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Section 1: 8-K (8-K)

8-K
AMERISAFE INC false 0001018979 0001018979 2019-10-31 2019-10-31

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): October 31, 2019

 

AMERISAFE, INC.

(Exact Name of Registrant as Specified in Charter)

 

Texas

 

001-12251

 

75-2069407

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

2301 Highway 190 West

DeRidder, Louisiana 70634

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (337) 463-9052

 

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):

  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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.  

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

Common Stock, par value $0.01 per share

 

AMSF

 

Nasdaq Stock Market LLC

 

 


Item 2.02. Results of Operations and Financial Condition.

On October 31, 2019, AMERISAFE, Inc. (the “Company”) issued a press release announcing its financial results for the third quarter ending September 30, 2019. A copy of the Company’s press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.

On October 31, 2019, 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 31, 2019 (Financial Results)

         
 

99.2

   

Press Release of AMERISAFE, Inc. dated October 31, 2019 (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 31, 2019

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Section 2: EX-99.1 (EX-99.1)

EX-99.1

Exhibit 99.1

 

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NEWS RELEASE

 

Neal A. Fuller, EVP & CFO

AMERISAFE

337.463.9052

AMERISAFE ANNOUNCES 2019 THIRD QUARTER RESULTS

Reports Combined Ratio of 78.4%

DeRidder, LA – October 31, 2019 - 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, 2019.

 

     Three Months Ended           Nine Months Ended        
     September 30,           September 30,        
     2019     2018     % Change     2019     2018     % Change  
     (in thousands, except per
share data)
          (in thousands, except per
share data)
       

Net premiums earned

   $ 82,712     $ 85,184       -2.9   $ 250,611     $ 261,489       -4.2

Net investment income

     8,264       7,884       4.8     24,448       22,396       9.2

Net realized losses on investments, pretax

     (4     (329     NM       (27     (1,471     NM  

Net income

     21,386       19,701       8.6     58,676       52,826       11.1

Diluted earnings per share

   $ 1.11     $ 1.02       8.8   $ 3.04     $ 2.74       10.9

Operating net income

     21,101       19,508       8.2     56,197       53,783       4.5

Operating earnings per share

   $ 1.09     $ 1.01       7.9   $ 2.91     $ 2.79       4.3

Book value per share

   $ 24.29     $ 23.82       2.0   $ 24.29     $ 23.82       2.0

Net combined ratio

     78.4     81.1       82.1     83.5  

Return on average equity

     18.6     17.4       17.8     15.9  

G. Janelle Frost, President and Chief Executive Officer, observed, “AMERISAFE continued to produce an attractive return on equity this quarter supported by favorable loss ratios and expense management. Our response to the soft insurance cycle hinged on our providing quality services with disciplined underwriting as competition and declining rates lowered premiums.”


INSURANCE RESULTS

 

     Three Months Ended           Nine Months Ended        
     September 30,           September 30,        
     2019     2018     % Change     2019     2018     % Change  
     (in thousands)           (in thousands)        

Gross premiums written

   $ 82,629     $ 85,324       -3.2   $ 262,754     $ 276,368       -4.9
  

 

 

   

 

 

     

 

 

   

 

 

   

Net premiums earned

     82,712       85,184       -2.9     250,611       261,489       -4.2

Loss and loss adjustment expenses incurred

     44,325       47,598       -6.9     142,807       152,836       -6.6

Underwriting and certain other operating costs, commissions, salaries and benefits

     19,285       20,606       -6.4     59,670       62,154       -4.0

Policyholder dividends

     1,265       865       46.2     3,363       3,290       2.2
  

 

 

   

 

 

     

 

 

   

 

 

   

Underwriting profit (pre-tax)

   $ 17,837     $ 16,115       10.7   $ 44,771     $ 43,209       3.6
  

 

 

   

 

 

     

 

 

   

 

 

   

Insurance Ratios:

            

Current accident year loss ratio

     72.5     71.5       72.5     71.5  

Prior accident year loss ratio

     -18.9     -15.6       -15.5     -13.1  
  

 

 

   

 

 

     

 

 

   

 

 

   

Net loss ratio

     53.6     55.9       57.0     58.4  

Net underwriting expense ratio

     23.3     24.2       23.8     23.8  

Net dividend ratio

     1.5     1.0       1.3     1.3  
  

 

 

   

 

 

     

 

 

   

 

 

   

Net combined ratio

     78.4     81.1       82.1     83.5  
  

 

 

   

 

 

     

 

 

   

 

 

   

 

   

Gross premiums written in the third quarter of 2019 decreased by $2.7 million, or 3.2%, compared with the third quarter of 2018, primarily due to lower voluntary premiums on policies written in the quarter, which were 8.6% lower than the third quarter of 2018.

 

   

Payroll audits and related premium adjustments increased premiums written by $2.0 million in the third quarter of 2019, compared to a decrease in premiums written of $2.1 million in the third quarter of 2018.

 

   

The current accident year loss ratio for the third quarter was 72.5%, unchanged from the first half of 2019, and an increase of 1.0 percentage point from the 71.5% ratio for accident year 2018. During the quarter, the Company experienced favorable net loss development for prior accident years, which reduced loss and loss adjustment expenses by $15.6 million, primarily from accident years 2014 through 2017.

 

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For the quarter ended September 30, 2019, the underwriting expense ratio was 23.3% compared with 24.2% in the same quarter in 2018. The decrease in the expense ratio was due to lower loss based assessments, premium based assessments and commissions compared with the third quarter of 2018.

 

   

The effective tax rate for the quarter ended September 30, 2019 was 19.6%, compared with 19.5% for the third quarter of 2018.

INVESTMENT RESULTS

 

     Three Months Ended           Nine Months Ended        
     September 30,           September 30,        
     2019     2018     % Change     2019     2018     % Change  
     (in thousands)           (in thousands)        

Net investment income

   $ 8,264     $ 7,884       4.8   $ 24,448     $ 22,396       9.2

Net realized losses on investments (pre-tax)

     (4     (329     NM       (27     (1,471     NM  

Net unrealized gains on equity securities (pre-tax)

     365       573       -36.3     3,165       259       NM  

Pre-tax investment yield

     2.7     2.6       2.7     2.5  

Tax-equivalent yield (1)

     3.1     3.0       3.1     3.0  

 

(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, 2019, increased 4.8% to $8.3 million from $7.9 million in the third quarter of 2018, due to slightly higher investment yields on fixed-income securities.

 

   

As of September 30, 2019, the carrying value of AMERISAFE’s investment portfolio, including cash and cash equivalents, was $1.2 billion.

CAPITAL MANAGEMENT

In an accompanying press release the Company announced a special cash dividend of $3.50 per share, payable on November 20, 2019, to shareholders of record as of November 13, 2019.

In addition, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.25 per share, payable on December 27, 2019 to shareholders of record as of December 13, 2019.

 

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Book value per share at September 30, 2019 was $24.29, an increase of 14.3% from $21.26 at December 31, 2018.

SUPPLEMENTAL INFORMATION

 

     Three Months Ended     Nine Months Ended  
     September 30,     September 30,  
     2019     2018     2019     2018  
     (in thousands, except share and per share data)  

Net income

   $ 21,386     $ 19,701     $ 58,676     $ 52,826  

Less:

        

Net realized losses on investments

     (4     (329     (27     (1,471

Net unrealized gains on equity securities

     365       573       3,165       259  

Tax effect (1)

     (76     (51     (659     255  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating net income (2)

   $ 21,101     $ 19,508     $ 56,197     $ 53,783  
  

 

 

   

 

 

   

 

 

   

 

 

 

Average shareholders’ equity (3)

   $ 459,086     $ 452,194     $ 439,246     $ 442,210  

Less:

        

Average accumulated other comprehensive income (loss)

     11,378       (3,142     5,892       (295
  

 

 

   

 

 

   

 

 

   

 

 

 

Average adjusted shareholders’ equity

   $ 447,708     $ 455,336     $ 433,354     $ 442,505  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted weighted average common shares

     19,302,551       19,272,984       19,320,199       19,281,036  

Return on average equity (4)

     18.6     17.4     17.8     15.9

Operating return on average adjusted equity (2)

     18.9     17.1     17.3     16.2

Diluted earnings per share

   $ 1.11     $ 1.02     $ 3.04     $ 2.74  

Operating earnings per share (2)

   $ 1.09     $ 1.01     $ 2.91     $ 2.79  

 

(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 November 1, 2019, 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 323-794-2588 (Conference Code 2913228) 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 for the year ended December 31, 2018. 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,  
     2019     2018     2019     2018  
     (unaudited)     (unaudited)  

Revenues:

        

Gross premiums written

   $ 82,629     $ 85,324     $ 262,754     $ 276,368  

Ceded premiums written

     (2,170     (2,283     (6,804     (6,982
  

 

 

   

 

 

   

 

 

   

 

 

 

Net premiums written

   $ 80,459     $ 83,041     $ 255,950     $ 269,386  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net premiums earned

   $ 82,712     $ 85,184     $ 250,611     $ 261,489  

Net investment income

     8,264       7,884       24,448       22,396  

Net realized losses on investments

     (4     (329     (27     (1,471

Net unrealized gains on equity securities

     365       573       3,165       259  

Fee and other income

     151       217       234       411  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     91,488       93,529       278,431       283,084  
  

 

 

   

 

 

   

 

 

   

 

 

 

Expenses:

        

Loss and loss adjustment expenses incurred

     44,325       47,598       142,807       152,836  

Underwriting and other operating costs

     19,285       20,606       59,670       62,154  

Policyholder dividends

     1,265       865       3,363       3,290  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

     64,875       69,069       205,840       218,280  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before taxes

     26,613       24,460       72,591       64,804  

Income tax expense

     5,227       4,759       13,915       11,978  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 21,386     $ 19,701     $ 58,676     $ 52,826  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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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,  
     2019      2018      2019      2018  
     (unaudited)      (unaudited)  

Basic EPS:

           

Net income

   $ 21,386      $ 19,701      $ 58,676      $ 52,826  
  

 

 

    

 

 

    

 

 

    

 

 

 

Basic weighted average common shares

     19,256,069        19,216,545        19,243,689        19,204,196  

Basic earnings per share

   $ 1.11      $ 1.03      $ 3.05      $ 2.75  

Diluted EPS:

           

Net income

   $ 21,386      $ 19,701      $ 58,676      $ 52,826  
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted weighted average common shares:

           

Weighted average common shares

     19,256,069        19,216,545        19,243,689        19,204,196  

Stock options and restricted stock

     46,482        56,439        76,510        76,840  
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted weighted average common shares

     19,302,551        19,272,984        19,320,199        19,281,036  

Diluted earnings per share

   $ 1.11      $ 1.02      $ 3.04      $ 2.74  

 

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AMERISAFE, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands)

 

     September 30,      December 31,  
     2019      2018  
     (unaudited)         

Assets

     

Investments

   $ 1,091,278      $ 1,125,490  

Cash and cash equivalents

     125,870        40,344  

Amounts recoverable from reinsurers

     102,866        112,006  

Premiums receivable, net

     170,649        162,478  

Deferred income taxes

     18,480        21,852  

Deferred policy acquisition costs

     20,341        19,734  

Other assets

     45,055        34,027  
  

 

 

    

 

 

 
   $ 1,574,539      $ 1,515,931  
  

 

 

    

 

 

 

Liabilities and Shareholders’ Equity

     

Liabilities:

     

Reserves for loss and loss adjustment expenses

   $ 790,812      $ 798,409  

Unearned premiums

     154,635        149,296  

Insurance-related assessments

     29,035        28,258  

Other liabilities

     131,328        130,206  

Shareholders’ equity

     468,729        409,762  
  

 

 

    

 

 

 

Total liabilities and shareholders’ equity

   $ 1,574,539      $ 1,515,931  
  

 

 

    

 

 

 

# # #

 

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Section 3: EX-99.2 (EX-99.2)

EX-99.2

Exhibit 99.2

 

LOGO  

 

NEWS RELEASE

 

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 31, 2019 - 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 20, 2019 to shareholders of record as of November 13, 2019. The Board of Directors also declared a regular quarterly dividend of $0.25 per share, payable on December 27, 2019 to shareholders of record as of December 13, 2019.

“AMERISAFE has shown a strong commitment to creating shareholder value through our operational consistency and long-term capital adequacy. We are pleased to continue to share the rewards of that commitment through an extraordinary dividend,” said G. Janelle Frost, President and Chief Executive Officer.

Over the past seven years, the Company has declared $23.05 per share in dividends, comprising $4.80 in regular dividends and $18.25 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.

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