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Amerisafe (AMSF) Q1 Earnings Lag Estimates on Lower Premiums
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Amerisafe Inc. (AMSF - Free Report) reported first-quarter 2017 operating earnings per share of 71 cents, missing the Zacks Consensus Estimate by 21%. Results also fared very poorly compared with the year-ago earnings of $1.26 per share. Earnings were affected by lower revenues stemming from a decline in premiums as the company slashed prices in order to counter a soft and competitive market.
Quarter in Detail
Amerisafe’s total operating revenue decreased 4.7% year over year to $97.5 million. The top line also came in a bit below the Zacks Consensus Estimate of $98 million.
The company’s insurance segment reported a 5.3% decline in gross premiums written to $95.1 million, primarily due to $4.4 million in lower payroll audits and slightly lower voluntary premiums written. Net premiums earned also fell 5.3% year over year to $90.9 million.
Net investment income, which accounted for almost 8% of total revenue, increased 11% year over year to $6.7 million. The improvement was largely due to the decline in the value of an investment in a limited partnership hedge fund last year.
Insurance loss adjustment expenses increased 20.3% year over year to $56.2 million. Total expense of $78.8 million increased 16.1% year over year.
Underwriting profit plunged 56.8% year over year to $12.1 million. Also, net combined ratio deteriorated 1580 basis points to 86.6% due to a higher net loss and underwriting expense ratio. The underwriting ratio deteriorated due to lower net premiums earned as well as slightly higher compensation, insurance assessment and premium tax expense compared with the year-ago quarter.
Financial Update
Amerisafe exited the quarter with cash and cash equivalents of $39.4 million, down 33% from year-end 2016 levels. As of Mar 31, 2017, total shareholders’ equity was $467.1 million compared with $456 million at the end of 2016.
Operating return on equity was 11.8%, down 900 basis points year over year. Book value per share as of Mar 31, 2017 was $24.29, up 2.4% from the year-end 2016 level.
Dividend and Share Repurchase Update
During the quarter, no shares were bought back under the repurchase plan. A day before the earnings release, the company declared a quarterly cash dividend of 20 cents per share, payable on Jun 23, 2017 to shareholders of record as of Jun 9, 2017.
Currently, Amerisafe has a Zacks Rank #3 (Hold). Some better-ranked stocks in the insurance space include Infinity Property and Casualty Corporation , Selective Insurance Group, Inc. (SIGI - Free Report) and Allied World Assurance Company Holdings, (AWH - Free Report) . While Infinity Property and Casualty sports a Zacks Rank #1 (Strong Buy), Selective Insurance and Allied World carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Selective Insurance posted a 17.8% earnings beat in the first quarter. Allied World, however, missed earnings estimates by 18.5%. Infinity Property is expected to report earnings on May 4.
The Best & Worst of Zacks
Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buys" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 "Strong Sells." Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>
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Amerisafe (AMSF) Q1 Earnings Lag Estimates on Lower Premiums
Amerisafe Inc. (AMSF - Free Report) reported first-quarter 2017 operating earnings per share of 71 cents, missing the Zacks Consensus Estimate by 21%. Results also fared very poorly compared with the year-ago earnings of $1.26 per share. Earnings were affected by lower revenues stemming from a decline in premiums as the company slashed prices in order to counter a soft and competitive market.
Quarter in Detail
Amerisafe’s total operating revenue decreased 4.7% year over year to $97.5 million. The top line also came in a bit below the Zacks Consensus Estimate of $98 million.
The company’s insurance segment reported a 5.3% decline in gross premiums written to $95.1 million, primarily due to $4.4 million in lower payroll audits and slightly lower voluntary premiums written. Net premiums earned also fell 5.3% year over year to $90.9 million.
Net investment income, which accounted for almost 8% of total revenue, increased 11% year over year to $6.7 million. The improvement was largely due to the decline in the value of an investment in a limited partnership hedge fund last year.
Insurance loss adjustment expenses increased 20.3% year over year to $56.2 million. Total expense of $78.8 million increased 16.1% year over year.
Underwriting profit plunged 56.8% year over year to $12.1 million. Also, net combined ratio deteriorated 1580 basis points to 86.6% due to a higher net loss and underwriting expense ratio. The underwriting ratio deteriorated due to lower net premiums earned as well as slightly higher compensation, insurance assessment and premium tax expense compared with the year-ago quarter.
Financial Update
Amerisafe exited the quarter with cash and cash equivalents of $39.4 million, down 33% from year-end 2016 levels. As of Mar 31, 2017, total shareholders’ equity was $467.1 million compared with $456 million at the end of 2016.
Operating return on equity was 11.8%, down 900 basis points year over year. Book value per share as of Mar 31, 2017 was $24.29, up 2.4% from the year-end 2016 level.
Dividend and Share Repurchase Update
During the quarter, no shares were bought back under the repurchase plan. A day before the earnings release, the company declared a quarterly cash dividend of 20 cents per share, payable on Jun 23, 2017 to shareholders of record as of Jun 9, 2017.
AMERISAFE, Inc. Price, Consensus and EPS Surprise
AMERISAFE, Inc. Price, Consensus and EPS Surprise | AMERISAFE, Inc. Quote
Zacks Rank & Stocks to Consider
Currently, Amerisafe has a Zacks Rank #3 (Hold). Some better-ranked stocks in the insurance space include Infinity Property and Casualty Corporation , Selective Insurance Group, Inc. (SIGI - Free Report) and Allied World Assurance Company Holdings, (AWH - Free Report) . While Infinity Property and Casualty sports a Zacks Rank #1 (Strong Buy), Selective Insurance and Allied World carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Selective Insurance posted a 17.8% earnings beat in the first quarter. Allied World, however, missed earnings estimates by 18.5%. Infinity Property is expected to report earnings on May 4.
The Best & Worst of Zacks
Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buys" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 "Strong Sells." Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>