Reviewing AmTrust Financial Services (AFSI) and RLI (RLI)

AmTrust Financial Services (NYSE: RLI) and RLI (NYSE:RLI) are both mid-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their risk, analyst recommendations, dividends, valuation, profitability, earnings and institutional ownership.

Valuation and Earnings

This table compares AmTrust Financial Services and RLI’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
AmTrust Financial Services $5.96 billion 0.48 -$348.88 million N/A N/A
RLI $797.22 million 4.37 $105.02 million $1.61 48.80

RLI has lower revenue, but higher earnings than AmTrust Financial Services.

Risk & Volatility

AmTrust Financial Services has a beta of 1.2, suggesting that its stock price is 20% more volatile than the S&P 500. Comparatively, RLI has a beta of 1.26, suggesting that its stock price is 26% more volatile than the S&P 500.

Insider & Institutional Ownership

37.1% of AmTrust Financial Services shares are owned by institutional investors. Comparatively, 85.8% of RLI shares are owned by institutional investors. 50.8% of AmTrust Financial Services shares are owned by company insiders. Comparatively, 5.5% of RLI shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares AmTrust Financial Services and RLI’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AmTrust Financial Services 2.56% -14.82% -1.58%
RLI 12.91% 9.13% 2.64%

Analyst Recommendations

This is a summary of recent ratings for AmTrust Financial Services and RLI, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AmTrust Financial Services 0 5 0 0 2.00
RLI 0 3 0 0 2.00

AmTrust Financial Services presently has a consensus price target of $14.90, indicating a potential upside of 2.05%. RLI has a consensus price target of $58.00, indicating a potential downside of 26.18%. Given AmTrust Financial Services’ higher possible upside, research analysts plainly believe AmTrust Financial Services is more favorable than RLI.

Dividends

AmTrust Financial Services pays an annual dividend of $0.51 per share and has a dividend yield of 3.5%. RLI pays an annual dividend of $0.88 per share and has a dividend yield of 1.1%. RLI pays out 54.7% of its earnings in the form of a dividend. AmTrust Financial Services has increased its dividend for 11 consecutive years and RLI has increased its dividend for 41 consecutive years.

Summary

RLI beats AmTrust Financial Services on 8 of the 13 factors compared between the two stocks.

AmTrust Financial Services Company Profile

AmTrust Financial Services, Inc. engages in the provision of insurance services. It operates through the following segments: Small Commercial Business, Specialty Risk and Extended Warranty, and Specialty Program. The Small Commercial Business segment offers workers compensation insurance to small businesses that operate in low and medium hazard classes and commercial package, and other property and casualty insurance products to small businesses. The Specialty Risk and Extended Warranty segment includes custom designed coverages, such as accidental damage plans, mechanical breakdown protection and payment protection plans offered in connection with the sale of consumer and commercial goods, and casualty and specialty liability such as general liability, employers liability, and professional and medical liability. The Specialty Program Business segment comprises workers compensation, general liability, commercial auto liability, property coverage, excess and surplus lines programs, and other specialty commercial property and casualty insurance. The company was founded by Michael Karfunkel in 1998 and is headquartered in New York, NY.

RLI Company Profile

RLI Corp., an insurance holding company, underwrites property and casualty insurance in the United States and internationally. Its Casualty segment provides commercial and personal coverage products; and general liability products, such as coverage for third-party liability of commercial insureds, including manufacturers, contractors, apartments, real estate investment trusts, and mercantile. This segment also offers coverages for security guards and in the areas of onshore energy-related businesses and environmental liability for underground storage tanks, contractors and asbestos, and environmental remediation specialists; and professional liability coverages focuses on providing errors and omission coverage to small to medium-sized design, technical, computer, and miscellaneous professionals. In addition, this segment provides commercial automobile liability and physical damage insurance to local, intermediate and long haul truckers, public transportation entities, and equipment dealers; incidental, related insurance coverages; inland marine coverages; management liability coverages, such as directors and officers liability insurance, fiduciary liability and fidelity coverages, and for low to moderate classes of risks, including public and private businesses; healthcare liability coverages; and home business insurance products. The company's Property segment offers commercial property, marine, homeowners', and other property insurance products. Its Surety segment offers small bonds for businesses and individuals; bonds for small to medium-sized contractors; commercial surety bonds for medium-to-large businesses; and commercial surety bonds for the energy, petrochemical, and refining industries. The company also underwrites various reinsurance coverages. The company markets its products through branch offices and independent agents. RLI Corp. was founded in 1965 and is headquartered in Peoria, Illinois.

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