Amerisafe (AMSF) Earnings, Revenues Miss Estimates in Q2

Amerisafe Inc.'s AMSF second-quarter 2016 operating earnings per share of 85 cents missed the Zacks Consensus Estimate by 1.2%. Nonetheless, the bottom line inched up 1.2% year over year on the back of continued focus on disciplined underwriting.

Quarter in Detail

Amerisafe’s total revenue declined 0.3% year over year to $97 million but missed the Zacks Consensus Estimate of $100 million. Net premiums written amounted to $100.7 million in the reported quarter, down 2.7% from the year-ago quarter.

Amerisafe’s insurance business reported a 2.6% decline in gross premiums written to $103.2 million. Net premiums earned were down 5.1% year over year to $90.7 million.

Net investment income, which represented nearly 6.3% of the total revenue, decreased 10% year over year to $6.2 million. The downside was attributable to a decline in the value of an investment in a limited partnership hedge fund.

Insurance loss adjustment expenses declined 14.2% year over year to $49 million. This was one of the primary factors behind the 8.6% year-over-year decrease in Amerisafe’s total expense to $72 million.

Underwriting profit jumped 14% year over year to $17.8 million. Also, net combined ratio improved 320 basis points to 80.4%.

Financial Update

Amerisafe exited the quarter with cash and cash equivalents worth $70.2 million, up 1% from year-end 2015. Total shareholders’ equity was $495.9 million as of Jun 30, 2016, up from $454 million at the end of 2015.

Operating return on equity was 13.7% in the quarter, up from 12.3% a year ago. Book value per share came in at $25.83, up 3.9% year over year.

Dividend and Share Repurchase Update

During the quarter, no shares were bought back under the repurchase plan. The company paid a dividend of 18 cents per share. On Jul 26, the board declared a quarterly dividend of 18 cents to be paid on Sep 23, 2016 to shareholders on record as of Sep 9, 2016.

Zacks Rank & Peer Performance

Currently, Amerisafe carries a Zacks Rank #3 (Hold). Among the other players in the insurance industry that have reported their earnings so far, the bottom line at The Travelers Companies, Inc. TRV and First American Financial Corporation FAF beat their respective Zacks Consensus Estimate, while earnings of RLI Corp. RLI missed the same.

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