DERIDDER, La., May 9, 2012 (GLOBE NEWSWIRE) -- AMERISAFE, Inc. (Nasdaq:AMSF), a specialty provider of hazardous workers' compensation insurance, today announced results for the first quarter ended March 31, 2012.
| Three Months Ended March 31, | ||||
| 2012 | 2011 | % Change | ||
| (in thousands, except per share data) | ||||
| Net premiums earned | $ 69,790 | $ 60,089 | 16.1% | |
| Net investment income | 6,914 | 6,546 | 5.6% | |
| Net realized gains on investments (pre-tax) | 1,791 | 103 | NM | |
| Net income | 9,561 | 6,630 | 44.2% | |
| Diluted earnings per share | 0.52 | 0.35 | 48.6% | |
| Operating net income | 8,397 | 6,528 | 28.6% | |
| Operating earnings per share | 0.45 | 0.35 | 28.6% | |
| Book value per share | 19.78 | 18.24 | 8.4% | |
| Net combined ratio | 96.0% | 98.3% | ||
| Return on average equity | 10.8% | 8.0% | ||
Financial data for the first quarter of 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 months ended March 31, 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, "We are pleased with the solid results of the first quarter. Workers' compensation market conditions continue to improve both in terms of product pricing and demand. We remain focused on expanding our business in a responsible and profitable fashion."
| Insurance Results | ||||
| Three Months Ended March 31, | ||||
| 2012 | 2011 | % Change | ||
| (in thousands) | ||||
| Gross premiums written | $ 84,924 | $ 71,359 | 19.0% | |
| Net premiums earned | 69,790 | 60,089 | 16.1% | |
| Loss and loss adjustment expenses incurred | 51,843 | 44,176 | 17.4% | |
| Underwriting and certain other operating costs, commissions and salaries and benefits | 14,715 | 14,559 | 1.1% | |
| Policyholder dividends | 384 | 355 | 8.2% | |
| Underwriting profit (pre-tax) | 2,848 | 999 | 185.1% | |
| Insurance Ratios: | ||||
| Current accident year loss ratio | 76.5% | 77.0% | ||
| Prior accident year loss ratio | (2.2)% | (3.5)% | ||
| Net loss ratio | 74.3% | 73.5% | ||
| Net underwriting expense ratio | 21.1% | 24.2% | ||
| Net dividend ratio | 0.6% | 0.6% | ||
| Net combined ratio | 96.0% | 98.3% | ||
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Voluntary premium for policies written during the quarter increased by 11.3% compared to prior year quarter. First quarter of 2011 included $4.0 million of gross premiums written for the renewal rights and assumption agreement with Cooperative Mutual. During the first quarter of 2012, gross premiums written increased by $5.4 million due to positive payroll audits and related premium adjustments for policies written in previous periods. Payroll audits and related premium adjustments reduced premiums written by $0.1 million in the first quarter of 2011.
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In the 2012 period, the Company experienced favorable loss development for prior accident years which reduced loss and loss adjustment expenses by $1.6 million. Accident years prior to 2010 contributed favorable development of $5.2 million, while accident year 2010 experienced $3.6 million of unfavorable development.
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The underwriting expense ratio decreased mainly as a result of higher experienced rated commission from our reinsurance program. In the first quarter of 2012, experienced rated commission offset our underwriting expense ratio by 4.1 percentage points compared to 2.2 percentage points in the first quarter of 2011. Included in the 2012 experience rated commission was $0.8 million related to the $4 million excess $1 million layer of the 2011 reinsurance program and $2.1 million related to the 2012 reinsurance program.
- The effective tax rate for the quarter was 16.4% compared to 11.5% in the first quarter in 2011. The increase was driven by the lower ratio of tax-free investment income to pre-tax income in the first quarter of 2012 compared to the first quarter of 2011.
Geoff Banta, President and Chief Operating Officer, noted, "Our premium growth this quarter resulted from both increased organic growth and improving economic conditions within our core industries. We believe that our strengthened pricing bodes well for future underwriting results."
| Investment Results | ||||
| Three Months Ended March 31, | ||||
| 2012 | 2011 | % Change | ||
| (in thousands) | ||||
| Net investment income | 6,914 | 6,546 | 5.6% | |
| Net realized gains on investments (pre-tax) | 1,791 | 103 | ||
| Pre-tax investment yield | 3.2% | 3.2% | ||
| Tax equivalent yield (1) | 4.5% | 4.6% | ||
| __________________________________ | ||||
| (1) The tax equivalent yield is calculated using the effective interest rate and a 35% marginal tax rate. | ||||
- As of March 31, 2012, the carrying value of AMERISAFE's investment portfolio, including cash and cash equivalents, was $868.7 million and the fair value of the portfolio was $908.1 million.
Recently Adopted Accounting Standard
As previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2011, the Company has adopted the new accounting standard for deferred acquisition costs, Accounting Standards Update 2010-26, "Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts." The new standard was adopted on a retrospective basis. The Company's adoption resulted in a $2.2 million reduction of deferred policy acquisition costs, a $0.8 million decrease in deferred income tax liabilities and a $1.4 million decrease to shareholders' equity at December 31, 2011. The adjustment to shareholders' equity resulted in a reduction in book value of $0.08 per share based on the number of shares outstanding at January 1, 2012. Comparative period information for the first quarter of 2011 has been revised to reflect changes resulting from our retrospective adoption of the new accounting standard.
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 for an average per share price of $17.78, including commissions.
| Three months ended March 31, | ||
| 2012 | 2011 | |
| (in thousands, except share data) | ||
| Net income | $ 9,561 | $ 6,630 |
| Less: Net realized capital gains | 1,791 | 103 |
| Tax effect (1) | (627) | (1) |
| Operating net income (2) | 8,397 | 6,528 |
| Average shareholders' equity (3) | $ 354,245 | $ 331,394 |
| Less: Average other comprehensive income (loss) | 2,189 | 219 |
| Adjusted average shareholders' equity | 352,056 | 331,175 |
| Diluted weighted average common shares | 18,542,330 | 18,709,166 |
| Return on average equity (4) | 10.8% | 8.0% |
| Operating return on average equity (2) | 9.5% | 7.9% |
| Diluted earnings per common share | $ 0.52 | $ 0.35 |
| Operating earnings per common share (2) | $ 0.45 | $ 0.35 |
| ________________________________ | ||
| (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. 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 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 May 10, 2012, at 2:00 p.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 May 17, 2012. To access the replay, dial 855-859-2056 or 404-537-3406 and use the pass code 69900972#.
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.
| AMERISAFE, INC. AND SUBSIDIARIES | ||||||
| Consolidated Statements of Income | ||||||
| (in thousands) | ||||||
|
Three Months Ended March 31, |
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| 2012 | 2011 | |||||
| (unaudited) | ||||||
| Revenues: | ||||||
| Gross premiums written | $ 84,924 | $ 71,359 | ||||
| Ceded premiums written | (3,904) | (3,582) | ||||
| Net premiums written | $ 81,020 | $ 67,777 | ||||
| Net premiums earned | $ 69,790 | $ 60,089 | ||||
| Net investment income | 6,914 | 6,546 | ||||
| Net realized gains on investments | 1,791 | 103 | ||||
| Fee and other income | 159 | 221 | ||||
| Total revenues | 78,654 | 66,959 | ||||
| Expenses: | ||||||
| Loss and loss adjustment expenses incurred | 51,843 | 44,176 | ||||
| Underwriting and other operating costs | 14,715 | 14,559 | ||||
| Interest expense | 279 | 379 | ||||
| Policyholder dividends | 384 | 355 | ||||
| Total expenses | 67,221 | 59,469 | ||||
| Income before taxes | 11,433 | 7,490 | ||||
| Income tax expense | 1,872 | 860 | ||||
| Net income | $ 9,561 | $ 6,630 | ||||
| AMERISAFE, INC. AND SUBSIDIARIES | ||
| Consolidated Statements of Income (cont.) | ||
| (in thousands, except per share amounts) | ||
|
Three Months Ended March 31, |
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| 2012 | 2011 | |
| (unaudited) | ||
| Basic EPS: | ||
| Net income | $ 9,561 | $ 6,630 |
| Basic weighted average common shares | 18,140,749 | 18,232,600 |
| Basic earnings per share | $ 0.53 | $ 0.36 |
| Diluted EPS: | ||
| Net income | $ 9,561 | $ 6,630 |
| Diluted weighted average common shares: | ||
| Weighted average common shares | 18,140,749 | 18,232,600 |
| Stock options | 395,239 | 468,679 |
| Restricted stock | 6,342 | 7,887 |
| Diluted weighted average common shares | 18,542,330 | 18,709,166 |
| Diluted earnings per common share | $ 0.52 | $ 0.35 |
| AMERISAFE, INC. AND SUBSIDIARIES | ||
| Consolidated Balance Sheets | ||
| (in thousands) | ||
| March 31, | December 31, | |
| 2012 | 2011 | |
| (unaudited) | ||
| Assets | ||
| Investments | $ 804,917 | $ 805,974 |
| Cash and cash equivalents | 63,775 | 45,536 |
| Amounts recoverable from reinsurers | 99,945 | 96,212 |
| Premiums receivable, net | 138,366 | 121,223 |
| Deferred income taxes | 29,888 | 30,048 |
| Deferred policy acquisition costs | 17,675 | 16,578 |
| Deferred charges | 3,388 | 3,120 |
| Other assets | 27,806 | 28,402 |
| $ 1,185,760 | $ 1,147,093 | |
| Liabilities and shareholders' equity | ||
| Liabilities: | ||
| Reserves for loss and loss adjustment expenses | $ 548,959 | $ 538,214 |
| Unearned premiums | 129,929 | 118,699 |
| Insurance-related assessments | 22,788 | 21,506 |
| Subordinated debt securities | 25,780 | 25,780 |
| Other liabilities | 99,251 | 93,457 |
| Total shareholders' equity | 359,053 | 349,437 |
| Total liabilities and shareholders' equity | $ 1,185,760 | $ 1,147,093 |