AMERISAFE Announces 2010 Fourth Quarter and Year-End Results
DERIDDER, La., March 3, 2011 /PRNewswire/ -- AMERISAFE, Inc. (Nasdaq: AMSF), a specialty provider of hazardous workers' compensation insurance, today announced results for the fourth quarter ended December 31, 2010.
Three Months Ended December 31, |
Twelve Months Ended December 31, |
||||||
2010 |
2009 |
% Change |
2010 |
2009 |
% Change |
||
(in thousands, except per share data) |
|||||||
Net premiums earned |
$56,429 |
$56,970 |
(1.0)% |
$218,881 |
$ 250,896 |
(12.8)% |
|
Net investment income |
6,458 |
6,783 |
(4.8)% |
26,242 |
28,014 |
(6.3)% |
|
Net realized gains on investments (pre-tax) |
165 |
34 |
385.3% |
2,449 |
2,033 |
20.5% |
|
Net income |
7,294 |
6,597 |
10.6% |
33,353 |
46,431 |
(28.2)% |
|
Diluted earnings per share |
$ 0.39 |
$ 0.28 |
39.3% |
$ 1.75 |
$ 2.22 |
(21.2)% |
|
Book value per share |
$17.72 |
$ 16.00 |
10.8% |
$ 17.72 |
$ 16.00 |
10.8% |
|
Net combined ratio |
92.6% |
96.7% |
93.3% |
86.9% |
|||
Return on average equity |
9.1% |
8.5% |
10.6% |
16.0% |
|||
Commenting on these results, AMERISAFE Chairman and Chief Executive Officer Allen Bradley stated, "In the fourth quarter, our gross premiums written showed a year-over-year increase for the first time since 2008. In addition, pricing improved slightly from the third quarter. However, the industry environment remains challenging, with robust price competition fueled by excess capacity and muted demand."
Insurance Results |
|||||||
Three Months Ended December 31, |
Twelve Months Ended December 31, |
||||||
2010 |
2009 |
% Change |
2010 |
2009 |
% Change |
||
(in thousands) |
|||||||
Gross premiums written |
$52,143 |
$ 49,369 |
5.6% |
$ 228,424 |
$ 256,454 |
(10.9)% |
|
Net premiums earned |
56,429 |
56,970 |
(1.0)% |
218,881 |
250,896 |
(12.8)% |
|
Loss and loss adjustment expenses incurred |
39,390 |
42,669 |
(7.7)% |
157,388 |
163,316 |
(3.6)% |
|
Underwriting and certain other operating costs, commissions and salaries and benefits |
12,758 |
12,179 |
4.8% |
45,959 |
53,957 |
(14.8)% |
|
Policyholder dividends |
108 |
247 |
(56.3)% |
834 |
770 |
8.3% |
|
Underwriting profit (pre-tax) |
4,173 |
1,875 |
122.6% |
14,700 |
32,853 |
(55.3)% |
|
Insurance Ratios: |
|||||||
Current accident year loss ratio |
83.5% |
90.2% |
81.8% |
73.8% |
|||
Prior accident year loss ratio |
(13.7)% |
(15.3)% |
(9.9)% |
(8.7)% |
|||
Net loss ratio |
69.8% |
74.9% |
71.9% |
65.1% |
|||
Net underwriting expense ratio |
22.6% |
21.4% |
21.0% |
21.5% |
|||
Net dividend ratio |
0.2% |
0.4% |
0.4% |
0.3% |
|||
Net combined ratio |
92.6% |
96.7% |
93.3% |
86.9% |
|||
- Gross premiums written increased for the quarter in comparison to the same period in the previous year. This growth was driven by less negative payroll audits and related premium adjustments for policies written in previous periods. These adjustments reduced premiums written $2.5 million in the fourth quarter of 2010 compared to a reduction of $8.2 million in the fourth quarter of 2009.
- In the fourth quarter, the Company increased the current accident year loss ratio for 2010 from 81.2% to 81.8%. Claims frequency increased in 2010. Severity was lower compared to 2009, but considerably higher than in years prior to 2009. During the quarter the Company experienced favorable case development for prior accident years, which reduced loss and loss adjustment expenses by $7.7 million. Accident years 2006, 2007 and 2008 were the primary contributors to the favorable development.
- The underwriting expense ratio continued to be competitive in the fourth quarter. In the quarter, the Company updated forfeiture assumptions for certain stock options granted in November 2005, resulting in additional non-cash compensation expense of $1.2 million. Offsetting this expense were lower fixed costs.
Geoff Banta, President and Chief Operating Officer, noted, "After seven straight quarters of premium declines, we were pleased to see a 5.6% increase in fourth quarter premium, especially given the fact that we had begun increasing our pricing late in the third quarter. We will continue to increase pricing and toughen underwriting in those subsegments of our business that performed poorly in 2009 and 2010."
Investment Results |
|||||||
Three Months Ended December 31, |
Twelve Months Ended December 31, |
||||||
2010 |
2009 |
% Change |
2010 |
2009 |
% Change |
||
(in thousands) |
|||||||
Net investment income |
$ 6,458 |
$ 6,783 |
(4.8)% |
$ 26,242 |
$ 28,014 |
(6.3)% |
|
Net realized gains (losses) on investments (pre-tax) |
165 |
34 |
385.3% |
2,449 |
2,033 |
20.5% |
|
Pre-tax investment yield |
3.2% |
3.3% |
3.2% |
3.5% |
|||
Tax equivalent yield (1) |
4.4% |
4.8% |
4.4% |
4.8% |
|||
(1) The tax equivalent yield is calculated using the effective interest rate and a 35% marginal tax rate. |
|||||||
- The carrying value of AMERISAFE's investment portfolio, including cash and cash equivalents, was $826.5 million and the fair value of the portfolio was $846.6 million at December 31, 2010.
Supplemental Information |
|||||
Three Months Ended December 31, |
Twelve Months Ended December 31, |
||||
2010 |
2009 |
2010 |
2009 |
||
Shares repurchased |
96,142 |
— |
708,608 |
— |
|
Average price of shares repurchased, including commissions |
$17.98 |
— |
$17.08 |
— |
|
Effective tax rate |
30.5% |
22.2% |
21.4% |
25.5% |
|
- The Board renewed the Company's previously authorized share repurchase program for one year, to December 31, 2011. As of December 31, 2010, AMERISAFE had spent approximately $12.1 million on its share repurchase program, leaving $23.3 million of the authorized amount remaining.
- For the year, the ratio of tax-free investment income to pre-tax income, coupled with changes in the valuation allowance resulted in a drop in the effective tax rate from 2009.
Reconciliation of GAAP and Non-GAAP measures |
|||||
Three Months Ended December 31, |
Twelve Months Ended December 31, |
||||
2010 |
2009 |
2010 |
2009 |
||
(in thousands, except share and per share data) |
|||||
Net income |
$ 7,294 |
$ 6,597 |
$ 33,353 |
$ 46,431 |
|
Less: Net realized capital gains (losses) |
165 |
34 |
2,449 |
2,033 |
|
Tax effect (1) |
23 |
11 |
12 |
(11) |
|
Operating net income (2) |
7,106 |
6,552 |
30,892 |
44,409 |
|
Average shareholders' equity (3) |
$ 321,713 |
$ 311,346 |
$ 313,820 |
$ 290,345 |
|
Less: Average other comprehensive income (loss) |
338 |
2,274 |
1,497 |
1,787 |
|
Adjusted average shareholders' equity |
$ 321,375 |
$ 309,072 |
$ 312,323 |
$ 288,558 |
|
Diluted weighted average common shares |
18,883,302 |
19,318,883 |
19,095,320 |
19,268,295 |
|
Portion allocable to common shareholders (4) |
100.0% |
94.1% |
100.0% |
94.1% |
|
Return on average equity (5) |
9.1% |
8.5% |
10.6% |
16.0% |
|
Operating return on average equity (2) |
8.8% |
8.5% |
9.9% |
15.4% |
|
Diluted earnings per common share |
$ 0.39 |
$ 0.28 |
$ 1.75 |
$ 2.22 |
|
Operating earnings per common share (2) |
$ 0.38 |
$ 0.32 |
$ 1.62 |
$ 2.17 |
|
(1) The tax effect of net realized capital gains is calculated assuming an annual tax rate of 35% plus the change in valuation allowance for deferred taxes. (2) Operating net income, operating return on average equity and operating earnings per share are non-GAAP financial measures, and 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, including redeemable preferred stock for the same period used in determining the numerator. On December 31, 2009, the Company redeemed all outstanding shares of its Series C and D redeemable preferred stock for $25.9 million. (4) The portion allocable to common shareholders relates to the two-class method of calculating earnings per share. (5) Return on average equity is calculated by dividing the annualized net income by the average shareholders' equity, including redeemable preferred stock for the applicable period. |
|||||
Conference Call Information
AMERISAFE has scheduled a conference call for March 4, 2011, at 9:30 a.m. Eastern Time. To participate in the conference call dial 480-629-9692 at least 10 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 March 11, 2011. To access the replay, dial 303-590-3030 and use the pass code 4403882 #.
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 and will remain available for approximately 60 days 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 and agriculture. AMERISAFE actively markets workers' compensation insurance in 33 states and the District of Columbia.
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. Actual results may differ materially from the results expressed or implied in these statements as the results of risks, uncertainties and other factors including, but not limited to, 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, 2009. 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.
Contacts: |
G. Janelle Frost, EVP & CFO |
|
AMERISAFE, Inc. |
||
337-463-9052 |
||
Ken Dennard, Managing Partner |
||
Karen Roan, Sr.VP |
||
DRG&L / 713-529-6600 |
||
- Tables to follow - |
|||||
AMERISAFE, INC. AND SUBSIDIARIES Consolidated Statements of Income (in thousands) |
|||||
Three Months Ended December 31, |
Twelve Months Ended December 31, |
||||
2010 |
2009 |
2010 |
2009 |
||
(unaudited) |
|||||
Revenues: |
|||||
Gross premiums written |
$ 52,143 |
$ 49,369 |
$ 228,424 |
$ 256,454 |
|
Ceded premiums written |
(5,973) |
(6,043) |
(20,549) |
(20,158) |
|
Net premiums written |
$ 46,170 |
$ 43,326 |
$207,875 |
$236,296 |
|
Net premiums earned |
$ 56,429 |
$ 56,970 |
$ 218,881 |
$ 250,896 |
|
Net investment income |
6,458 |
6,783 |
26,242 |
28,014 |
|
Net realized gains (losses) on investments |
165 |
34 |
2,449 |
2,033 |
|
Fee and other income |
89 |
185 |
584 |
1,268 |
|
Total revenues |
63,141 |
63,972 |
248,156 |
282,211 |
|
Expenses: |
|||||
Loss and loss adjustment expenses incurred |
39,390 |
42,669 |
157,388 |
163,316 |
|
Underwriting and other operating costs |
12,758 |
12,179 |
45,959 |
53,957 |
|
Interest expense |
388 |
399 |
1,548 |
1,810 |
|
Policyholder dividends |
108 |
247 |
834 |
770 |
|
Total expenses |
52,644 |
55,494 |
205,729 |
219,853 |
|
Income before taxes |
10,497 |
8,478 |
42,427 |
62,358 |
|
Income tax expense |
3,203 |
1,881 |
9,074 |
15,927 |
|
Net income |
7,294 |
6,597 |
33,353 |
46,431 |
|
Redemption premium |
— |
(875) |
— |
(875) |
|
Net income available to common shareholders |
$ 7,294 |
$ 5,722 |
$33,353 |
$45,556 |
|
AMERISAFE, INC. AND SUBSIDIARIES |
|||||
Three Months Ended |
Twelve Months Ended |
||||
2010 |
2009 |
2010 |
2009 |
||
(unaudited) |
|||||
Basic EPS: |
|||||
Net income available to common shareholders |
$ 7,294 |
$ 5,722 |
$ 33,353 |
$ 45,556 |
|
Portion allocable to common shareholders |
100.0% |
94.1% |
100.0% |
94.1% |
|
Net income allocable to common shareholders |
$ 7,294 |
$ 5,385 |
$ 33,353 |
$ 42,869 |
|
Basic weighted average common shares |
18,417,784 |
18,878,092 |
18,637,167 |
18,860,197 |
|
Basic earnings per share |
$ 0.40 |
$ 0.29 |
$ 1.79 |
$ 2.27 |
|
Diluted EPS: |
|||||
Net income allocable to common shareholders |
$ 7,294 |
$ 5,385 |
$ 33,353 |
$ 42,869 |
|
Diluted weighted average common shares: |
|||||
Weighted average common shares |
18,417,784 |
18,878,092 |
18,637,167 |
18,860,197 |
|
Stock options |
460,428 |
438,165 |
448,790 |
396,254 |
|
Restricted stock |
5,090 |
2,626 |
9,363 |
11,844 |
|
Diluted weighted average common shares |
18,883,302 |
19,318,883 |
19,095,320 |
19,268,295 |
|
Diluted earnings per common share |
$ 0.39 |
$ 0.28 |
$ 1.75 |
$ 2.22 |
|
AMERISAFE, INC. AND SUBSIDIARIES |
|||
December 31, |
December 31, |
||
2010 |
2009 |
||
(unaudited) |
|||
Assets |
|||
Investments |
$ 765,537 |
$ 737,297 |
|
Cash and cash equivalents |
60,966 |
63,188 |
|
Amounts recoverable from reinsurers |
95,133 |
81,878 |
|
Premiums receivable, net |
122,618 |
151,570 |
|
Deferred income taxes |
31,512 |
28,489 |
|
Deferred policy acquisition costs |
17,400 |
18,128 |
|
Deferred charges |
2,936 |
3,030 |
|
Other assets |
32,032 |
35,229 |
|
$ 1,128,134 |
$ 1,118,809 |
||
Liabilities and shareholders' equity |
|||
Liabilities: |
|||
Reserves for loss and loss adjustment expenses |
$ 532,204 |
$ 534,655 |
|
Unearned premiums |
111,494 |
122,500 |
|
Insurance-related assessments |
33,898 |
40,072 |
|
Subordinated debt securities |
36,090 |
36,090 |
|
Other liabilities |
89,225 |
83,075 |
|
Total shareholders' equity |
325,223 |
302,417 |
|
Total liabilities and shareholders' equity |
$ 1,128,134 |
$ 1,118,809 |
|
SOURCE AMERISAFE, Inc.
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