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AMERISAFE Inc. Reports Operating Results (10-Q)

November 06, 2009 | About:
10qk

10qk

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AMERISAFE Inc. (AMSF) filed Quarterly Report for the period ended 2009-09-30.

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 agriculture oil and gas maritime and sawmills. Amerisafe Inc. has a market cap of $351.4 million; its shares were traded at around $18.62 with a P/E ratio of 7.1 and P/S ratio of 1.2.

Highlight of Business Operations:

Gross Premiums Written. Gross premiums written for the quarter ended September 30, 2009 were $55.1 million, compared to $75.8 million for the same period in 2008, a decrease of 27.3%. The decrease was attributable to a $9.0 million decrease in annual premiums on voluntary policies written during the period, a $10.9 million decrease in premiums resulting from payroll audits and related premium adjustments, a $485,000 decrease in direct assigned risk premiums, and a $264,000 decrease in assumed premiums from mandatory pooling arrangements. The decrease from payroll audits and related premium adjustments includes a $5.0 million decrease in earned but unbilled (EBUB) premium. In connection with recent payroll audits, the EBUB premium estimate was updated to reflect future decreased premium from policy audits resulting from projected lower payrolls during the current economic climate.

Underwriting and Certain Other Operating Costs, Commissions and Salaries and Benefits. Underwriting and certain other operating costs, commissions and salaries and benefits for the quarter ended September 30, 2009 were $12.5 million, compared to $14.5 million for the same period in 2008, a decrease of 13.4%. This decrease was primarily due to a $1.4 million decrease in insurance-related assessments, a $958,000 decrease in commissions, and a $508,000 decrease in premium taxes. There was also a decrease of $388,000 in accounts receivable write-offs and a $438,000 increase in experience-rated commissions from our 2009 reinsurance agreements. Offsetting these expense reductions was a $1.4 million decrease in income from the commutation of certain reinsurance contracts. Our expense ratio was 21.6% in the third quarter of 2009 compared to 20.3% in the third quarter of 2008.

Gross Premiums Written. Gross premiums written for the nine months ended September 30, 2009 was $207.1 million, compared to $242.7 million for the same period in 2008, a decrease of 14.7%. The decrease was attributable to a $16.4 million decrease in annual premiums on voluntary policies written during the period, a $17.5 million decrease in premiums resulting from payroll audits and related premium adjustments, $1.6 million decrease in direct assigned risk premiums and a $122,000 decrease in premiums from mandatory pooling arrangements. The decrease from payroll audits and related premium adjustments includes a $6.4 million decrease in EBUB premium. In connection with recent payroll audits, the EBUB premium estimate was updated to reflect future decreased premium from policy audits resulting from projected lower payrolls during the current economic climate.

Net Realized Gains (Losses) on Investments. Net realized gains on investments for the nine months ended September 30, 2009 totaled $2.0 million, compared to net realized losses of $2.9 million for the same period in 2008. Net realized gains in the nine months ended September 30, 2009 primarily resulted from $1.6 million in gains from the sale of certain equities and $290,000 in gains from the sale of one asset-backed security. Net realized losses in the nine months ended September 30, 2008 were attributable to $320,000 in realized losses from the sale of equity securities and $2.5 million in other-than-temporary impairments of certain equities and asset-backed securities.

Underwriting and Certain Other Operating Costs, Commissions and Salaries and Benefits. Underwriting and certain other operating costs, commissions and salaries and benefits for the nine months ended September 30, 2009 were $41.8 million, compared to $43.1 million for the same period in 2008, a decrease of 3.2%. This decrease was primarily due to a $2.2 million decrease in commissions, $1.3 million of experience-rated commission from our 2009 reinsurance agreements, a $1.3 million decrease in premium taxes and a $531,000 decrease in insurance-related assessments. Offsetting these expense reductions was a $3.0 million decrease in income from the commutation of certain reinsurance contracts. Our expense ratio was 21.5% for the nine months ended September 30, 2009 compared to 19.8% for the same period in 2008.

Net cash provided by operating activities was $21.9 million for the nine months ended September 30, 2009, which represented a $22.1 million decrease in cash provided by operating activities, from $44.0 million in net cash provided by operating activities for the nine months ended September 30, 2008. This decrease in operating cash was attributable to a $29.9 million decrease in premiums collected, a $9.9 million decrease in reinsurance recoveries and a $782,000 decrease in net investment income. Offsetting these decreases in operating cash flow were a $7.1 million decrease in losses paid, a $4.9 million decrease in expense disbursements, a $4.0 million decrease in federal income taxes paid and a $3.5 million decrease in policyholder dividends paid.

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