Current Report
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of the Securities Exchange Act of 1934
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Date
of Report (Date of Earliest Event Reported)
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May
5, 2009
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AmTrust
Financial Services, Inc.
(Exact
name of registrant as specified in its charter)
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Delaware
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001-33143
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04-3106389
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(State
or other jurisdiction
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(Commission
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IRS
Employer
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of
incorporation)
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File
Number)
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Identification
No.)
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59
Maiden Lane, 6
th
Floor, New York, New York
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10038
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code
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(212)
220-7120
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(Former
name or former address, if changed since last report.)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (
see
General Instruction A.2. below):
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.133-4 (c))
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Item
2.02
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RESULTS
OF OPERATIONS AND FINANCIAL
CONDITION
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On May 5,
2009, AmTrust Financial Services, Inc. issued a press release announcing its
results of operations for the first quarter ended March 31, 2009 and the
scheduling of a conference call on May 6, 2009 with respect
thereto. A copy of the press release is attached as Exhibit 99.1 to
this Form 8-K and is furnished as Exhibit 99.1 to this report.
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Item
9.01
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FINANCIAL
STATEMENTS AND EXHIBITS.
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(a)
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Not
applicable.
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(b)
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Not
applicable.
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(c)
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Not
applicable.
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(d)
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Exhibits.
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Exhibit
Number
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Description
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99.1
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Press
release dated May 5, 2009.
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SIGNATURES
Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned hereunto duly
authorized.
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AmTrust
Financial Services, Inc.
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(Registrant)
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Date
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May
6, 2009
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/s/
Stephen Ungar
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Stephen
Ungar
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Secretary
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For
more information, please contact:
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EXHIBIT
99.1
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AmTrust
Financial Services, Inc.
Investor
Relations
Devora
Goldenberg
212.220.7120
ext. 7041
IR@amtrustgroup.com
For
immediate release
May 5, 2009
AmTrust
Financial Services, Inc. Reports First Quarter
Operating
Earnings of $30.2 million and Net Income of $24.2 million
(New York)
– AmTrust Financial
Services, Inc. (NASDAQ: AFSI) today reported operating earnings of $30.2 million
for the first quarter of 2009. Operating earnings is a non-GAAP
financial measure defined by the Company as net income, excluding realized
investment gains and losses, net of tax. Gross written
premium for the first quarter of 2009 was $267.5 million and net income was
$24.2 million.
During
the first quarter of 2009, the Company incurred a realized loss on an after-tax
basis of $6.0 million on its investment portfolio. The realized loss
related to certain fixed income and equity investments.
(more)
page
2 of 6
First
Quarter Overview:
Gross
written premium in the first quarter 2009 increased by $32.7 million to $267.5
million or 13.9% from $234.8 million in the first quarter of 2008.The Company
reported operating earnings of $30.2 million or basic operating earnings per
share of $0.50 for the first quarter of 2009, an increase of 16% from the first
quarter of 2008. Net income for the first quarter 2009 was $24.2 million, or
$0.40 basic earnings per share.
First Quarter 2009
Highlights
:
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·
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Quarterly
basic operating earnings per share was $.50 ($0.43 in
2008)
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·
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Quarterly
basic earnings per share was $0.40 ($0.37 in
2008)
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·
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Annualized
return on equity on operating earnings for the first quarter was
30.4%
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·
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Book
value per share was $6.77 as of March 31, 2009 ($6.54 as of December 31,
2008)
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·
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The
combined ratio for the first quarter was 79.7% (77.2% in
2008)
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·
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Completed
share repurchases of approximately 700 thousand
shares
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First
Quarter 2009 Results:
Revenue
:
Gross
written premium for the first quarter was $267.5 million, an increase of 13.9%
or $32.7 million from $234.8 million in the first quarter 2008. The
increases were attributable to both organic growth and the continued successful
integration of our recent acquisitions.
(more)
page
3 of 6
Net
written premium (gross written premium less cessions for reinsurance, including
cessions to Maiden Insurance Company (Maiden)) in the first quarter of 2009
increased by $18.8 million or 16.0%, to $136.2 million from $117.4 million in
the first quarter of 2008 and net earned premium for the first quarter of 2009
increased by $35.0 million or 35.9%, to $132.4 million from $97.4 million in the
first quarter 2008.
As
previously disclosed, the Company entered into a reinsurance agreement with
Maiden effective July 1, 2007. Under the terms of this reinsurance
agreement, the Company ceded approximately $87.5 million and $82.9 million of
written premium to Maiden in the first quarter of 2009 and 2008,
respectively.
The
Company’s agreement with Maiden generated $27.6 million and $20.2 million of
earned ceding commission for the first quarter of 2009 and 2008,
respectively. The agreement continues to enable the Company to
leverage its balance sheet, increase its writings, decrease its expense ratio
and, most importantly, increase its return on equity.
Commission
and fee income (exclusive of ceding commission from Maiden) for the first
quarter 2009 increased by $1.2 million or 19.0% to $7.5 million from $6.3
million for the first quarter 2008. The increase was attributable
primarily to additional fees from Maiden and administrator fees related to new
warranty programs in 2009.
(more)
page
4 of 6
Net
investment income, excluding realized gains and losses in the first quarter
2009, was $13.6 million compared to $13.5 million in the first quarter
2008. Average invested assets for the three months ended March 31,
2009 and 2008 was approximately $1.4 billion. During the quarters
ended March 31, 2009 and 2008, the Company realized investment losses of $6.0
million and $3.4 million, respectively, on an after-tax basis.
Expenses:
The
Company’s loss ratio for the quarter ended March 31, 2009 was 56.6% and was
consistent with the quarter ended March 31, 2008.
Acquisition
Costs and Other Underwriting Expenses less Ceding Commission Revenue for the
three months ended March 31, 2009 increased by $17.3 million to $58.2 million
from $40.9 million for the three months ended March 31, 2008. The
increase resulted, primarily, from increased premium writings in
2009. The expense ratio for the three months ended March 31, 2009
increased to 23.1% from 20.5% for the three months ended March 31,
2008.
Other Matters
:
During
the first quarter the Company completed share repurchases of approximately 700
thousand shares for $5.4 million. This leaves approximately 2.3
million remaining under its share repurchase authorization. The
weighted average shares outstanding were reduced by approximately 300 thousand
shares for the first quarter of 2009. Book value per common share
grew 3.5% from December 31, 2008 and total increase before dividend payment was
4.3% per share.
Shareholders’
Equity as of March 31, 2009 increased to $401.5 million from $392.5 million as
of December 31, 2008. During the quarter, the Board of Directors
declared a quarterly dividend of $0.05 per share.
(more)
page
5 of 6
As of
March 31, 2009, the Company’s debt-to-capitalization ratio was
31.1%. During the second quarter of 2008, the Company entered into a
three-year $40 million term loan, which has been reduced as of March 31, 2009 to
$30 million. Additionally, the Company has $123.7 million of
long-term trust preferred securities.
Conference
Call:
On May 6,
2009 at 10 a.m. ET, the Company will hold a conference call that can be accessed
as follows:
Toll-free
Dial-in: 877.857.6151
Toll
Dial-in (Int’l Callers): 719.325.4746
In order
to participate in the conference call, you must register at:
http://ir.amtrustgroup.com
A live
broadcast of the call will be available on-line at the above website. An on-line
replay will follow shortly after the call. In addition, a telephonic
replay will be available for
seven
days and can be accessed by dialing 888.203.1112 or
719.457.0820. Enter replay passcode 2964661.
About
AmTrust Financial Services, Inc.
(more)
page
6 of 6
Forward
Looking Statement
This news release contains
“forward-looking statements” which are made pursuant to
the safe
harbor provisions of the Private Securities Litigation Reform Act of
1995. The forward-looking statements are based on the Company’s
current expectations and beliefs concerning future developments and their
potential effects on the Company. There can be no assurance that
actual developments will be those anticipated by the Company. Actual
results may differ materially from those projected as a result of significant
risks and uncertainties, including non-receipt of the expected payments, changes
in interest rates, effect of the performance of financial markets on investment
income and fair values of investments, development of claims and the effect on
loss reserves, accuracy in projecting loss reserves, the impact of competition
and pricing environments, changes in the demand for the Company’s products, the
effect of general economic conditions, adverse state and federal legislation,
regulations and regulatory investigations into industry practices, developments
relating to existing agreements, heightened competition, changes in pricing
environments, and changes in asset valuations. The Company undertakes
no obligation to publicly update any forward-looking
statements.
###
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Income
Statement
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(in
thousands, except per share data)
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(Unaudited)
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Three
Months Ended March 31,
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2009
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2008
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Gross
premium written
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$ | 267,527 | $ | 234,756 | ||||
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Premium
income
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Net
premium written
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$ | 136,179 | $ | 117,442 | ||||
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Change
in unearned premium
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(3,756 | ) | (20,029 | ) | ||||
| 132,423 | 97,413 | |||||||
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Ceding
commission (primarily related party)
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27,591 | 20,875 | ||||||
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Commission
and fee income
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7,454 | 6,287 | ||||||
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Investment
income, net
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13,589 | 13,531 | ||||||
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Net
realized gains (losses)
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(9,238 | ) | (5,220 | ) | ||||
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Other
investment gain (loss) on managed assets
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- | (2,900 | ) | |||||
| 39,396 | 32,573 | |||||||
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Total
revenue
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171,819 | 129,986 | ||||||
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Loss
and loss adjustment expense
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74,915 | 55,165 | ||||||
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Acquisition
costs and other underwriting expenes
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58,154 | 40,877 | ||||||
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Other
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5,194 | 4,794 | ||||||
| 138,263 | 100,836 | |||||||
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Income
from continuing operations
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33,556 | 29,150 | ||||||
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Other
income (expense):
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Foreign
currency gain (loss)
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33 | 159 | ||||||
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Interest
expense
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(4,171 | ) | (2,629 | ) | ||||
| (4,138 | ) | (2,470 | ) | |||||
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Income
from continuing operations before provision for income
taxes
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29,418 | 26,680 | ||||||
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Provision
for income taxes
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5,256 | 7,317 | ||||||
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Minority
interest in net loss of subsidiary
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- | (2,900 | ) | |||||
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Net
income available to common shareholders
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$ | 24,162 | $ | 22,263 | ||||
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Operating
earnings
(1)
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$ | 30,167 | $ | 25,656 | ||||
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Earnings
per common share:
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||||||||
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Basic
earnings per share
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$ | 0.40 | $ | 0.37 | ||||
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Diluted
earnings per share
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$ | 0.40 | $ | 0.37 | ||||
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Basic
operating earnings per share
(1)
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$ | 0.50 | $ | 0.43 | ||||
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Weighted
average number of basic shares outstanding
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59,767 | 59,969 | ||||||
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Weighted
average number of diluted shares outstanding
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60,000 | 60,925 | ||||||
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Combined
ratio
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79.7 | % | 77.2 | % | ||||
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Non-GAAP
Financial Measure
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(in
thousands, except per share data)
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(Unaudited)
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Three
Months Ended March 31,
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2009
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2008
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Reconciliation
of net income to operating earnings:
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Net
income
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$ | 24,162 | $ | 22,263 | ||||
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Less:
Net realized gains (losses) net of taxes
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(6,005 | ) | (3,393 | ) | ||||
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Operating
earnings
(1)
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$ | 30,167 | $ | 25,656 | ||||
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Operating
earnings per common share:
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||||||||
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Basic
earnings per share
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$ | 0.50 | $ | 0.43 | ||||
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Diluted
earnings per share
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$ | 0.50 | $ | 0.42 | ||||
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(1)
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Net
operating income is a non-GAAP financial measure defined by the Company as
net income excluding realized investment gains and losses, net of tax,
which provides a useful indicator of trends in the Company's underlying
operations.
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