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Amerisafe (AMSF) Q4 Earnings Beat Estimates on Lower Expenses

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 Amerisafe Inc. (AMSF - Free Report) reported fourth-quarter 2018 operating earnings per share of 98 cents, beating the Zacks Consensus Estimate by 16.7%. In the year-ago quarter, the company reported earnings of 3 cents per share.
Better-than-expected earnings were driven by increase in net investment income and decline in total expenses.

Quarter in Detail

Amerisafe’s operating revenues increased 2.2% from the prior-year quarter to $97.1 million, surpassing the Zacks Consensus Estimate by 2%.

Gross written premiums in the quarter were down 7.1% year over year to $75.3 million, primarily due to lower voluntary premiums written, partly offset by increase in payroll audits and related premium adjustments.

Net investment income increased 10.2% year over year to $8.1 million, owing to higher yields on investment securities.

Total expenses came in at $71.9 million, down 6.8% from the year-ago quarter, thanks to lower loss and loss adjustments incurred. Net combined ratio, a measure of profitability (lower the better), was 81% compared with 88.3% in the year-ago quarter.

Financial Update

Amerisafe exited the quarter with cash and cash equivalents of $40.3 million, down 27.3% year over year.

As of Dec 31, 2018, total shareholders’ equity was $409.8 million, down 3.8% year over year.

Operating return on equity was 19%, up 760 basis points (bps) year over year.

Book value per share as of Dec 31, 2018, was $21.26, down 3.8% from Dec 31, 2017.

Dividend and Share Repurchase Update

The company increased its regular quarterly dividend by 14% to 22 cents per share. This dividend will be payable on Mar 22 to shareholders of record as of Mar 8, 2019.

During the quarter, no shares were repurchased under the company’s share repurchase plan.

Zacks Rank and Stocks to Consider

Amerisafe carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space are Cincinnati Financial Corp. (CINF - Free Report) , RLI Corp. (RLI - Free Report) and The Allstate Corp. (ALL - Free Report) .

Cincinnati Financial provides property casualty insurance products in the United States. It came up with a positive surprise of 22.50% in the last reported quarter. The stock sports a Zacks Rank #1 (Strong Buy).

You can see the complete list of today’s Zacks #1 Rank stocks here.

RLI, an insurance holding company, underwrites property and casualty insurance in the United States and internationally. The company delivered 566.67% positive earnings surprise in the last reported quarter. The stock carries a Zacks Rank #2 (Buy).

Allstate provides property and casualty, as well as other insurance products in the United States and Canada. The company delivered 22.77% positive earnings surprise in the last reported quarter. The stock carries a Zacks Rank #2.

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