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On Mar 2, Zacks Investment Research upgraded Amerisafe Inc. (AMSF - Analyst Report) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

After two quarters of dismal performance, Amerisafe delivered a strong fourth-quarter performance with a positive earnings surprise of 25.6%.

The company initiated a cash dividend policy with the intention to pay a dividend every quarter. The board of directors declared its first quarterly cash dividend of 8 cents per share payable on Mar 28, 2013 to shareholders of record as of Mar 14, 2013. The cash dividend is currently expected to be 32 cents per share on a yearly basis.

Amerisafe reported its fourth-quarter results on Feb 27. Non-GAAP earnings per share came in at 49 cents, surpassing the Zacks Consensus Estimate by 25.6% and the year-ago number by 53.1%.

Results reflect higher premiums written and earned that shored up the top line as well as the underwriting results. In addition, improved investment portfolio and capital position drove the book value of the shares, return on equity (ROE), combined ratio and other profitability metrics.

The top line improved 14.2% year over year to $85.6 million, driven by strong improvement in net premiums earned (up 18.9% year over).

The Zacks Consensus Estimate for 2013 is $1.84 per share, up 24% year over year. For 2014, the Zacks Consensus Estimate is currently pegged at $2.10 per share, up 14.4% year over year. The long-term expected earnings growth rate for this stock is 10%.   

Other Stocks to Consider

Insurers XL Group plc (XL - Analyst Report), EMC Insurance Group Inc. (EMCI - Snapshot Report) and  Navigators Group Inc. (NAVG - Snapshot Report), among others, carry a Zacks Rank #1 (Strong Buy) and are worth noting.

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