AMSF AMERISAFE Inc

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,

 

 

 

September 30,

 

 

 

2024

 

 

 

2023

 

 

% Change

 

 

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

 

 

 

Nine Months Ended

 

 

September 30,

 

 

 

September 30,

 

 

 

2024

 

 

 

2023

 

 

% Change

 

 

2024

 

 

 

2023

 

 

% 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

 

 

 

Nine Months Ended

 

 

September 30,

 

 

 

September 30,

 

 

 

2024

 

 

 

2023

 

 

% Change

 

 

2024

 

 

 

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

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241023884413/en/

Andy Omiridis, EVP & CFO AMERISAFE 337.463.9052