AMERISAFE, Inc. (Nasdaq: AMSF), a specialty writer of high hazard workers' compensation insurance, today announced results for the second quarter ended June 30, 2008.
Net income in the second quarter was $12.8 million compared to net income of $11.4 million in the 2007 second quarter, an increase of 12.9%. Pre-tax income for the second quarter of 2008 included $2.8 million of favorable prior year loss development and income of $991,000 from a previously announced reinsurance commutation. Pre-tax income for the second quarter of 2007 had no prior year loss development, but included income of $2.7 million from the commutation of several reinsurance contracts. Net investment income was $7.4 million for both the second quarter of 2008 and the second quarter of 2007. The Company's return on average equity for the 2008 second quarter was 20.6% compared to 22.8% for the same period in 2007.
Gross premiums written in the second quarter of 2008 were $86.0 million, a decrease of 8.8%, compared to $94.3 million in the second quarter of 2007. The decrease was the result of reduced state-mandated loss costs, increased competition, as well as decreased audit premium from lower work activity. Second quarter revenues totaled $79.8 million, a decrease of 5.8%, compared to revenues of $84.7 million in the prior year period.
Net income for the first half of 2008 was $24.8 million compared to $19.8 million for the first half of 2007, an increase of 25.1%. First half 2008 pre-tax income included $4.5 million of favorable prior year loss development and income of $991,000 from reinsurance commutations. Pre-tax net income for the first half of 2007 had no prior year loss development, but included income of $2.7 million from reinsurance commutations. Net investment income increased to $15.2 million for the six months ended June 30, 2008, from $14.4 million for the same period in 2007, an increase of 6.0%. The Company's return on average equity was 20.3% for both the first half of 2008 and the first half of 2007.
For the six months ended June 30, 2008, gross premiums written totaled $167.0 million, a 9.6% decrease from gross premiums written of $184.8 million for the same period in 2007. Revenues for the first half of 2008 totaled $162.1 million, a 3.3% decrease from revenues of $167.7 million for the first six months of 2007.
In the second quarter of 2008, diluted earnings per share allocable to common shareholders were $0.63 compared to $0.56 in the same period of 2007. Weighted average diluted shares outstanding for the second quarter of 2008 totaled 19,091,675 shares compared to 19,109,452 shares in the second quarter of 2007.
In the first six months of 2008, diluted earnings per share allocable to common shareholders were $1.22 compared to $0.98 in the same period of 2007. Weighted average diluted shares outstanding for the first half of 2008 totaled 19,060,673 shares compared to 19,055,149 shares in the first half of 2007.
The net combined ratio for the second quarter of 2008 was 85.4% compared to 88.4% for the same period in 2007. Loss and loss adjustment expenses for the second quarter of 2008 were $47.3 million, or 65.6% of net premiums earned, compared to $53.2 million, or 69.0% of net premiums earned, for the same period in 2007. Total underwriting expenses for the second quarter of 2008 were $14.1 million, or 19.6% of net premiums earned, compared to $14.8 million, or 19.2% of net premiums earned, for the second quarter 2007.
The net combined ratio for the first half of 2008 was 86.3% compared to 90.4% for the same period in 2007. Loss and loss adjustment expenses for the first six months of 2008 were $97.2 million, or 66.4% of net premiums earned, compared to $105.7 million, or 69.1% of net premiums earned, for the same period in 2007. Total underwriting expenses for the first half of 2008 were $28.7 million, or 19.6% of net premiums earned, compared to $32.0 million, or 20.9% of net premiums earned, for the first half of 2007.
Commenting on these results, Allen Bradley, AMERISAFE's Chairman, President and Chief Executive Officer, stated, "We are pleased to report these excellent second quarter results. We generated a solid year-over-year improvement in our combined ratio and a strong return on equity. We believe that our commitment to pricing discipline, stringent risk selection, intensive safety services, personalized claims adjudication and effective expense management is the foundation upon which these financial results are built and we are not inclined to compromise our commitment." -- AMERISAFE, Inc.
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