On Jan 17, 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 better market trends following the recent approval of its
first stock repurchase program since 2007 and improved agency
Earlier this month, the company acquired Insco Dico Group,
while it purchased Sagicor Europe Ltd. last month. These
acquisitions are expected to be accretive to AmTrust's earnings
in 2014 and beyond.
Last week, the company also announced its intention to buy the
renewal rights and assets of the commercial lines insurance
Tower Group International Inc.
) for about $125 million. The deal is likely to culminate by
mid-2014, upon receipt of regulatory approvals. Moreover, strong
capitalization and financial strength reflected by a strong
ratings upgrade by A.M. Best are deemed impressive.
Additionally, this specialty property-casualty insurer
delivered positive earnings surprises in the last 4 quarters with
an average beat of 11.7%. On Nov 5, AmTrust reported
third-quarter 2013 operating earnings per share of 83 cents,
which outpaced both the Zacks Consensus Estimate of 74 cents and
the year-ago quarter number of 64 cents.
Robust year-over-year growth of 58.4% in net earned premiums
along with a 58.8% surge in commission and other revenues 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
AmTrust's creditworthiness, prudent risk management,
diversified product portfolio and effective capital deployment
score well with the ratings agencies and investors.
Based on AmTrust's fundamental strength and prudent capital
management, the Zacks Consensus Estimate for 2013 rose 2.9% to
$3.19 per share in the last 60 days. Meanwhile, the estimate for
2014 grew 5.1% to $3.72 during the same period.
Moreover, the Most Accurate Estimate for AmTrust's 2014
earnings stands at $3.89 a share, resulting in an
of +4.6%. 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
Allied World Assurance Co. Holdings AG
Endurance Specialty Holdings Inc.
). Both these stocks carry a Zacks Rank #1 (Strong Buy).
AMTRUST FIN SVC (AFSI): Free Stock Analysis
ALLIED WORLD AS (AWH): Free Stock Analysis
ENDURANCE SPLTY (ENH): Free Stock Analysis
TOWER GRP INTL (TWGP): Free Stock Analysis
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