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AMERISAFE Announces 2012 Second Quarter Results
GlobeNewswire
2012-07-31
DERIDDER, La., July 30, 2012 (GLOBE NEWSWIRE) -- AMERISAFE, Inc.
(Nasdaq:AMSF), a specialty provider of hazardous workers' compensation
insurance, today announced results for the second quarter ended June
30, 2012.
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------- --------------------------
% %
2012 2011 Change 2012 2011 Change
---------- ------- -------- -------- -------- ------
(in thousands, except per share data)
Net premiums earned $69,733 $60,261 15.7% $139,523 $120,350 15.9%
Net investment income 6,605 6,597 0.1% 13,519 13,143 2.9%
Net realized gains on
investments (pre-tax) 137 145 (5.5)% 1,928 248 NM
Net income 3,445 4,594 (25.0)% 13,006 11,224 15.9%
Diluted earnings per share $ 0.19 $ 0.24 (20.8)% $ 0.70 $ 0.60 16.7%
Operating net income 3,356 4,448 (24.6)% 11,753 10,976 7.1%
Operating earnings per
share $ 0.18 $ 0.24 (25.0)% $ 0.63 $ 0.58 8.6%
Book value per share $19.98 $18.50 8.0% $ 19.98 $ 18.50 8.0%
Net combined ratio 103.8% 102.6% 99.8% 100.5%
Return on average equity 3.8% 5.5% 7.3% 6.7%
Financial data for 2011 was revised to reflect the retrospective
adoption of a new accounting standard for policy acquisition costs.
Financial data included in this report for the three and six months
ended June 30, 2011 has been adjusted to reflect a change for the
estimate of liability for state guaranty fund assessments.
Commenting on these results, Allen Bradley, AMERISAFE's Chairman and
Chief Executive Officer, stated, "The workers' compensation market
continues to harden. Pricing is rising. As investment yields fall, many
carriers are reassessing their underwriting approach to the business
and the residual markets are expanding rapidly. This changing
environment presents opportunities and challenges to carriers. We
believe that our focus on risk selection and pricing positions
AMERISAFE for profitable growth and expansion. However in the current
quarter, favorable operating results were effected by adverse prior
accident year development recorded in the period."
Insurance Results
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------- -----------------------------
% %
2012 2011 Change 2012 2011 Change
---------- -------- ------- --------- --------- -------
(in thousands)
Gross premiums written $85,476 $72,916 17.2% $ 170,400 $ 144,275 18.1%
Net premiums earned 69,733 60,261 15.7% 139,523 120,350 15.9%
Loss and loss adjustment expenses
incurred 56,720 46,576 21.8% 108,563 90,752 19.6%
Underwriting and certain other
operating costs, commissions and
salaries and benefits 15,347 14,899 3.0% 30,062 29,458 2.1%
Policyholder dividends 330 364 (9.3)% 714 719 (0.7)%
Underwriting profit (loss)
(pre-tax) (2,664) (1,578) (68.8)% 184 (579) 131.8%
Insurance Ratios:
Current accident year loss ratio 76.5% 79.3% 76.5% 78.2%
Prior accident year loss ratio 4.8% (2.0)% 1.3% (2.8)%
---------- -------- --------- ---------
Net loss ratio 81.3% 77.3% 77.8% 75.4%
Net underwriting expense ratio 22.0% 24.7% 21.5% 24.5%
Net dividend ratio 0.5% 0.6% 0.5% 0.6%
---------- -------- --------- ---------
Net combined ratio 103.8% 102.6% 99.8% 100.5%
========== ======== ========= =========
-- Gross premiums written continued to grow in the second quarter.
Voluntary premiums written increased 8.9% in the quarter and 10.1% for
the six months ended June 30, 2012 compared to the same periods in 2011.
Additionally, payroll audits and related premium adjustments for
policies written in previous periods increased premiums $4.5 million in
the second quarter and $9.9 million in the six months ended June 30,
2012. In 2011, these premium adjustments reduced premium $0.3 million in
the second quarter and $0.4 million for the six months ended June 30.
-- The current accident year loss ratio for the second quarter remained at
76.5% in the second quarter, same as the first quarter of 2012. During
the quarter the Company experienced unfavorable case development for
prior accident years which increased loss and loss adjustment expenses
by $3.4 million. Accident years 2009 and prior produced $1.9 million of
favorable development, while accident years 2010 and 2011 experienced
$5.3 million of unfavorable development. In total, prior accident year
development for the six months ended June 30, 2012 was an unfavorable
$1.8 million, compared to a favorable $3.3 million for the same period
in 2011.
-- For the second quarter, the decline in the underwriting expense ratio
was primarily driven by lower estimates for premium taxes based on prior
year retaliatory taxes of $1.2 million. For the first six months, the
decline in the underwriting expense ratio mainly resulted from
maintaining low operating costs as premium grew and from a higher
benefit from experienced rated commission.
-- The effective tax rate for the six months ended June 30, 2012 was 15.9%
compared to 8.9% in the first half of 2011. The increase was driven by
the lower ratio of tax-free investment income to pre-tax income in the
first half of 2012 compared to the first half of 2011.
Geoff Banta, President and Chief Operating Officer, noted, "We are
pleased that our top line continued to grow in the second quarter. Even
with strong pricing, our policy retention remained high. We were
disappointed with the unfavorable loss development for accident years
2010 and 2011. These accident years have been problematic for the
workers' compensation industry as a whole."
Investment Results
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------- --------------------------
% %
2012 2011 Change 2012 2011 Change
---------- ------- ------ -------- -------- ------
(in thousands)
Net investment income $ 6,605 $ 6,597 0.1% $ 13,519 $ 13,143 2.9%
Net realized gains on investments
(pre-tax) 137 145 1,928 248
Pre-tax investment yield 3.0% 3.2% 3.1% 3.2%
Tax equivalent yield (1) 4.5% 4.5% 4.5% 4.5%
________________________________
(1) The tax equivalent yield is calculated using the effective interest rate and a 35%
marginal tax rate.
-- As of June 30, 2012, the carrying value of AMERISAFE's investment
portfolio, including cash and cash equivalents, was $878.1 million and
the fair value of the portfolio was $920.4 million.
Supplemental Information
During the quarter, no shares were repurchased under the share
repurchase plan. Since beginning of this plan, the Company has
repurchased a total of 1,258,250 shares for $22.4 million, or an
average per share price of $17.78, including commissions.
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
2012 2011 2012 2011
---------- ---------- ---------- ----------
(in thousands, except share and per share
data)
Net income $ 3,445 $ 4,594 $ 13,006 $ 11,224
Less: Net realized capital gains 137 145 1,928 248
Tax effect (1) (48) 1 (675) --
---------- ---------- ---------- ----------
Operating net income (2) 3,356 4,448 11,753 10,976
========== ========== ========== ==========
Average shareholders' equity (3) $ 361,251 $ 337,403 $ 356,443 $ 334,730
Less: Average other comprehensive income
(loss) 2,414 569 2,440 615
---------- ---------- ---------- ----------
Adjusted average shareholders' equity 358,837 336,834 354,003 334,115
========== ========== ========== ==========
Diluted weighted average common shares 18,572,058 18,846,466 18,554,921 18,774,376
Return on average equity (4) 3.8% 5.5% 7.3% 6.7%
Operating return on average equity (2) 3.7% 5.3% 6.6% 6.6%
Diluted earnings per common share $ 0.19 $ 0.24 $ 0.70 $ 0.60
Operating earnings per common share (2) $ 0.18 $ 0.24 $ 0.63 $ 0.58
________________________________
(1) The tax effect of net realized capital gains is calculated assuming an annual tax rate
of 35%.
(2) Operating net income, operating return on average equity and operating earnings per
share are non-GAAP financial measures, and management believes that investor's
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 adjusted 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 July 31, 2012, at 10:30
a.m. Eastern Time to discuss the results for the quarter and the
outlook for future periods. To participate in the conference call dial
720-545-0027 at least 10 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 August 7, 2012. To access the replay, dial
855-859-2056 or 404-537-3406 and use the pass code 98691767#.
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 and will remain available for
approximately 60 days at http://www.amerisafe.com.
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 and agriculture.
AMERISAFE actively markets workers' compensation insurance in 35 states
and the District of Columbia.
The AMERISAFE, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=9767
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 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, 2011. 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 Six Months Ended
June 30, June 30,
---------------------- ----------------------
2012 2011 2012 2011
----------- --------- ---------- ----------
(unaudited)
Revenues:
Gross premiums written $ 85,476 $ 72,916 $ 170,400 $ 144,275
Ceded premiums written (3,971) (3,388) (7,875) (6,970)
----------- --------- ---------- ----------
Net premiums written $ 81,505 $ 69,528 $162,525 $137,305
----------- --------- ---------- ----------
Net premiums earned $ 69,733 $ 60,261 $ 139,523 $ 120,350
Net investment income 6,605 6,597 13,519 13,143
Net realized gains on
investments 137 145 1,928 248
Fee and other income 162 48 321 269
----------- --------- ---------- ----------
Total revenues 76,637 67,051 155,291 134,010
----------- --------- ---------- ----------
Expenses:
Loss and loss adjustment
expenses incurred 56,720 46,576 108,563 90,752
Underwriting and other
operating costs 15,347 14,899 30,062 29,458
Interest expense 207 380 486 759
Policyholder dividends 330 364 714 719
----------- --------- ---------- ----------
Total expenses 72,604 62,219 139,825 121,688
----------- --------- ---------- ----------
Income before taxes 4,033 4,832 15,466 12,322
Income tax expense 588 238 2,460 1,098
----------- --------- ---------- ----------
Net income $ 3,445 $ 4,594 $ 13,006 $ 11,224
=========== ========= ========== ==========
AMERISAFE, INC. AND SUBSIDIARIES
Consolidated Statements of Income (cont.)
(in thousands, except share and per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- ----------------------
2012 2011 2012 2011
----------- ---------- ---------- ----------
(unaudited)
Basic EPS:
Net income $ 3,445 $ 4,594 $ 13,006 $ 11,224
=========== ========== ========== ==========
Basic weighted average common shares 18,150,062 18,392,207 18,145,404 18,312,843
Basic earnings per share $ 0.19 $ 0.25 $ 0.72 $ 0.61
Diluted EPS:
Net income $ 3,445 $ 4,594 $ 13,006 $ 11,224
=========== ========== ========== ==========
Diluted weighted average common
shares:
Weighted average common shares 18,150,062 18,392,207 18,145,404 18,312,843
Stock options 413,958 446,975 403,363 455,461
Restricted stock 8,038 7,284 6,154 6,072
Diluted weighted average common
shares 18,572,058 18,846,466 18,554,921 18,774,376
Diluted earnings per common share $ 0.19 $ 0.24 $ 0.70 $ 0.60
AMERISAFE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands)
June 30, December 31,
------------- ------------
2012 2011
------------- ------------
(unaudited)
Assets
Investments $ 801,291 $ 805,974
Cash and cash equivalents 76,848 45,536
Amounts recoverable from
reinsurers 98,795 96,212
Premiums receivable, net 147,407 121,223
Deferred income taxes 30,493 30,048
Deferred policy acquisition
costs 18,533 16,578
Deferred charges 4,040 3,120
Other assets 32,901 28,402
------------- ------------
$ 1,210,308 $ 1,147,093
============= ============
Liabilities and shareholders'
equity
Liabilities:
Reserves for loss and loss
adjustment expenses $ 558,515 $ 538,214
Unearned premiums 141,701 118,699
Insurance-related assessments 25,438 21,506
Subordinated debt securities 12,890 25,780
Other liabilities 108,315 93,457
Total shareholders' equity 363,449 349,437
------------- ------------
Total liabilities and
shareholders' equity $ 1,210,308 $ 1,147,093
============= ============
CONTACT: G. Janelle Frost, EVP & CFO
AMERISAFE, Inc.
337-463-9052
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