AmTrust's Q4 Earnings Top, Revs Up - Analyst Blog


AmTrust Financial Services Inc. ( AFSI ) reported operating earnings per share (EPS) of $1.03 for the fourth quarter of 2013. The results outpaced the Zacks Consensus Estimate of 80 cents and the year-ago figure of 70 cents. Consequently, operating net income surged 53.4% year over year to $81.9 million.

Including extraordinary items, reported net income escalated to $64.7 million or 82 cents per share from $55.3 million or 72 cents a share in the year-ago quarter. Growth was primarily driven by significant improvement in the top line and agency acquisitions implemented in the past one year. The positives were, however, partially offset by higher-than-expected expenses.

AmTrust's total revenue jumped 76.9% year over year to $816.4 million. The upside was attributable to net earned premiums that increased 84.6% to $707.6 million. Additionally, service and fee income escalated 71.9% to $93 million and net investment income improved 10.1% to $20.8 million. However, the company incurred net realized loss of $4.9 million deteriorating considerably from a gain of $5.2 million in the year-ago quarter.

However, total expenses spiked 72.7% year over year to $715.7 million. The upsurge was led by higher loss and loss adjusted expenses (LAE) along with raised acquisition, underwriting and other expenses. Combined ratio improved marginally to 89.9% against 90.5% in the year-ago quarter.

Full-Year 2013 Highlights

For full-year 2013, AmTrust's operating EPS stood at $3.39, exceeding both the Zacks Consensus Estimate of $3.16 and the 2012 equivalent of $2.52. Operating net income soared 38.1% year over year to $264.6 million. On a GAAP basis, net income soared to a whopping $286.9 million or $3.67 per share in 2013 from $178.0 million or $2.34 per share in 2012.

Total revenue surged 61.7% year over year to $2.7 billion, driven by contribution from the recent acquisitions. Conversely, total expenses also increased 60.8% to $2.34 billion in 2013.

Financial Update

At the end of Dec 2013, AmTrust held cash and cash equivalents of $4.6 billion, up from $2.7 billion at 2012-end. Total assets surged to $11.3 billion from $7.4 billion at 2012-end, whereas shareholder equity rose to $1.45 billion from $1.14 billion at the end of Dec 2012.

Additionally, book value per share grew 15.3% from 2012-end to $17.85 at 2013-end. Operating return on equity (ROE) also improved to 21.3% from 18.8% in 2012.

Other Stocks

Along with AmTrust, RLI Corp. ( RLI ), White Mountains Insurance Group Ltd. ( WTM ) and OneBeacon Insurance Group Ltd. ( OB ) carry a Zacks Rank #1 (Strong Buy).

AMTRUST FIN SVC (AFSI): Free Stock Analysis Report

ONEBEACON INSUR (OB): Free Stock Analysis Report

RLI CORP (RLI): Free Stock Analysis Report

WHITE MTN INS (WTM): 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: EPS , AFSI , OB , RLI , WTM

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