Increases loss ratio as result of catastrophic claim

Reports $65.8 Million of Net Income and Return on Equity of 15.7% in 2021

Increases quarterly dividend by 6.9%

AMERISAFE, Inc. (NASDAQ:AMSF), a specialty provider of workers' compensation insurance focused on high hazard industries, today announced results for the fourth quarter and year ended December 31, 2021.

	Three Months Ended								Twelve Months Ended
	December 31,								December 31,
	2021			2020			% Change		2021			2020			% Change
	(in thousands, except per share data)								(in thousands, except per share data)
Net premiums earned	$	67,733		$	74,702		-9.3	%	$	275,993		$	304,427		-9.3	%
Net investment income		6,073			7,228		-16.0	%		25,435			29,364		-13.4	%
Net realized gains (losses) on investments (pretax)		205			(332	)	NM			1,695			1,132		NM
Net unrealized gains on equity securities (pre-tax)		4,289			6,553		NM			12,315			4,204		NM
Net income		3,541			28,501		-87.6	%		65,756			86,602		-24.1	%
Diluted earnings per share	$	0.18		$	1.47		-87.8	%	$	3.39		$	4.47		-24.2	%
Operating net income		(9	)		23,586		-100.0	%		54,688			82,387		-33.6	%
Operating earnings per share	$	-		$	1.22		-100.0	%	$	2.82		$	4.25		-33.6	%
Book value per share	$	20.62		$	22.70		-9.2	%	$	20.62		$	22.70		-9.2	%
Net combined ratio		112.9	%		70.4	%				85.7	%		76.3	%
Return on average equity		3.2	%		24.8	%				15.7	%		19.9	%

G. Janelle Frost, President and Chief Executive Officer, stated, "Our specialty is underwriting and servicing high-hazard workers' compensation and in 2021, our strength in those specialties counterbalanced slow economic growth, strong competition, declining rates, and a variety of pandemic-related uncertainties. We were responsive to the competitive environment, while applying disciplined pricing, and continued our long-held commitment to personalized claims management. Despite experiencing our first catastrophic claim, we are pleased to report a combined ratio of 85.7% and a return on average equity of 15.7% for 2021."

INSURANCE RESULTS

	Three Months Ended								Twelve Months Ended
	December 31,								December 31,
	2021			2020			% Change		2021			2020			% Change
	(in thousands)								(in thousands)

Gross premiums written	$	55,871		$	63,082		-11.4	%	$	278,294		$	303,090		-8.2	%
Net premiums earned		67,733			74,702		-9.3	%		275,993			304,427		-9.3	%
Loss and loss adjustment expenses incurred		59,197			36,260		63.3	%		160,798			157,226		2.3	%
Underwriting and certain other operating costs,
commissions, salaries and benefits		16,714			15,589		7.2	%		72,051			71,906		0.2	%
Policyholder dividends		515			768		-32.9	%		3,715			3,453		7.6	%
Underwriting profit (pre-tax)	$	(8,693	)	$	22,085		-139.4	%	$	39,429		$	71,842		-45.1	%

Insurance Ratios:
Current accident year loss ratio		107.4	%		72.5	%				80.7	%		72.5	%
Prior accident year loss ratio		-20.0	%		-24.0	%				-22.4	%		-20.9	%
Net loss ratio		87.4	%		48.5	%				58.3	%		51.6	%
Net underwriting expense ratio		24.7	%		20.9	%				26.1	%		23.6	%
Net dividend ratio		0.8	%		1.0	%				1.3	%		1.1	%
Net combined ratio		112.9	%		70.4	%				85.7	%		76.3	%

Voluntary premiums on policies written in the quarter were 9.4% lower than the fourth quarter of 2020, primarily due to continued declines in approved loss costs in the states in which we write business. For the full year, voluntary premiums decreased by 6.3%.
Payroll audits and related premium adjustments increased premiums written by $0.1 million in the fourth quarter of 2021, compared to $1.3 million in the fourth quarter of 2020. For the full year 2021, audits and related premium adjustments reduced premiums by $1.2 million, compared to an increase in premiums of $6.4 million in 2020.
As a result of information just developed on a fourth quarter catastrophic claim, the Company increased its accident year loss ratio from 72.0% to 80.7% for the full year. This claim involved several individuals who were severely injured in the same incident. The Company's catastrophic reinsurance program covers amounts up to $10 million per individual, but amounts greater than $10 million per individual are retained by the Company. As a result, AMERISAFE has increased its net estimate after reinsurance for this loss by $24 million and has increased its net accident year loss ratio. As with all AMERISAFE claims, this reserve will be evaluated periodically as the claim develops. This is the first catastrophic claim on the Company's catastrophe reinsurance layer in our history.
During the quarter, the Company experienced favorable net loss reserve development for prior accident years, which reduced loss and loss adjustment expenses by $13.6 million, primarily from accident years 2019 through 2016. For the full year, the company experienced favorable development on prior accident years of $61.9 million, compared with $63.5 million in 2020. The Company currently is estimating that its current accident year loss ratio will be 71.0% for 2022.
For the quarter ended December 31, 2021, the underwriting expense ratio was 24.7% compared with 20.9% in the same quarter in 2020, as a result of lower earned premium, increased bad debt from NCCI pools and increased loss- based assessments. For the year ended December 31, 2021, the underwriting expense ratio was 26.1%, compared with 23.6% in 2020, largely due to lower earned premium as underwriting and other expenses for the full year were largely unchanged.
The effective tax rate for the full year 2021 was 17.2% compared with 19.0% for 2020. The rate was lower than last year due to an increase in the proportion of tax-exempt interest income relative to underwriting profit and also due to a reduction in a valuation allowance on deferred state tax assets.

INVESTMENT RESULTS

	Three Months Ended								Twelve Months Ended
	December 31,								December 31,
	2021			2020			% Change		2021			2020			% Change
	(in thousands)								(in thousands)
Net investment income	$	6,073		$	7,228		-16.0	%	$	25,435		$	29,364		-13.4	%
Net realized gains (losses) on
investments (pre-tax)		205			(332	)	NM			1,695			1,132		NM
Net unrealized gains on
equity securities (pre-tax)		4,289			6,553		NM			12,315			4,204		NM
Pre-tax investment yield		2.2	%		2.4	%				2.3	%		2.5	%
Tax-equivalent yield (1)		2.7	%		2.9	%				2.7	%		2.9	%
________________________________

(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 December 31, 2021, decreased 16.0% to $6.1 million from $7.2 million in the fourth quarter of 2020, due to lower interest rates on fixed income securities. For the full year 2021, net investment income was $25.4 million compared with $29.4 million for 2020, a decrease of 13.4%, due to lower yields on fixed income securities.
Net unrealized gains on equity securities were $4.3 million in the fourth quarter and $12.3 million for the full year 2021.
As of December 31, 2021, the carrying value of AMERISAFE's investment portfolio, including cash and cash equivalents, was $1.1 billion.

CAPITAL MANAGEMENT

In an accompanying announcement, the Company's Board of Directors increased the regular quarterly dividend by 6.9% from $0.29 per share to $0.31 per share, payable on March 25, 2022 to shareholders of record as of March 11, 2022.

SUPPLEMENTAL INFORMATION

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2021			2020			2021			2020
	(in thousands, except share and per share data)

Net income	$	3,541		$	28,501		$	65,756		$	86,602
Less:
Net realized gains (losses) on investments		205			(332	)		1,695			1,132
Net unrealized gains on equity securities		4,289			6,553			12,315			4,204
Tax effect (1)		(944	)		(1,306	)		(2,942	)		(1,121	)
Operating net income (2)	$	(9	)	$	23,586		$	54,688		$	82,387

Average shareholders' equity (3)	$	439,740		$	460,363		$	419,070		$	434,516
Less:
Average accumulated other comprehensive income		14,262			20,466			17,278			16,615
Average adjusted shareholders' equity (2)	$	425,478		$	439,897		$	401,792		$	417,901

Diluted weighted average common shares		19,420,757			19,380,109			19,408,619			19,363,809

Return on average equity (4)		3.2	%		24.8	%		15.7	%		19.9	%
Operating return on average adjusted equity (2)		0.0	%		21.4	%		13.6	%		19.7	%
Diluted earnings per share	$	0.18		$	1.47		$	3.39		$	4.47
Operating earnings per share (2)	$	-		$	1.22		$	2.82		$	4.25
________________________________

(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 February 23, 2022, at 10:30 a.m. Eastern Time to discuss the results for the quarter and comment on future periods. To participate in the conference call, dial 773-305-6853 (Conference Code 7786013) 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, including the impact of the COVID-19 pandemic 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						Twelve Months Ended
	December 31,						December 31,
	2021			2020			2021			2020
	(unaudited)						(unaudited)
Revenues:
Gross premiums written	$	55,871		$	63,082		$	278,294		$	303,090
Ceded premiums written		(3,059	)		(2,348	)		(10,469	)		(10,276	)
Net premiums written	$	52,812		$	60,734		$	267,825		$	292,814

Net premiums earned	$	67,733		$	74,702		$	275,993		$	304,427
Net investment income		6,073			7,228			25,435			29,364
Net realized gains (losses) on investments		205			(332	)		1,695			1,132
Net unrealized gains on equity securities		4,289			6,553			12,315			4,204
Fee and other income		81			70			496			350
Total revenues		78,381			88,221			315,934			339,477

Expenses:
Loss and loss adjustment expenses incurred		59,197			36,260			160,798			157,226
Underwriting and other operating costs		16,714			15,589			72,051			71,906
Policyholder dividends		515			768			3,715			3,453
Provision for investment related credit loss
expense (benefit)		23			(14	)		(79	)		(27	)
Total expenses		76,449			52,603			236,485			232,558

Income before taxes		1,932			35,618			79,449			106,919
Income tax expense		(1,609	)		7,117			13,693			20,317
Net income	$	3,541		$	28,501		$	65,756		$	86,602


AMERISAFE, INC. AND SUBSIDIARIES Consolidated Statements of Income (cont.) (in thousands, except per share amounts)

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2021			2020			2021			2020
	(unaudited)						(unaudited)
Basic EPS:
Net income	$	3,541		$	28,501		$	65,756		$	86,602

Basic weighted average common shares		19,345,324			19,309,055			19,332,391			19,288,996
Basic earnings per share	$	0.18		$	1.48		$	3.40		$	4.49

Diluted EPS:
Net income	$	3,541		$	28,501		$	65,756		$	86,602

Diluted weighted average common shares:
Weighted average common shares		19,345,324			19,309,055			19,332,391			19,288,996
Restricted stock and stock options		75,433			71,054			76,228			74,813
Diluted weighted average common shares		19,420,757			19,380,109			19,408,619			19,363,809

Diluted earnings per share	$	0.18		$	1.47		$	3.39		$	4.47

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

	December 31,		December 31,
	2021		2020
	(unaudited)
Assets
Investments	$	1,012,571	$	1,088,744
Cash and cash equivalents		70,722		61,757
Amounts recoverable from reinsurers		120,561		105,803
Premiums receivable, net		135,100		156,760
Deferred income taxes		14,384		13,665
Deferred policy acquisition costs		17,059		17,810
Other assets		32,327		26,316
	$	1,402,724	$	1,470,855

Liabilities and Shareholders' Equity
Liabilities:
Reserves for loss and loss adjustment expenses	$	745,278	$	760,561
Unearned premiums		121,092		129,260
Insurance-related assessments		16,850		17,995
Other liabilities		120,181		124,223

Shareholders' equity		399,323		438,816
Total liabilities and shareholders' equity	$	1,402,724	$	1,470,855

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AMERISAFE Announces 2021 Fourth Quarter and Year-end Results