AmTrust Financial (NASDAQ:AFSI) EPS Estimates Lowered by FBR

FBR Capital lowered their EPS estimates on AmTrust Financial (NASDAQ:AFSI), although they still consider the share price cheap.

FBR says, "While we continue to rate AmTrust an Outperform, we are lowering our 2010 operating EPS estimate to $2.20 (from $2.30) and decreasing our 2011 forecast to $2.40 (from $2.50)...We believe that our new earnings estimates likely will underestimate AmTrust's long-term earnings potential, as they do not reflect the life settlement contracts business and the investment in ACAC.

"At 7.4x forecasted 2011 EPS, AmTrust remain one of the cheapest names in our coverage universe. In addition, the company's 2010E ROE of 20.6% and 2011E ROE of 18.3% are among the highest in our coverage. As we have said numerous times, for a significant portion of its business, AmTrust functions like a managing general agent (MGA) or insurance broker, effectively earning fee income for its services. As such, the traditional price-to-book value metric does not fully capture the intrinsic value of AmTrust, in our opinion, given the lack of capital requirements for this segment of the company's business."

FBR Capital maintains an "Outperform" rating on AmTrust Financial, which closed Thursday at $17.75, up $0.03, or 0.17 percent. They lowered their price target on AmTrust from $25 to $24.