DERIDDER, La., /PRNewswire/ — AMERISAFE, Inc. (Nasdaq: AMSF), a specialty provider of hazardous workers’ compensation insurance, today announced results for the first quarter ended March 31, 2011.
Commenting on these results, Allen Bradley, AMERISAFE’s Chairman and Chief Executive Officer, stated, “We believe we are at an inflection point in the current pricing cycle. The recent results for the workers’ compensation line have dampened carrier interest. Nationally, loss experience continues at levels higher than historical averages, reflecting the impact of multi-year loss costs and rate reductions coupled with our nation’s difficult economic circumstances. At the same time, demand for the product is rising.”
- Gross premiums written increased primarily due to less negative payroll audits and related premium adjustments for policies written in previous periods. These adjustments reduced premiums written by $0.1 million in the first quarter of 2011 compared to a reduction of $8.9 million in the first quarter of 2010. Additionally, voluntary premium for policies written during the quarter increased by 2.5% compared to prior year quarter. The Company completed its renewal rights and assumption agreement with Cooperative Mutual during the quarter which accounted for $4.0 million of gross premiums written.
- During the quarter, the Company experienced favorable case development for prior accident years which reduced loss and loss adjustment expenses by $2.1 million. Accident years 2006, 2007 and 2008 primarily contributed to the favorable development while accident year 2010 experienced unfavorable development.
- The underwriting expense ratio increased mainly as a result of lower experienced rated commission from our 2011 first layer reinsurance program. In the first quarter of 2011, experienced rated commission offset our underwriting expense ratio by 2.2 percentage points compared to 4.3 percentage points in the first quarter of 2010.
- The effective tax rate for the quarter was 11.5% compared to 17.2% in the first quarter in 2010. The ratio of tax-free investment income to pre-tax income resulted in a drop in the effective tax rate from 2010.
Geoff Banta, President and Chief Operating Officer, noted, “We are very pleased with the increase in our gross premiums written in the first quarter, especially amid tightening of underwriting standards and pricing increases. Our top line is clearly benefiting from a positive swing in our audit premiums. In terms of losses, our experience over the past two accident years has been disappointing; that experience has deteriorated as a result of increasing claims duration and what we believe to be deficient loss costs. In the meantime, we remain focused on our underwriting standards, efficient claims handling and aggressive expense management, which this quarter produced a 98.3% combined ratio.”
The complete earnings release is available here.