Unassociated Document
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)  November 14, 2006
 

AmTrust Financial Services, Inc.
(Exact name of registrant as specified in its charter)
 
Delaware
001-33143
04-3106389
(State or other jurisdiction
(Commission
IRS Employer
of incorporation)
File Number)
Identification No.)
     
     
59 Maiden Lane, 6th Floor, New York, New York
 
10038
(Address of principal executive offices)
 
(Zip Code)
  
Registrant’s telephone number, including area code (212) 220-7120

     
 
 
(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):

[ ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.133-4 (c))

Item 2.02    RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
 
All of the information furnished in Items 2.02, 7.01 and 9.01 of this report, including the accompanying exhibits, is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise and shall not be incorporated by reference in any filing under the Securities Act of 1933, as amended, except to the extent expressly set forth by specific reference in such filing.

On November 14, 2006, AmTrust Financial Services, Inc. issued a press release announcing its results of operations for the three and nine months ended September 30, 2006. A copy of the press release is attached as Exhibit 99.1 to this Form 8-K and is incorporated by reference to this Item 2.02 as if fully set forth herein.

Item 7.01    REGULATION FD DISCSLOSURE

On November 14, 2006, AmTrust Financial Services, Inc. issued a press release announcing the release date for its results of operations for the three and nine months ended September 30, 2006 and the scheduling of a conference call on November 15, 2006 with respect thereto. A copy of the press release is attached as Exhibit 99.2 to this Form 8-K and is incorporated by reference to this Item 7.01 as if fully set forth herein.

Item 9.01    FINANCIAL STATEMENTS AND EXHIBITS.
 
(d) Exhibits

99.1
Press release reporting the results of operations for the three and nine months ended September 30, 2006 issued by AmTrust Financial Services, Inc. on November 14, 2006.

99.2
Press release announcing the release date of the results of operations for the three and nine months ended September 30, 2006 and conference call issued by AmTrust Financial Services, Inc. on November 14, 2006.


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.
 
     
  AMTRUST FINANCIAL SERVICES, INC.
 
 
 
 
 
 
Date: November 15, 2006 By:   /s/ Stephen Ungar
 
Name: Stephen Ungar
 
Title: Secretary
Unassociated Document
Exhibit 99.1

Press Release

For more information, please contact:
AmTrust Financial Services, Inc.
 
Mr. Hilly Gross    Mr. Ronald Pipoly 
Vice President, Investor Relations   Chief Financial Officer
212.220.7120 x7023   216.328.6116  
hgross@amtrustgroup.com   rpipoly@amtrustgroup.com 
  
For immediate release
November 14, 2006

 
AmTrust Financial Services, Inc. Reports Record Third Quarter Net Income of $12.4 million or $0.21 per share

(New York) - AmTrust Financial Services Inc. (NASDAQ: AFSI) today reported net income of $12.4 million and revenues of $98.0 million for the third quarter 2006. For the nine months ended September 30, 2006 the Company reported net income of $31.5 million and revenues of $263.8 million.

Third Quarter Overview:
The Company reported $12.4 million in net income, or $0.21 per basic share, for the quarter ended September 30, 2006.

Third Quarter and Nine Months Highlights:
·  
Net income from continuing operations up 55.0% for the third quarter of 2006 compared to the third quarter of 2005
·  
Net income from continuing operations up 181.1% for nine months ended September 30, 2006 compared to the nine months ended September 30, 2005
·  
Quarterly earnings per basic share was $0.21
·  
Nine month ended September 30, 2006 earnings per basic share was $0.57
·  
Annualized quarterly return on equity for the third quarter was 15.8%

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·  
Book value per basic share was $5.38 (as of September 30, 2006)
·  
GAAP combined ratio for the third quarter was 91.6%
·  
GAAP combined ratio for the nine months was 92.4%

“These encouraging figures represent the combination of a strong growth objective, coupled with responsible underwriting and cost controls,” stated Ronald Pipoly, CFO, AmTrust Financial. Barry Zyskind, president & CEO, added, “The third quarter results are most gratifying. They not only confirm the validity of our strategic growth objectives, but underscore the unique niche that AmTrust Financial occupies in these specialized areas of insurance.”

Third Quarter and Nine Months Results:
To view the Third Quarter and Nine Months Results, please reference pages 6 and 7.

Revenue and comprehensive earnings:
Net revenue in the third quarter 2006 increased by $29.2 million or 42.4% to $98.0 million from $68.8 million in the third quarter 2005. Net revenue for the nine months ended September 30, 2006 increased by $88.6 million or 50.6% to $263.8 million from $175.2 million for the nine months ended September 30, 2005.

Net earned premium in the third quarter 2006 increased by $23.1 million or 38.2% to $83.5 million from $60.4 million in the third quarter 2005. Net earned premium for the nine months ended September 30, 2006 increased by $67.7 million or 42.8% to $225.8 to $158.1 million for the nine months ended September 30, 2005. The increase is primarily attributable to premium growth achieved through the successful integration of business acquired in renewal rights transactions as well as internal growth.

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Net investment income including realized gains and losses in the third quarter 2006 increased by $5.4 million or 87.1% to $11.6 million from $6.2 million in the third quarter 2005. Net investment income including realized gains for the nine months ended September 30, 2006 increased by $17.3 million or 146.6% to $29.1 million from $11.8 million for the nine months ended September 30, 2005. The primary reasons for the increase in investment income were the Company’s successful liquidation of a subsidiary which generated $80.0 million in the second half of 2005 and the Company’s February 2006 private placement, which generated net proceeds of $166.0 million. In addition, for the nine months ended September 30, 2006, the Company generated $123.9 million of positive cash flow from operations.

Comprehensive earnings, which include after-tax unrealized gains/loss from the investment portfolio, was $37.6 million , or $0.69 per share for the nine months ended September 30, 2006 compared to $4.7 million for the nine months ended
September 30, 2005 or $0.19 per share.

Expenses:
The Company’s loss ratio for the quarter ended September 30, 2006 was 66.3% compared to 67.1% for the quarter ended September 30, 2005. The Company’s loss ratio for the nine months ended September 30, 2006 was 64.7% compared to 68.3% for the nine months ended September 30, 2005. The Company continues to see stable trends in its loss ratio.

Policy Acquisition Expense, Salaries and Benefits Expense and Other Insurance General and Administrative Expense for the nine months ended 2006 increased by $17.2 million to $62.4 from $45.2 million for the nine months ended September 30, 2005. Despite the increase, the expense ratio for the nine months ended September 30, 2006 decreased to 27.7% from 28.6% for the nine months ended September 30, 2005.

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The decrease is the result of the Company’s ability to leverage its current infrastructure.

Interest expense in the third quarter 2006 increased to $1.4 million from $1.1 million in the third quarter of 2005. The increase is the result of the issuance by the Company in July 2006 of $30.0 million of trust preferred securities.

Other Matters:
Shareholders Equity as of September 30, 2006 increased to $322.8 million from $118.4 million as of December 31, 2005. The increase was due in large measure to the issuance of 25.6 million shares of common stock in a private placement, which generated net proceeds of $166.0 million as well as earnings for the nine months ended September 30, 2006. In connection with the private placement, the Company converted its outstanding preferred shares into 10.3 million shares of common stock.

As of September 30, 2006 the Company’s debt-to-equity ratio was 25.6%. The Company’s debt relates to three trust preferred securities offerings in which the Company participated in 2005 and 2006.

Conference Call:
On Wednesday, November 15, 2006 at 10:00 AM EST, the company will hold a conference call that can be accessed as follows:

  Dial-in:  800-540-0559
     
  Registration: http://ir.amtrustgroup.com 
 
In order to participate in the conference call, you must register at http://ir.amtrustgroup.com.


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A replay of the conference call will be available starting at 1 p.m., Eastern Standard Time, on Wednesday, November 15, 2006 through Tuesday, November 21, 2006 by dialing 719-457-0820 or 888-203-1112. The passcode for the replay is 9241653.

About AmTrust Financial Services, Inc.

AmTrust Financial Services, Inc., headquartered in New York City, is a multinational specialty property and casualty 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 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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AmTrust Financial Services, Inc.
 
Income Statement
 
(in thousands, expect per share data)
 
                      
   
Nine months Ended
 
 Nine months Ended
 
 Three months Ended
 
 Three months Ended
 
   
September 30, 2006
 
 September 30. 2005
 
 September 30, 2006
 
 September 30. 2005
 
   
(Unaudited)
 
 (Unaudited)
           
                      
 Gross Written Premium
 
$
373,003
 
$
228,181
 
$
135,993
 
$
71,627
 
                           
Revenue:
                         
Premium Income 
                         
 Net Premiums Written
 
$
314,343
 
$
203,743
 
$
105,599
 
$
63,061
 
 Change in Unearned Premium
   
88,572
   
45,597
   
22,073
   
2,655
 
     
225,771
   
158,146
   
83,526
   
60,406
 
                           
 Fee Income
   
8,935
   
5,272
   
2,879
   
2,212
 
 Finance and Interest Income
   
18,960
   
8,206
   
7,539
   
4,067
 
 Net Realized Gains
   
10,135
   
3,590
   
4,044
   
2,161
 
     
38,029
   
17,068
   
14,462
   
8,440
 
                           
 Total Revenue
   
263,801
   
175,214
   
97,988
   
68,846
 
                           
 Loss and Loss Adjustment Expense
   
146,008
   
108,035
   
55,350
   
40527
 
 Policy Acquisition Expenses
   
27,107
   
22,852
   
10,635
   
7879
 
 Salaries and Benefits
   
19,746
   
10,625
   
8,014
   
3804
 
 Other insurance General and administrative expense
   
15,588
   
11,763
   
2,550
   
3050
 
 Other Underwriting Expenses
   
8,873
   
3,680
   
3,107
   
1705
 
     
217,323
   
156,955
   
79,656
   
56,965
 
                           
 Income from Continuing operations
   
46,478
   
18,259
   
18,333
   
11,881
 
                           
 Other Income (Expense)
                         
 Foreign Currency Gain
   
457
   
0
   
473
   
-
 
 Interest Expense
   
(3,652
)
 
(1,734
)
 
(1,410
)
 
(1,133.0
)
     
(3,195
)
 
(1,734
)
 
(937
)
 
(1,133.0
)
                           
                           
 Income from Continuing Operations before Provision for Income Taxes
   
43,282
   
16,525
   
17,396
   
10,748
 
                           
 Provision for Income taxes
   
12,057
   
5,419
   
4,982
   
2,754
 
                           
                           
 Net income from continuing operations
   
31,225
   
11,106
   
12,413
   
7,994
 
                           
 Foreign currency gain on discontinued operations
   
-
   
20,572
   
-
   
-
 
 Gain (loss) from discontinued operations
   
250
   
(3,459
)
 
-
   
(1,074
)
     
250
   
17,113
   
-
   
(1,074
)
                           
 Net Income
   
31,475
   
28,219
   
12,413
   
6,920
 
                           
 Preferred Stock Dividends
   
-
   
(1,200
)
 
-
   
-
 
                           
 Net income available to common shareholders
 
$
31,475
 
$
27,019
 
$
12,413
 
$
6,920
 
                           
 Earnings per common share
                         
 Income (Loss) from Continuing Operations
 
$
0.57
 
$
0.41
 
$
0.21
 
$
0.33
 
 Income (Loss) from Discontinued Operations
   
0.00
   
0.71
   
0.00
   
(0.04
)
   
$
0.57
 
$
1.12
 
$
0.21
 
$
0.29
 
                           
 Weighted average number of shares outstanding
   
54,879
   
24,089
   
59,959
   
24,089
 
                           
                           
                           
 Combined Ratio
   
92.3
%
 
96.9
%
 
91.7
%
 
91.6
%
 Annualized Return on Equity (1)
   
18.9
%
 
27.8
%
 
15.8
%
 
12.7
%
 Earnings Per Share from
 
$
0.57
 
$
1.12
 
$
0.21
 
$
0.29
 
 Comprehensive earnings per share
 
$
0.69
 
$
0.19
 
$
0.26
 
$
0.18
 
 
 
 (1) - Calculated by dividing by net income without currency gain and discontinued operations by the average shareholders' equity. The calculations have been annualized



 
Page 7 of 7
 


AmTrust Financial Services, Inc.
 
Balance Sheet Highlights
 
(in thousands, expect per share data)
 
            
   
September
 
 December 31,
 
   
2006
 
 2005
 
   
(Unaudited)
 
 (Audited)
 
Invested assets
 
$
664,936
 
$
299,965
 
Cash and cash equivalents
   
51,065
   
115,847
 
Premiums receivables
   
133,069
   
81,070
 
Deferred tax asset
   
13,545
   
9,396
 
Intangible assets
   
28,842
   
20,781
 
Total Assets
   
1,077,733
   
612,890
 
Loss and loss expense reserves
   
250,777
   
168,008
 
Unearned premium
   
305,706
   
156,802
 
Junior subordinate debt
   
82,476
   
51,548
 
Total Stockholders' equity
 
$
322,842
 
$
118,411
 
               




Unassociated Document
 
 

Exhibit 99.2

For more information, please contact:
AmTrust Financial Services, Inc.
 
Mr. Hilly Gross    Mr. Ronald Pipoly 
Vice President, Investor Relations   Chief Financial Officer
212.220.7120 x7023   216.328.6116  
hgross@amtrustgroup.com   rpipoly@amtrustgroup.com 
 
For immediate release
November 14, 2006


AmTrust Financial Services, Inc. Announces 2006 Earnings Release Date and Conference Call Information

(New York) - AmTrust Financial Services, Inc. (NASDAQ: AFSI) announced today that it will release 2006 third quarter earnings following the close of the market on Tuesday, November 14, 2006.

On Wednesday, November 15, 2006 at 10:00 AM EST, the company will hold a conference call that can be accessed as follows:
 
 
  Dial-in: 800-540-0559
     
  Registration:  http://ir.amtrustgroup.com  
 
 
In order to participate in the conference call, you must register at http://ir.amtrustgroup.com.

A replay of the conference call will be available starting at 1 p.m., Eastern Standard Time, on Wednesday, November 15, 2006 through Tuesday, November 21, 2006 by dialing 719-457-0820 or 888-203-1112. The passcode for the replay is 9241653.


(more)

 
 

 
 
Page 2 of 2


About AmTrust Financial Services, Inc.

AmTrust Financial Services, Inc., headquartered in New York City, is a multinational specialty property and casualty 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. The AmTrust U.S. insurance carriers, Technology Insurance Company, Rochdale Insurance Company and Wesco Insurance Company and its Bermuda carrier, AmTrust International Insurance Ltd, are rated A- (Excellent), Financial Size VIII by A.M. Best Company. For more information about AmTrust, visit www.amtrustgroup.com, or call AmTrust toll-free at 866.203.3037. 

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.

###