Reports Return on Equity of 21.3% and Net Combined Ratio of 82.2%

AMERISAFE, Inc. (NASDAQ:AMSF), a specialty provider of workers' compensation insurance focused on high hazard industries, today announced results for the first quarter ended March 31, 2023.

	Three Months Ended
	March 31,
	2023		2022		% Change
	(in thousands, except per share data)
Net premiums earned	$	69,181	$	67,556	2.4%
Net investment income		7,433		6,113	21.6%
Net realized gains on investments (pre-tax)		258		738	-65.0%
Net unrealized gains on equity securities (pre-tax)		1,369		1,040	NM
Net income		17,339		17,331	0.0%
Diluted earnings per share	$	0.90	$	0.89	1.1%
Operating net income		16,054		15,926	0.8%
Operating earnings per share	$	0.83	$	0.82	1.2%
Book value per share	$	17.38	$	20.46	-15.1%
Net combined ratio		82.2%		80.1%
Return on average equity		21.3%		17.4%

G. Janelle Frost, President and Chief Executive Officer commented, "AMERISAFE's first quarter results reflect the company's disciplined approach to risk selection and adequate pricing within the high-hazard workers' compensation market. Continued competition and rate decreases were more than offset by positive audit premiums resulting in top-line growth of 6.0%, combined ratio of 82.2% and annualized ROE of 21.3%. With the support of a strong balance sheet, AMERISAFE is well-positioned for solid performance in the current market, and we remain confident in our ability to create long-term value for shareholders."

INSURANCE RESULTS

	Three Months Ended
	March 31,
	2023		2022		% Change
	(in thousands)

Gross premiums written	$	82,487	$	77,791	6.0%
Net premiums earned		69,181		67,556	2.4%
Loss and loss adjustment expenses incurred		39,009		37,741	3.4%
Underwriting and certain other operating costs, commissions, salaries and benefits		16,982		15,113	12.4%
Policyholder dividends		931		1,189	-21.7%
Underwriting profit (pre-tax)	$	12,259	$	13,513	-9.3%

Insurance Ratios:
Current accident year loss ratio		71.0%		71.0%
Prior accident year loss ratio		-14.6%		-15.1%
Net loss ratio		56.4%		55.9%
Net underwriting expense ratio		24.5%		22.4%
Net dividend ratio		1.3%		1.8%
Net combined ratio		82.2%		80.1%

Voluntary premium on policies written in the quarter decreased 1.1% compared with the first quarter of 2022, primarily due to continued declines in approved loss costs in the states we write business. The average decline in approved loss costs for the first quarter of 2023 was 6.8% versus the first quarter of 2022.
Payroll audits and related premium adjustments increased premiums written by $8.9 million in the first quarter of 2023, compared to an increase of $2.8 million in the first quarter of 2022.
The loss ratio for the first quarter was 56.4%, compared to 55.9% in the first 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 $10.1 million, primarily from accident years 2016 through 2020.
For the quarter ended March 31, 2023, the underwriting expense ratio was 24.5%, which included a $3.3 million increase in profit sharing reinsurance commission, versus a 22.4% in the same quarter of 2022, which included a $3.8 million return of assessments from the Minnesota Workers Compensation Reinsurance Association. The balance of the increase in expense for the first quarter of 2023 versus the first quarter of 2022 is primarily due to an increase in commissions and professional fees.
The effective tax rate for the quarter ended March 31, 2023 was 19.5% compared with 19.1% for March 31, 2022. The rate was slightly 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
	March 31,
	2023		2022		% Change
	(in thousands)
Net investment income	$	7,433	$	6,113	21.6%
Net realized gains on investments (pre-tax)		258		738	-65.0%
Net unrealized gains on equity securities (pre-tax)		1,369		1,040	NM
Pre-tax investment yield		3.1%		2.3%
Tax-equivalent yield (1)		3.5%		2.7%
________________________________

(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 March 31, 2023, increased 21.6% to $7.4 million from $6.1 million in the first quarter of 2022, due to higher yields on cash and fixed-income securities.
Net unrealized gains on equity securities were $1.4 million in the first quarter as a result of generally favorable equity market returns during the quarter.
As of March 31, 2023, the carrying value of AMERISAFE's investment portfolio, including cash and cash equivalents, was $961.1 million.

CAPITAL MANAGEMENT

During the first quarter of 2023, the Company paid a regular quarterly cash dividend of $0.34 per share on March 24, 2023 which represented a 9.7% increase in the quarterly dividend compared with 2022. On April 25, 2023 the Company's Board of Directors declared a quarterly cash dividend of $0.34 per share, payable on June 23, 2023 to shareholders of record as of June 16, 2023.

Book value per share at March 31, 2023 was $17.38, an increase of 4.9% from $16.57 at December 31, 2022.

SUPPLEMENTAL INFORMATION

	Three Months Ended
	March 31,
	2023			2022
	(in thousands, except share and per share data)

Net income	$	17,339		$	17,331
Less:
Net realized gains on investments		258			738
Net unrealized gains on equity securities		1,369			1,040
Tax effect (1)		(342	)		(373	)
Operating net income (2)	$	16,054		$	15,926

Average shareholders' equity (3)	$	325,144		$	397,298
Less:
Average accumulated other comprehensive income (loss)		(11,656	)		6,797
Average adjusted shareholders' equity (2)	$	336,800		$	390,501

Diluted weighted average common shares		19,235,411			19,430,824

Return on average equity (4)		21.3	%		17.4	%
Operating return on average adjusted equity (2)		19.1	%		16.3	%
Diluted earnings per share	$	0.90		$	0.89
Operating earnings per share (2)	$	0.83		$	0.82
________________________________

(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 April 27, 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 323-794-2423 (Conference Code 595703) 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
	March 31,
	2023			2022
	(unaudited)
Revenues:
Gross premiums written	$	82,487		$	77,791
Ceded premiums written		(4,179	)		(2,559	)
Net premiums written	$	78,308		$	75,232

Net premiums earned	$	69,181		$	67,556
Net investment income		7,433			6,113
Net realized gains on investments		258			738
Net unrealized gains on equity securities		1,369			1,040
Fee and other income		197			113
Total revenues		78,438			75,560

Expenses:
Loss and loss adjustment expenses incurred		39,009			37,741
Underwriting and other operating costs		16,982			15,113
Policyholder dividends		931			1,189
Provision for investment related credit loss
expense (benefit)		(19	)		95
Total expenses		56,903			54,138

Income before taxes		21,535			21,422
Income tax expense		4,196			4,091
Net income	$	17,339		$	17,331

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

	Three Months Ended
	March 31,
	2023		2022
	(unaudited)
Basic EPS:
Net income	$	17,339	$	17,331

Basic weighted average common shares		19,131,356		19,332,006
Basic earnings per share	$	0.91	$	0.90

Diluted EPS:
Net income	$	17,339	$	17,331

Diluted weighted average common shares:
Weighted average common shares		19,131,356		19,332,006
Restricted stock and RSUs		104,055		98,818
Diluted weighted average common shares		19,235,411		19,430,824

Diluted earnings per share	$	0.90	$	0.89

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

	March 31,		December 31,
	2023		2022
	(unaudited)
Assets
Investments	$	919,856	$	888,987
Cash and cash equivalents		41,210		61,469
Amounts recoverable from reinsurers		118,142		125,677
Premiums receivable, net		137,051		121,713
Deferred income taxes		21,658		22,794
Deferred policy acquisition costs		18,629		17,401
Other assets		31,708		31,238
	$	1,288,254	$	1,269,279

Liabilities and Shareholders' Equity
Liabilities:
Reserves for loss and loss adjustment expenses	$	686,652	$	696,037
Unearned premiums		124,103		114,976
Insurance-related assessments		17,594		17,653
Other liabilities		127,050		123,181

Shareholders' equity		332,855		317,432
Total liabilities and shareholders' equity	$	1,288,254	$	1,269,279

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