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 30, 2020

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))

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.  ☐

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

Item 2.02. Results of Operations and Financial Condition.

On July 30, 2020, AMERISAFE, Inc. (the “Company”) issued a press release announcing its financial results for the second quarter ended June 30, 2020. 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 30, 2020 (Financial Results)
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

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 30, 2020

EX-99.1

Exhibit 99.1

  Neal A. Fuller, EVP & CFO AMERISAFE 337.463.9052

AMERISAFE ANNOUNCES 2020 SECOND QUARTER RESULTS

Reports Combined Ratio of 78.5%

DeRidder, LA – July 30, 2020 - 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, 2020.

	Three Months Ended									Six Months Ended
	June 30,									June 30,
	2020			2019			% Change			2020			2019			% Change
	(in thousands, except per share data)									(in thousands, except per share data)
Net premiums earned	$	75,964		$	82,951			-8.4	%	$	154,954		$	167,899			-7.7	%
Net investment income		7,324			8,169			-10.3	%		15,073			16,184			-6.9	%
Net realized gains (losses) on investments (pretax)		163			(82	)		NM			1,155			(23	)		NM
Net unrealized gains (losses) on equity securities (pre-tax)		5,570			642			NM			(3,193	)		2,800			NM
Net income		23,948			17,890			33.9	%		34,748			37,290			-6.8	%
Diluted earnings per share	$	1.24		$	0.93			33.3	%	$	1.80		$	1.93			-6.7	%
Operating net income		19,419			17,448			11.3	%		36,358			35,096			3.6	%
Operating earnings per share	$	1.00		$	0.90			11.1	%	$	1.88		$	1.82			3.3	%
Book value per share	$	23.94		$	23.29			2.8	%	$	23.94		$	23.29			2.8	%
Net combined ratio		78.5	%		83.9	%					81.1	%		84.0	%
Return on average equity		21.3	%		16.3	%					15.6	%		17.4	%

G. Janelle Frost, President and Chief Executive Officer, observed, “AMERISAFE’s fundamentals are crucial in these unprecedented times. We are serving our stakeholders with disciplined underwriting, proactive safety and intensive claims management, which produce consistent returns, quality insurance services and financial stability. This quarter those fundamentals led to favorable prior year case development and a combined ratio of 78.5%. Over time, those fundamentals have led to twelve consecutive years as one of Ward’s Top 50 P&C companies. We are honored by the recognition and encouraged to continue seeking excellence for our stakeholders.”

INSURANCE RESULTS

	Three Months Ended									Six Months Ended
	June 30,									June 30,
	2020			2019			% Change			2020			2019			% Change
	(in thousands)									(in thousands)
Gross premiums written	$	80,289		$	87,018			-7.7	%	$	167,360		$	180,125			-7.1	%
Net premiums earned		75,964			82,951			-8.4	%		154,954			167,899			-7.7	%
Loss and loss adjustment expenses incurred		37,530			48,868			-23.2	%		81,177			98,482			-17.6	%
Underwriting and certain other operating costs, commissions, salaries and benefits		21,131			19,718			7.2	%		42,415			40,385			5.0	%
Policyholder dividends		948			998			-5.0	%		1,971			2,098			-6.1	%
Underwriting profit (pre-tax)	$	16,273		$	13,367			21.7	%	$	29,335		$	26,934			8.9	%
Insurance Ratios:
Current accident year loss ratio		72.5	%		72.5	%					72.5	%		72.5	%
Prior accident year loss ratio		-23.1	%		-13.6	%					-20.1	%		-13.8	%
Net loss ratio		49.4	%		58.9	%					52.4	%		58.7	%
Net underwriting expense ratio		27.8	%		23.8	%					27.4	%		24.1	%
Net dividend ratio		1.3	%		1.2	%					1.3	%		1.2	%
Net combined ratio		78.5	%		83.9	%					81.1	%		84.0	%

• Gross premiums written in the second quarter of 2020 decreased by $6.7 million, or 7.7%, primarily due to lower voluntary premiums on policies written in the quarter which were 6.4% lower as compared to the second quarter of 2019.

• Payroll audits and related premium adjustments increased premiums written by $0.5 million in the second quarter of 2020, compared to an increase in premiums written of $1.8 million in the second quarter of 2019. The amount this quarter included a $1.4 million reduction in anticipated future audit premiums.

• The current accident year loss ratio for the second quarter was 72.5%, unchanged from the first quarter of 2020, and unchanged from accident year 2019. During the quarter, the Company experienced favorable case reserve development for prior accident years, which reduced loss and loss adjustment expenses by $17.5 million, attributed primarily to accident years 2015 through 2018.

2

• For the quarter ended June 30, 2020, the underwriting expense ratio was 27.8% compared with 23.8% in the same quarter in 2019. The increase in the expense ratio was due to lower earned premium and higher expenses. Last year’s second quarter included $1.0 million in favorable lower estimates of variable share price based incentive compensation costs and $0.6 million in favorable lower insurance assessment costs.

• The effective tax rate for the quarter ended June 30, 2020 was 18.5%, compared with 19.3% for the second quarter of 2019. The decrease is due to a higher level of tax-exempt interest income in 2020 compared to 2019.

INVESTMENT RESULTS

	Three Months Ended									Six Months Ended
	June 30,									June 30,
	2020			2019			% Change			2020			2019			% Change
	(in thousands)									(in thousands)
Net investment income	$	7,324		$	8,169			-10.3	%	$	15,073		$	16,184			-6.9	%
Net realized gains (losses) on investments (pre-tax)		163			(82	)		NM			1,155			(23	)		NM
Net unrealized gains (losses) on equity securities (pre-tax)		5,570			642			NM			(3,193	)		2,800			NM
Pre-tax investment yield		2.5	%		2.7	%					2.5	%		2.7	%
Tax-equivalent yield (1)		2.9	%		3.1	%					2.9	%		3.1	%

(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, 2020, decreased 10.3% to $7.3 million from $8.2 million in the second quarter of 2019, due to lower investment yields on fixed-income securities.

• Net unrealized gains on equity investments were $5.6 million during the second quarter of 2020, which increased overall net income by $0.23 per share.

• As of June 30, 2020, the carrying value of AMERISAFE’s investment portfolio, including cash and cash equivalents, was $1.2 billion.

3

CAPITAL MANAGEMENT

The Company paid a regular quarterly cash dividend of $0.27 per share on June 26, 2020. On July 27, 2020 the Company’s Board of Directors declared a quarterly cash dividend of $0.27 per share, payable on September 25, 2020 to shareholders of record as of September 11, 2020.

Book value per share at June 30, 2020 was $23.94, an increase of 7.4% from $22.29 at December 31, 2019.

CORONAVIRUS (COVID-19) UPDATE

During the second quarter, AMERISAFE began gradually returning employees to our offices, with protocols in place to protect the health and safety of our employees. Many employees also continue to work from home, assisting agents and policyholders with their workers compensation insurance. AMERISAFE has also begun returning our Safety and Claims professionals to the field, where these professionals inspect job sites and meet with injured workers, all following health and safety guidelines. Additionally, the Company continues to work with customers utilizing virtual meeting tools along with access via phone, email and through our website. At this point and time, the Company is conducting business with no disruption to operations.

AMERISAFE policyholders are small to mid-sized employers engaged in hazardous industries, principally construction (44%), trucking (18%), logging and lumber (8%), manufacturing (5%), agriculture (5%), maritime (2%), and oil and gas (2%) with the remainder (16%) in a wide variety of hazardous industries (based on 2019 premiums).

There continues to be uncertainty about the impact to our policyholders from COVID-19 and our customers’ business operations, including payrolls, which is a primary source of premium revenue for AMERISAFE. In most industries and states, business continues, and in some cases the activities of our policyholders have been restricted due to the pandemic and associated recession.

Premiums in future periods will depend on the ongoing economic impact of COVID-19. Investment income may decline, and the market value of investment securities may decrease, depending on the ongoing economic impact.

4

SUPPLEMENTAL INFORMATION

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2020			2019			2020			2019
	(in thousands, except share and per share data)
Net income	$	23,948		$	17,890		$	34,748		$	37,290
Less:
Net realized gains (losses) on investments		163			(82	)		1,155			(23	)
Net unrealized gains (losses) on equity securities		5,570			642			(3,193	)		2,800
Tax effect (1)		(1,204	)		(118	)		428			(583	)
Operating net income (2)	$	19,419		$	17,448		$	36,358		$	35,096
Average shareholders’ equity (3)	$	449,876		$	439,924		$	446,506		$	429,603
Less:
Average accumulated other comprehensive income		16,437			7,551			15,695			4,654
Average adjusted shareholders’ equity (2)	$	433,439		$	432,373		$	430,811		$	424,949
Diluted weighted average common shares		19,335,707			19,306,953			19,335,748			19,316,276
Return on average equity (4)		21.3	%		16.3	%		15.6	%		17.4	%
Operating return on average adjusted equity (2)		17.9	%		16.1	%		16.9	%		16.5	%
Diluted earnings per share	$	1.24		$	0.93		$	1.80		$	1.93
Operating earnings per share (2)	$	1.00		$	0.90		$	1.88		$	1.82

(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.

5

CONFERENCE CALL INFORMATION

AMERISAFE has scheduled a conference call for July 31, 2020, 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 323-701-0225 (Conference Code 7192493) 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 http://www.amerisafe.com. To listen to the live call on the web, please visit the website at least ten 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.

6

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 the COVID-19 pandemic on the business and operations of the Company and our policyholders and the market value of the securities in our investment portfolio. Other 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 for the year ended December 31, 2019. 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,
	2020			2019			2020			2019
	(unaudited)						(unaudited)
Revenues:
Gross premiums written	$	80,289		$	87,018		$	167,360		$	180,125
Ceded premiums written		(2,672	)		(2,204	)		(5,455	)		(4,634	)
Net premiums written	$	77,617		$	84,814		$	161,905		$	175,491
Net premiums earned	$	75,964		$	82,951		$	154,954		$	167,899
Net investment income		7,324			8,169			15,073			16,184
Net realized gains (losses) on investments		163			(82	)		1,155			(23	)
Net unrealized gains (losses) on equity securities		5,570			642			(3,193	)		2,800
Loss on disposal of assets		(29	)		—			(29	)		—
Fee and other income		90			73			291			83
Total revenues		89,082			91,753			168,251			186,943
Expenses:
Loss and loss adjustment expenses incurred		37,530			48,868			81,177			98,482
Underwriting and other operating costs		21,131			19,718			42,415			40,385
Policyholder dividends		948			998			1,971			2,098
Provision for investment related credit loss expense		82			—			56			—
Total expenses		59,691			69,584			125,619			140,965
Income before taxes		29,391			22,169			42,632			45,978
Income tax expense		5,443			4,279			7,884			8,688
Net income	$	23,948		$	17,890		$	34,748		$	37,290

8

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,
	2020		2019		2020		2019
	(unaudited)				(unaudited)
Basic EPS:
Net income	$	23,948	$	17,890	$	34,748	$	37,290
Basic weighted average common shares		19,280,684		19,245,592		19,273,347		19,237,401
Basic earnings per share	$	1.24	$	0.93	$	1.80	$	1.94
Diluted EPS:
Net income	$	23,948	$	17,890	$	34,748	$	37,290
Diluted weighted average common shares:
Weighted average common shares		19,280,684		19,245,592		19,273,347		19,237,401
Stock options and restricted stock		55,023		61,361		62,401		78,875
Diluted weighted average common shares		19,335,707		19,306,953		19,335,748		19,316,276
Diluted earnings per share	$	1.24	$	0.93	$	1.80	$	1.93

9

AMERISAFE, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands)

	June 30,		December 31,
	2020		2019
	(unaudited)
Assets
Investments	$	1,098,760	$	1,125,018
Cash and cash equivalents		110,281		43,813
Amounts recoverable from reinsurers		103,524		95,913
Premiums receivable, net		175,241		157,953
Deferred income taxes		16,704		17,513
Deferred policy acquisition costs		19,765		19,048
Other assets		25,698		33,648
	$	1,549,973	$	1,492,906
Liabilities and Shareholders’ Equity
Liabilities:
Reserves for loss and loss adjustment expenses	$	768,767	$	772,887
Unearned premiums		147,824		140,873
Insurance-related assessments		25,955		22,967
Other liabilities		144,631		125,964
Shareholders’ equity		462,796		430,215
Total liabilities and shareholders’ equity	$	1,549,973	$	1,492,906

# # #

10

XML

Document and Entity Information	Jul. 30, 2020
Cover [Abstract]
Entity Registrant Name	AMERISAFE INC
Amendment Flag	false
Entity Central Index Key	0001018979
Document Type	8-K
Document Period End Date	Jul. 30, 2020
Entity Incorporation State Country Code	TX
Entity File Number	001-12251
Entity Tax Identification Number	75-2069407
Entity Address, Address Line One	2301 Highway 190 West
Entity Address, City or Town	DeRidder
Entity Address, State or Province	LA
Entity Address, Postal Zip Code	70634
City Area Code	(337)
Local Phone Number	463-9052
Written Communications	false
Soliciting Material	false
Pre Commencement Tender Offer	false
Pre Commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Security 12b Title	Common Stock, par value $0.01 per share
Trading Symbol	AMSF
Security Exchange Name	NASDAQ