UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2022

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

Commission File Number:

001-12251

AMERISAFE, INC.

(Exact Name of Registrant as Specified in Its Charter)

Texas	75-2069407
(State of Incorporation)	(I.R.S. Employer Identification Number)
2301 Highway 190 West, DeRidder, Louisiana	70634
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (337) 463-9052

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common	AMSF	NASDAQ

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 21, 2022, there were 19,155,873 shares of the Registrant’s common stock, par value $0.01 per share, outstanding.

TABLE OF CONTENTS

		Page
		No.
FORWARD-LOOKING STATEMENTS		3
PART I - FINANCIAL INFORMATION
Item 1	Financial Statements	4
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4	Controls and Procedures	27
PART II - OTHER INFORMATION
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 6	Exhibits	29

2

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and 21E of the Securities Exchange Act of 1934. You should not place undue reliance on these statements. These forward-looking statements include statements that reflect the current views of our senior management with respect to our financial performance and future events with respect to our business and the insurance industry in general. Statements that include the words “expect,” “intend,” “plan,” “believe,” “project,” “forecast,” “estimate,” “may,” “should,” “anticipate” and similar statements of a future or forward-looking nature identify forward-looking statements. Forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. We believe that these factors include, but are not limited to, the following:

•the cyclical nature of the workers’ compensation insurance industry;

•increased competition on the basis of types of insurance offered, premium rates, coverage availability, payment terms, claims management, safety services, policy terms, overall financial strength, financial ratings and reputation;

•changes in relationships with independent agencies (including retail and wholesale brokers and agents);

•general economic conditions, including recession, inflation, performance of financial markets, interest rates, unemployment rates and fluctuating asset values;

•developments in capital markets that adversely affect the performance of our investments;

•technology breaches or failures, including those resulting from a malicious cyber attack on the Company or its policyholders and service providers;

•decreased level of business activity of our policyholders caused by decreased business activity generally, and in particular in the industries we target;

•greater frequency or severity of claims and loss activity than our underwriting, reserving or investment practices anticipate based on historical experience or industry data;

•adverse developments in economic, competitive, judicial or regulatory conditions within the workers’ compensation insurance industry;

•loss of the services of any of our senior management or other key employees;

•the impact of pandemics on the business operations of our insurance subsidiaries and policyholders, the value of our investments, and our revenues, results of operations and cash flows;

•changes in regulations, laws, rates, rating factors, or taxes applicable to the Company, its policyholders or the agencies that sell its insurance;

•changes in current accounting standards or new accounting standards;

•changes in legal theories of liability under our insurance policies;

•changes in rating agency policies, practices or ratings;

•changes in the availability, cost or quality of reinsurance and the failure of our reinsurers to pay claims in a timely manner or at all;

•the effects of U.S. involvement in hostilities with other countries and large-scale acts of terrorism, or the threat of hostilities or terrorist acts; and

•other risks and uncertainties described from time to time in the Company’s filings with the Securities and Exchange Commission (SEC).

The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements in this report, and under the caption “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate.

3

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

AMERISAFE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	September 30, 2022			December 31, 2021
	(unaudited)
Assets
Investments:
Fixed maturity securities—held-to-maturity, at amortized cost net of allowance    for credit losses of $255 and $195 in 2022 and 2021, respectively,    (fair value $479,911 and $575,850 in 2022 and 2021, respectively)	$	514,610		$	549,231
Fixed maturity securities—available-for-sale, at fair value    (amortized cost $351,118, allowance for credit losses of $0 in 2022    and amortized cost $324,597, allowance for credit losses of $0 in 2021)		325,891			341,769
Equity securities, at fair value    (cost $50,394 and $44,175 in 2022 and 2021, respectively)		57,375			64,140
Short-term investments		36,927			57,431
Total investments		934,803			1,012,571
Cash and cash equivalents		90,952			70,722
Amounts recoverable from reinsurers    (net of allowance for credit losses of $404 and $440 in 2022 and 2021, respectively)		117,968			120,561
Premiums receivable    (net of allowance for credit losses of $4,677 and $4,386 in 2022 and 2021, respectively)		137,012			135,100
Deferred income taxes		26,227			14,384
Accrued interest receivable		8,772			8,080
Property and equipment, net		7,380			6,459
Deferred policy acquisition costs		18,275			17,059
Federal income tax recoverable		2,154			6,414
Other assets		15,953			11,374
Total assets	$	1,359,496		$	1,402,724
Liabilities and shareholders’ equity
Liabilities:
Reserves for loss and loss adjustment expenses	$	716,196		$	745,278
Unearned premiums		128,093			121,092
Amounts held for others		47,670			42,915
Policyholder deposits		36,864			39,383
Insurance-related assessments		18,751			16,850
Accounts payable and other liabilities		38,778			37,883
Payable for investments purchased		125			—
Total liabilities		986,477			1,003,401
Shareholders’ equity:
Common stock: voting—$0.01 par value authorized shares—50,000,000    in 2022 and 2021; 20,678,572 and 20,622,304 shares issued; and 19,159,171    and 19,364,054 shares outstanding in 2022 and 2021, respectively		207			206
Additional paid-in capital		219,988			217,458
Treasury stock, at cost (1,519,401 and 1,258,250 shares in 2022 and 2021,    respectively)		(34,606	)		(22,370	)
Accumulated earnings		207,394			190,492
Accumulated other comprehensive income (loss), net		(19,964	)		13,537
Total shareholders’ equity		373,019			399,323
Total liabilities and shareholders’ equity	$	1,359,496		$	1,402,724

See accompanying notes.

4

AMERISAFE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except share and per share data)

(unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2022			2021			2022			2021
Revenues
Gross premiums written	$	68,212		$	67,185		$	220,463		$	222,423
Ceded premiums written		(2,553	)		(2,407	)		(7,837	)		(7,410	)
Net premiums written	$	65,659		$	64,778		$	212,626		$	215,013
Net premiums earned	$	67,790		$	67,626		$	205,625		$	208,260
Net investment income		6,983			6,049			19,581			19,362
Net realized gains (losses) on investments		585			(8	)		2,402			1,490
Net unrealized gains (losses) on equity securities		(4,082	)		(771	)		(12,984	)		8,026
Fee and other income		104			149			352			415
Total revenues		71,380			73,045			214,976			237,553
Expenses
Loss and loss adjustment expenses incurred		37,725			29,661			115,792			101,601
Underwriting and certain other operating costs		7,426			6,503			19,100			19,769
Commissions		5,422			5,173			16,083			15,956
Salaries and benefits		6,737			6,239			19,428			19,612
Policyholder dividends		640			733			2,517			3,200
Provision for investment related credit loss expense (benefit)		(21	)		15			60			(102	)
Total expenses		57,929			48,324			172,980			160,036
Income before income taxes		13,451			24,721			41,996			77,517
Income tax expense		2,090			5,585			7,172			15,302
Net income	$	11,361		$	19,136		$	34,824		$	62,215
Earnings per share
Basic	$	0.59		$	0.99		$	1.81		$	3.22
Diluted	$	0.59		$	0.99		$	1.80		$	3.21
Shares used in computing earnings per share
Basic		19,198,320			19,344,636			19,267,602			19,328,041
Diluted		19,269,346			19,407,918			19,340,898			19,392,939
Cash dividends declared per common share	$	0.31		$	0.29		$	0.93		$	0.87

See accompanying notes.

5

AMERISAFE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2022			2021			2022			2021
Net income	$	11,361		$	19,136		$	34,824		$	62,215
Other comprehensive income:
Unrealized loss on debt securities, net of tax		(11,090	)		(1,876	)		(33,501	)		(6,033	)
Comprehensive income	$	271		$	17,260		$	1,323		$	56,182

See accompanying notes.

6

AMERISAFE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Three Months Ended September 30, 2022 and 2021

(in thousands, except share data)

(unaudited)

	Common Stock				Additional Paid-In		Treasury Stock						Accumulated			Accumulated Other Comprehensive
	Shares		Amounts		Capital		Shares			Amounts			Earnings			Loss			Total
Balance at June 30, 2022		20,676,474	$	207	$	219,744		(1,379,842	)	$	(28,071	)	$	201,983		$	(8,874	)	$	384,989
Comprehensive income:
Net income		—		—		—		—			—			11,361			—			11,361
Other comprehensive    income:
Change in unrealized    losses on debt    securities, net of tax		—		—		—		—			—			—			(11,090	)		(11,090	)
Comprehensive income:																				271
Common stock issued		2,098		—		—		—			—			—			—			—
Purchase of treasury stock		—		—		—		(139,559	)		(6,535	)		—			—			(6,535	)
Share-based compensation		—		—		244		—			—			—			—			244
Dividends to shareholders		—		—		—		—			—			(5,950	)		—			(5,950	)
Balance at September 30, 2022		20,678,572	$	207	$	219,988		(1,519,401	)	$	(34,606	)	$	207,394		$	(19,964	)	$	373,019
	Common Stock				Additional Paid-In		Treasury Stock						Accumulated			Accumulated Other Comprehensive
	Shares		Amounts		Capital		Shares			Amounts			Earnings			Income			Total
Balance at June 30, 2021		20,622,304	$	206	$	217,165		(1,258,250	)	$	(22,370	)	$	256,503		$	16,862		$	468,366
Comprehensive income:
Net income		—		—		—		—			—			19,136			—			19,136
Other comprehensive    income:
Change in unrealized    gains on debt    securities, net of tax		—		—		—		—			—			—			(1,876	)		(1,876	)
Comprehensive income:																				17,260
Share-based compensation		—		—		146		—			—			—			—			146
Dividends to shareholders		—		—		—		—			—			(5,616	)		—			(5,616	)
Balance at September 30, 2021		20,622,304	$	206	$	217,311		(1,258,250	)	$	(22,370	)	$	270,023		$	14,986		$	480,156

See accompanying notes.

7

AMERISAFE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Nine Months Ended September 30, 2022 and 2021

(in thousands, except share data)

(unaudited)

Common Stock		Additional Paid-In	Treasury Stock	Accumulated	Accumulated Other Comprehensive
Shares	Amounts	Capital