Reports Return on Equity of 11.8% for the Quarter

AMERISAFE, Inc. (NASDAQ:AMSF), a specialty provider of workers' compensation insurance focused on high-hazard industries, today announced results for the third quarter ended September 30, 2023.

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2023			2022			% Change		2023			2022			% Change
	(in thousands, except per share data)								(in thousands, except per share data)
Net premiums earned	$	66,634		$	67,790		-1.7	%	$	201,413		$	205,625		-2.0	%
Net investment income		8,105			6,983		16.1	%		23,262			19,581		18.8	%
Net realized gains on investments
(pre-tax)		5,133			585		NM			5,466			2,402		NM
Net unrealized losses on equity
securities (pre-tax)		(7,309	)		(4,082	)	NM			(3,892	)		(12,984	)	NM
Net income		9,961			11,361		-12.3	%		42,927			34,824		23.3	%
Diluted earnings per share	$	0.52		$	0.59		-11.9	%	$	2.23		$	1.80		23.9	%
Operating net income (loss)		11,680			14,124		-17.3	%		41,684			43,184		-3.5	%
Operating earnings per share	$	0.61		$	0.73		-16.4	%	$	2.17		$	2.23		-2.7	%
Book value per share	$	17.51		$	19.47		-10.1	%	$	17.51		$	19.47		-10.1	%
Net combined ratio		90.6	%		85.4	%				86.1	%		84.1	%
Return on average equity		11.8	%		12.0	%				17.5	%		12.0	%

G. Janelle Frost, President and Chief Executive Officer, commented, "Robust payroll audits coupled with growth in policy count led to top-line growth this quarter. We were able to maintain a strong operating ROAE of 13.2% and combined ratio of 90.6%, despite some infrequent items that impacted our expenses this quarter. Our underwriting expertise continues to drive AMERISAFE's strong returns and balance sheet position."

INSURANCE RESULTS
	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2023			2022			% Change		2023			2022			% Change
	(in thousands)								(in thousands)

Gross premiums written	$	70,840		$	68,212		3.9	%	$	225,031		$	220,463		2.1	%
Net premiums earned		66,634			67,790		-1.7	%		201,413			205,625		-2.0	%
Loss and loss adjustment expenses incurred		37,154			37,725		-1.5	%		111,808			115,792		-3.4	%
Underwriting and certain other operating costs, commissions, salaries and benefits		22,371			19,585		14.2	%		59,325			54,611		8.6	%
Policyholder dividends		804			640		25.6	%		2,225			2,517		-11.6	%
Underwriting profit (pre-tax)	$	6,305		$	9,840		-35.9	%	$	28,055		$	32,705		-14.2	%

Insurance Ratios:
Current accident year loss ratio		71.0	%		71.0	%				71.0	%		71.0	%
Prior accident year loss ratio		-15.2	%		-15.4	%				-15.5	%		-14.7	%
Net loss ratio		55.8	%		55.6	%				55.5	%		56.3	%
Net underwriting expense ratio		33.6	%		28.9	%				29.5	%		26.6	%
Net dividend ratio		1.2	%		0.9	%				1.1	%		1.2	%
Net combined ratio		90.6	%		85.4	%				86.1	%		84.1	%

Voluntary premiums on policies written in the third quarter were 1.1% higher than the third quarter of 2022, primarily due to policy count growth.
Payroll audits and related premium adjustments increased premiums written by $5.6 million in the third quarter of 2023, compared to an increase of $3.4 million in the third quarter of 2022.
Ceded premiums increased $1.6 million in the third quarter of 2023 as compared to the third quarter of 2022 as we purchased higher levels of reinsurance coverage at generally higher prices in 2023.
The loss ratio for the third quarter was 55.8%, fairly flat as compared to 55.6% in the third quarter of 2022. During the quarter, the Company experienced favorable net loss reserve development for prior accident years, which reduced loss and loss adjustment expenses by $10.2 million, primarily from accident years 2016 through 2021.
For the quarter ended September 30, 2023, the underwriting expense ratio was 33.6% compared to 28.9% in the same quarter in 2022 primarily due to a decrease of $1.6 million in profit sharing reinsurance commission, a $0.6 million increase in commission expense and $0.4 million increase in regulatory assessments and fees.

The effective tax rate for the quarter ended September 30, 2023, was 19.2% compared with 15.5% for 2022. The rate was higher than last year due to a decrease in the proportion of tax-exempt interest income relative to underwriting profit.

INVESTMENT RESULTS
	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2023			2022			% Change		2023			2022			% Change
	(in thousands)								(in thousands)
Net investment income	$	8,105		$	6,983		16.1	%	$	23,262		$	19,581		18.8	%
Net realized gains on investments
(pre-tax)		5,133			585		NM			5,466			2,402		NM
Net unrealized losses on equity
securities (pre-tax)		(7,309	)		(4,082	)	NM			(3,892	)		(12,984	)	NM
Pre-tax investment yield		3.4	%		2.7	%				3.3	%		2.5	%
Tax-equivalent yield (1)		3.8	%		3.2	%				3.8	%		3.2	%

___________________
(1)	The tax equivalent yield is calculated using the effective interest rate and the appropriate marginal tax rate.

Net investment income for the quarter ended September 30, 2023, increased 16.1% to $8.1 million from $7.0 million in the third quarter of 2022, due to higher yields on cash and fixed-income securities.
Net realized gains on investments were $5.1 million in the third quarter, primarily due to a realized gain on an equity security.
Net unrealized losses on equity securities were $7.3 million in the third quarter as a result of generally unfavorable equity market returns during the quarter.
As of September 30, 2023, the carrying value of AMERISAFE's investment portfolio, including cash and cash equivalents, was $948.3 million.

CAPITAL MANAGEMENT

In an accompanying news release, the Company announced a special cash dividend of $3.50 per share, payable on December 15, 2023, to shareholders of record as of December 1, 2023.

During the third quarter of 2023, the Company paid a regular quarterly cash dividend of $0.34 per share on September 22, 2023, which represented a 9.7% increase in the quarterly dividend compared with 2022. On October 24, 2023, the Company's Board of Directors declared a quarterly cash dividend of $0.34 per share, payable on December 15, 2023, to shareholders of record as of December 1, 2023.

Book value per share at September 30, 2023 was $17.51, an increase of 5.7% from $16.57 at December 31, 2022.

SUPPLEMENTAL INFORMATION
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2023			2022			2023			2022
	(in thousands, except share and per share data)

Net income	$	9,961		$	11,361		$	42,927		$	34,824
Less:
Net realized gains on investments		5,133			585			5,466			2,402
Net unrealized losses on equity securities		(7,309	)		(4,082	)		(3,892	)		(12,984	)
Tax effect (1)		457			734			(331	)		2,222
Operating net income (2)	$	11,680		$	14,124		$	41,684		$	43,184

Average shareholders' equity (3)	$	338,225		$	379,004		$	326,658		$	386,171
Less:
Average accumulated other comprehensive loss		(16,232	)		(14,419	)		(17,096	)		(3,214	)
Average adjusted shareholders' equity (2)	$	354,457		$	393,423		$	343,754		$	389,385

Diluted weighted average common shares		19,223,588			19,269,346			19,217,606			19,340,898

Return on average equity (4)		11.8	%		12.0	%		17.5	%		12.0	%
Operating return on average adjusted equity (2)		13.2	%		14.4	%		16.2	%		14.8	%
Diluted earnings per share	$	0.52		$	0.59		$	2.23		$	1.80
Operating earnings per share (2)	$	0.61		$	0.73		$	2.17		$	2.23

___________________
(1)	The tax effect of net realized losses on investments and net unrealized gains (losses) on equity securities is calculated with an effective tax rate of 21%.
(2)	Operating net income, operating return on average adjusted equity and operating earnings per share are non-GAAP financial measures. Management believes that investors' understanding of core operating performance is enhanced by AMERISAFE's disclosure of these financial measures.
(3)	Average shareholders' equity is calculated by taking the average of the beginning and ending shareholders' equity.
(4)	Return on average equity is calculated by dividing the annualized net income by the average shareholders' equity.

CONFERENCE CALL INFORMATION

AMERISAFE has scheduled a conference call for October 26, 2023 at 10:30 AM Eastern Time to discuss the results for the quarter and comment on future periods. To participate in the conference call, dial 323-794-2551 (Conference Code 1991265) at least ten minutes before the call begins.

Investors, analysts and the general public will also have the opportunity to listen to the conference call over the Internet by visiting the "Investor Relations Home" page of the "Investors" section of the Company's website (http://www.amerisafe.com). To listen to the live call on the web, please visit the website at least fifteen minutes before the call begins to register, download and install any necessary audio software. For those who cannot listen to the live webcast, an archive will be available shortly after the call at the same website location.

ABOUT AMERISAFE

AMERISAFE, Inc. is a specialty provider of workers' compensation insurance focused on small to mid-sized employers engaged in hazardous industries, principally construction, trucking, logging and lumber, agriculture, and manufacturing. AMERISAFE actively markets workers' compensation insurance in 27 states.

FORWARD LOOKING STATEMENTS

Statements made in this press release that are not historical facts, including statements accompanied by words such as "will," "believe," "anticipate," "expect," "estimate," or similar words are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding AMERISAFE's plans and performance. These statements are based on management's estimates, assumptions and projections as of the date of this release and are not guarantees of future performance and include statements regarding management's views and expectations of the workers' compensation market, the Company's growth opportunities, underwriting margins and actions by competitors. Actual results may differ materially from the results expressed or implied in these statements if the underlying assumptions prove to be incorrect or as the results of risks, uncertainties and other factors on the business and operations of the Company and our policyholders and the market value of our investment portfolio. Additional factors that may affect our results are set forth in the Company's filings with the Securities and Exchange Commission, including AMERISAFE's Annual Report on Form 10-K. AMERISAFE cautions you not to place undue reliance on the forward-looking statements contained in this release. AMERISAFE does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of this release.

- Tables to Follow -

AMERISAFE, INC. AND SUBSIDIARIES Consolidated Statements of Income (in thousands)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2023			2022			2023			2022
	(unaudited)						(unaudited)
Revenues:
Gross premiums written	$	70,840		$	68,212		$	225,031		$	220,463
Ceded premiums written		(4,112	)		(2,553	)		(12,256	)		(7,837	)
Net premiums written	$	66,728		$	65,659		$	212,775		$	212,626

Net premiums earned	$	66,634		$	67,790		$	201,413		$	205,625
Net investment income		8,105			6,983			23,262			19,581
Net realized gains on investments		5,133			585			5,466			2,402
Net unrealized losses on equity securities		(7,309	)		(4,082	)		(3,892	)		(12,984	)
Fee and other income		77			104			488			352
Total revenues		72,640			71,380			226,737			214,976

Expenses:
Loss and loss adjustment expenses incurred		37,154			37,725			111,808			115,792
Underwriting and other operating costs		22,371			19,585			59,325			54,611
Policyholder dividends		804			640			2,225			2,517
Provision for investment related credit
loss expense (benefit)		(16	)		(21	)		(51	)		60
Total expenses		60,313			57,929			173,307			172,980

Income before taxes		12,327			13,451			53,430			41,996
Income tax expense		2,366			2,090			10,503			7,172
Net income	$	9,961		$	11,361		$	42,927		$	34,824


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2023			2022			2023			2022
	(unaudited)						(unaudited)
Basic EPS:
Net income	$	9,961		$	11,361		$	42,927		$	34,824

Basic weighted average common shares		19,164,854			19,198,320			19,145,432			19,267,602
Basic earnings per share	$	0.52		$	0.59		$	2.24		$	1.81

Diluted EPS:
Net income	$	9,961		$	11,361		$	42,927		$	34,824

Diluted weighted average common shares:
Weighted average common shares		19,164,854			19,198,320			19,145,432			19,267,602
Restricted stock and RSUs		58,734			71,026			72,174			73,296
Diluted weighted average common shares		19,223,588			19,269,346			19,217,606			19,340,898

Diluted earnings per share	$	0.52		$	0.59		$	2.23		$	1.80

AMERISAFE, INC. AND SUBSIDIARIES Consolidated Balance Sheets (in thousands)

	September 30,		December 31,
	2023		2022
	(unaudited)
Assets
Investments	$	889,019	$	888,987
Cash and cash equivalents		59,249		61,469
Amounts recoverable from reinsurers		127,687		125,677
Premiums receivable, net		144,445		121,713
Deferred income taxes		25,683		22,794
Deferred policy acquisition costs		18,796		17,401
Other assets		31,757		31,238
	$	1,296,636	$	1,269,279

Liabilities and Shareholders' Equity
Liabilities:
Reserves for loss and loss adjustment expenses	$	684,348	$	696,037
Unearned premiums		126,338		114,976
Insurance-related assessments		18,295		17,653
Other liabilities		131,772		123,181

Shareholders' equity		335,883		317,432
Total liabilities and shareholders' equity	$	1,296,636	$	1,269,279

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AMERISAFE Announces 2023 Third Quarter Results