DERIDDER, La., (GLOBE NEWSWIRE) — AMERISAFE, Inc. (Nasdaq:AMSF), a specialty provider of hazardous workers’ compensation insurance, today announced results for the third quarter ended September 30, 2011.
Commenting on the results, Allen Bradley, AMERISAFE’s Chairman and Chief Executive Officer, stated, “The third quarter exhibited encouraging signs in terms of demand, the competitive landscape and loss parameters. We remain cautiously optimistic concerning the direction of the workers’ compensation marketplace. Further, we are confident that AMERISAFE is poised to take advantage of opportunities that may arise.”
Gross premiums written increased in both the three and nine month periods. Payroll audits and related premium adjustments for policies written in previous periods increased premiums by $2.5 million in the third quarter and $2.1 million in the nine months ended September 30, 2011. In 2010, these premium adjustments reduced premiums by $6.6 million in the third quarter and $24.7 million for the nine months ended September 30. Additionally, voluntary premiums written increased 7.8% in the quarter and 3.8% in the nine months ended September 30, 2011 compared to the same periods in 2010.
In the third quarter of 2011, the Company’s current accident year loss ratio for 2011 remained at 78.2%. Also during the quarter, the Company experienced favorable development for prior accident years which reduced loss and loss adjustment expenses by $1.1 million. Accident years 2005 and 2007 were the primary contributors to the favorable development while accident year 2010 experienced unfavorable development.
The underwriting expense ratio for both the three and nine months ended September 30, 2011 were higher compared to the prior year periods. For the nine months ended September 30, 2011, our experience rated commission offset the expense ratio by 2.1 percentage points compared to 4.4 percentage points for the same period in 2010.
In the third quarter of 2011, assessment expense was favorably impacted by a $2.7 million change in estimated premium-based assessments. Our assessment expense for the nine months ended September 30, 2011 was 2.6 percentage points higher than the same period in 2010. In 2010, we experienced large rate reductions in certain loss-based assessments.
Both of the increases in the underwriting ratio were offset by lower fixed costs in 2011.
The effective tax rate for the nine months ended September 30, 2011 was 13.1% compared to 18.4% for the same period in 2010. The ratio of tax-free investment income to pre-tax income resulted in the decrease in the effective tax rate.
Geoff Banta, President and Chief Operating Officer, noted, “We are pleased that our gross premiums written increased by a robust 26% in the third quarter, along with very strong policy and premium retention. We are not ready to declare the emergence of a sustained market turn, but we are seeing evidence of a firming of the market. On the loss side, we witnessed some slowing of claims frequency in the quarter. We are encouraged by these positive improvements in our third quarter results.”
f September 30, 2011, the carrying value of AMERISAFE’s investment portfolio, including cash and cash equivalents, was $836.5 million and the fair value of the portfolio was $870.8 million.
The Board has renewed the Company’s previously authorized share repurchase program through December 31, 2012. In addition, the Board authorized a new limit of up to $25 million effective October 1, 2011. During the quarter, the Company repurchased 357,970 shares of its outstanding common stock for $6.8 million at an average price per share of $18.99, including commissions. Since beginning its share repurchase plan, the Company repurchased a total of 1,225,640 shares for $21.8 million at an average per share price of $17.75, including commissions.
The complete earnings release is available here: AMERISAFE 2011 Q3 Results