Last week, ratings agency - A.M. Best asserted the debt and
credit ratings of
) and its subsidiaries, upholding the company's financial
strength and fundamental growth outlook.
Accordingly, A.M. Best affirmed issuer credit ratings (ICR) of
"bbb" on Amerisafe, while an ICR of "a" was reiterated on the
property-casualty (P&C) divisions of the company. These
include American Interstate Insurance Co., Silver Oak Casualty
Inc. and American Interstate Insurance Co. of Texas, together
known as Amerisafe.
The ratings agency also affirmed the financial strength rating
(FSR) of "A" on these P&C subsidiaries. Meanwhile, the
outlook for all ratings remains stable.
A.M. Best exhibited confidence in Amerisafe's core fundamental
growth, which is cushioned by strong risk-based capital and
operating leverage. Moreover, specialty provider of workers'
compensation insuranceallowed the company retain a sturdy market
position and competitive edge based on its efficient pricing
discipline and claims management.
Alongside, a prudent underwriting approach and focus on
controlling loss through safety programs helped Amerisafe deliver
favorable reserve trends in the latest 5-year period.
Consequently, Amerisafe witnessed remarkable operating
performance in 2012.
Operating earnings of $1.48 per share surpassed the Zacks
Consensus Estimate of $1.37 based on higher premiums and lower
underwriting expenses that drove the top line, underwriting
profit, book value per share, combined ratio and return on equity
On the contrary, the ratings agency has displayed some
concerns regarding the earnings volatility, which is caused by
the consistent adverse loss reserve development. Further, lack of
product diversification acts as a deterrent factor for growth of
the company. Although the pricing environment and industry demand
has witnessed some improvement, Amerisafe is expected to face
uncertainty in the upcoming quarters as the market weakness
continues to hurt payrolls.
Yet, prudent capital management, expanded share repurchase
plan, dividend initiation and affirmation of a strong financial
strength rating augur decent long-term growth. These factors also
validate the Zacks Rank #1 (Strong Buy) on Amerisafe.
Apart from Amerisafe, other stocks that are outperforming in
the insurance sector include
XL Group Plc
Navigators Group Inc.
). All these stocks carry a Zacks Rank #1 (Strong Buy).
AMERISAFE INC (AMSF): Free Stock Analysis
NAVIGATORS GRP (NAVG): Free Stock Analysis
PROGRESSIVE COR (PGR): Free Stock Analysis
XL GROUP PLC (XL): Free Stock Analysis Report
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