) first-quarter 2014 operating earnings per share of 56 cents
lagged the Zacks Consensus Estimate of 63 cents but outpaced the
prior-year quarter figure of 47 cents by 19.1%. Consequently,
operating net income jumped 18.7% year over year to $10.5
Reported results reflect higher premiums and
lower-than-expected decline in investment income that shored up
the top line as well as the underwriting results. In addition,
improved investment portfolio and favourable reserves drove the
book value of the shares, return on equity (ROE) and combined
ratio. These were partially offset by slightly higher loss and
loss adjustment expenses (LAE) along with lower investment
Amerisafe's total revenue stood at $96.2 million, up 11.1%
over the prior-year quarter. The top line also exceeded the Zacks
Consensus Estimate of $95 million. Gross premiums written for the
quarter were $105.7 million, reflecting a 6.7% year-over-year
The uptick was driven by payroll audits and related premium
adjustments for policies written in previous periods. These
adjustments increased premiums by $3.3 million in the reported
Furthermore, voluntary premiums written climbed 9.3% over the
prior-year quarter, whereas net premiums earned increased 11.9%
to $89.2 million. Net investment income, which represented about
7% of total revenue, was almost flat at $6.7 million.
Meanwhile, insurance loss and loss adjusted expenses (LAE)
climbed 9.5% year over year to $61.3 million (or about 69% of net
premiums earned). However, total expenses increased 9.8% year
over year to $82.8 million, while net underwriting expense ratio
slightly weakened to 23.9% from 23.7% in the year-ago quarter,
due to a 13.2% uptick in underwriting and operating costs
partially offset by higher premiums.
Subsequently, underwriting profit surged 51.1% to $6.5 million
from $4.3 million in the year-ago quarter. Even net combined
ratio for the reported quarter improved to 92.7% from 94.7% in
the prior-year quarter.
The favorable loss development for prior accident years
reduced expenses by $2.5 million. Consequently, the current
accident year loss ratio was 71.5%, down from 73.2% in the
Amerisafe exited the reported quarter with operating ROE of
10% that improved from 9.2% in the year-ago quarter.
Additionally, book value per share came in at $22.54 as on Mar
31, 2014, up 6.3% from $21.20 at prior period-end.
As on Mar 31, 2014, Amerisafe's investment portfolio,
including cash and investments, stood at $1.02 billion, slightly
higher than $1.0 billion at 2013-end. Moreover, fair value of the
portfolio stood at $1.0 billion, at par with the 2013-end level.
Total shareholders' equity stood at $420.6 million at Mar
2014-end, up from $416.8 million at 2013-end.
Share Repurchase Update
On Oct 31, 2013, the board of Amerisafe extended the company's
share repurchase program to $25 million, to be executed through
Dec 2014. However, no shares were bought back during the whole of
2012 and 2013 as well as in the reported quarter.
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.
On Apr 29, 2014, the board of Amerisafe declared a regular
quarterly dividend of 12 cents per share, payable on Jun 26,
2014, to shareholders of record as on Jun 12.
On Mar 28, 2014, Amerisafe paid its first extraordinary cash
dividend of 50 cents per share and a regular quarterly dividend
of 12 cents to shareholders of record as on Mar 14.
In Feb 2014, the regular quarterly dividend was hiked by 50%
from the prior 8 cents. The company had initiated dividend
payouts in Mar 2013.
Along with Amerisafe,
Protective Life Corp.
), all carry a Zacks Rank #2 (Buy) and are worth considering.
ACE LIMITED (ACE): Free Stock Analysis Report
AMERISAFE INC (AMSF): Free Stock Analysis
PROTECTIVE LIFE (PL): Free Stock Analysis
PRIMERICA INC (PRI): Free Stock Analysis
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