AMERISAFE(AMSF) - 2025 Q2 - Quarterly Results

Executive Summary A concise overview of AMERISAFE's Q2 2025 financial and operational highlights, including key performance indicators and company profile Second Quarter 2025 Highlights AMERISAFE, Inc. announced solid results for the second quarter ended June 30, 2025, marked by a fifth consecutive quarter of growth in gross premiums written and a significant increase in net income and diluted EPS Key Financial Metrics | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | % Change | YTD 2025 (in thousands) | YTD 2024 (in thousands) | % Change | | :--------------------------------- | :--------------------- | :--------------------- | :------- | :---------------------- | :---------------------- | :------- | | Gross premiums written | $79,704 | $76,428 | 4.3% | $163,488 | $156,502 | 4.5% | | Net premiums earned | $69,381 | $68,633 | 1.1% | $138,266 | $137,079 | 0.9% | | Net investment income | $6,691 | $7,447 | -10.2% | $13,343 | $14,813 | -9.9% | | Net realized gains (losses) | $3,116 | ($117) | NM | $3,118 | ($339) | NM | | Net unrealized gains (losses) | $1,829 | ($58) | NM | ($1,323) | $4,718 | NM | | Net income | $13,955 | $10,993 | 26.9% | $22,904 | $27,918 | -18.0% | | Diluted earnings per share | $0.73 | $0.57 | 28.1% | $1.20 | $1.46 | -17.8% | | Operating net income | $10,048 | $11,131 | -9.7% | $21,486 | $24,459 | -12.2% | | Operating earnings per share | $0.53 | $0.58 | -8.6% | $1.12 | $1.28 | -12.5% | | Book value per share | $13.96 | $15.78 | -11.5% | $13.96 | $15.78 | -11.5% | | Net combined ratio | 91.7% | 90.5% | | 90.5% | 88.8% | | | Return on average equity | 21.2% | 14.6% | | 17.5% | 18.8% | | - Voluntary premiums on policies written increased by 12.8% in Q2 2025 compared to Q2 2024, driven by increased policy count and strong retention[3] - The company achieved its fifth consecutive quarter of growth in gross premiums written[3] Company Profile AMERISAFE, Inc. is a specialty provider of workers' compensation insurance, primarily serving small to mid-sized employers in high-hazard industries across 27 states - AMERISAFE specializes in workers' compensation insurance for high-hazard industries[2] - The company focuses on small to mid-sized employers in sectors like construction, trucking, logging, agriculture, and manufacturing[22] - AMERISAFE actively markets workers' compensation insurance in 27 states[22] Financial Performance Analysis An in-depth analysis of AMERISAFE's insurance and investment results for Q2 2025, detailing premium growth, underwriting profitability, and investment income trends Insurance Results AMERISAFE's insurance operations in Q2 2025 showed a 4.3% increase in gross premiums written, but underwriting profit decreased by 12.2% due to higher underwriting and operating costs Insurance Operations Summary | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | % Change | YTD 2025 (in thousands) | YTD 2024 (in thousands) | % Change | | :------------------------------------------ | :--------------------- | :--------------------- | :------- | :---------------------- | :---------------------- | :------- | | Gross premiums written | $79,704 | $76,428 | 4.3% | $163,488 | $156,502 | 4.5% | | Net premiums earned | $69,381 | $68,633 | 1.1% | $138,266 | $137,079 | 0.9% | | Loss and loss adjustment expenses incurred | $40,660 | $40,624 | 0.1% | $80,819 | $80,615 | 0.3% | | Underwriting and certain other operating costs | $21,746 | $20,429 | 6.4% | $42,345 | $39,127 | 8.2% | | Policyholder dividends | $1,239 | $1,049 | 18.1% | $1,873 | $2,121 | -11.7% | | Underwriting profit (pre-tax) | $5,736 | $6,531 | -12.2% | $13,229 | $15,216 | -13.1% | - Voluntary premiums on policies written increased by 12.8% in Q2 2025, driven by stable policy retention, strong premium retention, and robust new business production[6] - Payroll audits and related premium adjustments contributed $1.5 million to written premiums in Q2 2025, a decrease from $7.3 million in Q2 2024[6] Insurance Ratios The net loss ratio improved to 58.6% in Q2 2025, aided by favorable prior accident year loss reserve development, while the net underwriting expense ratio increased to 31.3% Key Insurance Ratios | Insurance Ratio | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------ | :------ | :------ | :------- | :------- | | Current accident year loss ratio | 71.0% | 71.0% | 71.0% | 71.0% | | Prior accident year loss ratio | -12.4% | -11.8% | -12.5% | -12.2% | | Net loss ratio | 58.6% | 59.2% | 58.5% | 58.8% | | Net underwriting expense ratio | 31.3% | 29.8% | 30.6% | 28.5% | | Net dividend ratio | 1.8% | 1.5% | 1.4% | 1.5% | | Net combined ratio | 91.7% | 90.5% | 90.5% | 88.8% | - The loss ratio for Q2 2025 was 58.6%, an improvement from 59.2% in Q2 2024, due to $8.6 million in favorable net loss reserve development for prior accident years[6] - The underwriting expense ratio increased to 31.3% in Q2 2025 from 29.8% in the prior-year quarter, reflecting a 100 basis point increase from insurance-based assessments and sustained investment in the business[6] Investment Results Net investment income decreased by 10.2% in Q2 2025 due to a reduction in investable assets, but the company reported significant net realized and unrealized gains on equity securities Investment Performance | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | % Change | YTD 2025 (in thousands) | YTD 2024 (in thousands) | % Change | | :------------------------------------------ | :--------------------- | :--------------------- | :------- | :---------------------- | :---------------------- | :------- | | Net investment income | $6,691 | $7,447 | -10.2% | $13,343 | $14,813 | -9.9% | | Net realized gains (losses) on investments | $3,116 | ($117) | NM | $3,118 | ($339) | NM | | Net unrealized gains (losses) on equity securities | $1,829 | ($58) | NM | ($1,323) | $4,718 | NM | | Pre-tax investment yield | 3.3% | 3.3% | | 3.3% | 3.3% | | | Tax-equivalent yield | 3.9% | 3.8% | | 3.9% | 3.8% | | - Net investment income decreased by 10.2% to $6.7 million in Q2 2025, primarily due to a decrease in investable assets year-over-year following a special dividend in Q4 2024[11] - Net realized gains on investments were $3.1 million in Q2 2025, driven by gains on equity securities[11] - Net unrealized gains on equity securities totaled $1.8 million for the quarter, attributed to strong equity market performance[11] - As of June 30, 2025, the carrying value of AMERISAFE's investment portfolio, including cash and cash equivalents, was $807.4 million[11] Capital Management An overview of AMERISAFE's capital allocation strategies, including share repurchases, dividend payments, and book value per share performance Share Repurchase Program AMERISAFE repurchased 62,757 shares for $2.8 million in Q2 2025, and the Board reauthorized a new share repurchase program of up to $25.0 million - In Q2 2025, the Company repurchased 62,757 shares at an average cost of $44.55 per share, totaling $2.8 million[8] - Since February 2010, AMERISAFE has repurchased 1,745,608 shares for a total of $44.8 million at an average cost of $25.69[8] - As of June 30, 2025, the remaining share repurchase authorization was $2.5 million[8] - On July 23, 2025, the Board reauthorized a new share repurchase program of up to $25.0 million, replacing the previous program[9] Dividends The company paid a regular quarterly cash dividend of $0.39 per share in June 2025, representing a 5.4% increase from 2024, and declared another for September 2025 - A regular quarterly cash dividend of $0.39 per share was paid on June 20, 2025, marking a 5.4% increase compared to 2024[12] - On July 22, 2025, the Board declared another quarterly cash dividend of $0.39 per share, payable on September 26, 2025[12] Book Value Per Share Book value per share increased by 3.3% to $13.96 as of June 30, 2025, compared to December 31, 2024 - Book value per share was $13.96 on June 30, 2025, an increase of 3.3% from $13.51 on December 31, 2024[13] Supplemental Information Presentation of non-GAAP financial measures and their reconciliation to GAAP, providing additional insights into the company's operational performance Non-GAAP Financial Measures The report includes non-GAAP financial measures such as operating net income and operating earnings per share, which enhance understanding of core operating performance Reconciliation of Non-GAAP Financial Measures | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | YTD 2025 (in thousands) | YTD 2024 (in thousands) | | :------------------------------------ | :--------------------- | :--------------------- | :---------------------- | :---------------------- | | Net income | $13,955 | $10,993 | $22,904 | $27,918 | | Less: Net realized gains (losses) | $3,116 | ($117) | $3,118 | ($339) | | Less: Net unrealized gains (losses) | $1,829 | ($58) | ($1,323) | $4,718 | | Tax effect | ($1,038) | $37 | ($377) | ($920) | | Operating net income | $10,048 | $11,131 | $21,486 | $24,459 | | Average shareholders' equity | $263,192 | $301,043 | $261,456 | $296,722 | | Less: Average accumulated other comprehensive loss | ($7,415) | ($9,150) | ($8,218) | ($8,377) | | Average adjusted shareholders' equity | $270,607 | $310,193 | $269,674 | $305,099 | | Diluted weighted average common shares | 19,119,600 | 19,146,294 | 19,120,530 | 19,171,206 | | Return on average equity | 21.2% | 14.6% | 17.5% | 18.8% | | Operating return on average adjusted equity | 14.9% | 14.4% | 15.9% | 16.0% | | Diluted earnings per share | $0.73 | $0.57 | $1.20 | $1.46 | | Operating earnings per share | $0.53 | $0.58 | $1.12 | $1.28 | - Non-GAAP financial measures, including operating net income and operating earnings per share, are provided to enhance understanding of core operating performance[15][19] - The tax effect for non-GAAP adjustments is calculated using an effective tax rate of 21%[14] Corporate Information Essential corporate communications, including details for the Q2 2025 conference call and important disclosures regarding forward-looking statements Conference Call Details AMERISAFE scheduled a conference call for July 25, 2025, at 10:30 a.m. Eastern Time to discuss the second quarter results - A conference call to discuss Q2 2025 results was scheduled for July 25, 2025, at 10:30 a.m. Eastern Time[20] - Participants can dial 786-789-4797 (Conference Code 2260581) or listen via webcast on the company's investor relations website[20][21] Forward-Looking Statements The release contains forward-looking statements regarding AMERISAFE's plans, expectations, and performance, which are subject to various risks and uncertainties - Statements in the press release that are not historical facts are forward-looking statements, subject to risks and uncertainties[24] - Factors affecting results are detailed in the Company's filings with the U.S. Securities and Exchange Commission, including the Annual Report on Form 10-K[24] - AMERISAFE does not undertake any obligation to update or revise any forward-looking statements[24] Consolidated Financial Statements Comprehensive financial statements, including the Consolidated Statements of Income and Consolidated Balance Sheets, providing a detailed view of the company's financial performance and position Consolidated Statements of Income The Consolidated Statements of Income provide a detailed breakdown of revenues and expenses for the three and six months ended June 30, 2025, and 2024 Consolidated Statements of Income (in thousands) | Revenues (in thousands) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :---------------------- | :------ | :------ | :------- | :------- | | Gross premiums written | $79,704 | $76,428 | $163,488 | $156,502 | | Net premiums earned | $69,381 | $68,633 | $138,266 | $137,079 | | Net investment income | $6,691 | $7,447 | $13,343 | $14,813 | | Net realized gains (losses) on investments | $3,116 | ($117) | $3,118 | ($339) | | Net unrealized gains (losses) on equity securities | $1,829 | ($58) | ($1,323) | $4,718 | | Total revenues | $81,088 | $75,830 | $153,685 | $156,319 | | Expenses (in thousands) | | | | | | Loss and loss adjustment expenses incurred | $40,660 | $40,624 | $80,819 | $80,615 | | Underwriting and other operating costs | $21,746 | $20,429 | $42,345 | $39,127 | | Policyholder dividends | $1,239 | $1,049 | $1,873 | $2,121 | | Total expenses | $63,633 | $62,086 | $125,009 | $121,830 | | Income before taxes | $17,455 | $13,744 | $28,676 | $34,489 | | Income tax expense | $3,500 | $2,751 | $5,772 | $6,571 | | Net income | $13,955 | $10,993 | $22,904 | $27,918 | | Basic earnings per share | $0.73 | $0.58 | $1.20 | $1.46 | | Diluted earnings per share | $0.73 | $0.57 | $1.20 | $1.46 | Consolidated Balance Sheets The Consolidated Balance Sheets present the company's financial position as of June 30, 2025, and December 31, 2024, detailing assets, liabilities, and shareholders' equity Consolidated Balance Sheets (in thousands) | (in thousands) | June 30, 2025 | December 31, 2024 | | :------------- | :------------ | :---------------- | | Assets | | | | Investments | $758,888 | $788,778 | | Cash and cash equivalents | $48,465 | $44,045 | | Amounts recoverable from reinsurers | $115,771 | $117,019 | | Premiums receivable, net | $166,344 | $142,659 | | Deferred income taxes | $20,073 | $19,448 | | Deferred policy acquisition costs | $21,149 | $19,151 | | Other assets | $24,424 | $26,691 | | Total Assets | $1,155,114 | $1,157,791 | | Liabilities and Shareholders' Equity | | | | Liabilities: | | | | Reserves for loss and loss adjustment expenses | $624,095 | $651,309 | | Unearned premiums | $138,784 | $121,926 | | Insurance-related assessments | $17,386 | $14,852 | | Other liabilities | $109,279 | $112,363 | | Shareholders' equity | $265,570 | $257,341 | | Total liabilities and shareholders' equity | $1,155,114 | $1,157,791 |