AMERISAFE Announces 2024 Third Quarter Results

DERIDDER, La.--(BUSINESS WIRE)--AMERISAFE, Inc. (Nasdaq: AMSF), a specialty provider of workers' compensation insurance focused on high-hazard industries, today announced results for the third quarter ended September 30, 2024.

	Three Months Ended											Nine Months Ended
	September 30,											September 30,
		2024				2023			% Change				2024				2023			% Change
	(in thousands, except per share data)											(in thousands, except per share data)
Net premiums earned	$	67,050			$	66,634			0.6	%		$	204,129			$	201,413			1.3	%
Net investment income		7,485				8,105			-7.6	%			22,298				23,262			-4.1	%
Net realized gains (losses) on
investments (pre-tax)		158				5,133			-96.9	%			(181	)			5,466			NM
Net unrealized gains (losses) on
equity securities (pre-tax)		3,873				(7,309	)		NM				8,591				(3,892	)		NM
Net income		14,324				9,961			43.8	%			42,242				42,927			-1.6	%
Diluted earnings per share	$	0.75			$	0.52			44.2	%		$	2.21			$	2.23			-0.9	%
Operating net income		11,140				11,680			-4.6	%			35,598				41,684			-14.6	%
Operating earnings per share	$	0.58			$	0.61			-4.9	%		$	1.86			$	2.17			-14.3	%
Book value per share	$	16.50			$	17.51			-5.8	%		$	16.50			$	17.51			-5.8	%
Net combined ratio		90.9	%			90.6	%						89.6	%			86.1	%
Return on average equity		18.6	%			11.8	%						18.6	%			17.5	%

G. Janelle Frost, President and Chief Executive Officer, noted, "We are pleased with this quarter's performance. We maintained premium growth momentum and strong renewal retention despite a declining rate environment. Our long tenure in the high-hazard workers' compensation market enables AMERISAFE the ability to attract and retain quality business in the classes that we operate in, driving long-term shareholder value creation."

INSURANCE RESULTS

	Three Months Ended											Nine Months Ended
	September 30,											September 30,
		2024				2023			% Change				2024				2023			% Change
	(in thousands)											(in thousands)
Gross premiums written	$	74,940			$	70,840			5.8	%		$	231,442			$	225,031			2.8	%
Net premiums earned		67,050				66,634			0.6	%			204,129				201,413			1.3	%
Loss and loss adjustment expenses incurred		39,150				37,154			5.4	%			119,765				111,808			7.1	%
Underwriting and certain other operating
costs, commissions, salaries and benefits		21,252				22,371			-5.0	%			60,379				59,325			1.8	%
Policyholder dividends		513				804			-36.2	%			2,634				2,225			18.4	%
Underwriting profit (pre-tax)	$	6,135			$	6,305			-2.7	%		$	21,351			$	28,055			-23.9	%
Insurance Ratios:
Current accident year loss ratio		71.0	%			71.0	%						71.0	%			71.0	%
Prior accident year loss ratio		-12.6	%			-15.2	%						-12.3	%			-15.5	%
Net loss ratio		58.4	%			55.8	%						58.7	%			55.5	%
Net underwriting expense ratio		31.7	%			33.6	%						29.6	%			29.5	%
Net dividend ratio		0.8	%			1.2	%						1.3	%			1.1	%
Net combined ratio		90.9	%			90.6	%						89.6	%			86.1	%

• Voluntary premiums on policies written in the quarter were 8.8% higher than in the third quarter of 2023, primarily due to an increase in new business and strong retention.

• Payroll audits and related premium adjustments increased premiums written by $4.0 million in the third quarter of 2024 primarily due to continued payroll growth. In the third quarter of 2023 payroll audits were $5.6 million.
• The loss ratio for the third quarter was 58.4%, compared to 55.8% in the third quarter of 2023. During the quarter, the Company experienced favorable net loss reserve development for prior accident years, which reduced loss and loss adjustment expenses by $8.5 million, primarily from accident years 2019 through 2021.
• The net underwriting expense ratio was 31.7%, compared to 33.6% in the third quarter of 2023. The expense ratio reflects continued investment that has driven profitable growth.

• The effective tax rate for the quarter ended September 30, 2024, was 19.5%, which is in line for the quarter ended September 30, 2023.

INVESTMENT RESULTS

	Three Months Ended											Nine Months Ended
	September 30,											September 30,
		2024				2023			% Change				2024				2023			% Change
	(in thousands)											(in thousands)
Net investment income	$	7,485			$	8,105			-7.6	%		$	22,298			$	23,262			-4.1	%
Net realized gains (losses)
on investments (pre-tax)		158				5,133			-96.9	%			(181	)			5,466			NM
Net unrealized gains (losses) on
equity securities (pre-tax)		3,873				(7,309	)		NM				8,591				(3,892	)		NM
Pre-tax investment yield		3.4	%			3.4	%						3.3	%			3.3	%
Tax-equivalent yield (1)		3.8	%			3.8	%						3.8	%			3.8	%

(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 September 30, 2024, decreased 7.6% to $7.5 million due to the reduced portfolio size, partially offset by increased reinvestment rates as compared to portfolio rolloff.
• Net unrealized gains on equity securities were $3.9 million due to strong equity market returns compared to an unrealized loss of $7.3 million in the third quarter of 2023.
• As of September 30, 2024, the carrying value of AMERISAFE's investment portfolio, including cash and cash equivalents, was $899.2 million.

CAPITAL MANAGEMENT

On October 22, 2024, the Board of Directors of AMERISAFE declared a special cash dividend of $3.00 per share and a regular cash dividend of $0.37 per share, payable on December 13, 2024, to shareholders of record as of December 6, 2024.

During the third quarter of 2024, the Company repurchased 21,586 shares at an average cost (including commissions and excise tax) of $46.79 per share, for a total of $1.0 million. Since the inception of our initial share repurchase program in February 2010, we have repurchased 1,682,851 shares at an average cost of $24.99, for a total of $42.1 million. The remaining outstanding share repurchase authorization as of September 30, 2024 is $5.3 million.

Book value per share on September 30, 2024, was $16.50, an increase of 8.0% from $15.28 on December 31, 2023.

SUPPLEMENTAL INFORMATION

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
		2024				2023				2024				2023
	(in thousands, except share and per share data)
Net income	$	14,324			$	9,961			$	42,242			$	42,927
Less:
Net realized gains (losses) on investments		158				5,133				(181	)			5,466
Net unrealized gains (losses) on
equity securities (pre-tax)		3,873				(7,309	)			8,591				(3,892	)
Tax effect (1)		(847	)			457				(1,766	)			(331	)
Operating net income (2)	$	11,140			$	11,680			$	35,598			$	41,684
Average shareholders' equity (3)	$	307,682			$	338,225			$	303,411			$	326,658
Less:
Average accumulated other comprehensive
loss		(6,118	)			(16,232	)			(4,935	)			(17,096	)
Average adjusted shareholders' equity (2)	$	313,800			$	354,457			$	308,346			$	343,754
Diluted weighted average common shares		19,113,103				19,223,588				19,156,976				19,217,606
Return on average equity (4)		18.6	%			11.8	%			18.6	%			17.5	%
Operating return on average adjusted equity (2)		14.2	%			13.2	%			15.4	%			16.2	%
Diluted earnings per share	$	0.75			$	0.52			$	2.21			$	2.23
Operating earnings per share (2)	$	0.58			$	0.61			$	1.86			$	2.17

(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, average adjusted shareholders' equity, 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 for the applicable period.
(4)	Return on average equity is calculated by dividing the annualized net income by the average shareholders' equity.

NON-GAAP FINANCIAL MEASURES

This release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the U.S. Securities and Exchange Commission (the SEC) and includes a reconciliation of non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with GAAP in the Supplemental Information in this release.

Management believes that investors' understanding of core operating performance is enhanced by AMERISAFE's disclosure of these financial measures, which include operating net income, average adjusted shareholders' equity, operating return on average adjusted equity, and operating earnings per share.

CONFERENCE CALL INFORMATION

AMERISAFE has scheduled a conference call for October 24, 2024, at 10:30 a.m. Eastern Time to discuss the results for the quarter and comment on future periods. To participate in the conference call, dial 786-789-4797 (Conference Code 7683088) at least ten minutes before the call begins.

Investors, analysts, and the general public will also have the opportunity to listen to the conference call over the Internet by visiting the "Investor Relations Home" page of the "Investors" section of the Company's website (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 the same website location.

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, agriculture, and manufacturing. 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 on the business and operations of the Company and our policyholders and the market value of our investment portfolio. Additional factors that may affect our results are set forth in the Company's filings with the Securities and Exchange Commission, including AMERISAFE's Annual Report on Form 10-K. 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.

AMERISAFE, INC. AND SUBSIDIARIES Consolidated Statements of Income (in thousands, except per share amounts)
	Three Months Ended								Nine Months Ended
	September 30,								September 30,
		2024				2023				2024				2023
	(unaudited)								(unaudited)
Revenues:
Gross premiums written	$	74,940			$	70,840			$	231,442			$	225,031
Ceded premiums written		(3,951	)			(4,112	)			(11,904	)			(12,256	)
Net premiums written	$	70,989			$	66,728			$	219,538			$	212,775
Net premiums earned	$	67,050			$	66,634			$	204,129			$	201,413
Net investment income		7,485				8,105				22,298				23,262
Net realized gains (losses) on investments		158				5,133				(181	)			5,466
Net unrealized gains (losses) on
equity securities		3,873				(7,309	)			8,382				(3,894	)
Fee and other income		129				77				386				490
Total revenues		78,695				72,640				235,014				226,737
Expenses:
Loss and loss adjustment expenses incurred		39,150				37,154				119,765				111,808
Underwriting and other operating costs		21,252				22,371				60,379				59,325
Policyholder dividends		513				804				2,634				2,225
Provision for investment related credit
loss benefit		(13	)			(16	)			(46	)			(51	)
Total expenses		60,902				60,313				182,732				173,307
Income before taxes		17,793				12,327				52,282				53,430
Income tax expense		3,469				2,366				10,040				10,503
Net income	$	14,324			$	9,961			$	42,242			$	42,927
Basic EPS:
Net income	$	14,324			$	9,961			$	42,242			$	42,927
Basic weighted average common shares		19,042,152				19,164,854				19,082,374				19,145,432
Basic earnings per share	$	0.75			$	0.52			$	2.21			$	2.24
Diluted EPS:
Net income	$	14,324			$	9,961			$	42,242			$	42,927
Diluted weighted average common shares:
Weighted average common shares		19,042,152				19,164,854				19,082,374				19,145,432
Restricted stock and RSUs		70,951				58,734				74,602				72,174
Diluted weighted average common shares		19,113,103				19,223,588				19,156,976				19,217,606
Diluted earnings per share	$	0.75			$	0.52			$	2.21			$	2.23

AMERISAFE, INC. AND SUBSIDIARIES Consolidated Balance Sheets (in thousands)
	September 30,				December 31,
		2024				2023
	(unaudited)
Assets
Investments	$	835,532			$	857,786
Cash and cash equivalents		63,663				38,682
Amounts recoverable from reinsurers		128,963				129,963
Premiums receivable, net		152,945				132,861
Deferred income taxes		19,499				20,403
Deferred policy acquisition costs		20,148				17,975
Other assets		33,977				31,492
	$	1,254,727			$	1,229,162
Liabilities and Shareholders' Equity
Liabilities:
Reserves for loss and loss adjustment expenses	$	663,486			$	673,994
Unearned premiums		131,994				116,585
Insurance-related assessments		16,841				16,896
Other liabilities		128,035				129,236
Shareholders' equity		314,371				292,451
Total liabilities and shareholders' equity	$	1,254,727			$	1,229,162

Contacts

Andy Omiridis, EVP & CFO
AMERISAFE
337.463.9052