||
| Diluted earnings per share | $ |
0.52 |
|
$ |
0.59 |
|
-11.9 |
% |
$ |
2.23 |
|
$ |
1.80 |
|
23.9 |
% |
|||||
| Operating net income (loss) |
|
11,680 |
|
|
14,124 |
|
-17.3 |
% |
|
41,684 |
|
|
43,184 |
|
-3.5 |
% |
|||||
| Operating earnings per share | $ |
0.61 |
|
$ |
0.73 |
|
-16.4 |
% |
$ |
2.17 |
|
$ |
2.23 |
|
-2.7 |
% |
|||||
| Book value per share | $ |
17.51 |
|
$ |
19.47 |
|
-10.1 |
% |
$ |
17.51 |
|
$ |
19.47 |
|
-10.1 |
% |
|||||
| Net combined ratio |
|
90.6 |
% |
|
85.4 |
% |
|
86.1 |
% |
|
84.1 |
% |
|||||||||
| Return on average equity |
|
11.8 |
% |
|
12.0 |
% |
|
17.5 |
% |
|
12.0 |
% |
|||||||||
G. Janelle Frost, President and Chief Executive Officer, commented, "Robust payroll audits coupled with growth in policy count led to top-line growth this quarter. We were able to maintain a strong operating ROAE of 13.2% and combined ratio of 90.6%, despite some infrequent items that impacted our expenses this quarter. Our underwriting expertise continues to drive AMERISAFE's strong returns and balance sheet position."
INSURANCE RESULTS |
|||||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||
2023 |
|
2022 |
|
% Change |
|
2023 |
|
2022 |
% Change |
||||||||||||
| (in thousands) | (in thousands) | ||||||||||||||||||||
| Gross premiums written | $ |
70,840 |
|
$ |
68,212 |
|
3.9 |
% |
$ |
225,031 |
|
$ |
220,463 |
|
2.1 |
% |
|||||
| Net premiums earned |
|
66,634 |
|
|
67,790 |
|
-1.7 |
% |
|
201,413 |
|
|
205,625 |
|
-2.0 |
% |
|||||
| Loss and loss adjustment expenses incurred |
|
37,154 |
|
|
37,725 |
|
-1.5 |
% |
|
111,808 |
|
|
115,792 |
|
-3.4 |
% |
|||||
| Underwriting and certain other operating costs, commissions, salaries and benefits |
|
22,371 |
|
|
19,585 |
|
14.2 |
% |
|
59,325 |
|
|
54,611 |
|
8.6 |
% |
|||||
| Policyholder dividends |
|
804 |
|
|
640 |
|
25.6 |
% |
|
2,225 |
|
|
2,517 |
|
-11.6 |
% |
|||||
| Underwriting profit (pre-tax) | $ |
6,305 |
|
$ |
9,840 |
|
-35.9 |
% |
$ |
28,055 |
|
$ |
32,705 |
|
-14.2 |
% |
|||||
| Insurance Ratios: | |||||||||||||||||||||
| Current accident year loss ratio |
|
71.0 |
% |
|
71.0 |
% |
|
71.0 |
% |
|
71.0 |
% |
|||||||||
| Prior accident year loss ratio |
|
-15.2 |
% |
|
-15.4 |
% |
|
-15.5 |
% |
|
-14.7 |
% |
|||||||||
| Net loss ratio |
|
55.8 |
% |
|
55.6 |
% |
|
55.5 |
% |
|
56.3 |
% |
|||||||||
| Net underwriting expense ratio |
|
33.6 |
% |
|
28.9 |
% |
|
29.5 |
% |
|
26.6 |
% |
|||||||||
| Net dividend ratio |
|
1.2 |
% |
|
0.9 |
% |
|
1.1 |
% |
|
1.2 |
% |
|||||||||
| Net combined ratio |
|
90.6 |
% |
|
85.4 |
% |
|
86.1 |
% |
|
84.1 |
% |
|||||||||
- Voluntary premiums on policies written in the third quarter were 1.1% higher than the third quarter of 2022, primarily due to policy count growth.
- Payroll audits and related premium adjustments increased premiums written by $5.6 million in the third quarter of 2023, compared to an increase of $3.4 million in the third quarter of 2022.
- Ceded premiums increased $1.6 million in the third quarter of 2023 as compared to the third quarter of 2022 as we purchased higher levels of reinsurance coverage at generally higher prices in 2023.
- The loss ratio for the third quarter was 55.8%, fairly flat as compared to 55.6% in the third 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 $10.2 million, primarily from accident years 2016 through 2021.
- For the quarter ended September 30, 2023, the underwriting expense ratio was 33.6% compared to 28.9% in the same quarter in 2022 primarily due to a decrease of $1.6 million in profit sharing reinsurance commission, a $0.6 million increase in commission expense and $0.4 million increase in regulatory assessments and fees.
- The effective tax rate for the quarter ended September 30, 2023, was 19.2% compared with 15.5% for 2022. The rate was 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 | Nine Months Ended | ||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||
2023 |
|
2022 |
|
% Change |
|
2023 |
|
2022 |
|
% Change |
|||||||||||
| (in thousands) | (in thousands) | ||||||||||||||||||||
| Net investment income | $ |
8,105 |
|
$ |
6,983 |
|
16.1 |
% |
$ |
23,262 |
|
$ |
19,581 |
|
18.8 |
% |
|||||
| Net realized gains on investments | |||||||||||||||||||||
| (pre-tax) |
|
5,133 |
|
|
585 |
|
NM |
|
|
5,466 |
|
|
2,402 |
|
NM |
|
|||||
| Net unrealized losses on equity | |||||||||||||||||||||
| securities (pre-tax) |
|
(7,309 |
) |
|
(4,082 |
) |
NM |
|
|
(3,892 |
) |
|
(12,984 |
) |
NM |
|
|||||
| Pre-tax investment yield |
|
3.4 |
% |
|
2.7 |
% |
|
3.3 |
% |
|
2.5 |
% |
|||||||||
| Tax-equivalent yield (1) |
|
3.8 |
% |
|
3.2 |
% |
|
3.8 |
% |
|
3.2 |
% |
|||||||||
| ___________________ | |
(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 September 30, 2023, increased 16.1% to $8.1 million from $7.0 million in the third quarter of 2022, due to higher yields on cash and fixed-income securities.
- Net realized gains on investments were $5.1 million in the third quarter, primarily due to a realized gain on an equity security.
- Net unrealized losses on equity securities were $7.3 million in the third quarter as a result of generally unfavorable equity market returns during the quarter.
- As of September 30, 2023, the carrying value of AMERISAFE's investment portfolio, including cash and cash equivalents, was $948.3 million.
CAPITAL MANAGEMENT
In an accompanying news release, the Company announced a special cash dividend of $3.50 per share, payable on December 15, 2023, to shareholders of record as of December 1, 2023.
During the third quarter of 2023, the Company paid a regular quarterly cash dividend of $0.34 per share on September 22, 2023, which represented a 9.7% increase in the quarterly dividend compared with 2022. On October 24, 2023, the Company's Board of Directors declared a quarterly cash dividend of $0.34 per share, payable on December 15, 2023, to shareholders of record as of December 1, 2023.
Book value per share at September 30, 2023 was $17.51, an increase of 5.7% from $16.57 at December 31, 2022.
SUPPLEMENTAL INFORMATION |
|||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
2023 |
|
2022 |
|
2023 |
|
2022 |
|||||||||
| (in thousands, except share and per share data) | |||||||||||||||
| Net income | $ |
9,961 |
|
$ |
11,361 |
|
$ |
42,927 |
|
$ |
34,824 |
|
|||
| Less: | |||||||||||||||
| Net realized gains on investments |
|
5,133 |
|
|
585 |
|
|
5,466 |
|
|
2,402 |
|
|||
| Net unrealized losses on equity securities |
|
(7,309 |
) |
|
(4,082 |
) |
|
(3,892 |
) |
|
(12,984 |
) |
|||
| Tax effect (1) |
|
457 |
|
|
734 |
|
|
(331 |
) |
|
2,222 |
|
|||
| Operating net income (2) | $ |
11,680 |
|
$ |
14,124 |
|
$ |
41,684 |
|
$ |
43,184 |
|
|||
| Average shareholders' equity (3) | $ |
338,225 |
|
$ |
379,004 |
|
$ |
326,658 |
|
$ |
386,171 |
|
|||
| Less: | |||||||||||||||
| Average accumulated other comprehensive loss |
|
(16,232 |
) |
|
(14,419 |
) |
|
(17,096 |
) |
|
(3,214 |
) |
|||
| Average adjusted shareholders' equity (2) | $ |
354,457 |
|
$ |
393,423 |
|
$ |
343,754 |
|
$ |
389,385 |
|
|||
| Diluted weighted average common shares |
|
19,223,588 |
|
|
19,269,346 |
|
|
19,217,606 |
|
|
19,340,898 |
|
|||
| Return on average equity (4) |
|
11.8 |
% |
|
12.0 |
% |
|
17.5 |
% |
|
12.0 |
% |
|||
| Operating return on average adjusted equity (2) |
|
13.2 |
% |
|
14.4 |
% |
|
16.2 |
% |
|
14.8 |
% |
|||
| Diluted earnings per share | $ |
0.52 |
|
$ |
0.59 |
|
$ |
2.23 |
|
$ |
1.80 |
|
|||
| Operating earnings per share (2) | $ |
0.61 |
|
$ |
0.73 |
|
$ |
2.17 |
|
$ |
2.23 |
||||
| ___________________ | |
(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 October 26, 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 323-794-2551 (Conference Code 1991265) 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 | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
2023 |
|
2022 |
|
2023 |
|
2022 |
|||||||||
| (unaudited) | (unaudited) | ||||||||||||||
| Revenues: | |||||||||||||||
| Gross premiums written | $ |
70,840 |
|
$ |
68,212 |
|
$ |
225,031 |
|
$ |
220,463 |
|
|||
| Ceded premiums written |
|
(4,112 |
) |
|
(2,553 |
) |
|
(12,256 |
) |
|
(7,837 |
) |
|||
| Net premiums written | $ |
66,728 |
|
$ |
65,659 |
|
$ |
212,775 |
|
$ |
212,626 |
|
|||
| Net premiums earned | $ |
66,634 |
|
$ |
67,790 |
|
$ |
201,413 |
|
$ |
205,625 |
|
|||
| Net investment income |
|
8,105 |
|
|
6,983 |
|
|
23,262 |
|
|
19,581 |
|
|||
| Net realized gains on investments |
|
5,133 |
|
|
585 |
|
|
5,466 |
|
|
2,402 |
|
|||
| Net unrealized losses on equity securities |
|
(7,309 |
) |
|
(4,082 |
) |
|
(3,892 |
) |
|
(12,984 |
) |
|||
| Fee and other income |
|
77 |
|
|
104 |
|
|
488 |
|
|
352 |
|
|||
| Total revenues |
|
72,640 |
|
|
71,380 |
|
|
226,737 |
|
|
214,976 |
|
|||
| Expenses: | |||||||||||||||
| Loss and loss adjustment expenses incurred |
|
37,154 |
|
|
37,725 |
|
|
111,808 |
|
|
115,792 |
|
|||
| Underwriting and other operating costs |
|
22,371 |
|
|
19,585 |
|
|
59,325 |
|
|
54,611 |
|
|||
| Policyholder dividends |
|
804 |
|
|
640 |
|
|
2,225 |
|
|
2,517 |
|
|||
| Provision for investment related credit | |||||||||||||||
| loss expense (benefit) |
|
(16 |
) |
|
(21 |
) |
|
(51 |
) |
|
60 |
|
|||
| Total expenses |
|
60,313 |
|
|
57,929 |
|
|
173,307 |
|
|
172,980 |
|
|||
| Income before taxes |
|
12,327 |
|
|
13,451 |
|
|
53,430 |
|
|
41,996 |
|
|||
| Income tax expense |
|
2,366 |
|
|
2,090 |
|
|
10,503 |
|
|
7,172 |
|
|||
| Net income | $ |
9,961 |
|
$ |
11,361 |
|
$ |
42,927 |
|
$ |
34,824 |
|
|||
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
2023 |
2022 |
2023 |
2022 |
||||||||||||
| (unaudited) | (unaudited) | ||||||||||||||
| Basic EPS: | |||||||||||||||
| Net income | $ |
9,961 |
|
$ |
11,361 |
|
$ |
42,927 |
|
$ |
34,824 |
|
|||
| Basic weighted average common shares |
|
19,164,854 |
|
|
19,198,320 |
|
|
19,145,432 |
|
|
19,267,602 |
|
|||
| Basic earnings per share | $ |
0.52 |
|
$ |
0.59 |
|
$ |
2.24 |
|
$ |
1.81 |
|
|||
| Diluted EPS: | |||||||||||||||
| Net income | $ |
9,961 |
|
$ |
11,361 |
|
$ |
42,927 |
|
$ |
34,824 |
|
|||
| Diluted weighted average common shares: | |||||||||||||||
| Weighted average common shares |
|
19,164,854 |
|
|
19,198,320 |
|
|
19,145,432 |
|
|
19,267,602 |
|
|||
| Restricted stock and RSUs |
|
58,734 |
|
|
71,026 |
|
|
72,174 |
|
|
73,296 |
|
|||
| Diluted weighted average common shares |
|
19,223,588 |
|
|
19,269,346 |
|
|
19,217,606 |
|
|
19,340,898 |
|
|||
| Diluted earnings per share | $ |
0.52 |
|
$ |
0.59 |
|
$ |
2.23 |
|
$ |
1.80 |
|
|||
AMERISAFE, INC. AND SUBSIDIARIES Consolidated Balance Sheets (in thousands) |
|||||
| September 30, | December 31, | ||||
2023 |
2022 |
||||
| (unaudited) | |||||
| Assets | |||||
| Investments | $ |
889,019 |
$ |
888,987 |
|
| Cash and cash equivalents |
|
59,249 |
|
61,469 |
|
| Amounts recoverable from reinsurers |
|
127,687 |
|
125,677 |
|
| Premiums receivable, net |
|
144,445 |
|
121,713 |
|
| Deferred income taxes |
|
25,683 |
|
22,794 |
|
| Deferred policy acquisition costs |
|
18,796 |
|
17,401 |
|
| Other assets |
|
31,757 |
|
31,238 |
|
$ |
1,296,636 |
$ |
1,269,279 |
||
| Liabilities and Shareholders' Equity | |||||
| Liabilities: | |||||
| Reserves for loss and loss adjustment expenses | $ |
684,348 |
$ |
696,037 |
|
| Unearned premiums |
|
126,338 |
|
114,976 |
|
| Insurance-related assessments |
|
18,295 |
|
17,653 |
|
| Other liabilities |
|
131,772 |
|
123,181 |
|
| Shareholders' equity |
|
335,883 |
|
317,432 |
|
| Total liabilities and shareholders' equity | $ |
1,296,636 |
$ |
1,269,279 |
|
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