AmTrust Financial Services Inc. (AFSI) reported operating earnings per share (EPS) of $1.03 for the fourth quarter of 2013. The results outpaced the Zacks Consensus Estimate of 80 cents and the year-ago figure of 70 cents. Consequently, operating net income surged 53.4% year over year to $81.9 million.
Including extraordinary items, reported net income escalated to $64.7 million or 82 cents per share from $55.3 million or 72 cents a share in the year-ago quarter. Growth was primarily driven by significant improvement in the top line and agency acquisitions implemented in the past one year. The positives were, however, partially offset by higher-than-expected expenses.
AmTrust’s total revenue jumped 76.9% year over year to $816.4 million. The upside was attributable to net earned premiums that increased 84.6% to $707.6 million. Additionally, service and fee income escalated 71.9% to $93 million and net investment income improved 10.1% to $20.8 million. However, the company incurred net realized loss of $4.9 million deteriorating considerably from a gain of $5.2 million in the year-ago quarter.
However, total expenses spiked 72.7% year over year to $715.7 million. The upsurge was led by higher loss and loss adjusted expenses (LAE) along with raised acquisition, underwriting and other expenses. Combined ratio improved marginally to 89.9% against 90.5% in the year-ago quarter.
Full-Year 2013 Highlights
For full-year 2013, AmTrust’s operating EPS stood at $3.39, exceeding both the Zacks Consensus Estimate of $3.16 and the 2012 equivalent of $2.52. Operating net income soared 38.1% year over year to $264.6 million. On a GAAP basis, net income soared to a whopping $286.9 million or $3.67 per share in 2013 from $178.0 million or $2.34 per share in 2012.
Total revenue surged 61.7% year over year to $2.7 billion, driven by contribution from the recent acquisitions. Conversely, total expenses also increased 60.8% to $2.34 billion in 2013.
Financial Update
At the end of Dec 2013, AmTrust held cash and cash equivalents of $4.6 billion, up from $2.7 billion at 2012-end. Total assets surged to $11.3 billion from $7.4 billion at 2012-end, whereas shareholder equity rose to $1.45 billion from $1.14 billion at the end of Dec 2012.
Additionally, book value per share grew 15.3% from 2012-end to $17.85 at 2013-end. Operating return on equity (ROE) also improved to 21.3% from 18.8% in 2012.
Other Stocks
Along with AmTrust, RLI Corp. (RLI), White Mountains Insurance Group Ltd. (WTM) and OneBeacon Insurance Group Ltd. (OB) carry a Zacks Rank #1 (Strong Buy).
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