AMERISAFE Announces 2018 First Quarter Results
Source: Nasdaq GlobeNewswire / 25 Apr 2018 21:30:29 Europe/London
DERIDDER, La., April 25, 2018 (GLOBE NEWSWIRE) -- AMERISAFE, Inc. (Nasdaq:AMSF), a specialty provider of hazardous workers’ compensation insurance, today announced results for the first quarter ended March 31, 2018.
Three Months Ended March 31, 2018 2017 % Change (in thousands, except per share data) Net premiums earned $ 87,310 $ 90,912 -4.0 % Net investment income 7,209 6,710 7.4 % Net realized losses on investments, pretax (31 ) (181 ) NM Net unrealized losses on equity securities, pretax (390 ) - NM Net income 16,169 13,524 19.6 % Diluted earnings per share $ 0.84 $ 0.70 20.0 % Operating net income 16,502 13,642 21.0 % Operating earnings per share $ 0.86 $ 0.71 21.1 % Book value per share $ 22.43 $ 24.29 -7.7 % Net combined ratio 85.6 % 86.6 % Return on average equity 15.1 % 11.7 %
G. Janelle Frost, President and Chief Executive Officer, noted, “Our results this quarter demonstrate our ability to maintain discipline while navigating a competitive workers’ compensation environment. Pricing pressure continued as approved loss costs declined and carriers aggressively search for premium. AMERISAFE, however, focused on retaining and serving our valued policyholders through risk selection, proactive safety expertise, and claims management.”
Three Months Ended March 31, 2018 2017 % Change (in thousands) Gross premiums written $ 97,342 $ 95,078 2.4 % Net premiums earned 87,310 90,912 -4.0 % Loss and loss adjustment expenses incurred 53,162 56,216 -5.4 % Underwriting and certain other operating costs, commissions, salaries and benefits 20,266 21,222 -4.5 % Policyholder dividends 1,333 1,371 -2.8 % Underwriting profit (pre-tax) $ 12,549 $ 12,103 3.7 % Insurance Ratios: Current accident year loss ratio 71.5 % 69.0 % Prior accident year loss ratio -10.6 % -7.2 % Net loss ratio 60.9 % 61.8 % Net underwriting expense ratio 23.2 % 23.3 % Net dividend ratio 1.5 % 1.5 % Net combined ratio 85.6 % 86.6 %
- Gross premiums written in the quarter increased by $2.3 million, or 2.4%, due to higher voluntary premiums written and higher payroll audits and related premium adjustments.
- Voluntary premium for policies written during the quarter ended March 31, 2018 increased by $1.4 million, or 1.6%, compared with the first quarter of 2017.
- Payroll audits and related premium adjustments increased premiums written by $3.3 million in the first quarter of 2018, compared to $2.2 million in the first quarter of 2017.
- The current accident year loss ratio for the first quarter was 71.5%, an increase of 1.0 percentage points from the 70.5% ratio for the full year 2017. During the quarter, the Company experienced favorable loss development for prior accident years, which reduced loss and loss adjustment expenses by $9.3 million, largely attributable to accident years 2015 and 2014. These results reflect improved trends for both claims closing, severity of claims and favorable case reserve development on claims that were closed during the quarter.
- For the quarter ended March 31, 2018, the underwriting expense ratio was 23.2% compared to 23.3% in the same quarter in 2017. The decrease in the quarter was due to lower compensation and insurance assessment expense compared with last year’s first quarter.
- The effective tax rate for the quarter ended March 31, 2018 was 16.7% compared with 27.8% for the first quarter of 2017. The decrease is due to the new federal corporate tax rate of 21% on underwriting profits and taxable bond income.
Three Months Ended March 31, 2018 2017 % Change (in thousands) Net investment income $ 7,209 $ 6,710 7.4% Net realized losses on investments (pre-tax) (31 ) (181 ) NM Net unrealized losses on equity securities (pre-tax) (390 ) - NM Pre-tax investment yield 2.4 % 2.3 % Tax-equivalent yield (1) 2.9 % 3.4 %
(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, 2018, increased 7.4% to $7.2 million from $6.7 million in the first quarter of 2017, largely due to the decrease in value of an investment in a limited partnership hedge fund in last year’s first quarter.
- As of March 31, 2018, the carrying value of AMERISAFE’s investment portfolio, including cash and cash equivalents, was $1.2 billion.
The Company paid a regular quarterly cash dividend of $0.22 per share on March 23, 2018. The $0.22 per share cash dividend reflects a 10% increase from the regular quarterly cash dividend of $0.20 paid in 2017. On April 24, 2018, the Company’s Board of Directors declared a quarterly cash dividend of $0.22 per share, payable on June 22, 2018 to shareholders of record as of June 8, 2018.
Book value per share at March 31, 2018 was $22.43, an increase of 1.5% from $22.10 as of December 31, 2017. During the quarter, no shares were repurchased under the Company’s share repurchase plan.
Three Months Ended March 31, 2018 2017 Net income $ 16,169 $ 13,524 Less: Net realized losses on investments (31 ) (181 ) Net unrealized losses on equity securities (390 ) - Tax effect (1) 88 63 Operating net income (2) $ 16,502 $ 13,642 Average shareholders’ equity (3) $ 428,746 $ 461,626 Less: Average accumulated other comprehensive income (loss) 688 (16 ) Average adjusted shareholders’ equity $ 428,058 $ 461,642 Diluted weighted average common shares 19,262,237 19,230,125 Return on average equity (4) 15.1 % 11.7 % Operating return on average adjusted equity (2) 15.4 % 11.8 % Diluted earnings per share $ 0.84 $ 0.70 Operating earnings per share (2) $ 0.86 $ 0.71
(1) The tax effect of net realized losses on investments and net unrealized losses on equity securities is calculated assuming an annual tax rate of 21% for 2018 and 35% for 2017.
(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 26, 2018, at 10:30 a.m. Eastern Time to discuss the results for the quarter, as well as the outlook for future periods. To participate in the conference call dial 877-225-7695 (Domestic) or 720-545-0027 (International) 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 4, 2018. To access the replay, dial 855-859-2056 or 404-537-3406 and use the pass code 5252258#.
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 at http://www.amerisafe.com.
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, manufacturing, and agriculture. 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 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, 2017. 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
Three Months Ended March 31, 2018 2017 (unaudited) Revenues: Gross premiums written $ 97,342 $ 95,078 Ceded premiums written (2,330 ) (2,391 ) Net premiums written $ 95,012 $ 92,687 Net premiums earned $ 87,310 $ 90,912 Net investment income 7,209 6,710 Net realized losses on investments (31 ) (181 ) Net unrealized losses on equity securities (390 ) - Fee and other income 77 101 Total revenues 94,175 97,542 Expenses: Loss and loss adjustment expenses incurred 53,162 56,216 Underwriting and other operating costs 20,266 21,222 Policyholder dividends 1,333 1,371 Total expenses 74,761 78,809 Income before taxes 19,414 18,733 Income tax expense 3,245 5,209 Net income $ 16,169 $ 13,524 Three Months Ended March 31, 2018 2017 (unaudited) Basic EPS: Net income $ 16,169 $ 13,524 Basic weighted average common shares 19,187,136 19,150,400 Basic earnings per share $ 0.84 $ 0.71 Diluted EPS: Net income $ 16,169 $ 13,524 Diluted weighted average common shares: Weighted average common shares 19,187,136 19,150,400 Stock options and restricted stock 75,101 79,725 Diluted weighted average common shares 19,262,237 19,230,125 Diluted earnings per share $ 0.84 $ 0.70
AMERISAFE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, December 31, 2018 2017 (unaudited) Assets Investments $ 1,134,793 $ 1,130,314 Cash and cash equivalents 36,072 55,559 Amounts recoverable from reinsurers 94,173 90,133 Premiums receivable, net 186,798 174,234 Deferred income taxes 20,499 19,262 Deferred policy acquisition costs 21,287 20,251 Other assets 37,043 26,722 $ 1,530,665 $ 1,516,475 Liabilities and Shareholders’ Equity Liabilities: Reserves for loss and loss adjustment expenses $ 777,298 $ 771,845 Unearned premiums 164,972 157,270 Insurance-related assessments 28,389 28,246 Other liabilities 127,938 135,452 Shareholders’ equity 432,068 425,423 Total liabilities and shareholders’ equity $ 1,530,665 $ 1,518,236
Contact: Neal A Fuller, EVP & CFO AMERISAFE, Inc. 337-463-9052