) second-quarter 2013 operating earnings per share of 45 cents
lagged the Zacks Consensus Estimate of 50 cents per share by 10%.
However results were way ahead of the prior-year quarter's
earnings of 18 cents. However, operating net income climbed
152.8% year over year to $8.5 million.
Operating net income included after-tax net realized losses of
$1.3 million against an after-tax net realized gain of $0.12
million in the year-ago period. Including these, reported net
income stood at to $7.6 million or 41 cents per share, compared
with $3.4 million or 19 cents a share in the prior-year quarter.
Reported results reflect higher premiums 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) and combined ratio. However,
the positives were partially offset by insurance loss and loss
adjustment expenses (LAE) along with lower investment yields.
Amerisafe's total revenue for the reported quarter was $87.5
million, up 14.2% from $76.6 million in the prior-year quarter.
However, it lagged the Zacks Consensus Estimate of $91 million.
Gross premiums written for the quarter were $95.8 million,
reflecting a 12.1% 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 $3.7 million in the reported quarter, while the same
had boosted premiums by $4.5 million in the year-ago quarter.
Furthermore, voluntary premiums written by Amerisafe jumped 12.8%
year over year in the reported quarter. In addition, net premiums
earned increased 17.6 % from the year-ago quarter to $81.98
million. Net investment income, which represented about 7.6% of
total revenue, was $6.6 million for the reported quarter, up 0.7%
from the prior-year quarter.
Conversely, insurance loss and loss adjusted expenses (LAE)
increased 0.2% year over year to $56.8 million (or about 69.3% of
net premiums earned). As a result, total expenses of Amerisafe
grew 5.9% year over year to $76.9 million, while net underwriting
expense ratio deteriorated to 24% from 22% in the year-ago
quarter, due to a reduced profit commission arising from high
severity losses, a timing difference in premium taxes and higher
Subsequently, underwriting profit of Amerisafe came in at $5.1
million during the quarter, compared to an underwriting loss of
$2.7 million in the year-ago period. Even net combined ratio for
the reported quarter improved to 93.8% from 103.8% in the
prior-year quarter owing to a decline in claims frequency and
favourable prior year loss development.
Amerisafe exited the reported quarter with operating ROE of 8.7%,
up from 3.7% in year-ago quarter. Additionally, book value per
share came in at $21.29 as on Jun 30, 2013, up 6.5% from $19.98
at the end of the year-ago quarter.
As on Jun 30, 2013, Amerisafe's investment portfolio, including
cash and investments, stood at $944.1 million compared with
$900.8 million at the end of 2012. Moreover, fair value of the
portfolio improved to $972.8 million versus $944.9 million at
2012-end. Total shareholder's equity stood at $392.5 million at
the end of Jun 2013, up from $381.2 million at the end of 2012.
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 the
On Jun 26, 2013, Amerisafe paid its second quarterly dividend of
8 cents per share. On Jul 30, 2013, the board of Amerisafe
declared a cash dividend of 8 cents a share, which is payable on
Sep 27, 2013 to shareholders of record on Sep 13, 2013.
Performance of Another Insurer
) reported second-quarter 2013 operating earnings per share of
$1.62. The results comfortably surpassed the Zacks Consensus
Estimate of $1.52 but were a penny higher than year-ago quarter
figure. Operating earnings edged up 0.5% year over year to $759
million. A weak yen/dollar exchange rate had a negative impact of
22 cents per share on operating earnings.
Amerisafe currently carries a Zacks Rank #2 (Buy). Among other
strong performers of the insurance sector,
Employers Holdings Inc.
Hilltop Holdings Inc.
) share the same Zacks Rank as Amerisafe.
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AMERISAFE INC (AMSF): Free Stock Analysis
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HILLTOP HLDGS (HTH): Free Stock Analysis
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