Amerisafe Inc.’s AMSF second-quarter 2015 operating earnings per share of 84 cents comfortably outpaced the Zacks Consensus Estimate by 7.7%. The bottom line also surged 25.4% year over year. The upside came on the back of continuous solid underwriting results, claims management and efficient expense control.
Including net realized capital losses and the tax effect, net income rose 10.3% year over year to 75 cents per share.
Quarter in Detail
Amerisafe’s total operating revenues increased 2.1% year over year to $102.5 million. The top line remained in line with the Zacks Consensus Estimate. However, gross premiums written improved 2.1% year over year to $106 million during the reported quarter. Furthermore, voluntary premiums written increased 2.1% from the prior-year quarter result. The decrease in revenues stemmed from substantial net realized losses on investments faced by the company.
However, payroll audits and related premium adjustments for policies written in previous periods drove premiums by $4.5 million in the reported quarter as against an increase of $4.4 million in the year-ago quarter. Net premiums earned increased 2.2% to $95.6 million. Net investment income, which represents nearly 7% of the total revenue, remained almost flat with that in the year-ago quarter.
Insurance loss adjustment expenses (LAE) declined 8.3% year over year to $57.3 million, which primarily contributed to Amerisafe’s total expense decrease during the quarter. Total expenses of $79.8 million declined 4.5% year over year.
Consequently, underwriting profit climbed 58.2% year over year. Also, net combined ratio improved 580 basis points (bps) to 83.6% from 89.4% in the prior-year quarter.
The favorable loss development for prior accident years lowered loss and loss adjustment expenses by $9.4 million. Consequently, the current accident year loss ratio was 69.8%, which reflects an improvement of 680 bps year over year.
Financial Update
Amerisafe exited the quarter with cash and investments worth $61.6 million, down from $90.9 million at year-end 2014. Total shareholders’ equity was $472.8 million as of Jun 30, 2015, up from $446.9 million at the end of 2014.
Operating ROE was 12.3% in the quarter, up from 11.9% in the year-ago quarter. Additionally, book value per share came in at $24.87 as of Jun 30, 2015, up 6.9% from $23.26 at the year-ago period.
Dividend Update
On Jun 26, 2015, the company paid 15 cents per share quarterly dividend to shareholders on record as of Jun 12, 2015.
Additionally, on Jul 28, 2015, the company’s board of directors announced a quarterly dividend of 15 cents per share. This is payable on Sep 25, to shareholders on record as of Sep 11, 2015.
Share Repurchase Update
During the quarter no shares were repurchased under the share repurchase plan.
Since the initiation of its share repurchase program, the company has bought back about 1.25 million shares for $22.4 million.
Zacks Rank & Other Stocks
Currently, Amerisafe holds a Zacks Rank #2 (Buy). Other stocks from the insurance space such as MGIC Investment Corp. MTG, Assurant Inc. AIZ and The Hartford Financial Services Group, Inc. HIG outpaced the Zacks Consensus Estimate for second quarter 2015 earnings.
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