A.M. Best Co. affirmed the issuer credit ratings ("ICR") of
"bbb" and debt rating of "bb+" on
). Concurrently, it also confirmed the financial strength rating of
A (Excellent) and ICR of "a" on the subsidiaries of Amerisafe
including American Interstate Insurance Company, Silver Oak
Casualty, Inc. and American Interstate Insurance Company of Texas.
The outlook for all ratings remains stable.
The rating affirmation was based on favorable capitalization,
strong operating profitability for a prolonged period of time,
established market presence and sufficient experience in the
workers' compensation market. Amerisafe's strong underwriting
results are reflected in its steady operating performance stemming
from prudent management practices, decent pricing structure,
effective loss control, safety measures and an active claims
management system, which have generated a positive calendar year
reserve development trends during the five-year period.
However, lack of product diversification and unfavorable loss
reserve development are some of the negatives for the company.
Nonetheless, the agency experts expect Amerisafe will continue
posting strong operating figures. This will in turn result in
The company registered an operating margin of 12.9% in the first
quarter ended 2012 up130 basis points from the year-ago quarter.
This indicates an improving financial condition and its ability to
meet its expenses. Amerisafe also reported a favorable Return on
Equity of 7.85% higher than the sector average of 7.77% and
way ahead of 4.08% for its closest peer
SeaBright Holdings, Inc.
The ratings are subject to upgrade provided Amerisafe posts
strong underwriting and operating results. But if the company fails
to report steady operating performance it may see a rating
With an improving combined ratio of 96% as on March 31, 2012
against 98.3% reported in the year-ago quarter and a sound
financial position, the company is well positioned to get higher
ratings from the rating agencies. Amerisafe currently retains a
Zacks #1 Rank, which translates in to a short-term Strong Buy
AMERISAFE INC (AMSF): Free Stock Analysis
SEABRIGHT INSUR (SBX): Free Stock Analysis
To read this article on Zacks.com click here.