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AmTrust Financial Services Inc. Reports Operating Results (10-Q)

May 10, 2010 | About:
10qk

10qk

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AmTrust Financial Services Inc. (AFSI) filed Quarterly Report for the period ended 2010-03-31.

Amtrust Financial Services Inc. has a market cap of $772.4 million; its shares were traded at around $13.02 with a P/E ratio of 6.23 and P/S ratio of 1.04. The dividend yield of Amtrust Financial Services Inc. stocks is 2.15%.AFSI is in the portfolios of Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

Gross Written Premium. Gross written premium increased $70.7 million, or 26.4%, to $338.2 million from $267.5 million for the three months ended March 31, 2010 and 2009, respectively. The increase of $70.7 million was attributable to growth in our Specialty Risk and Extended Warranty business and $8.7 million of assumed business from ACAC. The increase was partially offset by a $4.8 million decrease in our Small Commercial Business and a $2.7 million decrease in our Specialty Program business. The increase in Specialty Risk and Extended Warranty business resulted primarily from new program writings in the Company s European business. The decrease in Small Commercial Business primarily from lower premium in the commercial package business as the Company maintains its pricing discipline. The decrease in the Specialty Program segment related primarily to a decline from business the Company wrote on behalf of HSBC Insurance Company of Delaware pursuant to a 100% fronting arrangement which was entered into connection with the Company s acquisition of WIC from an HSBC affiliate as an accommodation to HSBC and is now in run-off.

Net Written Premium. Net written premium increased $53.2 million, or 39.1%, to $189.4 million from $136.2 million for the three months ended March 31, 2010 and 2009, respectively. The increase (decrease) by segment was: Small Commercial Business - $(9.1) million, Specialty Risk and Extended Warranty - $47.8 million, Specialty Program - $5.8 million and Personal Lines - $8.7 million. Net written premium increased for the three months ended March 31, 2010 compared to the same period in 2009 due to the increase in gross written premium in 2010 compared to 2009.

Net Earned Premium. Net earned premium increased $15.7 million, or 11.9%, to $148.1 million from $132.4 million for the three months ended March 31, 2010 and 2009. The increase by segment was: Small Commercial Business - $1.5 million; Specialty Risk and Extended Warranty - $11.1 million; and Specialty Program - $3.1 million.

Net Realized Gains (Losses) on Investments. Net realized gains on investments for the three months ended March 31, 2010 were $1.8 million, compared to net realized losses of $9.2 million for the same period in 2009. The increase period over period related to the continued recovery of the Company s equity portfolio and the timing of certain sales within its equity and fixed income portfolio. Additionally, the Company recorded non-cash write-downs of $5.1 million and $1.4 million during the three months ended March 31, 2010 and 2009, respectively, for securities that were determined to be other-than-temporarily-impaired.

Loss and Loss Adjustment Expenses. Loss and loss adjustment expenses increased $14.9 million, or 19.9%, to $89.8 million for the three months ended March 31, 2010 from $74.9 million for the three months ended March 31, 2009. The Company s loss ratio for the three months ended March 31, 2010 and 2009 were 60.6% and 56.6%, respectively. The increase in the loss ratio resulted primarily from the effect in 2009 of a one-time $5.9 million benefit to the Specialty Risk and Extended Warranty segment related to the acquisition of ACHL.

Acquisition Costs and Other Underwriting Expenses. Acquisition costs and other underwriting expenses increased $3.1 million, or 5.3%, to $61.3 million for the three months ended March 31, 2010 from $58.2 million for the three months ended March 31, 2009. The expense ratio for the same periods decreased to 19.6% from 23.1%, respectively, and impacted all segments. The decrease in the expense ratio resulted primarily from the increase in ceding commission received from Maiden Insurance during the three months ended March 31, 2010, partially offset by higher salary expense. Additionally, in 2009 the Company incurred higher one-time policy acquisition expenses of $1.7 milli

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