AMERISAFE Announces 2023 Fourth Quarter and Year-end Results
- AMERISAFE reports strong financial performance with $62.1 million of net income in 2023.
- The company achieved a return on equity of 20.4% and a net combined ratio of 85.9% in 2023.
- Gross premium written increased by 8.4% in the fourth quarter of 2023.
- The company's disciplined approach resulted in a 20.4% return on average equity for the full year.
- AMERISAFE's capital strength and market position set the company up for solid performance and long-term shareholder value.
- The company increased its regular quarterly dividend by 8.8% to $0.37 per share.
- AMERISAFE's investment income increased by 5.7% in 2023, driven by higher fixed income reinvestment rates.
- The company repurchased shares and has an outstanding share repurchase authorization of $10.4 million.
- AMERISAFE's effective tax rate for 2023 was 19.7%, slightly higher than the previous year.
- None.
Insights
The reported financial results of AMERISAFE, Inc. show a mixed performance, with a slight decline in net premiums earned year-over-year, which could indicate a challenging environment for growth in their high-hazard workers' compensation insurance segment. However, the company has managed to achieve a substantial increase in net realized gains on investments and a notable improvement in net income, which suggests effective capital management and investment strategies.
From an investor's perspective, the Return on Average Equity (ROAE) of 20.4% is robust, reflecting efficient use of shareholder equity in generating profits. Additionally, the net combined ratio of 85.9% is below 100%, indicating underwriting profitability. However, the increase in the underwriting expense ratio could be a concern if it reflects a trend of rising operational costs that could squeeze future margins.
The increase in the regular quarterly dividend by 8.8% is a positive signal to shareholders, reflecting confidence in the company's ability to generate cash flow. The share repurchase activity also suggests management believes the stock is undervalued. Both actions could be perceived as shareholder-friendly and may support the stock price.
AMERISAFE's performance in the high-hazard workers' compensation insurance market is noteworthy, particularly the gross premium written growth of 8.4% in the fourth quarter. This growth could be attributed to an increase in policy count, indicating a competitive edge in acquiring new business or expanding in existing markets.
The favorable development on prior accident years suggests that the company has been conservative in its initial loss estimates or has been particularly effective in claims management. This could be a differentiator in an industry where managing claim costs is critical to profitability.
It's also important to note the impact of payroll audits and related premium adjustments, which have contributed to the increase in premiums written. This demonstrates the company's attention to detail and commitment to accurate premium collection, which can affect both revenue and customer relations.
The reported results from AMERISAFE, Inc. reflect broader economic trends, such as the impact of interest rates on investment income. The increase in net investment income is consistent with rising reinvestment rates, which can be a direct consequence of a changing interest rate environment.
Moreover, the company's effective tax rate has slightly increased, which could be influenced by both corporate tax policies and the proportion of taxable versus tax-exempt income. As tax policies evolve, they can significantly impact the net income of insurance companies, which often rely on investment portfolios for a portion of their earnings.
The volatility in equity markets is reflected in the net unrealized gains on equity securities, which can fluctuate and impact the company's financial position. Investors should consider the potential for such volatility to affect future earnings, despite the company's strong performance in the current period.
Reports
Net Combined Ratio of
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||||
2023 |
2022 |
% Change | 2023 |
2022 |
% Change | |||||||||||||||||
| (in thousands, except per share data) | (in thousands, except per share data) | |||||||||||||||||||||
| Net premiums earned | $ |
65,712 |
|
$ |
66,073 |
|
-0.5 |
% |
$ |
267,125 |
|
$ |
271,698 |
|
-1.7 |
% |
||||||
| Net investment income |
|
8,077 |
|
|
7,642 |
|
5.7 |
% |
|
31,339 |
|
|
27,223 |
|
15.1 |
% |
||||||
| Net realized gains on investments | ||||||||||||||||||||||
| (pre-tax) |
|
1,113 |
|
|
1,038 |
|
7.2 |
% |
|
6,579 |
|
|
3,440 |
|
91.3 |
% |
||||||
| Net unrealized gain (losses) on | ||||||||||||||||||||||
| equity securities (pre-tax) |
|
5,120 |
|
|
4,892 |
|
NM |
|
|
1,228 |
|
|
(8,092 |
) |
NM |
|
||||||
| Net income |
|
19,181 |
|
|
20,778 |
|
-7.7 |
% |
|
62,108 |
|
|
55,602 |
|
11.7 |
% |
||||||
| Diluted earnings per share | $ |
1.00 |
|
$ |
1.08 |
|
-7.4 |
% |
$ |
3.23 |
|
$ |
2.88 |
|
12.2 |
% |
||||||
| Operating net income |
|
14,257 |
|
|
16,093 |
|
-11.4 |
% |
|
55,940 |
|
|
59,277 |
|
-5.6 |
% |
||||||
| Operating earnings per share | $ |
0.74 |
|
$ |
0.84 |
|
-11.9 |
% |
$ |
2.91 |
|
$ |
3.07 |
|
-5.2 |
% |
||||||
| Book value per share | $ |
15.28 |
|
$ |
16.57 |
|
-7.8 |
% |
$ |
15.28 |
|
$ |
16.57 |
|
-7.8 |
% |
||||||
| Net combined ratio |
|
85.5 |
% |
|
82.0 |
% |
|
85.9 |
% |
|
83.6 |
% |
||||||||||
| Return on average equity |
|
24.4 |
% |
|
24.1 |
% |
|
20.4 |
% |
|
15.5 |
% |
||||||||||
G. Janelle Frost, President and Chief Executive Officer, commented: “AMERISAFE’s value proposition to our policyholders, agents, and shareholders rests on our service and delivering on our commitments to them. The Company collaborates closely with insured parties to assess risks, bolster safety measures, and meticulously handle claims to achieve optimal results. The Company’s disciplined approach resulted in gross premium written growth of
INSURANCE RESULTS
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||||
2023 |
2022 |
% Change | 2023 |
2022 |
% Change | |||||||||||||||||
| (in thousands) | (in thousands) | |||||||||||||||||||||
| Gross premiums written | $ |
60,324 |
|
$ |
55,647 |
|
8.4 |
% |
$ |
285,355 |
|
$ |
276,110 |
|
3.3 |
% |
||||||
| Net premiums earned |
|
65,712 |
|
|
66,073 |
|
-0.5 |
% |
|
267,125 |
|
|
271,698 |
|
-1.7 |
% |
||||||
| Loss and loss adjustment expenses incurred |
|
36,455 |
|
|
36,524 |
|
-0.2 |
% |
|
148,263 |
|
|
152,316 |
|
-2.7 |
% |
||||||
| Underwriting and certain other operating costs, commissions, salaries and benefits |
|
18,988 |
|
|
17,421 |
|
9.0 |
% |
|
78,313 |
|
|
72,032 |
|
8.7 |
% |
||||||
| Policyholder dividends |
|
732 |
|
|
182 |
|
302.2 |
% |
|
2,957 |
|
|
2,699 |
|
9.6 |
% |
||||||
| Underwriting profit (pre-tax) | $ |
9,537 |
|
$ |
11,946 |
|
-20.2 |
% |
$ |
37,592 |
|
$ |
44,651 |
|
-15.8 |
% |
||||||
| Insurance Ratios: | ||||||||||||||||||||||
| Current accident year loss ratio |
|
71.0 |
% |
|
71.0 |
% |
|
71.0 |
% |
|
71.0 |
% |
||||||||||
| Prior accident year loss ratio |
|
-15.5 |
% |
|
-15.7 |
% |
|
-15.5 |
% |
|
-14.9 |
% |
||||||||||
| Net loss ratio |
|
55.5 |
% |
|
55.3 |
% |
|
55.5 |
% |
|
56.1 |
% |
||||||||||
| Net underwriting expense ratio |
|
28.9 |
% |
|
26.4 |
% |
|
29.3 |
% |
|
26.5 |
% |
||||||||||
| Net dividend ratio |
|
1.1 |
% |
|
0.3 |
% |
|
1.1 |
% |
|
1.0 |
% |
||||||||||
| Net combined ratio |
|
85.5 |
% |
|
82.0 |
% |
|
85.9 |
% |
|
83.6 |
% |
||||||||||
-
Voluntary premiums on policies written in the quarter were
4.7% higher than in the fourth quarter of 2022, primarily due to an increase in policy count partially offset by continued declines in approved loss costs. For the full year, voluntary premiums increased by0.3% . -
Payroll audits and related premium adjustments increased premiums written by
$4.8 million $2.3 million $24.0 million $14.0 million -
The loss ratio for both the fourth quarter and full year was
55.5% . During the quarter, the Company experienced favorable net loss reserve development for prior accident years, which reduced loss and loss adjustment expenses by$10.2 million $41.4 million $40.6 million -
For the quarter that ended December 31, 2023, the underwriting expense ratio was
28.9% compared with26.4% in the same quarter in 2022, as a result of slightly lower earned premium and increased insurance related assessments. For the year ended December 31, 2023, the underwriting expense ratio was29.3% , compared with26.5% in 2022, largely due to slightly lower earned premium and increased insurance related assessments. -
The effective tax rate for the full year 2023 was
19.7% compared with17.8% for 2022. The rate was slightly higher than last year due to a decrease in the proportion of tax-exempt interest income relative to taxable interest income and underwriting profit.
INVESTMENT RESULTS
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||||
2023 |
2022 |
% Change | 2023 |
2022 |
% Change | |||||||||||||||||
| (in thousands) | (in thousands) | |||||||||||||||||||||
| Net investment income | $ |
8,077 |
|
$ |
7,642 |
|
5.7 |
% |
$ |
31,339 |
|
$ |
27,223 |
|
15.1 |
% |
||||||
| Net realized gains on investments | ||||||||||||||||||||||
| (pre-tax) |
|
1,113 |
|
|
1,038 |
|
7.2 |
% |
|
6,579 |
|
|
3,440 |
|
91.3 |
% |
||||||
| Net unrealized gains (losses) on | ||||||||||||||||||||||
| equity securities (pre-tax) |
|
5,120 |
|
|
4,892 |
|
NM |
|
|
1,228 |
|
|
(8,092 |
) |
NM |
|
||||||
| Pre-tax investment yield |
|
3.5 |
% |
|
3.1 |
% |
|
3.4 |
% |
|
2.7 |
% |
||||||||||
| Tax-equivalent yield (1) |
|
3.7 |
% |
|
3.4 |
% |
|
3.7 |
% |
|
3.4 |
% |
||||||||||
| ________________________________ | ||||||||||||||||||||||
(1) |
The tax equivalent yield is calculated using the effective interest rate and the appropriate marginal tax rate. |
-
Net investment income for the quarter and full year ended December 31, 2023, increased
5.7% to$8.1 million 15.1% to$31.3 million -
Net unrealized gains on equity securities were
$5.1 million $1.2 million -
As of December 31, 2023, the carrying value of AMERISAFE’s investment portfolio, including cash and cash equivalents, was
$896.5 million
CAPITAL MANAGEMENT
During the fourth quarter of 2023, the Company repurchased 46,741 shares at an average cost (including commissions and excise tax) of
In an accompanying announcement, the Company’s Board of Directors increased the regular quarterly dividend by
SUPPLEMENTAL INFORMATION
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
2023 |
2022 |
2023 |
2022 |
|||||||||||||
| (in thousands, except share and per share data) | ||||||||||||||||
| Net income | $ |
19,181 |
|
$ |
20,778 |
|
$ |
62,108 |
|
$ |
55,602 |
|
||||
| Less: | ||||||||||||||||
| Net realized gains on investments |
|
1,113 |
|
|
1,038 |
|
|
6,579 |
|
|
3,440 |
|
||||
| Net unrealized gains (losses) on equity securities |
|
5,120 |
|
|
4,892 |
|
|
1,228 |
|
|
(8,092 |
) |
||||
| Tax effect (1) |
|
(1,309 |
) |
|
(1,245 |
) |
|
(1,639 |
) |
|
977 |
|
||||
| Operating net income (2) | $ |
14,257 |
|
$ |
16,093 |
|
$ |
55,940 |
|
$ |
59,277 |
|
||||
| Average shareholders’ equity (3) | $ |
314,167 |
|
$ |
345,226 |
|
$ |
304,942 |
|
$ |
358,378 |
|
||||
| Less: | ||||||||||||||||
| Average accumulated other comprehensive loss |
|
(13,779 |
) |
|
(16,896 |
) |
|
(10,511 |
) |
|
(146 |
) |
||||
| Average adjusted shareholders’ equity (2) | $ |
327,946 |
|
$ |
362,122 |
|
$ |
315,453 |
|
$ |
358,524 |
|
||||
| Diluted weighted average common shares |
|
19,220,250 |
|
|
19,209,279 |
|
|
19,226,021 |
|
|
19,321,717 |
|
||||
| Return on average equity (4) |
|
24.4 |
% |
|
24.1 |
% |
|
20.4 |
% |
|
15.5 |
% |
||||
| Operating return on average adjusted equity (2) |
|
17.4 |
% |
|
17.8 |
% |
|
17.7 |
% |
|
16.5 |
% |
||||
| Diluted earnings per share | $ |
1.00 |
|
$ |
1.08 |
|
$ |
3.23 |
|
$ |
2.88 |
|
||||
| Operating earnings per share (2) | $ |
0.74 |
|
$ |
0.84 |
|
$ |
2.91 |
|
$ |
3.07 |
|
||||
| ________________________________ | ||||||||||||||||
(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 |
|
(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
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 February 22, 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 323-794-2423 (Conference Code 9182860) 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 |
|
Twelve Months Ended |
||||||||||||||
December 31, |
|
December 31, |
||||||||||||||
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||||
| (unaudited) | (unaudited) | |||||||||||||||
| Revenues: | ||||||||||||||||
| Gross premiums written | $ |
60,324 |
|
$ |
55,647 |
|
$ |
285,355 |
|
$ |
276,110 |
|
||||
| Ceded premiums written |
|
(4,365 |
) |
|
(2,690 |
) |
|
(16,621 |
) |
|
(10,527 |
) |
||||
| Net premiums written | $ |
55,959 |
|
$ |
52,957 |
|
$ |
268,734 |
|
$ |
265,583 |
|
||||
| Net premiums earned | $ |
65,712 |
|
$ |
66,073 |
|
$ |
267,125 |
|
$ |
271,698 |
|
||||
| Net investment income |
|
8,077 |
|
|
7,642 |
|
|
31,339 |
|
|
27,223 |
|
||||
| Net realized gains on investments |
|
1,113 |
|
|
1,038 |
|
|
6,579 |
|
|
3,440 |
|
||||
| Net unrealized gains (losses) on equity securities |
|
5,120 |
|
|
4,892 |
|
|
1,228 |
|
|
(8,092 |
) |
||||
| Fee and other income |
|
94 |
|
|
116 |
|
|
582 |
|
|
468 |
|
||||
| Total revenues |
|
80,116 |
|
|
79,761 |
|
|
306,853 |
|
|
294,737 |
|
||||
| Expenses: | ||||||||||||||||
| Loss and loss adjustment expenses incurred |
|
36,455 |
|
|
36,524 |
|
|
148,263 |
|
|
152,316 |
|
||||
| Underwriting and other operating costs |
|
18,988 |
|
|
17,421 |
|
|
78,313 |
|
|
72,032 |
|
||||
| Policyholder dividends |
|
732 |
|
|
182 |
|
|
2,957 |
|
|
2,699 |
|
||||
| Provision for investment related credit | ||||||||||||||||
| loss expense (benefit) |
|
(6 |
) |
|
(16 |
) |
|
(57 |
) |
|
44 |
|
||||
| Total expenses |
|
56,169 |
|
|
54,111 |
|
|
229,476 |
|
|
227,091 |
|
||||
| Income before taxes |
|
23,947 |
|
|
25,650 |
|
|
77,377 |
|
|
67,646 |
|
||||
| Income tax expense |
|
4,766 |
|
|
4,872 |
|
|
15,269 |
|
|
12,044 |
|
||||
| Net income | $ |
19,181 |
|
$ |
20,778 |
|
$ |
62,108 |
|
$ |
55,602 |
|
||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
2023 |
2022 |
2023 |
2022 |
|||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||
| Basic EPS: | ||||||||||||||||
| Net income | $ |
19,181 |
|
$ |
20,778 |
|
$ |
62,108 |
|
$ |
55,602 |
|
||||
| Basic weighted average common shares |
|
19,159,911 |
|
|
19,131,271 |
|
|
19,149,080 |
|
|
19,233,241 |
|
||||
| Basic earnings per share | $ |
1.00 |
|
$ |
1.09 |
|
$ |
3.24 |
|
$ |
2.89 |
|
||||
| Diluted EPS: | ||||||||||||||||
| Net income | $ |
19,181 |
|
$ |
20,778 |
|
$ |
62,108 |
|
$ |
55,602 |
|
||||
| Diluted weighted average common shares: | ||||||||||||||||
| Weighted average common shares |
|
19,159,911 |
|
|
19,131,271 |
|
|
19,149,080 |
|
|
19,233,241 |
|
||||
| Restricted stock and RSUs |
|
60,339 |
|
|
78,008 |
|
|
76,941 |
|
|
88,476 |
|
||||
| Diluted weighted average common shares |
|
19,220,250 |
|
|
19,209,279 |
|
|
19,226,021 |
|
|
19,321,717 |
|
||||
| Diluted earnings per share | $ |
1.00 |
|
$ |
1.08 |
|
$ |
3.23 |
|
$ |
2.88 |
|
||||
AMERISAFE, INC. AND SUBSIDIARIES |
||||||
Consolidated Balance Sheets |
||||||
(in thousands) |
||||||
| December 31, | December 31, | |||||
2023 |
2022 |
|||||
| (unaudited) | ||||||
| Assets | ||||||
| Investments | $ |
857,786 |
$ |
888,987 |
||
| Cash and cash equivalents |
|
38,682 |
|
61,469 |
||
| Amounts recoverable from reinsurers |
|
129,963 |
|
125,677 |
||
| Premiums receivable, net |
|
132,861 |
|
121,713 |
||
| Deferred income taxes |
|
20,403 |
|
22,794 |
||
| Deferred policy acquisition costs |
|
17,975 |
|
17,401 |
||
| Other assets |
|
31,492 |
|
31,238 |
||
$ |
1,229,162 |
$ |
1,269,279 |
|||
| Liabilities and Shareholders’ Equity | ||||||
| Liabilities: | ||||||
| Reserves for loss and loss adjustment expenses | $ |
673,994 |
$ |
696,037 |
||
| Unearned premiums |
|
116,585 |
|
114,976 |
||
| Insurance-related assessments |
|
16,896 |
|
17,653 |
||
| Other liabilities |
|
129,236 |
|
123,181 |
||
| Shareholders’ equity |
|
292,451 |
|
317,432 |
||
| Total liabilities and shareholders’ equity | $ |
1,229,162 |
$ |
1,269,279 |
||
View source version on businesswire.com: https://www.businesswire.com/news/home/20240221323970/en/
Andy Omiridis, EVP & CFO
AMERISAFE
337.463.9052
Source: AMERISAFE, Inc.
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