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AMERISAFE Announces 2023 Fourth Quarter and Year-end Results

Reports $62.1 Million of Net Income, Return on Equity of 20.4% and

Net Combined Ratio of 85.9% in 2023

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, 2023.

Three Months Ended Twelve Months Ended
December 31, December 31,

2023

2022

% Change

2023

2022

% Change
(in thousands, except per share data) (in thousands, except per share data)
Net premiums earned

$

65,712

 

$

66,073

 

-0.5

%

$

267,125

 

$

271,698

 

-1.7

%

Net investment income

 

8,077

 

 

7,642

 

5.7

%

 

31,339

 

 

27,223

 

15.1

%

Net realized gains on investments
(pre-tax)

 

1,113

 

 

1,038

 

7.2

%

 

6,579

 

 

3,440

 

91.3

%

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

 

5,120

 

 

4,892

 

NM

 

 

1,228

 

 

(8,092

)

NM

 

Net income

 

19,181

 

 

20,778

 

-7.7

%

 

62,108

 

 

55,602

 

11.7

%

Diluted earnings per share

$

1.00

 

$

1.08

 

-7.4

%

$

3.23

 

$

2.88

 

12.2

%

Operating net income

 

14,257

 

 

16,093

 

-11.4

%

 

55,940

 

 

59,277

 

-5.6

%

Operating earnings per share

$

0.74

 

$

0.84

 

-11.9

%

$

2.91

 

$

3.07

 

-5.2

%

Book value per share

$

15.28

 

$

16.57

 

-7.8

%

$

15.28

 

$

16.57

 

-7.8

%

Net combined ratio

 

85.5

%

 

82.0

%

 

85.9

%

 

83.6

%

Return on average equity

 

24.4

%

 

24.1

%

 

20.4

%

 

15.5

%

G. Janelle Frost, President and Chief Executive Officer, commented: “AMERISAFE’s value proposition to our policyholders, agents, and shareholders rests on our service and delivering on our commitments to them. The Company collaborates closely with insured parties to assess risks, bolster safety measures, and meticulously handle claims to achieve optimal results. The Company’s disciplined approach resulted in gross premium written growth of 8.4% and a combined ratio of 85.5% for the fourth quarter, and a 20.4% ROAE for the full year. Our capital strength and approach to the high-hazard workers’ compensation market position AMERISAFE for solid performance and ability to create long-term shareholder value into the future.”

INSURANCE RESULTS

Three Months Ended Twelve Months Ended
December 31, December 31,

2023

2022

% Change

2023

2022

% Change
(in thousands) (in thousands)
 
Gross premiums written

$

60,324

 

$

55,647

 

8.4

%

$

285,355

 

$

276,110

 

3.3

%

Net premiums earned

 

65,712

 

 

66,073

 

-0.5

%

 

267,125

 

 

271,698

 

-1.7

%

Loss and loss adjustment expenses incurred

 

36,455

 

 

36,524

 

-0.2

%

 

148,263

 

 

152,316

 

-2.7

%

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

 

18,988

 

 

17,421

 

9.0

%

 

78,313

 

 

72,032

 

8.7

%

Policyholder dividends

 

732

 

 

182

 

302.2

%

 

2,957

 

 

2,699

 

9.6

%

Underwriting profit (pre-tax)

$

9,537

 

$

11,946

 

-20.2

%

$

37,592

 

$

44,651

 

-15.8

%

 
Insurance Ratios:
Current accident year loss ratio

 

71.0

%

 

71.0

%

 

71.0

%

 

71.0

%

Prior accident year loss ratio

 

-15.5

%

 

-15.7

%

 

-15.5

%

 

-14.9

%

Net loss ratio

 

55.5

%

 

55.3

%

 

55.5

%

 

56.1

%

Net underwriting expense ratio

 

28.9

%

 

26.4

%

 

29.3

%

 

26.5

%

Net dividend ratio

 

1.1

%

 

0.3

%

 

1.1

%

 

1.0

%

Net combined ratio

 

85.5

%

 

82.0

%

 

85.9

%

 

83.6

%

  • Voluntary premiums on policies written in the quarter were 4.7% higher than in the fourth quarter of 2022, primarily due to an increase in policy count partially offset by continued declines in approved loss costs. For the full year, voluntary premiums increased by 0.3%.
  • Payroll audits and related premium adjustments increased premiums written by $4.8 million in the fourth quarter of 2023, compared to an increase of $2.3 million in the fourth quarter of 2022. For the full year 2023, audits and related premium adjustments increased premiums by $24.0 million, compared to an increase of $14.0 million in 2022.
  • The loss ratio for both the fourth quarter and full year was 55.5%. During the quarter, the Company experienced favorable net loss reserve development for prior accident years, which reduced loss and loss adjustment expenses by $10.2 million, primarily from accident years 2018 through 2021. For the full year, the Company experienced favorable development on prior accident years of $41.4 million, compared with $40.6 million in 2022. The Company attributes its lower claim severities for prior years to proactive claims handling.
  • For the quarter that ended December 31, 2023, the underwriting expense ratio was 28.9% compared with 26.4% in the same quarter in 2022, as a result of slightly lower earned premium and increased insurance related assessments. For the year ended December 31, 2023, the underwriting expense ratio was 29.3%, compared with 26.5% in 2022, largely due to slightly lower earned premium and increased insurance related assessments.
  • The effective tax rate for the full year 2023 was 19.7% compared with 17.8% for 2022. The rate was slightly higher than last year due to a decrease in the proportion of tax-exempt interest income relative to taxable interest income and underwriting profit.

INVESTMENT RESULTS

Three Months Ended Twelve Months Ended
December 31, December 31,

2023

2022

% Change

2023

2022

% Change
(in thousands) (in thousands)
Net investment income

$

8,077

 

$

7,642

 

5.7

%

$

31,339

 

$

27,223

 

15.1

%

Net realized gains on investments
(pre-tax)

 

1,113

 

 

1,038

 

7.2

%

 

6,579

 

 

3,440

 

91.3

%

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

 

5,120

 

 

4,892

 

NM

 

 

1,228

 

 

(8,092

)

NM

 

Pre-tax investment yield

 

3.5

%

 

3.1

%

 

3.4

%

 

2.7

%

Tax-equivalent yield (1)

 

3.7

%

 

3.4

%

 

3.7

%

 

3.4

%

________________________________

(1)

The tax equivalent yield is calculated using the effective interest rate and the appropriate marginal tax rate.

  • Net investment income for the quarter and full year ended December 31, 2023, increased 5.7% to $8.1 million and 15.1% to $31.3 million, respectively, due to higher fixed income reinvestment rates in relation to portfolio rolloff.
  • Net unrealized gains on equity securities were $5.1 million in the fourth quarter. The full year unrealized gain of $1.2 million is reflective of favorable equity market returns during the year.
  • As of December 31, 2023, the carrying value of AMERISAFE’s investment portfolio, including cash and cash equivalents, was $896.5 million.

CAPITAL MANAGEMENT

During the fourth quarter of 2023, the Company repurchased 46,741 shares at an average cost (including commissions and excise tax) of $46.45 per share for a total of $2.2 million. The remaining outstanding share repurchase authorization as of December 31, 2023 is $10.4 million.

In an accompanying announcement, the Company’s Board of Directors increased the regular quarterly dividend by 8.8% from $0.34 per share to $0.37 per share, payable on March 22, 2024, to shareholders of record as of March 8, 2024.

SUPPLEMENTAL INFORMATION

Three Months Ended Twelve Months Ended
December 31, December 31,

2023

2022

2023

2022

(in thousands, except share and per share data)
 
Net income

$

19,181

 

$

20,778

 

$

62,108

 

$

55,602

 

Less:
Net realized gains on investments

 

1,113

 

 

1,038

 

 

6,579

 

 

3,440

 

Net unrealized gains (losses) on equity securities

 

5,120

 

 

4,892

 

 

1,228

 

 

(8,092

)

Tax effect (1)

 

(1,309

)

 

(1,245

)

 

(1,639

)

 

977

 

Operating net income (2)

$

14,257

 

$

16,093

 

$

55,940

 

$

59,277

 

 
Average shareholders’ equity (3)

$

314,167

 

$

345,226

 

$

304,942

 

$

358,378

 

Less:
Average accumulated other comprehensive loss

 

(13,779

)

 

(16,896

)

 

(10,511

)

 

(146

)

Average adjusted shareholders’ equity (2)

$

327,946

 

$

362,122

 

$

315,453

 

$

358,524

 

 
Diluted weighted average common shares

 

19,220,250

 

 

19,209,279

 

 

19,226,021

 

 

19,321,717

 

 
Return on average equity (4)

 

24.4

%

 

24.1

%

 

20.4

%

 

15.5

%

Operating return on average adjusted equity (2)

 

17.4

%

 

17.8

%

 

17.7

%

 

16.5

%

Diluted earnings per share

$

1.00

 

$

1.08

 

$

3.23

 

$

2.88

 

Operating earnings per share (2)

$

0.74

 

$

0.84

 

$

2.91

 

$

3.07

 

________________________________

(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, average adjusted shareholders’ equity, 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 for the applicable period.

(4)

Return on average equity is calculated by dividing the annualized net income by the average shareholders’ equity.

NON-GAAP FINANCIAL MEASURES

This release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the U.S. Securities and Exchange Commission (the SEC) and includes a reconciliation of non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with GAAP in the Supplemental Information in this release.

Management believes that investors’ understanding of core operating performance is enhanced by AMERISAFE’s disclosure of these financial measures which include operating net income, average adjusted shareholders’ equity, operating return on average adjusted equity and operating earnings per share.

CONFERENCE CALL INFORMATION

AMERISAFE has scheduled a conference call for February 22, 2024, 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 9182860) 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, agriculture, and manufacturing. AMERISAFE actively markets workers’ compensation insurance in 27 states.

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 on the business and operations of the Company and our policyholders and the market value of our investment portfolio. Additional 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. 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.

AMERISAFE, INC. AND SUBSIDIARIES

Consolidated Statements of Income

(in thousands, except per share amounts)

 

Three Months Ended

 

Twelve Months Ended

December 31,

 

December 31,

2023

 

2022

 

2023

 

2022

(unaudited) (unaudited)
Revenues:
Gross premiums written

$

60,324

 

$

55,647

 

$

285,355

 

$

276,110

 

Ceded premiums written

 

(4,365

)

 

(2,690

)

 

(16,621

)

 

(10,527

)

Net premiums written

$

55,959

 

$

52,957

 

$

268,734

 

$

265,583

 

 
Net premiums earned

$

65,712

 

$

66,073

 

$

267,125

 

$

271,698

 

Net investment income

 

8,077

 

 

7,642

 

 

31,339

 

 

27,223

 

Net realized gains on investments

 

1,113

 

 

1,038

 

 

6,579

 

 

3,440

 

Net unrealized gains (losses) on equity securities

 

5,120

 

 

4,892

 

 

1,228

 

 

(8,092

)

Fee and other income

 

94

 

 

116

 

 

582

 

 

468

 

Total revenues

 

80,116

 

 

79,761

 

 

306,853

 

 

294,737

 

 
Expenses:
Loss and loss adjustment expenses incurred

 

36,455

 

 

36,524

 

 

148,263

 

 

152,316

 

Underwriting and other operating costs

 

18,988

 

 

17,421

 

 

78,313

 

 

72,032

 

Policyholder dividends

 

732

 

 

182

 

 

2,957

 

 

2,699

 

Provision for investment related credit
loss expense (benefit)

 

(6

)

 

(16

)

 

(57

)

 

44

 

Total expenses

 

56,169

 

 

54,111

 

 

229,476

 

 

227,091

 

 
Income before taxes

 

23,947

 

 

25,650

 

 

77,377

 

 

67,646

 

Income tax expense

 

4,766

 

 

4,872

 

 

15,269

 

 

12,044

 

Net income

$

19,181

 

$

20,778

 

$

62,108

 

$

55,602

 

 
Three Months Ended Twelve Months Ended
December 31, December 31,

2023

2022

2023

2022

(unaudited) (unaudited)
Basic EPS:
Net income

$

19,181

 

$

20,778

 

$

62,108

 

$

55,602

 

 
Basic weighted average common shares

 

19,159,911

 

 

19,131,271

 

 

19,149,080

 

 

19,233,241

 

Basic earnings per share

$

1.00

 

$

1.09

 

$

3.24

 

$

2.89

 

 
Diluted EPS:
Net income

$

19,181

 

$

20,778

 

$

62,108

 

$

55,602

 

 
Diluted weighted average common shares:
Weighted average common shares

 

19,159,911

 

 

19,131,271

 

 

19,149,080

 

 

19,233,241

 

Restricted stock and RSUs

 

60,339

 

 

78,008

 

 

76,941

 

 

88,476

 

Diluted weighted average common shares

 

19,220,250

 

 

19,209,279

 

 

19,226,021

 

 

19,321,717

 

 
Diluted earnings per share

$

1.00

 

$

1.08

 

$

3.23

 

$

2.88

 

AMERISAFE, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands)

 
December 31, December 31,

2023

2022

(unaudited)
Assets
Investments

$

857,786

$

888,987

Cash and cash equivalents

 

38,682

 

61,469

Amounts recoverable from reinsurers

 

129,963

 

125,677

Premiums receivable, net

 

132,861

 

121,713

Deferred income taxes

 

20,403

 

22,794

Deferred policy acquisition costs

 

17,975

 

17,401

Other assets

 

31,492

 

31,238

$

1,229,162

$

1,269,279

 
Liabilities and Shareholders’ Equity
Liabilities:
Reserves for loss and loss adjustment expenses

$

673,994

$

696,037

Unearned premiums

 

116,585

 

114,976

Insurance-related assessments

 

16,896

 

17,653

Other liabilities

 

129,236

 

123,181

 
Shareholders’ equity

 

292,451

 

317,432

Total liabilities and shareholders’ equity

$

1,229,162

$

1,269,279

 

Contacts

Andy Omiridis, EVP & CFO

AMERISAFE

337.463.9052

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