) first-quarter 2013 operating earnings per share of 47 cents
came at par with the Zacks Consensus Estimate but exceeded the
prior-year quarter's earnings by 2 cents. Consequently, operating
net income climbed 5.2% year over year to $8.8 million.
Operating net income excluded after-tax net realized gains of
$0.016 million against $1.2 million in the year-ago period.
Including these, reported net income fell to $8.9 million or 47
cents per share, compared with $9.6 million or 52 cents a share
in the prior-year quarter.
Reported results reflect higher premiums that shored up the
top line as well as the underwriting results. In addition,
improved investment portfolio and capital position drove the book
value of the shares, return on equity (ROE) and combined ratio.
However, the positives were substantially offset by
higher-than-expected underwriting, loss and loss adjustment
expenses (LAE) along with lower investment yields.
Amerisafe's total revenue for the reported quarter was $86.5
million, up 9.9% from $78.7 million in the prior-year quarter.
However, it lagged the Zacks Consensus Estimate of $89
Gross premiums written for the quarter were $99.1 million,
reflecting a 16.7% year-over-year expansion. The uptick was
driven by payroll audits and related premium adjustments for
policies written in previous periods. These adjustments increased
premiums by $6.0 million in the reported quarter, while the same
had boosted premiums by $5.4 million in the year-ago quarter.
Furthermore, voluntary premiums written jumped 16.1% year over
year in the reported quarter. In addition, net premiums earned
increased 14.2% from the year-ago quarter to $79.7 million. Net
investment income, which represented about 8% of total revenue,
was $6.7 million for the reported quarter, down 2.9% from the
Conversely, insurance loss and loss adjusted expenses (LAE)
increased 8.1% year over year to $56.0 million (or about 70% of
net premiums earned). As a result, total expenses grew 12.2% year
over year to $75.4 million, while net underwriting expense ratio
deteriorated to 23.7% from 21.1% in the year-ago quarter, due to
28.6% growth in underwriting and operating costs, partially
offset by higher premiums.
Subsequently, underwriting profit surged $4.3 million from
$2.8 million in the year-ago quarter. Even net combined ratio for
the reported quarter improved to 94.7% from 96.0% in the
Amerisafe exited the reported quarter with operating ROE of
9.2% that slipped from 9.5% in year-ago quarter. Additionally,
book value per share came in at $21.20 as on Mar 31, 2013, up
7.2% from $19.25 at the end of the year-ago quarter.
As on Mar 31, 2013, Amerisafe's investment portfolio,
including cash and investments, stood at $918.7 million compared
with $900.8 million at the end of 2012. Moreover, fair value of
the portfolio improved to $959.4 million versus $944.9 million at
2012-end. Total shareholder equity stood at $389.7 million at the
end of Mar 2013, up from $381.2 million at the end of 2012.
Share Repurchase Update
On Oct 30, 2012, the board of Amerisafe protracted the
company's share repurchase program through Dec 2013. Since the
initiation of its share repurchase program, the company has
bought back about 1.26 million shares for $22.4 million, at an
average price of $17.78.
However, no shares were repurchased during the reported
quarter, while the company had $24.4 million of shares available
for repurchases as of Mar 31, 2013.
On Feb 27, 2013, the board of Amerisafe announced its first
regular quarterly dividend of 8 cents a share, which was paid on
Mar 28, 2013 to shareholders of record on Mar 14, 2013.
Along with Amerisafe, strong performers of the insurance
Employers Holdings Inc.
Hilltop Holdings Inc.
Navigators Group Inc.
). All the stocks carry a Zacks Rank #1 (Strong Buy).
AMERISAFE INC (AMSF): Free Stock Analysis
EMPLOYERS HLDGS (EIG): Free Stock Analysis
HILLTOP HLDGS (HTH): Free Stock Analysis
NAVIGATORS GRP (NAVG): Free Stock Analysis
To read this article on Zacks.com click here.