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Amerisafe (AMSF) Beats on Q3 Earnings, Misses Revenues
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Amerisafe Inc.'s (AMSF - Free Report) third-quarter 2016 operating earnings of 93 cents per share surpassed the Zacks Consensus Estimate of 89 cents. However, the bottom line dipped 1.2% year over year due to higher expenses.
Amerisafe’s total revenue inched up 0.7% year over year to $98.2 million but missed the Zacks Consensus Estimate of $100 million.
Quarter in Detail
Amerisafe’s insurance business reported a 2.4% decline in gross premiums written to $88 million. Net premiums written were down 1.15% year over year to $85.9 million.
Net premiums earned amounted to $89.9 million in the reported quarter, down 0.6% year over year.
Net investment income of $8 million increased 15.6% year over year, mainly due to an increase in the value of an investment in a limited partnership hedge fund where the change in value is recorded in investment income each quarter. Fee and other income came in at $0.1 million as against $0.003 million in the prior-year quarter.
Insurance loss adjustment expenses increased 3.3% year over year to $50.5 million. Policyholders dividend rose 140% year over year while underwriting and other operating costs declined 10% from the prior-year quarter to $20.7 million.Total expenses thus grew 1% year over year to $72.2 million in the third quarter.
For the third quarter, underwriting expense ratio was 23.1% compared with 24.6% a year ago. This was primarily due to a year-over-year decrease in assessments and commissions.
The current accident year loss ratio for the third quarter was 67.9%, down 190 basis points (bps) year over year. During the quarter, the company experienced favorable loss development for prior accident years owing to improvement in both closing claims and claims severity. This reduced loss and loss adjustment expenses by $10.5 million.
Combined ratio of 80.3% in the third quarter deteriorated 120 basis points over the prior year quarter.
Financial Update
Amerisafe exited the quarter with cash and cash equivalents of $86.6 million, up 24.6% from year-end 2015.
As of Sep 30, 2016, total shareholders’ equity was $509.7 million, up 12.4% from year-end 2015.
Operating return on average equity was 14.4% in the quarter, down 60 bps from 15% a year ago.
Book value per share came in at $26.51, up 3.2% year over year.
Dividend and Share Repurchase Update
During the quarter, no shares were bought back under the repurchase plan.
Amerisafe paid a regular quarterly cash dividend of 18 cents per share on Sep 23, 2016.
On Oct 25, 2016 the board of directors declared a quarterly cash dividend of 18 cents per share along with a special dividend of $3.25 per share. The dividend is payable on Dec 29, to shareholders on record as of Dec 15, 2016.
Among the other insurers that have reported their third-quarter earnings so far, the bottom line at Progressive Corp.(PGR - Free Report) and The Travelers Companies Inc. (TRV - Free Report) beat their respective Zacks Consensus Estimate, while RLI Corp. (RLI - Free Report) missed the same.
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Amerisafe (AMSF) Beats on Q3 Earnings, Misses Revenues
Amerisafe Inc.'s (AMSF - Free Report) third-quarter 2016 operating earnings of 93 cents per share surpassed the Zacks Consensus Estimate of 89 cents. However, the bottom line dipped 1.2% year over year due to higher expenses.
Amerisafe’s total revenue inched up 0.7% year over year to $98.2 million but missed the Zacks Consensus Estimate of $100 million.
Quarter in Detail
Amerisafe’s insurance business reported a 2.4% decline in gross premiums written to $88 million. Net premiums written were down 1.15% year over year to $85.9 million.
Net premiums earned amounted to $89.9 million in the reported quarter, down 0.6% year over year.
Net investment income of $8 million increased 15.6% year over year, mainly due to an increase in the value of an investment in a limited partnership hedge fund where the change in value is recorded in investment income each quarter. Fee and other income came in at $0.1 million as against $0.003 million in the prior-year quarter.
Insurance loss adjustment expenses increased 3.3% year over year to $50.5 million. Policyholders dividend rose 140% year over year while underwriting and other operating costs declined 10% from the prior-year quarter to $20.7 million.Total expenses thus grew 1% year over year to $72.2 million in the third quarter.
For the third quarter, underwriting expense ratio was 23.1% compared with 24.6% a year ago. This was primarily due to a year-over-year decrease in assessments and commissions.
The current accident year loss ratio for the third quarter was 67.9%, down 190 basis points (bps) year over year. During the quarter, the company experienced favorable loss development for prior accident years owing to improvement in both closing claims and claims severity. This reduced loss and loss adjustment expenses by $10.5 million.
Combined ratio of 80.3% in the third quarter deteriorated 120 basis points over the prior year quarter.
Financial Update
Amerisafe exited the quarter with cash and cash equivalents of $86.6 million, up 24.6% from year-end 2015.
As of Sep 30, 2016, total shareholders’ equity was $509.7 million, up 12.4% from year-end 2015.
Operating return on average equity was 14.4% in the quarter, down 60 bps from 15% a year ago.
Book value per share came in at $26.51, up 3.2% year over year.
Dividend and Share Repurchase Update
During the quarter, no shares were bought back under the repurchase plan.
Amerisafe paid a regular quarterly cash dividend of 18 cents per share on Sep 23, 2016.
On Oct 25, 2016 the board of directors declared a quarterly cash dividend of 18 cents per share along with a special dividend of $3.25 per share. The dividend is payable on Dec 29, to shareholders on record as of Dec 15, 2016.
AMERISAFE INC Price, Consensus and EPS Surprise
AMERISAFE INC Price, Consensus and EPS Surprise | AMERISAFE INC Quote
Zacks Rank and Stocks to Consider
Amerisafe presently carries Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Among the other insurers that have reported their third-quarter earnings so far, the bottom line at Progressive Corp.(PGR - Free Report) and The Travelers Companies Inc. (TRV - Free Report) beat their respective Zacks Consensus Estimate, while RLI Corp. (RLI - Free Report) missed the same.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>