Declares an Extraordinary Dividend of $3.50 per share

DERIDDER, La., Oct. 25, 2017 (GLOBE NEWSWIRE) -- AMERISAFE, Inc. (Nasdaq:AMSF), a specialty provider of hazardous workers’ compensation insurance, today announced results for the third quarter ended September 30, 2017.

	Three Months Ended									Nine Months Ended
	September 30,									September 30,
		2017			2016		% Change				2017			2016		% Change
	(in thousands, except per share data)									(in thousands, except per share data)
Net premiums earned	$	85,118		$	89,918		-5.3	%		$	258,779		$	276,607		-6.4	%
Net investment income		7,788			8,006		-2.7	%			21,969			20,251		8.5	%
Net realized gains (losses) on
investments (pre-tax)		(192	)		181		NM				(761	)		974		NM
Net income		16,577			17,896		-7.4	%			45,582			58,792		-22.5	%
Diluted earnings per share	$	0.86		$	0.93		-7.5	%		$	2.37		$	3.06		-22.5	%
Operating net income		16,702			17,778		-6.1	%			46,077			58,159		-20.8	%
Operating earnings per share	$	0.87		$	0.93		-6.5	%		$	2.40		$	3.03		-20.8	%
Book value per share	$	25.72		$	26.51		-3.0	%		$	25.72		$	26.51		-3.0	%
Net combined ratio		81.4	%		80.3	%					83.5	%		77.0	%
Return on average equity		13.6	%		14.2	%					12.8	%		16.3	%

G. Janelle Frost, President and Chief Executive Officer, said, “Capital strength and continued profitable underwriting led to this quarter’s declaration of an extraordinary dividend.  AMERISAFE is well positioned for the future and remains committed to the underwriting discipline and claims management that provides protection to our policyholders and returns to our shareholders.”

Insurance Results

	Three Months Ended										Nine Months Ended
	September 30,										September 30,
		2017				2016		% Change				2017				2016		% Change
	(in thousands)										(in thousands)
Gross premiums written	$	87,035			$	88,837		-2.0	%		$	269,152			$	292,443		-8.0	%
Net premiums earned		85,118				89,918		-5.3	%			258,779				276,607		-6.4	%
Loss and loss adjustment expenses incurred		48,394				50,526		-4.2	%			151,038				146,413		3.2	%
Underwriting and certain other operating costs,
commissions, salaries and benefits		19,281				20,764		-7.1	%			60,686				63,459		-4.4	%
Policyholder dividends		1,573				889		76.9	%			4,107				3,195		28.5	%
Underwriting profit (pre-tax)	$	15,870			$	17,739		-10.5	%		$	42,948			$	63,540		-32.4	%
Insurance Ratios:
Current accident year loss ratio		69.0	%			67.9	%					69.0	%			67.9	%
Prior accident year loss ratio		-12.1	%			-11.7	%					-10.6	%			-15.0	%
Net loss ratio		56.9	%			56.2	%					58.4	%			52.9	%
Net underwriting expense ratio		22.7	%			23.1	%					23.5	%			22.9	%
Net dividend ratio		1.8	%			1.0	%					1.6	%			1.2	%
Net combined ratio		81.4	%			80.3	%					83.5	%			77.0	%

• Gross premiums written in the quarter decreased by $1.8 million, or 2.0%, primarily due to lower voluntary premiums written.  Voluntary premium for policies written during the quarter ended September 30, 2017 declined by 1.9% compared with the third quarter of 2016.

• Payroll audits and related premium adjustments decreased premiums written by $1.1 million in the third quarter of 2017, compared to a decrease of $1.2 million in the third quarter of 2016.

• The current accident year loss ratio for the third 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 $10.3 million, primarily attributable to accident years 2015, 2014 and 2013.  The favorable reserve development reflects improved trends for closing claims and by favorable case reserve development on claims during the quarter.

• For the quarter ended September 30, 2017, the underwriting expense ratio was 22.7% compared to 23.1% in the same quarter in 2016.  The decrease in the quarter was due to lower assessments and commission expense compared with last year’s third quarter. 

• The effective tax rate for the quarter ended September 30, 2017 was 29.6% compared with 31.2% for the third quarter of 2016.  The decrease in the tax rate resulted from a higher proportion of tax-exempt income to underwriting income relative to the third quarter of 2016.

Investment Results

	Three Months Ended									Nine Months Ended
	September 30,									September 30,
		2017			2016		% Change				2017			2016		% Change
	(in thousands)									(in thousands)
Net investment income	$	7,788		$	8,006		-2.7	%		$	21,969		$	20,251		8.5	%
Net realized gains (losses) on
investments (pre-tax)		(192	)		181		NM				(761	)		974		NM
Pre-tax investment yield		2.6	%		2.7	%					2.5	%		2.4	%
Tax-equivalent yield (1)		3.2	%		3.2	%					3.2	%		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 September 30, 2017, decreased 2.7% to $7.8 million from $8.0 million in the third quarter of 2016.  In last year’s third quarter, there was a significant gain in value of an investment in a limited partnership hedge fund.  The change in value of this investment is recorded in investment income each quarter. 
• As of September 30, 2017, the carrying value of AMERISAFE’s investment portfolio, including cash and cash equivalents, was $1.2 billion.  

Capital Management and Extraordinary Dividend

The company paid a regular quarterly cash dividend of $0.20 per share on September 22, 2017.  On October 23, 2017 the Company’s Board of Directors declared a quarterly cash dividend of $0.20 per share, payable on December 28, 2017 to shareholders of record as of December 14, 2017.

In addition, on October 23, 2017 the Company’s Board of Directors declared an extraordinary dividend of $3.50 per share, payable on December 28, 2017 to shareholders of record as of December 14, 2017.

Book value per share at September 30, 2017 was $25.72, an increase of 8.4% 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							Nine Months Ended
	September 30,							September 30,
		2017				2016			2017				2016
	(in thousands, except share and per share data)
Net income	$	16,577			$	17,896		$	45,582			$	58,792
Less: Net realized gains (losses) on investments		(192	)			181			(761	)			974
Tax effect (1)		67				(63	)		266				(341	)
Operating net income (2)	$	16,702			$	17,778		$	46,077			$	58,159
Average shareholders’ equity (3)	$	488,169			$	502,845		$	475,548			$	481,862
Less: Average accumulated other comprehensive income		2,725				7,453			1,271				4,592
Average adjusted shareholders’ equity	$	485,444			$	495,392		$	474,277			$	477,270
Diluted weighted average common shares		19,236,114				19,190,191			19,235,955				19,186,398
Return on average equity (4)		13.6	%			14.2	%		12.8	%			16.3	%
Operating return on average adjusted equity (2)		13.8	%			14.4	%		13.0	%			16.2	%
Diluted earnings per share	$	0.86			$	0.93		$	2.37			$	3.06
Operating earnings per share (2)	$	0.87			$	0.93		$	2.40			$	3.03
________________________________

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

(2) Operating net income, operating earnings per share, and operating return on average adjusted equity 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 October 26, 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 November 3, 2017.  To access the replay, dial 855-859-2056 or 404-537-3406 and use the pass code 88043900#.

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							Nine Months Ended
	September 30,							September 30,
		2017				2016				2017				2016
	(unaudited)							(unaudited)
Revenues:
Gross premiums written	$	87,035			$	88,837			$	269,152			$	292,443
Ceded premiums written		(1,992	)			(2,945	)			(6,581	)			(8,046	)
Net premiums written	$	85,043			$	85,892			$	262,571			$	284,397
Net premiums earned	$	85,118			$	89,918			$	258,779			$	276,607
Net investment income		7,788				8,006				21,969				20,251
Net realized gains (losses) on investments		(192	)			181				(761	)			974
Fee and other income		90				101				284				272
Total revenues		92,804				98,206				280,271				298,104
Expenses:
Loss and loss adjustment expenses incurred		48,394				50,526				151,038				146,413
Underwriting and other operating costs		19,281				20,764				60,686				63,459
Policyholder dividends		1,573				889				4,107				3,195
Total expenses		69,248				72,179				215,831				213,067
Income before taxes		23,556				26,027				64,440				85,037
Income tax expense		6,979				8,131				18,858				26,245
Net income	$	16,577			$	17,896			$	45,582			$	58,792
AMERISAFE, INC. AND SUBSIDIARIES Consolidated Statements of Income (cont.) (in thousands, except share and per share data)
	Three Months Ended							Nine Months Ended
	September 30,							September 30,
		2017				2016				2017				2016
	(unaudited)							(unaudited)
Basic EPS:
Net income	$	16,577			$	17,896			$	45,582			$	58,792
Basic weighted average common shares		19,171,912				19,121,947				19,161,529				19,092,298
Basic earnings per share	$	0.86			$	0.94			$	2.38			$	3.08
Diluted EPS:
Net income	$	16,577			$	17,896			$	45,582			$	58,792
Diluted weighted average common shares:
Weighted average common shares		19,171,912				19,121,947				19,161,529				19,092,298
Stock options and performance shares		64,202				68,244				74,426				94,100
Diluted weighted average common shares		19,236,114				19,190,191				19,235,955				19,186,398
Diluted earnings per share	$	0.86			$	0.93			$	2.37			$	3.06

 

AMERISAFE, INC. AND SUBSIDIARIES Consolidated Balance Sheets (in thousands)
	September 30,		December 31,
		2017			2016
	(unaudited)
Assets
Investments	$	1,144,521		$	1,084,474
Cash and cash equivalents		80,378			58,936
Amounts recoverable from reinsurers		84,958			83,666
Premiums receivable, net		185,497			183,005
Deferred income taxes		31,572			33,811
Deferred policy acquisition costs		20,906			19,300
Other assets		35,416			55,664
	$	1,583,248		$	1,518,856
Liabilities and Shareholders’ Equity
Liabilities:
Reserves for loss and loss adjustment expenses	$	755,026		$	742,776
Unearned premiums		165,820			162,028
Insurance-related assessments		30,293			31,742
Other liabilities		137,164			126,160
Shareholders’ equity		494,945			456,150
Total liabilities and shareholders’ equity	$	1,583,248		$	1,518,856

 

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

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