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 27, 2017

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 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 27, 2017, AMERISAFE, Inc. (the “Company”) issued a press release announcing its financial results for the second quarter ended June 30, 2017. 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 27, 2017

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 27, 2017

EX-99.1

Exhibit 99.1

	NEWS RELEASE
	Contact:	Neal A Fuller, EVP & CFO AMERISAFE, Inc. 337-463-9052

AMERISAFE ANNOUNCES 2017 SECOND QUARTER RESULTS

Reports Combined Ratio of 81.9%

DeRidder, LA – July 27, 2017—AMERISAFE, Inc. (Nasdaq: AMSF), a specialty provider of hazardous workers’ compensation insurance, today announced results for the second quarter ended June 30, 2017.

	Three Months Ended June 30,									Six Months Ended June 30,
	2017			2016			% Change			2017			2016			% Change
	(in thousands, except per share data)									(in thousands, except per share data)
Net premiums earned .	$	82,749		$	90,728			-8.8	%	$	173,661		$	186,689			-7.0	%
Net investment income		7,471			6,201			20.5	%		14,181			12,245			15.8	%
Net realized gains (losses) on investments (pre-tax)		(388	)		545			NM			(569	)		793			NM
Net income .		15,481			16,639			-7.0	%		29,005			40,896			-29.1	%
Diluted earnings per share .	$	0.81		$	0.87			-6.9	%	$	1.51		$	2.13			-29.1	%
Operating net income		15,733			16,285			-3.4	%		29,375			40,381			-27.3	%
Operating earnings per share	$	0.82		$	0.85			-3.5	%	$	1.53		$	2.11			-27.5	%
Book value per share	$	25.02		$	25.83			-3.1	%	$	25.02		$	25.83			-3.1	%
Net combined ratio		81.9	%		80.4	%					84.4	%		75.5	%
Return on average equity .		13.1	%		13.7	%					12.4	%		17.2	%

G. Janelle Frost, President and Chief Executive Officer, stated, “AMERISAFE’s combined ratio of 81.9% in the second quarter was the result of our emphasis on risk selection with appropriate pricing and prudent reserving. Our focus has been consistent as competition intensified. In the second quarter, carriers sought out workers’ compensation premiums to offset deteriorating results in other commercial lines. At the same time, loss costs continued to decline. Such conditions are why AMERISAFE’s underwriting discipline is critical to providing returns to shareholders and long-term financial stability for our policyholders.”

Insurance Results

	Three Months Ended June 30,									Six Months Ended June 30,
	2017			2016			% Change			2017			2016			% Change
	(in thousands)									(in thousands)
Gross premiums written	$	87,039		$	103,224			-15.7	%	$	182,117		$	203,606			-10.6	%
Net premiums earned		82,749			90,728			-8.8	%		173,661			186,689			-7.0	%
Loss and loss adjustment expenses incurred .		46,428			49,171			-5.6	%		102,644			95,887			7.0	%
Underwriting and certain other operating costs, commissions, salaries and benefits		20,183			22,561			-10.5	%		41,405			42,695			-3.0	%
Policyholder dividends		1,163			1,216			-4.4	%		2,534			2,306			9.9	%
Underwriting profit (pre-tax).	$	14,975		$	17,780			-15.8	%	$	27,078		$	45,801			-40.9	%
Insurance Ratios:
Current accident year loss ratio .		69.0	%		67.9	%					69.0	%		67.9	%
Prior accident year loss ratio .		-12.9	%		-13.7	%					-9.9	%		-16.5	%
Net loss ratio		56.1	%		54.2	%					59.1	%		51.4	%
Net underwriting expense ratio .		24.4	%		24.9	%					23.8	%		22.9	%
Net dividend ratio .		1.4	%		1.3	%					1.5	%		1.2	%
Net combined ratio		81.9	%		80.4	%					84.4	%		75.5	%

◾ Gross premiums written in the quarter decreased by $16.2 million, or 15.7%, primarily due to lower voluntary premiums written and $4.1 million in lower payroll audits. Voluntary premium for policies written during the quarter ended June 30, 2017 declined by 11.6% compared with the second quarter of 2016.

◾ Payroll audits and related premium adjustments decreased premiums written by $2.6 million in the second quarter of 2017, compared to an increase of $1.5 million in the second quarter of 2016.

◾ The current accident year loss ratio for the second quarter was 69.0%, an increase of 1.1 percentage points from 67.9% in 2016. During the quarter, the Company experienced favorable loss development for prior accident years which reduced loss and loss adjustment expenses by $10.7 million, mostly attributable to accident years 2015, 2014 and 2013. These results reflect improved trends for both claims closing and severity of claims and by favorable case reserve development on claims that were closed during the quarter.

◾ For the quarter ended June 30, 2017, the underwriting expense ratio was 24.4% compared to 24.9% in the same quarter in 2016. The decrease in the quarter was due to lower loss based assessments and lower commissions compared with last year’s second quarter.

◾ The effective tax rate for the quarter ended June 30, 2017 was 30.1% compared with 32.4% for the second quarter of 2016. The decrease in the tax rate resulted from a lower proportion of underwriting income to tax-exempt income relative to the second quarter of 2016.

Investment Results

	Three Months Ended June 30,									Six Months Ended June 30,
	2017			2016			% Change			2017			2016			% Change
	(in thousands)									(in thousands)
Net investment income	$	7,471		$	6,201			20.5	%	$	14,181		$	12,245			15.8	%
Net realized gains (losses) on investments (pre-tax)		(388	)		545			NM			(569	)		793			NM
Pre-tax investment yield		2.6	%		2.1	%					2.4	%		2.1	%
Tax-equivalent yield (1)		3.3	%		3.2	%					3.3	%		3.2	%

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

◾ Net investment income for the quarter ending June 30, 2017, increased 20.5% to $7.5 million from $6.2 million in the second quarter of 2016, largely due to a significant decline in value of an investment in a limited partnership hedge fund in last year’s second quarter. The change in value of this investment is recorded in investment income each quarter.

◾ As of June 30, 2017, 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 $0.20 per share on June 23, 2017. On July 25, 2017 the Company’s Board of Directors declared a quarterly cash dividend of $0.20 per share, payable on September 22, 2017 to shareholders of record as of September 8, 2017.

Book value per share at June 30, 2017 was $25.02, an increase of 5.5% from $23.72 as of December 31, 2016. During the quarter, no shares were repurchased under the Company’s share repurchase plan.

Supplemental Information

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
	(in thousands, except share and per share data)
Net income	$	15,481		$	16,639		$	29,005		$	40,896
Less: Net realized gains (losses) on investments .		(388	)		545			(569	)		793
Tax effect (1) .		136			(191	)		199			(278	)
Operating net income (2) .	$	15,733		$	16,285		$	29,375		$	40,381
Average shareholders’ equity (3) .	$	474,247		$	487,350		$	468,771		$	474,964
Less: Average accumulated other comprehensive income		1,438			6,845			962			5,448
Average adjusted shareholders’ equity	$	472,809		$	480,505		$	467,809		$	469,516
Diluted weighted average common shares		19,227,960			19,184,984			19,227,997			19,178,893
Return on average equity (4)		13.1	%		13.7	%		12.4	%		17.2	%
Operating return on average adjusted equity (2) .		13.3	%		13.6	%		12.6	%		17.2	%
Diluted earnings per share .	$	0.81		$	0.87		$	1.51		$	2.13
Operating earnings per share (2)	$	0.82		$	0.85		$	1.53		$	2.11

(1) The tax effect of net realized capital gains is calculated assuming an annual tax rate of 35%.

(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.

Conference Call Information

AMERISAFE has scheduled a conference call for July 28, 2017, at 10:30 a.m. Eastern Time to discuss the results for the quarter, as well as the outlook for future periods. To participate in the conference call dial 877-225-7695 (Domestic) or 720-545-0027 (International) 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 4, 2017. To access the replay, dial 855-859-2056 or 404-537-3406 and use the pass code 46153972#.

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.

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, 2016. 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 June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
	(unaudited)						(unaudited)
Revenues:
Gross premiums written	$	87,039		$	103,224		$	182,117		$	203,606
Ceded premiums written		(2,198	)		(2,550	)		(4,589	)		(5,101	)
Net premiums written .	$	84,841		$	100,674		$	177,528		$	198,505
Net premiums earned .	$	82,749		$	90,728		$	173,661		$	186,689
Net investment income		7,471			6,201			14,181			12,245
Net realized gains (losses) on investments		(388	)		545			(569	)		793
Fee and other income .		93			89			194			171
Total revenues		89,925			97,563			187,467			199,898
Expenses:
Loss and loss adjustment expenses incurred		46,428			49,171			102,644			95,887
Underwriting and other operating costs		20,183			22,561			41,405			42,695
Policyholder dividends		1,163			1,216			2,534			2,306
Total expenses		67,774			72,948			146,583			140,888
Income before taxes		22,151			24,615			40,884			59,010
Income tax expense		6,670			7,976			11,879			18,114
Net income	$	15,481		$	16,639		$	29,005		$	40,896

AMERISAFE, INC. AND SUBSIDIARIES

Consolidated Statements of Income (cont.)

(in thousands, except per share amounts)

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
	(unaudited)				(unaudited)
Basic EPS:
Net income	$	15,481	$	16,639	$	29,005	$	40,896
Basic weighted average common shares		19,162,049		19,096,718		19,156,250		19,077,328
Basic earnings per share .	$	0.81	$	0.87	$	1.51	$	2.14
Diluted EPS:
Net income .	$	15,481	$	16,639	$	29,005	$	40,896
Diluted weighted average common shares:
Weighted average common shares .		19,162,049		19,096,718		19,156,250		19,077,328
Stock options and performance shares		65,911		88,266		71,747		101,565
Diluted weighted average common shares		19,227,960		19,184,984		19,227,997		19,178,893
Diluted earnings per share	$	0.81	$	0.87	$	1.51	$	2.13

AMERISAFE, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

	June 30, 2017		December 31, 2016
	(unaudited)
Assets
Investments	$	1,120,630	$	1,084,474
Cash and cash equivalents .		53,967		58,936
Amounts recoverable from reinsurers		84,147		83,666
Premiums receivable, net		190,646		183,005
Deferred income taxes		31,943		33,811
Deferred policy acquisition costs		20,882		19,300
Other assets		57,272		55,664
	$	1,559,487	$	1,518,856
Liabilities and Shareholders’ Equity
Liabilities:
Reserves for loss and loss adjustment expenses	$	749,759	$	742,776
Unearned premiums		165,895		162,028
Insurance-related assessments .		31,801		31,742
Other liabilities		130,640		126,160
Shareholders’ equity		481,392		456,150
Total liabilities and shareholders’ equity .	$	1,559,487	$	1,518,856

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