AmTrust Q2 Earnings Ride on Strong Revs - Analyst Blog


On Tuesday, AmTrust Financial Services Inc. ( AFSI ) reported operating earnings per share of 86 centsfor the second quarter of 2013. The results were significantly better thanthe Zacks Consensus Estimate of 76 cents and the year-ago figure of 64 cents. Consequently, operating net income surged 33% year over year to $60.4 million.

Excluding extraordinary items, reported net income escalated to $80.1 million or $1.14 per share as compared with $40.4 million or 59 cents a sharein the year-ago quarter. Growth was primarily driven by significant improvement in top line and agency acquisitions implemented in the past one year. The positives were partially offset by higher-than-expected expenses.

AmTrust's total revenue jumped 66.4% to $716.5 million from $430.6 billion in the year-ago quarter. It substantially topped the Zacks Consensus Estimate of $476 million as well. The upside was attributable to net earned premiums that increased 60.6% year over year to $536.5 million. Additionally, commission and other revenues escalated 86.3% to $180 million, owing to higher ceding commission, investment income as well as service and fee revenues.

However, total expenses spiked 70.6% year over year to $637.6 million. The upsurge was led by higher loss and loss adjusted expenses (LAE) along with raised acquisition, underwriting and other expenses. Consequently, combined ratio deteriorated to 91.3% against 88.9% in the year-ago quarter.

Financial Update

At the end of Jun 2013, AmTrust held cash and equivalents of $3.5 billion, up from $2.7 billion at 2012-end. Total assets surged to $9.08 billion from $7.42 billion at 2012-end, whereas shareholder equity rose to $1.32 billion from $1.14 billion at the end of Dec 2012.

Additionally, book value per share grew 4.4% from 2012-end to $17.78 during the reported quarter. Annualized operating return on equity (ROE) also improved to 19.2% from 18.5% in the year-ago period.

Dividend Update

Concurrently, the board announced a quarterly cash dividend of 14 cents per share, payable on Oct 15, 2013, to shareholders of record as on Oct 1, 2013.

Furthermore, AmTrust approved a stock dividend of 10%, which equates to 10 cents per share. The stock dividend will be paid on Sep 4, 2013 to shareholders of record as on Aug 20, 2013.


AmTrust carries a Zacks Rank #3 (Hold). Other strong performers in the insurance sector include Chubb Corp. ( CB ), Hilltop Holdings Inc. ( HTH ) and Everest Re Ltd. ( RE ), all of which carry a Zacks Rank #2 (Buy).

AMTRUST FIN SVC (AFSI): Free Stock Analysis Report

CHUBB CORP (CB): Free Stock Analysis Report

HILLTOP HLDGS (HTH): Free Stock Analysis Report

EVEREST RE LTD (RE): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: AFSI , CB , HTH , RE

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