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AMERISAFE (AMSF) Up 2.6% Since Q1 Earnings Beat on Lower Costs

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AMERISAFE, Inc.'s (AMSF - Free Report) shares have gained 2.6% since it reported strong first-quarter 2022 earnings, driven by reduced expenses and better underwriting profits. However, the upside was partly offset by a year-over-year decline in revenues coupled with a lower fee and other income.

Q1 Update

AMERISAFE reported first-quarter 2022 earnings per share of 82 cents, which outpaced the Zacks Consensus Estimate by 34.4%. The bottom line improved nearly 8% year over year.

Operating revenues of AMERISAFE were $74 million, which slipped 5.1% year over year due to a 4.5% and 7.1% decline in net premiums earned and net investment income, respectively. However, the top line beat the consensus mark by 2.5%.

Net premiums earned declined 4.5% year over year to $67.6 in the first quarter. Meanwhile, net investment income of $6.1 million tumbled 7.1% year over year due to reduced investment yields on fixed-income securities. Fee and other income plunged 41.1% year over year.

AMERISAFE reported a pre-tax underwriting profit of $13.5 million in the first quarter, which climbed 23.8% year over year.

Total expenses decreased 9.4% year over year to $54.1 million on account of lower loss and loss adjustment expenses incurred coupled with reduced underwriting and other operating costs.

Net combined ratio of 80.1% improved 450 basis points (bps) year over year in the quarter under review.

AMERISAFE, Inc. Price, Consensus and EPS Surprise

AMERISAFE, Inc. Price, Consensus and EPS Surprise

AMERISAFE, Inc. price-consensus-eps-surprise-chart | AMERISAFE, Inc. Quote

Financial Update (as of Mar 31, 2022)

Cash and cash equivalents of AMERISAFE amounted to $30.7 million, which plunged 56.5% from the figure at the 2021-end.

Total assets of $1.4 billion dipped 0.8% from the 2021-end level.

Shareholders' equity slipped 1% from the 2021-end figure to $395.3 million.

Net cash provided by operating activities totaled $7.1 million, down 57.1% year over year.

Book value per share of $20.46 declined 11.7% year over year.

Return on average equity came in at 17.4% for the first quarter.

Share Repurchases and Dividend Update

AMERISAFE bought back shares worth $2.1 million in the first quarter. As of Apr 25, 2022, it had $22.9 million left under the authorized share buyback program.

On Apr 26, 2022, its board of directors approved a quarterly cash dividend of 31 cents per share. The dividend will be paid on Jun 24, 2022, to shareholders of record as of Jun 17.

Net Investment Income Outlook Unveiled

For the remaining three quarters of 2022, management disclosed its view of net investment income. The metric witnessed a plunge in the first quarter of 2022 but fared little higher than the third and fourth quarters of 2021. Net investment income is likely to continue to suffer in the second quarter of 2022. Ushering in hope, management anticipates positive growth in net investment income during the third and fourth quarter of 2022.

Zacks Rank

AMERISAFE currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Some Other Insurers

Of the insurance industry players that have reported first-quarter results so far, the bottom line of AXIS Capital Holdings Limited (AXS - Free Report) , RLI Corp. (RLI - Free Report) and Chubb Limited (CB - Free Report) beat the Zacks Consensus Estimate.

AXIS Capital posted first-quarter 2022 operating income of $2.09 per share, beating the Zacks Consensus Estimate by 20.1%. The bottom line of AXS increased two-fold year over year. Total operating revenues of $1.3 billion missed the Zacks Consensus Estimate by 2.6%. The top line, however, rose 11% year over year. Net investment income of AXIS Capital decreased 20.2% year over year to $91 million.

RLI reported first-quarter 2022 operating earnings of $1.43 per share, beating the Zacks Consensus Estimate by 40.2%. The bottom line improved 64.4% from the prior-year quarter. Operating revenues of RLI for the reported quarter were $287 million, up 17.1% year over year. The top line beat the Zacks Consensus Estimate of $276 million by 0.8%. RLI’s gross premiums written increased 22% year over year to $359.2 million.

Chubb reported first-quarter 2022 core operating income of $3.82 per share, which outpaced the Zacks Consensus Estimate by 8.5%. The bottom line improved 51.6% from the year-ago quarter. Chubb’s net premiums written increased 6.2% year over year to $9.1 billion in the quarter. Net premiums earned rose 6.4% to $8.7 billion. Net investment income of CB was $822 million, down 4.8% year over year.

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