AMERISAFE Announces 2022 Fourth Quarter and Year-End Results

Rhea-AI Summary

AMERISAFE, Inc. (Nasdaq: AMSF) reported a net income of $55.6 million for 2022, a 15.4% decline from the previous year. The company achieved a return on equity of 15.5% and a net combined ratio of 83.6%.

In Q4 2022, net premiums earned fell 2.5% to $66.1 million, while net investment income grew 25.8% to $7.6 million. The diluted earnings per share increased to $1.08 from $0.18.

The Board approved a 6.5% increase in the quarterly dividend, now $0.34 per share, payable March 24, 2023.

Positive

• Net investment income rose 25.8% to $7.6 million in Q4 2022.
• Diluted earnings per share increased 500% to $1.08 in Q4 2022.
• Underwriting profit increased to $11.9 million in Q4 2022, showing strong operational performance.

Negative

• Net income decreased 15.4% to $55.6 million for the full year.
• Net premiums earned declined by 1.6% for the full year.
• Book value per share dropped 19.6% year-over-year.

Reports $55.6 Million of Net Income, Return on Equity of 15.5% and Net Combined Ratio of 83.6% in 2022

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 fourth quarter and year ended December 31, 2022.

		Three Months Ended											Twelve Months Ended
		December 31,											December 31,
			2022				2021			% Change				2022				2021			% Change
		(in thousands, except per share data)											(in thousands, except per share data)
Net premiums earned		$	66,073			$	67,733			-2.5	%		$	271,698			$	275,993			-1.6	%
Net investment income			7,642				6,073			25.8	%			27,223				25,435			7.0	%
Net realized gains on investments (pre-tax)			1,038				205			406.3	%			3,440				1,695			102.9	%
Net unrealized gains (losses) on
equity securities (pre-tax)			4,892				4,289			NM				(8,092	)			12,315			NM
Net income			20,778				3,541			486.8	%			55,602				65,756			-15.4	%
Diluted earnings per share		$	1.08			$	0.18			500.0	%		$	2.88			$	3.39			-15.0	%
Operating net income (loss)			16,093				(9	)		NM				59,277				54,688			8.4	%
Operating earnings per share		$	0.84			$	-			NM			$	3.07			$	2.82			8.9	%
Book value per share		$	16.57			$	20.62			-19.6	%		$	16.57			$	20.62			-19.6	%
Net combined ratio			82.0	%			112.9	%						83.6	%			85.7	%
Return on average equity			24.1	%			3.2	%						15.5	%			15.7	%

G. Janelle Frost, President and Chief Executive Officer commented, “AMERISAFE’s financial results this quarter are reflective of our focus on underwriting margins and sustainability in providing long-term returns to our shareholders. Despite industrywide pressure as competition increases and rates decrease, our focus on risk selection, appropriate product pricing and claims handling resulted in combined ratios of 82.0% this quarter and 83.6% for the year. Based on these results and our capital strength, AMERISAFE has demonstrated it is well-positioned for solid performance in the current market and to create long-term shareholder value into the future.”

INSURANCE RESULTS

		Three Months Ended											Twelve Months Ended
		December 31,											December 31,
			2022				2021			% Change				2022				2021			% Change
		(in thousands)											(in thousands)
Gross premiums written		$	55,647			$	55,871			-0.4	%		$	276,110			$	278,294			-0.8	%
Net premiums earned			66,073				67,733			-2.5	%			271,698				275,993			-1.6	%
Loss and loss adjustment expenses incurred			36,524				59,197			-38.3	%			152,316				160,798			-5.3	%
Underwriting and certain other operating costs,
commissions, salaries and benefits			17,421				16,714			4.2	%			72,032				72,051			0.0	%
Policyholder dividends			182				515			-64.7	%			2,699				3,715			-27.3	%
Underwriting profit (pre-tax)		$	11,946			$	(8,693	)		NM			$	44,651			$	39,429			13.2	%
Insurance Ratios:
Current accident year loss ratio			71.0	%			107.4	%						71.0	%			80.7	%
Prior accident year loss ratio			-15.7	%			-20.0	%						-14.9	%			-22.4	%
Net loss ratio			55.3	%			87.4	%						56.1	%			58.3	%
Net underwriting expense ratio			26.4	%			24.7	%						26.5	%			26.1	%
Net dividend ratio			0.3	%			0.8	%						1.0	%			1.3	%
Net combined ratio			82.0	%			112.9	%						83.6	%			85.7	%

• Voluntary premiums on policies written in the quarter were 4.5% lower than the fourth quarter of 2021, primarily due to continued declines in approved loss costs in the states in which we write business partially offset by an increase in payrolls. For the full year, voluntary premiums decreased by 5.9%.
• Payroll audits and related premium adjustments increased premiums written by $2.3 million in the fourth quarter of 2022, compared to an increase of $0.1 million in the fourth quarter of 2021. For the full year 2022, audits and related premium adjustments increased premiums by $14.0 million, compared to a decrease in premiums of $1.2 million in 2021.
• The loss ratio for the fourth quarter was 55.3% and 56.1% for the full year. During the quarter, the Company experienced favorable net loss reserve development for prior accident years, which reduced loss and loss adjustment expenses by $10.4 million, primarily from accident years 2017 through 2020. For the full year, the company experienced favorable development on prior accident years of $40.6 million, compared with $61.9 million in 2021. The Company attributes its lower claim severities for prior years to active claims handling.
• For the quarter ended December 31, 2022, the underwriting expense ratio was 26.4% compared with 24.7% in the same quarter in 2021, as a result of lower earned premium and increased guaranty fund assessments. For the year ended December 31, 2022, the underwriting expense ratio was 26.5%, compared with 26.1% in 2021, largely due to lower earned premium as underwriting and other expenses for the full year were largely unchanged.
• The effective tax rate for the full year 2022 was 17.8% compared with 17.2% for 2021. The rate was slightly higher than last year due to a decrease in the proportion of tax-exempt interest income relative to underwriting profit.

INVESTMENT RESULTS

		Three Months Ended											Twelve Months Ended
		December 31,											December 31,
			2022				2021			% Change				2022				2021			% Change
		(in thousands)											(in thousands)
Net investment income		$	7,642			$	6,073			25.8	%		$	27,223			$	25,435			7.0	%
Net realized gains on
investments (pre-tax)			1,038				205			406.3	%			3,440				1,695			102.9	%
Net unrealized gains (losses) on
equity securities (pre-tax)			4,892				4,289			NM				(8,092	)			12,315			NM
Pre-tax investment yield			3.1	%			2.2	%						2.7	%			2.3	%
Tax-equivalent yield (1)			3.4	%			2.7	%						3.4	%			2.7	%
________________________________

(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 and full year ended December 31, 2022 increased 25.8% to $7.6 million and 7.0% to $27.2 million, respectively, due to higher yields on fixed income securities.
• Net unrealized gains on equity securities were $4.9 million in the fourth quarter. The full year loss of ($8.1) million is reflective of declines in the equity markets in the first half of the year.
• As of December 31, 2022, the carrying value of AMERISAFE’s investment portfolio, including cash and cash equivalents, was $1.0 billion.

CAPITAL MANAGEMENT

In an accompanying announcement, the Company’s Board of Directors increased the regular quarterly dividend by 6.5% from $0.31 per share to $0.34 per share, payable on March 24, 2023, to shareholders of record as of March 10, 2023.

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, operating return on average adjusted equity and operating earnings per share.

SUPPLEMENTAL INFORMATION

	Three Months Ended								Twelve Months Ended
	December 31,								December 31,
		2022				2021				2022				2021
	(in thousands, except share and per share data)
Net income	$	20,778			$	3,541			$	55,602			$	65,756
Less:
Net realized gains on investments		1,038				205				3,440				1,695
Net unrealized gains (losses) on equity securities		4,892				4,289				(8,092	)			12,315
Tax effect (1)		(1,245	)			(944	)			977				(2,942	)
Operating net income (2)	$	16,093			$	(9	)		$	59,277			$	54,688
Average shareholders’ equity (3)	$	345,226			$	439,740			$	358,378			$	419,070
Less:
Average accumulated other comprehensive income (loss)		(16,896	)			14,262				(146	)			17,278
Average adjusted shareholders’ equity (2)	$	362,122			$	425,478			$	358,524			$	401,792
Diluted weighted average common shares		19,209,279				19,420,757				19,321,717				19,408,619
Return on average equity (4)		24.1	%			3.2	%			15.5	%			15.7	%
Operating return on average adjusted equity (2)		17.8	%			0.0	%			16.5	%			13.6	%
Diluted earnings per share	$	1.08			$	0.18			$	2.88			$	3.39
Operating earnings per share (2)	$	0.84			$	-			$	3.07			$	2.82
________________________________

(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.

CONFERENCE CALL INFORMATION

AMERISAFE has scheduled a conference call for February 21, 2023, at 11:00 a.m. Eastern Time to discuss the results for the quarter and comment on future periods. To participate in the conference call, dial 323-701-0225 (Conference Code 3095655) 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, including the impact of a pandemic 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.

- Tables to Follow -

AMERISAFE, INC. AND SUBSIDIARIES Consolidated Statements of Income (in thousands)
		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
			2022				2021				2022				2021
		(unaudited)								(unaudited)
Revenues:
Gross premiums written		$	55,647			$	55,871			$	276,110			$	278,294
Ceded premiums written			(2,690	)			(3,059	)			(10,527	)			(10,469	)
Net premiums written		$	52,957			$	52,812			$	265,583			$	267,825
Net premiums earned		$	66,073			$	67,733			$	271,698			$	275,993
Net investment income			7,642				6,073				27,223				25,435
Net realized gains on investments			1,038				205				3,440				1,695
Net unrealized gains (losses) on equity securities			4,892				4,289				(8,092	)			12,315
Fee and other income			116				81				468				496
Total revenues			79,761				78,381				294,737				315,934
Expenses:
Loss and loss adjustment expenses incurred			36,524				59,197				152,316				160,798
Underwriting and other operating costs			17,421				16,714				72,032				72,051
Policyholder dividends			182				515				2,699				3,715
Provision for investment related credit loss
expense (benefit)			(16	)			23				44				(79	)
Total expenses			54,111				76,449				227,091				236,485
Income before taxes			25,650				1,932				67,646				79,449
Income tax expense			4,872				(1,609	)			12,044				13,693
Net income		$	20,778			$	3,541			$	55,602			$	65,756

AMERISAFE, INC. AND SUBSIDIARIES Consolidated Statements of Income (cont.) (in thousands, except per share amounts)
		Three Months Ended						Twelve Months Ended
		December 31,						December 31,
		2022			2021			2022			2021
		(unaudited)						(unaudited)
Basic EPS:
Net income		$	20,778		$	3,541		$	55,602		$	65,756
Basic weighted average common shares			19,131,271			19,345,324			19,233,241			19,332,391
Basic earnings per share		$	1.09		$	0.18		$	2.89		$	3.40
Diluted EPS:
Net income		$	20,778		$	3,541		$	55,602		$	65,756
Diluted weighted average common shares:
Weighted average common shares			19,131,271			19,345,324			19,233,241			19,332,391
Restricted stock and restricted stock units			78,008			75,433			88,476			76,228
Diluted weighted average common shares			19,209,279			19,420,757			19,321,717			19,408,619
Diluted earnings per share		$	1.08		$	0.18		$	2.88		$	3.39

AMERISAFE, INC. AND SUBSIDIARIES Consolidated Balance Sheets (in thousands)
		December 31,			December 31,
		2022			2021
		(unaudited)
Assets
Investments		$	888,987		$	1,012,571
Cash and cash equivalents			61,469			70,722
Amounts recoverable from reinsurers			125,677			120,561
Premiums receivable, net			121,713			135,100
Deferred income taxes			22,794			14,384
Deferred policy acquisition costs			17,401			17,059
Other assets			31,238			32,327
		$	1,269,279		$	1,402,724
Liabilities and Shareholders’ Equity
Liabilities:
Reserves for loss and loss adjustment expenses		$	696,037		$	745,278
Unearned premiums			114,976			121,092
Insurance-related assessments			17,653			16,850
Other liabilities			123,181			120,181
Shareholders’ equity			317,432			399,323
Total liabilities and shareholders’ equity		$	1,269,279		$	1,402,724

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230220005059/en/

Andy Omiridis, EVP & CFO

AMERISAFE

337.463.9052

Source: AMERISAFE, Inc.

FAQ

What were AMERISAFE's net income figures for 2022?

AMERISAFE reported a net income of $55.6 million for the year 2022.

What is the return on equity for AMERISAFE in 2022?

The return on equity for AMERISAFE in 2022 was 15.5%.

How much did AMERISAFE's diluted earnings per share increase in Q4 2022?

Diluted earnings per share increased 500% to $1.08 in Q4 2022.

What is the new quarterly dividend amount for AMERISAFE?

The Board increased the quarterly dividend by 6.5% to $0.34 per share.

What was AMERISAFE's net combined ratio for 2022?

AMERISAFE's net combined ratio for 2022 was 83.6%.