AMERISAFE Announces 2009 Third Quarter Results
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DERIDDER, La., Nov. 5 /PRNewswire-FirstCall/ -- AMERISAFE, Inc. (Nasdaq: AMSF), a specialty provider of high hazard workers' compensation insurance, today announced results for the third quarter ended September 30, 2009.
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- -----------------
2009 2008 2009 2008
---- ---- ---- ----
(In thousands)
Gross premiums written $55,119 $75,767 $207,085 $242,739
Net income 15,071 13,359 39,834 38,109
Net combined ratio 79.3% 79.4% 84.0% 84.0%
Return on average equity 19.3% 20.5% 17.8% 20.3%
Net income in the third quarter of 2009 was $15.1 million compared to net income of $13.4 million in the 2008 third quarter, an increase of 12.8%. Pre-tax income for the third quarter of 2009 included $6.7 million of favorable prior year loss development and $2.0 million of realized gains from sales of certain equity securities and one previously impaired fixed maturity security. Pre-tax income for the third quarter of 2008 included $6.6 million of favorable prior year loss development, realized losses of $2.9 million from the sale of equity securities and other-than-temporary impairments, and income of $703,000 from a reinsurance commutation. Return on average equity for the 2009 third quarter was 19.3% compared to 20.5% for the same period in 2008.
Gross premiums written in the third quarter of 2009 were $55.1 million, a decrease of 27.3%, compared to $75.8 million in the third quarter of 2008. Both the voluntary premiums written in the quarter and audit premiums for policies written in prior periods decreased in the third quarter of 2009. These decreases were compounded by a $5.0 million decrease in earned but unbilled (EBUB) premium. The EBUB premium estimate was updated to reflect expected future decreased premium from policy audits resulting from projected lower payrolls during the current economic climate.
Net investment income was $6.9 million for the third quarter of 2009, compared to $7.7 million for the third quarter of 2008, a decrease of 10.8%. Third quarter revenues totaled $67.2 million, a decrease of 11.9%, compared to revenues of $76.3 million in the prior year period.
Net income for the nine months ended September 30, 2009 was $39.8 million compared to $38.1 million for the same period in 2008, an increase of 4.5%. For the nine-month period ended September 30, 2009, pre-tax income included $13.1 million of favorable prior year loss development, realized gains of $2.0 million from sales of certain securities, and income of $344,000 from a reinsurance commutation. For the nine-month period ended September 30, 2008, pre-tax income included $11.1 million of favorable prior year loss development, $2.9 million of realized losses from sales of certain equity securities and other-than-temporary impairments, and income of $1.7 million from reinsurance commutations. Net investment income decreased to $21.2 million for the nine months ended September 30, 2009, from $22.9 million for the same period in 2008, a decrease of 7.4%. The Company's return on average equity was 17.8% for the nine months ended September 30, 2009 compared to 20.3% for the same period in 2008.
For the nine months ended September 30, 2009, gross premiums written totaled $207.1 million, a 14.7% decrease from gross premiums written of $242.7 million for the same period in 2008. Revenues for the nine months ended September 30, 2009 totaled $218.2 million, an 8.4% decrease from revenues of $238.4 million for the same period in 2008.
In the third quarter of 2009, diluted earnings per share allocable to common shareholders were $0.74 compared to $0.65 in the same period of 2008. Weighted average diluted shares outstanding for the third quarter of 2009 totaled 19,273,287 shares compared to 19,207,487 shares in the third quarter of 2008.
For the nine months ended September 30, 2009, diluted earnings per share allocable to common shareholders were $1.95 compared to $1.87 in the same period of 2008. Weighted average diluted shares outstanding for the nine months ended September 30, 2009 totaled 19,247,406 shares compared to 19,119,207 shares in the nine months ended September 30, 2008.
The net combined ratio for the third quarter of 2009 was 79.3% compared to 79.4% for the same period in 2008. Loss and loss adjustment expenses for the third quarter of 2009 were $33.4 million, or 57.4% of net premiums earned, compared to $42.0 million, or 58.9% of net premiums earned, for the same period in 2008. Total underwriting expenses for the third quarter of 2009 were $12.5 million, or 21.6% of net premiums earned, compared to $14.5 million, or 20.3% of net premiums earned, for the third quarter 2008.
The net combined ratio for both the nine months ended September 30, 2009 and the nine months ended September 30, 2008 was 84.0%. Loss and loss adjustment expenses for the nine months ended September 30, 2009 were $120.6 million, or 62.2% of net premiums earned, compared to $139.2 million, or 63.9% of net premiums earned, for the same period in 2008. Total underwriting expenses for the nine months ended September 30, 2009 were $41.8 million, or 21.5% of net premiums earned, compared to $43.1 million, or 19.8% of net premiums earned, for the same period in 2008.
Commenting on these results, Allen Bradley, AMERISAFE's Chairman, President and Chief Executive Officer, stated, "Despite a protracted, soft insurance market and very poor economic conditions, AMERISAFE's team has delivered superior returns to our shareholders once again. We are steadfast in our commitment to maintain underwriting discipline and superior risk selection. We continue to focus on building long term shareholder value by making prudent business decisions in the current market."
2009 Outlook
AMERISAFE's overall financial objective is to produce a return on equity of at least 15% over the long-term while maintaining optimal operating leverage in its insurance subsidiaries that is commensurate with its A. M. Best rating of "A-" (Excellent).
Conference Call Information
AMERISAFE has scheduled a conference call for November 6, 2009, at 10:00 a.m. Eastern Time. To participate in the conference call dial 480-629-9820 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 November 13, 2009. To access the replay, dial 303-590-3000 and use the pass code 4170470#.
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, agriculture, logging, oil and gas and maritime. AMERISAFE actively markets workers' compensation insurance in 30 states and the District of Columbia. The Company's financial strength rating is "A-" (Excellent) by A.M. Best.
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, 2008. 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, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- -----------------
2009 2008 2009 2008
---- ---- ---- ----
(unaudited)
Revenues:
---------
Gross premiums written $55,119 $75,767 $207,085 $242,739
Ceded premiums written (4,051) (4,574) (14,115) (14,030)
------- ------- -------- --------
Net premiums written $51,068 $71,193 $192,970 $228,709
------- ------- -------- --------
Net premiums earned $58,133 $71,284 $193,926 $217,727
Net investment income 6,877 7,712 21,231 22,934
Net realized gains (losses)
on investments 1,956 (2,921) 1,999 (2,860)
Fee and other income 242 200 1,083 570
--- --- ----- ---
Total revenues 67,208 76,275 218,239 238,371
------ ------ ------- -------
Expenses:
---------
Loss and loss adjustment
expenses incurred 33,358 41,972 120,647 139,217
Underwriting and other
operating costs 12,535 14,474 41,778 43,137
Interest expense 417 654 1,411 2,080
Policyholder dividends 201 125 523 563
--- --- --- ---
Total expenses 46,511 57,225 164,359 184,997
------ ------ ------- -------
Income before taxes 20,697 19,050 53,880 53,374
Income tax expense 5,626 5,691 14,046 15,265
----- ----- ------ ------
Net income $15,071 $13,359 $39,834 $38,109
======= ======= ======= =======
AMERISAFE, INC. AND SUBSIDIARIES
Consolidated Statements of Income (cont.)
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
(unaudited)
Basic EPS:
----------
Net income available to
common shareholders $15,071 $13,359 $39,834 $38,109
======= ======= ======= =======
Portion allocable to
common shareholders 94.1% 94.1% 94.1% 94.0%
Net income allocable to
common shareholders $14,178 $12,571 $37,468 $35,822
======= ======= ======= =======
Basic weighted average
common shares 18,862,044 18,819,463 18,854,169 18,809,061
Basic earnings
per share $0.75 $0.67 $1.99 $1.90
Diluted EPS:
------------
Net income allocable to
common shareholders $14,176 $12,571 $37,468 $35,822
======= ======= ======= =======
Diluted weighted
average common shares:
Weighted average
common shares 18,862,044 18,819,463 18,854,169 18,809,061
Stock options 397,835 376,275 382,675 290,813
Restricted stock 13,408 11,749 10,562 19,333
------ ------ ------ ------
Diluted weighted
average common
shares 19,273,287 19,207,487 19,247,406 19,119,207
Diluted earnings
per common share $0.74 $0.65 $1.95 $1.87
AMERISAFE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands)
September 30, December 31,
------------- ------------
2009 2008
---- ----
(unaudited)
Assets
Investments $716,824 $704,732
Cash and cash equivalents 104,829 95,241
Amounts recoverable from reinsurers 91,606 67,763
Premiums receivable, net 166,208 156,567
Deferred income taxes 28,290 33,580
Deferred policy acquisition costs 19,424 20,289
Deferred charges 3,410 3,381
Other assets 32,181 26,280
------ ------
$1,162,772 $1,107,833
========== ==========
Liabilities, redeemable preferred stock
and shareholders' equity
Liabilities:
Reserves for loss and loss adjustment
expenses $544,098 $531,293
Unearned premiums 136,144 137,100
Insurance-related assessments 41,633 42,505
Subordinated debt securities 36,090 36,090
Other liabilities 84,533 82,573
Redeemable preferred stock 25,000 25,000
Total shareholders' equity 295,274 253,272
------- -------
Total liabilities, redeemable preferred
stock and shareholders' equity $1,162,772 $1,107,833
========== ==========
AMERISAFE, INC. AND SUBSIDIARIES
Selected Insurance Ratios
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
(unaudited)
Current accident year loss
ratio (1) 69.0% 68.1% 69.0% 69.0%
Prior accident year loss
ratio (2) (11.6)% (9.2)% (6.8)% (5.1)%
----- ---- ---- ----
Net loss ratio 57.4% 58.9% 62.2% 63.9%
---- ---- ---- ----
Net underwriting expense
ratio (3) 21.6% 20.3% 21.5% 19.8%
Net dividend ratio (4) 0.3% 0.2% 0.3% 0.3%
Net combined ratio (5) 79.3% 79.4% 84.0% 84.0%
Return on average equity (6) 19.3% 20.5% 17.8% 20.3%
(1) The current accident year loss ratio is calculated by dividing loss
and loss adjustment expenses incurred for the current accident year
by the current year's net premiums earned.
(2) The prior accident year loss ratio is calculated by dividing the
change in loss and loss adjustment expenses incurred for prior
accident years by the current year's net premiums earned.
(3) The net underwriting expense ratio is calculated by dividing
underwriting and certain other operating costs by the current year's
net premiums earned.
(4) The net dividend ratio is calculated by dividing policyholder
dividends by the current year's net premiums earned.
(5) The net combined ratio is the sum of the net loss ratio, the net
underwriting expense ratio and the net dividend ratio.
(6) 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.
Contacts: G. Janelle Frost, EVP & CFO
AMERISAFE, Inc.
337-463-9052
Ken Dennard, Managing Partner
Karen Roan, Sr.VP
DRG&E / 713-529-6600
SOURCE AMERISAFE, Inc.
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