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Amerisafe Announces 2015 Third Quarter Results

The following excerpt is from the company's SEC filing.

Net Income Grows 33.1%

Declares Extraordinary Dividend of $3.00 per share

DeRidder, LA October 28, 2015 - AMERISAFE, Inc. (Nasdaq: AMSF), a specialty provider of hazardous workers compensation insurance, today announced results for the third quarter ended September 30, 2015.

Three Months Ended

Nine Months Ended

% Change

(in thousands, except per share data)

Net premiums earned

90,504

95,928

280,860

278,677

Net investment income

20,646

20,048

Net realized gains (losses) on investments (pre-tax)

(2,5 18

Net income

17,940

13,479

47,389

36,801

Diluted earnings per share

Operating net income

17,914

13,578

49,026

36,683

Operating earnings per share

Book value per share

Net combined ratio

Return on average equity

Commenting on these results, Allen Bradley, AMERISAFEs Executive Chairman, stated, In the quarter, the workers compensation market continued to gradually transition to a more competitive environment. Pricing is decreasing very slowly driven largely by lower loss costs as opposed to aggressive carrier discounting. A continuing economic recovery has increased exposures and premium which largely has offset lower loss costs and rates. On the claims side, both frequency and severity appear to be muted at this time.

Insurance Results

(in thousands)

Gross premiums written

91,061

93,962

297,872

303,485

Loss and loss adjustment expenses incurred

48,942

61,822

166,252

185,570

Underwriting and certain other operating costs, commissions, salaries and benefits

22,267

21,027

64,719

63,410

Policyholder dividends

Underwriting profit (pre-tax)

18,924

12,940

48,865

29,357

Insurance Ratios:

Current accident year loss ratio

Prior accident year loss ratio

Net loss ratio

Net underwriting expense ratio

Net dividend ratio

Gross premiums written in the quarter decreased by $2.9 million, or 3.1%. Premiums on voluntary policies written during the quarter increased $2.0 million, or 2.4%. Payroll audits and related premium adjustments had no impact on premiums in the third quarter of 2015, compared with a $4.6 million positive impact in the third quarter of 2014.

Net premiums earned in the quarter decreased by $5.4 million, or 5.7%. The decrease was attributable to the decline in premium audits and an increase in ceded premiums of $1.8 million due to ceded losses during the quarter on our reinsurance treaty.

In the quarter, the Company experienced favorable loss development for prior accident years which reduced loss and loss adjustment expenses by $14.2 million, mostly attributable to accident years 2009, 2010, 2012, and 2013. Our calendar year loss ratio was 54.1%, a 10.3 percentage point improvement from the third quarter of 2014, reflecting improved trends on frequency and favorable case reserve development.

For the quarter ended September 30, 2015, the underwriting expense ratio was 2.7 percentage points higher than the prior year. The increase was primarily due to lower reinsurance contingent profit commissions, which typically act as an offset to expenses.

The effective tax rate for the three months ended September 30, 2015 was 30.7% compared to 30.3% for the third quarter of 2014. The increase was driven by the mix of improved underwriting...


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