Summary

AmTrust Financial Services, Inc. (AFSI) is a fast growing specialty property and casualty insurer focused on generating consistent underwriting profits. AmTrust operates in three business segments: small commercial business insurance, specialty risk and extended warranty, and specialty middle-market property and casualty insurance.

AFSI will release 2009 second quarter earnings following the close of the market on Wednesday, August 5, 2009.

On Thursday, August 6 at 10:00 a.m. ET, the company will hold a conference call that can be accessed as follows: details

Q1 2009 Financial Press Release

• Quarterly basic operating earnings per share was $0.50 ($0.43 in 2008)
• Quarterly basic earnings per share was $0.40 ($0.37 in 2008)
• Return on equity on operating earnings for the first quarter was 30.4%
• Return on equity on operating earnings for 2008 was 32.3%
• Book value per share was $6.77 as of March 31, 2009 ($6.54 as of December 31, 2008)
• The combined ratio for the fourth quarter was 79.7% (77.2% in 2008)
• Bought back 700,000 shares for $5.4M, average price $7.71
• Gross written premiums $267.5M, up 13.9% YoY.

Links and Resources

• Events and presentations
• SEC Filings
• 2008 Annual Report
• Increased Dividend to $0.06 a quarter on May 12 2009

Notes

• Enjoy 80%+ renewal rates
• quarterly dividend of $0.06, around a 1.9% yield
• excellent combined ratios, 2008 – 74.4% , 2007 – 83.2%, 2006 – 91.9%
• went public late 2006
• 53% of business in US, 21% in UK, rest in Europe
• 61.6% of investment portfolio in AAA, 4.5% in AA, 25.1% in A, 6.3% in BBB+/-
• Excellent Return on equity; 21.2%, 24.7% and 21.3% for 2008, 2007 and 2006 respectively.
• Their spectacular earnings growth ground to a halt in 2008. Income per share from continuing operations for 2008 to 2004: $1.38, $1.50, $0.86, $0.80, $0.30
• Gross premium written for the same period continued their growth $1,110,574, $839,391, $526,074, $286,131, $210,851.

AFSI appear to have reignited their earning growth in 2009. Q1 continued the growth, with book value increasing 3.5% for the quarter, gross premiums up a healthy 13.9% and operating earnings up 16%.

The market appears to be pricing in a return of growth for AFSI

Key Valuation Ratios

With AFSI up 38% since my Q1 09 earnings preview it’s no surprise that the ratios aren’t quite as attractive as then, but they are still attractive. Book value has moved closely to my sell flag of 2, so growth rather than ratio expansion is now the key driver for future returns.

More on AFSI Q1 2009 Earning Preview

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