• AMERISAFE Announces 2017 Fourth Quarter and Year-End Results

    المصدر: Nasdaq GlobeNewswire / 26 فبراير 2018 16:30:22   America/New_York

    DERIDDER, La., Feb. 26, 2018 (GLOBE NEWSWIRE) -- AMERISAFE, Inc. (Nasdaq:AMSF), a specialty provider of hazardous workers’ compensation insurance, today announced results for the fourth quarter and year ended December 31, 2017.

           
     Three Months Ended  Twelve Months Ended
     December 31,  December 31,
      2017  2016 % Change 2017  2016 
     (in thousands, except per
    share data)
      (in thousands, except per
    share data)
    Net premiums earned $  87,377 $  92,097 -5.1% $  346,156 $  368,704 
    Net investment income    7,312    7,855 -6.9%    29,281    28,106 
    Net realized gains (losses) on investments  (pre-tax)   114    (1,468)NM    (647)   (494)
    Net income (1)   649    19,073 -96.6%    46,231    77,865 
    Diluted earnings per share (1)$  0.03 $  0.99 -97.0% $  2.40 $  4.05 
    Operating net income   13,195    20,027 -34.1%    59,272    78,186 
    Operating earnings per share $  0.69 $  1.04 -33.7% $  3.08 $  4.07 
    Book value per share$  22.10 $  23.72 -6.8% $  22.10 $  23.72 
    Net combined ratio 88.3%  76.8%    84.7%  77.0% 
    Return on average equity 0.6%  15.8%    10.5%  17.1% 

    (1) Includes $12.6 million ($0.66 per share) of additional income tax expense related to the impact of the tax reform legislation enacted in December requiring our net deferred tax assets to be revalued at the new lower federal corporate tax rate of 21%.

    G. Janelle Frost, President and Chief Executive Officer said, “AMERISAFE achieved an 84.7% combined ratio, a 13.3% operating return on average equity and maintained our strong balance sheet in 2017.  Overall, we are pleased with our performance as the workers’ compensation market continued to soften.  Our focus remains on maintaining long-term financial stability and outstanding service desired by our policyholders, while providing superior returns to shareholders.”

    Tax Reform Impact

    As a result of tax reform legislation enacted in December, AMERISAFE recognized a one-time non-cash charge of $12.6 million in the fourth quarter of 2017 from the estimated impact of a revaluation of its net deferred tax assets.  This charge is equal to $0.66 cents per share and is excluded from operating net income and operating earnings per share. 

    Insurance Results

                         
     Three Months Ended
        Twelve Months Ended
     December 31,
        December 31,
      2017   2016 % Change  2017   2016 
     (in thousands)  (in thousands)
                     
    Gross premiums written$ 81,115  $ 80,612  0.6% $ 350,267  $ 373,055 
    Net premiums earned   87,377     92,097  -5.1%    346,156     368,704 
    Loss and loss adjustment expenses incurred   58,286     52,618  10.8%    209,324     199,031 
    Underwriting and certain other operating costs,
    commissions, salaries and benefits
       18,090     17,135  5.6%    78,776     80,594 
    Policyholder dividends   761     1,021  -25.5%    4,868     4,216 
    Underwriting profit (pre-tax)$ 10,240  $ 21,323  -52.0% $  53,188  $  84,863 
                     
    Insurance Ratios:     
    Current accident year loss ratio 75.0%  67.9%   70.5%  67.9%
    Prior accident year loss ratio -8.3%  -10.8%   -10.0%  -13.9%
    Net loss ratio  66.7%  57.1%   60.5%  54.0%
    Net underwriting expense ratio  20.7%  18.6%   22.8%  21.9%
    Net dividend ratio  0.9%  1.1%   1.4%  1.1%
    Net combined ratio  88.3%  76.8%   84.7%  77.0%
    • Voluntary premiums for policies written during the quarter ended December 31, 2017 decreased $0.4 million, or 0.5%, compared with the fourth quarter of 2016.  For the full year 2017, voluntary premiums written decreased 4.0%, compared with 2016.
    • Payroll audits and related premium adjustments increased premiums written by $2.1 million in the fourth quarter of 2017, compared with $1.2 million in the fourth quarter of 2016.  For the full year, these premium adjustments totaled $0.6 million in 2017 compared with $8.1 million in 2016, a decrease of $7.5 million.
    • In the fourth quarter, the Company increased the accident year loss ratio for 2017 from 69.0% to 70.5% as a result of severity trends observed in accident year 2017 relative to prior accident years.  However, during the quarter, the Company experienced favorable case development for prior accident years which reduced loss and loss adjustment expenses by $7.2 million. Accident years 2014, 2015, as well as 2010 and 2011 were the primary contributors to the favorable development.  In total, prior accident year favorable development for the year ended December 31, 2017 was $34.8 million, compared with favorable development of $51.3 million in 2016.  These results reflect improved trends for both closing claims and claims severity and were driven largely by favorable case reserve development on claims that were closed during the year.
    • For the quarter ended December 31, 2017, the underwriting expense ratio was 20.7% compared to 18.6% in the same quarter in 2016.  The increase was due to slightly higher insurance related assessments in the fourth quarter compared to the same quarter a year ago as well as lower net premiums earned.  For the year ended December 31, 2017, the underwriting expense ratio was 22.8%, compared with 21.9% in 2016.
    • The effective tax rate for the year ended December 31, 2017 was 43.8%. Excluding the impact of revaluing deferred tax assets, the effective tax rate for the year was 28.4% compared with 31.0% for 2016.  The decrease in the rate was due to a higher proportion of tax-exempt investment income to underwriting income in 2017 relative to 2016.

    Investment Results

     
     Three Months Ended  Twelve Months Ended  
     December 31,  December 31,  
      2017  2016 % Change 2017  2016 % Change
     (in thousands)  (in thousands)  
    Net investment income $  7,312 $  7,855 -6.9%  $  29,281 $  28,106 4.2%  
    Net realized gains (losses) on investments (pre-tax)    114    (1,468)     (647)   (494)  
    Pre-tax investment yield  2.4%  2.7%    2.5%  2.5%   
    Tax-equivalent yield (1)  2.9%  3.2%    2.9%  3.2%   
    ________________________________     

    (1) The tax equivalent yield is calculated using the effective interest rate and the appropriate marginal tax rate effective January 1, 2018. 

    • Net investment income for the quarter ending December 31, 2017, decreased 6.9% to $7.3 million from $7.9 million in the fourth quarter of 2016, largely due to the increase in value of an investment in a limited partnership hedge fund in last year’s fourth quarter.  For the full year 2017, net investment income was $29.3 million compared with $28.1 million for 2016, an increase of 4.2%.

    • As of December 31, 2017, the carrying and fair value of AMERISAFE’s investment portfolio, including cash and cash equivalents, was $1.2 billion.  

    Capital Management

    On February 22, 2018 the Company’s Board of Directors increased the regular quarterly dividend from $0.20 per share to $0.22 per share, a 10.0% increase, payable on March 23, 2018 to shareholders of record as of March 9, 2018.
    During the quarter and year, no shares were repurchased under the Company’s share repurchase plan. 

    Supplemental Information

     
     Three Months EndedTwelve Months Ended
     December 31,December 31,
      2017   2016   2017   2016  
     (in thousands, except share and per share data)
         
    Net income$  649  $  19,073  $  46,231  $  77,865  
    Less: Impact of tax reform legislation   (12,620)    -      (12,620)    -   
    Less: Net realized gains (losses) on investments    114     (1,468)    (647)    (494) 
    Tax effect (1)   (40)    514     226     173  
    Operating net income (2) $  13,195  $  20,027  $  59,272  $  78,186  
         
    Average shareholders’ equity (3) $  460,184  $  482,947  $  440,787  $  455,066  
    Less: Average accumulated other comprehensive income   3,323     3,052     1,560     1,048  
    Average adjusted shareholders’ equity $456,861  $  479,895  $439,227  $  454,018  
                     
    Diluted weighted average common shares   19,246,150     19,210,635     19,245,866     19,203,650  
         
    Return on average equity (4)  0.6%   15.8%   10.5%   17.1%  
    Operating return on average adjusted equity (2)  11.4%   16.7%   13.3%   17.2%  
    Diluted earnings per share $  0.03  $  0.99  $  2.40  $  4.05  
    Operating earnings per share (2)$  0.69  $  1.04  $  3.08  $  4.07  
    ________________________________  

    (1) The tax effect of net realized capital gains was calculated assuming an annual tax rate of 35% in 2017 and will be calculated to reflect the new 21% corporate tax rate in 2018.

    (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 Tuesday February 27, 2018, at 10:30 a.m. Eastern Time to discuss the results for the quarter and year, 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 March 6, 2018.  To access the replay, dial 855-859-2056 or 404-537-3406 and use the pass code 1385708#.

    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

    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, 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.  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 EndedTwelve Months Ended
     December 31,December 31,
      2017   2016   2017   2016  
     (unaudited)(unaudited) 
    Revenues:    
    Gross premiums written $  81,115  $  80,612  $  350,267  $  373,055  
    Ceded premiums written    (2,288)    (2,261)    (8,869)    (10,307) 
    Net premiums written $  78,827  $  78,351  $  341,398  $  362,748  
         
    Net premiums earned $  87,377  $  92,097  $  346,156  $  368,704  
    Net investment income    7,312     7,855     29,281     28,106  
    Net realized gains (losses) on investments   114     (1,468)    (647)    (494) 
    Fee and other income    134     74     418     346  
    Total revenues    94,937     98,558     375,208     396,662  
         
    Expenses:    
    Loss and loss adjustment expenses incurred   58,286     52,618     209,324     199,031  
    Underwriting and other operating costs    18,090     17,135     78,776     80,594  
    Policyholder dividends    761     1,021     4,868     4,216  
    Total expenses    77,137     70,774     292,968     283,841  
         
    Income before taxes    17,800     27,784     82,240     112,821  
    Income tax expense (1)   17,151     8,711     36,009     34,956  
    Net income $  649  $  19,073  $  46,231  $  77,865  

    (1)  On December 22, 2017, the Tax Act was signed into law making significant changes to the Internal Revenue Code.  Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017.  As a result, we have recorded $12.6 million as additional income tax expense related to our net deferred tax assets revalued at the new lower rate of 21% in the fourth quarter of 2017, the period in which the legislation was enacted.

    AMERISAFE, INC. AND SUBSIDIARIES
    Consolidated Statements of Income (cont.)
    (in thousands, except per share amounts)

     
     Three Months EndedTwelve Months Ended
     December 31,December 31,
      2017  2016  2017  2016 
     (unaudited)(unaudited) 
         
    Basic EPS:     
    Net income$  649 $  19,073 $46,231 $ 77,865 
                 
    Basic weighted average common shares    19,177,261    19,146,047    19,165,489    19,105,806 
    Basic earnings per share $  0.03 $  1.00 $  2.41 $  4.08 
         
    Diluted EPS:    
    Net income $  649 $  19,073 $  46,231 $  77,865 
                 
    Diluted weighted average common shares:   
      Weighted average common shares   19,177,261    19,146,047    19,165,489    19,105,806 
      Stock options and performance shares   68,889    64,588    80,377    97,844 
      Diluted weighted average common shares   19,246,150    19,210,635    19,245,866    19,203,650 
         
    Diluted earnings per  share $  0.03 $  0.99 $  2.40 $  4.05 


    AMERISAFE, INC. AND SUBSIDIARIES
    Consolidated Balance Sheets
    (in thousands) 

     
     December 31,December 31,
      2017 2016
     (unaudited) 
    Assets  
    Investments $  1,130,314 $  1,084,474
    Cash and cash equivalents    55,559    58,936
    Amounts recoverable from reinsurers    90,133    83,666
    Premiums receivable, net    174,234    183,005
    Deferred income taxes    19,262    33,811
    Deferred policy acquisition costs    20,251    19,300
    Other assets    28,483    55,664
     $  1,518,236 $  1,518,856
         
    Liabilities and Shareholders’ Equity 
    Liabilities:  
    Reserves for loss and loss adjustment expenses$  771,845 $  742,776
    Unearned premiums    157,270    162,028
    Insurance-related assessments    28,246    31,742
    Other liabilities    135,452    126,160
          
    Shareholders’ equity    425,423    456,150
    Total liabilities and shareholders’ equity $  1,518,236 $  1,518,856
         


    Contact:                                                         

    Neal A Fuller, EVP & CFO
    AMERISAFE, Inc.
    337-463-9052

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