AmTrust Financial Services Inc
) kept its positive surprise streak alive with first quarter 2014
earnings released on May 1. Shares of the property and property
casualty insurer gained about 11% to close at $43.00 in the next
Quarterly operating net earnings of $1.24 per share surpassed the
Zacks Consensus Estimate by 33% and surged nearly 67% on a
year-over-year basis. The improvement was primarily driven by
significant improvement in the top line (on both organic and
Including extraordinary items, reported net income escalated 19%
year over year to $1.27 per share.
AmTrust's total revenue leaped 89% year over year to $954
million. The improvement largely came on the back of net earned
premiums that nearly doubled year over year, a 50% increase in
service and fee income, and a 57% jump in investment income. The
top line also outperformed the Zacks Consensus Estimate of $722
For fourth straight quarters, AmTrust has surpassed $1 billion in
gross written premium. The reported quarter's gross written
premium was $1.67 billion, up 76.5% year over year.
While service and fee income benefitted from growth in core
businesses, a huge level of invested assets supported the
improvement in investment income.
However, total expenses also increased nearly twofold year over
year to $833 million. The rise resulted from higher loss and loss
adjusted expenses (LAE) along with raised acquisition,
underwriting and other expenses.
Combined ratio improved 140 basis points to 89.9% against 91.3%
in the year-ago quarter. Expense ratio also improved 210 basis
points to 22.5%.
At the end of the first quarter, AmTrust held cash and cash
equivalents of $4.89 billion, up from $4.59 billion at 2013 end.
Total assets swelled to $12.2 billion from $11.3 billion at 2013
end, whereas shareholder equity rose to $1.58 billion from $1.44
billion at the end of Dec 2013.
Long-term debt-to-capitalization ratio of AmTrust came in at
26.2%, reflecting an improvement of 180 basis points from Dec 31,
Additionally, book value per share grew 9.1% to $19.48 as of
March 31, 2014 from $17.85 at Dec 31, 2013. Operating return on
equity also improved to 27.8% from 19.6% in the year ago quarter.
Zacks Rank & Peers
AmTrust Financial carries a Zacks Rank #3 (Hold). Other property
and casualty insurers such as
Montpelier Re Holdings Ltd
) outperformed their respective Zacks Consensus Estimate in the
first quarter of 2014. These are also better-ranked stocks each
with a Zacks Rank #2 (Buy).
ACE LIMITED (ACE): Free Stock Analysis Report
AMTRUST FIN SVC (AFSI): Free Stock Analysis
MONTPELIER RE (MRH): Free Stock Analysis
PARTNERRE LTD (PRE): Free Stock Analysis
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