Wunderlich Securities Upgrades Amerisafe Inc. To Buy

On March 4, AMERISAFE, Inc. AMSF reported 4Q10 operating EPS of $0.38 compared to $0.32 in 4Q09. Book value per share increased 11% to $17.72 compared to $16.00 a year ago. The fourth quarter of 2010 was the first quarter in two years that AMSF reported an annual increase in gross written premiums, rising 6% to $52.1 million. CEO Allen Bradley was the most optimistic since 2007 regarding the market, with less aggressive pricing and increasing demand due to the economy.

CEO Allen Bradley was upbeat regarding pricing increases for high-hazard workers' compensation in the company's key markets of trucking and other manufacturing businesses. However, contractors' insurance continues to struggle. The better pricing drove gross written premiums up 5.6% in 4Q10. Self insured programs and large competitors such as AIG have reduced pressure on pricing. The company anticipates claims trends may improve.

Favorable reserve development for 2010 was $21.6 million, or $0.90/share, compared to 2009 of $21.9 million, or $0.85 per share. Wunderlich believes the company's underwriting is conservative as reflected in its favorable reserve development. Wunderlich anticipate favorable reserve development will continue into 2011 and 2012.

Wunderlich Securities has a Buy rating and $25 PT on AMSF

AMSF closed Wednesday at $21.51