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, 2021

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 25, 2021, there were 19,364,054 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	26
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	28

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;

• 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;

• 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;

• 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, 2020. 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, 2021			December 31, 2020
	(unaudited)
Assets
Investments:
Fixed maturity securities—held-to-maturity, at amortized cost net of allowance    for credit losses of $172 and $274 in 2021 and 2020, respectively,    (fair value $569,445 and $621,654 in 2021 and 2020, respectively)	$	541,224		$	585,130
Fixed maturity securities—available-for-sale, at fair value    (amortized cost $322,863, allowance for credit losses of $0 in 2021    and amortized cost $387,665, allowance for credit losses of $0 in 2020)		341,838			414,279
Equity securities, at fair value    (cost $40,674 and $35,787 in 2021 and 2020, respectively)		56,351			43,437
Short-term investments		94,774			45,898
Total investments		1,034,187			1,088,744
Cash and cash equivalents		123,128			61,757
Amounts recoverable from reinsurers    (net of allowance for credit losses of $389 and $452 in 2021 and 2020, respectively)		108,394			105,803
Premiums receivable    (net of allowance for credit losses of $4,414 and $4,791 in 2021 and 2020, respectively)		154,517			156,760
Deferred income taxes		14,738			13,665
Accrued interest receivable		9,148			9,274
Property and equipment, net		6,158			6,182
Deferred policy acquisition costs		18,580			17,810
Other assets		11,073			10,860
Total assets	$	1,479,923		$	1,470,855
Liabilities and shareholders’ equity
Liabilities:
Reserves for loss and loss adjustment expenses	$	720,789		$	760,561
Unearned premiums		136,013			129,260
Amounts held for others		41,595			43,402
Policyholder deposits		39,908			41,524
Insurance-related assessments		18,907			17,995
Federal income tax payable		2,685			417
Accounts payable and other liabilities		39,870			38,880
Total liabilities		999,767			1,032,039
Shareholders’ equity:
Common stock:  voting—$0.01 par value authorized shares—50,000,000    in 2021 and 2020; 20,622,304 and 20,589,309 shares issued; and 19,364,054    and 19,331,059 shares outstanding in 2021 and 2020, respectively		206			206
Additional paid-in capital		217,311			215,316
Treasury stock, at cost (1,258,250 shares in 2021 and 2020)		(22,370	)		(22,370	)
Accumulated earnings		270,023			224,645
Accumulated other comprehensive income, net		14,986			21,019
Total shareholders’ equity		480,156			438,816
Total liabilities and shareholders’ equity	$	1,479,923		$	1,470,855

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,
	2021			2020			2021			2020
Revenues
Gross premiums written	$	67,185		$	72,648		$	222,423		$	240,008
Ceded premiums written		(2,407	)		(2,473	)		(7,410	)		(7,928	)
Net premiums written	$	64,778		$	70,175		$	215,013		$	232,080
Net premiums earned	$	67,626		$	74,771		$	208,260		$	229,725
Net investment income		6,049			7,063			19,362			22,136
Net realized gains (losses) on investments		(8	)		309			1,490			1,464
Net unrealized gains (losses) on equity securities		(771	)		844			8,026			(2,349	)
Gain (loss) on disposal of assets		—			—			21			(29	)
Fee and other income		149			18			394			309
Total revenues		73,045			83,005			237,553			251,256
Expenses
Loss and loss adjustment expenses incurred		29,661			39,789			101,601			120,966
Underwriting and certain other operating costs		6,503			1,334			19,769			17,337
Commissions		5,173			5,608			15,956			17,475
Salaries and benefits		6,239			6,960			19,612			21,505
Policyholder dividends		733			714			3,200			2,685
Provision for investment related credit loss expense (benefit)		15			(69	)		(102	)		(13	)
Total expenses		48,324			54,336			160,036			179,955
Income before income taxes		24,721			28,669			77,517			71,301
Income tax expense		5,585			5,316			15,302			13,200
Net income	$	19,136		$	23,353		$	62,215		$	58,101
Earnings per share
Basic	$	0.99		$	1.21		$	3.22		$	3.01
Diluted	$	0.99		$	1.21		$	3.21		$	3.00
Shares used in computing earnings per share
Basic		19,344,636			19,299,921			19,328,041			19,282,263
Diluted		19,407,918			19,358,682			19,392,939			19,345,952
Cash dividends declared per common share	$	0.29		$	0.27		$	0.87		$	0.81

See accompanying notes.

5

AMERISAFE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2021			2020		2021			2020
Net income	$	19,136		$	23,353	$	62,215		$	58,101
Other comprehensive income:
Unrealized gain (loss) on debt securities, net of tax		(1,876	)		734		(6,033	)		7,701
Comprehensive income	$	17,260		$	24,087	$	56,182		$	65,802

See accompanying notes.

6

AMERISAFE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Three Months Ended September 30, 2021 and 2020

(in thousands, except share data)

(unaudited)

	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
	Common Stock				Additional Paid-In		Treasury Stock						Accumulated			Accumulated Other Comprehensive
	Shares		Amounts		Capital		Shares			Amounts			Earnings			Income			Total
Balance at June 30, 2020		20,589,309	$	206	$	214,894		(1,258,250	)	$	(22,370	)	$	250,888		$	19,178		$	462,796
Comprehensive income:
Net income		—		—		—		—			—			23,353			—			23,353
Other comprehensive    income:
Change in unrealized    gains on debt securities,    net of tax		—		—		—		—			—			—			734			734
Comprehensive income:																				24,087
Share-based compensation		—		—		246		—			—			—			—			246
Dividends to shareholders		—		—		—		—			—			(5,219	)		—			(5,219	)
Balance at September 30, 2020		20,589,309	$	206	$	215,140		(1,258,250	)	$	(22,370	)	$	269,022		$	19,912		$	481,910

See accompanying notes.

7

AMERISAFE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Nine Months Ended September 30, 2021 and 2020

(in thousands, except share data)

(unaudited)

	Common Stock				Additional Paid-In		Treasury Stock						Accumulated		Accumulated Other Comprehensive
	Shares		Amounts		Capital		Shares			Amounts			Earnings		Income			Total
Balance at December 31, 2020		20,589,309	$	206	$	215,316		(1,258,250	)	$	(22,370	)	$	224,645	$	21,019		$	438,816
Comprehensive income:
Net income		—		—		—		—			—			62,215		—			62,215
Other comprehensive    income:
Change in unrealized    gains, net of tax		—		—		—		—			—			—		(6,033	)		(6,033	)
Comprehensive income:																			56,182
Common stock issued		32,995		—		1,563		—			—			—		—			1,563
Share-based compensation		—		—		432		—			—			—