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 JUNE 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 July 22, 2022, there were 19,283,980 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	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)

	June 30, 2022			December 31, 2021
	(unaudited)
Assets
Investments:
Fixed maturity securities—held-to-maturity, at amortized cost net of allowance    for credit losses of $276 and $195 in 2022 and 2021, respectively,    (fair value $525,637 and $575,850 in 2022 and 2021, respectively)	$	541,297		$	549,231
Fixed maturity securities—available-for-sale, at fair value    (amortized cost $341,297, allowance for credit losses of $0 in 2022    and amortized cost $324,597, allowance for credit losses of $0 in 2021)		330,135			341,769
Equity securities, at fair value    (cost $49,422 and $44,175 in 2022 and 2021, respectively)		60,485			64,140
Short-term investments		34,483			57,431
Total investments		966,400			1,012,571
Cash and cash equivalents		85,318			70,722
Amounts recoverable from reinsurers    (net of allowance for credit losses of $369 and $440 in 2022 and 2021, respectively)		118,575			120,561
Premiums receivable    (net of allowance for credit losses of $4,746 and $4,386 in 2022 and 2021, respectively)		143,307			135,100
Deferred income taxes		21,927			14,384
Accrued interest receivable		8,228			8,080
Property and equipment, net		6,889			6,459
Deferred policy acquisition costs		18,103			17,059
Federal income tax recoverable		289			6,414
Other assets		12,884			11,374
Total assets	$	1,381,920		$	1,402,724
Liabilities and shareholders’ equity
Liabilities:
Reserves for loss and loss adjustment expenses	$	724,891		$	745,278
Unearned premiums		130,224			121,092
Amounts held for others		46,112			42,915
Policyholder deposits		37,632			39,383
Insurance-related assessments		18,566			16,850
Accounts payable and other liabilities		37,868			37,883
Payable for investments purchased		1,638			—
Total liabilities		996,931			1,003,401
Shareholders’ equity:
Common stock:  voting—$0.01 par value authorized shares—50,000,000    in 2022 and 2021; 20,676,474 and 20,622,304 shares issued; and 19,296,632    and 19,364,054 shares outstanding in 2022 and 2021, respectively		207			206
Additional paid-in capital		219,744			217,458
Treasury stock, at cost (1,379,842 and 1,258,250 shares in 2022 and 2021,    respectively)		(28,071	)		(22,370	)
Accumulated earnings		201,983			190,492
Accumulated other comprehensive income (loss), net		(8,874	)		13,537
Total shareholders’ equity		384,989			399,323
Total liabilities and shareholders’ equity	$	1,381,920		$	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						Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021
Revenues
Gross premiums written	$	74,460		$	73,724		$	152,251		$	155,238
Ceded premiums written		(2,725	)		(2,486	)		(5,284	)		(5,003	)
Net premiums written	$	71,735		$	71,238		$	146,967		$	150,235
Net premiums earned	$	70,279		$	69,888		$	137,835		$	140,634
Net investment income		6,485			6,730			12,598			13,313
Net realized gains on investments		1,079			1,179			1,817			1,498
Net unrealized gains (losses) on equity securities		(9,942	)		3,286			(8,902	)		8,797
Fee and other income		135			74			248			266
Total revenues		68,036			81,157			143,596			164,508
Expenses
Loss and loss adjustment expenses incurred		40,326			32,423			78,067			71,940
Underwriting and certain other operating costs		7,684			6,339			11,674			13,266
Commissions		5,453			5,309			10,661			10,783
Salaries and benefits		6,776			6,807			12,691			13,373
Policyholder dividends		688			1,117			1,877			2,467
Provision for investment related credit loss expense (benefit)		(14	)		(9	)		81			(117	)
Total expenses		60,913			51,986			115,051			111,712
Income before income taxes		7,123			29,171			28,545			52,796
Income tax expense		991			5,404			5,082			9,717
Net income	$	6,132		$	23,767		$	23,463		$	43,079
Earnings per share
Basic	$	0.32		$	1.23		$	1.22		$	2.23
Diluted	$	0.32		$	1.23		$	1.21		$	2.22
Shares used in computing earnings per share
Basic		19,273,934			19,327,422			19,302,805			19,319,608
Diluted		19,332,168			19,380,611			19,367,085			19,384,078
Cash dividends declared per common share	$	0.31		$	0.29		$	0.62		$	0.58

See accompanying notes.

5

AMERISAFE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(unaudited)

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2022			2021		2022			2021
Net income	$	6,132		$	23,767	$	23,463		$	43,079
Other comprehensive income (loss):
Unrealized gain (loss) on debt securities, net of tax		(8,931	)		891		(22,411	)		(4,157	)
Comprehensive income (loss)	$	(2,799	)	$	24,658	$	1,052		$	38,922

See accompanying notes.

6

AMERISAFE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Three Months Ended June 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			Income (Loss)			Total
Balance at March 31, 2022		20,622,565	$	206	$	217,605		(1,302,143	)	$	(24,429	)	$	201,834		$	57		$	395,273
Comprehensive loss:
Net income		—		—		—		—			—			6,132			—			6,132
Other comprehensive    loss:
Change in unrealized    gains on debt    securities, net of tax		—		—		—		—			—			—			(8,931	)		(8,931	)
Comprehensive loss:																				(2,799	)
Common stock issued		53,909		1		1,969		—			—			—			—			1,970
Purchase of treasury stock		—		—		—		(77,699	)		(3,642	)		—			—			(3,642	)
Share-based compensation		—		—		170		—			—			—			—			170
Dividends to shareholders		—		—		—		—			—			(5,983	)		—			(5,983	)
Balance at June 30, 2022		20,676,474	$	207	$	219,744		(1,379,842	)	$	(28,071	)	$	201,983		$	(8,874	)	$	384,989
	Common Stock				Additional Paid-In		Treasury Stock						Accumulated			Accumulated Other Comprehensive
	Shares		Amounts		Capital		Shares			Amounts			Earnings			Income			Total
Balance at March 31, 2021		20,589,309	$	206	$	215,468		(1,258,250	)	$	(22,370	)	$	238,351		$	15,971		$	447,626
Comprehensive income:
Net income		—		—		—		—			—			23,767			—			23,767
Other comprehensive    loss:
Change in unrealized    gains on debt    securities, net of tax		—		—		—		—			—			—			891			891
Comprehensive income:																				24,658
Common stock issued		32,995		—		1,563		—			—			—			—			1,563
Share-based compensation		—		—		134		—			—			—			—			134
Dividends to shareholders		—		—		—		—			—			(5,615	)		—			(5,615	)
Balance at June 30, 2021		20,622,304	$	206	$	217,165		(1,258,250	)	$	(22,370	)	$	256,503		$	16,862		$	468,366

See accompanying notes.

7

AMERISAFE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Six Months Ended June 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		Income (Loss)			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		—		—		—		—			—			23,463		—			23,463
Other comprehensive    income:
Change in unrealized    gains on debt    securities, net of tax		—		—		—		—			—			—		(22,411	)		(22,411	)
Comprehensive income: