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) March 5, 2013
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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, 6
th
Floor, New York, New York 10038
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code (212) 220-7120
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(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):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.133-4 (c))
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Item 1.01
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Entry into a Material Definitive Agreement.
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Endorsement No. 2 to Amended and Restated Quota Share Reinsurance Agreement with Maiden Insurance Company Ltd.
In 2007, AmTrust Financial Services, Inc. (the “Company”) entered into a master agreement with Maiden Insurance Company, Ltd. (“Maiden Insurance”) by which the Company’s Bermuda subsidiary, AmTrust International Insurance Ltd. (“AII”), and Maiden Insurance entered into a quota share reinsurance agreement (the “Maiden Quota Share”). Under this agreement, AII retrocedes to Maiden Insurance an amount equal to 40% of the premium written by the Company’s U.S., Irish and U.K. insurance companies (the “AmTrust Ceding Insurers”), net of the cost of unaffiliated inuring reinsurance (and in the case of the Company’s U.K. insurance subsidiary, AEL, net of commissions) and 40% of losses excluding certain specialty risk programs that the Company commenced writing after the effective date, such as the Company's European medical liability business, and risks, other than workers’ compensation risks and certain business written by the Company’s Irish subsidiary, AmTrust International Underwriters Limited (“AIU”), for which the AmTrust Ceding Insurers’ net retention exceeds $5,000,000 (“Covered Business”).
The existing terms of the Maiden Quota Share provide that AII receives a ceding commission based on a percentage of ceded written premiums with respect to all Covered Business. The ceding commission with respect to all Covered Business, other than the retail commercial package business, is adjusted on a quarterly basis to between 30% and 31% of ceded premium depending on the percentage of the total Subject Premium that is derived from the Company’s Specialty Risk and Extended Warranty segment, exclusive of European medical liability business included within that segment. The ceding commission for the Company’s retail commercial package business is 34.375% of ceded premium. The Maiden Quota Share, which had an initial term of three years, was renewed through June 30, 2014.
On March 5, 2013, after receipt of approval from each of the Company’s and Maiden’s Audit Committee, the Company and Maiden executed an amendment to the Maiden Quota Share, which provides for the extension of the term of the Maiden Quota Share to July 1, 2016. The amendment further provides that, effective January 1, 2013, AII will receive a ceding commission of 31% of ceded written premiums with respect to all Covered Business other than retail commercial package business, for which the ceding commission will remain 34.375%. Lastly, with regards to the Specialty Program portion of Covered Business only, excluding workers’ compensation business included in the Company’s Specialty Program segment from July 1, 2007 through December 31, 2012, the Company will be responsible for ultimate net loss otherwise recoverable from Maiden Insurance to the extent that the loss ratio to Maiden Insurance, which shall be determined on an inception to date basis from July 1, 2007 through the date of calculation, is between 81.5% and 95%.
The description of the amendment is qualified in its entirety by reference to the full text of the amendment, which is filed as Exhibit 10.1 to this Form 8-K and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
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Exhibit No.
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Description
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10.1
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Endorsement No.2 to the Amended and Restated Quota Share Reinsurance Agreement, dated March 7, 2013, between AmTrust International Insurance, Ltd. and Maiden Insurance Company Ltd.
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SIGNATURE
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.
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(Registrant)
Date March 11, 2013
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/s/ Stephen Ungar
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Stephen Ungar
General Counsel and Secretary
ENDORSEMENT NO. 2
to the
AMENDED AND RESTATED
QUOTA SHARE REINSURANCE AGREEMENT
(hereinafter referred to as the ‘Agreement”)
BETWEEN
AMTRUST INTERNATIONAL INSURANCE, LTD.
HAMILTON, BERMUDA
(hereinafter referred to as the “Company”)
AND
MAIDEN INSURANCE COMPANY LTD.
HAMILTON, BERMUDA
(hereinafter referred to as the “Reinsurer”)
IT IS HEREBY AGREED, effective as of 12:01 a.m., Eastern Standard Time, January 1, 2013, Paragraph C of ARTICLE VI – PREMIUM AND CEDING COMMISSION shall be deleted in its entirety and the following substituted therefor:
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A.
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The Reinsurer shall allow the Company a 31% commission on all Subject Premium ceded hereunder and attributable to Covered Business, except that the Reinsurer shall allow the Company a 34.375% commission on the UBI UEP and Subject Premium related to Retail Commercial Package Business. The Company and Reinsurer acknowledge and agree that the commission payable hereunder shall be subject to appropriate adjustments if Additional Business is reinsured hereunder as described in Section B of Article I hereof. The Company shall allow the Reinsurer return commission on return premiums at the rate in effect when the return premiums were originally ceded to the Reinsurer. It is expressly agreed that the ceding commission allowed the Company includes provision for all commissions, taxes, assessments (other than assessments based on losses of an Affiliate as a ceding company under an Underlying Reinsurance Agreement) and all other expenses of whatever nature of the Company and Affiliates, except loss adjustment expense.
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IT IS FURTHER AGREED, effective as of 12:01 a.m., Eastern Standard Time, March 6, 2013, Paragraph A. of ARTICLE XXI – TERM AND TERMINATION shall be deleted in its entirety and the following substituted therefor:
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A.
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This Agreement shall remain in effect until July 1, 2016, and shall automatically renew for successive three-year periods thereafter, unless the Reinsurer or Company elects to
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terminate this Agreement effective as of July 1, 2016 or as of the expiration of any successive three-year period. If the Reinsurer or Company elects to so terminate this Agreement, it shall give written notice to the other party hereto not less than nine months prior to either July 1, 2016 or the expiration of any successive three-year period.
IT IS FURTHER AGREED, as of the Effective Time, 12:01 a.m., Eastern Standard Time, July 1, 2007, Paragraph A. of ARTICLE V – LIABILITY OF THE REINSURER
shall be deleted in its entirety and the following substituted therefor:
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A.
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1. Commencing as of the Effective Time, except as otherwise provided on Schedule A, as now stated and as amended from time to time with respect to Additional Business and Excess Retention Business, the Company hereby agrees to cede to the Reinsurer, and the Reinsurer agrees to accept and reinsure, the Ultimate Net Loss of the Company equal to forty percent (40%) of the Affiliate Ultimate Net Loss with respect to Covered Business ceded to the Company by each Affiliate, subject to all other terms and conditions set forth in this Agreement. For purposes of this Agreement “Affiliate Ultimate Net Loss” means the sum actually paid or to be paid by such Affiliate in settlement of losses for which it is liable in respect of the Covered Business, after making deductions for all inuring reinsurance (other than reinsurance with any direct or indirect subsidiary of AmTrust), whether collectible or not, and all Recoveries.
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2. Notwithstanding the above, as respects the specialty middle-market (as defined in section A.3. of Schedule A) portion of Covered Business only, excluding workers’ compensation business included therein for the period from the Effective Time through December 31, 2012, the Company shall be responsible for all Ultimate Net Loss otherwise recoverable from the Reinsurer under this Agreement above a Loss Ratio to the Reinsurer of eighty-one and one-half percent (81.5%) up to a Loss Ratio to the Reinsurer of ninety-five percent (95%). For purposes of this Agreement, “Loss Ratio” means the total of Ultimate Net Loss incurred by the Reinsurer, from the Effective Time through the date of calculation, for which the Reinsurer would be responsible under this Agreement in the absence of this provision, divided by the Reinsurer’s earned premium during that same period.
3. Without limiting the generality of the foregoing, the Reinsurer shall be liable for its proportionate share of any experience-related premium rebates or credits to policyholders under Policies of workers compensation insurance, and shall benefit proportionately to the extent any such policyholder pays any additional premiums as a result of the experience under such Policies.
IN WITNESS WHEREOF the parties hereto, by their respective duly authorized officers, have executed this ENDORSEMENT NO. 2 to the Agreement, in duplicate, as of the dates recorded below.
AMTRUST INTERNATIONAL INSURANCE, LTD.
By:
/s/ Michael F. Bott
Dated:
March 7, 2013
MAIDEN INSURANCE COMPANY LTD.
By:
/s/ Michael J. Tait
Dated:
March 7, 2013