AMERISAFE INC - FORM 8-K - EX-99.1

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8-K - FORM 8-K - AMERISAFE INC	d491910d8k.htm

Exhibit 99.1

LOGO

Contacts:

G. Janelle Frost, EVP & CFO

AMERISAFE, Inc.

337-463-9052

AMERISAFE ANNOUNCES 2012 FOURTH QUARTER

AND YEAR-END RESULTS

Initiates Quarterly Cash Dividend

DeRidder, LA — February 27, 2013 — AMERISAFE, Inc. (Nasdaq: AMSF), a specialty provider of hazardous workers’ compensation insurance, today announced results for the fourth quarter and year ended December 31, 2012.


	Three Months Ended December 31,									Twelve Months Ended December 31,
	2012			2011			% Change			2012			2011			% Change
	(in thousands, except per share data)
Net premiums earned	$	78,741		$	66,211			18.9	%	$	290,689		$	251,015			15.8	%
Net investment income		6,698			6,702			(0.1	)%		27,018			26,340			2.6	%
Net realized gains on investments (pre-tax)		66			1,468			(95.5	)%		2,979			2,228			33.7	%
Net income		9,226			8,073			14.3	%		29,353			24,181			21.4	%
Diluted earnings per share	$	0.50		$	0.44			13.6	%	$	1.58		$	1.29			22.5	%
Operating net income		9,183			5,943			54.5	%		27,417			21,291			28.8	%
Operating earnings per share	$	0.49		$	0.32			53.1	%	$	1.48		$	1.14			29.8	%
Book value per share	$	20.88		$	19.25			8.5	%	$	20.88		$	19.25			8.5	%
Net combined ratio		92.6	%		98.4	%					97.5	%		100.4	%
Return on average equity		9.8	%		9.4	%					8.0	%		7.1	%

Commenting on these results, Allen Bradley, AMERISAFE’s Chairman and Chief Executive Officer, stated, “The workers’ compensation marketplace continues to harden. Loss costs and rate increases, coupled with a lessened underwriting appetite for workers’ compensation accounts by many carriers, continues to provide AMERISAFE with the opportunity to increase premium volume with higher pricing and better expected margins.”

Quarterly Cash Dividend

The Company’s Board of Directors declared its first quarterly cash dividend of $0.08 per share, payable on March 28, 2013 to shareholders of record as of March 14, 2013. The Board intends to consider the payment of a regular cash dividend each calendar quarter. On an annualized basis, the cash dividend is currently expected to be $0.32 per share.

Insurance Results


	Three Months Ended December 31,									Twelve Months Ended December 31,
	2012			2011			% Change			2012			2011			% Change
	(in thousands)
Gross premiums written	$	81,140		$	62,128			30.6	%	$	328,823		$	272,101			20.8	%
Net premiums earned		78,741			66,211			18.9	%		290,689			251,015			15.8	%
Loss and loss adjustment expenses incurred		57,489			49,627			15.8	%		219,903			189,706			15.9	%
Underwriting and certain other operating costs, commissions and salaries and benefits		14,876			15,017			(0.9	)%		61,433			60,825			1.0	%
Policyholder dividends		544			474			14.8	%		2,203			1,464			50.5	%
Underwriting profit (loss) (pre-tax)		5,832			1,093			433.6	%		7,150			(980	)		829.6	%

Insurance Ratios:
Current accident year loss ratio		76.5	%		78.2	%					76.5	%		78.2	%
Prior accident year loss ratio		(3.5	)%		(3.2	)%					(0.9	)%		(2.6	)%

Net loss ratio		73.0	%		75.0	%					75.6	%		75.6	%
Net underwriting expense ratio		18.9	%		22.7	%					21.1	%		24.2	%
Net dividend ratio		0.7	%		0.7	%					0.8	%		0.6	%

Net combined ratio		92.6	%		98.4	%					97.5	%		100.4	%

•

Voluntary premiums written increased 25.0% in the quarter and 14.9% for the year ended December 31, 2012 compared to the same periods in 2011. Additionally, payroll audits and related premium adjustments for policies written in previous periods increased premiums $7.9 million in the fourth quarter and $20.9 million in the year ended December 31, 2012. In 2011, these premium adjustments increased premium $3.8 million in the fourth quarter and $5.9 million for the year ended December 31.

•

The current accident year loss ratio for the fourth quarter was 76.5%. During the quarter the Company experienced $2.7 million of favorable prior year development, primarily attributable to accident year 2008. In total, prior accident year development for year ended December 31, 2012 was a favorable $2.5 million, compared to a favorable $6.6 million for the same period in 2011.

•

For the year ended December 31, 2012, the underwriting expense ratio was 3.1 percentage points lower than the prior year. The primary contributors to the decrease were efficiencies gained by maintaining general operating costs at a level equivalent to the prior year as earned premium increased and recognition of higher experience rated commissions. Level general operating costs resulted in a 1.6 percentage point decrease in the underwriting expense ratio in 2012. Our experience rated commissions offset the expense ratio by 3.8 percentage points in the year ended December 31, 2012 compared to 2.3 percentage points in 2011.

•

The effective tax rate for the year ended December 31, 2012 was 21.0% compared to 11.6% in the same period in 2011. The increase was driven by tax-exempt investment income reflecting a smaller percentage of pre-tax income in the year ended December 31, 2012 compared to the same period in 2011. Also in 2011, there was a decrease in the effective rate from a change in the valuation allowance related to capital loss carry forwards.

Geoff Banta, President and Chief Operating Officer, noted, “We experienced another quarter of premium growth with stronger pricing, while maintaining our healthy policy retention levels. Additionally, our claims frequency for the 2012 accident year continued its downward trend and prior accident years developed favorably. Overall, we are pleased with our fourth quarter underwriting results.”

Investment Results


	Three Months Ended December 31,									Twelve Months Ended December 31,
	2012			2011			% Change			2012			2011			% Change
	(in thousands)
Net investment income	$	6,698		$	6,702			(0.1	)%	$	27,018		$	26,340			2.6	%
Net realized gains on investments (pre-tax)		66			1,468			(95.5	)%		2,979			2,228			33.7	%
Pre-tax investment yield		3.0	%		3.2	%					3.1	%		3.1	%
Tax equivalent yield (1)		4.3	%		4.6	%					4.3	%		4.6	%

(1)	The tax equivalent yield is calculated using the effective interest rate and a 35% marginal tax rate.

•

As of December 31, 2012, the carrying value of AMERISAFE’s investment portfolio, including cash and cash equivalents, was $900.8 million and the fair value of the portfolio was $944.9 million.

Supplemental Information

During the quarter, no shares were repurchased under the share repurchase plan. Since 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. On October 30, 2012, the Board of Directors extended the share repurchase program through December 31, 2013.


	Three Months Ended December 31,						Twelve Months Ended December 31,
	2012			2011			2012			2011
	(in thousands, except share and per share data)
Net income	$	9,226		$	8,073		$	29,353		$	24,181
Less: Net realized capital gains		66			1,468			2,979			2,228
Tax effect of gains (1)		(23	)		(514	)		(1,043	)		(780	)
Valuation allowance (1)		—			1,176			—			1,442

Operating net income (2)		9,183			5,943			27,417			21,291

Average shareholders’ equity (3)	$	376,681		$	344,820		$	365,330		$	339,079
Less: Average other comprehensive income		3,547			2,229			2,597			1,240

Adjusted average shareholders’ equity		373,134			342,591			362,733			337,839

Diluted weighted average common shares		18,602,759			18,492,088			18,575,133			18,700,982
Return on average equity (4)		9.8	%		9.4	%		8.0	%		7.1	%
Operating return on average equity (2)		9.8	%		6.9	%		7.6	%		6.3	%
Diluted earnings per common share	$	0.50		$	0.44		$	1.58		$	1.29
Operating earnings per common share (2)	$	0.49		$	0.32		$	1.48		$	1.14

(1)	The tax effect of net realized capital gains is calculated assuming an annual tax rate of 35% plus the change in valuation allowance for deferred taxes.

(2)	Operating net income, operating return on average adjusted equity and operating earnings per share are non-GAAP financial measures, and 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 28, 2013, 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 7, 2013. To access the replay, dial 855-859-2056 or 404-537-3406 and use the pass code 94677394#.

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 35 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, 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 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, 2011. 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 -

AMERISAFE, INC. AND SUBSIDIARIES

Consolidated Statements of Income

(in thousands)


	Three Months Ended December 31,						Twelve Months Ended December 31,
	2012			2011			2012			2011
	(unaudited)
Revenues:
Gross premiums written	$	81,140		$	62,128		$	328,823		$	272,101
Ceded premiums written		(4,398	)		(3,394	)		(16,305	)		(13,881	)

Net premiums written	$	76,742		$	58,734		$	312,518		$	258,220

Net premiums earned	$	78,741		$	66,211		$	290,689		$	251,015
Net investment income		6,698			6,702			27,018			26,340
Net realized gains on investments		66			1,468			2,979			2,228
Fee and other income		78			529			562			1,080

Total revenues		85,583			74,910			321,248			280,663

Expenses:
Loss and loss adjustment expenses incurred		57,489			49,627			219,903			189,706
Underwriting and other operating costs		14,876			15,017			61,433			60,825
Interest expense		—			275			566			1,311
Policyholder dividends		544			474			2,203			1,464

Total expenses		72,909			65,393			284,105			253,306

Income before taxes		12,674			9,517			37,143			27,357
Income tax expense		3,448			1,444			7,790			3,176

Net income	$	9,226		$	8,073		$	29,353		$	24,181

AMERISAFE, INC. AND SUBSIDIARIES

Consolidated Statements of Income (cont.)

(in thousands, except share and per share amounts)


	Three Months Ended December 31,				Twelve Months Ended December 31,
	2012		2011		2012		2011
	(unaudited)
Basic EPS:
Net income	$	9,226	$	8,073	$	29,353	$	24,181

Basic weighted average common shares		18,200,394		18,082,974		18,166,175		18,250,173
Basic earnings per share	$	0.51	$	0.45	$	1.62	$	1.32

Diluted EPS:
Net income	$	9,226	$	8,073	$	29,353	$	24,181

Diluted weighted average common shares:
Weighted average common shares		18,200,394		18,082,974		18,166,175		18,250,173
Stock options		392,724		405,120		390,829		439,737
Restricted stock		3,995		3,994		11,895		11,072
Long-term incentive stock		5,646		—		6,234		—

Diluted weighted average common shares		18,602,759		18,492,088		18,575,133		18,700,982

Diluted earnings per common share	$	0.50	$	0.44	$	1.58	$	1.29

AMERISAFE, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands)


	December 31,		December 31,
	2012		2011
	(unaudited)
Assets
Investments	$	808,116	$	805,974
Cash and cash equivalents		92,676		45,536
Amounts recoverable from reinsurers		101,352		96,212
Premiums receivable, net		141,950		121,223
Deferred income taxes		29,521		30,048
Deferred policy acquisition costs		18,419		16,578
Other assets		28,912		28,402

	$	1,220,946	$	1,143,973

Liabilities and shareholders’ equity
Liabilities:
Reserves for loss and loss adjustment expenses	$	570,450	$	538,214
Unearned premiums		140,528		118,699
Insurance-related assessments		22,244		19,071
Subordinated debt securities		—		25,780
Other liabilities		106,502		92,772

Total shareholders’ equity		381,222		349,437

Total liabilities and shareholders’ equity	$	1,220,946	$	1,143,973

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AMERISAFE INC - FORM 8-K - EX-99.1 - February 27, 2013

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AMERISAFE INC Reports