AMERISAFE(AMSF) - 2024 Q2 - Quarterly Results

AMERISAFE Second Quarter 2024 Results Financial Highlights AMERISAFE's Q2 2024 results show net premiums earned growth, but decreased net income and diluted EPS, with a higher net combined ratio Q2 & H1 2024 Financial Highlights (in thousands) | Metric | Q2 2024 | Q2 2023 | % Change | H1 2024 | H1 2023 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net premiums earned | $68,633 | $65,598 | 4.6% | $137,079 | $134,779 | 1.7% | | Net income | $10,993 | $15,627 | -29.7% | $27,918 | $32,966 | -15.3% | | Diluted earnings per share | $0.57 | $0.81 | -29.6% | $1.46 | $1.72 | -15.1% | | Operating net income | $11,131 | $13,950 | -20.2% | $24,459 | $30,004 | -18.5% | | Net combined ratio | 90.5% | 85.4% | N/A | 88.8% | 83.9% | N/A | | Book value per share | $15.78 | $17.76 | -11.1% | $15.78 | $17.76 | -11.1% | - CEO G. Janelle Frost noted that gross premiums written grew 6.6% for the quarter, driven by new business generation, strong retention, and increased audit premiums, leading to an attractive underwriting profit[3] Insurance Results Q2 2024 gross premiums written increased, but the net combined ratio deteriorated due to a higher net loss ratio, despite favorable prior year development Q2 2024 Insurance Ratios (vs. Q2 2023) | Insurance Ratio | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Current accident year loss ratio | 71.0% | 71.0% | | Prior accident year loss ratio | -11.8% | -16.7% | | Net loss ratio | 59.2% | 54.3% | | Net underwriting expense ratio | 29.8% | 30.4% | | Net dividend ratio | 1.5% | 0.7% | | Net combined ratio | 90.5% | 85.4% | - Gross premiums written grew 6.6% in Q2 2024, supported by a 2.7% increase in voluntary premiums from higher policy count and strong retention[4] - Payroll audits and related adjustments added $7.3 million to premiums in Q2 2024, up from $4.8 million in Q2 2023, due to continued payroll strength[4] - The company experienced $8.1 million in favorable net loss reserve development from prior accident years (mainly 2020-2022), which reduced loss expenses for the quarter[4] Investment Results Q2 2024 net investment income decreased due to a smaller portfolio, partially offset by higher reinvestment rates, with minor realized and unrealized losses Q2 2024 Investment Results (in thousands) | Metric | Q2 2024 | Q2 2023 | % Change | | :--- | :--- | :--- | :--- | | Net investment income | $7,447 | $7,724 | -3.6% | | Net realized gains (losses) | $(117) | $75 | NM | | Net unrealized gains (losses) on equity securities | $(58) | $2,048 | NM | - The decrease in net investment income was due to a reduced portfolio size, partially offset by increased reinvestment rates[6] - The carrying value of the investment portfolio, including cash and cash equivalents, was $884.2 million as of June 30, 2024[6] Capital Management In Q2 2024, AMERISAFE repurchased shares and paid an increased quarterly dividend, leading to a rise in book value per share - The company repurchased 91,825 shares in Q2 2024 at an average cost of $44.79 per share, totaling $4.1 million[7] - A regular quarterly cash dividend of $0.37 per share was paid in June 2024, representing an 8.8% increase over 2023. A similar dividend was declared for September 2024[7] - Book value per share was $15.78 on June 30, 2024, a 3.3% increase from $15.28 at the end of 2023[8] Supplemental Information and Non-GAAP Reconciliation This section reconciles GAAP to non-GAAP financial measures, adjusting for investment-related items to derive operating net income, which management believes enhances understanding of core performance Q2 2024 GAAP to Non-GAAP Reconciliation (in thousands) | Metric | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Net income (GAAP) | $10,993 | $15,627 | | Less: Net realized (gains) losses | (117) | 75 | | Less: Net unrealized (gains) losses | (58) | 2,048 | | Less: Tax effect | 37 | (446) | | Operating net income (Non-GAAP) | $11,131 | $13,950 | - Management believes non-GAAP measures like operating net income and operating EPS enhance investors' understanding of the company's core operating performance[10] Consolidated Financial Statements This section presents the unaudited consolidated financial statements for Q2 2024 and 2023, including the Statements of Income and Balance Sheets Consolidated Statements of Income For Q2 2024, total revenues remained flat, while increased expenses led to a decrease in income before taxes and net income compared to the prior year Consolidated Income Statement Highlights (in thousands) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net premiums earned | $68,633 | $65,598 | | Total revenues | $75,830 | $75,659 | | Total expenses | $62,086 | $56,091 | | Income before taxes | $13,744 | $19,568 | | Net income | $10,993 | $15,627 | Consolidated Balance Sheets As of June 30, 2024, total assets slightly increased, total liabilities decreased, and shareholders' equity rose, driven by net income partially offset by capital distributions Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Investments | $853,597 | $857,786 | | Total Assets | $1,233,529 | $1,229,162 | | Reserves for loss and loss adjustment expenses | $663,985 | $673,994 | | Total Liabilities | $932,537 | $936,711 | | Total Shareholders' Equity | $300,992 | $292,451 | Other Information This section provides conference call details, a company business overview, and a standard forward-looking statements disclaimer Conference Call Information A conference call to discuss Q2 results is scheduled for July 30, 2024, at 10:30 a.m. ET, accessible via phone or webcast - A conference call to discuss Q2 results is scheduled for July 30, 2024, at 10:30 a.m. Eastern Time[11] About AMERISAFE AMERISAFE is a specialty workers' compensation insurer for high-hazard industries, serving small to mid-sized employers across 27 states - AMERISAFE is a specialty provider of workers' compensation insurance for hazardous industries, including construction, trucking, logging, agriculture, and manufacturing, operating in 27 states[12] Forward-Looking Statements This section contains a standard disclaimer that forward-looking statements are based on management's estimates and are subject to risks and uncertainties, not guarantees of future performance - The press release contains forward-looking statements based on management's current estimates and projections, which are not guarantees of future performance and are subject to various risks and uncertainties[13]