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, Aug 5, 2009 (GlobeNewswire via COMTEX News Network) -- 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.
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:
* Quarterly basic operating earnings per share was $0.54 ($0.46 in 2008) * Quarterly basic earnings per share was $0.45 ($0.44 in 2008) * Six months ended June 30, 2009 basic operating earnings per share was $1.04 ($0.89 in 2008) * Six months ended June 30, 2009 basic earnings per share was $0.86 ($0.81 in 2008) * Annualized return on equity on operating earnings for the second quarter was 28.9% * Book value per share was $8.04 as of June 30, 2009 ($6.91 as of June 30, 2008) * The combined ratio for the second quarter was 79.6% (81.7% in 2008) * The combined ratio for the six months ended June 30, 2009 was 79.6% (79.6% in 2008)
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.
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.
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.
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.
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.
The AmTrust Financial Services, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3280
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
AmTrust Financial Services, Inc.
Income Statement
(in thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Gross written premium $ 270,229 $ 301,062 $ 537,756 $ 535,818
========= ========= ========= =========
Premium income
Net premium written $ 137,120 $ 132,057 $ 273,299 $ 249,499
Change in unearned
premium (317) (16,112) (4,073) (36,141)
--------- --------- --------- ---------
136,803 115,945 269,226 213,358
Ceding commission'
(primarily related
party) 32,278 37,209 59,869 58,084
Commission and fee income 7,607 8,375 15,061 14,662
Investment income, net 13,582 14,190 27,171 27,721
Net realized losses (7,709) (2,135) (16,947) (7,355)
Other investment gain
(loss) on managed assets -- -- -- (2,900)
--------- --------- --------- ---------
45,758 57,639 85,154 90,212
--------- --------- --------- ---------
Total revenue 182,561 173,584 354,380 303,570
--------- --------- --------- ---------
Loss and loss adjustment
expense 76,585 74,134 151,500 129,299
Acquisition costs and
other underwriting
expense 64,587 57,824 122,741 98,701
Other 5,774 2,504 10,968 7,298
--------- --------- --------- ---------
146,946 134,462 285,209 235,298
--------- --------- --------- ---------
Income from continuing
operations 35,615 39,122 69,171 68,272
Other income (expense):
Foreign currency gain
(loss) 611 (15) 644 144
Interest expense (4,007) (5,541) (8,178) (8,170)
--------- --------- --------- ---------
(3,396) (5,556) (7,534) (8,026)
--------- --------- --------- ---------
Income from continuing
operations before
provision for income
taxes 32,219 33,566 61,637 60,246
Provision for income
taxes 5,448 7,216 10,704 14,533
Minority interest in
net loss of subsidiary -- -- -- (2,900)
--------- --------- --------- ---------
Net income available to
common shareholders $ 26,771 $ 26,350 $ 50,933 $ 48,613
========= ========= ========= =========
Operating earnings (1) $ 31,782 $ 27,738 $ 61,949 $ 53,394
========= ========= ========= =========
Earnings per common share:
Basic earnings per share $ 0.45 $ 0.44 $ 0.86 $ 0.81
Diluted earnings per
share $ 0.45 $ 0.43 $ 0.85 $ 0.80
Basic operating earnings
per share $ 0.54 $ 0.46 $ 1.04 $ 0.89
Weighted average number
of basic shares
outstanding 59,337 59,989 59,551 59,979
Weighted average number
of diluted shares
outstanding 59,734 61,001 59,863 60,960
Combined ratio 79.6% 81.7% 79.6% 79.6%
Reconciliation of net
realized losses:
Other-than-temporary
investment impairments $ (10,786) $ (7,230) $ (12,213) $ (7,972)
Impairments recognized
in other comprehensive
income -- -- -- --
--------- --------- --------- ---------
(10,786) (7,230) (12,213) (7,972)
Net realized gains
(losses) on sale of
investments 3,077 5,095 (4,734) 617
--------- --------- --------- ---------
Net realized losses $ (7,709) $ (2,135) $ (16,947) $ (7,355)
========= ========= ========= =========
AmTrust Financial Services, Inc.
Balance Sheet Highlights
(in thousands)
(Unaudited)
June 30, December 31,
2009 2008
----------- -----------
Cash, cash equivalents and investments $ 1,410,833 $ 1,361,440
Premiums receivables 383,736 419,577
Goodwill and intangible assets 102,722 102,425
Total assets 3,183,530 3,143,893
Loss and loss expense reserves 1,057,646 1,014,059
Unearned premium 767,842 759,915
Trust preferred securities 123,714 123,714
Total stockholders' equity $ 476,853 $ 392,548
AmTrust Financial Services, Inc.
Non-GAAP Financial Measure
(in thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2009 2008 2009 2008
-------- -------- -------- --------
Reconciliation of net
income to operating
earnings:
Net income $ 26,771 $ 26,350 $ 50,933 $ 48,613
Less: Net realized
gains (losses)
net of taxes (5,011) (1,388) (11,016) (4,781)
-------- -------- -------- --------
Operating earnings(1) $ 31,782 $ 27,738 $ 61,949 $ 53,394
======== ======== ======== ========
Operating earnings per
common share:
Basic earnings per share $ 0.54 $ 0.46 $ 1.04 $ 0.89
Diluted earnings per share $ 0.53 $ 0.45 $ 1.03 $ 0.88
(1)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.
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: AmTrust Financial Services, Inc.
AmTrust Financial Services, Inc. Investor Relations Hilly Gross 212.220.7120 ext. 7023 IR@amtrustgroup.com
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