DERIDDER, La., March 3, 2011 /PRNewswire/ — AMERISAFE, Inc. (Nasdaq: AMSF), a specialty provider of hazardous workers’ compensation insurance, today announced results for the fourth quarter ended December 31, 2010.
Commenting on these results, AMERISAFE Chairman and Chief Executive Officer Allen Bradley stated, “In the fourth quarter, our gross premiums written showed a year-over-year increase for the first time since 2008. In addition, pricing improved slightly from the third quarter. However, the industry environment remains challenging, with robust price competition fueled by excess capacity and muted demand.”
Gross premiums written increased for the quarter in comparison to the same period in the previous year. This growth was driven by less negative payroll audits and related premium adjustments for policies written in previous periods. These adjustments reduced premiums written $2.5 million in the fourth quarter of 2010 compared to a reduction of $8.2 million in the fourth quarter of 2009.
In the fourth quarter, the Company increased the current accident year loss ratio for 2010 from 81.2% to 81.8%. Claims frequency increased in 2010. Severity was lower compared to 2009, but considerably higher than in years prior to 2009. During the quarter the Company experienced favorable case development for prior accident years, which reduced loss and loss adjustment expenses by $7.7 million. Accident years 2006, 2007 and 2008 were the primary contributors to the favorable development.
The underwriting expense ratio continued to be competitive in the fourth quarter. In the quarter, the Company updated forfeiture assumptions for certain stock options granted in November 2005, resulting in additional non-cash compensation expense of $1.2 million. Offsetting this expense were lower fixed costs.
Geoff Banta, President and Chief Operating Officer, noted, “After seven straight quarters of premium declines, we were pleased to see a 5.6% increase in fourth quarter premium, especially given the fact that we had begun increasing our pricing late in the third quarter. We will continue to increase pricing and toughen underwriting in those subsegments of our business that performed poorly in 2009 and 2010.”
The carrying value of AMERISAFE’s investment portfolio, including cash and cash equivalents, was $826.5 million and the fair value of the portfolio was $846.6 million at December 31, 2010.
he Board renewed the Company’s previously authorized share repurchase program for one year, to December 31, 2011. As of December 31, 2010, AMERISAFE had spent approximately $12.1 million on its share repurchase program, leaving $23.3 million of the authorized amount remaining.
For the year, the ratio of tax-free investment income to pre-tax income, coupled with changes in the valuation allowance resulted in a drop in the effective tax rate from 2009.
The full earnings release is available here.