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
Date of
Report (Date of Earliest Event
Reported)
August 5, 2009
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
(212) 220-7120
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 August
5, 2009, AmTrust Financial Services, Inc. issued a press release announcing its
results of operations for the first quarter ended June 30, 2009 and the
scheduling of a conference call on August 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 August 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.
(Registrant)
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|||
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Date
August 6, 2009
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By:
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/s/ Stephen Ungar | |
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Stephen
Ungar
Secretary
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|||
| For more information, please contact: | EXHIBIT 99.1 |
AmTrust
Financial Services, Inc.
Investor
Relations
Hilly
Gross
212.220.7120
ext. 7023
IR@amtrustgroup.com
For
immediate release
August 5, 2009
AmTrust
Financial Services, Inc. Reports Second Quarter
Operating
Earnings of $31.8 million, Net Income of $26.8 million and Book Value Per Share
Increased 18.7% to $8.04
(New York)
– AmTrust Financial
Services, Inc. (NASDAQ: AFSI) today reported operating earnings of $31.8 million
for the second 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. During the second quarter of
2009, book value per share increased 18.7% to $8.04 per
share. Gross written premium for the second quarter of
2009 was $270.2 million and net income was $26.8 million. For the six
months ended June 30, 2009 the Company reported gross written premium of $537.8
million, operating earnings of $61.9 million and net income of $50.9
million.
During
the second quarter of 2009, the Company incurred a realized loss on an after-tax
basis of $5.0 million on its investment portfolio. The realized loss
related to certain fixed income and equity investments.
(more)
page
2 of 6
Second
Quarter Overview:
Total
revenue in the second quarter increased by $9.0 million to $182.6 million or
5.2% from $173.6 million in the second quarter of 2008. The Company reported
operating earnings of $31.8 million or basic operating earnings per share of
$0.54 for the second quarter of 2009, an increase of 17.4% from the second
quarter of 2008. Net income for the second quarter of 2009 was $26.8 million, or
$0.45 basic earnings per share.
Second Quarter and Six Months
Highlights
:
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·
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Quarterly
basic operating earnings per share was $0.54 ($0.46 in
2008)
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·
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Quarterly
basic earnings per share was $0.45 ($0.44 in
2008)
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·
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Six
months ended June 30, 2009 basic operating earnings per share was $1.04
($0.89 in 2008)
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·
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Six
months ended June 30, 2009 basic earnings per share was $0.86 ($0.81 in
2008)
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·
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Annualized
return on equity on operating earnings for the second quarter was
28.9%
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·
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Book
value per share was $8.04 as of June 30, 2009 ($6.91 as of June 30,
2008)
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·
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The
combined ratio for the second quarter was 79.6% (81.7% in
2008)
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·
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The
combined ratio for the six months ended June 30, 2009 was 79.6% (79.6% in
2008)
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Second
Quarter and Six Months Results:
Revenue
:
Total
revenue for the second quarter of 2009 increased $9.0 million or 5.2% to $182.6
million from $173.6 million for the second quarter of 2008. Net
premium earned increased $20.9 million or 18.0% to $136.8 million during the
second quarter of 2009 from $115.9 million during the second quarter of
2008. Gross written premium in the second quarter of 2009 decreased
by $30.9 million to $270.2 million from $301.1 million for the second quarter of
2008.
(more)
page
3 of 6
Total
revenue for the six months ended June 30, 2009 was $354.4 million, an increase
of 16.7% from the six months ended June 30, 2008. Net premium earned
increased $55.9 million or 26.2% to $269.2 during the six months ended June 30,
2008. Gross written premium in the six months ended June 30, 2009
increased by $2.0 million to $537.8 million from $535.8 million for the six
months ended June 30, 2008.
Net
written premium (gross written premium less cessions for reinsurance, including
cessions to Maiden Insurance Company (Maiden)) in the second quarter of 2009
increased by $5.0 million or 3.8%, to $137.1 million from $132.1 million in the
second quarter of 2008. For the six months ended June 30, 2009, net
written premium increased $23.8 million or 9.5% to $273.3 million from $249.5
million for the six months ended June 30, 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 $177.6 million and $251.0 million of
written premium to Maiden in the six months ended June 30, 2009 and 2008,
respectively. The Company’s agreement with Maiden generated $31.0
million and $35.2 million of earned ceding commission for the second quarter of
2009 and 2008, respectively, and $58.6 million and $55.4 million of earned
ceding commission for the six months ended June 30, 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 second
quarter 2009 decreased by $0.8 million or 9.5% to $7.6 million from $8.4 million
for the second quarter 2008. Commission and fee income for the six
months ended June 30, 2009 increased by $0.4 million or 2.7% to $15.1 million
from $14.7 million for the six months ended June 30, 2008.
(more)
page
4 of 6
Net
investment income, excluding realized gains and losses in the second quarter
2009, was $13.6 million compared to $14.2 million in the second quarter
2008. Net investment income, excluding realized gains and losses for
the six months ended June 30, 2009, was $27.1 million compared to $27.7 million
for the six months ended June 30, 2008. During the three months ended
June 30, 2009 and 2008, the Company realized investment losses of $5.0 million
and $1.4 million, respectively, on an after-tax basis. For the six
months ended June 30, 2009 and 2008, the Company realized investment losses of
$11.0 million and $4.8 million, respectively, on an
after-tax-basis.
Expenses:
The
Company’s loss ratio for the second quarter of 2009 was 56.0% compared to 63.9%
for the second quarter of 2008. The Company’s loss ratio for the six
months ended June 30, 2009 was 56.3% compared to 60.6% for the six months ended
December 31, 2008.
Acquisition
Costs and Other Underwriting Expenses less Ceding Commission Revenue for the
three months ended June 30, 2009 increased by $11.7 million to $32.3 million
from $20.6 million for the three months ended June 30, 2008. The
expense ratio for the three months ended June 30, 2009 increased to 23.6% from
17.8% for the three months ended June 30, 2008.
Acquisition
Costs and Other Underwriting Expenses less Ceding Commission Revenue for the six
months ended June 30, 2009 increased by $22.3 million to $62.9 million from
$40.6 million for the six months ended June 30, 2008. As a result,
the expense ratio for the six months ended December 31, 2008 increased to 23.4%
from 19.0% for the six months ended June 30, 2008.
(more)
page
5 of 6
Other Matters
:
Shareholders’
Equity as of June 30, 2009 increased to $476.9 million from $392.5 million as of
December 31, 2008. During the quarter, the Board of Directors
declared a quarterly dividend of $0.06 per share.
As of
June 30, 2009, the Company’s debt-to-capitalization ratio was 26.4% down from
32.0% from the year ended 2008. During the second quarter of 2008,
the Company entered into a three-year $40.0 million term loan, which has been
reduced as of June 30, 2009 to $26.7 million. Additionally, the
Company has $123.7 million of long-term trust preferred securities.
Conference
Call:
On August
6, 2009 at 10 a.m. ET, the Company will hold a conference call that can be
accessed as follows:
Toll-free
Dial-in: 888.634.7543
Toll
Dial-in (Int’l Callers): 719.457.2677
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 7984928.
(more)
page
6 of 6
About
AmTrust Financial Services, Inc.
AmTrust
Financial Services, Inc., headquartered in New York City, is a multinational
insurance holding company, which, through its insurance carriers, offers
specialty property and casualty insurance products, including workers’
compensation, commercial automobile and general liability; extended service and
warranty coverage. For more information about AmTrust, visit
www.amtrustgroup.com
,
or call AmTrust toll-free at 866.203.3037.
Forward
Looking Statements
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 except as may be
required by law. Additional information about these risks and
uncertainties, as well as others that may cause actual results to differ
materially from those projected, is contained in Item 1A. Risk Factors in the
Company’s Annual Report on Form 10-K for the period ended December 31,
2008.
AFSI-F
###
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AmTrust
Financial Services, Inc.
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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 June 30,
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Six
Months Ended June 30,
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|||||||||||||||
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2009
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2008
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2009
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2008
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|||||||||||||
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Gross
written premium
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$ | 270,229 | $ | 301,062 | $ | 537,756 | $ | 535,818 | ||||||||
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Premium
income
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||||||||||||||||
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Net
premium written
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$ | 137,120 | $ | 132,057 | $ | 273,299 | $ | 249,499 | ||||||||
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Change
in unearned premium
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(317 | ) | (16,112 | ) | (4,073 | ) | (36,141 | ) | ||||||||
| 136,803 | 115,945 | 269,226 | 213,358 | |||||||||||||
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Ceding
commission (primarily related party)
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32,278 | 37,209 | 59,869 | 58,084 | ||||||||||||
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Commission
and fee income
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7,607 | 8,375 | 15,061 | 14,662 | ||||||||||||
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Investment
income, net
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13,582 | 14,190 | 27,171 | 27,721 | ||||||||||||
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Net
realized losses
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(7,709 | ) | (2,135 | ) | (16,947 | ) | (7,355 | ) | ||||||||
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Other
investment gain (loss) on managed assets
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- | - | - | (2,900 | ) | |||||||||||
| 45,758 | 57,639 | 85,154 | 90,212 | |||||||||||||
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Total
revenue
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182,561 | 173,584 | 354,380 | 303,570 | ||||||||||||
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Loss
and loss adjustment expense
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76,585 | 74,134 | 151,500 | 129,299 | ||||||||||||
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Acquisition
costs and other underwriting expense
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64,587 | 57,824 | 122,741 | 98,701 | ||||||||||||
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Other
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5,774 | 2,504 | 10,968 | 7,298 | ||||||||||||
| 146,946 | 134,462 | 285,209 | 235,298 | |||||||||||||
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Income
from continuing operations
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35,615 | 39,122 | 69,171 | 68,272 | ||||||||||||
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Other
income (expense):
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||||||||||||||||
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Foreign
currency gain (loss)
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611 | (15 | ) | 644 | 144 | |||||||||||
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Interest
expense
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(4,007 | ) | (5,541 | ) | (8,178 | ) | (8,170 | ) | ||||||||
| (3,396 | ) | (5,556 | ) | (7,534 | ) | (8,026 | ) | |||||||||
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Income
from continuing operations before provision for income
taxes
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32,219 | 33,566 | 61,637 | 60,246 | ||||||||||||
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Provision
for income taxes
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5,448 | 7,216 | 10,704 | 14,533 | ||||||||||||
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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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$ | 26,771 | $ | 26,350 | $ | 50,933 | $ | 48,613 | ||||||||
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Operating
earnings
(1)
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$ | 31,782 | $ | 27,738 | $ | 61,949 | $ | 53,394 | ||||||||
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Earnings
per common share:
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||||||||||||||||
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Basic
earnings per share
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$ | 0.45 | $ | 0.44 | $ | 0.86 | $ | 0.81 | ||||||||
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Diluted
earnings per share
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$ | 0.45 | $ | 0.43 | $ | 0.85 | $ | 0.80 | ||||||||
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Basic
operating earnings per share
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$ | 0.54 | $ | 0.46 | $ | 1.04 | $ | 0.89 | ||||||||
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Weighted
average number of basic shares outstanding
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59,337 | 59,989 | 59,551 | 59,979 | ||||||||||||
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Weighted
average number of diluted shares outstanding
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59,734 | 61,001 | 59,863 | 60,960 | ||||||||||||
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Combined
ratio
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79.6 | % | 81.7 | % | 79.6 | % | 79.6 | % | ||||||||
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Reconciliation
of net realized losses:
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||||||||||||||||
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Other-than-temporary
investment impairments
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$ | (10,786 | ) | $ | (7,230 | ) | $ | (12,213 | ) | $ | (7,972 | ) | ||||
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Impairments
recognized in other comprehensive income
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- | - | - | - | ||||||||||||
| (10,786 | ) | (7,230 | ) | (12,213 | ) | (7,972 | ) | |||||||||
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Net
realized gains (losses) on sale of investments
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3,077 | 5,095 | (4,734 | ) | 617 | |||||||||||
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Net
realized losses
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$ | (7,709 | ) | $ | (2,135 | ) | $ | (16,947 | ) | $ | (7,355 | ) | ||||
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June
30, 2009
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December
31, 2008
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|||||||
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Cash,
cash equivalents and investments
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$ | 1,410,833 | $ | 1,361,440 | ||||
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Premiums
receivables
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383,736 | 419,577 | ||||||
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Goodwill
and intangible assets
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102,722 | 102,425 | ||||||
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Total
assets
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3,183,530 | 3,143,893 | ||||||
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Loss
and loss expense reserves
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1,057,646 | 1,014,059 | ||||||
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Unearned
premium
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767,842 | 759,915 | ||||||
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Trust
preferred securities
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123,714 | 123,714 | ||||||
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Total
stockholders' equity
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$ | 476,853 | $ | 392,548 | ||||
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AmTrust
Financial Services, Inc.
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Non-GAAP
Financial Measure
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(in
thousands, except per share data)
(Unaudited)
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Three
Months Ended June 30,
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Six
Months Ended June 30,
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|||||||||||||||
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2009
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2008
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2009
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2008
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|||||||||||||
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Reconciliation
of net income to operating earnings:
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||||||||||||||||
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Net
income
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$ | 26,771 | $ | 26,350 | $ | 50,933 | $ | 48,613 | ||||||||
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Less:
Net realized gains (losses) net of taxes
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(5,011 | ) | (1,388 | ) | (11,016 | ) | (4,781 | ) | ||||||||
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Operating
earnings
(1)
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$ | 31,782 | $ | 27,738 | $ | 61,949 | $ | 53,394 | ||||||||
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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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$ | 0.54 | $ | 0.46 | $ | 1.04 | $ | 0.89 | ||||||||
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Diluted
earnings per share
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$ | 0.53 | $ | 0.45 | $ | 1.03 | $ | 0.88 | ||||||||
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(1)
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Operating
earnings is a non-GAAP financial measure defined by the Company as net
income excluding realized investment gains and losses, net of tax and
should not be considered an alternative to net income. The
Company's management believes that operating earnings is a useful
indicatior of trends in the Company's underlying
operations. The Company's measure of operating earnings may not
be comparable to similarly titled measures used by other
companies.
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