Advertisement
U.S. markets closed
  • S&P 500

    5,254.35
    +5.86 (+0.11%)
     
  • Dow 30

    39,807.37
    +47.29 (+0.12%)
     
  • Nasdaq

    16,379.46
    -20.06 (-0.12%)
     
  • Russell 2000

    2,124.55
    +10.20 (+0.48%)
     
  • Crude Oil

    83.11
    -0.06 (-0.07%)
     
  • Gold

    2,254.80
    +16.40 (+0.73%)
     
  • Silver

    25.10
    +0.18 (+0.74%)
     
  • EUR/USD

    1.0804
    +0.0010 (+0.10%)
     
  • 10-Yr Bond

    4.2060
    +0.0100 (+0.24%)
     
  • GBP/USD

    1.2636
    +0.0014 (+0.11%)
     
  • USD/JPY

    151.2130
    -0.1590 (-0.11%)
     
  • Bitcoin USD

    70,045.46
    -449.44 (-0.64%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,952.62
    +20.64 (+0.26%)
     
  • Nikkei 225

    40,369.44
    +201.37 (+0.50%)
     

AMERISAFE (AMSF) Q2 Earnings Beat, Rise Y/Y on Lower Expenses

AMERISAFE, Inc.’s AMSF second-quarter 2021 earnings of $1.04 per share outpaced the Zacks Consensus Estimate by 42.47%. The bottom line rose 4% year over year, courtesy of lower expenses, partly offset by a decline in premium.

AMERISAFE, Inc. Price, Consensus and EPS Surprise

AMERISAFE, Inc. Price, Consensus and EPS Surprise
AMERISAFE, Inc. Price, Consensus and EPS Surprise

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

Top-Line Decline

Operating revenues dropped 7.3% year over year to $77 million and missed the Zacks Consensus Estimate by 1.8% as well. Lower premium written as well as a weak net investment income induced this downfall.

Net premiums written declined 8.2% year over year to $71.2 million on account of lower voluntary premiums, partly offset by an increase in payroll audits and a higher related premium adjustment. Pre-tax underwriting profit of $17.9 million rose 9.4% year over year.

Net investment income fell 8.1% year over year to $6.73 million due to reduced interest rates on fixed income securities.

Lower Expenses Save the Bottom Line

Total expenses of $52 million were down 13% from the prior-year quarter’s level owing to lower policyholder dividends, underwriting expenses as well as loss expenses. Net combined ratio (a measure of insurer’s profitability) of 74.4% improved 410 basis points (bps) year over year. Lower the combined ratio, the better.

Operating return on average equity was 20.8 %, down 50 basis points year over year, reflecting weaker profitability.

As of Jun 30, 2021, book value per share came in at $57.54, down 6.8% year over year.

Financial Update (as of Jun 30, 2021)

The company exited the second quarter with cash and cash equivalents of $57.54 million, down nearly 46% from the level at 2020 end. Total assets were up 2.7% to $1.5 billion from the level at 2020 end. Shareholders’ equity was $468.4 million, up 6.7% from the 2020-end level.

Our Take

AMERISAFE's revenues remained under pressure due to soft pricing. Its product concentration due to an intense focus on workers' compensation insurance line reduces diversification benefits. Low interest rates, which weigh on investment income, are yet another headwind.

The company’s niche presence in high-hazard risk insurance makes it a specialized player. It has a clean balance sheet with no debt, which provides plenty of financial flexibility to fund operations and meet its financial obligations. The company's strong cash flows enable it to engage in shareholder-friendly moves through dividend hikes. Shares of the company have underperformed its industry in a year, falling 1.2% against the industry’s growth of 18.4%.

Zacks Rank and Some Other Winners

Amerisafe carries a Zacks Rank #3 (Hold), currently.

Earnings of other companies in the insurance space including The Hartford Insurance Services Group, Inc. HIG, Aflac Inc. AFL and W.R.Berkley Corp. WRB beat the second-quarter estimates by 75.2%, 25.2% and 21.9%, respectively.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.




Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

The Hartford Financial Services Group, Inc. (HIG) : Free Stock Analysis Report

W.R. Berkley Corporation (WRB) : Free Stock Analysis Report

Aflac Incorporated (AFL) : Free Stock Analysis Report

AMERISAFE, Inc. (AMSF) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

Advertisement