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): May 1, 2019

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 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.  ☐

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	AMSF	Nasdaq Stock Market LLC

Item 2.02. Results of Operations and Financial Condition.

On May 1, 2019, AMERISAFE, Inc. (the “Company”) issued a press release announcing its financial results for the first quarter ending March 31, 2019. 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 May 1, 2019 (Financial Results)

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: May 1, 2019

EX-99.1

Exhibit 99.1

  Neal A. Fuller, EVP & CFO AMERISAFE 337.463.9052

AMERISAFE ANNOUNCES 2019 FIRST QUARTER RESULTS

Reports Combined Ratio of 84.0%

DeRidder, LA – May 1, 2019 - AMERISAFE, Inc. (Nasdaq: AMSF), a specialty provider of workers’ compensation insurance focused on high hazard industries, today announced results for the first quarter ended March 31, 2019.

	Three Months Ended
	March 31,
	2019			2018			% Change
	(in thousands, except per share data)
Net premiums earned	$	84,948		$	87,310			-2.7	%
Net investment income		8,015			7,209			11.2	%
Net realized gains (losses) on investments, pretax		59			(31	)		NM
Net income		19,400			16,169			20.0	%
Diluted earnings per share	$	1.01		$	0.84			20.2	%
Operating net income		17,649			16,502			7.0	%
Operating earnings per share	$	0.91		$	0.86			5.8	%
Book value per share	$	22.33		$	22.43			-0.4	%
Net combined ratio		84.0	%		85.6	%
Return on average equity		18.5	%		15.1	%

G. Janelle Frost, President and Chief Executive Officer, said, “We are pleased with the first quarter results. A return on equity of 18.5% and a combined ratio of 84.0% resulted from AMERISAFE’s methodical approach to a prolonged soft cycle in workers’ compensation insurance. Continued declines in underlying loss costs kept insurers highly competitive, while payroll growth benefited revenue in the quarter.”

INSURANCE RESULTS

	Three Months Ended
	March 31,
	2019			2018			% Change
	(in thousands)
Gross premiums written	$	93,107		$	97,342			-4.4	%
Net premiums earned		84,948			87,310			-2.7	%
Loss and loss adjustment expenses incurred		49,614			53,162			-6.7	%
Underwriting and certain other operating costs, commissions, salaries and benefits		20,667			20,266			2.0	%
Policyholder dividends		1,100			1,333			-17.5	%
Underwriting profit (pre-tax)	$	13,567		$	12,549			8.1	%
Insurance Ratios:
Current accident year loss ratio		72.5	%		71.5	%
Prior accident year loss ratio		-14.1	%		-10.6	%
Net loss ratio		58.4	%		60.9	%
Net underwriting expense ratio		24.3	%		23.2	%
Net dividend ratio		1.3	%		1.5	%
Net combined ratio		84.0	%		85.6	%

• Gross premiums written in the first quarter of 2019 decreased by $4.2 million, or 4.4%, compared with the first quarter of 2018, driven by voluntary premiums which were 5.7% lower than the first quarter of 2018.

• Payroll audits and related premium adjustments increased premiums written by $4.5 million in the first quarter of 2019, compared to an increase in premiums written of $3.3 million in the first quarter of 2018.

• The current accident year loss ratio for the first quarter was 72.5%, an increase of 1.0 percentage point from the 71.5% ratio for accident year 2018. During the quarter, the Company experienced favorable net loss development for prior accident years, which reduced loss and loss adjustment expenses by $12.0 million, attributable primarily to accident years 2016, 2015, 2014 and 2012.

• For the quarter ended March 31, 2019, the underwriting expense ratio was 24.3% compared with 23.2% in the same quarter in 2018. The increase in the ratio was primarily due to a decrease in net earned premium and due to higher estimates of variable share price based incentive compensation costs compared with the first quarter of 2018.

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• The effective tax rate for the quarter ended March 31, 2019 was 18.5% compared with 16.7% for the first quarter of 2018. The increase is largely due to a higher proportion of underwriting income relative to municipal bond investment income compared with last year’s first quarter.

INVESTMENT RESULTS

	Three Months Ended
	March 31,
	2019			2018			% Change
	(in thousands)
Net investment income	$	8,015		$	7,209			11.2	%
Net realized gains (losses) on investments (pre-tax)		59			(31	)		NM
Net unrealized gains (losses) on equity securities (pre-tax)		2,158			(390	)		NM
Pre-tax investment yield		2.7	%		2.4	%
Tax-equivalent yield (1)		3.1	%		2.9	%

(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 March 31, 2019, increased 11.2% to $8.0 million from $7.2 million in the first quarter of 2018, due to higher investment yields on fixed-income securities.

• Net unrealized gains on equity investments were $2.2 million for the first quarter of 2019, which increased overall net income by $0.09 per share.

• As of March 31, 2019, the carrying value of AMERISAFE’s investment portfolio, including cash and cash equivalents, was $1.2 billion.

CAPITAL MANAGEMENT

During the first quarter of 2019, the company paid a regular quarterly cash dividend of $0.25 per share on March 22, 2019 which represented a 14% increase in the quarterly dividend compared with 2018. On April 29, 2019 the Company’s Board of Directors declared a quarterly cash dividend of $0.25 per share, payable on June 21, 2019 to shareholders of record as of June 7, 2019.

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Book value per share at March 31, 2019 was $22.33, an increase of 5.0% from $21.26 at December 31, 2018.

SUPPLEMENTAL INFORMATION

	Three Months Ended
	March 31,
	2019			2018
Net income	$	19,400		$	16,169
Less:
Net realized gains (losses) on investments		59			(31	)
Net unrealized gains (losses) on equity securities		2,158			(390	)
Tax effect (1)		(466	)		88
Operating net income (2)	$	17,649		$	16,502
Average shareholders’ equity (3)	$	420,084		$	428,746
Less:
Average accumulated other comprehensive income		2,065			688
Average adjusted shareholders’ equity	$	418,019		$	428,058
Diluted weighted average common shares		19,298,036			19,262,237
Return on average equity (4)		18.5	%		15.1	%
Operating return on average adjusted equity (2)		16.9	%		15.4	%
Diluted earnings per share	$	1.01		$	0.84
Operating earnings per share (2)	$	0.91		$	0.86

(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, 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.

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CONFERENCE CALL INFORMATION

AMERISAFE has scheduled a conference call for May 2, 2019, at 10:30 a.m. Eastern Time to discuss the results for the quarter. 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 May 10, 2019. To access the replay, dial 855-859-2056 or 404-537-3406 and use the pass code 3471578#.

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, 2018. 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 March 31,
	2019			2018
	(unaudited)
Revenues:
Gross premiums written	$	93,107		$	97,342
Ceded premiums written		(2,430	)		(2,330	)
Net premiums written	$	90,677		$	95,012
Net premiums earned	$	84,948		$	87,310
Net investment income		8,015			7,209
Net realized gains (losses) on investments		59			(31	)
Net unrealized gains (losses) on equity securities		2,158			(390	)
Fee and other income		10			77
Total revenues		95,190			94,175
Expenses:
Loss and loss adjustment expenses incurred		49,614			53,162
Underwriting and other operating costs		20,667			20,266
Policyholder dividends		1,100			1,333
Total expenses		71,381			74,761
Income before taxes		23,809			19,414
Income tax expense		4,409			3,245
Net income	$	19,400		$	16,169

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AMERISAFE, INC. AND SUBSIDIARIES

Consolidated Statements of Income (cont.)

(in thousands, except per share amounts)

	Three Months Ended March 31,
	2019		2018
	(unaudited)
Basic EPS:
Net income	$	19,400	$	16,169
Basic weighted average common shares		19,229,134		19,187,136
Basic earnings per share	$	1.01	$	0.84
Diluted EPS:
Net income	$	19,400	$	16,169
Diluted weighted average common shares:
Weighted average common shares		19,229,134		19,187,136
Stock options and restricted stock		68,902		75,101
Diluted weighted average common shares		19,298,036		19,262,237
Diluted earnings per share	$	1.01	$	0.84

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AMERISAFE, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands)

	March 31, 2019		December 31, 2018
	(unaudited)
Assets
Investments	$	1,161,633	$	1,125,490
Cash and cash equivalents		34,895		40,344
Amounts recoverable from reinsurers		111,182		112,006
Premiums receivable, net		174,310		162,478
Deferred income taxes		20,057		21,852
Deferred policy acquisition costs		20,433		19,734
Other assets		36,472		34,027
	$	1,558,982	$	1,515,931
Liabilities and Shareholders’ Equity
Liabilities:
Reserves for loss and loss adjustment expenses	$	800,580	$	798,409
Unearned premiums		155,026		149,296
Insurance-related assessments		28,802		28,258
Other liabilities		144,169		130,206
Shareholders’ equity		430,405		409,762
Total liabilities and shareholders’ equity	$	1,558,982	$	1,515,931

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