DeRidder, LA – AMERISAFE, Inc. (Nasdaq:AMSF), a specialty provider of hazardous workers’ compensation insurance, recently announced results for the fourth quarter and year ended December 31, 2016.
G. Janelle Frost, President and Chief Executive Officer commented, “Underwriting margins across the industry continued to be pressured this quarter as competition increased and rates decreased. We are at a point in the underwriting cycle where the choice to remain focused on underwriting margins and sustainability is essential to providing long-term returns to shareholders. AMERISAFE’s financial results this quarter are reflective of our focus over an extended period of time. Risk selection, appropriate product pricing and claims handling ultimately led to combined ratios of 76.8% this quarter and 77.0% for the year. Based on these results and our capital strength, AMERISAFE is well-positioned for the softening market cycle.”
- Voluntary premiums for policies written during the quarter ended December 31, 2016 decreased $5.6 million, or 6.8%, compared with the fourth quarter of 2015. This decrease was largely attributable to the loss of three large accounts in the fourth quarter totaling $4.7 million in estimated annual premium. For 2016, voluntary premiums written decreased 2.3%, compared with 2015.
- Payroll audits and related premium adjustments increased premiums written by $1.2 million in the fourth quarter of 2016, compared with $3.3 million in the fourth quarter of 2015. For the full year, these premium adjustments totaled $8.0 million in 2016 compared with $12.2 million in 2015, a decrease of $4.2 million.
- The current accident year loss ratio for the fourth quarter was 67.9%, unchanged from prior quarters in 2016, and a decrease of 1.9 percentage points from the fourth quarter of 2015. During the quarter, the Company experienced favorable loss development for prior accident years which reduced loss and loss adjustment expenses by $9.9 million, mostly attributable to accident years 2014, 2013, and 2012. In total, prior accident year development for the year ended December 31, 2016 resulted in favorable development of $51.3 million, compared with favorable development of $47.8 million in 2015. These results reflect improved trends for both closing claims and claims severity and were driven largely by favorable case reserve development on claims that were closed during the year.
- For the quarter ended December 31, 2016, the underwriting expense ratio was 18.6% compared to 20.4% in the same quarter in 2015. The decrease was largely due to lower premium based assessments and premium taxes in the fourth quarter compared to the same quarter a year ago. For the year ended December 31, 2016, the underwriting expense ratio was 21.9%, a decrease compared with 22.4% in 2015.
- The effective tax rate for the year ended December 31, 2016 was 31.0% compared with 30.2% for 2015. The increase in the tax rate was due to improvement in our underwriting margins which created a higher proportion of underwriting income to tax-exempt investment income relative to 2015.
The complete results release is available here: AMERISAFE 2016 Fourth Quarter and Year-End Results