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 MARCH 31, 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 April 22, 2022, there were 19,320,422 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	20
Item 3	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4	Controls and Procedures	25
PART II - OTHER INFORMATION
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 6	Exhibits	26

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)

	March 31, 2022			December 31, 2021
	(unaudited)
Assets
Investments:
Fixed maturity securities—held-to-maturity, at amortized cost net of allowance    for credit losses of $290 and $195 in 2022 and 2021, respectively,    (fair value $545,425 and $575,850 in 2022 and 2021, respectively)	$	545,372		$	549,231
Fixed maturity securities—available-for-sale, at fair value    (amortized cost $342,784, allowance for credit losses of $0 in 2022    and amortized cost $324,597, allowance for credit losses of $0 in 2021)		342,972			341,769
Equity securities, at fair value    (cost $48,151 and $44,175 in 2022 and 2021, respectively)		69,156			64,140
Short-term investments		72,820			57,431
Total investments		1,030,320			1,012,571
Cash and cash equivalents		30,741			70,722
Amounts recoverable from reinsurers    (net of allowance for credit losses of $388 and $440 in 2022 and 2021, respectively)		116,233			120,561
Premiums receivable    (net of allowance for credit losses of $4,530 and $4,386 in 2022 and 2021, respectively)		140,601			135,100
Deferred income taxes		17,602			14,384
Accrued interest receivable		8,949			8,080
Property and equipment, net		6,423			6,459
Deferred policy acquisition costs		17,877			17,059
Federal income tax recoverable		2,973			6,414
Other assets		19,662			11,374
Total assets	$	1,391,381		$	1,402,724
Liabilities and shareholders’ equity
Liabilities:
Reserves for loss and loss adjustment expenses	$	728,558		$	745,278
Unearned premiums		128,768			121,092
Amounts held for others		44,200			42,915
Policyholder deposits		38,518			39,383
Insurance-related assessments		17,622			16,850
Accounts payable and other liabilities		38,442			37,883
Total liabilities		996,108			1,003,401
Shareholders’ equity:
Common stock:  voting—$0.01 par value authorized shares—50,000,000    in 2022 and 2021; 20,622,565 and 20,622,304 shares issued; and 19,320,422    and 19,364,054 shares outstanding in 2022 and 2021, respectively		206			206
Additional paid-in capital		217,605			217,458
Treasury stock, at cost (1,302,143 and 1,258,250 shares in 2022 and 2021, respectively)		(24,429	)		(22,370	)
Accumulated earnings		201,834			190,492
Accumulated other comprehensive income, net		57			13,537
Total shareholders’ equity		395,273			399,323
Total liabilities and shareholders’ equity	$	1,391,381		$	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
	March 31,
	2022			2021
Revenues
Gross premiums written	$	77,791		$	81,514
Ceded premiums written		(2,559	)		(2,517	)
Net premiums written	$	75,232		$	78,997
Net premiums earned	$	67,556		$	70,746
Net investment income		6,113			6,583
Net realized gains on investments		738			319
Net unrealized gains on equity securities		1,040			5,511
Fee and other income		113			192
Total revenues		75,560			83,351
Expenses
Loss and loss adjustment expenses incurred		37,741			39,517
Underwriting and certain other operating costs		3,990			6,927
Commissions		5,208			5,474
Salaries and benefits		5,915			6,566
Policyholder dividends		1,189			1,350
Provision for investment related credit loss expense (benefit)		95			(108	)
Total expenses		54,138			59,726
Income before income taxes		21,422			23,625
Income tax expense		4,091			4,313
Net income	$	17,331		$	19,312
Earnings per share
Basic	$	0.90		$	1.00
Diluted	$	0.89		$	0.99
Shares used in computing earnings per share
Basic		19,332,006			19,311,710
Diluted		19,430,824			19,408,804
Cash dividends declared per common share	$	0.31		$	0.29

See accompanying notes.

5

AMERISAFE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)

	Three Months Ended
	March 31,
	2022			2021
Net income	$	17,331		$	19,312
Other comprehensive income:
Unrealized loss on debt securities, net of tax		(13,480	)		(5,048	)
Comprehensive income	$	3,851		$	14,264

See accompanying notes.

6

AMERISAFE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Three Months Ended March 31, 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			Income			Total
Balance at December 31, 2021		20,622,304	$	206	$	217,458		(1,258,250	)	$	(22,370	)	$	190,492		$	13,537		$	399,323
Comprehensive income:
Net income		—		—		—		—			—			17,331			—			17,331
Other comprehensive    income:
Change in unrealized    gains on debt    securities, net of tax		—		—		—		—			—			—			(13,480	)		(13,480	)
Comprehensive income:																				3,851
Common stock issued		261		—		—		—			—			—			—			—
Purchase of treasury stock		—		—		—		(43,893	)		(2,059	)		—			—			(2,059	)
Share-based compensation		—		—		147		—			—			—			—			147
Dividends to shareholders		—		—		—		—			—			(5,989	)		—			(5,989	)
Balance at March 31, 2022		20,622,565	$	206	$	217,605		(1,302,143	)	$	(24,429	)	$	201,834		$	57		$	395,273
	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		—		—		—		—			—			19,312			—			19,312
Other comprehensive    income:
Change in unrealized    gains on debt    securities, net of tax		—		—		—		—			—			—			(5,048	)		(5,048	)
Comprehensive income:																				14,264
Share-based compensation		—		—		152		—			—			—			—			152
Dividends to shareholders		—		—		—		—			—			(5,606	)		—			(5,606	)
Balance at March 31, 2021		20,589,309	$	206	$	215,468		(1,258,250	)	$	(22,370	)	$	238,351		$	15,971		$	447,626

See accompanying notes.

7

AMERISAFE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Three Months Ended March 31,
	2022			2021
Operating activities
Net income	$	17,331		$	19,312
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		294			270
Net amortization of investments		2,068			2,179
Change in investment related allowance for credit losses		95			(108	)
Deferred income taxes		364			500
Net realized gains on investments		(738	)		(319	)
Net unrealized gains on equity securities		(1,040	)		(5,511	)
Net realized gains on disposal of assets		—			(23	)
Share-based compensation		(9	)		571
Changes in operating assets and liabilities:
Premiums receivable, net		(5,501	)		(8,410	)
Accrued interest receivable		(869	)		(395	)
Deferred policy acquisition costs		(818	)		(874	)
Other assets		(4,714	)		(266	)
Reserves for loss and loss adjustment expenses		(16,720	)		(803	)
Unearned premiums		7,676			8,251
Reinsurance balances		4,281			(4,914	)
Amounts held for others and policyholder deposits		420			1,069
Federal income taxes payable		3,441			3,555
Accounts payable and other liabilities		1,557			2,509
Net cash provided by operating activities		7,118			16,593
Investing activities
Purchases of investments held-to-maturity		(13,665	)		(5,281	)
Purchases of investments available-for-sale		(30,076	)		(22,118	)
Purchases of equity securities		(4,975	)		(1,895	)
Purchases of short-term investments		(24,133	)		(42,286	)
Proceeds from maturities of investments held-to-maturity		12,723			13,814
Proceeds from sales and maturities of investments available-for-sale		11,638			17,947
Proceeds from sales of equity securities		1,483			—
Proceeds from sales and maturities of short-term investments		8,218			585
Purchases of property and equipment		(258	)		(390	)
Proceeds from sales of property and equipment		—			23
Net cash used in investing activities		(39,045	)		(39,601	)
Financing activities
Finance lease purchases		(12	)		(9	)
Purchase of treasury stock		(2,059	)		—
Dividends to shareholders		(5,983	)		(5,666	)
Net cash used in financing activities		(8,054	)		(5,675	)
Change in cash and cash equivalents		(39,981	)		(28,683	)
Cash and cash equivalents at beginning of period		70,722			61,757
Cash and cash equivalents at end of period	$	30,741		$	33,074

See accompanying notes.

8

AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1. Basis of Presentation

AMERISAFE, Inc. (the Company) is an insurance holding company incorporated in the state of Texas. The accompanying unaudited consolidated financial statements include the accounts of AMERISAFE and its subsidiaries: American Interstate Insurance Company (AIIC) and its insurance subsidiaries, Silver Oak Casualty, Inc. (SOCI) and American Interstate Insurance Company of Texas (AIICTX), Amerisafe Risk Services, Inc. (RISK) and Amerisafe General Agency, Inc. (AGAI). AIIC and SOCI are property and casualty insurance companies organized under the laws of the state of Nebraska. AIICTX is a property and casualty insurance company organized under the laws of the state of Texas. RISK, a wholly owned subsidiary of the Company, is a claims and safety service company currently servicing only affiliated insurance companies. AGAI, a wholly owned subsidiary of the Company, is a general agent for the Company. AGAI sells insurance, which is underwritten by AIIC, SOCI and AIICTX, as well as by nonaffiliated insurance carriers. The assets and operations of AGAI are not significant to that of the Company and its consolidated subsidiaries.

The terms “AMERISAFE,” the “Company,” “we,” “us” or “our” refer to AMERISAFE, Inc. and its consolidated subsidiaries, as the context requires.

The Company provides workers’ compensation insurance for small to mid-sized employers engaged in hazardous industries, principally construction, trucking, logging and lumber, agriculture, manufacturing, telecommunications, and maritime. Assets and revenues of AIIC and its subsidiaries represent at least 95% of comparable consolidated amounts of the Company for each of the three months ended March 31, 2022 and 2021.

In the opinion of management of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position, the results of operations and cash flows for the periods presented. The unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q under the Securities Exchange Act of 1934 and therefore do not include all information and footnotes to be in conformity with accounting principles generally accepted in the United States (GAAP). The results for the interim periods are not necessarily indicative of the results of operations that may be expected for the year. The unaudited consolidated financial statements contained herein should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2021.

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of our assets, liabilities, revenues and expenses and related disclosures.  Some of the estimates result from judgments that can be subjective and complex and, consequently, actual results in future periods might differ from these estimates.

Adopted Accounting Guidance

The Company has not adopted any new accounting guidance in 2022.

Prospective Accounting Guidance

All issued but not yet effective accounting and reporting standards as of March 31, 2022 are either not applicable to the Company or are not expected to have a material impact on the Company.

Note 2. Restricted Stock and Stock Options

As of March 31, 2022, the Company has two equity incentive plans: the AMERISAFE Non-Employee Director Restricted Stock Plan (the Restricted Stock Plan) and the AMERISAFE 2012 Equity and Incentive Compensation Plan (the 2012 Incentive Plan). See Note 12 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021 for additional information regarding the Company’s incentive plans.

During the three months ended March 31, 2022, the Company issued 261 shares of restricted common stock to a non-employee director.  The market value of these shares totaled $12.5 thousand.  During the three months ended March 31, 2021, the Company did not issue any shares of restricted common stock to non-employee directors.

During the three months ended March 31, 2022 and 2021, there were no exercises of options to purchase common stock.  The Company had no stock options outstanding as of March 31, 2022.

9

Due to changes in variable share price based incentive compensation, the Company recognized a benefit (negative expense) for share-based compensation of $9.0 thousand in the quarter ended March 31, 2022 compared to an expense of $0.6 million in the same period in 2021.  

Note 3. Earnings Per Share

The Company computes earnings per share (EPS) in accordance with FASB Accounting Standards Codification (ASC) Topic 260, Earnings Per Share. The Company has no participating unvested common shares which contain nonforfeitable rights to dividends and applies the treasury stock method in computing basic and diluted earnings per share.

Basic EPS is calculated by dividing net income by the weighted-average number of common shares outstanding during the period.

The diluted EPS calculation includes potential common shares assumed issued under the treasury stock method, which reflects the potential dilution that would occur if any restricted stock becomes vested.

	Three Months Ended
	March 31,
	2022		2021
	(in thousands, except share and per share amounts)
Basic EPS:
Net income	$	17,331	$	19,312
Basic weighted average common shares		19,332,006		19,311,710
Basic earnings per common share	$	0.90	$	1.00
Diluted EPS:
Net income	$	17,331	$	19,312
Diluted weighted average common shares:
Weighted average common shares		19,332,006		19,311,710
Restricted stock		98,818		97,094
Diluted weighted average common shares		19,430,824		19,408,804
Diluted earnings per common share	$	0.89	$	0.99

Note 4. Investments

The amortized cost, allowance for credit losses, carrying amount, gross unrecognized gains and losses, and the fair value of those investments classified as held-to-maturity at March 31, 2022 are summarized as follows:

Amortized Cost Allowance for Credit Losses Carrying Amount Gross Unrecognized Gains Gross Unrecognized