AMSF 8-K
Amerisafe Inc (AMSF)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
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Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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Securities registered or to be registered pursuant to Section 12(b) of the Act.
| Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
| Item 2.02. | Results of Operations and Financial Condition. |
On October 28, 2020, AMERISAFE, Inc. (the “Company”) issued a press release announcing its financial results for the third quarter ended September 30, 2020. A copy of the Company’s press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.
On October 28, 2020, AMERISAFE, Inc. (the “Company”) issued a press release announcing a special dividend of $3.50 per share. A copy of the Company’s press release is attached as Exhibit 99.2 to this Current Report on Form 8-K.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
| Exhibit No. |
Description | |
| 99.1 | Press Release of AMERISAFE, Inc. dated October 28, 2020 (Financial Results) | |
| 99.2 | Press Release of AMERISAFE, Inc. dated October 28, 2020 (Dividend) | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| AMERISAFE, INC. | ||
| By: | /s/ Neal A. Fuller | |
| Neal A. Fuller, Executive Vice President and Chief Financial Officer | ||
Date: October 28, 2020
Exhibit 99.1
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| Neal A. Fuller, EVP & CFO AMERISAFE 337.463.9052 |
AMERISAFE ANNOUNCES 2020 THIRD QUARTER RESULTS
Declares an Extraordinary Dividend of $3.50 Per Share
Reports Combined Ratio of 72.8%
DeRidder, LA – October 28, 2020 - 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, 2020.
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||
| 2020 | 2019 | % Change | 2020 | 2019 | % Change | |||||||||||||||||||
| (in thousands, except per share data) |
(in thousands, except per share data) |
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| Net premiums earned |
$ | 74,771 | $ | 82,712 | -9.6 | % | $ | 229,725 | $ | 250,611 | -8.3 | % | ||||||||||||
| Net investment income |
7,063 | 8,264 | -14.5 | % | 22,136 | 24,448 | -9.5 | % | ||||||||||||||||
| Net realized gains (losses) on investments (pretax) |
309 | (4 | ) | NM | 1,464 | (27 | ) | NM | ||||||||||||||||
| Net unrealized gains (losses) on equity securities (pre-tax) |
844 | 365 | 131.2 | % | (2,349 | ) | 3,165 | NM | ||||||||||||||||
| Net income |
23,353 | 21,386 | 9.2 | % | 58,101 | 58,676 | -1.0 | % | ||||||||||||||||
| Diluted earnings per share |
$ | 1.21 | $ | 1.11 | 9.0 | % | $ | 3.00 | $ | 3.04 | -1.3 | % | ||||||||||||
| Operating net income |
22,442 | 21,101 | 6.4 | % | 58,800 | 56,197 | 4.6 | % | ||||||||||||||||
| Operating earnings per share |
$ | 1.16 | $ | 1.09 | 6.4 | % | $ | 3.04 | $ | 2.91 | 4.5 | % | ||||||||||||
| Book value per share |
$ | 24.93 | $ | 24.29 | 2.6 | % | $ | 24.93 | $ | 24.29 | 2.6 | % | ||||||||||||
| Net combined ratio |
72.8 | % | 78.4 | % | 78.4 | % | 82.1 | % | ||||||||||||||||
| Return on average equity |
19.8 | % | 18.6 | % | 17.0 | % | 17.8 | % | ||||||||||||||||
G. Janelle Frost, President and Chief Executive Officer, noted, “AMERISAFE continued to see loss cost declines and robust competition in the states we actively market and hazard classes we underwrite. These conditions suppressed premium, with policy count written in the quarter only down slightly. However, AMERISAFE’s profitability remained strong. Our focus on managing expenses benefitted this quarter from a loss assessment change. We also continued to reach favorable outcomes on prior year claims. Our underwriting profit, along with investment returns, produced a 19.8% return on average equity for the quarter, and a strong capital position supported an extraordinary dividend for shareholders.”
INSURANCE RESULTS
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||
| 2020 | 2019 | % Change | 2020 | 2019 | % Change | |||||||||||||||||||
| (in thousands) | (in thousands) | |||||||||||||||||||||||
| Gross premiums written |
$ | 72,648 | $ | 82,629 | -12.1 | % | $ | 240,008 | $ | 262,754 | -8.7 | % | ||||||||||||
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| Net premiums earned |
74,771 | 82,712 | -9.6 | % | 229,725 | 250,611 | -8.3 | % | ||||||||||||||||
| Loss and loss adjustment expenses incurred |
39,789 | 44,325 | -10.2 | % | 120,966 | 142,807 | -15.3 | % | ||||||||||||||||
| Underwriting and certain other operating costs, commissions, salaries and benefits |
13,902 | 19,285 | -27.9 | % | 56,317 | 59,670 | -5.6 | % | ||||||||||||||||
| Policyholder dividends |
714 | 1,265 | -43.6 | % | 2,685 | 3,363 | -20.2 | % | ||||||||||||||||
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| Underwriting profit (pre-tax) |
$ | 20,366 | $ | 17,837 | 14.2 | % | $ | 49,757 | $ | 44,771 | 11.1 | % | ||||||||||||
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| Insurance Ratios: |
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| Current accident year loss ratio |
72.5 | % | 72.5 | % | 72.5 | % | 72.5 | % | ||||||||||||||||
| Prior accident year loss ratio |
-19.3 | % | -18.9 | % | -19.8 | % | -15.5 | % | ||||||||||||||||
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| Net loss ratio |
53.2 | % | 53.6 | % | 52.7 | % | 57.0 | % | ||||||||||||||||
| Net underwriting expense ratio |
18.6 | % | 23.3 | % | 24.5 | % | 23.8 | % | ||||||||||||||||
| Net dividend ratio |
1.0 | % | 1.5 | % | 1.2 | % | 1.3 | % | ||||||||||||||||
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| Net combined ratio |
72.8 | % | 78.4 | % | 78.4 | % | 82.1 | % | ||||||||||||||||
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| • | Gross premiums written in the third quarter of 2020 decreased by $10.0 million, or 12.1%, primarily due to lower voluntary premiums on policies written in the quarter which were 10.7% lower as compared to the third quarter of 2019. The primary driver of lower premiums were lower state rates, which were 7.8% lower on average than in the third quarter of 2019. |
| • | Payroll audits and related premium adjustments increased premiums written by $1.1 million in the third quarter of 2020, compared to an increase in premiums written of $2.0 million in the third quarter of 2019. |
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| • | The current accident year loss ratio for the third quarter was 72.5%, unchanged from the first half of 2020, and unchanged from accident year 2019. During the quarter, the Company experienced favorable case reserve development for prior accident years, which reduced loss and loss adjustment expenses by $14.4 million, attributed primarily to accident years 2014 through 2018. |
| • | For the quarter ended September 30, 2020, the underwriting expense ratio was 18.6% compared with 23.3% in the same quarter in 2019. The decrease in the expense ratio in the third quarter was due to the early termination of an assessment related to a state multiple injury fund, which lowered expenses by $5.7 million. Without the assessment change, the expense ratio would have been 26.2% for the third quarter of 2020. |
| • | The effective tax rate for the quarter ended September 30, 2020 was 18.5%, compared with 19.6% for the third quarter of 2019. The decrease was due to a higher proportion of tax-exempt income in 2020 compared to 2019. |
INVESTMENT RESULTS
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||
| 2020 | 2019 | % Change | 2020 | 2019 | % Change | |||||||||||||||||||
| (in thousands) | (in thousands) | |||||||||||||||||||||||
| Net investment income |
$ | 7,063 | $ | 8,264 | -14.5 | % | $ | 22,136 | $ | 24,448 | -9.5 | % | ||||||||||||
| Net realized gains (losses) on investments (pre-tax) |
309 | (4 | ) | NM | 1,464 | (27 | ) | NM | ||||||||||||||||
| Net unrealized gains (losses) on equity securities (pre-tax) |
844 | 365 | 131.2 | % | (2,349 | ) | 3,165 | NM | ||||||||||||||||
| Pre-tax investment yield |
2.3 | % | 2.7 | % | 2.5 | % | 2.7 | % | ||||||||||||||||
| Tax-equivalent yield (1) |
2.8 | % | 3.1 | % | 2.8 | % | 3.1 | % | ||||||||||||||||
| (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, 2020, decreased 14.5% to $7.1 million from $8.3 million in the third quarter of 2019, due to lower investment yields on fixed-income securities. |
| • | As of September 30, 2020, the carrying value of AMERISAFE’s investment portfolio, including cash and cash equivalents, was $1.2 billion. |
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CAPITAL MANAGEMENT
In an accompanying press release the Company announced a special cash dividend of $3.50 per share, payable on November 18, 2020, to shareholders of record as of November 11, 2020.
In addition, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.27 per share, payable on December 18, 2020 to shareholders of record as of December 4, 2020.
Book value per share at September 30, 2020 was $24.93, an increase of 11.8% from $22.29 at December 31, 2019.
HURRICANES LAURA AND DELTA
On August 27, 2020 the DeRidder area in Southwest Louisiana was significantly impacted by Hurricane Laura (category 4) with winds of 150 miles per hour at landfall. There was widespread damage to homes, trees, and the power infrastructure of the area. AMERISAFE’s business continuity plans were in place including internet and IT system redundancies, and our ability to operate on generator power. The storm impacted nearly half of our employee base. Our dedicated employees, both in DeRidder and throughout the country, were able to continue to serve our customers without significant disruption to business operations, despite their personal circumstances. Aided by volunteers throughout the community and electrical professionals from throughout the country, recovery efforts continued and most power was restored to the community within two weeks, although rebuilding and roofing repairs continue.
On October 9, 2020 the DeRidder area was again impacted, this time by Hurricane Delta (category 2) with winds of 100 miles per hour at landfall. AMERISAFE’s employees once again rose to the occasion, continuing to serve our customers with minimal disruption to ongoing operations. The impact of this storm was again significant to the power infrastructure of the area, and recovery efforts continue to restore power and internet services to the community.
G. Janelle Frost noted, “The back to back hurricanes amid the ongoing COVID-19 pandemic, challenged AMERISAFE in ways we did not imagine. In these trying times, our employees and our community remained resilient. I am continually impressed with our employees and their ability to focus and provide outstanding results for AMERISAFE’s stakeholders. We want to thank all the first responders, electrical professionals, loggers, and volunteers who have helped to rebuild our community. We also want to thank our field employees who donated supplies and delivered them to the DeRidder community from across the country.”
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SUPPLEMENTAL INFORMATION
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| (in thousands, except share and per share data) | ||||||||||||||||
| Net income |
$ | 23,353 | $ | 21,386 | $ | 58,101 | $ | 58,676 | ||||||||
| Less: |
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| Net realized gains (losses) on investments |
309 | (4 | ) | 1,464 | (27 | ) | ||||||||||
| Net unrealized gains (losses) on equity securities |
844 | 365 | (2,349 | ) | 3,165 | |||||||||||
| Tax effect (1) |
(242 | ) | (76 | ) | 186 | (659 | ) | |||||||||
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| Operating net income (2) |
$ | 22,442 | $ | 21,101 | $ | 58,800 | $ | 56,197 | ||||||||
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| Average shareholders’ equity (3) |
$ | 472,353 | $ | 459,086 | $ | 456,063 | $ | 439,246 | ||||||||
| Less: |
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| Average accumulated other comprehensive income |
19,545 | 11,378 | 16,062 | 5,892 | ||||||||||||
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| Average adjusted shareholders’ equity (2) |
$ | 452,808 | $ | 447,708 | $ | 440,001 | $ | 433,354 | ||||||||
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| Diluted weighted average common shares |
19,358,682 | 19,302,551 | 19,345,952 | 19,320,199 | ||||||||||||
| Return on average equity (4) |
19.8 | % | 18.6 | % | 17.0 | % | 17.8 | % | ||||||||
| Operating return on average adjusted equity (2) |
19.8 | % | 18.9 | % | 17.8 | % | 17.3 | % | ||||||||
| Diluted earnings per share |
$ | 1.21 | $ | 1.11 | $ | 3.00 | $ | 3.04 | ||||||||
| Operating earnings per share (2) |
$ | 1.16 | $ | 1.09 | $ | 3.04 | $ | 2.91 | ||||||||
| (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. |
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CONFERENCE CALL INFORMATION
AMERISAFE has scheduled a conference call for October 29, 2020, 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 2623310) 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.
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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 impact of the recent hurricanes on our policyholders and employees, and on the Company’s business and financial results, including the impact of the COVID-19 pandemic on the business and operations of the Company and our policyholders and the market value of the securities in our investment portfolio. 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, 2019. 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 -
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AMERISAFE, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(in thousands)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||
| Revenues: |
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| Gross premiums written |
$ | 72,648 | $ | 82,629 | $ | 240,008 | $ | 262,754 | ||||||||
| Ceded premiums written |
(2,473 | ) | (2,170 | ) | (7,928 | ) | (6,804 | ) | ||||||||
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| Net premiums written |
$ | 70,175 | $ | 80,459 | $ | 232,080 | $ | 255,950 | ||||||||
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| Net premiums earned |
$ | 74,771 | $ | 82,712 | $ | 229,725 | $ | 250,611 | ||||||||
| Net investment income |
7,063 | 8,264 | 22,136 | 24,448 | ||||||||||||
| Net realized gains (losses) on investments. |
309 | (4 | ) | 1,464 | (27 | ) | ||||||||||
| Net unrealized gains (losses) on equity securities |
844 | 365 | (2,349 | ) | 3,165 | |||||||||||
| Loss on disposal of assets |
— | (2 | ) | (29 | ) | (2 | ) | |||||||||
| Fee and other income |
18 | 153 | 309 | 236 | ||||||||||||
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| Total revenues |
83,005 | 91,488 | 251,256 | 278,431 | ||||||||||||
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| Expenses: |
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| Loss and loss adjustment expenses incurred |
39,789 | 44,325 | 120,966 | 142,807 | ||||||||||||
| Underwriting and other operating costs |
13,902 | 19,285 | 56,317 | 59,670 | ||||||||||||
| Policyholder dividends |
714 | 1,265 | 2,685 | 3,363 | ||||||||||||
| Provision for investment related credit loss benefit |
(69 | ) | — | (13 | ) | — | ||||||||||
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| Total expenses |
54,336 | 64,875 | 179,955 | 205,840 | ||||||||||||
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| Income before taxes |
28,669 | 26,613 | 71,301 | 72,591 | ||||||||||||
| Income tax expense |
5,316 | 5,227 | 13,200 | 13,915 | ||||||||||||
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| Net income |
$ | 23,353 | $ | 21,386 | $ | 58,101 | $ | 58,676 | ||||||||
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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, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||
| Basic EPS: |
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| Net income |
$ | 23,353 | $ | 21,386 | $ | 58,101 | $ | 58,676 | ||||||||
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| Basic weighted average common shares |
19,299,921 | 19,256,069 | 19,282,263 | 19,243,689 | ||||||||||||
| Basic earnings per share |
$ | 1.21 | $ | 1.11 | $ | 3.01 | $ | 3.05 | ||||||||
| Diluted EPS: |
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| Net income |
$ | 23,353 | $ | 21,386 | $ | 58,101 | $ | 58,676 | ||||||||
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| Diluted weighted average common shares: |
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| Weighted average common shares |
19,299,921 | 19,256,069 | 19,282,263 | 19,243,689 | ||||||||||||
| Stock options and restricted stock |
58,761 | 46,482 | 63,689 | 76,510 | ||||||||||||
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| Diluted weighted average common shares |
19,358,682 | 19,302,551 | 19,345,952 | 19,320,199 | ||||||||||||
| Diluted earnings per share |
$ | 1.21 | $ | 1.11 | $ | 3.00 | $ | 3.04 | ||||||||
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AMERISAFE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands)
| September 30, | December 31, | |||||||
| 2020 | 2019 | |||||||
| (unaudited) | ||||||||
| Assets |
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| Investments |
$ | 1,125,393 | $ | 1,125,018 | ||||
| Cash and cash equivalents |
88,168 | 43,813 | ||||||
| Amounts recoverable from reinsurers |
97,955 | 95,913 | ||||||
| Premiums receivable, net |
171,128 | 157,953 | ||||||
| Deferred income taxes |
17,014 | 17,513 | ||||||
| Deferred policy acquisition costs |
19,237 | 19,048 | ||||||
| Other assets |
27,926 | 33,648 | ||||||
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| $ | 1,546,821 | $ | 1,492,906 | |||||
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| Liabilities and Shareholders’ Equity |
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| Liabilities: |
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| Reserves for loss and loss adjustment expenses |
$ | 759,912 | $ | 772,887 | ||||
| Unearned premiums |
143,228 | 140,873 | ||||||
| Insurance-related assessments |
20,902 | 22,967 | ||||||
| Other liabilities |
140,869 | 125,964 | ||||||
| Shareholders’ equity |
481,910 | 430,215 | ||||||
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| Total liabilities and shareholders’ equity |
$ | 1,546,821 | $ | 1,492,906 | ||||
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# # #
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10 |
Exhibit 99.2
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Neal A. Fuller, EVP & CFO AMERISAFE 337.463.9052 |
AMERISAFE DECLARES SPECIAL DIVIDEND OF $3.50 PER SHARE
AND REGULAR QUARTERLY DIVIDEND
DeRidder, LA – October 28, 2020—AMERISAFE, Inc. (Nasdaq: AMSF), a specialty provider of workers’ compensation insurance focused on high hazard industries, today announced that its Board of Directors had declared a special cash dividend of $3.50 per share.
The special cash dividend will be payable on November 18, 2020 to shareholders of record as of November 11, 2020. The Board of Directors also declared a regular quarterly dividend of $0.27 per share, payable on December 18, 2020 to shareholders of record as of December 4, 2020.
“Our long-term commitment to underwriting discipline throughout the insurance cycle allowed us to strengthen our balance sheet, while returning significant capital to our shareholders. We are pleased to announce this extraordinary dividend in an unprecedented time in the market,” said G. Janelle Frost, President and Chief Executive Officer.
Over the past eight years, the Company has declared $27.63 per share in dividends, comprising $5.88 in regular dividends and $21.75 in special dividends per share.
More information on the dividend and information on the company’s third quarter earnings can be found in AMERISAFE’s accompanying earnings release issued today.
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.