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Section 1: 8-K (8-K)

8-K

 

 

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): July 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))

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

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 July 31, 2019, AMERISAFE, Inc. (the “Company”) issued a press release announcing its financial results for the second quarter ending June 30, 2019. A copy of the Company’s press release is attached as Exhibit 99.1 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 July 31, 2019 (Financial Results)


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: July 31, 2019

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Section 2: EX-99.1 (EX-99.1)

EX-99.1

Exhibit 99.1

 

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Neal A. Fuller, EVP & CFO

AMERISAFE

337.463.9052

AMERISAFE ANNOUNCES 2019 SECOND QUARTER RESULTS

Reports Combined Ratio of 83.9%

DeRidder, LA – July 31, 2019 - AMERISAFE, Inc. (Nasdaq: AMSF), a specialty provider of workers’ compensation insurance focused on high hazard industries, today announced results for the second quarter ended June 30, 2019.

 

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

Net premiums earned

   $ 82,951     $ 88,995       -6.8   $ 167,899     $ 176,305       -4.8

Net investment income

     8,169       7,303       11.9     16,184       14,512       11.5

Net realized losses on investments, pretax

     (82     (1,111     NM       (23     (1,142     NM  

Net income

     17,890       16,956       5.5     37,290       33,125       12.6

Diluted earnings per share

   $ 0.93     $ 0.88       5.7   $ 1.93     $ 1.72       12.2

Operating net income

     17,448       17,774       -1.8     35,096       34,275       2.4

Operating earnings per share

   $ 0.90     $ 0.92       -2.2   $ 1.82     $ 1.78       2.2

Book value per share

   $ 23.29     $ 23.11       0.8   $ 23.29     $ 23.11       0.8

Net combined ratio

     83.9     83.6       84.0     84.7  

Return on average equity

     16.3     15.5       17.4     15.2  

G. Janelle Frost, President and Chief Executive Officer, noted, “The workers’ compensation industry remained profitable through 2018, and competition remained strong through the second quarter. AMERISAFE’s response was to execute on our commitment to deliver an exceptional product to our policyholders through our quality insurance services and risk assessment. Remaining committed to our core disciplines has allowed us to provide stable returns for our shareholders, a consistent market for our agent partners, and aided business owners with mitigating risks.”


INSURANCE RESULTS

 

     Three Months Ended
June 30,
          Six Months Ended
June 30,
       
     2019     2018     % Change     2019     2018     % Change  
     (in thousands)           (in thousands)        

Gross premiums written

   $ 87,018     $ 93,702       -7.1   $ 180,125     $ 191,044       -5.7
  

 

 

   

 

 

     

 

 

   

 

 

   

Net premiums earned

     82,951       88,995       -6.8     167,899       176,305       -4.8

Loss and loss adjustment expenses incurred

     48,868       52,076       -6.2     98,482       105,238       -6.4

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

     19,718       21,282       -7.3     40,385       41,548       -2.8

Policyholder dividends

     998       1,092       -8.6     2,098       2,425       -13.5
  

 

 

   

 

 

     

 

 

   

 

 

   

Underwriting profit (pre-tax)

   $ 13,367     $ 14,545       -8.1   $ 26,934     $ 27,094       -0.6
  

 

 

   

 

 

     

 

 

   

 

 

   

Insurance Ratios:

            

Current accident year loss ratio

     72.5     71.5       72.5     71.5  

Prior accident year loss ratio

     -13.6     -13.0       -13.8     -11.8  
  

 

 

   

 

 

     

 

 

   

 

 

   

Net loss ratio

     58.9     58.5       58.7     59.7  

Net underwriting expense ratio

     23.8     23.9       24.1     23.6  

Net dividend ratio

     1.2     1.2       1.2     1.4  
  

 

 

   

 

 

     

 

 

   

 

 

   

Net combined ratio

     83.9     83.6       84.0     84.7  
  

 

 

   

 

 

     

 

 

   

 

 

   

 

   

Gross premiums written in the second quarter of 2019 decreased by $6.7 million, or 7.1%, compared with the second quarter of 2018, primarily due to lower voluntary premiums on policies written in the quarter, which were 5.3% lower than the second quarter of 2018.

 

   

Payroll audits and related premium adjustments increased premiums written by $1.8 million in the second quarter of 2019, compared to an increase in premiums written of $3.8 million in the second quarter of 2018.

 

   

The current accident year loss ratio for the second quarter was 72.5%, unchanged from the first quarter 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 $11.3 million, primarily coming from accident years 2014 through 2017.

 

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For the quarter ended June 30, 2019, the underwriting expense ratio was 23.8% compared with 23.9% in the same quarter in 2018. The decrease in the expense ratio was due to lower compensation costs and premium based assessments compared with the second quarter of 2018.

 

   

The effective tax rate for the quarter ended June 30, 2019 was 19.3%, largely unchanged compared with 19.0% for the second quarter of 2018.

INVESTMENT RESULTS

 

     Three Months
Ended June 30,
          Six Months Ended
June 30,
       
     2019     2018     % Change     2019     2018     % Change  
     (in thousands)           (in thousands)        

Net investment income

   $ 8,169     $ 7,303       11.9   $ 16,184     $ 14,512       11.5

Net realized losses on investments (pre-tax)

     (82     (1,111     NM       (23     (1,142     NM  

Net unrealized gains (losses) on equity securities (pre-tax)

     642       76       NM       2,800       (314     NM  

Pre-tax investment yield

     2.7     2.5       2.7     2.4  

Tax-equivalent yield (1)

     3.1     2.9       3.1     2.9  

 

(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 June 30, 2019, increased 11.9% to $8.2 million from $7.3 million in the second quarter of 2018, due to slightly higher investment yields on fixed-income securities.

 

   

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

CAPITAL MANAGEMENT

The Company paid a regular quarterly cash dividend of $0.25 per share on June 21, 2019. On July 30, 2019 the Company’s Board of Directors declared a quarterly cash dividend of $0.25 per share, payable on September 20, 2019 to shareholders of record as of September 6, 2019.

Book value per share at June 30, 2019 was $23.29, an increase of 9.5% from $21.26 at December 31, 2018.

 

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SUPPLEMENTAL INFORMATION

 

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

Net income

   $ 17,890     $ 16,956     $ 37,290     $ 33,125  

Less:

        

Net realized losses on investments

     (82     (1,111     (23     (1,142

Net unrealized gains (losses) on equity securities

     642       76       2,800       (314

Tax effect (1)

     (118     217       (583     306  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating net income (2)

   $ 17,448     $ 17,774     $ 35,096     $ 34,275  
  

 

 

   

 

 

   

 

 

   

 

 

 

Average shareholders’ equity (3)

   $ 439,924     $ 438,730     $ 429,603     $ 435,407  

Less:

        

Average accumulated other comprehensive income (loss)

     7,551       (2,160     4,654       765  
  

 

 

   

 

 

   

 

 

   

 

 

 

Average adjusted shareholders’ equity

   $ 432,373     $ 440,890     $ 424,949     $ 434,642  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted weighted average common shares

     19,306,953       19,266,735       19,316,276       19,275,883  

Return on average equity (4)

     16.3     15.5     17.4     15.2

Operating return on average adjusted equity (2)

     16.1     16.1     16.5     15.8

Diluted earnings per share

   $ 0.93     $ 0.88     $ 1.93     $ 1.72  

Operating earnings per share (2)

   $ 0.90     $ 0.92     $ 1.82     $ 1.78  

 

(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 August 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 877-225-7695 or 720-545-0027 at least ten 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 August 8, 2019. To access the replay, dial 855-859-2056 or 404-537-3406 and use the pass code 7867689#.

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 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 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     Six Months Ended  
     June 30,     June 30,  
     2019     2018     2019     2018  
     (unaudited)     (unaudited)  

Revenues:

        

Gross premiums written

   $ 87,018     $ 93,702     $ 180,125     $ 191,044  

Ceded premiums written

     (2,204     (2,369     (4,634     (4,699
  

 

 

   

 

 

   

 

 

   

 

 

 

Net premiums written

   $ 84,814     $ 91,333     $ 175,491     $ 186,345  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net premiums earned

   $ 82,951     $ 88,995     $ 167,899     $ 176,305  

Net investment income

     8,169       7,303       16,184       14,512  

Net realized gains (losses) on investments

     (82     (1,111     (23     (1,142

Net unrealized gains (losses) on equity securities

     642       76       2,800       (314

Fee and other income

     73       117       83       194  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     91,753       95,380       186,943       189,555  
  

 

 

   

 

 

   

 

 

   

 

 

 

Expenses:

        

Loss and loss adjustment expenses incurred

     48,868       52,076       98,482       105,238  

Underwriting and other operating costs

     19,718       21,282       40,385       41,548  

Policyholder dividends

     998       1,092       2,098       2,425  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

     69,584       74,450       140,965       149,211  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before taxes

     22,169       20,930       45,978       40,344  

Income tax expense

     4,279       3,974       8,688       7,219  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 17,890     $ 16,956     $ 37,290     $ 33,125  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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AMERISAFE, INC. AND SUBSIDIARIES

Consolidated Statements of Income (cont.)

(in thousands, except per share amounts)

 

     Three Months Ended      Six Months Ended  
     June 30,      June 30,  
     2019      2018      2019      2018  
     (unaudited)      (unaudited)  

Basic EPS:

           

Net income

   $ 17,890      $ 16,956      $ 37,290      $ 33,125  
  

 

 

    

 

 

    

 

 

    

 

 

 

Basic weighted average common shares

     19,245,592        19,208,601        19,237,401        19,197,925  

Basic earnings per share

   $ 0.93      $ 0.88      $ 1.94      $ 1.73  

Diluted EPS:

           

Net income

   $ 17,890      $ 16,956      $ 37,290      $ 33,125  
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted weighted average common shares:

           

Weighted average common shares

     19,245,592        19,208,601        19,237,401        19,197,925  

Stock options and restricted stock

     61,361        58,134        78,875        77,958  
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted weighted average common shares

     19,306,953        19,266,735        19,316,276        19,275,883  

Diluted earnings per share

   $ 0.93      $ 0.88      $ 1.93      $ 1.72  

 

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AMERISAFE, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands)

 

     June 30,      December 31,  
     2019      2018  
     (unaudited)         

Assets

     

Investments

   $ 1,163,059      $ 1,125,490  

Cash and cash equivalents

     51,246        40,344  

Amounts recoverable from reinsurers

     103,695        112,006  

Premiums receivable, net

     175,020        162,478  

Deferred income taxes

     19,461        21,852  

Deferred policy acquisition costs

     20,550        19,734  

Other assets

     38,062        34,027  
  

 

 

    

 

 

 
   $ 1,571,093      $ 1,515,931  
  

 

 

    

 

 

 

Liabilities and Shareholders’ Equity

     

Liabilities:

     

Reserves for loss and loss adjustment expenses

   $ 795,046      $ 798,409  

Unearned premiums

     156,889        149,296  

Insurance-related assessments

     30,253        28,258  

Other liabilities

     139,462        130,206  

Shareholders’ equity

     449,443        409,762  
  

 

 

    

 

 

 

Total liabilities and shareholders’ equity

   $ 1,571,093      $ 1,515,931  
  

 

 

    

 

 

 

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