) fourth-quarter 2012 operating earnings per share of 49 cents
outpaced the Zacks Consensus Estimate of 39 cents and the
prior-year quarter's earnings of 32 cents. Consequently,
operating net income spiked 54.5% year over year to $9.2
Operating net income excluded after-tax net realized gains of
$0.43 million against $0.95 million in the year-ago period along
with valuation allowance of $1.2 million in the prior-year
quarter. Including these, reported net income rose to $9.2
million or 50 cents per share, compared with $8.1 million or 44
cents a share in the prior-year quarter.
Reported results reflect higher premiums written and earned
that shored up the top line as well as the underwriting results.
In addition, improved investment portfolio and capital position
drove the book value of the shares, return on equity (ROE),
combined ratio and other profitability metrics. However, the
positives were substantially offset by higher-than-expected tax,
loss and loss adjustment expenses (LAE) along with lower
Amerisafe's total revenue for the reported quarter was $85.6
million, up 14.3% from $74.9 million in the prior-year quarter.
This also exceeded the Zacks Consensus Estimate of $83.0 million.
Gross premiums written for the quarter were $81.1 million,
reflecting a 30.6% year-over-year expansion. The uptick was
driven by payroll audits and related premium adjustments for
policies written in previous periods. These adjustments increased
premiums by $7.9 million in the reported quarter, while the same
had boosted premiums by $3.8 million in the year-ago quarter.
Furthermore, voluntary premiums written jumped 25% year over
year in the reported quarter. In addition, net premiums earned
increased 18.9% from the year-ago quarter to $78.7 million. Net
investment income, which represented about 8% of total revenue,
was $6.7 million for the reported quarter, down marginally by
0.1% from the prior-year quarter.
Conversely, insurance loss and loss adjusted expenses (LAE)
increased 15.9% year over year to $57.5 million (or about 73% of
net premiums earned). As a result, total expenses grew 11.5% year
over year to $72.9 million, while net underwriting expense ratio
improved to 18.9% from 22.7% in the year-ago quarter, due to
higher premiums and a mere 0.9% hike in underwriting and
Subsequently, underwriting profit surged $5.8 million from
$1.1 million in the year-ago quarter. Even net combined ratio for
the reported quarter improved to 92.6% from 98.4% in the
The accident years primarily contributed to the favorable
development of $2.7 million. Consequently, the current accident
year loss ratio was 76.5%, down from 78.2% in the prior-year
Full-Year 2012 Highlights
For full year 2012, Amerisafe generate operating earnings per
share of $1.48, noticeably surpassing the Zacks Consensus
Estimate of $1.37 and $1.14 in 2011. Operating net income soared
29.8% year over year to $27.4 million.
Additionally, reported net income increased to $29.4 million
or $1.58 a share in 2012 from $24.2 million or $1.29 per share in
2011. Net combined ratio also improved to 97.5% from 100.4% in
Total revenue grew 14.4% year over year to $321.2 million in
2012, and comfortably beat the Zacks Consensus Estimate of $319
million. Meanwhile, total expenses increased 12.2% to $284.1
Amerisafe exited the reported quarter with operating ROE of
9.8% that improved from 6.9% in year-ago quarter. Operating ROE
also climbed to 7.6% in 2012 from 6.3% in 2011. Additionally,
book value per share came in at $20.88 as on Dec 31, 2012, up
8.5% from $19.25 at 2011-end.
As on Dec 31, 2012, Amerisafe's investment portfolio,
including cash and investments, stood at $900.8 million compared
with $890.7 million at the end of 2011. Moreover, fair value of
the portfolio improved to $944.9 million at 2012-end versus
$806.0 million at 2011-end. Total shareholders' equity stood at
$381.2 million at the end of 2012, up from $349.4 million at the
end of 2011.
Share Repurchase Update
On Oct 30, 2012, the board of Amerisafe protracted the
company's share repurchase program through Dec 2013. Since the
initiation of its share repurchase program, the company has
bought back about 1.26 million shares for $22.4 million, at an
average price of $17.78.
However, no shares were repurchased during 2012, while the
company had $24.4 million of shares available for repurchases as
of Dec 31, 2012.
Concurrently, the board of Amerisafe announced its first
regular quarterly dividend of 8 cents a share, payable on Mar 28,
2013 to shareholders of record on Mar 14, 2013.
Amerisafe carries a Zacks Rank #3 (Hold). Other strong
performers in the insurance sector include
XL Group Plc
EMC Insurance Group Inc.
Navigators Group Inc.
), all of which carry a Zacks Rank #1 (Strong Buy).
AMERISAFE INC (AMSF): Free Stock Analysis
EMC INSURANCE (EMCI): Free Stock Analysis
NAVIGATORS GRP (NAVG): Free Stock Analysis
XL GROUP PLC (XL): Free Stock Analysis Report
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