On Feb 14, Zacks Investment Research upgraded
AmTrust Financial Services Inc.
) by a notch to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
AmTrust has been experiencing rising earnings estimates on the
back of robust fourth-quarter 2013 results. Improved market
trends stemmed from incremental agency acquisitions and a healthy
capital position, which in turn, paved the way for the recent
approval of its first stock repurchase program since 2007.
Additionally, this specialty property-casualty insurer
delivered positive earnings surprises in the last 4 quarters with
an average beat of 16.5%. On Feb 13, AmTrust reported
fourth-quarter 2013 operating earnings per share of $1.03, which
outpaced the Zacks Consensus Estimate of 80 cents by about 29% as
well as the year-ago quarter number of 70 cents by 47%.
Robust year-over-year growth of 84.6% in net earned premiums
along with a 71.9% surge in service and fee income boosted the
top line, margins and bottom line. Despite higher underwriting
and acquisition expenses, combined ratio witnessed improvement.
Moreover, capital position remained sturdy with appreciated cash
position, book value per share and return on equity (ROE).
Going ahead, the recent acquisitions of Insco Dico Group and
Sagicor Europe Ltd. are expected to be accretive to AmTrust's
earnings in 2014 and beyond. Moreover, the pending purchase of
renewal rights and assets of the commercial lines insurance
Canopius Holdings Bermuda Ltd.
), by mid-2014, is deemed positive. AmTrust's
creditworthiness,prudent risk management, diversified product
portfolio and effective capital deployment also score well with
the ratings agencies and investors.
Based on AmTrust's fundamental strength and prudent capital
management, the Zacks Consensus Estimate for 2014 rose 5.4% to
$3.92 per share in the last 7 days. Meanwhile, the estimate for
2015 grew 1.6% to $4.45 during the same period.
Moreover, the Most Accurate estimate for AmTrust's 2014 and
2015 earnings stands at $4.18 and $4.60 a share, resulting in an
of +6.6% and +3.4%, respectively. Furthermore, no downward
revision in estimates was witnessed for both the years.
Other Stocks to Consider
Besides AmTrust, other top-ranked insurers in the industry
OneBeacon Insurance Group Ltd.
). Both these stocks sport the same Zacks Rank as AmTrust.
AMTRUST FIN SVC (AFSI): Free Stock Analysis
ONEBEACON INSUR (OB): Free Stock Analysis
RLI CORP (RLI): Free Stock Analysis Report
TOWER GRP INTL (TWGP): Free Stock Analysis
To read this article on Zacks.com click here.