Having a vehicle service contract (VSC) gives you added peace of mind while taking away the risk of an expensive and unexpected repair bill. But as vehicle design starts to evolve even further, the appeal of a VSC continues to change as well.
More dealerships are finding that consumers are less worried about mechanical failure and are more focused on in-vehicle technology. That’s not to say that there’s not a need for component coverage on items such as the transmission and engine — far from it. It’s just that as cars are being built with more electronics and connectivity features, items like navigation systems and Bluetooth technology are becoming more of a focus for customers interested in a VSC.
In a 2014 study by the Consumer Electronics Association (CEA), in-vehicle technology was cited as an important factor when purchasing a new vehicle for more than half (59 percent) of U.S. drivers. The same study also found that two in five consumers (42 percent) stated that they intended to buy an in-vehicle technology device or accessory within a year.
Fast forwarding to the present day, another study was just released that helps provide even further insight into VSC/automotive purchasing habits. According to a recent DealerRater survey question supplied by Automotive News, 30 percent of consumers said that they bought a service contract on their most recent vehicle purchase. Taking a deeper dive, here are some additional findings from the survey:
• 26 percent of new-vehicle buyers purchased service contracts
• 40 percent of used-vehicle buyers purchased service contracts
• 33 percent of consumers who visited a dealership for service bought a service contract
• 21 percent of all respondents purchased GAP protection, which was the next best-selling F&I product
• 12 percent or less of all respondents purchased F&I products such as tire and wheel, prepaid maintenance, paint protection and coverage for alarm systems
Advanced features and safety systems cost more to replace if they malfunction, so a VSC makes good sense if your vehicle features the latest state-of-the-art technology. And even if it doesn’t, a service contract is still a great option for covering the major components of your vehicle. Plus, a VSC gives your vehicle greater resale value. If you plan on selling your car or truck after a few years, keep in mind that you can get a higher price for it if it’s backed by a VSC.
So, yes, car design has evolved and will continue to do so. But on the flipside, so have VSCs. Service plans have become more flexible, which allows every consumer to find the perfect fit for their budget and the way they drive. And this key advantage in how VSCs are designed allows consumers to stay out of the red and on the road a lot longer.
Filed Under: automotive, consumer, contract, resale, service, technology, value, vehicle, VSC
AmTrust Financial Services, Inc. (AFSI) today announced continued growth of operating earnings and strong operating return on equity for the fourth quarter and full year of 2015.
For the fourth quarter of 2015, operating earnings were $123.9 million, or $0.72 per diluted share compared to $118.5 million, or $0.73 per diluted share, in the fourth quarter of 2014. Fourth quarter 2015 net income attributable to common stockholders was $63.9 million, or $0.37 per diluted share, compared to $71.6 million, or $0.44 per diluted share, in the fourth quarter 2014. Annualized return on common equity was 11.2% for the fourth quarter of 2015 compared to 16.7% for the fourth quarter of 2014. For 2015, operating earnings were $526.7 million, or $3.13 per diluted share, an increase of 15%, compared to $458.4 million, or $2.87 per diluted share, in 2014. During 2015, net income attributable to common stockholders grew to $472.0 million, or $2.80 per diluted share, an increase of 9% from $434.3 million, or $2.72 per diluted share, in 2014. Operating return on common equity for 2015 was 25.3% compared to 29.9% from 2014. Return on common equity for 2015 was 22.7% compared to 28.4% for 2014.
Fourth Quarter 2015 Results
Total revenue was $1.21 billion, an increase of $0.16 billion, or 16%, from $1.05 billion in the fourth quarter 2014. Gross written premium was $1.61 billion, an increase of $0.15 billion, or 10%, from $1.46 billion in the fourth quarter of 2014. Fourth quarter 2015 gross written premium was negatively impacted by $49.3 million due to declines in European currencies compared to a $12.0 million negative impact to gross written premium in the fourth quarter 2014. Net written premium was $1.07 billion, an increase of $166.7 million, or 19%, compared to $898.5 million in the fourth quarter 2014. Net earned premium was $1.06 billion, an increase of $149.8 million, or 16%, from $908.2 million in the fourth quarter 2014. The combined ratio was 91.9% compared to 90.8% in fourth quarter 2014.
A summary of Q4 results is listed below along with a link to the earnings release.
Fourth Quarter 2015
• Gross written premium of $1.61 billion, up 10% (14% excluding the impact of European currency fluctuations) compared to $1.46 billion in the fourth quarter of 2014
• Net earned premium of $1.06 billion, up 16% from $908.2 million in the fourth quarter 2014
• Operating diluted EPS of $0.72 compared to $0.73 in the fourth quarter 2014
• Diluted EPS of $0.37 compared with $0.44 in the fourth quarter 2014
• Annualized operating return on common equity of 21.7% and annualized return on common equity of 11.2%
• Service and fee income of $131.4 million, up 29% from $101.7 million in the fourth quarter 2014
• Operating earnings of $123.9 million compared to $118.5 million in the fourth quarter 2014
• Net income attributable to common stockholders of $63.9 million compared to $71.6 million in the fourth quarter 2014
• Combined ratio of 91.9% compared to 90.8% in the fourth quarter 2014
• Weighted average diluted shares outstanding of 172.0 million, up 6% compared to 162.1 million in the fourth quarter 2014
Full Year 2015
• Gross written premium of $6.80 billion, up 12% (14% excluding the impact of European currency fluctuations) compared to $6.09 billion in 2014
• Net earned premium of $4.02 billion, up 14% from $3.53 billion in 2014
• Operating diluted EPS of $3.13 compared to $2.87 in 2014
• Diluted EPS of $2.80 compared with $2.72 in 2014
• Operating return on common equity of 25.3% and return on common equity of 22.7%
• Service and fee income of $478.2 million, up 17% from $409.7 million in 2014
• Operating earnings of $526.7 million, up 15% compared to $458.4 million in 2014
• Net income attributable to common stockholders of $472.0 million compared to $434.3 million in 2014
• Combined ratio of 91.0% compared to 90.7% in 2014
• Book value per common share of $13.81, up 24% from $11.17 at December 31, 2014
• AmTrust’s stockholders’ equity was $2.91 billion as of December 31, 2015, up 43% compared to $2.04 billion as of December 31, 2014
• Weighted average diluted shares outstanding of 168.4 million, up 6% compared to 159.0 million in 2014
To view AmTrust Financial Services’ Q4 earnings release, visit the Investor Relations section at http://ir.amtrustgroup.com or click on the following link: http://ir.amtrustgroup.com/releasedetail.cfm?ReleaseID=954218
Filed Under: 2015, AmTrust, currency, earnings, financial, fourth, growth, investor, quarter, results, shares