10-Q 1 amsf-10q_20220331.htm 10-Q amsf-10q_20220331.htm
false 2022 Q1 0001018979 --12-31 2022 0001018979 2022-01-01 2022-03-31 xbrli:shares 0001018979 2022-04-22 iso4217:USD 0001018979 2022-03-31 0001018979 2021-12-31 iso4217:USD xbrli:shares 0001018979 2021-01-01 2021-03-31 0001018979 us-gaap:CommonStockMember 2021-12-31 0001018979 us-gaap:AdditionalPaidInCapitalMember 2021-12-31 0001018979 us-gaap:TreasuryStockMember 2021-12-31 0001018979 us-gaap:RetainedEarningsMember 2021-12-31 0001018979 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-12-31 0001018979 us-gaap:RetainedEarningsMember 2022-01-01 2022-03-31 0001018979 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-01-01 2022-03-31 0001018979 us-gaap:CommonStockMember 2022-01-01 2022-03-31 0001018979 us-gaap:TreasuryStockMember 2022-01-01 2022-03-31 0001018979 us-gaap:AdditionalPaidInCapitalMember 2022-01-01 2022-03-31 0001018979 us-gaap:CommonStockMember 2022-03-31 0001018979 us-gaap:AdditionalPaidInCapitalMember 2022-03-31 0001018979 us-gaap:TreasuryStockMember 2022-03-31 0001018979 us-gaap:RetainedEarningsMember 2022-03-31 0001018979 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-03-31 0001018979 us-gaap:CommonStockMember 2020-12-31 0001018979 us-gaap:AdditionalPaidInCapitalMember 2020-12-31 0001018979 us-gaap:TreasuryStockMember 2020-12-31 0001018979 us-gaap:RetainedEarningsMember 2020-12-31 0001018979 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-12-31 0001018979 2020-12-31 0001018979 us-gaap:RetainedEarningsMember 2021-01-01 2021-03-31 0001018979 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-01-01 2021-03-31 0001018979 us-gaap:AdditionalPaidInCapitalMember 2021-01-01 2021-03-31 0001018979 us-gaap:CommonStockMember 2021-03-31 0001018979 us-gaap:AdditionalPaidInCapitalMember 2021-03-31 0001018979 us-gaap:TreasuryStockMember 2021-03-31 0001018979 us-gaap:RetainedEarningsMember 2021-03-31 0001018979 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-03-31 0001018979 2021-03-31 0001018979 us-gaap:HeldtomaturitySecuritiesMember 2022-01-01 2022-03-31 0001018979 us-gaap:AvailableforsaleSecuritiesMember 2022-01-01 2022-03-31 xbrli:pure amsf:Incentive_Plan 0001018979 amsf:NonEmployeeDirectorMember us-gaap:RestrictedStockMember 2022-01-01 2022-03-31 0001018979 amsf:NonEmployeeDirectorMember us-gaap:RestrictedStockMember 2021-01-01 2021-03-31 0001018979 us-gaap:USStatesAndPoliticalSubdivisionsMember 2022-03-31 0001018979 us-gaap:CorporateDebtSecuritiesMember 2022-03-31 0001018979 us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember 2022-03-31 0001018979 us-gaap:USTreasuryAndGovernmentMember 2022-03-31 0001018979 us-gaap:AssetBackedSecuritiesMember 2022-03-31 0001018979 amsf:DomesticCommonStockMember 2022-03-31 0001018979 us-gaap:USStatesAndPoliticalSubdivisionsMember 2021-12-31 0001018979 us-gaap:CorporateDebtSecuritiesMember 2021-12-31 0001018979 us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember 2021-12-31 0001018979 us-gaap:USTreasuryAndGovernmentMember 2021-12-31 0001018979 us-gaap:AssetBackedSecuritiesMember 2021-12-31 0001018979 amsf:DomesticCommonStockMember 2021-12-31 amsf:Security 0001018979 us-gaap:USStatesAndPoliticalSubdivisionsMember 2022-01-01 2022-03-31 0001018979 us-gaap:CorporateDebtSecuritiesMember 2022-01-01 2022-03-31 0001018979 amsf:CorporateFixedIncomeSecuritiesMember srt:MaximumMember 2022-01-01 2022-03-31 0001018979 us-gaap:USStatesAndPoliticalSubdivisionsMember amsf:AAAOrAAOrARatingsMember 2022-03-31 0001018979 us-gaap:CorporateDebtSecuritiesMember amsf:AAAOrAAOrARatingsMember 2022-03-31 0001018979 us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember amsf:AAAOrAAOrARatingsMember 2022-03-31 0001018979 us-gaap:USTreasuryAndGovernmentMember amsf:AAAOrAAOrARatingsMember 2022-03-31 0001018979 us-gaap:AssetBackedSecuritiesMember amsf:AAAOrAAOrARatingsMember 2022-03-31 0001018979 amsf:AAAOrAAOrARatingsMember 2022-03-31 0001018979 us-gaap:USStatesAndPoliticalSubdivisionsMember amsf:BaaOrBBBRatingsMember 2022-03-31 0001018979 us-gaap:CorporateDebtSecuritiesMember amsf:BaaOrBBBRatingsMember 2022-03-31 0001018979 us-gaap:AssetBackedSecuritiesMember amsf:BaaOrBBBRatingsMember 2022-03-31 0001018979 amsf:BaaOrBBBRatingsMember 2022-03-31 0001018979 us-gaap:AssetBackedSecuritiesMember amsf:BRatingsMember 2022-03-31 0001018979 amsf:BRatingsMember 2022-03-31 0001018979 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember 2022-01-01 2022-03-31 0001018979 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember 2021-01-01 2021-03-31 0001018979 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USStatesAndPoliticalSubdivisionsMember us-gaap:FairValueInputsLevel2Member 2022-03-31 0001018979 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USStatesAndPoliticalSubdivisionsMember 2022-03-31 0001018979 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember us-gaap:FairValueInputsLevel2Member 2022-03-31 0001018979 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2022-03-31 0001018979 us-gaap:FairValueMeasurementsRecurringMember us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember us-gaap:FairValueInputsLevel2Member 2022-03-31 0001018979 us-gaap:FairValueMeasurementsRecurringMember us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember 2022-03-31 0001018979 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasurySecuritiesMember us-gaap:FairValueInputsLevel1Member 2022-03-31 0001018979 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasurySecuritiesMember 2022-03-31 0001018979 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member 2022-03-31 0001018979 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel2Member 2022-03-31 0001018979 us-gaap:FairValueMeasurementsRecurringMember 2022-03-31 0001018979 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CommonStockMember us-gaap:FairValueInputsLevel1Member 2022-03-31 0001018979 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CommonStockMember 2022-03-31 0001018979 us-gaap:FairValueInputsLevel2Member us-gaap:USStatesAndPoliticalSubdivisionsMember 2022-03-31 0001018979 us-gaap:USStatesAndPoliticalSubdivisionsMember 2022-03-31 0001018979 us-gaap:FairValueInputsLevel2Member us-gaap:CorporateDebtSecuritiesMember 2022-03-31 0001018979 us-gaap:CorporateDebtSecuritiesMember 2022-03-31 0001018979 us-gaap:FairValueInputsLevel2Member us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember 2022-03-31 0001018979 us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember 2022-03-31 0001018979 us-gaap:FairValueInputsLevel1Member us-gaap:USTreasurySecuritiesMember 2022-03-31 0001018979 us-gaap:USTreasurySecuritiesMember 2022-03-31 0001018979 us-gaap:FairValueInputsLevel2Member us-gaap:AssetBackedSecuritiesMember 2022-03-31 0001018979 us-gaap:AssetBackedSecuritiesMember 2022-03-31 0001018979 us-gaap:FairValueInputsLevel1Member 2022-03-31 0001018979 us-gaap:FairValueInputsLevel2Member 2022-03-31 0001018979 us-gaap:USStatesAndPoliticalSubdivisionsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2021-12-31 0001018979 us-gaap:USStatesAndPoliticalSubdivisionsMember us-gaap:FairValueMeasurementsRecurringMember 2021-12-31 0001018979 us-gaap:CorporateDebtSecuritiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2021-12-31 0001018979 us-gaap:CorporateDebtSecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2021-12-31 0001018979 us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2021-12-31 0001018979 us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember us-gaap:FairValueMeasurementsRecurringMember 2021-12-31 0001018979 us-gaap:USTreasurySecuritiesMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2021-12-31 0001018979 us-gaap:USTreasurySecuritiesMember us-gaap:FairValueMeasurementsRecurringMember 2021-12-31 0001018979 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2021-12-31 0001018979 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2021-12-31 0001018979 us-gaap:FairValueMeasurementsRecurringMember 2021-12-31 0001018979 us-gaap:CommonStockMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2021-12-31 0001018979 us-gaap:CommonStockMember us-gaap:FairValueMeasurementsRecurringMember 2021-12-31 0001018979 us-gaap:FairValueInputsLevel2Member us-gaap:USStatesAndPoliticalSubdivisionsMember 2021-12-31 0001018979 us-gaap:USStatesAndPoliticalSubdivisionsMember 2021-12-31 0001018979 us-gaap:FairValueInputsLevel2Member us-gaap:CorporateDebtSecuritiesMember 2021-12-31 0001018979 us-gaap:CorporateDebtSecuritiesMember 2021-12-31 0001018979 us-gaap:FairValueInputsLevel2Member us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember 2021-12-31 0001018979 us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember 2021-12-31 0001018979 us-gaap:FairValueInputsLevel1Member us-gaap:USTreasurySecuritiesMember 2021-12-31 0001018979 us-gaap:USTreasurySecuritiesMember 2021-12-31 0001018979 us-gaap:FairValueInputsLevel2Member us-gaap:AssetBackedSecuritiesMember 2021-12-31 0001018979 us-gaap:AssetBackedSecuritiesMember 2021-12-31 0001018979 us-gaap:FairValueInputsLevel1Member 2021-12-31 0001018979 us-gaap:FairValueInputsLevel2Member 2021-12-31 0001018979 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2022-03-31 0001018979 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2022-03-31 0001018979 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2021-12-31 0001018979 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2021-12-31 0001018979 2016-10-31 0001018979 us-gaap:SubsequentEventMember us-gaap:DividendDeclaredMember 2022-04-26 2022-04-26 0001018979 us-gaap:SubsequentEventMember us-gaap:DividendDeclaredMember 2022-04-26

 

 

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: (337463-9052

 

 

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