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, 2024.
Three Months Ended |
|
|
|
Nine Months Ended |
|
|
|||||||||||||||
September 30, |
|
|
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September 30, |
|
|
|||||||||||||||
|
2024 |
|
|
|
2023 |
|
|
% Change |
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|
2024 |
|
|
|
2023 |
|
|
% Change |
|||
| (in thousands, except per share data) | (in thousands, except per share data) | ||||||||||||||||||||
| Net premiums earned | $ |
67,050 |
|
$ |
66,634 |
|
0.6 |
% |
$ |
204,129 |
|
$ |
201,413 |
|
1.3 |
% |
|||||
| Net investment income |
|
7,485 |
|
|
8,105 |
|
-7.6 |
% |
|
22,298 |
|
|
23,262 |
|
-4.1 |
% |
|||||
| Net realized gains (losses) on | |||||||||||||||||||||
| investments (pre-tax) |
|
158 |
|
|
5,133 |
|
-96.9 |
% |
|
(181 |
) |
|
5,466 |
|
NM |
|
|||||
| Net unrealized gains (losses) on | |||||||||||||||||||||
| equity securities (pre-tax) |
|
3,873 |
|
|
(7,309 |
) |
NM |
|
|
8,591 |
|
|
(3,892 |
) |
NM |
|
|||||
| Net income |
|
14,324 |
|
|
9,961 |
|
43.8 |
% |
|
42,242 |
|
|
42,927 |
|
-1.6 |
% |
|||||
| Diluted earnings per share | $ |
0.75 |
|
$ |
0.52 |
|
44.2 |
% |
$ |
2.21 |
|
$ |
2.23 |
|
-0.9 |
% |
|||||
| Operating net income |
|
11,140 |
|
|
11,680 |
|
-4.6 |
% |
|
35,598 |
|
|
41,684 |
|
-14.6 |
% |
|||||
| Operating earnings per share | $ |
0.58 |
|
$ |
0.61 |
|
-4.9 |
% |
$ |
1.86 |
|
$ |
2.17 |
|
-14.3 |
% |
|||||
| Book value per share | $ |
16.50 |
|
$ |
17.51 |
|
-5.8 |
% |
$ |
16.50 |
|
$ |
17.51 |
|
-5.8 |
% |
|||||
| Net combined ratio |
|
90.9 |
% |
|
90.6 |
% |
|
89.6 |
% |
|
86.1 |
% |
|||||||||
| Return on average equity |
|
18.6 |
% |
|
11.8 |
% |
|
18.6 |
% |
|
17.5 |
% |
|||||||||
G. Janelle Frost, President and Chief Executive Officer, noted, "We are pleased with this quarter's performance. We maintained premium growth momentum and strong renewal retention despite a declining rate environment. Our long tenure in the high-hazard workers' compensation market enables AMERISAFE the ability to attract and retain quality business in the classes that we operate in, driving long-term shareholder value creation."
INSURANCE RESULTS
Three Months Ended |
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|
Nine Months Ended |
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September 30, |
|
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September 30, |
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|||||||||||||||
|
2024 |
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2023 |
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% Change |
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2024 |
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2023 |
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% Change |
|||
(in thousands) |
|
|
|
(in thousands) |
|
|
|||||||||||||||
| Gross premiums written | $ |
74,940 |
|
$ |
70,840 |
|
5.8 |
% |
$ |
231,442 |
|
$ |
225,031 |
|
2.8 |
% |
|||||
| Net premiums earned |
|
67,050 |
|
|
66,634 |
|
0.6 |
% |
|
204,129 |
|
|
201,413 |
|
1.3 |
% |
|||||
| Loss and loss adjustment expenses incurred |
|
39,150 |
|
|
37,154 |
|
5.4 |
% |
|
119,765 |
|
|
111,808 |
|
7.1 |
% |
|||||
| Underwriting and certain other operating | |||||||||||||||||||||
| costs, commissions, salaries and benefits |
|
21,252 |
|
|
22,371 |
|
-5.0 |
% |
|
60,379 |
|
|
59,325 |
|
1.8 |
% |
|||||
| Policyholder dividends |
|
513 |
|
|
804 |
|
-36.2 |
% |
|
2,634 |
|
|
2,225 |
|
18.4 |
% |
|||||
| Underwriting profit (pre-tax) | $ |
6,135 |
|
$ |
6,305 |
|
-2.7 |
% |
$ |
21,351 |
|
$ |
28,055 |
|
-23.9 |
% |
|||||
| Insurance Ratios: | |||||||||||||||||||||
| Current accident year loss ratio |
|
71.0 |
% |
|
71.0 |
% |
|
71.0 |
% |
|
71.0 |
% |
|||||||||
| Prior accident year loss ratio |
|
-12.6 |
% |
|
-15.2 |
% |
|
-12.3 |
% |
|
-15.5 |
% |
|||||||||
| Net loss ratio |
|
58.4 |
% |
|
55.8 |
% |
|
58.7 |
% |
|
55.5 |
% |
|||||||||
| Net underwriting expense ratio |
|
31.7 |
% |
|
33.6 |
% |
|
29.6 |
% |
|
29.5 |
% |
|||||||||
| Net dividend ratio |
|
0.8 |
% |
|
1.2 |
% |
|
1.3 |
% |
|
1.1 |
% |
|||||||||
| Net combined ratio |
|
90.9 |
% |
|
90.6 |
% |
|
89.6 |
% |
|
86.1 |
% |
|||||||||
- Voluntary premiums on policies written in the quarter were 8.8% higher than in the third quarter of 2023, primarily due to an increase in new business and strong retention.
- Payroll audits and related premium adjustments increased premiums written by $4.0 million in the third quarter of 2024 primarily due to continued payroll growth. In the third quarter of 2023 payroll audits were $5.6 million.
- The loss ratio for the third quarter was 58.4%, compared to 55.8% in the third quarter of 2023. During the quarter, the Company experienced favorable net loss reserve development for prior accident years, which reduced loss and loss adjustment expenses by $8.5 million, primarily from accident years 2019 through 2021.
- The net underwriting expense ratio was 31.7%, compared to 33.6% in the third quarter of 2023. The expense ratio reflects continued investment that has driven profitable growth.
- The effective tax rate for the quarter ended September 30, 2024, was 19.5%, which is in line for the quarter ended September 30, 2023.
INVESTMENT RESULTS
Three Months Ended |
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Nine Months Ended |
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September 30, |
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|
September 30, |
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|
2024 |
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|
2023 |
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% Change |
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|
2024 |
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|
2023 |
|
|
% Change |
|||
(in thousands) |
|
|
|
(in thousands) |
|
|
|||||||||||||||
| Net investment income | $ |
7,485 |
|
$ |
8,105 |
|
-7.6 |
% |
$ |
22,298 |
|
$ |
23,262 |
|
-4.1 |
% |
|||||
| Net realized gains (losses) | |||||||||||||||||||||
| on investments (pre-tax) |
|
158 |
|
|
5,133 |
|
-96.9 |
% |
|
(181 |
) |
|
5,466 |
|
NM |
|
|||||
| Net unrealized gains (losses) on | |||||||||||||||||||||
| equity securities (pre-tax) |
|
3,873 |
|
|
(7,309 |
) |
NM |
|
|
8,591 |
|
|
(3,892 |
) |
NM |
|
|||||
| Pre-tax investment yield |
|
3.4 |
% |
|
3.4 |
% |
|
3.3 |
% |
|
3.3 |
% |
|||||||||
| Tax-equivalent yield (1) |
|
3.8 |
% |
|
3.8 |
% |
|
3.8 |
% |
|
3.8 |
% |
|||||||||
(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, 2024, decreased 7.6% to $7.5 million due to the reduced portfolio size, partially offset by increased reinvestment rates as compared to portfolio rolloff.
- Net unrealized gains on equity securities were $3.9 million due to strong equity market returns compared to an unrealized loss of $7.3 million in the third quarter of 2023.
- As of September 30, 2024, the carrying value of AMERISAFE's investment portfolio, including cash and cash equivalents, was $899.2 million.
CAPITAL MANAGEMENT
On October 22, 2024, the Board of Directors of AMERISAFE declared a special cash dividend of $3.00 per share and a regular cash dividend of $0.37 per share, payable on December 13, 2024, to shareholders of record as of December 6, 2024.
During the third quarter of 2024, the Company repurchased 21,586 shares at an average cost (including commissions and excise tax) of $46.79 per share, for a total of $1.0 million. Since the inception of our initial share repurchase program in February 2010, we have repurchased 1,682,851 shares at an average cost of $24.99, for a total of $42.1 million. The remaining outstanding share repurchase authorization as of September 30, 2024 is $5.3 million.
Book value per share on September 30, 2024, was $16.50, an increase of 8.0% from $15.28 on December 31, 2023.
SUPPLEMENTAL INFORMATION
Three Months Ended |
|
Nine Months Ended |
|||||||||||||
September 30, |
|
September 30, |
|||||||||||||
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
(in thousands, except share and per share data) |
|||||||||||||||
| Net income | $ |
14,324 |
|
$ |
9,961 |
|
$ |
42,242 |
|
$ |
42,927 |
|
|||
| Less: | |||||||||||||||
| Net realized gains (losses) on investments |
|
158 |
|
|
5,133 |
|
|
(181 |
) |
|
5,466 |
|
|||
| Net unrealized gains (losses) on | |||||||||||||||
| equity securities (pre-tax) |
|
3,873 |
|
|
(7,309 |
) |
|
8,591 |
|
|
(3,892 |
) |
|||
| Tax effect (1) |
|
(847 |
) |
|
457 |
|
|
(1,766 |
) |
|
(331 |
) |
|||
| Operating net income (2) | $ |
11,140 |
|
$ |
11,680 |
|
$ |
35,598 |
|
$ |
41,684 |
|
|||
| Average shareholders' equity (3) | $ |
307,682 |
|
$ |
338,225 |
|
$ |
303,411 |
|
$ |
326,658 |
|
|||
| Less: | |||||||||||||||
| Average accumulated other comprehensive | |||||||||||||||
| loss |
|
(6,118 |
) |
|
(16,232 |
) |
|
(4,935 |
) |
|
(17,096 |
) |
|||
| Average adjusted shareholders' equity (2) | $ |
313,800 |
|
$ |
354,457 |
|
$ |
308,346 |
|
$ |
343,754 |
|
|||
| Diluted weighted average common shares |
|
19,113,103 |
|
|
19,223,588 |
|
|
19,156,976 |
|
|
19,217,606 |
|
|||
| Return on average equity (4) |
|
18.6 |
% |
|
11.8 |
% |
|
18.6 |
% |
|
17.5 |
% |
|||
| Operating return on average adjusted equity (2) |
|
14.2 |
% |
|
13.2 |
% |
|
15.4 |
% |
|
16.2 |
% |
|||
| Diluted earnings per share | $ |
0.75 |
|
$ |
0.52 |
|
$ |
2.21 |
|
$ |
2.23 |
|
|||
| Operating earnings per share (2) | $ |
0.58 |
|
$ |
0.61 |
|
$ |
1.86 |
|
$ |
2.17 |
|
|||
(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, average adjusted shareholders' equity, 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 for the applicable period. |
(4) |
Return on average equity is calculated by dividing the annualized net income by the average shareholders' equity. |
NON-GAAP FINANCIAL MEASURES
This release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the U.S. Securities and Exchange Commission (the SEC) and includes a reconciliation of non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with GAAP in the Supplemental Information in this release.
Management believes that investors' understanding of core operating performance is enhanced by AMERISAFE's disclosure of these financial measures, which include operating net income, average adjusted shareholders' equity, operating return on average adjusted equity, and operating earnings per share.
CONFERENCE CALL INFORMATION
AMERISAFE has scheduled a conference call for October 24, 2024, 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 786-789-4797 (Conference Code 7683088) 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.
AMERISAFE, INC. AND SUBSIDIARIES Consolidated Statements of Income (in thousands, except per share amounts)
|
|||||||||||||||
Three Months Ended |
|
Nine Months Ended |
|||||||||||||
September 30, |
|
September 30, |
|||||||||||||
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
(unaudited) |
|
(unaudited) |
|||||||||||||
| Revenues: | |||||||||||||||
| Gross premiums written | $ |
74,940 |
|
$ |
70,840 |
|
$ |
231,442 |
|
$ |
225,031 |
|
|||
| Ceded premiums written |
|
(3,951 |
) |
|
(4,112 |
) |
|
(11,904 |
) |
|
(12,256 |
) |
|||
| Net premiums written | $ |
70,989 |
|
$ |
66,728 |
|
$ |
219,538 |
|
$ |
212,775 |
|
|||
| Net premiums earned | $ |
67,050 |
|
$ |
66,634 |
|
$ |
204,129 |
|
$ |
201,413 |
|
|||
| Net investment income |
|
7,485 |
|
|
8,105 |
|
|
22,298 |
|
|
23,262 |
|
|||
| Net realized gains (losses) on investments |
|
158 |
|
|
5,133 |
|
|
(181 |
) |
|
5,466 |
|
|||
| Net unrealized gains (losses) on | |||||||||||||||
| equity securities |
|
3,873 |
|
|
(7,309 |
) |
|
8,382 |
|
|
(3,894 |
) |
|||
| Fee and other income |
|
129 |
|
|
77 |
|
|
386 |
|
|
490 |
|
|||
| Total revenues |
|
78,695 |
|
|
72,640 |
|
|
235,014 |
|
|
226,737 |
|
|||
| Expenses: | |||||||||||||||
| Loss and loss adjustment expenses incurred |
|
39,150 |
|
|
37,154 |
|
|
119,765 |
|
|
111,808 |
|
|||
| Underwriting and other operating costs |
|
21,252 |
|
|
22,371 |
|
|
60,379 |
|
|
59,325 |
|
|||
| Policyholder dividends |
|
513 |
|
|
804 |
|
|
2,634 |
|
|
2,225 |
|
|||
| Provision for investment related credit | |||||||||||||||
| loss benefit |
|
(13 |
) |
|
(16 |
) |
|
(46 |
) |
|
(51 |
) |
|||
| Total expenses |
|
60,902 |
|
|
60,313 |
|
|
182,732 |
|
|
173,307 |
|
|||
| Income before taxes |
|
17,793 |
|
|
12,327 |
|
|
52,282 |
|
|
53,430 |
|
|||
| Income tax expense |
|
3,469 |
|
|
2,366 |
|
|
10,040 |
|
|
10,503 |
|
|||
| Net income | $ |
14,324 |
|
$ |
9,961 |
|
$ |
42,242 |
|
$ |
42,927 |
|
|||
| Basic EPS: | |||||||||||||||
| Net income | $ |
14,324 |
|
$ |
9,961 |
|
$ |
42,242 |
|
$ |
42,927 |
|
|||
| Basic weighted average common shares |
|
19,042,152 |
|
|
19,164,854 |
|
|
19,082,374 |
|
|
19,145,432 |
|
|||
| Basic earnings per share | $ |
0.75 |
|
$ |
0.52 |
|
$ |
2.21 |
|
$ |
2.24 |
|
|||
| Diluted EPS: | |||||||||||||||
| Net income | $ |
14,324 |
|
$ |
9,961 |
|
$ |
42,242 |
|
$ |
42,927 |
|
|||
| Diluted weighted average common shares: | |||||||||||||||
| Weighted average common shares |
|
19,042,152 |
|
|
19,164,854 |
|
|
19,082,374 |
|
|
19,145,432 |
|
|||
| Restricted stock and RSUs |
|
70,951 |
|
|
58,734 |
|
|
74,602 |
|
|
72,174 |
|
|||
| Diluted weighted average common shares |
|
19,113,103 |
|
|
19,223,588 |
|
|
19,156,976 |
|
|
19,217,606 |
|
|||
| Diluted earnings per share | $ |
0.75 |
|
$ |
0.52 |
|
$ |
2.21 |
|
$ |
2.23 |
|
|||
AMERISAFE, INC. AND SUBSIDIARIES Consolidated Balance Sheets (in thousands)
|
|||||||
September 30, |
|
December 31, |
|||||
|
2024 |
|
|
|
2023 |
|
|
| (unaudited) | |||||||
| Assets | |||||||
| Investments | $ |
835,532 |
$ |
857,786 |
|||
| Cash and cash equivalents |
|
63,663 |
|
|
38,682 |
|
|
| Amounts recoverable from reinsurers |
|
128,963 |
|
|
129,963 |
|
|
| Premiums receivable, net |
|
152,945 |
|
|
132,861 |
|
|
| Deferred income taxes |
|
19,499 |
|
|
20,403 |
|
|
| Deferred policy acquisition costs |
|
20,148 |
|
|
17,975 |
|
|
| Other assets |
|
33,977 |
|
|
31,492 |
|
|
$ |
1,254,727 |
|
$ |
1,229,162 |
|
||
| Liabilities and Shareholders' Equity | |||||||
| Liabilities: | |||||||
| Reserves for loss and loss adjustment expenses | $ |
663,486 |
|
$ |
673,994 |
|
|
| Unearned premiums |
|
131,994 |
|
|
116,585 |
|
|
| Insurance-related assessments |
|
16,841 |
|
|
16,896 |
|
|
| Other liabilities |
|
128,035 |
|
|
129,236 |
|
|
| Shareholders' equity |
|
314,371 |
|
|
292,451 |
|
|
| Total liabilities and shareholders' equity | $ |
1,254,727 |
|
$ |
1,229,162 |
|
|
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