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
Date of report (Date of earliest event reported):
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions (see General Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered or to be registered pursuant to Section 12(b) of the Act.
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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).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02. | Results of Operations and Financial Condition. |
On February 19, 2020, AMERISAFE, Inc. (the “Company”) issued a press release announcing its financial results for the fourth quarter and year ended December 31, 2019. A copy of the Company’s press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.
On February 19, 2020, AMERISAFE, Inc. (the “Company”) issued a press release announcing an increase in its regular quarterly dividend. 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 February 19, 2020 (Financial Results) | |||
| 99.2 |
Press Release of AMERISAFE, Inc. dated February 19, 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: February 19, 2020
Exhibit 99.1
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Neal A. Fuller, EVP & CFO AMERISAFE 337.463.9052 |
AMERISAFE ANNOUNCES 2019 FOURTH QUARTER AND
YEAR-END RESULTS
Reports $92.7 Million Net Income in 2019
DeRidder, LA – February 19, 2020 - AMERISAFE, Inc. (Nasdaq: AMSF), a specialty provider of workers’ compensation insurance focused on high hazard industries, today announced results for the fourth quarter and year ended December 31, 2019.
| Three Months Ended December 31, |
Twelve Months Ended December 31, |
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| 2019 | 2018 | % Change | 2019 | 2018 | % Change | |||||||||||||||||||
| (in thousands, except per share data) |
(in thousands, except per share data) |
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| Net premiums earned |
$ | 82,277 | $ | 88,837 | -7.4 | % | $ | 332,888 | $ | 350,326 | -5.0 | % | ||||||||||||
| Net investment income |
8,035 | 8,056 | -0.3 | % | 32,483 | 30,452 | 6.7 | % | ||||||||||||||||
| Net realized losses on investments, pretax |
(53 | ) | (65 | ) | -18.5 | % | (80 | ) | (1,536 | ) | NM | |||||||||||||
| Net income |
34,014 | 18,806 | 80.9 | % | 92,690 | 71,632 | 29.4 | % | ||||||||||||||||
| Diluted earnings per share |
$ | 1.76 | $ | 0.98 | 79.6 | % | $ | 4.80 | $ | 3.71 | 29.4 | % | ||||||||||||
| Operating net income |
32,797 | 20,711 | 58.4 | % | 88,994 | 74,495 | 19.5 | % | ||||||||||||||||
| Operating earnings per share |
$ | 1.70 | $ | 1.07 | 58.9 | % | $ | 4.60 | $ | 3.86 | 19.2 | % | ||||||||||||
| Book value per share |
$ | 22.29 | $ | 21.26 | 4.8 | % | $ | 22.29 | $ | 21.26 | 4.8 | % | ||||||||||||
| Net combined ratio |
59.6 | % | 81.0 | % | 76.6 | % | 82.9 | % | ||||||||||||||||
| Return on average equity |
30.3 | % | 17.3 | % | 22.1 | % | 17.2 | % | ||||||||||||||||
G. Janelle Frost, President and Chief Executive Officer, noted, “The current soft market is unique in its challenges given the state of the property and casualty industry. AMERISAFE is a specialist, and our distinctive approach to workers’ compensation produced another year of excellent financial results. We reported a combined ratio of 76.6% and a return on average equity of 22.1% in 2019, the fourth year of workers’ compensation rate declines. For AMERISAFE, less than anticipated average loss severity for prior years offset the impact of lower premiums.”
INSURANCE RESULTS
| Three Months Ended December 31, |
Twelve Months Ended December 31, |
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| 2019 | 2018 | % Change | 2019 | 2018 | % Change | |||||||||||||||||||
| (in thousands) | (in thousands) | |||||||||||||||||||||||
| Gross premiums written |
$ | 70,706 | $ | 75,328 | -6.1 | % | $ | 333,460 | $ | 351,696 | -5.2 | % | ||||||||||||
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| Net premiums earned |
82,277 | 88,837 | -7.4 | % | 332,888 | 350,326 | -5.0 | % | ||||||||||||||||
| Loss and loss adjustment expenses incurred |
33,535 | 52,055 | -35.6 | % | 176,342 | 204,891 | -13.9 | % | ||||||||||||||||
| Underwriting and certain other operating costs, commissions, salaries and benefits |
14,681 | 18,979 | -22.6 | % | 74,351 | 81,133 | -8.4 | % | ||||||||||||||||
| Policyholder dividends |
797 | 858 | -7.1 | % | 4,160 | 4,148 | 0.3 | % | ||||||||||||||||
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| Underwriting profit (pre-tax) |
$ | 33,264 | $ | 16,945 | 96.3 | % | $ | 78,035 | $ | 60,154 | 29.7 | % | ||||||||||||
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| Insurance Ratios: |
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| Current accident year loss ratio |
72.5 | % | 71.5 | % | 72.5 | % | 71.5 | % | ||||||||||||||||
| Prior accident year loss ratio |
-31.7 | % | -12.9 | % | -19.5 | % | -13.0 | % | ||||||||||||||||
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| Net loss ratio |
40.8 | % | 58.6 | % | 53.0 | % | 58.5 | % | ||||||||||||||||
| Net underwriting expense ratio |
17.8 | % | 21.4 | % | 22.3 | % | 23.2 | % | ||||||||||||||||
| Net dividend ratio |
1.0 | % | 1.0 | % | 1.3 | % | 1.2 | % | ||||||||||||||||
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| Net combined ratio |
59.6 | % | 81.0 | % | 76.6 | % | 82.9 | % | ||||||||||||||||
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| • | Gross premiums written in the fourth quarter of 2019 decreased by $4.6 million, or 6.1%, compared with the fourth quarter of 2018, primarily due to continued declines in approved loss costs in the states in which we write business. For the full year, gross written premiums decreased by 5.2%. |
| • | Voluntary premiums on policies written in the quarter were 8.2% lower than the fourth quarter of 2018, and 6.9% lower for the full year. |
| • | Payroll audits and related premium adjustments increased premiums written by $4.0 million in the fourth quarter of 2019, compared to $2.3 million in the fourth quarter of 2018. For the full year 2019, audits and related premium adjustments added $12.3 million to premiums, compared to $7.3 million in 2018, an increase of $5.0 million. |
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| • | The current accident year loss ratio for the fourth quarter was 72.5%, unchanged from the first three quarters of 2019, and an increase of 1.0 percentage point from the 71.5% ratio for the full year 2018. During the quarter, the Company experienced favorable net loss reserve development for prior accident years, which reduced loss and loss adjustment expenses by $26.1 million, primarily from accident years 2014 through 2017. For the full year, the company experienced favorable development on prior accident years of $65.0 million, compared with $45.6 million in 2018. The Company attributes its lower claim severities for prior years to benign medical inflation and its claims handling. The Company anticipates that its current accident year loss ratio will be unchanged for 2020, unless there are unforeseen changes in macro conditions. |
| • | For the quarter ended December 31, 2019, the underwriting expense ratio was 17.8% compared with 21.4% in the same quarter in 2018. The decrease in the expense ratio in the fourth quarter was primarily due to the end of an assessment related to a multiple injury fund, which lowered expenses by $3.5 million. For the year ended December 31, 2019, the underwriting expense ratio was 22.3%, compared with 23.2% in 2018. |
| • | The effective tax rate for the quarter ended December 31, 2019 was 20.8%, compared with 17.4% for the fourth quarter of 2018. The effective tax rate for the full year 2019 was 19.8% compared with 18.2% for 2018. Both rates increased in the quarter and year end period, due to increased taxable income from stronger underwriting profitability and lower expenses. |
INVESTMENT RESULTS
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||||||
| 2019 | 2018 | % Change | 2019 | 2018 | % Change | |||||||||||||||||||
| (in thousands) | (in thousands) | |||||||||||||||||||||||
| Net investment income |
$ | 8,035 | $ | 8,056 | -0.3 | % | $ | 32,483 | $ | 30,452 | 6.7 | % | ||||||||||||
| Net realized losses on investments (pre-tax) |
(53 | ) | (65 | ) | -18.5 | % | (80 | ) | (1,536 | ) | NM | |||||||||||||
| Net unrealized gains (losses) on equity securities (pre-tax) |
1,593 | (2,347 | ) | NM | 4,758 | (2,088 | ) | NM | ||||||||||||||||
| Pre-tax investment yield |
2.7 | % | 2.7 | % | 2.8 | % | 2.6 | % | ||||||||||||||||
| Tax-equivalent yield (1) |
3.1 | % | 3.2 | % | 3.1 | % | 3.2 | % | ||||||||||||||||
| (1) | The tax equivalent yield is calculated using the effective interest rate and the appropriate marginal tax rate. |
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| • | Net investment income for the quarter ended December 31, 2019, decreased 0.3% to $8.0 million from $8.1 million in the fourth quarter of 2018, due to a slightly smaller investment portfolio. For the full year 2019, net investment income was $32.5 million compared with $30.5 million for 2018, an increase of 6.7%, due to slightly higher yields on fixed income securities. |
| • | As of December 31, 2019, the carrying value of AMERISAFE’s investment portfolio, including cash and cash equivalents, was $1.2 billion. |
CAPITAL MANAGEMENT
In an accompanying announcement, the Company’s Board of Directors increased the regular quarterly dividend 8% from $0.25 per share to $0.27 per share, payable on March 27, 2020 to shareholders of record as of March 13, 2020.
SUPPLEMENTAL INFORMATION
| Three Months Ended December 31, |
Twelve Months Ended December 31, |
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| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| (in thousands, except share and per share data) | ||||||||||||||||
| Net income |
$ | 34,014 | $ | 18,806 | $ | 92,690 | $ | 71,632 | ||||||||
| Less: |
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| Net realized losses on investments |
(53 | ) | (65 | ) | (80 | ) | (1,536 | ) | ||||||||
| Net unrealized gains (losses) on equity securities |
1,593 | (2,347 | ) | 4,758 | (2,088 | ) | ||||||||||
| Tax effect (1) |
(323 | ) | 507 | (982 | ) | 761 | ||||||||||
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| Operating net income (2) |
$ | 32,797 | $ | 20,711 | $ | 88,994 | $ | 74,495 | ||||||||
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| Average shareholders’ equity (3) |
$ | 449,472 | $ | 434,379 | $ | 419,989 | $ | 417,593 | ||||||||
| Less: |
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| Average accumulated other comprehensive income (loss) |
12,413 | (2,517 | ) | 5,690 | 1,390 | |||||||||||
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| Average adjusted shareholders’ equity |
$ | 437,059 | $ | 436,896 | $ | 414,299 | $ | 416,203 | ||||||||
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| Diluted weighted average common shares |
19,321,394 | 19,284,923 | 19,329,238 | 19,293,082 | ||||||||||||
| Return on average equity (4) |
30.3 | % | 17.3 | % | 22.1 | % | 17.2 | % | ||||||||
| Operating return on average adjusted equity (2) |
30.0 | % | 19.0 | % | 21.5 | % | 17.9 | % | ||||||||
| Diluted earnings per share |
$ | 1.76 | $ | 0.98 | $ | 4.80 | $ | 3.71 | ||||||||
| Operating earnings per share (2) |
$ | 1.70 | $ | 1.07 | $ | 4.60 | $ | 3.86 | ||||||||
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| (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 February 20, 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 1019192) 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 the “Investor Relations Home” page of the “Investors” section of the Company’s website (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 at the same website location.
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 factors set forth in the Company’s filings with the Securities and Exchange Commission, including AMERISAFE’s Annual Report on Form 10-K. 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 Decexmber 31, |
Twelve Months Ended December 31, |
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| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||
| Revenues: |
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| Gross premiums written |
$ | 70,706 | $ | 75,328 | $ | 333,460 | $ | 351,696 | ||||||||
| Ceded premiums written |
(2,191 | ) | (2,362 | ) | (8,995 | ) | (9,344 | ) | ||||||||
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| Net premiums written |
$ | 68,515 | $ | 72,966 | $ | 324,465 | $ | 342,352 | ||||||||
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| Net premiums earned |
$ | 82,277 | $ | 88,837 | $ | 332,888 | $ | 350,326 | ||||||||
| Net investment income |
8,035 | 8,056 | 32,483 | 30,452 | ||||||||||||
| Net realized losses on investments |
(53 | ) | (65 | ) | (80 | ) | (1,536 | ) | ||||||||
| Net unrealized gains (losses) on equity securities |
1,593 | (2,347 | ) | 4,758 | (2,088 | ) | ||||||||||
| Fee and other income |
87 | 188 | 321 | 599 | ||||||||||||
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| Total revenues |
91,939 | 94,669 | 370,370 | 377,753 | ||||||||||||
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| Expenses: |
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| Loss and loss adjustment expenses incurred |
33,535 | 52,055 | 176,342 | 204,891 | ||||||||||||
| Underwriting and other operating costs |
14,681 | 18,979 | 74,351 | 81,133 | ||||||||||||
| Policyholder dividends |
797 | 858 | 4,160 | 4,148 | ||||||||||||
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| Total expenses |
49,013 | 71,892 | 254,853 | 290,172 | ||||||||||||
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| Income before taxes |
42,926 | 22,777 | 115,517 | 87,581 | ||||||||||||
| Income tax expense |
8,912 | 3,971 | 22,827 | 15,949 | ||||||||||||
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| Net income |
$ | 34,014 | $ | 18,806 | $ | 92,690 | $ | 71,632 | ||||||||
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AMERISAFE, INC. AND SUBSIDIARIES
Consolidated Statements of Income (cont.)
(in thousands, except per share amounts)
| Three Months Ended December 31, |
Twelve Months Ended December 31, |
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| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||
| Basic EPS: |
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| Net income |
$ | 34,014 | $ | 18,806 | $ | 92,690 | $ | 71,632 | ||||||||
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| Basic weighted average common shares |
19,263,723 | 19,223,189 | 19,248,657 | 19,208,978 | ||||||||||||
| Basic earnings per share |
$ | 1.77 | $ | 0.98 | $ | 4.82 | $ | 3.73 | ||||||||
| Diluted EPS: |
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| Net income |
$ | 34,014 | $ | 18,806 | $ | 92,690 | $ | 71,632 | ||||||||
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| Diluted weighted average common shares: |
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| Weighted average common shares |
19,263,723 | 19,223,189 | 19,248,657 | 19,208,978 | ||||||||||||
| Stock options and restricted stock |
57,671 | 61,734 | 80,581 | 84,104 | ||||||||||||
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| Diluted weighted average common shares |
19,321,394 | 19,284,923 | 19,329,238 | 19,293,082 | ||||||||||||
| Diluted earnings per share |
$ | 1.76 | $ | 0.98 | $ | 4.80 | $ | 3.71 | ||||||||
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AMERISAFE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands)
| December 31, 2019 |
December 31, 2018 |
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| (unaudited) | ||||||||
| Assets |
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| Investments |
$ | 1,125,018 | $ | 1,125,490 | ||||
| Cash and cash equivalents |
43,813 | 40,344 | ||||||
| Amounts recoverable from reinsurers |
95,913 | 112,006 | ||||||
| Premiums receivable, net |
157,953 | 162,478 | ||||||
| Deferred income taxes |
17,513 | 21,852 | ||||||
| Deferred policy acquisition costs |
19,048 | 19,734 | ||||||
| Other assets |
33,648 | 34,027 | ||||||
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| $1,492,906 | $1,515,931 | |||||||
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| Liabilities and Shareholders’ Equity |
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| Liabilities: |
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| Reserves for loss and loss adjustment expenses |
$ | 772,887 | $ | 798,409 | ||||
| Unearned premiums |
140,873 | 149,296 | ||||||
| Insurance-related assessments |
22,967 | 28,258 | ||||||
| Other liabilities |
125,964 | 130,206 | ||||||
| Shareholders’ equity |
430,215 | 409,762 | ||||||
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| Total liabilities and shareholders’ equity |
$ | 1,492,906 | $ | 1,515,931 | ||||
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# # #
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9 |
Exhibit 99.2
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Neal A. Fuller, EVP & CFO AMERISAFE 337.463.9052 |
AMERISAFE INCREASES DIVIDEND 8.0%
Increases Quarterly Dividend from $0.25 to $0.27 per Share
DeRidder, LA – February 19, 2020 - AMERISAFE, Inc. (Nasdaq: AMSF), a specialty provider of workers’ compensation insurance focused on high hazard industries, today announced that its Board of Directors has increased the quarterly dividend by 8.0%.
The Board of Directors declared a quarterly cash dividend of $0.27 per share, payable on March 27, 2020 to shareholders of record as of March 13, 2020.
Over the past six years, the Company has paid $4.48 in regular dividends and $18.25 in extraordinary dividends per share.
Additional information on the Company’s fourth quarter and 2019 full year 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.