Business Wire | Jul 28, 2021 04:30PM EDT

AMERISAFE Announces 2021 Second Quarter Results

Jul. 28, 2021

DERIDDER, La.--(BUSINESS WIRE)--Jul. 28, 2021--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, 2021.

Three Months Ended Six Months Ended June 30, June 30, 2021 2020 % 2021 2020 % Change Change

(in thousands, except (in thousands, except per share data) per share data)Net premiums $ 69,888 $ 75,964 -8.0 % $ 140,634 $ 154,954 -9.2 %earnedNet 6,730 7,324 -8.1 % 13,313 15,073 -11.7 %investmentincomeNet realizedgains on 1,179 163 NM 1,498 1,155 29.7 %investments(pretax)Netunrealizedgains 3,286 5,570 NM 8,797 (3,193 ) NM (losses) onequitysecurities(pre-tax)Net income 23,767 23,948 -0.8 % 43,079 34,748 24.0 %

Diluted $ 1.23 $ 1.24 -0.8 % $ 2.22 $ 1.80 23.3 %earnings pershareOperating 20,240 19,419 4.2 % 34,946 36,358 -3.9 %net incomeOperating $ 1.04 $ 1.00 4.0 % $ 1.80 $ 1.88 -4.3 %earnings pershareBook value $ 24.19 $ 23.94 1.0 % $ 24.19 $ 23.94 1.0 %per shareNet combined 74.4 % 78.5 % 79.6 % 81.1 %ratioReturn on 20.8 % 21.3 % 19.0 % 15.6 %averageequity G. Janelle Frost, President and Chief Executive Officer, said, "Approved loss costs declined, and competition remained strong this quarter, even as industry-wide results reported an increasing combined ratio for 2020. AMERISAFE's combined ratio, however, declined this quarter. Favorable prior year case development and operating expense management countered premium pressures as pricing declined and the economy continued to recover."

INSURANCE RESULTS

Three Months Ended Six Months Ended June 30, June 30, 2021 2020 % 2021 2020 % Change Change (in thousands) (in thousands) Gross $ 73,724 $ 80,289 -8.2 % $ 155,238 $ 167,360 -7.2 %premiumswrittenNet premiums 69,888 75,964 -8.0 % 140,634 154,954 -9.2 %earnedLoss andloss 32,423 37,530 -13.6 % 71,940 81,177 -11.4 %adjustmentexpensesincurredUnderwritingand certainotheroperatingcosts,commissions, 18,455 21,131 -12.7 % 37,422 42,415 -11.8 %salaries andbenefitsPolicyholder 1,117 948 17.8 % 2,467 1,971 25.2 %dividendsUnderwriting $ 17,893 $ 16,355 9.4 % $ 28,805 $ 29,391 -2.0 %profit(pre-tax) InsuranceRatios:Currentaccident 72.0 % 72.5 % 72.0 % 72.5 %year lossratioPrioraccident -25.6 % -23.1 % -20.8 % -20.1 %year lossratioNet loss 46.4 % 49.4 % 51.2 % 52.4 %ratioNetunderwriting 26.4 % 27.8 % 26.6 % 27.4 %expenseratioNet dividend 1.6 % 1.3 % 1.8 % 1.3 %ratioNet combined 74.4 % 78.5 % 79.6 % 81.1 %ratio * Gross premiums written in the second quarter of 2021 decreased by $6.6 million, or 8.2%, primarily due to lower voluntary premiums on policies written in the quarter which were 8.9% lower compared to the second quarter of 2020. This reduction in premium is primarily due to a continued decline in approved loss costs, which were lower by 6.5% on average on policies we renewed during the quarter. * Payroll audits and related premium adjustments increased premiums written by $0.5 million in the second quarter of 2021, the same amount as the second quarter of 2020. * The current accident year loss ratio for the second quarter was 72.0%, unchanged from the first quarter of 2021, and one half point lower than 2020. During the quarter, the Company experienced favorable case reserve development for prior accident years, which reduced loss and loss adjustment expenses by $17.9 million, primarily from accident years 2015 through 2019. * For the quarter ended June 30, 2021, the underwriting expense ratio was 26.4% compared with 27.8% in the same quarter in 2020. The decrease in the expense ratio was primarily due to lower insurance related assessments compared to the same quarter in 2020. * The effective tax rate for the quarter ended June 30, 2021 was 18.5%, which was the same as the second quarter of 2020.

INVESTMENT RESULTS

Three Months Ended Six Months Ended June 30, June 30, 2021 2020 % 2021 2020 % Change Change (in thousands) (in thousands)Net investment $ 6,730 $ 7,324 -8.1 % $ 13,313 $ 15,073 -11.7 %incomeNet realizedgains on 1,179 163 NM 1,498 1,155 29.7 %investments(pre-tax)Net unrealizedgains (losses) 3,286 5,570 NM 8,797 (3,193 ) NM on equitysecurities(pre-tax)Pre-tax 2.3 % 2.5 % 2.3 % 2.5 %investment yieldTax-equivalent 2.6 % 2.9 % 2.6 % 2.9 %yield (1) (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, 2021, decreased 8.1% to $6.7 million from $7.3 million in the second quarter of 2020, due to lower investment yields on fixed-income securities. * As of June 30, 2021, the carrying value of AMERISAFE's investment portfolio, including cash and cash equivalents, was $1.2 billion.

CAPITAL MANAGEMENT

The Company paid a regular quarterly cash dividend of $0.29 per share on June 25, 2021. On July 27, 2021 the Company's Board of Directors declared a quarterly cash dividend of $0.29 per share, payable on September 24, 2021 to shareholders of record as of September 10, 2021.

Book value per share at June 30, 2021 was $24.19, an increase of 6.6% from $22.70 at December 31, 2020.

SUPPLEMENTAL INFORMATION

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

* Net investment income for the quarter ended June 30, 2021, decreased 8.1% to $6.7 million from $7.3 million in the second quarter of 2020, due to lower investment yields on fixed-income securities. * As of June 30, 2021, the carrying value of AMERISAFE's investment portfolio, including cash and cash equivalents, was $1.2 billion.

CAPITAL MANAGEMENT

The Company paid a regular quarterly cash dividend of $0.29 per share on June 25, 2021. On July 27, 2021 the Company's Board of Directors declared a quarterly cash dividend of $0.29 per share, payable on September 24, 2021 to shareholders of record as of September 10, 2021.

Book value per share at June 30, 2021 was $24.19, an increase of 6.6% from $22.70 at December 31, 2020.

SUPPLEMENTAL INFORMATION

Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020

(in thousands, except share and per share data) Net income $ 23,767 $ 23,948 $ 43,079 $ 34,748

Less:Net realized 1,179 163 1,498 1,155 gains oninvestmentsNet unrealizedgains (losses) 3,286 5,570 8,797 (3,193 )on equitysecuritiesTax effect (1) (938 ) (1,204 ) (2,162 ) 428

Operating net $ 20,240 $ 19,419 $ 34,946 $ 36,358 income (2) Average $ 457,996 $ 449,876 $ 453,591 $ 446,506 shareholders'equity (3)Less:Averageaccumulated 16,417 16,437 18,941 15,695 othercomprehensiveincomeAverage adjusted $ 441,579 $ 433,439 $ 434,650 $ 430,811 shareholders'equity (2) Diluted weighted 19,380,611 19,335,707 19,384,078 19,335,748 average commonshares Return on 20.8 % 21.3 % 19.0 % 15.6 %average equity(4)Operating returnon average 18.3 % 17.9 % 16.1 % 16.9 %adjusted equity(2)Diluted earnings $ 1.23 $ 1.24 $ 2.22 $ 1.80 per shareOperating $ 1.04 $ 1.00 $ 1.80 $ 1.88 earnings pershare (2) (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, 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 July 29, 2021, 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 323-701-0225 (Conference Code 2203760) 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 http://www.amerisafe.com. To listen to the live call on the web, please visit the website at least ten 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. Other 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 for the year ended December 31, 2020. 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 -

The tax effect of net realized losses on investments and net unrealized(1) gains (losses) on equity securities is calculated with an effective tax rate of 21%.

Operating net income, operating return on average adjusted equity and(2) 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 July 29, 2021, 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 323-701-0225 (Conference Code 2203760) 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 http://www.amerisafe.com. To listen to the live call on the web, please visit the website at least ten 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. Other 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 for the year ended December 31, 2020. 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, 2021 2020 2021 2020

(unaudited) (unaudited)Revenues:Gross premiums written $ 73,724 $ 80,289 $ 155,238 $ 167,360

Ceded premiums written (2,486 ) (2,672 ) (5,003 ) (5,455 )

Net premiums written $ 71,238 $ 77,617 $ 150,235 $ 161,905

Net premiums earned $ 69,888 $ 75,964 $ 140,634 $ 154,954

Net investment income 6,730 7,324 13,313 15,073

Net realized gains on 1,179 163 1,498 1,155 investmentsNet unrealized gains (losses) 3,286 5,570 8,797 (3,193 )on equity securitiesGain (loss) on disposal of (2 ) (29 ) 21 (29 )assetsFee and other income 76 90 245 291

Total revenues 81,157 89,082 164,508 168,251

Expenses:Loss and loss adjustment 32,423 37,530 71,940 81,177 expenses incurredUnderwriting and other 18,455 21,131 37,422 42,415 operating costsPolicyholder dividends 1,117 948 2,467 1,971

Provision for investment (9 ) 82 (117 ) 56 related credit loss expense(benefit)Total expenses 51,986 59,691 111,712 125,619

Income before taxes 29,171 29,391 52,796 42,632

Income tax expense 5,404 5,443 9,717 7,884

Net income $ 23,767 $ 23,948 $ 43,079 $ 34,748

AMERISAFE, INC. AND SUBSIDIARIES

Consolidated Statements of Income (cont.)

(in thousands, except per share amounts)

Three Months EndedSix Months EndedJune 30,June 30,2021

2020

2021

2020

(unaudited)(unaudited)Basic EPS:Net income$

23,767

$

23,948

$

43,079

$

34,748

Basic weighted average common shares19,327,422

19,280,684

19,319,608

19,273,347

Basic earnings per share$

1.23

$

1.24

$

2.23

$

1.80

Diluted EPS:Net income$

23,767

$

23,948

$

43,079

$

34,748

Diluted weighted average common shares:Weighted average common shares19,327,422

19,280,684

19,319,608

19,273,347

Restricted stock and stock options53,189

55,023

64,470

62,401

Diluted weighted average common shares19,380,611

19,335,707

19,384,078

19,335,748

Diluted earnings per share$

1.23

$

1.24

$

2.22

$

1.80

AMERISAFE, INC. AND SUBSIDIARIES

Consolidated Statements of Income (cont.)

(in thousands, except per share amounts)

Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020

(unaudited) (unaudited)Basic EPS:Net income $ 23,767 $ 23,948 $ 43,079 $ 34,748

Basic weighted average 19,327,422 19,280,684 19,319,608 19,273,347common sharesBasic earnings per $ 1.23 $ 1.24 $ 2.23 $ 1.80share Diluted EPS:Net income $ 23,767 $ 23,948 $ 43,079 $ 34,748

Diluted weightedaverage common shares:Weighted average common 19,327,422 19,280,684 19,319,608 19,273,347sharesRestricted stock and 53,189 55,023 64,470 62,401stock optionsDiluted weighted 19,380,611 19,335,707 19,384,078 19,335,748average common shares Diluted earnings per $ 1.23 $ 1.24 $ 2.22 $ 1.80shareAMERISAFE, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands)

June 30,December 31,2021

2020

(unaudited)AssetsInvestments$

1,112,805

$

1,088,744

Cash and cash equivalents57,541

61,757

Amounts recoverable from reinsurers110,912

105,803

Premiums receivable, net165,158

156,760

Deferred income taxes14,219

13,665

Deferred policy acquisition costs18,857

17,810

Other assets26,771

26,316

$

1,506,263

$

1,470,855

Liabilities and Shareholders' EquityLiabilities:Reserves for loss and loss adjustment expenses$

744,969

$

760,561

Unearned premiums138,861

129,260

Insurance-related assessments18,688

17,995

Other liabilities135,379

124,223

Shareholders' equity468,366

438,816

Total liabilities and shareholders' equity$

1,506,263

$

1,470,855

View source version on businesswire.com: https://www.businesswire.com/news/home/20210728005715/en/

CONTACT: Neal A. Fuller, EVP & CFO AMERISAFE 337.463.9052