Amerisafe Poised For Growth Despite Escalating Expenses

On May 25, we issued an updated research report on Amerisafe, Inc. (NASDAQ:AMSF) .

Amerisafe’s first-quarter 2016 earnings outperformed the Zacks Consensus Estimate and displayed significant year-over-year improvement. The upside was driven by continued solid underwriting results, efficient claims management, and expense control. Notably, this is the fourth consecutive quarter of positive earnings surprise by the company.

The company witnessed a huge improvement in its operating income in the first quarter. In addition, the top line displayed modest growth.

Amerisafe has a history of profitable underwriting in its industry, as reflected by its solid operating and financial performance in the last couple of years. Despite the economic turmoil, the policy renewal rates of the company remained stable in the voluntary business.

The company remains focused on providing workers’ compensation insurance to employers engaged in hazardous industries. Also, moving ahead the company intends to expand within the construction and basic industries on the back of improved employment rates.

Higher premiums typically paid by the policyholders of Amerisafe, along with its strategy of employing a proactive and disciplined approach in underwriting, as well as a prudent capital management drove the consistent favorable growth of book value per share over the last several years.

With respect to other significant growth measures such as return on equity (ROE), combined ratio displayed noticeable improvement since 2011, thereby substantially shoring up the operating margin and bottom line.

However, exposure to a low interest rate environment has adversely affected the company’s investment income. Moreover, escalating expenses continue to remain a concern as it will weigh on the company’s margins.

Zacks Rank and Stocks to Consider

Currently, Amerisafe sports a Zacks Rank #1 (Strong Buy). Investors can also consider other well-ranked stocks like Aflac Incorporated (NYSE:AFL) , Trupanion, Inc. (NYSE:TRUP) and Employers Holdings, Inc. (NYSE:EIG) . Each of these stocks holds a Zacks Rank #2 (Buy).

AFLAC INC (AFL): Free Stock Analysis Report

AMERISAFE INC (AMSF): Free Stock Analysis Report

TRUPANION INC (TRUP): Free Stock Analysis Report

EMPLOYERS HLDGS (EIG): Free Stock Analysis Report

Original post

Zacks Investment Research