This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

AmTrust Financial Services, Inc. Reports Fourth Quarter Operating Earnings(1) Of $53.4 Million And Net Income Of $55.3 Million

Stocks in this article: AFSI

AFSI-F

 
AmTrust Financial Services, Inc.
Income Statement
(in thousands, except per share data)
(Unaudited)
         
  Three Months Ended December 31, Year Ended December 31,
  2012 2011 2012 2011
Gross written premium $ 773,645 $ 586,761 $ 2,749,326 $ 2,150,472
         
Net written premium $ 413,012 $ 344,994 $ 1,648,037 $ 1,276,597
Change in unearned premium (29,625) (45,601) (229,185) (239,736)
Net earned premium 383,387 299,393 1,418,852 1,036,861
Ceding commission (primarily related party) 56,298 42,123 196,982 153,953
Service and fee income 54,064 30,114 172,174 108,660
Investment income, net 18,876 13,700 68,167 55,515
Net realized gains (loss) 5,213 1,187 8,981 2,768
Commission and other revenues 134,451 87,124 446,304 320,896
Total revenue 517,838 386,517 1,865,156 1,357,757
Loss and loss adjustment expense 255,313 194,277 922,675 678,333
Acquisition costs and other underwriting expense 146,239 114,320 543,713 398,404
Other expense 51,024 23,806 161,320 86,611
Total expenses 452,576 332,403 1,627,708 1,163,348
Income before other, provision for income taxes, equity in earnings of unconsolidated subsidiaries and non-controlling interest 65,262 54,114 237,448 194,409
Other income (expense):        
Interest expense (7,205) (4,045) (28,508) (16,079)
Net gain (loss) on life settlement contracts 8,520 (1,454) 13,822 46,892
Foreign currency gain (loss) 2,743 (591) (242) (2,418)
Acquisition gain on purchase 5,850
Total other income (expenses) 4,058 (6,090) (14,928) 34,245
Income before provision for income taxes, equity in earnings of unconsolidated subsidiaries and non-controlling interest 69,320 48,024 222,520 228,654
Provision for income taxes 10,849 11,749 46,955 42,372
Equity in earnings of unconsolidated subsidiaries (related parties) 636 1,467 9,295 4,882
Net income 59,107 37,742 184,860 191,164
Non-controlling interest (3,794) 181 (6,873) (20,730)
Net income attributable to AmTrust Financial Services, Inc. $ 55,313 $ 37,923 $ 177,987 $ 170,434
Operating earnings attributable to AmTrust Financial Services, Inc.  (3) $ 53,427 $ 40,697 $ 191,646 $ 179,451
Earnings per common share:        
Basic earnings per share $ 0.82 $ 0.57 $ 2.67 $ 2.58
Diluted earnings per share $ 0.79 $ 0.56 $ 2.57 $ 2.52
Operating diluted earnings per share  (4) $ 0.77 $ 0.60 $ 2.77 $ 2.65
Weighted average number of basic shares outstanding 66,870 66,121 66,499 65,915
Weighted average number of diluted shares outstanding 69,417 68,116 68,850 67,661
Combined ratio 90.1% 89.0% 89.5% 89.0%
Return on equity 19.9% 17.6% 17.5% 21.2%
Operating return on equity  (5) 19.3% 18.8% 18.8% 22.3%
Reconciliation of net realized losses:        
Other-than-temporary investment impairments $ (1,757) $ (4,066) $ (2,965) $ (4,411)
Impairments recognized in other comprehensive income
  (1,757) (4,066) (2,965) (4,411)
Net realized gains on sale of investments 6,970 5,253 11,946 7,179
Net realized gains $ 5,213 $ 1,187 $ 8,981 $ 2,768
 
 
AmTrust Financial Services, Inc.
Balance Sheet Highlights
(in thousands)
(Unaudited)  
     
  December 31, 2012 December 31, 2011
Cash, cash equivalents and investments $ 2,696,402 $ 2,086,638
Premiums receivables 1,204,181 932,992
Goodwill and intangible assets 514,967 372,786
Total assets 7,421,602 5,732,518
Loss and loss expense reserves 2,431,244 1,879,175
Unearned premium 1,773,593 1,366,170
Trust preferred securities 123,714 123,714
Convertible senior notes 161,218 138,506
AmTrust's stockholders' equity 1,144,121 890,563
Book value per share $ 17.03 $ 13.47
 
 
AmTrust Financial Services, Inc.
Non-GAAP Financial Measures
(in thousands, except per share data)
(Unaudited)
     
  Three Months Ended December 31, Year Ended December 31,
  2012 2011 2012 2011
Reconciliation of net income attributable to AmTrust Financial Services, Inc. to operating earnings attributable to AmTrust Financial Services, Inc.:        
Net income attributable to AmTrust Financial Services, Inc. $ 55,313 $ 37,923 $ 177,987 $ 170,434
Less: Net realized gains (loss) net of tax 3,389 771 5,838 1,799
Non cash amortization of certain intangible assets (5,374) (2,954) (17,165) (9,852)
Non cash interest on convertible senior notes net of tax 1,128 (2,090)
Foreign currency transaction gain (loss) 2,743 (591) (242) (2,418)
Loss on investment in unconsolidated subsidiary net of tax (1) (2,349)
Acquisition gain net of tax (2) 3,803
Operating earnings attributable to AmTrust Financial Services, Inc. (3) $ 53,427 $ 40,697 $ 191,646 $ 179,451
Reconciliation of diluted earnings per share to diluted operating earnings per share:        
Diluted earnings per share $ 0.79 $ 0.56 $ 2.57 $ 2.52
Less: Net realized gain (loss) net of tax 0.04 0.01 0.09 0.03
Non cash amortization of certain intangible assets (0.06) (0.04) (0.25) (0.14)
Non cash interest on convertible senior notes net of tax 0.01 (0.04)
Foreign currency transaction gain (loss) 0.03 (0.01) (0.04)
Loss on investment in unconsolidated subsidiary net of tax (1) (0.04)
Acquisition gain net of tax (2) 0.06
Operating diluted earnings per share (4) $ 0.77 $ 0.60 $ 2.77 $ 2.65
Reconciliation of return on equity to operating return on equity:        
Return on equity 19.9% 17.6% 17.5% 21.2%
Less: Net realized gain (loss) net of tax 1.1% 0.3% 0.6% 0.2%
Non cash amortization of certain intangible assets (1.8)% (1.2)% (1.7)% (1.2)%
Non cash interest on convertible senior notes net of tax 0.4% (0.2)%
Foreign currency transaction gain (loss) 0.9% (0.3)% (0.3)%
Loss on investment in unconsolidated subsidiary net of tax (1) (0.3)%
Acquisition gain net of tax (2) 0.5%
Operating return on equity (5) 19.3% 18.8% 18.8% 22.3%
         
(1) In 2011, the Company recorded its final purchase price adjustment related to ACAC's 2010 purchase of GMAC's consumer property and casualty insurance business. The Company originally recorded an after-tax gain of $6,792 related to this acquisition in 2010. ACAC finalized its purchase price accounting in 2011 and the impact on the Company's gain on acquisition was to reduce the gain by $2,349 on an after-tax basis. As required under GAAP, the Company recorded this adjustment in 2011 and included it as part of equity in earnings of unconsolidated subsidiaries (related parties), which was $1,467 and $4,882 for the three months and year ended December 31, 2011. This purchase price adjustment is not included in the Company's calculation of operating earnings.
(2) The Company recorded a gain of $5,850 and after-tax gain of $3,803 related to the renewal rights and loss portfolio transfer transaction with Majestic Insurance Company.
(3) Operating earnings is a non-GAAP financial measure defined by the Company as net income less after-tax realized investment gain (loss), certain amortization expense, non-cash interest on convertible senior notes net of tax, foreign currency transaction gain (loss), gain (loss) on investment in unconsolidated subsidiary net of tax and acquisition gain net of tax and should not be considered an alternative to net income. The Company's management believes that operating earnings is a useful indicator of trends in the Company's underlying operations because it provides a more meaningful representation of the Company's earnings power. The Company's measure of operating earnings may not be comparable to similarly titled measures used by other companies.
(4) Diluted operating earnings per share is a non-GAAP financial measure defined by the Company as net income less after-tax realized investment gain (loss), certain amortization expense, non-cash interest on convertible senior notes net of tax, foreign currency transaction gain (loss), gain (loss) on investment in unconsolidated subsidiary net of tax and acquisition gain net of tax divided by the weighted average diluted shares outstanding for the period and should not be considered an alternative to diluted earnings per share. The Company's management believes that diluted operating earnings per share is a useful indicator of trends in the Company's underlying operations because it provides a more meaningful representation of the Company's earnings power. The Company's measure of diluted operating earnings per share may not be comparable to similarly titled measures used by other companies.
(5) Operating return on equity is a non-GAAP financial measure defined by the Company as net income less after-tax realized investment gain (loss), certain amortization expense, non-cash interest on convertible senior notes net of tax, foreign currency transaction gain (loss), gain (loss) on investment in unconsolidated subsidiary net of tax and acquisition gain net of tax divided by the average shareholders' equity for the period and should not be considered an alternative to return on equity. The Company's management believes that operating return on equity is a useful indicator of trends in the Company's underlying operations because it provides a more meaningful representation of the Company's earnings power. The Company's measure of operating return on equity may not be comparable to similarly titled measures used by other companies.
 
 
AmTrust Financial Services, Inc.
Segment Information
(in thousands, except percentages)
(Unaudited)
         
  Three Months Ended December 31, Year Ended December 31,
  2012 2011 2012 2011
Gross written premium        
Small Commercial Business $ 243,659 $ 149,081 $ 933,740 $ 609,822
Specialty Risk and Extended Warranty 351,596 306,768 1,118,710 1,056,511
Specialty Program 149,939 105,590 578,735 381,541
Personal Lines Reinsurance 28,451 25,322 118,141 102,598
  $ 773,645 $ 586,761 $ 2,749,326 $ 2,150,472
Net written premium        
Small Commercial Business $ 117,729 $ 85,779 $ 474,381 $ 355,721
Specialty Risk and Extended Warranty 174,029 176,600 624,555 615,563
Specialty Program 92,803 57,293 430,960 202,715
Personal Lines Reinsurance 28,451 25,322 118,141 102,598
  $ 413,012 $ 344,994 $ 1,648,037 $ 1,276,597
Net earned premium        
Small Commercial Business $ 106,863 $ 94,494 $ 416,565 $ 320,266
Specialty Risk and Extended Warranty 148,658 125,773 541,573 446,765
Specialty Program 98,796 53,520 348,568 171,375
Personal Lines Reinsurance 29,070 25,606 112,146 98,455
  $ 383,387 $ 299,393 $ 1,418,852 $ 1,036,861
Loss Ratio:        
Small Commercial Business 65.1% 63.0% 65.0% 63.0%
Specialty Risk and Extended Warranty 66.8% 64.3% 63.0% 66.6%
Specialty Program 68.5% 67.7% 68.4% 66.9%
Personal Lines Reinsurance 64.5% 68.7% 64.5% 65.2%
Total 66.6% 64.9% 65.0% 65.4%
Expense Ratio:        
Small Commercial Business 26.1% 27.2% 26.6% 26.8%
Specialty Risk and Extended Warranty 17.9% 19.0% 19.1% 17.9%
Specialty Program 26.9% 27.9% 28.2% 27.6%
Personal Lines Reinsurance 30.5% 30.0% 30.5% 31.8%
Total 23.5% 24.1% 24.4% 23.6%
Combined Ratio:        
Small Commercial Business 91.2% 90.1% 91.6% 89.9%
Specialty Risk and Extended Warranty 84.7% 83.4% 82.1% 84.5%
Specialty Program 95.4% 95.6% 96.6% 94.6%
Personal Lines Reinsurance 95.0% 98.7% 95.0% 97.1%
Total 90.1% 89.0% 89.5% 89.0%
CONTACT: AmTrust Financial Services, Inc.
         
         Investor Relations
         Elizabeth Malone CFA
         beth.malone@amtrustgroup.com
         646.458.7924
         
         Hilly Gross
         New York, New York
         hilly.gross@amtrustgroup.com
         646.458.7925

company logo

6 of 6

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs