AMSF AMERISAFE Inc

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, 2024.

Three Months Ended

 

 

 

Six Months Ended

 

 

June 30,

 

 

 

June 30,

 

 

2024

 

2023

 

% Change

 

2024

 

2023

 

% Change

(in thousands, except per share data) (in thousands, except per share data) Net premiums earned

$

68,633

 

$

65,598

 

4.6

%

$

137,079

 

$

134,779

 

1.7

%

Net investment income

 

7,447

 

 

7,724

 

-3.6

%

 

14,813

 

 

15,157

 

-2.3

%

Net realized gains (losses) on investments (pre-tax)

 

(117

)

 

75

 

NM

 

 

(339

)

 

333

 

NM

 

Net unrealized gains (losses) on equity securities (pre-tax)

 

(58

)

 

2,048

 

NM

 

 

4,718

 

 

3,417

 

NM

 

Net income

 

10,993

 

 

15,627

 

-29.7

%

 

27,918

 

 

32,966

 

-15.3

%

Diluted earnings per share

$

0.57

 

$

0.81

 

-29.6

%

$

1.46

 

$

1.72

 

-15.1

%

Operating net income

 

11,131

 

 

13,950

 

-20.2

%

 

24,459

 

 

30,004

 

-18.5

%

Operating earnings per share

$

0.58

 

$

0.73

 

-20.5

%

$

1.28

 

$

1.56

 

-17.9

%

Book value per share

$

15.78

 

$

17.76

 

-11.1

%

$

15.78

 

$

17.76

 

-11.1

%

Net combined ratio

 

90.5

%

 

85.4

%

 

88.8

%

 

83.9

%

Return on average equity

 

14.6

%

 

18.6

%

 

18.8

%

 

20.0

%

G. Janelle Frost, President and Chief Executive Officer, noted, “We are pleased with our second-quarter results. New business generation, along with strong retention and increased audit premiums generated gross premiums written growth of 6.6% for the quarter. Enhancing the profitable growth was favorable loss development from prior accident years. In all, we produced an attractive underwriting profit and added to the year's robust returns."

INSURANCE RESULTS

Three Months Ended

 

 

 

Six Months Ended

 

 

June 30,

 

 

 

June 30,

 

 

2024

 

2023

 

% Change

 

2024

 

2023

 

% Change

(in thousands) (in thousands)   Gross premiums written

$

76,428

 

$

71,704

 

6.6

%

$

156,502

 

$

154,191

 

1.5

%

Net premiums earned

 

68,633

 

 

65,598

 

4.6

%

 

137,079

 

 

134,779

 

1.7

%

Loss and loss adjustment expenses incurred

 

40,624

 

 

35,645

 

14.0

%

 

80,615

 

 

74,654

 

8.0

%

Underwriting and certain other operating costs, commissions, salaries and benefits

 

20,429

 

 

19,972

 

2.3

%

 

39,127

 

 

36,954

 

5.9

%

Policyholder dividends

 

1,049

 

 

490

 

114.1

%

 

2,121

 

 

1,421

 

49.3

%

Underwriting profit (pre-tax)

$

6,531

 

$

9,491

 

-31.2

%

$

15,216

 

$

21,750

 

-30.0

%

  Insurance Ratios: Current accident year loss ratio

 

71.0

%

 

71.0

%

 

71.0

%

 

71.0

%

Prior accident year loss ratio

 

-11.8

%

 

-16.7

%

 

-12.2

%

 

-15.6

%

Net loss ratio

 

59.2

%

 

54.3

%

 

58.8

%

 

55.4

%

Net underwriting expense ratio

 

29.8

%

 

30.4

%

 

28.5

%

 

27.4

%

Net dividend ratio

 

1.5

%

 

0.7

%

 

1.5

%

 

1.1

%

Net combined ratio

 

90.5

%

 

85.4

%

 

88.8

%

 

83.9

%

• Voluntary premiums on policies written in the quarter were 2.7% higher than in the second quarter of 2023, primarily due to an increase in policy count and strong retention, partially offset by continued declines in approved loss costs.

• Payroll audits and related premium adjustments increased premiums written by $7.3 million in the second quarter of 2024, compared to an increase of $4.8 million in the second quarter of 2023, primarily due to continued payroll strength.
• The loss ratio for the second quarter was 59.2%, compared to 54.3% in the second 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 $8.1 million, primarily from accident years 2020 through 2022.
• The effective tax rate for the quarter ended June 30, 2024, was 20.0%, which is slightly lower than the 20.1% for the quarter ended June 30, 2023.

INVESTMENT RESULTS

Three Months Ended

 

 

 

Six Months Ended

 

 

June 30,

 

 

 

June 30,

 

 

2024

 

2023

 

% Change

 

2024

 

2023

 

% Change

(in thousands) (in thousands) Net investment income

$

7,447

 

$

7,724

 

-3.6

%

$

14,813

 

$

15,157

 

-2.3

%

Net realized gains (losses) on investments (pre-tax)

 

(117

)

 

75

 

NM

 

 

(339

)

 

333

 

NM

 

Net unrealized gains (losses) on equity securities (pre-tax)

 

(58

)

 

2,048

 

NM

 

 

4,718

 

 

3,417

 

NM

 

Pre-tax investment yield

 

3.3

%

 

3.2

%

 

3.3

%

 

3.2

%

Tax-equivalent yield (1)

 

3.8

%

 

3.6

%

 

3.8

%

 

3.6

%

___________

(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 June 30, 2024, decreased 3.6% to $7.4 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 relatively unchanged during the quarter compared to a $2.0 million unrealized gain in the second quarter of 2023.
• As of June 30, 2024, the carrying value of AMERISAFE’s investment portfolio, including cash and cash equivalents, was $884.2 million.

CAPITAL MANAGEMENT

During the second quarter of 2024, the Company repurchased 91,825 shares at an average cost (including commissions and excise tax) of $44.79 per share, a total of $4.1 million. Since the inception of our initial share repurchase program in February 2010, we have repurchased 1,661,265 shares at an average cost of $24.71, a total of $41.0 million. The remaining outstanding share repurchase authorization as of June 30, 2024 is $6.3 million.

The Company also paid a regular quarterly cash dividend of $0.37 per share on June 21, 2024, which represented an 8.8% increase in the quarterly dividend compared with 2023. On July 26, 2024, the Company’s Board of Directors declared a quarterly cash dividend of $0.37 per share, payable on September 20, 2024, to shareholders of record as of September 6, 2024.

Book value per share on June 30, 2024, was $15.78, an increase of 3.3% from $15.28 on December 31, 2023.

SUPPLEMENTAL INFORMATION

Three Months Ended

 

Six Months Ended

June 30,

 

June 30,

2024

 

2023

 

2024

 

2023

(in thousands, except share and per share data)   Net income

$

10,993

 

$

15,627

 

$

27,918

 

$

32,966

 

Less: Net realized gains (losses) on investments

 

(117

)

 

75

 

 

(339

)

 

333

 

Net unrealized gains (losses) on equity securities (pre-tax)

 

(58

)

 

2,048

 

 

4,718

 

 

3,417

 

Tax effect (1)

 

37

 

 

(446

)

 

(920

)

 

(788

)

Operating net income (2)

$

11,131

 

$

13,950

 

$

24,459

 

$

30,004

 

  Average shareholders’ equity (3)

$

301,043

 

$

336,711

 

$

296,722

 

$

329,000

 

Less: Average accumulated other comprehensive loss

 

(9,150

)

 

(10,792

)

 

(8,377

)

 

(12,964

)

Average adjusted shareholders’ equity (2)

$

310,193

 

$

347,503

 

$

305,099

 

$

341,964

 

  Diluted weighted average common shares

 

19,146,294

 

 

19,196,755

 

 

19,171,206

 

 

19,200,377

 

  Return on average equity (4)

 

14.6

%

 

18.6

%

 

18.8

%

 

20.0

%

Operating return on average adjusted equity (2)

 

14.4

%

 

16.1

%

 

16.0

%

 

17.5

%

Diluted earnings per share

$

0.57

 

$

0.81

 

$

1.46

 

$

1.72

 

Operating earnings per share (2)

$

0.58

 

$

0.73

 

$

1.28

 

$

1.56

 

(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 July 30, 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 786-789-4833 (Conference Code 9064151) 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

 

Six Months Ended

June 30,

 

June 30,

2024

 

2023

 

2024

 

2023

(unaudited) (unaudited) Revenues: Gross premiums written

$

76,428

 

$

71,704

 

$

156,502

 

$

154,191

 

Ceded premiums written

 

(4,027

)

 

(3,965

)

 

(7,953

)

 

(8,144

)

Net premiums written

$

72,401

 

$

67,739

 

$

148,549

 

$

146,047

 

  Net premiums earned

$

68,633

 

$

65,598

 

$

137,079

 

$

134,779

 

Net investment income

 

7,447

 

 

7,724

 

 

14,813

 

 

15,157

 

Net realized gains (losses) on investments

 

(117

)

 

75

 

 

(339

)

 

333

 

Net unrealized gains (losses) on equity securities

 

(58

)

 

2,048

 

 

4,718

 

 

3,417

 

Fee and other income (losses)

 

(75

)

 

214

 

 

48

 

 

411

 

Total revenues

 

75,830

 

 

75,659

 

 

156,319

 

 

154,097

 

  Expenses: Loss and loss adjustment expenses incurred

 

40,624

 

 

35,645

 

 

80,615

 

 

74,654

 

Underwriting and other operating costs

 

20,429

 

 

19,972

 

 

39,127

 

 

36,954

 

Policyholder dividends

 

1,049

 

 

490

 

 

2,121

 

 

1,421

 

Provision for investment related credit loss benefit

 

(16

)

 

(16

)

 

(33

)

 

(35

)

Total expenses

 

62,086

 

 

56,091

 

 

121,830

 

 

112,994

 

  Income before taxes

 

13,744

 

 

19,568

 

 

34,489

 

 

41,103

 

Income tax expense

 

2,751

 

 

3,941

 

 

6,571

 

 

8,137

 

Net income

$

10,993

 

$

15,627

 

$

27,918

 

$

32,966

 

    Basic EPS: Net income

$

10,993

 

$

15,627

 

$

27,918

 

$

32,966

 

  Basic weighted average common shares

 

19,083,232

 

 

19,139,735

 

 

19,102,700

 

 

19,135,564

 

Basic earnings per share

$

0.58

 

$

0.82

 

$

1.46

 

$

1.72

 

  Diluted EPS: Net income

$

10,993

 

$

15,627

 

$

27,918

 

$

32,966

 

  Diluted weighted average common shares: Weighted average common shares

 

19,083,232

 

 

19,139,735

 

 

19,102,700

 

 

19,135,564

 

Restricted stock and RSUs

 

63,062

 

 

57,020

 

 

68,506

 

 

64,813

 

Diluted weighted average common shares

 

19,146,294

 

 

19,196,755

 

 

19,171,206

 

 

19,200,377

 

  Diluted earnings per share

$

0.57

 

$

0.81

 

$

1.46

 

$

1.72

 

AMERISAFE, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands)

 

June 30,

 

December 31,

2024

 

2023

(unaudited) Assets Investments

$

853,597

$

857,786

Cash and cash equivalents

 

30,611

 

 

38,682

 

Amounts recoverable from reinsurers

 

123,335

 

 

129,963

 

Premiums receivable, net

 

150,914

 

 

132,861

 

Deferred income taxes

 

21,781

 

 

20,403

 

Deferred policy acquisition costs

 

19,506

 

 

17,975

 

Other assets

 

33,785

 

 

31,492

 

$

1,233,529

 

$

1,229,162

 

  Liabilities and Shareholders’ Equity Liabilities: Reserves for loss and loss adjustment expenses

$

663,985

 

$

673,994

 

Unearned premiums

 

128,055

 

 

116,585

 

Insurance-related assessments

 

16,661

 

 

16,896

 

Other liabilities

 

123,836

 

 

129,236

 

  Shareholders’ equity

 

300,992

 

 

292,451

 

Total liabilities and shareholders’ equity

$

1,233,529

 

$

1,229,162

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240729190019/en/

Andy Omiridis, EVP & CFO AMERISAFE 337.463.9052