DeRidder, LA – AMERISAFE, Inc. (Nasdaq:AMSF), a specialty provider of hazardous workers’ compensation insurance, today announced results for the second quarter ended June 30, 2017.
G. Janelle Frost, President and Chief Executive Officer, stated, “AMERISAFE’s combined ratio of 81.9% in the second quarter was the result of our emphasis on risk selection with appropriate pricing and prudent reserving. Our focus has been consistent as competition intensified. In the second quarter, carriers sought out workers’ compensation premiums to offset deteriorating results in other commercial lines. At the same time, loss costs continued to decline. Such conditions are why AMERISAFE’s underwriting discipline is critical to providing returns to shareholders and long-term financial stability for our policyholders.”
Gross premiums written in the quarter decreased by $16.2 million, or 15.7%, primarily due to lower voluntary premiums written and $4.1 million in lower payroll audits. Voluntary premium for policies written during the quarter ended June 30, 2017 declined by 11.6% compared with the second quarter of 2016.
Payroll audits and related premium adjustments decreased premiums written by $2.6 million in the second quarter of 2017, compared to an increase of $1.5 million in the second quarter of 2016.
The current accident year loss ratio for the second quarter was 69.0%, an increase of 1.1 percentage points from 67.9% in 2016. During the quarter, the Company experienced favorable loss development for prior accident years which reduced loss and loss adjustment expenses by $10.7 million, mostly attributable to accident years 2015, 2014 and 2013. These results reflect improved trends for both claims closing and severity of claims and by favorable case reserve development on claims that were closed during the quarter.
For the quarter ended June 30, 2017, the underwriting expense ratio was 24.4% compared to 24.9% in the same quarter in 2016. The decrease in the quarter was due to lower loss based assessments and lower commissions compared with last year’s second quarter.
The effective tax rate for the quarter ended June 30, 2017 was 30.1% compared with 32.4% for the second quarter of 2016. The decrease in the tax rate resulted from a lower proportion of underwriting income to tax-exempt income relative to the second quarter of 2016.
Net investment income for the quarter ending June 30, 2017, increased 20.5% to $7.5 million from $6.2 million in the second quarter of 2016, largely due to a significant decline in value of an investment in a limited partnership hedge fund in last year’s second quarter. The change in value of this investment is recorded in investment income each quarter.
As of June 30, 2017, the carrying value of AMERISAFE’s investment portfolio, including cash and cash equivalents, was $1.2 billion.
The complete earnings release is available here: AMERISAFE 2017 Second Quarter Results