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AMERISAFE (AMSF) Earnings Break Even in Q4, Revenues Lag

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AMERISAFE, Inc. AMSF reported break-even fourth-quarter 2021 earnings per share against the Zacks Consensus Estimate of 86 cents and prior-year quarter’s earnings of $1.22 per share.

AMSF’s results were affected by declining rates leading to a fall in net premiums earned. Escalating costs led to dismal results. Catastrophic claim reported in the fourth quarter dampened the company’s underwriting results. Despite several headwinds, higher fee and other income partly benefited AMERISAFE’s revenues.

AMERISAFE, Inc. Price, Consensus and EPS Surprise

AMERISAFE, Inc. Price, Consensus and EPS Surprise
AMERISAFE, Inc. Price, Consensus and EPS Surprise

AMERISAFE, Inc. price-consensus-eps-surprise-chart | AMERISAFE, Inc. Quote

Quarter in Detail

AMERISAFE’s operating revenues amounted to $74 million, which fell nearly 10% year over year due to reduced net premiums earned and weaker net investment income. The top line missed the consensus mark by 1.2%.

Net premiums earned of $67.7 million tumbled 9.3% year over year in the fourth quarter due to persistently lower approved loss costs amid the states wherein the company operates, which resulted in reduced voluntary premiums. Nevertheless, payroll audits and related premium adjustments partly drove the premiums of the company.

Meanwhile, AMSF’s net investment income dropped 16% year over year to $6.1 million stemming from reduced interest rates on fixed income securities.

AMERISAFE incurred a pre-tax underwriting loss of $8.7 million in the quarter under review, which came in against the year-ago quarter’s underwriting income of $22.1 million.

Total expenses of $76.4 million escalated 45.3% year over year due to higher loss and loss adjustment expenses incurred and increased underwriting and other operating costs.

Net combined ratio of AMERISAFE deteriorated 4,250 basis points (bps) year over year to 112.9% in the fourth quarter.

Financial Update (as of Dec 31, 2021)

AMSF exited the fourth quarter with cash and cash equivalents of $70.7 million, which increased 14.5% from the 2020-end level.

Total assets were $1.4 billion, which decreased 4.6% from the figure at 2020 end.

Shareholders’ equity of $399.3 million slipped 9% from the level as of Dec 31, 2020.

Book value per share declined 9.2% year over year to $20.62.

Dividend Hike Announced

Concurrent with the fourth-quarter earnings release, AMERISAFE’s board of directors approved a 6.9% rise in the quarterly dividend. AMSF will now pay out a dividend of 31 cents per share compared with the prior payout of 29 cents. The increased dividend will be paid out on Mar 25, 2022, to shareholders of record as of Mar 11.

Full-Year Update

For 2021, AMSF’s revenues declined 6.9% year over year to $315.9 million. Full-year earnings per share was $2.82, which slumped 33.6% year over year.

Operating return on average adjusted equity for 2021 came in at 13.6%, which contracted 610 bps year over year.

Zacks Rank

AMERISAFE currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Some Other Insurers

Of the insurance industry players that have reported fourth-quarter results so far, Unum Group UNM, Aflac Incorporated AFL and MetLife, Inc. MET beat the Zacks Consensus Estimate for earnings.

Unum Group’s fourth-quarter 2021 operating net income of 89 cents per share beat the Zacks Consensus Estimate by 8.4%. The bottom line decreased 22.6% year over year. Total operating revenues of UNM were nearly $3 billion, up 0.6% year over year. The top line marginally beat the Zacks Consensus Estimate. Net investment income of Unum Group decreased 7.2% year over year to $550.8 million.

Aflac reported fourth-quarter 2021 adjusted earnings per share of $1.28, which surpassed the Zacks Consensus Estimate by 2.4%. The bottom line improved 19.6% year over year. AFL’s total revenues of $5.4 billion fell 8.1% year over year but outpaced the consensus mark by 4.2%. Adjusted net investment income of Aflac declined 5.1% year over year to $893 million in the fourth quarter.

MetLife reported fourth-quarter 2021 adjusted operating earnings of $2.39 per share, which surpassed the Zacks Consensus Estimate by 52.8%. The bottom line improved 6.9% over a year. MET’s adjusted operating revenues of $20 billion dipped 1.8% year over year but outpaced the Zacks Consensus Estimate by 19.8%. Adjusted net investment income of MetLife amounted to $5.2 billion, which improved 7% year over year.


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