x
|
QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
¨
|
TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Delaware
|
04-3106389
|
|
(State
or other jurisdiction of
|
(IRS
Employer Identification No.)
|
|
incorporation
or organization)
|
||
59
Maiden Lane, 6th
Floor, New York, New York
|
10038
|
|
(Address
of principal executive offices)
|
|
(Zip
Code)
|
Large
accelerated filer ¨
|
Accelerated
filer x
|
Non-accelerated
filer ¨
|
Smaller
reporting company ¨
|
(Do
not check if a smaller reporting company)
|
Page
|
||||
PART
I
|
FINANCIAL
INFORMATION
|
|||
Item
1.
|
Unaudited
Financial Statements:
|
|||
Condensed
Consolidated Balance Sheets as of June 30, 2010 and December 31, 2009
(audited)
|
3
|
|||
Condensed
Consolidated Statements of Income
|
4
|
|||
—
Three and six months ended June 30, 2010 and 2009
|
||||
Condensed
Consolidated Statements of Cash Flows
|
5
|
|||
—
Three and six months ended June 30, 2010 and 2009
|
||||
|
Notes
to Condensed Consolidated Financial Statements
|
6
|
||
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
29
|
||
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
51
|
||
Item
4.
|
Controls
and Procedures
|
53
|
||
PART
II
|
OTHER
INFORMATION
|
|||
Item
1.
|
Legal
Proceedings
|
53
|
||
Item
1A.
|
Risk
Factors
|
53
|
||
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
53
|
||
Item
3.
|
Defaults
Upon Senior Securities
|
53
|
||
Item
4.
|
(Removed
and Reserved)
|
53
|
||
Item
5.
|
Other
Information
|
53
|
||
Item
6.
|
Exhibits
|
54
|
||
|
Signatures
|
|
55
|
June 30,
2010
|
December 31,
2009
|
|||||||
(Unaudited)
|
||||||||
ASSETS
|
||||||||
Investments:
|
||||||||
Fixed
maturities, available-for-sale, at market value (amortized cost
$1,047,827; $1,080,914)
|
$
|
1,063,472
|
$
|
1,085,362
|
||||
Equity
securities, available-for-sale, at market value (cost $54,553;
$60,639)
|
45,937
|
50,355
|
||||||
Short-term
investments
|
990
|
31,265
|
||||||
Equity
investment in unconsolidated subsidiaries – related party
|
74,359
|
1,288
|
||||||
Other
investments
|
13,323
|
12,746
|
||||||
Total
investments
|
1,198,081
|
1,181,016
|
||||||
Cash
and cash equivalents
|
316,409
|
233,810
|
||||||
Accrued
interest and dividends
|
6,326
|
7,617
|
||||||
Premiums
receivable, net
|
654,780
|
495,871
|
||||||
Note
receivable – related party
|
23,822
|
23,224
|
||||||
Reinsurance
recoverable
|
360,564
|
349,695
|
||||||
Reinsurance
recoverable – related party
|
335,973
|
293,626
|
||||||
Prepaid
reinsurance premium
|
166,477
|
148,425
|
||||||
Prepaid
reinsurance premium – related party
|
279,983
|
262,128
|
||||||
Prepaid
expenses and other assets
|
97,027
|
85,108
|
||||||
Federal
income tax receivable
|
—
|
364
|
||||||
Deferred
policy acquisition costs
|
222,519
|
180,179
|
||||||
Deferred
income taxes
|
—
|
7,615
|
||||||
Property
and equipment, net
|
14,916
|
15,858
|
||||||
Goodwill
|
59,764
|
53,156
|
||||||
Intangible
assets
|
65,941
|
62,672
|
||||||
|
$
|
3,802,582
|
$
|
3,400,364
|
||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
Liabilities:
|
||||||||
Loss
and loss expense reserves
|
$
|
1,154,615
|
$
|
1,091,944
|
||||
Unearned
premiums
|
960,432
|
871,779
|
||||||
Ceded
reinsurance premiums payable
|
144,501
|
75,032
|
||||||
Ceded
reinsurance premium payable – related party
|
93,390
|
86,165
|
||||||
Reinsurance
payable on paid losses
|
2,819
|
1,238
|
||||||
Funds
held under reinsurance treaties
|
620
|
690
|
||||||
Securities
sold but not yet purchased, at market
|
70,328
|
16,315
|
||||||
Securities
sold under agreements to repurchase, at contract value
|
238,252
|
172,774
|
||||||
Accrued
expenses and other current liabilities
|
165,797
|
180,325
|
||||||
Deferred
tax liability
|
4,194
|
—
|
||||||
Federal
tax payable
|
9,762
|
—
|
||||||
Derivatives
liabilities
|
220
|
1,893
|
||||||
Note
payable on collateral loan – related party
|
167,975
|
167,975
|
||||||
Non
interest bearing note payable – net of unamortized discount of
$922; $1,372
|
14,078
|
21,128
|
||||||
Term
loan
|
13,333
|
20,000
|
||||||
Junior
subordinated debt
|
123,714
|
123,714
|
||||||
Total
liabilities
|
3,164,030
|
2,830,972
|
||||||
Commitments
and contingencies
|
||||||||
Stockholders’
equity:
|
||||||||
Common
stock, $.01 par value; 100,000 shares authorized, 84,280 and 84,179 issued
in 2010 and 2009, respectively; 59,464 and 59,314 outstanding in 2010 and
2009, respectively
|
843
|
842
|
||||||
Preferred
stock, $.01 par value; 10,000 shares authorized
|
—
|
—
|
||||||
Additional
paid-in capital
|
546,015
|
543,977
|
||||||
Treasury
stock at cost; 24,816 and 24,866 shares in 2010 and 2009,
respectively
|
(300,278
|
)
|
(300,889
|
)
|
||||
Accumulated
other comprehensive loss
|
(11,716
|
)
|
(17,020
|
)
|
||||
Retained
earnings
|
403,688
|
342,482
|
||||||
Total
stockholders’ equity
|
638,552
|
569,392
|
||||||
|
$
|
3,802,582
|
$
|
3,400,364
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Revenues:
|
||||||||||||||||
Premium
income:
|
||||||||||||||||
Net
written premium
|
$
|
196,394
|
$
|
137,120
|
$
|
385,808
|
$
|
273,299
|
||||||||
Change
in unearned premium
|
(133
|
)
|
(317
|
)
|
(41,447
|
)
|
(4,073
|
)
|
||||||||
Net
earned premium
|
196,261
|
136,803
|
344,361
|
269,226
|
||||||||||||
Ceding
commission – primarily related party
|
32,958
|
32,278
|
65,206
|
59,869
|
||||||||||||
Service
and fee income
|
6,241
|
5,711
|
11,539
|
11,282
|
||||||||||||
Service
and fee income – related party
|
2,880
|
1,896
|
5,548
|
3,779
|
||||||||||||
Net
investment income
|
14,686
|
13,799
|
28,285
|
27,790
|
||||||||||||
Net
realized loss on investments
|
(6,544
|
)
|
(7,709
|
)
|
(4,759
|
)
|
(16,947
|
)
|
||||||||
Total
revenues
|
246,482
|
182,778
|
450,180
|
354,999
|
||||||||||||
Expenses:
|
||||||||||||||||
Loss
and loss adjustment expense
|
121,510
|
76,585
|
211,331
|
151,500
|
||||||||||||
Acquisition
costs and other underwriting expenses
|
79,579
|
64,587
|
140,925
|
122,741
|
||||||||||||
Other
|
9,336
|
5,774
|
15,570
|
10,968
|
||||||||||||
Total
expenses
|
210,425
|
146,946
|
367,826
|
285,209
|
||||||||||||
Income
before other income (expense), income taxes and equity in earnings (loss)
of unconsolidated subsidiaries
|
36,057
|
35,832
|
82,354
|
69,790
|
||||||||||||
Other
income (expenses):
|
||||||||||||||||
Foreign
currency gain
|
755
|
611
|
38
|
644
|
||||||||||||
Interest
expense
|
(3,063
|
)
|
(4,007
|
)
|
(6,635
|
)
|
(8,178
|
)
|
||||||||
Total
other expenses
|
(2,308
|
)
|
(3,396
|
)
|
(6,597
|
)
|
(7,534
|
)
|
||||||||
Income
before income taxes and equity in earnings (loss) of unconsolidated
subsidiaries
|
33,749
|
32,436
|
75,757
|
62,256
|
||||||||||||
Provision
for income taxes
|
8,839
|
5,448
|
24,007
|
10,704
|
||||||||||||
Income
before equity in earnings (loss) of unconsolidated
subsidiaries
|
24,910
|
26,988
|
51,750
|
51,552
|
||||||||||||
Equity
in earnings (loss) of unconsolidated subsidiaries – related
party
|
5,913
|
(217
|
)
|
17,773
|
(619
|
)
|
||||||||||
Net
Income
|
30,823
|
26,771
|
69,523
|
50,933
|
||||||||||||
Earnings
per common share:
|
||||||||||||||||
Basic
earnings per common share
|
$
|
0.52
|
$
|
0.45
|
$
|
1.17
|
$
|
0.86
|
||||||||
Diluted
earnings per common share
|
$
|
0.51
|
$
|
0.45
|
$
|
1.15
|
$
|
0.85
|
||||||||
Dividends
declared per common share
|
$
|
0.07
|
$
|
0.06
|
$
|
0.14
|
$
|
0.11
|
Net
realized loss on investments:
|
||||||||||||||||
Total
other-than-temporary impairment losses
|
$
|
(12,007
|
)
|
$
|
(10,786
|
)
|
$
|
(17,145
|
)
|
$
|
(12,213
|
)
|
||||
Portion
of loss recognized in other comprehensive income
|
—
|
—
|
—
|
—
|
||||||||||||
Net
impairment losses recognized in earnings
|
(12,007
|
)
|
(10,786
|
)
|
(17,145
|
)
|
(12,213
|
)
|
||||||||
Other
net realized gain (loss) on investments
|
5,463
|
3,077
|
12,386
|
(4,734
|
)
|
|||||||||||
Net
realized investment loss
|
$
|
(6,544
|
)
|
$
|
(7,709
|
)
|
$
|
(4,759
|
)
|
$
|
(16,947
|
)
|
Six Months Ended June 30,
|
||||||||
(in
thousands)
|
2010
|
2009
|
||||||
Cash
flows from operating activities:
|
||||||||
Net
income from continuing operations
|
$
|
69,523
|
$
|
50,933
|
||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
Depreciation
and amortization
|
7,945
|
4,415
|
||||||
Equity
earnings and gain on investment in unconsolidated
subsidiaries
|
(17,773
|
)
|
-
|
|||||
Realized
loss (gain) on marketable securities
|
(12,386
|
)
|
4,734
|
|||||
Non-cash
write-down of marketable securities
|
17,145
|
12,213
|
||||||
Discount
on notes payable
|
450
|
596
|
||||||
Stock
compensation expense
|
1,860
|
1,812
|
||||||
Bad
debt expense
|
3,510
|
1,951
|
||||||
Foreign
currency (gain)
|
(38
|
)
|
(644
|
)
|
||||
Changes
in assets - (increase) decrease:
|
||||||||
Premium
and notes receivable
|
(162,419
|
)
|
33,890
|
|||||
Reinsurance
recoverable
|
(10,869
|
)
|
18,004
|
|||||
Reinsurance
recoverable – related party
|
(42,347
|
)
|
(44,775
|
)
|
||||
Deferred
policy acquisition costs, net
|
(42,340
|
)
|
(33,516
|
)
|
||||
Prepaid
reinsurance premiums
|
(18,052
|
)
|
(7,149
|
)
|
||||
Prepaid
reinsurance premiums – related party
|
(17,855
|
)
|
7,659
|
|||||
Prepaid
expenses and other assets
|
(739
|
)
|
9,850
|
|||||
Deferred
tax asset
|
(4,170
|
)
|
27,117
|
|||||
Changes
in liabilities - increase (decrease):
|
||||||||
Reinsurance
premium payable
|
69,469
|
(9,294
|
)
|
|||||
Reinsurance
premium payable – related party
|
25,011
|
(13,283
|
)
|
|||||
Loss
and loss expense reserve
|
62,671
|
43,587
|
||||||
Unearned
premiums
|
88,653
|
7,927
|
||||||
Funds
held under reinsurance treaties
|
(70
|
)
|
77
|
|||||
Accrued
expenses and other current liabilities
|
(10,896
|
)
|
(3,270
|
)
|
||||
Net
cash provided by operating activities
|
6,283
|
|
112,834
|
|||||
Cash
flows from investing activities:
|
||||||||
Net
sales (purchases) of securities with fixed maturities
|
95,734
|
36,935
|
||||||
Net
(purchases) sales of equity securities
|
4,502
|
(4,615
|
)
|
|||||
Net
sales of other investments
|
(577
|
)
|
441
|
|||||
Investment
in ACAC
|
(53,055
|
)
|
-
|
|||||
Acquisition
of subsidiaries, net of cash obtained
|
(3,553
|
)
|
-
|
|||||
Acquisition
of renewal rights and goodwill
|
-
|
(910
|
)
|
|||||
Purchase
of property and equipment
|
(1,677
|
)
|
(1,833
|
)
|
||||
Net
cash provided by investing activities
|
41,374
|
30,018
|
||||||
Cash
flows from financing activities:
|
||||||||
Repurchase
agreements, net
|
65,478
|
(53,887
|
)
|
|||||
Term
loan payment
|
(6,667
|
)
|
(6,666
|
)
|
||||
Non-interest
bearing note payment
|
(7,500
|
)
|
(7,500
|
)
|
||||
Repurchase
of common stock
|
-
|
(5,492
|
)
|
|||||
Stock
option exercise
|
790
|
95
|
||||||
Dividends
distributed on common stock
|
(7,713
|
)
|
(5,970
|
)
|
||||
Net
cash provided by (used in) financing activities
|
44,388
|
(79,420
|
)
|
|||||
Effect
of exchange rate changes on cash
|
(9,446
|
)
|
2,387
|
|||||
Net increase
in cash and cash equivalents
|
82,599
|
65,819
|
||||||
Cash
and cash equivalents, beginning of the period
|
233,810
|
192,053
|
||||||
Cash
and cash equivalents, end of the period
|
$
|
316,409
|
$
|
257,872
|
||||
Supplemental
Cash Flow Information:
|
||||||||
Income
tax payments
|
$
|
7,258
|
$
|
9,098
|
||||
Interest
payments on debt
|
8,434
|
8,296
|
1.
|
Basis of
Reporting
|
2.
|
Recent Accounting
Pronouncements
|
3.
|
Investments
|
(Amounts
in thousands)
|
Original or
amortized cost
|
Gross
unrealized
gains
|
Gross
unrealized
losses
|
Market
value
|
||||||||||||
Preferred
stock
|
$
|
5,621
|
$
|
—
|
$
|
(509
|
)
|
$
|
5,112
|
|||||||
Common
stock
|
48,932
|
3,067
|
(11,174
|
)
|
40,825
|
|||||||||||
U.S.
treasury securities
|
32,170
|
1,568
|
—
|
33,738
|
||||||||||||
U.S.
government agencies
|
41,506
|
750
|
—
|
42,256
|
||||||||||||
Municipal
bonds
|
32,844
|
1,263
|
(2
|
)
|
34,105
|
|||||||||||
Corporate
bonds and other bonds:
|
||||||||||||||||
Finance
|
423,248
|
9,265
|
(21,704
|
)
|
410,809
|
|||||||||||
Industrial
|
49,414
|
2,889
|
(698
|
)
|
51,605
|
|||||||||||
Utilities
|
25,006
|
1,210
|
(16
|
)
|
26,200
|
|||||||||||
Commercial
mortgage backed securities
|
2,102
|
93
|
-
|
2,195
|
||||||||||||
Residential
mortgage backed securities:
|
||||||||||||||||
Agency
backed
|
430,619
|
20,224
|
-
|
450,843
|
||||||||||||
Non-agency
backed
|
7,985
|
596
|
(9
|
)
|
8,572
|
|||||||||||
Asset-backed
securities
|
2,933
|
216
|
-
|
3,149
|
||||||||||||
$
|
1,102,380
|
$
|
41,141
|
$
|
(34,112
|
)
|
$
|
1,109,409
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
(Amounts
in thousands)
|
2010
|
2009
|
2010
|
2009
|
||||||||||||
Fixed
maturities
|
$
|
11,666
|
$
|
11,582
|
$
|
23,370
|
$
|
23,464
|
||||||||
Equity
securities
|
32
|
163
|
359
|
351
|
||||||||||||
Cash
and cash equivalents
|
1,910
|
1,768
|
2755
|
3,572
|
||||||||||||
Note
receivable - related party
|
1,204
|
821
|
2,049
|
1,633
|
||||||||||||
14,812
|
14,334
|
28,533
|
29,020
|
|||||||||||||
Less:
Investment expenses and interest expense on securities sold under
agreement to repurchase
|
126
|
535
|
248
|
1,230
|
||||||||||||
$
|
14,686
|
$
|
13,799
|
$
|
28,285
|
$
|
27,790
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
(Amounts
in thousands)
|
2010
|
2009
|
2010
|
2009
|
||||||||||||
Equity
securities
|
$
|
1,467
|
$
|
8,761
|
$
|
6,605
|
$
|
10,188
|
||||||||
Fixed
maturities
|
10,540
|
2,025
|
10,540
|
2,025
|
||||||||||||
$
|
12,007
|
$
|
10,786
|
$
|
17,145
|
$
|
12,213
|
Less Than 12 Months
|
12 Months or More
|
Total
|
||||||||||||||||||||||||||||||
(Amounts
in thousands)
|
Fair
Market
Value
|
Unrealized
Losses
|
No. of
Positions
Held
|
Fair
Market
Value
|
Unrealized
Losses
|
No. of
Positions
Held
|
Fair
Market
Value
|
Unrealized
Losses
|
||||||||||||||||||||||||
Common
and preferred stock
|
$
|
21,198
|
$
|
(9,215
|
)
|
23
|
$
|
7,696
|
$
|
(2,468
|
)
|
87
|
$
|
28,894
|
$
|
(11,683
|
)
|
|||||||||||||||
Municipal
bonds
|
—
|
—
|
350
|
(2
|
)
|
1
|
350
|
(2
|
)
|
|||||||||||||||||||||||
Corporate
bonds:
|
||||||||||||||||||||||||||||||||
Finance
|
51,877
|
(1,230
|
)
|
13
|
172,249
|
(20,474
|
)
|
38
|
224,126
|
(21,704
|
)
|
|||||||||||||||||||||
Industrial
|
16,995
|
(698
|
)
|
3
|
—
|
—
|
1
|
16,995
|
(698
|
)
|
||||||||||||||||||||||
Utilities
|
—
|
—
|
—
|
2,065
|
(16
|
)
|
2
|
2,065
|
(16
|
)
|
||||||||||||||||||||||
Residential
mortgage backed securities:
|
||||||||||||||||||||||||||||||||
Non-agency
backed
|
—
|
—
|
—
|
22
|
(9
|
)
|
1
|
22
|
(9
|
)
|
||||||||||||||||||||||
Total
temporarily impaired
|
$
|
90,070
|
$
|
(11,143
|
)
|
39
|
$
|
182,382
|
$
|
(22,969
|
)
|
130
|
$
|
272,452
|
$
|
(34,112
|
)
|
|
Remaining Life of Notional Amount
(1)
|
|||||||||||||||||||
(Amounts in thousands)
|
One Year
|
Two Through
Five Years
|
Six Through
Ten Years
|
After Ten
Years
|
Total
|
|||||||||||||||
Interest
rate swaps
|
$ | — | $ | 13,333 | $ | — | $ | — | $ | 13,333 | ||||||||||
Credit
default swaps
|
— | 2,000 | — | — | 2,000 | |||||||||||||||
|
$ | — | $ | 15,333 | $ | — | $ | — | $ | 15,333 |
(1)
|
Notional amount is not
representative of either market risk or credit risk and is not recorded in
the consolidated balance
sheet.
|
4.
|
Fair Value of Financial
Instruments
|
(Amounts in thousands)
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
Assets:
|
||||||||||||||||
U.S.
treasury securities
|
$
|
33,738
|
$
|
33,738
|
$
|
-
|
$
|
-
|
||||||||
U.S.
government agencies
|
42,256
|
-
|
42,256
|
-
|
||||||||||||
Municipal
bonds
|
34,105
|
-
|
34,105
|
-
|
||||||||||||
Corporate
bonds and other bonds:
|
||||||||||||||||
Finance
|
410,809
|
-
|
410,809
|
-
|
||||||||||||
Industrial
|
51,605
|
-
|
51,605
|
-
|
||||||||||||
Utilities
|
26,200
|
-
|
26,200
|
-
|
||||||||||||
Commercial
mortgage backed securities
|
2,195
|
-
|
2,195
|
-
|
||||||||||||
Residential
mortgage backed securities:
|
||||||||||||||||
Agency
backed
|
450,843
|
-
|
450,843
|
-
|
||||||||||||
Non-agency
backed
|
8,572
|
-
|
8,572
|
-
|
||||||||||||
Asset-backed
securities
|
3,149
|
-
|
3,149
|
-
|
||||||||||||
Equity
securities
|
45,937
|
45,937
|
-
|
-
|
||||||||||||
Short
term investment
|
990
|
990
|
||||||||||||||
Other
investments
|
13,323
|
-
|
-
|
13,323
|
||||||||||||
$
|
1,123,722
|
$
|
80,665
|
$
|
1,029,734
|
$
|
13,323
|
|||||||||
Liabilities:
|
||||||||||||||||
Equity
securities sold but not yet purchased, market
|
$
|
1,040
|
$
|
1,040
|
$
|
-
|
$
|
-
|
||||||||
Fixed
maturity securities sold but not yet purchased, market
|
69,288
|
52,328
|
16,960
|
-
|
||||||||||||
Securities
sold under agreements to repurchase, at contract value
|
238,252
|
-
|
238,252
|
-
|
||||||||||||
Derivatives
|
220
|
-
|
-
|
220
|
||||||||||||
|
$
|
308,800
|
$
|
53,368
|
$
|
255,212
|
$
|
220
|
(Amounts
in thousands)
|
Assets
|
Liabilities
|
Total
|
|||||||||
Beginning
balance as of April 1, 2010
|
$
|
14,019
|
$
|
(353
|
)
|
$
|
13,666
|
|||||
Total
net gains (losses) included in:
|
||||||||||||
Net
income
|
-
|
133
|
133
|
|||||||||
Other
comprehensive loss
|
(685
|
)
|
-
|
(685
|
)
|
|||||||
Purchases
and issuances
|
108
|
-
|
108
|
|||||||||
Sales
and settlements
|
(119
|
)
|
-
|
(119
|
)
|
|||||||
Net
transfers into (out of) Level 3
|
-
|
-
|
-
|
|||||||||
Ending
balance as of June 30, 2010
|
$
|
13,323
|
$
|
(220
|
)
|
$
|
13,103
|
(Amounts
in thousands)
|
Assets
|
Liabilities
|
Total
|
|||||||||
Beginning
balance as of January 1, 2010
|
$
|
12,746
|
$
|
(1,893
|
)
|
$
|
10,853
|
|||||
Total
net gains (losses) included in:
|
||||||||||||
Net
income
|
277
|
133
|
410
|
|||||||||
Other
comprehensive loss
|
296
|
-
|
296
|
|||||||||
Purchases
and issuances
|
123
|
-
|
123
|
|||||||||
Sales
and settlements
|
(119
|
)
|
1,540
|
1,421
|
||||||||
Net
transfers into (out of) Level 3
|
-
|
-
|
-
|
|||||||||
Ending
balance as of June 30, 2010
|
$
|
13,323
|
$
|
(220
|
)
|
$
|
13,103
|
(Amounts
in thousands)
|
Assets
|
Liabilities
|
Total
|
|||||||||
Beginning
balance as of April 1, 2009
|
$
|
19,145
|
$
|
(982
|
)
|
$
|
18,163
|
|||||
Total
net gains (losses) included in:
|
||||||||||||
Net
income
|
15
|
(139
|
)
|
(124
|
)
|
|||||||
Other
comprehensive loss
|
-
|
-
|
-
|
|||||||||
Purchases
and issuances
|
-
|
-
|
-
|
|||||||||
Sales
and settlements
|
(403
|
)
|
(1,199
|
)
|
(1,602
|
)
|
||||||
Net
transfers into (out of) Level 3
|
-
|
-
|
-
|
|||||||||
Ending
balance as of June 30, 2009
|
$
|
18,757
|
$
|
(2,320
|
)
|
$
|
16,437
|
(Amounts
in thousands)
|
Assets
|
Liabilities
|
Total
|
|||||||||
Beginning
balance as of January 1, 2009
|
$
|
21,352
|
$
|
(1,439
|
)
|
$
|
19,913
|
|||||
Total
net gains (losses) included in:
|
||||||||||||
Net
income
|
(39
|
)
|
(123
|
)
|
(162
|
)
|
||||||
Other
comprehensive loss
|
-
|
-
|
-
|
|||||||||
Purchases
and issuances
|
138
|
138
|
||||||||||
Sales
and settlements
|
(2,694
|
)
|
(758
|
)
|
(3,452
|
)
|
||||||
Net
transfers into (out of) Level 3
|
-
|
-
|
-
|
|||||||||
Ending
balance as of June 30, 2009
|
$
|
18,757
|
$
|
(2,320
|
)
|
$
|
16,437
|
•
|
Equity and
Fixed Income Investments: Fair value disclosures for these
investments are disclosed above in this note. The carrying values of cash,
short term investments and investment income accrued approximate their
fair values;
|
•
|
Premiums
Receivable: The
carrying values reported in the accompanying balance sheets for these
financial instruments approximate their fair values due to the short term
nature of the asset; and
|
•
|
Subordinated
Debentures and Debt:
The carrying values reported in the accompanying balance sheets for these
financial instruments approximate fair value. Fair value was estimated
using projected cash flows, discounted at rates currently being offered
for similar notes.
|
5.
|
Debt
|
Aggregate
|
|||||||||||||||||
Liquidation
|
Aggregate
|
Per
|
|||||||||||||||
Amount of
|
Liquidation
|
Aggregate
|
Annum
|
||||||||||||||
(Amounts in thousands)
|
Trust
|
Amount of
|
Principal
|
Stated
|
Interest
|
||||||||||||
Preferred
|
Common
|
Amount
|
Maturity
|
Rate of
|
|||||||||||||
Name of Trust
|
Securities
|
Securities
|
of Notes
|
of Notes
|
Notes
|
||||||||||||
AmTrust
Capital Financing Trust I
|
$
|
25,000
|
$
|
774
|
$
|
25,774
|
3/17/2035
|
8.275
|
%(1)
|
||||||||
AmTrust
Capital Financing Trust II
|
25,000
|
774
|
25,774
|
6/15/2035
|
7.710
|
(1)
|
|||||||||||
AmTrust
Capital Financing Trust III
|
30,000
|
928
|
30,928
|
9/15/2036
|
8.830
|
(2)
|
|||||||||||
AmTrust
Capital Financing Trust IV
|
40,000
|
1,238
|
41,238
|
3/15/2037
|
7.930
|
(3)
|
|||||||||||
Total
trust preferred securities
|
$
|
120,000
|
$
|
3,714
|
$
|
123,714
|
(1)
|
The interest rate will change to
three-month LIBOR plus 3.40% after the tenth anniversary in
2015.
|
(2)
|
The interest rate will change to
LIBOR plus 3.30% after the fifth anniversary in
2011.
|
(3)
|
The interest rate will change to
LIBOR plus 3.00% after the fifth anniversary in
2012.
|
(Amounts
in thousands)
|
2010
|
2011
|
2012
|
2013
|
2014
|
Thereafter
|
||||||||||||||||||
Junior
subordinated debt
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
123,714
|
||||||||||||
Term
loan
|
6,666
|
6,667
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Promissory
note
|
—
|
6,716
|
7,362
|
—
|
—
|
—
|
||||||||||||||||||
Total
|
$
|
6,666
|
$
|
13,383
|
$
|
7,362
|
$
|
—
|
$
|
—
|
$
|
123,714
|
6.
|
Acquisition
Costs and Other Underwriting
Expenses
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
(Amounts
in thousands)
|
2010
|
2009
|
2010
|
2009
|
||||||||||||
Policy
acquisition expenses
|
$
|
50,122
|
$
|
34,776
|
$
|
75,413
|
$
|
64,024
|
||||||||
Salaries
and benefits
|
23,062
|
20,660
|
48,415
|
39,941
|
||||||||||||
Other
insurance general and administrative expense
|
6,395
|
9,151
|
17,097
|
18,776
|
||||||||||||
$
|
79,579
|
$
|
64,587
|
$
|
140,925
|
$
|
122,741
|
7.
|
Earnings Per
Share
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
(Amounts
in thousands except per share)
|
2010
|
2009
|
2010
|
2009
|
||||||||||||
Basic
earnings per share:
|
||||||||||||||||
Net
income
|
$
|
30,823
|
$
|
26,771
|
$
|
69,523
|
$
|
50,933
|
||||||||
Less:
Net income allocated to participating securities
|
26
|
-
|
32
|
-
|
||||||||||||
Net
income allocated to common shareholders
|
$
|
30,797
|
$
|
26,771
|
$
|
69,491
|
$
|
50,933
|
||||||||
Weighted
average shares outstanding – basic
|
59,486
|
59,338
|
59,412
|
59,551
|
||||||||||||
Less:
Weighted average participating shares outstanding
|
50
|
-
|
27
|
-
|
||||||||||||
Weighted
average common shares outstanding – basic
|
59,436
|
59,338
|
59,385
|
59,551
|
||||||||||||
Net
income per common share - basic
|
$
|
0.52
|
$
|
0.45
|
$
|
1.17
|
$
|
0.86
|
||||||||
Diluted
earnings per share:
|
||||||||||||||||
Net
income
|
$
|
30,823
|
$
|
26,771
|
$
|
69,523
|
$
|
50,933
|
||||||||
Less:
Net income allocated to participating securities
|
26
|
-
|
32
|
-
|
||||||||||||
Net
income allocated to common shareholders
|
$
|
30,797
|
$
|
26,771
|
$
|
69,491
|
$
|
50,933
|
||||||||
Weighted
average common shares outstanding – basic
|
59,436
|
59,338
|
59,385
|
59,551
|
||||||||||||
Plus:
Dilutive effect of stock options, other
|
920
|
397
|
887
|
312
|
||||||||||||
Weighted
average common shares outstanding – dilutive
|
60,356
|
59,735
|
60,272
|
59,863
|
||||||||||||
Net
income per common share - diluted
|
$
|
0.51
|
$
|
0.45
|
$
|
1.15
|
$
|
0.85
|
8.
|
Share Based
Compensation
|
2010
|
2009
|
|||||||||||||||
(Amounts
in thousands except per share)
|
Number of
Shares
|
Amount per
Share
|
Number of
Shares
|
Amount per
Share
|
||||||||||||
Outstanding
beginning of period
|
4,168
|
$
|
7.00-15.02
|
3,728
|
$
|
7.00-15.02
|
||||||||||
Granted
|
141
|
12.82-14.25
|
423
|
8.99-11.40
|
||||||||||||
Exercised
|
(101
|
)
|
7.50
|
(13
|
)
|
7.50
|
||||||||||
Cancelled
or terminated
|
(32
|
)
|
7.50-14.55
|
(86
|
)
|
7.50-14.55
|
||||||||||
Outstanding
end of period
|
4,176
|
$
|
7.00-15.02
|
4,052
|
$
|
7.00-15.02
|
9.
|
Comprehensive
Income
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
(Amounts
in thousands)
|
2010
|
2009
|
2010
|
2009
|
||||||||||||
Net
income
|
$
|
30,823
|
$
|
26,771
|
$
|
69,523
|
$
|
50,933
|
||||||||
Unrealized
holding gain (loss)
|
1,999
|
|
46,960
|
14,151
|
40,404
|
|||||||||||
Foreign
currency translation
|
(3,300
|
)
|
3,963
|
(8,847
|
)
|
3,123
|
||||||||||
Comprehensive
income
|
$
|
29,522
|
$
|
77,694
|
$
|
74,827
|
94,460
|
10.
|
Income
Taxes
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
(Amounts
in thousands)
|
2010
|
2009
|
2010
|
2009
|
||||||||||||
Income
before provision for income taxes, equity in earnings of unconsolidated
subsidiaries
|
$
|
33,749
|
$
|
32,436
|
$
|
75,757
|
$
|
62,256
|
||||||||
Equity
in earnings (loss) of unconsolidated subsidiaries
|
5,913 | (217 | ) | 17,773 | (619 | ) | ||||||||||
$
|
39,662 |
$
|
32,219 |
$
|
93,530 |
$
|
61,637 | |||||||||
Income
taxes at statutory rates
|
$
|
13,882
|
$
|
11,277
|
$
|
32,736
|
$
|
21,573
|
||||||||
Effect
of income not subject to U.S. taxation
|
(5,724
|
)
|
(4,675
|
)
|
(8,969
|
)
|
(9,888
|
)
|
||||||||
Other,
net
|
681
|
(1,154
|
)
|
240
|
(981
|
)
|
||||||||||
Provision
for income taxes as shown on the Condensed Consolidated Statements of
Income
|
$
|
8,839
|
$
|
5,448
|
$
|
24,007
|
$
|
10,704
|
||||||||
GAAP
effective tax rate
|
22.3
|
%
|
16.9
|
%
|
25.7
|
%
|
17.4
|
%
|
11.
|
Related Party
Transactions
|
(Amounts
in thousands)
|
As of June 30, 2010
|
As of December 31, 2009
|
||||||
Assets
and liabilities:
|
||||||||
Reinsurance
recoverable
|
$
|
335,973
|
293,626
|
|||||
Prepaid
reinsurance premium
|
279,983
|
262,128
|
||||||
Ceded
reinsurance premiums payable
|
(93,390
|
)
|
(86,165
|
)
|
||||
Note
payable
|
(167,975
|
)
|
(167,975
|
)
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
(Amounts
in thousands)
|
2010
|
2009
|
2010
|
2009
|
||||||||||||
Results
of operations:
|
||||||||||||||||
Premium
written - ceded
|
$
|
(112,465
|
)
|
$
|
(90,079
|
)
|
$
|
(226,557
|
)
|
$
|
(177,559
|
)
|
||||
Change
in unearned premium - ceded
|
6,166
|
2,218
|
17,855
|
(4,753
|
)
|
|||||||||||
Earned
premium - ceded
|
$
|
(106,299
|
)
|
$
|
(87,861
|
)
|
$
|
(208,702
|
)
|
$
|
(182,312
|
)
|
||||
Ceding
commission on premium written
|
$
|
36,124
|
$
|
27,570
|
$
|
71,104
|
$
|
55,123
|
||||||||
Ceding
commission – deferred
|
2,925
|
3,960
|
5,898
|
3,525
|
||||||||||||
Ceding
commission - earned
|
$
|
33,199
|
$
|
31,530
|
$
|
65,206
|
$
|
58,648
|
||||||||
Incurred
loss and loss adjustment expense - ceded
|
$
|
64,274
|
$
|
66,908
|
$
|
135,446
|
$
|
138,113
|
||||||||
Interest
expense
|
25
|
554
|
507
|
1,124
|
(i)
|
the Company provides ACAC and its
affiliates information technology development services at a price of cost
plus 20%. In addition, once a new system to be developed by the Company is
implemented and ACAC or its affiliates begin using the system in its
operations, the Company will be entitled to an additional fee for use of
the systems in the amount of 1.25% of gross premiums of ACAC and its
affiliates. The Company recorded approximately $407 and $622 of fee income
for the three and six months ended June 30, 2010, respectively, related to
this agreement. The terms and conditions of the above are subject to
regulatory approval.
|
(ii)
|
the
Company manages the assets of ACAC and its subsidiaries for an annual fee
equal to 0.20% of the average aggregate value of the assets under
management for the preceding quarter if the average aggregate value for
the preceding quarter is $1,000,000 or less and 0.15% of the average
aggregate value of the assets under management for the preceding quarter
if the average aggregate value for that quarter is more than $1,000,000.
As a result of this agreement, the Company earned approximately $442 and
$583 of investment management fees for the three and six months ended June
30, 2010.
|
(iii)
|
ACAC
is providing the Company with access to its agency sales force to
distribute the Company’s products, and ACAC will use its best efforts to
have said agency sales team appointed as the Company’s
agents.
|
(iv)
|
ACAC
will grant the Company a right of first refusal to purchase or to reinsure
commercial auto insurance business acquired from GMAC in connection with
the Acquisition.
|
(v)
|
the
Company, effective March 1, 2010, reinsures 10% of the net premiums of the
GMAC Business, pursuant to a 50% quota share reinsurance agreement
(“Personal Lines Quota Share”) with the GMAC Insurers , as cedents, and
the Company, MK Re, Ltd., a Bermuda reinsurer which is a wholly-owned
indirect subsidiary of the Trust, and Maiden Insurance Company, Ltd., as
reinsurers. The Company has a 20% participation in the Personal Lines
Quota Share, by which it receives 10% of net premiums of the personal
lines business. The Personal Lines Quota share provides that the
reinsurers, severally, in accordance with their participation percentages,
shall receive 50% of the net premium of the GMAC Insurers and assume 50%
of the related net losses. The Personal Lines Quota Share has an initial
term of three years and shall renew automatically for successive three
year terms unless terminated by written notice not less than nine months
prior to the expiration of the current term. Notwithstanding the
foregoing, the Company’s participation in the Personal Lines Quota Share
may be terminated by the GMAC Insurers on 60 days written notice in the
event the Company becomes insolvent, is placed into receivership, its
financial condition is impaired by 50% of the amount of its surplus at the
inception of the Personal Lines Quota Share or latest anniversary,
whichever is greater, is subject to a change of control, or ceases writing
new and renewal business. The GMAC Insurers also may terminate the
agreement on nine months written notice following the effective date of
initial public offering or private placement of stock by ACAC or a
subsidiary. The Company may terminate its participation in the Personal
Lines Quota Share on 60 days written notice in the event the GMAC
Insurers are subject to a change of control, cease writing new and
renewal business, effect a reduction in their net retention without the
Company’s consent or fail to remit premium as required by the terms of the
Personal Lines Quota Share. The Personal Lines Quota Share provides that
the reinsurers pay a provisional ceding commission equal to 32.5% of ceded
earned premium, net of premiums ceded by the personal lines companies for
inuring reinsurance, subject to adjustment. The ceding commission is
subject to adjustment to a maximum of 34.5% if the loss ratio for the
reinsured business is 60.5% or less and a minimum of 30.5% if the loss
ratio is 64.5% or higher. As a result of this agreement, the Company
assumed $25,860 and $34,560 of business from the GMAC Insurers during the
three and six months ended June 30, 2010. The terms and conditions of the
above are subject to final regulatory approval, which is
pending.
|
12.
|
Acquisitions
|
13.
|
Contingent
Liabilities
|
14.
|
Segments
|
(Amounts
in thousands)
|
Small
Commercial
Business
|
Specialty Risk
and Extended
Warranty
|
Specialty
Program
|
Personal
Lines
Reinsurance
|
Corporate
and Other
|
Total
|
||||||||||||||||||
Three
months ended June 30, 2010:
|
||||||||||||||||||||||||
Gross
written premium
|
$
|
107,600
|
$
|
197,470
|
$
|
77,712
|
$
|
25,860
|
$
|
—
|
$
|
408,642
|
||||||||||||
Net
written premium
|
56,052
|
74,216
|
40,266
|
25,860
|
—
|
196,394
|
||||||||||||||||||
Change
in unearned premium
|
9,208
|
12,371
|
(5,205
|
)
|
(16,507
|
)
|
—
|
(133
|
)
|
|||||||||||||||
Net
earned premium
|
65,260
|
86,587
|
35,061
|
9,353
|
—
|
196,261
|
||||||||||||||||||
Ceding
commission - primarily related party
|
12,954
|
12,927
|
7,077
|
—
|
—
|
32,958
|
||||||||||||||||||
Loss
and loss adjustment expense
|
(39,347
|
)
|
(54,064
|
)
|
(22,253
|
)
|
(5,846
|
)
|
—
|
(121,510
|
)
|
|||||||||||||
Acquisition
costs and other underwriting expenses
|
(30,541
|
)
|
(29,338
|
)
|
(16,660
|
)
|
(3,040
|
)
|
—
|
(79,579
|
)
|
|||||||||||||
(69,888
|
)
|
(83,402
|
)
|
(38,913
|
)
|
(8,886
|
)
|
—
|
(201,089
|
)
|
||||||||||||||
Underwriting
income
|
8,326
|
16,112
|
3,225
|
467
|
—
|
28,130
|
||||||||||||||||||
Service
and fee income
|
2,978
|
3,261
|
—
|
—
|
2,882
|
9,121
|
||||||||||||||||||
Investment
income and realized gain (loss)
|
3,096
|
2,584
|
1,873
|
589
|
—
|
8,142
|
||||||||||||||||||
Other
expenses
|
(2,933
|
)
|
(3,736
|
)
|
(1,967
|
)
|
(700
|
)
|
—
|
(9,336
|
)
|
|||||||||||||
Interest
expense
|
(928
|
)
|
(1,174
|
)
|
(689
|
)
|
(272
|
)
|
—
|
(3,063
|
)
|
|||||||||||||
Foreign
currency loss
|
—
|
755
|
—
|
—
|
—
|
755
|
||||||||||||||||||
Provision
for income taxes
|
(2,737
|
)
|
(4,692
|
)
|
(627
|
)
|
(23
|
)
|
(760
|
)
|
(8,839
|
)
|
||||||||||||
Equity
in earnings of unconsolidated subsidiaries – related party
|
—
|
—
|
—
|
—
|
5,913
|
5,913
|
||||||||||||||||||
Net
income
|
$
|
7,802
|
$
|
13,110
|
$
|
1,815
|
$
|
61
|
$
|
8,035
|
30,823
|
(Amounts in thousands)
|
Small
Commercial
Business
|
Specialty Risk
and Extended
Warranty
|
Specialty
Program
|
Corporate
and Other
|
Total
|
|||||||||||||||
Three
months ended June 30, 2009:
|
||||||||||||||||||||
Gross
written premium
|
$
|
109,141
|
$
|
92,635
|
$
|
68,453
|
$
|
—
|
$
|
270,229
|
||||||||||
Net
Written Premium
|
54,332
|
47,254
|
35,534
|
—
|
137,120
|
|||||||||||||||
Change
in unearned premium
|
7,165
|
(3,310
|
)
|
(4,172
|
)
|
—
|
(317)
|
|||||||||||||
Net
Earned Premium
|
61,497
|
43,944
|
31,362
|
—
|
136,803
|
|||||||||||||||
Ceding
commission – primarily related party
|
17,091
|
6,175
|
9,012
|
—
|
32,278
|
|||||||||||||||
Loss
and loss adjustment expense
|
(37,090
|
)
|
(19,525
|
)
|
(19,970
|
)
|
—
|
(76,585
|
)
|
|||||||||||
Acquisition
costs and other underwriting expenses
|
(34,105
|
)
|
(12,314
|
)
|
(18,168
|
)
|
—
|
(64,587
|
)
|
|||||||||||
(71,195
|
)
|
(31,839
|
)
|
(38,138
|
)
|
—
|
(141,172
|
)
|
||||||||||||
Underwriting
income
|
7,393
|
18,280
|
2,236
|
—
|
27,909
|
|||||||||||||||
Service
and fee income
|
3,207
|
2,547
|
—
|
1,853
|
7,607
|
|||||||||||||||
Investment
income and realized gain (loss)
|
3,081
|
1,722
|
1,288
|
—
|
6,091
|
|||||||||||||||
Other
expense
|
(2,356
|
)
|
(1,974
|
)
|
(1,444
|
)
|
—
|
(5,774
|
)
|
|||||||||||
Interest
expense
|
(1,604
|
)
|
(1,390
|
)
|
(1,013
|
)
|
—
|
(4,007
|
)
|
|||||||||||
Foreign
currency gain
|
—
|
611
|
—
|
—
|
611
|
|||||||||||||||
Provision
for income taxes
|
(1,644
|
)
|
(3,310
|
)
|
(188
|
)
|
(307
|
)
|
(5,449
|
)
|
||||||||||
Equity
in earnings of unconsolidated subsidiary – related party
|
—
|
—
|
—
|
(217
|
)
|
(217
|
)
|
|||||||||||||
Net
income
|
$
|
8,077
|
$
|
16,486
|
$
|
879
|
$
|
1,329
|
$
|
26,771
|
(Amounts in thousands)
|
Small
Commercial
Business
|
Specialty Risk
and Extended
Warranty
|
Specialty
Program
|
Personal
Lines
Reinsurance
|
Corporate
and Other
|
Total
|
||||||||||||||||||
Six
months ended June 30, 2010:
|
||||||||||||||||||||||||
Gross
written premium
|
$
|
230,302
|
$
|
349,644
|
$
|
132,367
|
$
|
34,560
|
$
|
—
|
$
|
746,873
|
||||||||||||
Net
written premium
|
117,490
|
160,265
|
73,493
|
34,560
|
—
|
385,808
|
||||||||||||||||||
Change
in unearned premium
|
7,374
|
(21,914
|
)
|
(1,700
|
)
|
(25,207
|
)
|
—
|
(41,447
|
)
|
||||||||||||||
Net
earned premium
|
124,864
|
138,351
|
71,793
|
9,353
|
—
|
344,361
|
||||||||||||||||||
Ceding
commission - primarily related party
|
34,180
|
20,830
|
10,196
|
—
|
—
|
65,206
|
||||||||||||||||||
Loss
and loss adjustment expense
|
(74,435
|
)
|
(85,224
|
)
|
(45,826
|
)
|
(5,846
|
)
|
—
|
(211,331
|
)
|
|||||||||||||
Acquisition
costs and other underwriting expenses
|
(64,722
|
)
|
(44,049
|
)
|
(29,114
|
)
|
(3,040
|
)
|
—
|
(140,925
|
)
|
|||||||||||||
(139,157
|
)
|
(129,273
|
)
|
(74,940
|
)
|
8,886
|
—
|
(352,256
|
)
|
|||||||||||||||
Underwriting
income
|
19,887
|
29,908
|
7,049
|
467
|
—
|
57,311
|
||||||||||||||||||
Service
and fee income
|
5,552
|
5,987
|
—
|
—
|
5,548
|
17,087
|
||||||||||||||||||
Investment
income and realized gain (loss)
|
9,752
|
7,867
|
5,102
|
805
|
—
|
23,526
|
||||||||||||||||||
Other
expenses
|
(5,125
|
)
|
(6,583
|
)
|
(2,983
|
)
|
(879
|
)
|
—
|
(15,570
|
)
|
|||||||||||||
Interest
expense
|
(2,185
|
)
|
(2,805
|
)
|
(1,271
|
)
|
(374
|
)
|
—
|
(6,635
|
)
|
|||||||||||||
Foreign
currency loss
|
—
|
38
|
—
|
—
|
—
|
38
|
||||||||||||||||||
Provision
for income taxes
|
(8,835
|
)
|
(10,905
|
)
|
(2,503
|
)
|
(6
|
)
|
(1,758
|
)
|
(24,007
|
)
|
||||||||||||
Equity
in earnings of unconsolidated subsidiaries – related party
|
—
|
—
|
—
|
—
|
17,773
|
17,773
|
||||||||||||||||||
Net
income
|
$
|
19,046
|
$
|
23,507
|
$
|
5,394
|
$
|
13
|
$
|
21,563
|
69,523
|
(Amounts
in thousands)
|
Small
Commercial
Business
|
Specialty
Risk
and
Extended
Warranty
|
Specialty
Program
|
Corporate
and
Other
|
Total
|
|||||||||||||||
Six
months ended June 30, 2009:
|
||||||||||||||||||||
Gross
written premium
|
$
|
236,611
|
$
|
175,343
|
$
|
125,802
|
$
|
—
|
$
|
537,756
|
||||||||||
Net
Written Premium
|
124,791
|
85,513
|
62,995
|
—
|
273,299
|
|||||||||||||||
Change
in unearned premium
|
(5,203
|
)
|
(894
|
)
|
2,024
|
—
|
(4,073
|
)
|
||||||||||||
Net
Earned Premium
|
119,588
|
84,619
|
65,019
|
—
|
269,226
|
|||||||||||||||
Ceding
commission – primarily related party
|
36,867
|
12,202
|
10,800
|
—
|
59,869
|
|||||||||||||||
Loss
and loss adjustment expense
|
(72,484
|
)
|
(37,343
|
)
|
(41,673
|
)
|
—
|
(151,500
|
)
|
|||||||||||
Acquisition
costs and other underwriting expenses
|
(68,259
|
)
|
(25,017
|
)
|
(29,465
|
)
|
—
|
(122,741
|
)
|
|||||||||||
(140,743
|
)
|
(62,360
|
)
|
(71,138
|
)
|
—
|
(274,241
|
)
|
||||||||||||
Underwriting
income
|
15,712
|
34,461
|
4,681
|
—
|
54,854
|
|||||||||||||||
Service
and fee income
|
6,696
|
4,685
|
—
|
3,680
|
15,061
|
|||||||||||||||
Investment
income and realized gain (loss)
|
5,449
|
3,186
|
2,208
|
—
|
10,843
|
|||||||||||||||
Other
expenses
|
(5,017
|
)
|
(3,401
|
)
|
(2,550
|
)
|
—
|
(10,968
|
)
|
|||||||||||
Interest
expense
|
(3,741
|
)
|
(2,536
|
)
|
(1,901
|
)
|
—
|
(8,178
|
)
|
|||||||||||
Foreign
currency gain
|
—
|
644
|
—
|
—
|
644
|
|||||||||||||||
Provision
for income taxes
|
(3,284
|
)
|
(6,368
|
)
|
(419
|
)
|
(633
|
)
|
(10,704
|
)
|
||||||||||
Equity
in earnings of unconsolidated subsidiary – related party
|
—
|
—
|
—
|
(619
|
)
|
(619
|
)
|
|||||||||||||
Net
income
|
$
|
15,815
|
$
|
30,671
|
$
|
2,019
|
$
|
2,428
|
$
|
50,933
|
(Amounts in thousands)
|
Small
Commercial
Business
|
Specialty Risk
and Extended
Warranty
|
Specialty
Program
|
Personal Lines
Reinsurance
|
Corporate and
other
|
Total
|
||||||||||||||||||
As of June 30, 2010:
|
||||||||||||||||||||||||
Fixed
assets
|
$
|
4,910
|
$
|
6,306
|
$
|
2,858
|
$
|
842
|
$
|
—
|
$
|
14,916
|
||||||||||||
Goodwill
and intangible assets
|
79,280
|
31,052
|
15,373
|
—
|
—
|
125,705
|
||||||||||||||||||
Total
assets
|
1,539,274
|
1,444,575
|
711,917
|
106,816
|
—
|
3,802,582
|
||||||||||||||||||
As of December 31, 2009:
|
||||||||||||||||||||||||
Fixed
assets
|
$
|
6,471
|
$
|
5,788
|
$
|
3,599
|
$
|
—
|
$
|
—
|
$
|
15,858
|
||||||||||||
Goodwill
and intangible assets
|
80,849
|
19,319
|
15,660
|
—
|
—
|
115,828
|
||||||||||||||||||
Total
assets
|
1,582,247
|
1,001,347
|
816,770
|
—
|
—
|
3,400,364
|
(Amounts in thousands)
|
Three Months Ended
June 30, 2010
|
Six Months Ended
June 30, 2010
|
||||||
Gross
written premium
|
$
|
263,019
|
367,129
|
|||||
Net
earned premium
|
195,816
|
278,455
|
||||||
Income
from continuing operations
|
29,633
|
39,853
|
||||||
Net
income
|
29,633
|
89,030
|
·
|
Small Commercial Business. We
provide workers’ compensation, commercial package and other commercial
insurance lines produced by wholesale agents, retail agents and brokers in
the United States.
|
·
|
Specialty Risk and Extended
Warranty. We provide coverage for consumer and commercial goods and custom
designed coverages, such as accidental damage plans and payment protection
plans offered in connection with the sale of consumer and commercial
goods, in the United States and Europe, and certain niche property,
casualty and specialty liability risks in the United States and Europe,
including general liability, employers’ liability and professional and
medical liability.
|
·
|
Specialty Program. We write
commercial insurance for homogeneous, narrowly defined classes of
insureds, requiring an in-depth knowledge of the insured’s industry
segment, through general and other wholesale
agents.
|
·
|
Personal Lines Reinsurance. We
reinsure 10% of the net premiums of the GMAC Business, pursuant to the
Personal Lines Quota Share with the GMAC Insurers. See discussion below
related to ACAC investment.
|
Company
|
A.M.
Best Rated
|
Coverage Type Offered
|
Coverage
Market
|
Domiciled
|
||||
Technology
Insurance Company, Inc. (“TIC”)
|
A
(Excellent)
|
Small
commercial, middle market property & casualty, specialty risk &
extended warranty and reinsurance for GMAC
|
United
States
|
New
Hampshire
|
||||
Rochdale
Insurance
Company
(“RIC”)
|
A
(Excellent)
|
Small
commercial, middle market property & casualty and specialty risk &
extended warranty
|
United
States
|
New
York
|
||||
Wesco
Insurance Company (“WIC”)
|
A
(Excellent)
|
Small
commercial, middle market property & casualty and specialty risk &
extended warranty
|
United
States
|
Delaware
|
||||
Associated
Industries Insurance Company, Inc. (“AIIC”)
|
Unrated
|
Workers’
compensation
|
United
States
|
Florida
|
||||
Milwaukee
Casualty Insurance Company (“MCIC”)
|
A
(Excellent)
|
Small
Commercial Business
|
United
States
|
Wisconsin
|
||||
Security
National Insurance Company (“SNIC”)
|
A
(Excellent)
|
Small
Commercial Business
|
United
States
|
Texas
|
||||
AmTrust
Insurance Company of Kansas, Inc. (“AICK”)
|
A
(Excellent)
|
Small
Commercial Business
|
United
States
|
Kansas
|
||||
AmTrust
Lloyd’s Insurance Company of Texas (“ALICT”) (formerly Trinity Lloyd’s
Insurance Company)
|
A
(Excellent)
|
Small
Commercial Business
|
United
States
|
Texas
|
||||
AmTrust
International Underwriters Limited (“AIU”)
|
A
(Excellent)
|
Specialty
Risk and Extended Warranty
|
European
Union
|
Ireland
|
||||
AmTrust
Europe, Ltd. (“AEL”) (formerly IGI Insurance Company,
Ltd.)
|
A
(Excellent)
|
Specialty
Risk and Extended Warranty
|
European
Union
|
England
|
||||
AmTrust
International Insurance Ltd. (“AII”)
|
A
(Excellent)
|
Reinsurance
for consolidated subsidiaries
|
United
States
and
European
Union
|
Bermuda
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
(Amounts in thousands)
|
2010
|
2009
|
2010
|
2009
|
||||||||||||
Gross
written premium
|
$
|
408,642
|
$
|
270,229
|
$
|
746,873
|
$
|
537,756
|
||||||||
Net
written premium
|
$
|
196,394
|
$
|
137,120
|
$
|
385,808
|
$
|
273,299
|
||||||||
Change
in unearned premium
|
(133
|
)
|
(317
|
)
|
(41,447
|
)
|
(4,073
|
)
|
||||||||
Net
earned premium
|
196,261
|
136,803
|
344,361
|
269,226
|
||||||||||||
Ceding
commission – primarily related party
|
32,958
|
32,278
|
65,206
|
59,869
|
||||||||||||
Service
and fee income
|
6,241
|
5,711
|
11,539
|
11,282
|
||||||||||||
Service
and fee income – related parties
|
2,880
|
1,896
|
5,548
|
3,779
|
||||||||||||
Net
investment income
|
14,686
|
13,799
|
28,285
|
27,790
|
||||||||||||
Net
realized loss on investments
|
(6,544
|
)
|
(7,709
|
)
|
(4,759
|
)
|
(16,947
|
)
|
||||||||
Total
revenues
|
246,482
|
182,778
|
450,180
|
354,999
|
||||||||||||
Loss
and loss adjustment expense
|
121,510
|
76,585
|
211,331
|
151,500
|
||||||||||||
Acquisition
costs and other underwriting expenses
|
79,579
|
64,587
|
140,925
|
122,741
|
||||||||||||
Other
|
9,336
|
5,774
|
15,570
|
10,968
|
||||||||||||
Total
expenses
|
210,425
|
146,946
|
367,826
|
285,209
|
||||||||||||
Income
before other income (expense), income taxes and equity earnings (loss) of
unconsolidated subsidiaries
|
36,057
|
35,832
|
82,354
|
69,790
|
||||||||||||
Other
income (expense):
|
||||||||||||||||
Foreign
currency gain
|
755
|
611
|
38
|
644
|
||||||||||||
Interest
expense
|
(3,063
|
)
|
(4,007
|
)
|
(6,635
|
)
|
(8,178
|
)
|
||||||||
Total
other expense
|
(2,308
|
)
|
(3,396
|
)
|
(6,597
|
)
|
(7,534
|
)
|
||||||||
Income
before other income (expense), income taxes and equity earnings
(loss) of unconsolidated subsidiaries
|
33,749
|
32,436
|
75,757
|
62,256
|
||||||||||||
Provision
for income taxes
|
8,839
|
5,448
|
24,007
|
10,704
|
||||||||||||
Income
before equity in earnings (loss) of unconsolidated
subsidiaries
|
24,910
|
26,988
|
51,750
|
51,552
|
||||||||||||
Equity
in earnings (loss) of unconsolidated subsidiaries – related
party
|
5,913
|
(217
|
)
|
17,773
|
(619
|
)
|
||||||||||
Net
income
|
30,823
|
26,771
|
69,523
|
50,933
|
||||||||||||
Key
Measures:
|
||||||||||||||||
Net
loss ratio
|
61.9
|
%
|
56.0
|
%
|
61.4
|
%
|
56.3
|
%
|
||||||||
Net
expense ratio
|
23.8
|
%
|
23.6
|
%
|
22.0
|
%
|
23.4
|
%
|
||||||||
Net
combined ratio
|
85.7
|
%
|
79.6
|
%
|
83.4
|
%
|
79.6
|
%
|
||||||||
Net
realized loss on investments:
|
||||||||||||||||
Total
other-than-temporary impairment losses
|
$
|
(12,007
|
)
|
$
|
(10,786
|
)
|
$
|
(17,145
|
)
|
$
|
(12,213
|
)
|
||||
Portion
of loss recognized in other comprehensive income
|
—
|
—
|
—
|
—
|
||||||||||||
Net
impairment losses recognized in earnings
|
(12,007
|
)
|
(10,786
|
)
|
(17,145
|
)
|
(12,213
|
)
|
||||||||
Other
net realized gain (loss) on investments
|
5,463
|
3,077
|
12,386
|
(4,734
|
)
|
|||||||||||
Net
realized investment loss
|
$
|
(6,544
|
)
|
$
|
(7,709
|
)
|
$
|
(4,759
|
)
|
$
|
(16,947
|
)
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
(Amounts in thousands)
|
2010
|
2009
|
2010
|
2009
|
||||||||||||
Gross
written premium
|
$
|
107,600
|
$
|
109,141
|
$
|
230,302
|
$
|
236,611
|
||||||||
Net
written premium
|
56,052
|
54,332
|
117,490
|
124,791
|
||||||||||||
Change
in unearned premium
|
9,208
|
7,165
|
7,374
|
|
(5,203
|
)
|
||||||||||
Net
earned premium
|
65,260
|
61,497
|
124,864
|
119,588
|
||||||||||||
Ceding
commission revenue – primarily related party
|
12,954
|
17,091
|
34,180
|
36,867
|
||||||||||||
Loss
and loss adjustment expense
|
39,347
|
37,090
|
74,435
|
72,484
|
||||||||||||
Acquisition
costs and other underwriting expenses
|
30,541
|
34,105
|
64,722
|
68,259
|
||||||||||||
69,888
|
71,195
|
139,157
|
140,743
|
|||||||||||||
Net
premiums earned less expenses included in combined ratio (Underwriting
income)
|
$
|
8,326
|
$
|
7,393
|
$
|
19,887
|
$
|
15,712
|
||||||||
Key
Measures:
|
||||||||||||||||
Net
loss ratio
|
60.3
|
%
|
60.3
|
%
|
59.6
|
%
|
60.6
|
%
|
||||||||
Net
expense ratio
|
26.9
|
%
|
27.7
|
%
|
24.5
|
%
|
26.3
|
%
|
||||||||
Net
combined ratio
|
87.2
|
%
|
88.0
|
%
|
84.1
|
%
|
86.9
|
%
|
||||||||
Reconciliation
of net expense ratio:
|
||||||||||||||||
Acquisition
costs and other underwriting expenses
|
30,541
|
34,105
|
64,722
|
68,259
|
||||||||||||
Less:
ceding commission revenue – primarily related party
|
12,954
|
17,091
|
34,180
|
36,867
|
||||||||||||
17,587
|
17,014
|
30,542
|
31,392
|
|||||||||||||
Net
earned premium
|
65,260
|
61,497
|
124,864
|
119,588
|
||||||||||||
Net
expense ratio
|
26.9
|
%
|
27.7
|
%
|
24.5
|
%
|
26.3
|
%
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
(Amounts in thousands)
|
2010
|
2009
|
2010
|
2009
|
||||||||||||
Gross
written premium
|
$
|
197,470
|
$
|
92,635
|
$
|
349,644
|
$
|
175,343
|
||||||||
Net
written premium
|
74,216
|
47,254
|
160,265
|
85,513
|
||||||||||||
Change
in unearned premium
|
12,371
|
|
(3,310
|
)
|
(21,914
|
)
|
(894
|
)
|
||||||||
Net
premiums earned
|
86,587
|
43,944
|
138,351
|
84,619
|
||||||||||||
Ceding
commission revenue – primarily related party
|
12,927
|
6,175
|
20,830
|
12,202
|
||||||||||||
Loss
and loss adjustment expense
|
54,064
|
19,525
|
85,224
|
37,343
|
||||||||||||
Acquisition
costs and other underwriting expenses
|
29,338
|
12,314
|
44,049
|
25,017
|
||||||||||||
83,402
|
31,839
|
129,273
|
62,360
|
|||||||||||||
Net
premiums earned less expenses included in combined ratio (Underwriting
income)
|
$
|
16,112
|
$
|
18,280
|
$
|
29,908
|
$
|
34,461
|
||||||||
Key
Measures:
|
||||||||||||||||
Net
loss ratio
|
62.4
|
%
|
44.4
|
%
|
61.6
|
%
|
44.1
|
%
|
||||||||
Net
expense ratio
|
19.0
|
%
|
14.0
|
%
|
16.8
|
%
|
15.1
|
%
|
||||||||
Net
combined ratio
|
81.4
|
%
|
58.4
|
%
|
78.4
|
%
|
59.3
|
%
|
||||||||
Reconciliation
of net expense ratio:
|
||||||||||||||||
Acquisition
costs and other underwriting expenses
|
29,338
|
12,314
|
44,049
|
25,017
|
||||||||||||
Less:
ceding commission revenue – primarily related party
|
12,927
|
6,175
|
20,830
|
12,202
|
||||||||||||
16,411
|
6,139
|
23,219
|
12,815
|
|||||||||||||
Net
earned premium
|
86,587
|
43,944
|
138,351
|
84,619
|
||||||||||||
Net
expense ratio
|
19.0
|
%
|
14.0
|
%
|
16.8
|
%
|
15.1
|
%
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
(Amounts in thousands)
|
2010
|
2009
|
2010
|
2009
|
||||||||||||
Gross
written premium
|
$
|
77,712
|
$
|
68,453
|
$
|
132,367
|
$
|
125,802
|
||||||||
Net
written premium
|
40,266
|
35,534
|
73,493
|
62,995
|
||||||||||||
Change
in unearned premium
|
(5,205
|
)
|
(4,172
|
)
|
(1,700
|
)
|
2,024
|
|||||||||
Net
premiums earned
|
35,061
|
31,362
|
71,793
|
65,019
|
||||||||||||
Ceding
commission revenue – primarily related party
|
7,077
|
9,012
|
10,196
|
10,800
|
||||||||||||
Loss
and loss adjustment expense
|
22,253
|
19,970
|
45,826
|
41,673
|
||||||||||||
Acquisition
costs and other underwriting expenses
|
16,660
|
18,168
|
29,114
|
29,465
|
||||||||||||
38,913
|
38,138
|
74,940
|
71,138
|
|||||||||||||
Net
premiums earned less expenses included in combined ratio (Underwriting
income)
|
$
|
3,225
|
$
|
2,236
|
$
|
7,049
|
$
|
4,681
|
||||||||
Key
Measures:
|
||||||||||||||||
Net
loss ratio
|
63.5
|
%
|
63.7
|
%
|
63.8
|
%
|
64.1
|
%
|
||||||||
Net
expense ratio
|
27.3
|
%
|
29.2
|
%
|
26.4
|
%
|
28.7
|
%
|
||||||||
Net
combined ratio
|
90.8
|
%
|
92.9
|
%
|
90.2
|
%
|
92.8
|
%
|
||||||||
Reconciliation
of net expense ratio:
|
||||||||||||||||
Acquisition
costs and other underwriting expenses
|
16,660
|
18,168
|
29,114
|
29,465
|
||||||||||||
Less:
ceding commission revenue – primarily related party
|
7,077
|
9,012
|
10,196
|
10,800
|
||||||||||||
9,583
|
9,156
|
18,918
|
18,665
|
|||||||||||||
Net
earned premium
|
35,061
|
31,362
|
71,793
|
65,019
|
||||||||||||
Net
expense ratio
|
27.3
|
%
|
29.2
|
%
|
26.4
|
%
|
28.7
|
%
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
(Amounts in thousands)
|
2010
|
2009
|
2010
|
2009
|
||||||||||||
Gross
written premium
|
$
|
25,860
|
$
|
—
|
$
|
34,560
|
$
|
—
|
||||||||
Net
written premium
|
25,860
|
—
|
34,560
|
—
|
||||||||||||
Change
in unearned premium
|
(16,507
|
)
|
—
|
(25,207
|
)
|
—
|
||||||||||
Net
premiums earned
|
9,353
|
—
|
9,353
|
|||||||||||||
Loss
and loss adjustment expense
|
5,846
|
—
|
5,846
|
—
|
||||||||||||
Acquisition
costs and other underwriting expenses
|
3,040
|
—
|
3,040
|
—
|
||||||||||||
8,886
|
—
|
8,886
|
—
|
|||||||||||||
Net
premiums earned less expenses included in combined ratio (Underwriting
income)
|
$
|
467
|
$
|
—
|
$
|
467
|
$
|
—
|
||||||||
Key
Measures:
|
||||||||||||||||
Net
loss ratio
|
62.5
|
%
|
—
|
62.5
|
%
|
—
|
||||||||||
Net
expense ratio
|
32.5
|
%
|
—
|
32.5
|
%
|
—
|
||||||||||
Net
combined ratio
|
95.0
|
%
|
—
|
95.0
|
%
|
—
|
Six Months Ended June 30,
|
||||||||
(Amounts in thousands)
|
2010
|
2009
|
||||||
Cash
and cash equivalents provided by (used in):
|
||||||||
Operating
activities
|
$
|
6,283
|
|
$
|
112,834
|
|||
Investing
activities
|
41,374
|
30,018
|
||||||
Financing
activities
|
44,388
|
(79,420
|
)
|
June 30, 2010
|
December 31, 2009
|
|||||||||||||
(Amounts in thousands)
|
Carrying
Value
|
Percentage of
Portfolio
|
Carrying
Value
|
Percentage of
Portfolio
|
||||||||||
Cash
and cash equivalents
|
$
|
316,409
|
22.2
|
%
|
$
|
233,810
|
16.7
|
%
|
||||||
Time
and short-term deposits
|
990
|
0.1
|
31,265
|
2.2
|
||||||||||
U.S.
treasury securities
|
33,738
|
2.4
|
124,143
|
8.9
|
||||||||||
U.S.
government agencies
|
42,256
|
2.9
|
47,424
|
3.4
|
||||||||||
Municipals
|
34,105
|
2.4
|
27,268
|
1.9
|
||||||||||
Commercial
mortgage back securities
|
2,195
|
0.2
|
3,359
|
0.2
|
||||||||||
Residential
mortgage backed securities:
|
||||||||||||||
Agency
backed
|
450,843
|
31.6
|
481,731
|
34.4
|
||||||||||
Non-agency
backed
|
8,572
|
0.6
|
8,632
|
0.6
|
||||||||||
Asset
backed securities
|
3,149
|
0.2
|
3,619
|
0.3
|
||||||||||
Corporate
bonds
|
488,614
|
34.2
|
389,186
|
27.8
|
||||||||||
Preferred
stocks
|
5,112
|
0.4
|
5,110
|
0.4
|
||||||||||
Common
stocks
|
40,825
|
2.8
|
45,245
|
3.2
|
||||||||||
$
|
1,426,808
|
100.0
|
%
|
$
|
1,400,792
|
100.0
|
%
|
•
|
the current fair value compared
to amortized cost;
|
•
|
the length of time the security’s
fair value has been below its amortized
cost;
|
•
|
specific credit issues related to
the issuer such as changes in credit rating, reduction or elimination of
dividends or non-payment of scheduled interest
payments;
|
•
|
whether management intends to
sell the security and, if not, whether it is not more than likely than not
that we will be required to sell the security before recovery of our
amortized cost basis;
|
•
|
the financial condition and
near-term prospects of the issuer of the security, including any specific
events that may affect its operations or
earnings;
|
•
|
the occurrence of a discrete
credit event resulting in the issuer defaulting on a material outstanding
obligation or the issuer seeking protection under bankruptcy laws;
and
|
•
|
other items, including, company
management, media exposure, sponsors, marketing and advertising
agreements, debt restructurings, regulatory changes, acquisitions and
dispositions, pending litigation, distribution agreements and general
industry trends.
|
(Amounts
in thousands)
|
2010
|
2009
|
||||||
Equity
securities
|
$
|
6,605
|
$
|
10,188
|
||||
Fixed
maturity securities
|
10,540
|
2,025
|
||||||
$
|
17,145
|
$
|
12,213
|
Hypothetical Change in Interest Rates
|
Fair Value
|
Estimated
Change in
Fair Value
|
Hypothetical
Percentage
(Increase)
Decrease in
Shareholders’
Equity
|
|||||||||
(Amounts in thousands) | ||||||||||||
200
basis point increase
|
$ | 996,451 | $ | (67,021 | ) | (6.8 | )% | |||||
100
basis point increase
|
1,030,758 | (32,714 | ) | (3.3 | ) | |||||||
No
change
|
1,063,472 | — | — | |||||||||
100
basis point decrease
|
1,092,112 | 28,640 | 2.9 | |||||||||
200
basis point decrease
|
1,113,400 | 49,928 | 5.1 |
Hypothetical Change in Interest Rates
|
Fair Value
|
Estimated
Change in
Fair Value
|
Hypothetical
Percentage
(Increase)
Decrease in
Shareholders’
Equity
|
|||||||||
|
(Amounts
in thousands)
|
|||||||||||
5%
increase
|
$
|
48,234
|
$
|
2,297
|
0.2
|
%
|
||||||
No
change
|
45,937
|
—
|
—
|
|||||||||
5 %
decrease
|
43,640
|
(2,297
|
)
|
(0.2
|
)%
|
Exhibit
Number
|
Description
|
|
10.1
|
AmTrust
Financial Services, Inc. 2010 Omnibus Incentive Plan (incorporated by
reference to Appendix B to the Company’s definitive proxy statement on
Schedule 14A filed on April 1, 2010.)
|
|
10.2
|
Form
of Incentive Stock Option Agreement, effective May 14,
2010.
|
|
10.3
|
Form
of Non-qualified Stock Option Agreement for Non-Employee Directors,
effective May 14, 2010.
|
|
10.4
|
Form
of Restricted Stock Agreement, effective May 14, 2010.
|
|
10.5
|
Form
of Restricted Stock Unit Agreement, effective May 14,
2010.
|
|
10.6
|
Amendment
No. 1 to the Stockholders Agreement, dated August 4, 2010, by and among
the Company, ACAC, The Michael Karfunkel 2005 Grantor Retained Annuity
Trust and Michael Karfunkel.
|
|
31.1
|
Certification
of the Chief Executive Officer, pursuant to Rule 13a-14(a) or 15d-14(a),
for the quarter ended June 30, 2010.
|
|
31.2
|
Certification
of the Chief Financial Officer, pursuant to Rule 13a-14(a) or 15d-14(a),
for the quarter ended June 30, 2010.
|
|
32.1
|
Certification
of the Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, for
the quarter ended June 30, 2010.
|
|
32.2
|
Certification
of the Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, for
the quarter ended June 30,
2010.
|
AmTrust
Financial Services, Inc.
|
||
(Registrant)
|
||
Date:
August 9, 2010
|
/s/ Barry D.
Zyskind
|
|
Barry
D. Zyskind
President
and Chief Executive Officer
|
||
/s/ Ronald E. Pipoly,
Jr.
|
||
Ronald
E. Pipoly, Jr.
Chief
Financial Officer
|