8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): July 31, 2019

AMERISAFE, INC.

(Exact Name of Registrant as Specified in Charter)

Texas	001-12251	75-2069407
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

2301 Highway 190 West

DeRidder, Louisiana 70634

(Address of Principal Executive Offices) (Zip Code)

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

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	AMSF	Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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.  ☐

Item 2.02. Results of Operations and Financial Condition.

On July 31, 2019, AMERISAFE, Inc. (the “Company”) issued a press release announcing its financial results for the second quarter ending June 30, 2019. A copy of the Company’s press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.	Description
99.1	Press Release of AMERISAFE, Inc. dated July 31, 2019 (Financial Results)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

AMERISAFE, INC.
	By:	/s/ Neal A. Fuller
	Neal A. Fuller, Executive Vice President and Chief Financial Officer

Date: July 31, 2019

EX-99.1

Exhibit 99.1

  Neal A. Fuller, EVP & CFO AMERISAFE 337.463.9052

AMERISAFE ANNOUNCES 2019 SECOND QUARTER RESULTS

Reports Combined Ratio of 83.9%

DeRidder, LA – July 31, 2019 - AMERISAFE, Inc. (Nasdaq: AMSF), a specialty provider of workers’ compensation insurance focused on high hazard industries, today announced results for the second quarter ended June 30, 2019.

	Three Months Ended June 30,									Six Months Ended June 30,
	2019			2018			% Change			2019			2018			% Change
	(in thousands, except per share data)									(in thousands, except per share data)
Net premiums earned	$	82,951		$	88,995			-6.8	%	$	167,899		$	176,305			-4.8	%
Net investment income		8,169			7,303			11.9	%		16,184			14,512			11.5	%
Net realized losses on investments, pretax		(82	)		(1,111	)		NM			(23	)		(1,142	)		NM
Net income		17,890			16,956			5.5	%		37,290			33,125			12.6	%
Diluted earnings per share	$	0.93		$	0.88			5.7	%	$	1.93		$	1.72			12.2	%
Operating net income		17,448			17,774			-1.8	%		35,096			34,275			2.4	%
Operating earnings per share	$	0.90		$	0.92			-2.2	%	$	1.82		$	1.78			2.2	%
Book value per share	$	23.29		$	23.11			0.8	%	$	23.29		$	23.11			0.8	%
Net combined ratio		83.9	%		83.6	%					84.0	%		84.7	%
Return on average equity		16.3	%		15.5	%					17.4	%		15.2	%

G. Janelle Frost, President and Chief Executive Officer, noted, “The workers’ compensation industry remained profitable through 2018, and competition remained strong through the second quarter. AMERISAFE’s response was to execute on our commitment to deliver an exceptional product to our policyholders through our quality insurance services and risk assessment. Remaining committed to our core disciplines has allowed us to provide stable returns for our shareholders, a consistent market for our agent partners, and aided business owners with mitigating risks.”

INSURANCE RESULTS

	Three Months Ended June 30,									Six Months Ended June 30,
	2019			2018			% Change			2019			2018			% Change
	(in thousands)									(in thousands)
Gross premiums written	$	87,018		$	93,702			-7.1	%	$	180,125		$	191,044			-5.7	%
Net premiums earned		82,951			88,995			-6.8	%		167,899			176,305			-4.8	%
Loss and loss adjustment expenses incurred		48,868			52,076			-6.2	%		98,482			105,238			-6.4	%
Underwriting and certain other operating costs, commissions, salaries and benefits		19,718			21,282			-7.3	%		40,385			41,548			-2.8	%
Policyholder dividends		998			1,092			-8.6	%		2,098			2,425			-13.5	%
Underwriting profit (pre-tax)	$	13,367		$	14,545			-8.1	%	$	26,934		$	27,094			-0.6	%
Insurance Ratios:
Current accident year loss ratio		72.5	%		71.5	%					72.5	%		71.5	%
Prior accident year loss ratio		-13.6	%		-13.0	%					-13.8	%		-11.8	%
Net loss ratio		58.9	%		58.5	%					58.7	%		59.7	%
Net underwriting expense ratio		23.8	%		23.9	%					24.1	%		23.6	%
Net dividend ratio		1.2	%		1.2	%					1.2	%		1.4	%
Net combined ratio		83.9	%		83.6	%					84.0	%		84.7	%

• Gross premiums written in the second quarter of 2019 decreased by $6.7 million, or 7.1%, compared with the second quarter of 2018, primarily due to lower voluntary premiums on policies written in the quarter, which were 5.3% lower than the second quarter of 2018.

• Payroll audits and related premium adjustments increased premiums written by $1.8 million in the second quarter of 2019, compared to an increase in premiums written of $3.8 million in the second quarter of 2018.

• The current accident year loss ratio for the second quarter was 72.5%, unchanged from the first quarter of 2019, and an increase of 1.0 percentage point from the 71.5% ratio for accident year 2018. During the quarter, the Company experienced favorable net loss development for prior accident years, which reduced loss and loss adjustment expenses by $11.3 million, primarily coming from accident years 2014 through 2017.

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• For the quarter ended June 30, 2019, the underwriting expense ratio was 23.8% compared with 23.9% in the same quarter in 2018. The decrease in the expense ratio was due to lower compensation costs and premium based assessments compared with the second quarter of 2018.

• The effective tax rate for the quarter ended June 30, 2019 was 19.3%, largely unchanged compared with 19.0% for the second quarter of 2018.

INVESTMENT RESULTS

	Three Months Ended June 30,									Six Months Ended June 30,
	2019			2018			% Change			2019			2018			% Change
	(in thousands)									(in thousands)
Net investment income	$	8,169		$	7,303			11.9	%	$	16,184		$	14,512			11.5	%
Net realized losses on investments (pre-tax)		(82	)		(1,111	)		NM			(23	)		(1,142	)		NM
Net unrealized gains (losses) on equity securities (pre-tax)		642			76			NM			2,800			(314	)		NM
Pre-tax investment yield		2.7	%		2.5	%					2.7	%		2.4	%
Tax-equivalent yield (1)		3.1	%		2.9	%					3.1	%		2.9	%

(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 June 30, 2019, increased 11.9% to $8.2 million from $7.3 million in the second quarter of 2018, due to slightly higher investment yields on fixed-income securities.

• As of June 30, 2019, the carrying value of AMERISAFE’s investment portfolio, including cash and cash equivalents, was $1.2 billion.

CAPITAL MANAGEMENT

The Company paid a regular quarterly cash dividend of $0.25 per share on June 21, 2019. On July 30, 2019 the Company’s Board of Directors declared a quarterly cash dividend of $0.25 per share, payable on September 20, 2019 to shareholders of record as of September 6, 2019.

Book value per share at June 30, 2019 was $23.29, an increase of 9.5% from $21.26 at December 31, 2018.

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SUPPLEMENTAL INFORMATION

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
	(in thousands, except share and per share data)
Net income	$	17,890		$	16,956		$	37,290		$	33,125
Less:
Net realized losses on investments		(82	)		(1,111	)		(23	)		(1,142	)
Net unrealized gains (losses) on equity securities		642			76			2,800			(314	)
Tax effect (1)		(118	)		217			(583	)		306
Operating net income (2)	$	17,448		$	17,774		$	35,096		$	34,275
Average shareholders’ equity (3)	$	439,924		$	438,730		$	429,603		$	435,407
Less:
Average accumulated other comprehensive income (loss)		7,551			(2,160	)		4,654			765
Average adjusted shareholders’ equity	$	432,373		$	440,890		$	424,949		$	434,642
Diluted weighted average common shares		19,306,953			19,266,735			19,316,276			19,275,883
Return on average equity (4)		16.3	%		15.5	%		17.4	%		15.2	%
Operating return on average adjusted equity (2)		16.1	%		16.1	%		16.5	%		15.8	%
Diluted earnings per share	$	0.93		$	0.88		$	1.93		$	1.72
Operating earnings per share (2)	$	0.90		$	0.92		$	1.82		$	1.78

(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.

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CONFERENCE CALL INFORMATION

AMERISAFE has scheduled a conference call for August 1, 2019, 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 877-225-7695 or 720-545-0027 at least ten 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 August 8, 2019. To access the replay, dial 855-859-2056 or 404-537-3406 and use the pass code 7867689#.

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 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, logging and lumber, manufacturing, and agriculture. AMERISAFE actively markets workers’ compensation insurance in 27 states.

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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 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, 2018. 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 -

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AMERISAFE, INC. AND SUBSIDIARIES

Consolidated Statements of Income

(in thousands)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
	(unaudited)						(unaudited)
Revenues:
Gross premiums written	$	87,018		$	93,702		$	180,125		$	191,044
Ceded premiums written		(2,204	)		(2,369	)		(4,634	)		(4,699	)
Net premiums written	$	84,814		$	91,333		$	175,491		$	186,345
Net premiums earned	$	82,951		$	88,995		$	167,899		$	176,305
Net investment income		8,169			7,303			16,184			14,512
Net realized gains (losses) on investments		(82	)		(1,111	)		(23	)		(1,142	)
Net unrealized gains (losses) on equity securities		642			76			2,800			(314	)
Fee and other income		73			117			83			194
Total revenues		91,753			95,380			186,943			189,555
Expenses:
Loss and loss adjustment expenses incurred		48,868			52,076			98,482			105,238
Underwriting and other operating costs		19,718			21,282			40,385			41,548
Policyholder dividends		998			1,092			2,098			2,425
Total expenses		69,584			74,450			140,965			149,211
Income before taxes		22,169			20,930			45,978			40,344
Income tax expense		4,279			3,974			8,688			7,219
Net income	$	17,890		$	16,956		$	37,290		$	33,125

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AMERISAFE, INC. AND SUBSIDIARIES

Consolidated Statements of Income (cont.)

(in thousands, except per share amounts)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
	(unaudited)				(unaudited)
Basic EPS:
Net income	$	17,890	$	16,956	$	37,290	$	33,125
Basic weighted average common shares		19,245,592		19,208,601		19,237,401		19,197,925
Basic earnings per share	$	0.93	$	0.88	$	1.94	$	1.73
Diluted EPS:
Net income	$	17,890	$	16,956	$	37,290	$	33,125
Diluted weighted average common shares:
Weighted average common shares		19,245,592		19,208,601		19,237,401		19,197,925
Stock options and restricted stock		61,361		58,134		78,875		77,958
Diluted weighted average common shares		19,306,953		19,266,735		19,316,276		19,275,883
Diluted earnings per share	$	0.93	$	0.88	$	1.93	$	1.72

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AMERISAFE, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands)

	June 30,		December 31,
	2019		2018
	(unaudited)
Assets
Investments	$	1,163,059	$	1,125,490
Cash and cash equivalents		51,246		40,344
Amounts recoverable from reinsurers		103,695		112,006
Premiums receivable, net		175,020		162,478
Deferred income taxes		19,461		21,852
Deferred policy acquisition costs		20,550		19,734
Other assets		38,062		34,027
	$	1,571,093	$	1,515,931
Liabilities and Shareholders’ Equity
Liabilities:
Reserves for loss and loss adjustment expenses	$	795,046	$	798,409
Unearned premiums		156,889		149,296
Insurance-related assessments		30,253		28,258
Other liabilities		139,462		130,206
Shareholders’ equity		449,443		409,762
Total liabilities and shareholders’ equity	$	1,571,093	$	1,515,931

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