Increases Regular Dividend 50%
Announces Special Dividend of $0.50 Per Share
DERIDDER, La., Feb. 26, 2014 (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, 2013.
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Three Months Ended December 31, |
Twelve Months Ended December 31, |
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| 2013 | 2012 | % Change | 2013 | 2012 | % Change | |
| (in thousands, except per share data) | ||||||
| Net premiums earned | $ 86,695 | $ 78,741 | 10.1% | $ 329,983 | $ 290,689 | 13.5% |
| Net investment income | 6,763 | 6,698 | 1.0% | 27,029 | 27,018 | 0.0% |
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Net realized gains (losses) on investments (pre-tax) |
710 | 66 | NM | (1,211) | 2,979 | NM |
| Net income | 17,443 | 9,226 | 89.1% | 43,637 | 29,353 | 48.7% |
| Diluted earnings per share | $ 0.92 | $ 0.50 | 84.0% | $ 2.32 | $ 1.58 | 46.8% |
| Operating net income | 16,982 | 9,183 | 84.9% | 44,424 | 27,417 | 62.0% |
| Operating earnings per share | $ 0.90 | $ 0.49 | 83.7% | $ 2.37 | $ 1.48 | 60.1% |
| Book value per share | $ 22.41 | $ 20.88 | 7.3% | $ 22.41 | $ 20.88 | 7.3% |
| Net combined ratio | 80.0% | 92.6% | 90.0% | 97.5% | ||
| Return on average equity | 17.1% | 9.8% | 10.9% | 8.0% | ||
Commenting on fourth quarter results, Allen Bradley, AMERISAFE's Chairman and Chief Executive Officer, stated, "During the fourth quarter of 2013 Amerisafe continued to witness favorable trends in its business with the combination of improved pricing, stable loss trends and expense management generating stellar results. From an industry perspective, the workers' compensation market continues to exhibit evidence of stressed balance sheets, a difficult investing environment and a growing residual market, providing the ingredients for a sustained favorable operating environment, particularly in our niche high severity markets."
Insurance Results
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Three Months Ended December 31, |
Twelve Months Ended December 31, |
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| 2013 | 2012 | % Change | 2013 | 2012 | % Change | |
| (in thousands) | ||||||
| Gross premiums written | $ 91,102 | $ 81,140 | 12.3% | $372,177 | $328,823 | 13.2% |
| Net premiums earned | 86,695 | 78,741 | 10.1% | 329,983 | 290,689 | 13.5% |
| Loss and loss adjustment expenses incurred | 59,113 | 57,489 | 2.8% | 228,973 | 219,903 | 4.1% |
| Underwriting and certain other operating costs, commissions and salaries and benefits | 10,104 | 14,876 | (32.1)% | 67,116 | 61,433 | 9.3% |
| Policyholder dividends | 62 | 544 | NM | 1,042 | 2,203 | NM |
| Underwriting profit (pre-tax) | 17,416 | 5,832 | 198.6% | 32,852 | 7,150 | 359.5% |
| Insurance Ratios: | ||||||
| Current accident year loss ratio | 73.2% | 76.5% | 73.2% | 76.5% | ||
| Prior accident year loss ratio | (5.0)% | (3.5)% | (3.8)% | (0.9)% | ||
| Net loss ratio | 68.2% | 73.0% | 69.4% | 75.6% | ||
| Net underwriting expense ratio | 11.7% | 18.9% | 20.3% | 21.1% | ||
| Net dividend ratio | 0.1% | 0.7% | 0.3% | 0.8% | ||
| Net combined ratio | 80.0% | 92.6% | 90.0% | 97.5% | ||
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Voluntary premiums written increased 19.6% in the quarter and 15.6% for the year ended December 31, 2013 compared to the same periods in 2012. Additionally, payroll audits and related premium adjustments for policies written in previous periods increased premiums $3.2 million in the fourth quarter and $13.6 million in the year ended December 31, 2013. In 2012, these premium adjustments increased premium $7.9 million in the fourth quarter and $20.9 million for the full year.
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The current accident year loss ratio for the fourth quarter was 73.2%. During the quarter the Company experienced $4.4 million of favorable prior year development, primarily attributable to accident years 2009 and 2010. In total, prior accident year development for year ended December 31, 2013 resulted in favorable development of $12.6 million, compared to favorable development of $2.5 million in 2012.
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For the year ended December 31, 2013, the underwriting expense ratio declined 80bps from the prior year to 20.3%. Growth in premium earned combined with flat operating expenses more than off-set increases in commissions and total compensation. During the fourth quarter the Company benefited from the following reductions in estimates: a $1.7 million reduction of allowance for doubtful accounts; the reversal of accrued retaliatory premium taxes of $1.5 million; and $2.2 million reduction of a guaranty fund estimate.
- The effective tax rate for the year ended December 31, 2013 rose to 26.3% compared to 21.0% in the same period in 2012. The increase resulted from continued improvement in our underwriting margins which created a higher proportion of underwriting income relative to tax-exempt investment income in 2013.
Janelle Frost, President and Chief Operating Officer, noted, "We are pleased with the operating results in the quarter. We maintained our pricing discipline, experienced favorable prior year loss development and benefited from our focus on expense management, resulting in an 80.0% combined ratio for the quarter and 90.0% for the full year. The operating results were supported by the emphasis on our core disciplines in a competitive environment. Those same disciplines have the company well-positioned for the future."
Investment Results
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Three Months Ended December 31, |
Twelve Months Ended December 31, |
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| 2013 | 2012 | % Change | 2013 | 2012 | % Change | |
| (in thousands) | ||||||
| Net investment income | $ 6,763 | $ 6,698 | 1.0% | $ 27,029 | $ 27,018 | 0.0% |
| Net realized gains (losses) on investments (pre-tax) | 710 | 66 | NM | (1,211) | 2,979 | NM |
| Pre-tax investment yield | 2.7% | 3.0% | 2.8% | 3.1% | ||
| Tax equivalent yield (1) | 3.9% | 4.3% | 3.9% | 4.3% | ||
| ________________________________ | ||||||
| (1) The tax equivalent yield is calculated using the effective interest rate and a 35% marginal tax rate. | ||||||
- As of December 31, 2013, the carrying value of AMERISAFE's investment portfolio, including cash and cash equivalents, was $1.0 billion. The fair value of the portfolio was $1.0 billion.
Capital Management
The Company's Board of Directors increased the regular quarterly dividend from $0.08 per share to $0.12 per share, a 50.0% increase, payable on March 28, 2014 to shareholders of record as of March 14, 2014. The Board also approved an extraordinary dividend of $0.50 per share payable on March 28, 2014 to shareholders of record as of March 14, 2014.
Chairman and Chief Executive Officer, Allen Bradley, commented, "In light of our strong financial performance, Amerisafe continues to generate significant capital. The Board's actions of increasing the regular dividend and paying shareholders an extraordinary cash dividend is a reflection of our solid operating results as well as a commitment to our shareholders."
During the quarter, no shares were repurchased under the share repurchase plan. Since the 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.
Non-GAAP Financials
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Three Months Ended December 31, |
Twelve Months Ended December 31, |
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| 2013 | 2012 | 2013 | 2012 | |
| (in thousands, except share and per share data) | ||||
| Net income | $ 17,443 | $ 9,226 | $ 43,637 | $ 29,353 |
| Less: Net realized capital gains/(losses) | 710 | 66 | (1,211) | 2,979 |
| Tax effect of (gains)/losses (1) | (249) | (23) | 424 | (1,043) |
| Operating net income (2) | 16,982 | 9,183 | 44,424 | 27,417 |
| Average shareholders' equity (3) | $ 408,763 | $ 376,681 | $ 399,018 | $ 365,330 |
| Less: Average other comprehensive income. | (3,483) | 3,547 | (658) | 2,597 |
| Adjusted average shareholders' equity | 412,246 | 373,134 | 399,676 | 362,733 |
| Diluted weighted average common shares | 18,796,566 | 18,592,164 | 18,748,809 | 18,575,191 |
| Return on average equity (4) | 17.1% | 9.8% | 10.9% | 8.0% |
| Operating return on average equity (2) | 16.5% | 9.8% | 11.1% | 7.6% |
| Diluted earnings per common share | $ 0.92 | $ 0.50 | $ 2.32 | $ 1.58 |
| Operating earnings per common share (2) | $ 0.90 | $ 0.49 | $ 2.37 | $ 1.48 |
| ______________________________ | ||||
| (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 adjusted equity and operating earnings per share are each 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 February 27, 2014, at 10:30 a.m. Eastern Time, to discuss the fourth quarter results 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 March 6, 2014. To access the replay, dial 855-859-2056 or 404-537-3406 and use the pass code 31770996.
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 30 states and the District of Columbia.
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 and assumptions 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, 2012. 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 December 31, |
Twelve Months Ended December 31, |
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| 2013 | 2012 | 2013 | 2012 | |
| (unaudited) | (unaudited) | |||
| Revenues: | ||||
| Gross premiums written | $ 91,102 | $ 81,140 | $ 372,177 | $ 328,823 |
| Ceded premiums written | (4,849) | (4,398) | (18,425) | (16,305) |
| Net premiums written | $ 86,253 | $ 76,742 | $353,752 | $312,518 |
| Net premiums earned | $ 86,695 | $ 78,741 | $ 329,983 | $ 290,689 |
| Net investment income | 6,763 | 6,698 | 27,029 | 27,018 |
| Net realized gains (losses) on investments | 710 | 66 | (1,211) | 2,979 |
| Fee and other income | 141 | 78 | 534 | 562 |
| Total revenues | 94,309 | 85,583 | 356,335 | 321,248 |
| Expenses: | ||||
| Loss and loss adjustment expenses incurred | 59,113 | 57,489 | 228,973 | 219,903 |
| Underwriting and other operating costs | 10,104 | 14,876 | 67,116 | 61,433 |
| Interest expense | — | — | — | 566 |
| Policyholder dividends | 62 | 544 | 1,042 | 2,203 |
| Total expenses | 69,279 | 72,909 | 297,131 | 284,105 |
| Income before taxes | 25,030 | 12,674 | 59,204 | 37,143 |
| Income tax expense | 7,587 | 3,448 | 15,567 | 7,790 |
| Net income | $ 17,443 | $ 9,226 | $ 43,637 | $ 29,353 |
| AMERISAFE, INC. AND SUBSIDIARIES | ||||
| Consolidated Statements of Income (cont.) | ||||
| (in thousands, except share and per share amounts) | ||||
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Three Months Ended December 31, |
Twelve Months Ended December 31, |
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| 2013 | 2012 | 2013 | 2012 | |
| Basic EPS: | ||||
| Net income, as reported | $17,443 | $9,226 | $43,637 | $29,353 |
| Less allocated income to unvested shares | 79 | 10 | 142 | 22 |
| Net income available to common | $17,364 | $9,216 | $43,495 | $29,331 |
| Basic weighted average common shares | 18,459,486 | 18,200,503 | 18,373,033 | 18,166,261 |
| Basic earnings per common share | $0.94 | $0.51 | $2.37 | $1.62 |
| Diluted EPS: | ||||
| Net income available to common – diluted | $17,364 | $9,216 | $43,495 | $29,331 |
| Diluted weighted average common shares: | ||||
| Weighted average common shares | 18,459,486 | 18,200,503 | 18,373,033 | 18,166,261 |
| Stock options and performance shares | 337,080 | 391,661 | 375,776 | 408,930 |
| Diluted weighted average common shares | 18,796,566 | 18,592,164 | 18,748,809 | 18,575,191 |
| Diluted earnings per common share | $0.92 | $0.50 | $2.32 | $1.58 |
| AMERISAFE, INC. AND SUBSIDIARIES | ||
| Consolidated Balance Sheets | ||
| (in thousands) | ||
| December 31, | December 31, | |
| 2013 | 2012 | |
| (unaudited) | ||
| Assets | ||
| Investments | $ 878,775 | $ 808,116 |
| Cash and cash equivalents | 123,077 | 92,676 |
| Amounts recoverable from reinsurers | 75,326 | 101,352 |
| Premiums receivable, net | 171,579 | 141,950 |
| Deferred income taxes | 33,645 | 29,521 |
| Deferred policy acquisition costs | 19,171 | 18,419 |
| Other assets | 27,428 | 28,912 |
| $ 1,329,001 | $ 1,220,946 | |
| Liabilities and shareholders' equity | ||
| Liabilities: | ||
| Reserves for loss and loss adjustment expenses | $ 614,557 | $ 570,450 |
| Unearned premiums | 164,296 | 140,528 |
| Insurance-related assessments | 25,428 | 22,244 |
| Other liabilities | 107,906 | 106,502 |
| Total shareholders' equity | 416,814 | 381,222 |
| Total liabilities and shareholders' equity | $ 1,329,001 | $ 1,220,946 |