AMERISAFE, Inc.’s AMSF shares have jumped 11.1% since it reported better-than-expected third-quarter results on Oct 26. Its results were supported by higher premiums and net investment income. However, the positives were partially offset by an elevated expense level, lower fees, and other income. The market value of its bond portfolio took a hit in the quarter.
AMERISAFE reported third-quarter 2022 earnings per share of 73 cents, which beat the Zacks Consensus Estimate of 58 cents. The figure was also higher than our estimate of 59 cents per share. However, the bottom line plunged 28.4% year over year.
Operating revenues of AMERISAFE amounted to $74.9 million, up from $73.8 million a year ago. The top line outpaced the consensus mark by 3.5% and was higher than our estimate of $71.6 million.
AMERISAFE, Inc. Price, Consensus and EPS Surprise
AMERISAFE, Inc. price-consensus-eps-surprise-chart | AMERISAFE, Inc. Quote
Net premiums earned of $67.8 million inched up 0.2% year over year in the third quarter. The figure was higher than the Zacks Consensus Estimate of $66.2 million and our estimate of $65.3 million.
Net investment income jumped 15.4% year over year to $7 million due to increased investment yields on fixed-income securities. The figure was higher than the Zacks Consensus Estimate of $6.2 million and our estimate of $6 million.
Fees and other income of $0.1 million fell 30.2% year over year in the quarter under review and missed the Zacks Consensus Estimate and our estimate.
AMERISAFE reported a pre-tax underwriting profit of $9.8 million in the third quarter, which dropped 49.1% year over year. In the third quarter, the market value of AMSF’s bond portfolio decreased due to interest rate hikes.
Total expenses of $57.9 million escalated 19.9% year over year, mainly due to an increase in loss and loss adjustment expenses incurred, underwriting and other operating costs. The figure was higher than our estimate of $57.6 million.
The net combined ratio during the quarter under review was 85.4% compared with 71.5% in the year-ago period. The figure was lower than the Zacks Consensus Estimate of 87.9% and our estimate of 88.2%.
Financial Update (as of Sep 30, 2022)
AMERISAFE exited the third quarter with cash and cash equivalents of $91 million, which climbed from the 2021-end level of $70.7 million.
Total assets of $1,359.5 million declined from $1,402.7 million at 2021-end.
Shareholders' equity declined from the 2021-end level of $399.3 million to $373 million.
During the nine months ended Sep 30, 2022, net cash provided by operating activities rose to $36.1 million from the prior-year comparable period’s level of $29.4 million.
Book value per share came in at $19.47, down 21.5% year over year.
Return on average equity deteriorated 410 basis points year over year to 12% in the third quarter.
Share Repurchases and Dividend Update
AMERISAFE bought back shares worth $6.5 million in the third quarter. As of Sep 30, 2022, an amount of $12.8 million was left under the authorized share buyback program.
On Oct 25, 2022, its board of directors declared a quarterly cash dividend of 31 cents per share. The dividend will be paid out on Dec 16, 2022, to its shareholders of record as of Dec 2. It also announced a special cash dividend of $4 per share, payable on Dec 16.
Zacks Rank & Other Key Picks
AMERISAFE currently sports a Zacks Rank #1 (Strong Buy). Some other top-ranked stocks in the broader finance space are StoneX Group Inc. SNEX, Axos Financial, Inc. AX and FlexShopper, Inc. FPAY. While StoneX Group has a Zacks Rank #1, Axos Financial and FlexShopper have a Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
New York-based StoneX Group works as a global financial services network. The Zacks Consensus Estimate for SNEX’s 2022 bottom line indicates 54.8% year-over-year growth.
Headquartered in Las Vegas, NV, Axos Financial is a consumer and business banking products provider. The Zacks Consensus Estimate for AX’s current year bottom line indicates a 10.4% increase from the prior-year reported number.
Based in Boca Raton, FL, FlexShopper is a leading e-commerce marketplace operator. The Zacks Consensus Estimate for FPAY’s 2022 earnings is pegged at 70 cents per share, signaling a massive jump from 4 cents a year ago.
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