Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Amerisafe (NASDAQ:AMSF), a workman's compensation and general liability insurance underwriter for small-to-mid-sized businesses, jumped as much as 16% after announcing better-than-expected fourth-quarter earnings results, declaring a dividend, and receiving an upgrade.
So what: For the quarter, Amerisafe reported a 19% increase in net premiums earned, a 580-basis point drop in its combined ratio (meaning it was more profitable to underwrite insurance), and 53% increase in operating EPS, to $0.49. Operating EPS topped Wall Street's expectations by $0.11. Amerisafe CEO Allen Bradley continues to see plenty of opportunity in an already improving workers compensation underwriting market. In addition, Amerisafe declared its first-ever quarterly dividend of $0.08, and was upgraded to "buy" from "neutral" by SunTrust.
Now what: This is a fantastic report all the way around. Amerisafe's combined ratio -- essentially, a margin measurement for insurers -- is headed in the right direction. Shareholders are now receiving about a 1% yield annually from its newly instituted dividend, and its primary areas of growth are seeing stabilization. Amerisafe isn't exactly what I'd call cheap for an insurer, but if it keeps reporting results like these, it could indeed have further room to run.
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