Business Wire | Oct 27, 2021 04:30PM EDT

AMERISAFE Announces 2021 Third Quarter Results

Oct. 27, 2021

DERIDDER, La.--(BUSINESS WIRE)--Oct. 27, 2021--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, 2021.

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 % 2021 2020 % Change Change

(in thousands, except (in thousands, except per per share data) share data)

Net $ 67,626 $ 74,771 -9.6 % $ 208,260 $ 229,725 -9.3 %premiumsearnedNet 6,049 7,063 -14.4 % 19,362 22,136 -12.5 %investmentincomeNetrealizedgains (8 ) 309 NM 1,490 1,464 1.8 %(losses) oninvestments(pretax)Netunrealizedgains(losses) onequity (771 ) 844 NM 8,026 (2,349 ) NM securities(pre-tax)Net income 19,136 23,353 -18.1 % 62,215 58,101 7.1 %

Diluted $ 0.99 $ 1.21 -18.2 % $ 3.21 $ 3.00 7.0 %earningsper shareOperating 19,751 22,442 -12.0 % 54,697 58,800 -7.0 %net incomeOperating $ 1.02 $ 1.16 -12.1 % $ 2.82 $ 3.04 -7.2 %earningsper shareBook value $ 24.80 $ 24.93 -0.5 % $ 24.80 $ 24.93 -0.5 %per shareNet 71.5 % 72.8 % 76.9 % 78.4 %combinedratioReturn on 16.1 % 19.8 % 18.1 % 17.0 %averageequity G. Janelle Frost, President and Chief Executive Officer, noted, "We were pleased with this quarter's results as we were able to maintain strong renewal retention and find new business opportunities in a declining rate environment. In addition, claim severity trends for prior accident years continued to show improvement as our claims handling practices reach favorable outcomes."

INSURANCE RESULTS

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 % 2021 2020 % Change Change

(in thousands) (in thousands)

Gross $ 67,185 $ 72,648 -7.5 % $ 222,423 $ 240,008 -7.3 %premiumswrittenNet premiums 67,626 74,771 -9.6 % 208,260 229,725 -9.3 %earnedLoss andloss 29,661 39,789 -25.5 % 101,601 120,966 -16.0 %adjustmentexpensesincurredUnderwritingand certainotheroperatingcosts,commissions, 17,915 13,902 28.9 % 55,337 56,317 -1.7 %salaries andbenefitsPolicyholder 733 714 2.7 % 3,200 2,685 19.2 %dividendsUnderwriting $ 19,317 $ 20,366 -5.2 % $ 48,122 $ 49,757 -3.3 %profit(pre-tax) InsuranceRatios:Currentaccident 72.0 % 72.5 % 72.0 % 72.5 %year lossratioPrioraccident -28.1 % -19.3 % -23.2 % -19.8 %year lossratioNet loss 43.9 % 53.2 % 48.8 % 52.7 %ratioNetunderwriting 26.5 % 18.6 % 26.6 % 24.5 %expenseratioNet dividend 1.1 % 1.0 % 1.5 % 1.2 %ratioNet combined 71.5 % 72.8 % 76.9 % 78.4 %ratio * Voluntary premiums were $3.2 million lower, or 4.6%, compared with the third quarter of 2020, due to continued reductions in approved state loss costs, which were 7.0% lower on average for policies we renewed during the quarter. * Payroll audits and related premium adjustments were $3.2 million lower than last year's third quarter, decreasing premiums written by $2.1 million in the third quarter of 2021, compared with an increase of $1.1 million in the same period in 2020. * The current accident year loss ratio for the third quarter was 72.0%, unchanged from the first six months 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 $19.0 million, primarily from accident years 2015 through 2019. * For the quarter ended September 30, 2021, the underwriting expense ratio was 26.5% compared with 18.6% in the same quarter in 2020. The increase in the expense ratio was primarily due to a benefit in last year's third quarter of $5.7 million from the termination of an assessment related to a multiple injury fund. * The effective tax rate for the quarter ended September 30, 2021 was 22.6%, compared with 18.5% in the third quarter of 2020, due to a higher proportion of income from underwriting and taxable investment income.

INVESTMENT RESULTS

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 % 2021 2020 % Change Change

(in thousands) (in thousands)

Net investment $ 6,049 $ 7,063 -14.4 % $ 19,362 $ 22,136 -12.5 %incomeNet realizedgains (losses)oninvestments (8 ) 309 NM 1,490 1,464 1.8 %(pre-tax)Net unrealizedgains (losses)onequity (771 ) 844 NM 8,026 (2,349 ) NM securities(pre-tax)Pre-tax 2.1 % 2.3 % 2.2 % 2.5 %investmentyieldTax-equivalent 2.5 % 2.8 % 2.5 % 2.8 %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 September 30, 2021, decreased 14.4% to $6.0 million from $7.1 million in the third quarter of 2020, due to lower investment yields on fixed-income securities. * As of September 30, 2021, the carrying value of AMERISAFE's investment portfolio, including cash and cash equivalents, was $1.2 billion.

CAPITAL MANAGEMENT

In an accompanying news release, the Company announced a special cash dividend of $4.00 per share, payable on November 17, 2021, to shareholders of record as of November 10, 2021.

In addition, the Company's Board of Directors declared a regular quarterly cash dividend of $0.29 per share, payable on December 17, 2021 to shareholders of record as of December 3, 2021.

Book value per share at September 30, 2021 was $24.80, an increase of 9.3% from $22.70 at December 31, 2020.

SUSTAINABILITY DISCLOSURES

The Company recently published additional sustainability disclosures for investors. These disclosures, which follow the Sustainability Accounting Standards Board (SASB) and Task Force on Climate-related Financial Disclosures (TCFD) format, can be found on our website at www.amerisafe.com under Sustainability.

SUPPLEMENTAL INFORMATION

(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, 2021, decreased 14.4% to $6.0 million from $7.1 million in the third quarter of 2020, due to lower investment yields on fixed-income securities. * As of September 30, 2021, the carrying value of AMERISAFE's investment portfolio, including cash and cash equivalents, was $1.2 billion.

CAPITAL MANAGEMENT

In an accompanying news release, the Company announced a special cash dividend of $4.00 per share, payable on November 17, 2021, to shareholders of record as of November 10, 2021.

In addition, the Company's Board of Directors declared a regular quarterly cash dividend of $0.29 per share, payable on December 17, 2021 to shareholders of record as of December 3, 2021.

Book value per share at September 30, 2021 was $24.80, an increase of 9.3% from $22.70 at December 31, 2020.

SUSTAINABILITY DISCLOSURES

The Company recently published additional sustainability disclosures for investors. These disclosures, which follow the Sustainability Accounting Standards Board (SASB) and Task Force on Climate-related Financial Disclosures (TCFD) format, can be found on our website at www.amerisafe.com under Sustainability.

SUPPLEMENTAL INFORMATION

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

(in thousands, except share and per share data)

Net income $ 19,136 $ 23,353 $ 62,215 $ 58,101

Less:Net realized (8 ) 309 1,490 1,464 gains (losses)on investmentsNet unrealizedgains (losses) (771 ) 844 8,026 (2,349 )on equitysecuritiesTax effect (1) 164 (242 ) (1,998 ) 186

Operating net $ 19,751 $ 22,442 $ 54,697 $ 58,800 income (2) Average $ 474,261 $ 472,353 $ 459,486 $ 456,063 shareholders'equity (3)Less:Averageaccumulated 15,924 19,545 18,003 16,062 othercomprehensiveincomeAverageadjusted $ 458,337 $ 452,808 $ 441,483 $ 440,001 shareholders'equity (2) Dilutedweighted 19,407,918 19,358,682 19,392,939 19,345,952 average commonshares Return on 16.1 % 19.8 % 18.1 % 17.0 %average equity(4)Operatingreturn on 17.2 % 19.8 % 16.5 % 17.8 %averageadjustedequity (2)Diluted $ 0.99 $ 1.21 $ 3.21 $ 3.00 earnings pershareOperating $ 1.02 $ 1.16 $ 2.82 $ 3.04 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 Thursday, October 28, 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 323-794-2423 (Conference Code 2096837) 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, 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. 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.

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 Thursday, October 28, 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 323-794-2423 (Conference Code 2096837) 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, 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. 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.





AMERISAFE, INC. AND SUBSIDIARIES

Consolidated Statements of Income

(in thousands)

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

(unaudited) (unaudited)

Revenues:Gross premiums written $ 67,185 $ 72,648 $ 222,423 $ 240,008

Ceded premiums written (2,407 ) (2,473 ) (7,410 ) (7,928 )

Net premiums written $ 64,778 $ 70,175 $ 215,013 $ 232,080

Net premiums earned $ 67,626 $ 74,771 $ 208,260 $ 229,725

Net investment income 6,049 7,063 19,362 22,136

Net realized gains (losses) (8 ) 309 1,490 1,464 on investmentsNet unrealized gains (771 ) 844 8,026 (2,349 )(losses) on equitysecuritiesGain (loss) on disposal of - - 21 (29 )assetsFee and other income 149 18 394 309

Total revenues 73,045 83,005 237,553 251,256

Expenses:Loss and loss adjustment 29,661 39,789 101,601 120,966 expenses incurredUnderwriting and other 17,915 13,902 55,337 56,317 operating costsPolicyholder dividends 733 714 3,200 2,685

Provision for investmentrelated credit lossexpense (benefit) 15 (69 ) (102 ) (13 )

Total expenses 48,324 54,336 160,036 179,955

Income before taxes 24,721 28,669 77,517 71,301

Income tax expense 5,585 5,316 15,302 13,200

Net income $ 19,136 $ 23,353 $ 62,215 $ 58,101

AMERISAFE, INC. AND SUBSIDIARIES

Consolidated Statements of Income (cont.)

(in thousands, except per share amounts)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2021

2020

2021

2020

(unaudited)

(unaudited)

Basic EPS:Net income$

19,136

$

23,353

$

62,215

$

58,101

Basic weighted average common shares19,344,636

19,299,921

19,328,041

19,282,263

Basic earnings per share$

0.99

$

1.21

$

3.22

$

3.01

Diluted EPS:Net income$

19,136

$

23,353

$

62,215

$

58,101

Diluted weighted average common shares:Weighted average common shares19,344,636

19,299,921

19,328,041

19,282,263

Restricted stock and stock options63,282

58,761

64,898

63,689

Diluted weighted average common shares19,407,918

19,358,682

19,392,939

19,345,952

Diluted earnings per share$

0.99

$

1.21

$

3.21

$

3.00

AMERISAFE, INC. AND SUBSIDIARIES

Consolidated Statements of Income (cont.)

(in thousands, except per share amounts)

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

(unaudited) (unaudited)

Basic EPS:Net income $ 19,136 $ 23,353 $ 62,215 $ 58,101

Basicweighted 19,344,636 19,299,921 19,328,041 19,282,263 averagecommon sharesBasic $ 0.99 $ 1.21 $ 3.22 $ 3.01 earnings pershare Diluted EPS:Net income $ 19,136 $ 23,353 $ 62,215 $ 58,101

Dilutedweightedaveragecommonshares:Weighted 19,344,636 19,299,921 19,328,041 19,282,263 averagecommon sharesRestricted 63,282 58,761 64,898 63,689 stock andstock optionsDilutedweighted 19,407,918 19,358,682 19,392,939 19,345,952 averagecommon shares Diluted $ 0.99 $ 1.21 $ 3.21 $ 3.00 earnings pershareAMERISAFE, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands)

September 30,

December 31,

2021

2020

(unaudited)AssetsInvestments$

1,034,187

$

1,088,744

Cash and cash equivalents123,128

61,757

Amounts recoverable from reinsurers108,394

105,803

Premiums receivable, net154,517

156,760

Deferred income taxes14,738

13,665

Deferred policy acquisition costs18,580

17,810

Other assets26,379

26,316

$

1,479,923

$

1,470,855

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

720,789

$

760,561

Unearned premiums136,013

129,260

Insurance-related assessments18,907

17,995

Other liabilities124,058

124,223

Shareholders' equity480,156

438,816

Total liabilities and shareholders' equity$

1,479,923

$

1,470,855

View source version on businesswire.com: https://www.businesswire.com/news/home/20211027005862/en/

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