Amerisafe, Inc. AMSF has been exhibiting strong operating performance, reflected by stronger-than-expected underwriting results in the first nine months of 2019. The results were driven by favorable prior-year reserve development. The strong operating performance positions the company for solid growth after an extended phase of soft revenues since 2015.
Amerisafe has experience of 33 years as a specialty provider of workers’ compensation insurance for small to midsize employers in high-hazard industries. The line of business that the insurer follows is profitable. The business rakes in higher premium owing to inherent workplace dangers associated with such policies.
The company is known for its balance sheet strength, strong operating performance, neutral business profile and appropriate enterprise risk management.
Amerisafe also flaunts a competitive edge in specialized underwriting expertise as is evident by its combined ratios, which are at more favorable levels than its peers. The company’s combined ratio has stayed below 100% since 2006, except in 2011, which indicates underwriting profitability. The company’s focus on loss control and safety programs as well as active claims management has generated strong underwriting results.
The company also boasts an efficient operating platform. Through extensive cost-management initiatives, Amerisafe executes one of the most efficient operations in the workers’ compensation industry. This has enabled the company to maintain its operating return on equity at 17.1%, which is above the industry’s ROE of 13.5%.
Amerisafe is delivering solid cash flow from operations since many years. Favorable cash flow generation along with absence of any long-term debt prepares the company to adopt a disciplined capital management strategy.
Also, the company’s capital management policy via acquisitions, steady dividend and annual payouts since 2014 along with share buybacks has boosted shareholders’ value.
In the past year, the stock has gained 20.2% compared with the industry’s growth of 15.8%.
Amerisafe also carries an investment grade rating from A.M. Best with a stable outlook on risk-adjusted capitalization, consistent profitable operating performance as well as established position and experience in the workers’ compensation market for high-hazard risks.
Amerisafe currently has a Zacks Rank #2 (Buy). Some other top-ranked stocks in the insurance space are RenaissanceRe Holdings RNR, Hallmark Financial Services, Inc HALL and MGIC Investment Corp MTG.
RenaissanceRe Holdings surpassed earnings estimates in three of the trailing four quarters, the average being 23.3%.
MGIC Investment and Hallmark Financial Services beat their respective earnings estimates in each of the the trailing four quarters, the average being 12.6% and 95.3%, respectively.
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers “Most Likely for Early Price Pops.”
Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.6% per year. So be sure to give these hand-picked 7 your immediate attention.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
AMERISAFE, Inc. (AMSF): Free Stock Analysis Report
MGIC Investment Corporation (MTG): Free Stock Analysis Report
Hallmark Financial Services, Inc. (HALL): Free Stock Analysis Report
RenaissanceRe Holdings Ltd. (RNR): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.