DeRidder, LA – AMERISAFE, Inc. (Nasdaq:AMSF), a specialty provider of hazardous workers’ compensation insurance, recently announced results for the second quarter ended June 30, 2018.
G. Janelle Frost, President and Chief Executive Officer, commented, “Encouraged by reporting of the third straight year of underwriting profitability for the industry, competition in the workers’ compensation market remained aggressive in the second quarter. However, AMERISAFE’s niche focus provided some protection, and we responded to market conditions with a slight decrease in pricing. Our responsiveness resulted in record policy retention, which aided in offsetting premium decreases from loss costs declines. In addition, strong payroll audits and favorable case reserve development were essential to underwriting profitability, which resulted in an 83.6% combined ratio for the quarter.”
Gross premiums written in the quarter increased by $6.7 million, or 7.7%, due to higher payroll audits and related premium adjustments offset by lower voluntary premiums written.
Voluntary premium for policies written during the quarter ended June 30, 2018 decreased by $0.4 million, or 0.5%, compared with the second quarter of 2017.
Payroll audits and related premium adjustments increased premiums written by $3.8 million in the second quarter of 2018, compared to a decrease in premiums written of $2.6 million in the second quarter of 2017. These adjustments led to the 7.7% increase in gross premiums written in the quarter.
The current accident year loss ratio for the second quarter was 71.5%, unchanged from the first quarter of 2018, and an increase of 1.0 percentage point from the 70.5% ratio for the full year 2017. During the quarter, the Company experienced favorable loss development for prior accident years, which reduced loss and loss adjustment expenses by $11.6 million, attributable to accident years 2016, 2015, 2013 and 2012 and prior. These results largely reflect favorable case reserve development on claims during the quarter.
For the quarter ended June 30, 2018, the underwriting expense ratio was 23.9% compared with 24.4% in the same quarter in 2017. The decrease in the ratio in the quarter was due to higher net earned premiums compared with last year’s second quarter. Underwriting and other expenses were $1.1 million higher in the second quarter of 2018 compared to 2017, largely due to higher commission expense and premium taxes.
The effective tax rate for the quarter ended June 30, 2018 was 19.0% compared with 30.1% for the second quarter of 2017. The decrease is largely due to the new federal corporate tax rate of 21% on underwriting profits and taxable bond income.
The complete results release is available here: AMERISAFE 2018 Second Quarter Results