The property and casualty insurance sector still offers quite an interesting selection of diversified companies with global footprints and strong growth records.

Source: Company

AmTrust Financial Service, (AFSI) is such a company. Originally founded as a niche player in workers compensation in 1998, the insurance business has grown into a global property and casualty insurance enterprise with offices in thirteen countries and a market capitalization of $3.2 billion.

With strong growth in all its business segments and sharply increasing dividends, AmTrust Financial is one of the most promising insurance plays in the sector.

Background
Despite its increasing reach and compelling market opportunities abroad, AmTrust Financial remains committed to the domestic market. 73% of its 2013 gross written premiums originated in the United States while the second biggest market was the United Kingdom with a share of 12% followed by Italy with 7%.

It is often those companies, that present investors with durable growth rates over an extended period of time that make compelling value propositions. And AmTrust Financial certainly doesn't have to hide behind its growth record.

AmTrust Financial earned about 40% of its first quarter 2014 revenues in the Small Commercial business segment, 29% in Specialty Risk and Extended Warranty, 18% in the Specialty Program and 13% in fees and investment income.

In the past, AmTrust Financial has largely concentrated on entering insurance markets where supply/demand dynamics were supporting favorable long-term price and margin trends.

With an improving U.S. economy and better projected commercial insurance pricing, AmTrust Financial has set itself up to reap the rewards of a disciplined yet ambitious growth strategy.

Impressive growth history
Gross written insurance premiums skyrocketed by 36% per year over the last five years to $4.1 billion and net operating earnings 20% per year to $265 million.

And it seems that AmTrust Financial's growth rates are accelerating thanks to a better operating and pricing environment, especially in the commercial business.

Source: AmTrust Financial Services, William Blair 34th Annual Growth Stock Conference Presentation June 11, 2014

AmTrust Financial's growth emanates from all business segments. Tough all divisions grew enormously since 2009, AmTrust Financial's Small Commercial segment grew the fastest with a total increase of 253% in gross written premiums over the last five years.


Premium valuation
While many insurance companies trade at discounts to their respective book values due to the competitive nature of the insurance business and high combined ratios -- an insurance metric to gauge underwriting discipline -- some companies already manage to trade at healthy premiums to book value, thanks to their convincing growth records.

AmTrust Financial presently trades at approximately 2.2 times book value mainly because investors expect the young insurance company to continue to grow at a rapid pace.

And it really does have much more potential to grow. With just $11 billion in assets and a market capitalization of $3.2 billion, the company is pretty much a small fish in the large insurance market pond.

Reliable dividend payer
Strong underlying business and written premium growth have led to an explosion in AmTrust Financial's equity. In 2009, the property and casualty company had only $569 million in equity on its balance sheet which has grown, both organically and through acquisitions, to $1,581 million in 2013.

The increase in net operating earnings also enabled the insurance business to materially step up its dividend game: The property and casualty business hiked its dividends from $0.23 per share in 2009 to $0.56 per share in 2013. 

AmTrust Financial currently pays investors $0.20 per share quarterly which translates into an annual dividend yield of 1.88%.

The Foolish Bottom Line
AmTrust Financial is a relatively young insurance business with only a 15-year long track record. However, the property and casualty insurance company has grown enormously in terms of assets, equity, net operating earnings and written premiums and has a lot more room to grow in the future, especially outside the United States.