AMSF Stock Down 6% Despite Q1 Earnings Beat on New Business Growth

Shares of AMERISAFE, Inc. AMSF lost 5.5% since it reported first-quarter 2025 results on April 29. The quarterly results were hurt by a drop in net investment income and softer underwriting results. An elevated expense level also inflicted pressure on margins. Nevertheless, the downside was partly offset by strong retention rates and new business growth. 

AMSF reported first-quarter adjusted earnings per share of 60 cents, which beat the Zacks Consensus Estimate by 1.7%. However, the bottom line dropped 13% year over year. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

Operating revenues were $76 million, which remained flat year over year. The top line fell short of the consensus mark by 1.4%.

AMERISAFE, Inc. Price, Consensus and EPS Surprise

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

AMSF’s Q1 Performance

Net premiums earned inched up 0.6% year over year to $68.9 million in the quarter under review but lagged the Zacks Consensus Estimate of $69.8 million. The metric was aided by strong retention rates and new business growth. 

Net investment income of $6.7 million tumbled 9.7% year over year due to reduced investable assets as a result of the special dividend paid in the prior quarter. The metric missed the consensus mark of $6.9 million. Fee and other income surged 70.7% year over year.

AMERISAFE reported a pre-tax underwriting profit of $7.5 million in the first quarter, which fell 13.7% year over year.

Total expenses of $61.4 million increased 2.7% year over year due to higher loss and loss adjustment expenses incurred, and underwriting and other operating costs.

Operating net income slipped 14.2% year over year to $11.4 million. 

The net combined ratio was 89.1%, which deteriorated 180 basis points (bps) year over year but came lower than the consensus mark of 91%. The metric suffered due to a deteriorating net underwriting expense ratio.

Financial Update (as of March 31, 2025)

AMERISAFE exited the first quarter with cash and cash equivalents of $44.8 million, which inched up 1.6% from the 2024-end level. 

Total assets of $1.2 billion decreased marginally from the figure at 2024-end.

Shareholders' equity of $260.8 million inched up 1.3% from the 2024-end level. 

Book value per share was $13.69 as of March 31, 2025, which fell 13% year over year. 

Return on average equity deteriorated 900 bps year over year to 13.8% in the quarter under review.

Capital Deployment Update

Management announced a quarterly cash dividend of 39 cents per share, which will be paid out on June 20, 2025, to its shareholders of record as of June 13.

AMSF’s Zacks Rank

AMERISAFE currently carries a Zacks Rank #3 (Hold).  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

Of the insurance industry players that have reported first-quarter 2025 results so far, the bottom-line results of Arch Capital Group Ltd. ACGL, RLI Corp. RLI and Kinsale Capital Group, Inc. KNSL beat the respective Zacks Consensus Estimate.

Arch Capital reported first-quarter 2025 operating income of $1.54 per share, which beat the Zacks Consensus Estimate by 12.4%. The bottom line, however, declined 37.1% year over year. Gross premiums written improved 8.9% year over year to $6.4 billion. Net premiums written climbed 10.5% year over year to $4.5 billion. Net investment income grew 15.6% year over year to $378 million. Operating revenues of $4.5 billion rose 21.2% year over year. It missed the Zacks Consensus Estimate by 0.9%.

Pre-tax current accident year catastrophic losses for the company’s insurance and reinsurance segments, net of reinsurance and reinstatement premiums, were $547 million, wider than the year-ago period’s loss of $58 million. Arch Capital’s underwriting income declined 43.3% year over year to $417 million. The combined ratio — the percentage of premiums paid out as claims and expenses — deteriorated 1,130 bps to 90.1. In the Insurance unit, gross premiums written increased 24.4% year over year to $2.6 billion. 

RLI’s first-quarter 2025 operating earnings of 92 cents per share beat the Zacks Consensus Estimate by 4.5%. The bottom line, however, decreased 9.2% from the prior-year quarter. Operating revenues for the reported quarter were $436 million, up 10.7% year over year. The top line, however, missed the Zacks Consensus Estimate by 0.9%. Gross premiums written increased 5% year over year to $491 million. This uptick can be attributed to the solid performance of the Casualty segment (up 13.5%). 

Net investment income increased 12% year over year to $36.7 million. The investment portfolio’s total return was 1.3% in the quarter. Underwriting income of $70.5 million decreased 9.3% year over year. The combined ratio deteriorated 380 bps year over year to 82.3. 

Kinsale Capital delivered first-quarter 2025 net operating earnings of $3.71 per share, which surpassed the Zacks Consensus Estimate by 17.8%. The bottom line increased 6% year over year. Operating revenues jumped 13.4% year over year to $423 million. Revenues, however, missed the consensus estimate by 0.2%. Gross written premiums increased 7.9% year over year to $484.3 million.  Net written premiums climbed 8.7% year over year to $381.7 million in the quarter. 

Net investment income increased 33.1% year over year to $43.1 million in the quarter.  Kinsale Capital’s underwriting income was $67.5 million, which grew 3.7% year over year. The combined ratio deteriorated 260 bps to 82.1 in the quarter under review. The expense ratio deteriorated 70 bps to 20 in the quarter. The loss ratio deteriorated 330 bps to 62.1. 

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This article originally published on Zacks Investment Research (zacks.com).

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