Exhibit 99.1
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Contacts: |
G. Janelle Frost, EVP & CFO AMERISAFE, Inc. 337-463-9052 | |||
AMERISAFE ANNOUNCES 2013 FIRST QUARTER RESULTS
Declares Quarterly Cash Dividend
DeRidder, LA — May 1, 2013 — AMERISAFE, Inc. (Nasdaq: AMSF), a specialty provider of hazardous workers’ compensation insurance, today announced results for the first quarter ended March 31, 2013.
| Three Months
Ended March 31, |
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| 2013 | 2012 | % Change | ||||||||||
| (in thousands, except per share data) | ||||||||||||
| Net premiums earned |
$ | 79,709 | $ | 69,790 | 14.2 | % | ||||||
| Net investment income |
6,670 | 6,914 | (3.5 | )% | ||||||||
| Net realized gains on investments (pre-tax) |
24 | 1,791 | NM | |||||||||
| Net income |
8,851 | 9,561 | (7.4 | )% | ||||||||
| Diluted earnings per share |
0.47 | 0.52 | (9.6 | )% | ||||||||
| Operating net income |
8,835 | 8,397 | 5.2 | % | ||||||||
| Operating earnings per share |
0.47 | 0.45 | 4.4 | % | ||||||||
| Book value per share |
21.20 | 19.78 | 7.2 | % | ||||||||
| Net combined ratio |
94.7 | % | 96.0 | % | ||||||||
| Return on average equity |
9.2 | % | 10.8 | % | ||||||||
Commenting on these results, Allen Bradley, AMERISAFE’s Chairman and Chief Executive Officer, stated, “The workers’ compensation market continued to firm in the first quarter of 2013 as underwriters refocused on underwriting profitability. We expect workers’ compensation pricing improvement to continue through at least the remainder of the year. AMERISAFE is pleased with our first quarter results in terms of premium growth and underwriting profitability.”
Insurance Results
| Three Months
Ended March 31, |
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| 2013 | 2012 | % Change | ||||||||||
| (in thousands) | ||||||||||||
| Gross premiums written |
$ | 99,123 | $ | 84,924 | 16.7 | % | ||||||
| Net premiums earned |
79,709 | 69,790 | 14.2 | % | ||||||||
| Loss and loss adjustment expenses incurred |
56,001 | 51,843 | 8.0 | % | ||||||||
| Underwriting and certain other operating costs, commissions and salaries and benefits |
18,877 | 14,715 | 28.3 | % | ||||||||
| Policyholder dividends |
554 | 384 | 44.3 | % | ||||||||
| Underwriting profit (pre-tax) |
4,277 | 2,848 | 50.2 | % | ||||||||
| Insurance Ratios: |
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| Current accident year loss ratio |
73.2 | % | 76.5 | % | ||||||||
| Prior accident year loss ratio |
(2.9 | )% | (2.2 | )% | ||||||||
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| Net loss ratio |
70.3 | % | 74.3 | % | ||||||||
| Net underwriting expense ratio |
23.7 | % | 21.1 | % | ||||||||
| Net dividend ratio |
0.7 | % | 0.6 | % | ||||||||
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| Net combined ratio |
94.7 | % | 96.0 | % | ||||||||
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| • | Voluntary premium for policies written during the quarter increased by 16.1% compared to prior year quarter. During the first quarter of 2013, gross premiums written increased by $6.0 million due to positive payroll audits and related premium adjustments for policies written in previous periods. Payroll audits and related premium adjustments increased premiums written by $5.4 million in the first quarter of 2012. |
| • | In the 2013 period, the Company experienced favorable loss development for prior accident years which reduced loss and loss adjustment expenses by $2.4 million, primarily attributable to accident years 2008 and 2009. |
| • | For the quarter ended March 31, 2013, the underwriting expense ratio was 2.6 percentage points higher than the prior year. The primary contributors were a 2.5 percentage point increase in assessment expenses related to both premium-based and loss-based assessments in various states. Also, experienced rated commissions decreased $1.0 million which increased the underwriting expense ratio 1.8 percentage points. The underwriting expense ratio was reduced 1.2 percentage points for maintaining general operating costs as earned premium increased. |
| • | The effective tax rate for the three months ended March 31, 2013 was 20.1% compared to 16.4% for the first quarter of 2012. The increase was driven by the lower ratio of tax-exempt investment income to pre-tax income in the first quarter of 2013 compared to the first quarter of 2012. |
Geoff Banta, President and Chief Operating Officer, noted, “We are pleased with our continued quarter-over-quarter growth in premium at increased pricing levels. We also experienced another quarter of decline in frequency of claims, which we believe is the result of our focused approach to pricing, loss control and underwriting selection. As a result of these factors, we have projected a 73.2% loss ratio for the 2013 accident year, which is 3.3 percentage points lower than our projection for 2012.”
Investment Results
| Three Months Ended March 31, |
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| 2013 | 2012 | % Change | ||||||||||
| (in thousands) | ||||||||||||
| Net investment income |
6,670 | 6,914 | (3.5 | )% | ||||||||
| Net realized gains on investments (pre-tax) |
24 | 1,791 | ||||||||||
| Pre-tax investment yield |
2.9 | % | 3.2 | % | ||||||||
| Tax equivalent yield (1) |
4.2 | % | 4.5 | % | ||||||||
| (1) | The tax equivalent yield is calculated using the effective interest rate and a 35% marginal tax rate. |
| • | As of March 31, 2013, the carrying value of AMERISAFE’s investment portfolio, including cash and cash equivalents, was $918.7 million and the fair value of the portfolio was $959.4 million. |
Quarterly Dividend
The Company paid its first quarterly dividend of $0.08 on March 28, 2013. On April 30, 2013, the Company’s Board of Directors declared a quarterly cash dividend of $0.08 per share, payable on June 26, 2013 to shareholders of record as of June 12, 2013.
Supplemental Information
During the quarter, no shares were repurchased under the share repurchase plan. Since beginning the plan, the Company has repurchased a total of 1,258,250 shares for $22.4 million for an average per share price of $17.78, including commissions.
| Three Months Ended March 31, |
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| 2013 | 2012 | |||||||
| (in thousands, except share data) | ||||||||
| Net income |
$ | 8,851 | $ | 9,561 | ||||
| Less: Net realized capital gains |
24 | 1,791 | ||||||
| Tax effect (1) |
(8 | ) | (627 | ) | ||||
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| Operating net income (2) |
8,835 | 8,397 | ||||||
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| Average shareholders’ equity (3) |
$ | 385,460 | $ | 354,245 | ||||
| Less: Average other comprehensive income (loss) |
2,707 | 2,189 | ||||||
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| Adjusted average shareholders’ equity |
382,753 | 352,056 | ||||||
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| Diluted weighted average common shares |
18,689,842 | 18,535,979 | ||||||
| Return on average equity (4) |
9.2 | % | 10.8 | % | ||||
| Operating return on average equity (2) |
9.2 | % | 9.5 | % | ||||
| Diluted earnings per common share |
$ | 0.47 | $ | 0.52 | ||||
| Operating earnings per common share (2) |
$ | 0.47 | $ | 0.45 | ||||
| (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 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 May 2, 2013, at 10:30 a.m. Eastern Time to discuss the results for the quarter and the outlook for future periods. To participate in the conference call dial 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 May 9, 2013. To access the replay, dial 855-859-2056 or 404-537-3406 and use the pass code 32185771#.
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, manufacturing and agriculture. AMERISAFE actively markets workers’ compensation insurance in 30 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, 2012. 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 March 31, |
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| 2013 | 2012 | |||||||
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| Revenues: |
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| Gross premiums written |
$ | 99,123 | $ | 84,924 | ||||
| Ceded premiums written |
(4,481 | ) | (3,904 | ) | ||||
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| Net premiums written |
$ | 94,642 | $ | 81,020 | ||||
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| Net premiums earned |
$ | 79,709 | $ | 69,790 | ||||
| Net investment income |
6,670 | 6,914 | ||||||
| Net realized gains on investments |
24 | 1,791 | ||||||
| Fee and other income |
109 | 159 | ||||||
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| Total revenues |
86,512 | 78,654 | ||||||
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| Expenses: |
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| Loss and loss adjustment expenses incurred |
56,001 | 51,843 | ||||||
| Underwriting and other operating costs |
18,877 | 14,715 | ||||||
| Interest expense |
— | 279 | ||||||
| Policyholder dividends |
554 | 384 | ||||||
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| Total expenses |
75,432 | 67,221 | ||||||
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| Income before taxes |
11,080 | 11,433 | ||||||
| Income tax expense |
2,229 | 1,872 | ||||||
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| Net income |
$ | 8,851 | $ | 9,561 | ||||
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AMERISAFE, INC. AND SUBSIDIARIES
Consolidated Statements of Income (cont.)
(in thousands, except per share amounts)
| Three Months
Ended March 31, |
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| 2013 | 2012 | |||||||
| (unaudited) | ||||||||
| Basic EPS: |
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| Net income |
$ | 8,851 | $ | 9,561 | ||||
| Less: Portion allocable to unvested shares |
15 | 5 | ||||||
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| Net income available to common shareholders |
$ | 8,836 | $ | 9,556 | ||||
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| Basic weighted average common shares |
18,281,353 | 18,140,749 | ||||||
| Basic earnings per share |
$ | 0.48 | $ | 0.53 | ||||
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| Diluted EPS: |
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| Net income available to common shareholders |
$ | 8,836 | $ | 9,556 | ||||
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| Diluted weighted average common shares: |
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| Weighted average common shares |
18,281,353 | 18,140,749 | ||||||
| Stock options and performance shares |
408,489 | 395,239 | ||||||
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| Diluted weighted average common shares |
18,689,842 | 18,535,979 | ||||||
| Diluted earnings per common share |
$ | 0.47 | $ | 0.52 | ||||
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AMERISAFE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands)
| March 31, | December 31, | |||||||
| 2013 | 2012 | |||||||
| (unaudited) | ||||||||
| Assets |
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| Investments |
$ | 843,417 | $ | 808,116 | ||||
| Cash and cash equivalents |
75,294 | 92,676 | ||||||
| Amounts recoverable from reinsurers |
99,301 | 101,352 | ||||||
| Premiums receivable, net |
167,147 | 141,950 | ||||||
| Deferred income taxes |
30,699 | 29,521 | ||||||
| Deferred policy acquisition costs |
20,038 | 18,419 | ||||||
| Other assets |
29,507 | 28,912 | ||||||
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| $ | 1,265,403 | $ | 1,220,946 | |||||
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| Liabilities and shareholders’ equity |
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| Liabilities: |
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| Reserves for loss and loss adjustment expenses |
$ | 577,988 | $ | 570,450 | ||||
| Unearned premiums |
155,460 | 140,528 | ||||||
| Insurance-related assessments |
25,351 | 22,244 | ||||||
| Other liabilities |
116,906 | 106,502 | ||||||
| Total shareholders’ equity |
389,698 | 381,222 | ||||||
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| Total liabilities and shareholders’ equity |
$ | 1,265,403 | $ | 1,220,946 | ||||
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