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): August 1, 2018

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 (§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 August 1, 2018, AMERISAFE, Inc. (the “Company”) issued a press release announcing its financial results for the first quarter ended June 30, 2018. 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 August 1, 2018

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: August 1, 2018

EX-99.1

Exhibit 99.1

  Neal A. Fuller, EVP & CFO AMERISAFE 337.463.9052

AMERISAFE ANNOUNCES 2018 SECOND QUARTER RESULTS

Reports Combined Ratio of 83.6%

DeRidder, LA – August 1, 2018—AMERISAFE, Inc. (Nasdaq: AMSF), a specialty provider of hazardous workers’ compensation insurance, today announced results for the second quarter ended June 30, 2018.

	Three Months Ended									Six Months Ended
	June 30,									June 30,
	2018			2017			% Change			2018			2017			% Change
	(in thousands, except per share data)									(in thousands, except per share data)
Net premiums earned	$	88,995		$	82,749			7.5	%	$	176,305		$	173,661			1.5	%
Net investment income		7,303			7,471			-2.2	%		14,512			14,181			2.3	%
Net realized losses on investments, pretax		(1,111	)		(388	)		NM			(1,142	)		(569	)		NM
Net income		16,956			15,481			9.5	%		33,125			29,005			14.2	%
Diluted earnings per share	$	0.88		$	0.81			8.6	%	$	1.72		$	1.51			13.9	%
Operating net income		17,774			15,733			13.0	%		34,275			29,375			16.7	%
Operating earnings per share	$	0.92		$	0.82			12.2	%	$	1.78		$	1.53			16.3	%
Book value per share	$	23.11		$	25.02			-7.6	%	$	23.11		$	25.02			-7.6	%
Net combined ratio		83.6	%		81.9	%					84.7	%		84.4	%
Return on average equity		15.5	%		13.1	%					15.2	%		12.4	%

G. Janelle Frost, President and Chief Executive Officer, commented, “Encouraged by reporting of the third straight year of underwriting profitability for the industry, competition in the workers’ compensation market remained aggressive in the second quarter. However, AMERISAFE’s niche focus provided some protection, and we responded to market conditions with a slight decrease in pricing. Our responsiveness resulted in record policy retention, which aided in offsetting premium decreases from loss costs declines. In addition, strong payroll audits and favorable case reserve development were essential to underwriting profitability, which resulted in an 83.6% combined ratio for the quarter.”

INSURANCE RESULTS

	Three Months Ended									Six Months Ended
	June 30,									June 30,
	2018			2017			% Change			2018			2017			% Change
	(in thousands)									(in thousands)
Gross premiums written	$	93,702		$	87,039			7.7	%	$	191,044		$	182,117			4.9	%
Net premiums earned		88,995			82,749			7.5	%		176,305			173,661			1.5	%
Loss and loss adjustment expenses incurred		52,076			46,428			12.2	%		105,238			102,644			2.5	%
Underwriting and certain other operating costs, commissions, salaries and benefits		21,282			20,183			5.4	%		41,548			41,405			0.3	%
Policyholder dividends		1,092			1,163			-6.1	%		2,425			2,534			-4.3	%
Underwriting profit (pre-tax)	$	14,545		$	14,975			-2.9	%	$	27,094		$	27,078			0.1	%
Insurance Ratios:
Current accident year loss ratio		71.5	%		69.0	%					71.5	%		69.0	%
Prior accident year loss ratio		-13.0	%		-12.9	%					-11.8	%		-9.9	%
Net loss ratio		58.5	%		56.1	%					59.7	%		59.1	%
Net underwriting expense ratio		23.9	%		24.4	%					23.6	%		23.8	%
Net dividend ratio		1.2	%		1.4	%					1.4	%		1.5	%
Net combined ratio		83.6	%		81.9	%					84.7	%		84.4	%

• Gross premiums written in the quarter increased by $6.7 million, or 7.7%, due to higher payroll audits and related premium adjustments offset by lower voluntary premiums written.

• Voluntary premium for policies written during the quarter ended June 30, 2018 decreased by $0.4 million, or 0.5%, compared with the second quarter of 2017.

• Payroll audits and related premium adjustments increased premiums written by $3.8 million in the second quarter of 2018, compared to a decrease in premiums written of $2.6 million in the second quarter of 2017. These adjustments led to the 7.7% increase in gross premiums written in the quarter.

• The current accident year loss ratio for the second quarter was 71.5%, unchanged from the first quarter of 2018, and an increase of 1.0 percentage point from the 70.5% ratio for the full year 2017. During the quarter, the Company experienced favorable loss development for prior accident years, which reduced loss and loss adjustment expenses by $11.6 million, attributable to accident years 2016, 2015, 2013 and 2012 and prior. These results largely reflect favorable case reserve development on claims during the quarter.

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• For the quarter ended June 30, 2018, the underwriting expense ratio was 23.9% compared with 24.4% in the same quarter in 2017. The decrease in the ratio in the quarter was due to higher net earned premiums compared with last year’s second quarter. Underwriting and other expenses were $1.1 million higher in the second quarter of 2018 compared to 2017, largely due to higher commission expense and premium taxes.

• The effective tax rate for the quarter ended June 30, 2018 was 19.0% compared with 30.1% for the second quarter of 2017. The decrease is largely due to the new federal corporate tax rate of 21% on underwriting profits and taxable bond income.

INVESTMENT RESULTS

	Three Months Ended									Six Months Ended
	June 30,									June 30,
	2018			2017			% Change			2018			2017			% Change
	(in thousands)									(in thousands)
Net investment income	$	7,303		$	7,471			-2.2	%	$	14,512		$	14,181			2.3	%
Net realized losses on investments (pre-tax)		(1,111	)		(388	)		NM			(1,142	)		(569	)		NM
Net unrealized gains (losses) on equity securities (pre-tax)		76			—			NM			(314	)		—			NM
Pre-tax investment yield		2.5	%		2.6	%					2.4	%		2.4	%
Tax-equivalent yield (1)		2.9	%		3.3	%					2.9	%		3.3	%

(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, 2018, decreased 2.2% to $7.3 million from $7.5 million in the second quarter of 2017, largely due to the increase in value of an investment in a limited partnership hedge fund in last year’s second quarter.

• As of June 30, 2018, the carrying value of AMERISAFE’s investment portfolio, including cash and cash equivalents, was $1.2 billion.

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CAPITAL MANAGEMENT

The Company paid a regular quarterly cash dividend of $0.22 per share on June 22, 2018. On July 31, 2018, the Company’s Board of Directors declared a quarterly cash dividend of $0.22 per share, payable on September 21, 2018 to shareholders of record as of September 7, 2018.

Book value per share at June 30, 2018 was $23.11, an increase of 4.6% from $22.10 at December 31, 2017.

SUPPLEMENTAL INFORMATION

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
	(in thousands, except share and per share data)
Net income	$	16,956		$	15,481		$	33,125		$	29,005
Less:
Net realized losses on investments		(1,111	)		(388	)		(1,142	)		(569	)
Net unrealized gains (losses) on equity securities		76			—			(314	)		—
Tax effect (1)		217			136			306			199
Operating net income (2)	$	17,774		$	15,733		$	34,275		$	29,375
Average shareholders’ equity (3)	$	438,730		$	474,247		$	435,407		$	468,771
Less:
Avg. accumulated other comprehensive income (loss)		(2,160	)		1,438			765			962
Average adjusted shareholders’ equity	$	440,890		$	472,809		$	434,642		$	467,809
Diluted weighted average common shares		19,266,735			19,227,960			19,275,883			19,227,997
Return on average equity (4)		15.5	%		13.1	%		15.2	%		12.4	%
Operating return on average adjusted equity (2)		16.1	%		13.3	%		15.8	%		12.6	%
Diluted earnings per share	$	0.88		$	0.81		$	1.72		$	1.51
Operating earnings per share (2)	$	0.92		$	0.82		$	1.78		$	1.53

(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% for 2018 and 35% for 2017.

(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.

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(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 August 2, 2018, 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 10, 2018. To access the replay, dial 855-859-2056 or 404-537-3406 and use the pass code 5490189#.

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, 2017. 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,
	2018			2017			2018			2017
	(unaudited)						(unaudited)
Revenues:
Gross premiums written	$	93,702		$	87,039		$	191,044		$	182,117
Ceded premiums written		(2,369	)		(2,198	)		(4,699	)		(4,589	)
Net premiums written	$	91,333		$	84,841		$	186,345		$	177,528
Net premiums earned	$	88,995		$	82,749		$	176,305		$	173,661
Net investment income		7,303			7,471			14,512			14,181
Net realized losses on investments		(1,111	)		(388	)		(1,142	)		(569	)
Net unrealized gains (losses) on equity securities		76			—			(314	)		—
Fee and other income		117			93			194			194
Total revenues		95,380			89,925			189,555			187,467
Expenses:
Loss and loss adjustment expenses incurred		52,076			46,428			105,238			102,644
Underwriting and other operating costs		21,282			20,183			41,548			41,405
Policyholder dividends		1,092			1,163			2,425			2,534
Total expenses		74,450			67,774			149,211			146,583
Income before taxes		20,930			22,151			40,344			40,884
Income tax expense		3,974			6,670			7,219			11,879
Net income	$	16,956		$	15,481		$	33,125		$	29,005

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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,
	2018		2017		2018		2017
	(unaudited)				(unaudited)
Basic EPS:
Net income	$	16,956	$	15,481	$	33,125	$	29,005
Basic weighted average common shares		19,208,601		19,162,049		19,197,925		19,156,250
Basic earnings per share	$	0.88	$	0.81	$	1.73	$	1.51
Diluted EPS:
Net income	$	16,956	$	15,481	$	33,125	$	29,005
Diluted weighted average common shares:
Weighted average common shares		19,208,601		19,162,049		19,197,925		19,156,250
Stock options and restricted stock		58,134		65,911		77,958		71,747
Diluted weighted average common shares		19,266,735		19,227,960		19,275,883		19,227,997
Diluted earnings per share	$	0.88	$	0.81	$	1.72	$	1.51

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AMERISAFE, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

	June 30,		December 31,
	2018		2017
	(unaudited)
Assets
Investments	$	1,167,040	$	1,130,314
Cash and cash equivalents		21,176		55,559
Amounts recoverable from reinsurers		98,961		90,133
Premiums receivable, net		189,892		174,234
Deferred income taxes		19,891		19,262
Deferred policy acquisition costs		21,601		20,251
Other assets		35,720		28,483
	$	1,554,281	$	1,518,236
Liabilities and Shareholders’ Equity
Liabilities:
Reserves for loss and loss adjustment expenses	$	783,601	$	771,845
Unearned premiums		167,310		157,270
Insurance-related assessments		30,070		28,246
Other liabilities		127,909		135,452
Shareholders’ equity		445,391		425,423
Total liabilities and shareholders’ equity	$	1,554,281	$	1,518,236

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