x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended September 30, 2016
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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04-3106389
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(State or other jurisdiction of
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(IRS Employer Identification No.)
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incorporation or organization)
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59 Maiden Lane, 43rd Floor, New York, New York
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10038
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
x
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Accelerated filer
¨
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Non-accelerated filer
¨
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Smaller reporting company
¨
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(Do not check if a smaller reporting company)
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Page
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Notes to Consolidated Financial Statements
(unaudited)
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September 30,
2016 |
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December 31,
2015 |
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ASSETS
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(Unaudited)
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(Audited)
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Investments:
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Fixed maturities, available-for-sale, at fair value (amortized cost $6,800,294; $5,482,042)
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$
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7,043,815
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$
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5,433,797
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Equity securities, available-for-sale, at fair value (cost $160,011; $109,346)
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165,743
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104,497
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Equity securities, trading, at fair value (cost $34,091; $26,937)
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34,439
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27,271
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Short-term investments
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49,008
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84,266
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Equity investment in unconsolidated subsidiaries – related party
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153,040
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138,023
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Other investments (related party $67,077; $64,869; recorded at fair value $40,267; $30,309)
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125,201
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99,012
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Total investments
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7,571,246
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5,886,866
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Cash and cash equivalents
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1,092,836
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931,970
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Restricted cash and cash equivalents
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557,159
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380,699
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Accrued interest and dividends
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52,569
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51,487
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Premiums receivable, net
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2,405,638
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2,115,653
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Reinsurance recoverable (related party $2,376,739; $1,963,140)
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4,040,073
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3,008,670
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Prepaid reinsurance premium (related party $1,196,420; $1,066,961)
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2,018,372
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1,531,866
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Other assets (related party $177,352; $189,223; recorded at fair value $332,085; $264,001)
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1,393,379
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1,398,064
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Deferred policy acquisition costs
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964,642
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704,243
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Property and equipment, net
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339,063
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281,456
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Goodwill
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654,861
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432,700
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Intangible assets
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429,700
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367,345
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$
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21,519,538
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$
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17,091,019
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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Liabilities:
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Loss and loss adjustment expense reserves
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$
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9,427,770
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$
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7,208,367
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Unearned premiums
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4,900,926
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4,014,728
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Ceded reinsurance premiums payable (related party $734,103; $379,988)
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932,199
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651,051
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Accrued expenses and other liabilities (related party $167,975; $167,975; recorded at fair value $92,337; $132,558)
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1,317,386
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1,140,830
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Debt
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1,235,316
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989,356
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Total liabilities
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17,813,597
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14,004,332
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Commitments and contingencies
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Redeemable non-controlling interest
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1,187
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1,172
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Stockholders’ equity:
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Common stock, $0.01 par value; 500,000 shares authorized; 196,455 issued in 2016 and 2015, respectively; 170,427 and 175,915 outstanding in 2016 and 2015, respectively
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1,965
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1,964
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Preferred stock, $0.01 par value; 10,000 shares authorized; 5,399 and 4,968 issued and outstanding; $913,750 and $482,500 aggregated liquidation preference in 2016 and 2015, respectively.
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913,750
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482,500
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Additional paid-in capital
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1,376,463
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1,383,492
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Treasury stock at cost; 26,028 and 20,540 shares in 2016 and 2015, respectively
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(311,328
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)
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(162,867
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)
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Accumulated other comprehensive loss, net of tax
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(51,024
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(130,262
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Retained earnings
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1,591,664
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1,334,233
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Total AmTrust Financial Services, Inc. equity
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3,521,490
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2,909,060
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Non-controlling interest
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183,264
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176,455
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Total stockholders’ equity
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3,704,754
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3,085,515
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$
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21,519,538
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$
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17,091,019
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Three Months Ended September 30,
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Nine Months Ended September 30,
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2016
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2015
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2016
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2015
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Revenues:
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Premium income:
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Net written premium
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$
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1,216,050
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$
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1,142,983
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$
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3,705,165
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$
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3,194,893
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Change in unearned premium
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(19,814
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)
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(97,575
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(252,895
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)
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(231,138
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)
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Net earned premium
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1,196,236
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1,045,408
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3,452,270
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2,963,755
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Service and fee income (related parties - three months $19,367; $19,250 and nine months $61,137; $57,935)
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146,611
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126,143
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429,082
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346,766
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Net investment income
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59,919
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40,425
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160,079
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111,281
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Net realized gain on investments
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8,230
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17,682
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31,304
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30,693
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Total revenues
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1,410,996
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1,229,658
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4,072,735
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3,452,495
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Expenses:
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Loss and loss adjustment expense
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811,048
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709,604
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2,310,514
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1,961,362
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Acquisition costs and other underwriting expenses (net of ceding commission - related party - three months $158,216; $138,036 and nine months $440,561; $385,945)
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283,958
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258,016
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847,395
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728,402
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Other
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137,542
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116,900
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398,698
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313,487
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Total expenses
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1,232,548
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1,084,520
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3,556,607
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3,003,251
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Income before other income (expense), income taxes and equity in earnings of unconsolidated subsidiaries
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178,448
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145,138
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516,128
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449,244
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Other income (loss):
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Interest expense (net of interest income - related party - three months $2,061; $2,115 and nine months $6,436; $6,514)
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(23,950
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)
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(12,862
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)
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(61,388
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)
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(32,763
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)
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Loss on extinguishment of debt
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—
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(557
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)
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—
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(5,271
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)
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Gain on investment in life settlement contracts net of profit commission
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5,485
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4,616
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28,891
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19,085
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Foreign currency (loss) gain
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(8,320
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)
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24,721
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(70,428
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)
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17,355
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Acquisition gain on purchase
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—
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5,826
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48,775
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5,826
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Total other income (loss)
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(26,785
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)
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21,744
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(54,150
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)
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4,232
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Income before income taxes and equity in earnings of unconsolidated subsidiaries
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151,663
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166,882
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461,978
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453,476
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Provision for income taxes
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35,516
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(12,649
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)
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91,160
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38,635
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Income before equity in earnings of unconsolidated subsidiaries
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116,147
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179,531
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370,818
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414,841
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Equity in earnings of unconsolidated subsidiaries – related parties
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1,954
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13,477
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12,532
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23,048
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Net income
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$
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118,101
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$
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193,008
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$
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383,350
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$
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437,889
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Net income attributable to redeemable non-controlling interest and non-controlling interest of subsidiaries
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|
(2,975
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)
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(1,511
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)
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(12,809
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)
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(6,940
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)
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Net income attributable to AmTrust Financial Services, Inc.
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$
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115,126
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$
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191,497
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$
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370,541
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$
|
430,949
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Dividends on preferred stock
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|
(11,576
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)
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(8,789
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)
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(31,943
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)
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(22,797
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)
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Net income attributable to AmTrust common stockholders
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$
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103,550
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$
|
182,708
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$
|
338,598
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$
|
408,152
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Earnings per common share:
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Basic earnings per share
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$
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0.61
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$
|
1.10
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$
|
1.96
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|
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$
|
2.48
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|
Diluted earnings per share
|
|
$
|
0.60
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$
|
1.09
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$
|
1.93
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|
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$
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2.43
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Dividends declared per common share
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$
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0.17
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$
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0.15
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$
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0.47
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$
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0.40
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Net realized loss on investments:
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|
|
|
|
|
|
|
|
|
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||||
Total other-than-temporary impairment loss
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$
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(9,461
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)
|
|
$
|
(7,636
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)
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$
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(26,417
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)
|
|
$
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(10,118
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)
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Portion of loss recognized in other comprehensive income
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—
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—
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—
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|
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—
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|
||||
Net impairment losses recognized in earnings
|
|
(9,461
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)
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(7,636
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)
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(26,417
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)
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(10,118
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)
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||||
Net realized gain on available for sale securities
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|
14,380
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|
16,049
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|
53,106
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|
29,306
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|
||||
Net unrealized gain on trading securities and other investments
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|
3,311
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|
|
9,269
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|
4,615
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|
|
11,505
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|
||||
Net realized investment gain (loss)
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|
$
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8,230
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|
|
$
|
17,682
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|
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$
|
31,304
|
|
|
$
|
30,693
|
|
|
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Three Months Ended September 30,
|
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Nine Months Ended September 30,
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||||||||||||
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|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net income
|
|
$
|
118,101
|
|
|
$
|
193,008
|
|
|
$
|
383,350
|
|
|
$
|
437,889
|
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency translation adjustments
|
|
(89,218
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)
|
|
2,128
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|
|
(173,883
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)
|
|
(49,204
|
)
|
||||
Change in fair value of interest rate swap
|
|
253
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|
|
107
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|
|
540
|
|
|
297
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|
||||
Unrealized gain (loss) on securities:
|
|
|
|
|
|
|
|
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||||||||
Gross unrealized holding gain (loss)
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|
31,529
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|
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(25,611
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)
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|
331,761
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|
|
(106,105
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)
|
||||
Tax expense (benefit) arising during period
|
|
(41,602
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)
|
|
(8,964
|
)
|
|
61,187
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|
|
(37,137
|
)
|
||||
Net unrealized holding gain (loss)
|
|
73,131
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|
|
(16,647
|
)
|
|
270,574
|
|
|
(68,968
|
)
|
||||
Reclassification adjustments for investment gain (loss) included in net income, net of tax:
|
|
|
|
|
|
|
|
|
||||||||
Other-than-temporary impairment loss
|
|
5,989
|
|
|
1,088
|
|
|
16,526
|
|
|
1,046
|
|
||||
Other net realized (gain) loss on investments
|
|
(9,388
|
)
|
|
751
|
|
|
(34,519
|
)
|
|
(412
|
)
|
||||
Reclassification adjustments for investment gain (loss) included in net income:
|
|
(3,399
|
)
|
|
1,839
|
|
|
(17,993
|
)
|
|
634
|
|
||||
Other comprehensive income (loss), net of tax
|
|
$
|
(19,233
|
)
|
|
$
|
(12,573
|
)
|
|
$
|
79,238
|
|
|
$
|
(117,241
|
)
|
Comprehensive income
|
|
98,868
|
|
|
180,435
|
|
|
462,588
|
|
|
320,648
|
|
||||
Less: Comprehensive income attributable to redeemable non-controlling interest and non-controlling interest
|
|
2,975
|
|
|
1,511
|
|
|
12,809
|
|
|
6,940
|
|
||||
Comprehensive income attributable to AmTrust Financial Services, Inc.
|
|
$
|
95,893
|
|
|
$
|
178,924
|
|
|
$
|
449,779
|
|
|
$
|
313,708
|
|
|
Nine Months Ended September 30,
|
||||||
|
2016
|
|
2015
|
||||
Cash flows from operating activities:
|
|
|
|
|
|
||
Net income
|
$
|
383,350
|
|
|
$
|
437,889
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
89,779
|
|
|
61,602
|
|
||
Net amortization of bond premium or discount
|
21,983
|
|
|
11,845
|
|
||
Equity earnings on investment in unconsolidated subsidiaries
|
(12,532
|
)
|
|
(23,048
|
)
|
||
Gain on investment in life settlement contracts, net
|
(28,891
|
)
|
|
(19,085
|
)
|
||
Realized gain on available for sale securities and unrealized gain on trading securities
|
(57,721
|
)
|
|
(40,811
|
)
|
||
Non-cash write-down of available for sale securities
|
26,417
|
|
|
10,118
|
|
||
Discount on notes payable
|
4,420
|
|
|
4,226
|
|
||
Stock based compensation
|
17,433
|
|
|
16,678
|
|
||
Loss on extinguishment of debt
|
—
|
|
|
5,271
|
|
||
Bad debt expense
|
15,199
|
|
|
13,943
|
|
||
Foreign currency loss (gain)
|
70,428
|
|
|
(17,355
|
)
|
||
Acquisition gain on purchase
|
(48,775
|
)
|
|
(5,826
|
)
|
||
Changes in assets - (increase) decrease:
|
|
|
|
|
|
||
Premiums and note receivables
|
(265,477
|
)
|
|
(492,354
|
)
|
||
Reinsurance recoverable
|
(361,794
|
)
|
|
(510,397
|
)
|
||
Deferred policy acquisition costs, net
|
(260,399
|
)
|
|
(87,597
|
)
|
||
Prepaid reinsurance premiums
|
(486,506
|
)
|
|
(304,361
|
)
|
||
Other assets
|
177,545
|
|
|
(428,504
|
)
|
||
Changes in liabilities - increase (decrease):
|
|
|
|
||||
Reinsurance premium payable
|
316,497
|
|
|
138,192
|
|
||
Loss and loss expense reserve
|
1,189,411
|
|
|
999,371
|
|
||
Unearned premiums
|
513,141
|
|
|
495,499
|
|
||
Funds held under reinsurance treaties
|
(7,487
|
)
|
|
20,685
|
|
||
Accrued expenses and other current liabilities
|
(669,059
|
)
|
|
360,490
|
|
||
Deferred taxes
|
212,952
|
|
|
(178,363
|
)
|
||
Net cash provided by operating activities
|
839,914
|
|
|
468,108
|
|
||
Cash flows from investing activities:
|
|
|
|
|
|
||
Purchases of fixed maturities, available-for-sale
|
(1,839,005
|
)
|
|
(1,671,330
|
)
|
||
Purchases of equity securities, available-for-sale
|
(129,716
|
)
|
|
(32,898
|
)
|
||
Purchase of equity securities, trading
|
(150,654
|
)
|
|
(154,524
|
)
|
||
Purchase of other investments
|
(22,555
|
)
|
|
(74,562
|
)
|
||
Sales of fixed maturities, available-for-sale
|
1,537,296
|
|
|
971,448
|
|
||
Sales of equity securities, available-for-sale
|
110,895
|
|
|
18,639
|
|
||
Sales of equity securities, trading
|
155,502
|
|
|
161,723
|
|
||
Sales of other investments
|
3,371
|
|
|
2,960
|
|
||
Net sale of short term investments
|
(99,320
|
)
|
|
48,165
|
|
||
Net (purchase) sale of securities sold but not purchased
|
(14,848
|
)
|
|
75,573
|
|
||
Acquisition of life settlement contracts
|
(15,880
|
)
|
|
—
|
|
||
Receipt of life settlement contract proceeds
|
38,247
|
|
|
86,033
|
|
||
Acquisition of subsidiaries, net of cash obtained
|
(139,038
|
)
|
|
(219,568
|
)
|
||
Change in restricted cash and cash equivalents
|
(176,428
|
)
|
|
(70,846
|
)
|
||
Purchase of property and equipment
|
(93,787
|
)
|
|
(100,421
|
)
|
||
Net cash used in investing activities
|
(835,920
|
)
|
|
(959,608
|
)
|
||
|
|
|
|
1.
|
Basis of Reporting
|
2.
|
Recent Accounting Pronouncements
|
3.
|
Investments
|
(Amounts in Thousands)
As of September 30, 2016 |
|
Cost or amortized cost
|
|
Gross unrealized gains
|
|
Gross unrealized losses
|
|
Fair Value
|
||||||||
Preferred stock
|
|
$
|
4,044
|
|
|
$
|
—
|
|
|
$
|
(48
|
)
|
|
$
|
3,996
|
|
Common stock
|
|
155,967
|
|
|
12,067
|
|
|
(6,287
|
)
|
|
161,747
|
|
||||
U.S. treasury securities
|
|
292,558
|
|
|
3,179
|
|
|
(16
|
)
|
|
295,721
|
|
||||
U.S. government agencies
|
|
7,567
|
|
|
112
|
|
|
—
|
|
|
7,679
|
|
||||
Municipal bonds
|
|
850,475
|
|
|
26,974
|
|
|
(1,460
|
)
|
|
875,989
|
|
||||
Foreign government
|
|
134,355
|
|
|
8,435
|
|
|
(528
|
)
|
|
142,262
|
|
||||
Corporate bonds:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Finance
|
|
1,511,610
|
|
|
70,747
|
|
|
(12,751
|
)
|
|
1,569,606
|
|
||||
Industrial
|
|
2,087,449
|
|
|
114,255
|
|
|
(18,256
|
)
|
|
2,183,448
|
|
||||
Utilities
|
|
207,328
|
|
|
8,244
|
|
|
(1,869
|
)
|
|
213,703
|
|
||||
Commercial mortgage backed securities
|
|
174,224
|
|
|
6,143
|
|
|
(650
|
)
|
|
179,717
|
|
||||
Residential mortgage backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Agency backed
|
|
1,028,335
|
|
|
32,991
|
|
|
(81
|
)
|
|
1,061,245
|
|
||||
Non-agency backed
|
|
61,910
|
|
|
1,662
|
|
|
(377
|
)
|
|
63,195
|
|
||||
Collateralized loan / debt obligations
|
|
419,597
|
|
|
7,694
|
|
|
(1,622
|
)
|
|
425,669
|
|
||||
Asset-backed securities
|
|
24,886
|
|
|
814
|
|
|
(119
|
)
|
|
25,581
|
|
||||
|
|
$
|
6,960,305
|
|
|
$
|
293,317
|
|
|
$
|
(44,064
|
)
|
|
$
|
7,209,558
|
|
(Amounts in Thousands)
As of December 31, 2015 |
|
Cost or amortized cost
|
|
Gross unrealized gains
|
|
Gross unrealized losses
|
|
Fair value
|
||||||||
Preferred stock
|
|
$
|
4,869
|
|
|
$
|
150
|
|
|
$
|
(30
|
)
|
|
$
|
4,989
|
|
Common stock
|
|
104,477
|
|
|
3,816
|
|
|
(8,785
|
)
|
|
99,508
|
|
||||
U.S. treasury securities
|
|
69,547
|
|
|
1,470
|
|
|
(258
|
)
|
|
70,759
|
|
||||
U.S. government agencies
|
|
45,586
|
|
|
235
|
|
|
(263
|
)
|
|
45,558
|
|
||||
Municipal bonds
|
|
530,004
|
|
|
11,952
|
|
|
(1,530
|
)
|
|
540,426
|
|
||||
Foreign government
|
|
109,645
|
|
|
4,912
|
|
|
(812
|
)
|
|
113,745
|
|
||||
Corporate bonds:
|
|
|
|
|
|
|
|
|
||||||||
Finance
|
|
1,358,765
|
|
|
38,058
|
|
|
(34,393
|
)
|
|
1,362,430
|
|
||||
Industrial
|
|
1,706,772
|
|
|
20,542
|
|
|
(80,251
|
)
|
|
1,647,063
|
|
||||
Utilities
|
|
157,067
|
|
|
1,548
|
|
|
(9,115
|
)
|
|
149,500
|
|
||||
Commercial mortgage backed securities
|
|
151,164
|
|
|
1,334
|
|
|
(1,180
|
)
|
|
151,318
|
|
||||
Residential mortgage backed securities:
|
|
|
|
|
|
|
|
|
||||||||
Agency backed
|
|
964,059
|
|
|
14,912
|
|
|
(4,133
|
)
|
|
974,838
|
|
||||
Non-agency backed
|
|
124,046
|
|
|
322
|
|
|
(4,139
|
)
|
|
120,229
|
|
||||
Collateralized loan / debt obligation
|
|
232,245
|
|
|
10
|
|
|
(6,161
|
)
|
|
226,094
|
|
||||
Asset backed securities
|
|
33,142
|
|
|
4
|
|
|
(1,309
|
)
|
|
31,837
|
|
||||
|
|
$
|
5,591,388
|
|
|
$
|
99,265
|
|
|
$
|
(152,359
|
)
|
|
$
|
5,538,294
|
|
|
|
September 30, 2016
|
|
December 31, 2015
|
||||||||||||
(Amounts in Thousands)
|
|
Amortized Cost
|
|
Fair Value
|
|
Amortized Cost
|
|
Fair Value
|
||||||||
Due in one year or less
|
|
$
|
257,764
|
|
|
$
|
258,760
|
|
|
$
|
125,563
|
|
|
$
|
124,763
|
|
Due after one through five years
|
|
1,487,745
|
|
|
1,523,695
|
|
|
913,365
|
|
|
909,634
|
|
||||
Due after five through ten years
|
|
2,947,206
|
|
|
3,091,368
|
|
|
2,586,061
|
|
|
2,537,734
|
|
||||
Due after ten years
|
|
398,638
|
|
|
414,597
|
|
|
352,397
|
|
|
357,288
|
|
||||
Mortgage and asset backed securities
|
|
1,708,941
|
|
|
1,755,395
|
|
|
1,504,656
|
|
|
1,504,378
|
|
||||
Total fixed maturities
|
|
$
|
6,800,294
|
|
|
$
|
7,043,815
|
|
|
$
|
5,482,042
|
|
|
$
|
5,433,797
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(Amounts in Thousands)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Equity securities recognized in earnings
|
|
$
|
3,021
|
|
|
$
|
84
|
|
|
$
|
19,977
|
|
|
$
|
1,276
|
|
Fixed-maturity securities recognized in earnings
|
|
—
|
|
|
7,552
|
|
|
—
|
|
|
8,842
|
|
||||
Other investments
|
|
6,440
|
|
|
—
|
|
|
6,440
|
|
|
—
|
|
||||
|
|
$
|
9,461
|
|
|
$
|
7,636
|
|
|
$
|
26,417
|
|
|
$
|
10,118
|
|
|
|
Less Than 12 Months
|
|
12 Months or More
|
|
Total
|
||||||||||||||||||||||||
(Amounts in Thousands)
As of September 30, 2016 |
|
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
|
|
$
|
49,144
|
|
|
$
|
(6,039
|
)
|
|
100
|
|
|
$
|
1,279
|
|
|
$
|
(297
|
)
|
|
24
|
|
|
$
|
50,423
|
|
|
$
|
(6,336
|
)
|
U.S. treasury securities
|
|
26,829
|
|
|
(15
|
)
|
|
19
|
|
|
649
|
|
|
(1
|
)
|
|
1
|
|
|
27,478
|
|
|
(16
|
)
|
||||||
U.S. government agencies
|
|
178
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
178
|
|
|
—
|
|
||||||
Municipal bonds
|
|
103,790
|
|
|
(895
|
)
|
|
98
|
|
|
12,175
|
|
|
(565
|
)
|
|
24
|
|
|
115,965
|
|
|
(1,460
|
)
|
||||||
Foreign government
|
|
10,311
|
|
|
(528
|
)
|
|
12
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,311
|
|
|
(528
|
)
|
||||||
Corporate bonds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Finance
|
|
203,687
|
|
|
(11,638
|
)
|
|
121
|
|
|
50,990
|
|
|
(1,113
|
)
|
|
27
|
|
|
254,677
|
|
|
(12,751
|
)
|
||||||
Industrial
|
|
237,197
|
|
|
(14,607
|
)
|
|
126
|
|
|
87,030
|
|
|
(3,647
|
)
|
|
54
|
|
|
324,227
|
|
|
(18,254
|
)
|
||||||
Utilities
|
|
22,028
|
|
|
(1,116
|
)
|
|
21
|
|
|
8,922
|
|
|
(754
|
)
|
|
4
|
|
|
30,950
|
|
|
(1,870
|
)
|
||||||
Commercial mortgage backed securities
|
|
13,077
|
|
|
(216
|
)
|
|
12
|
|
|
12,202
|
|
|
(435
|
)
|
|
38
|
|
|
25,279
|
|
|
(651
|
)
|
||||||
Residential mortgage backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Agency backed
|
|
9,265
|
|
|
(59
|
)
|
|
27
|
|
|
2,414
|
|
|
(22
|
)
|
|
22
|
|
|
11,679
|
|
|
(81
|
)
|
||||||
Non-agency backed
|
|
17,544
|
|
|
(376
|
)
|
|
18
|
|
|
63
|
|
|
(2
|
)
|
|
2
|
|
|
17,607
|
|
|
(378
|
)
|
||||||
Collateralized loan / debt obligations
|
|
47,636
|
|
|
(273
|
)
|
|
19
|
|
|
60,349
|
|
|
(1,349
|
)
|
|
23
|
|
|
107,985
|
|
|
(1,622
|
)
|
||||||
Asset-backed securities
|
|
9,462
|
|
|
(116
|
)
|
|
19
|
|
|
510
|
|
|
(3
|
)
|
|
6
|
|
|
9,972
|
|
|
(119
|
)
|
||||||
Total temporarily impaired securities
|
|
$
|
750,148
|
|
|
$
|
(35,878
|
)
|
|
594
|
|
|
$
|
236,583
|
|
|
$
|
(8,188
|
)
|
|
225
|
|
|
$
|
986,731
|
|
|
$
|
(44,066
|
)
|
|
|
Less Than 12 Months
|
|
12 Months or More
|
|
Total
|
||||||||||||||||||||||||
(Amounts in Thousands)
As of December 31, 2015 |
|
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
|
|
$
|
59,302
|
|
|
$
|
(8,711
|
)
|
|
67
|
|
|
$
|
402
|
|
|
$
|
(104
|
)
|
|
2
|
|
|
$
|
59,704
|
|
|
$
|
(8,815
|
)
|
U.S. treasury securities
|
|
31,658
|
|
|
(232
|
)
|
|
77
|
|
|
2,586
|
|
|
(26
|
)
|
|
8
|
|
|
34,244
|
|
|
(258
|
)
|
||||||
U.S. government agencies
|
|
22,412
|
|
|
(262
|
)
|
|
20
|
|
|
182
|
|
|
(1
|
)
|
|
2
|
|
|
22,594
|
|
|
(263
|
)
|
||||||
Municipal bonds
|
|
121,550
|
|
|
(867
|
)
|
|
111
|
|
|
17,163
|
|
|
(663
|
)
|
|
30
|
|
|
138,713
|
|
|
(1,530
|
)
|
||||||
Foreign government
|
|
18,598
|
|
|
(688
|
)
|
|
27
|
|
|
5,977
|
|
|
(124
|
)
|
|
1
|
|
|
24,575
|
|
|
(812
|
)
|
||||||
Corporate bonds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Finance
|
|
604,898
|
|
|
(33,068
|
)
|
|
349
|
|
|
59,020
|
|
|
(1,325
|
)
|
|
22
|
|
|
663,918
|
|
|
(34,393
|
)
|
||||||
Industrial
|
|
858,632
|
|
|
(65,887
|
)
|
|
633
|
|
|
82,495
|
|
|
(14,364
|
)
|
|
55
|
|
|
941,127
|
|
|
(80,251
|
)
|
||||||
Utilities
|
|
79,358
|
|
|
(5,305
|
)
|
|
113
|
|
|
7,712
|
|
|
(3,810
|
)
|
|
5
|
|
|
87,070
|
|
|
(9,115
|
)
|
||||||
Commercial mortgage backed securities
|
|
35,405
|
|
|
(1,079
|
)
|
|
100
|
|
|
2,870
|
|
|
(101
|
)
|
|
6
|
|
|
38,275
|
|
|
(1,180
|
)
|
||||||
Residential mortgage backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Agency backed
|
|
334,224
|
|
|
(2,788
|
)
|
|
163
|
|
|
35,446
|
|
|
(1,345
|
)
|
|
29
|
|
|
369,670
|
|
|
(4,133
|
)
|
||||||
Non-agency backed
|
|
95,001
|
|
|
(4,077
|
)
|
|
39
|
|
|
4,023
|
|
|
(62
|
)
|
|
4
|
|
|
99,024
|
|
|
(4,139
|
)
|
||||||
Collateralized loan / debt obligations
|
|
201,086
|
|
|
(6,161
|
)
|
|
78
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
201,086
|
|
|
(6,161
|
)
|
||||||
Asset-backed securities
|
|
30,302
|
|
|
(1,309
|
)
|
|
70
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30,302
|
|
|
(1,309
|
)
|
||||||
Total temporarily impaired securities
|
|
$
|
2,492,426
|
|
|
$
|
(130,434
|
)
|
|
1,847
|
|
|
$
|
217,876
|
|
|
$
|
(21,925
|
)
|
|
164
|
|
|
$
|
2,710,302
|
|
|
$
|
(152,359
|
)
|
(Amounts in Thousands)
As of September 30, 2016 |
|
Cost or amortized cost
|
|
Gross unrealized gains
|
|
Gross unrealized losses
|
|
Market value
|
||||||||
Common stock
|
|
$
|
34,091
|
|
|
$
|
788
|
|
|
$
|
(440
|
)
|
|
$
|
34,439
|
|
(Amounts in Thousands)
As of December 31, 2015 |
|
Cost or amortized cost
|
|
Gross unrealized gains
|
|
Gross unrealized losses
|
|
Market value
|
||||||||
Common stock
|
|
$
|
26,937
|
|
|
$
|
739
|
|
|
$
|
(405
|
)
|
|
$
|
27,271
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(Amounts in Thousands)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Fixed maturities, available-for-sale
|
|
$
|
59,712
|
|
|
$
|
39,452
|
|
|
$
|
152,140
|
|
|
$
|
107,404
|
|
Equity securities, available-for-sale
|
|
465
|
|
|
1,183
|
|
|
6,927
|
|
|
2,253
|
|
||||
Equity securities, trading
|
|
(40
|
)
|
|
(640
|
)
|
|
(318
|
)
|
|
(600
|
)
|
||||
Cash and short term investments
|
|
410
|
|
|
844
|
|
|
2,182
|
|
|
3,432
|
|
||||
|
|
60,547
|
|
|
40,839
|
|
|
160,931
|
|
|
112,489
|
|
||||
Investment expenses
|
|
(628
|
)
|
|
(414
|
)
|
|
(852
|
)
|
|
(1,208
|
)
|
||||
|
|
$
|
59,919
|
|
|
$
|
40,425
|
|
|
$
|
160,079
|
|
|
$
|
111,281
|
|
(Amounts in Thousands)
Three Months Ended September 30, 2016
|
|
Gross Gains
|
|
Gross Losses
|
|
Net Gains (Losses)
|
||||||
Fixed maturities, available-for-sale
|
|
$
|
17,535
|
|
|
$
|
(2,582
|
)
|
|
$
|
14,953
|
|
Equity securities, available-for-sale
|
|
553
|
|
|
(1,126
|
)
|
|
(573
|
)
|
|||
Equity securities, trading
|
|
2,897
|
|
|
(1,902
|
)
|
|
995
|
|
|||
Other investments
|
|
3,449
|
|
|
(1,133
|
)
|
|
2,316
|
|
|||
Write-down of other invested assets
|
|
—
|
|
|
(6,440
|
)
|
|
(6,440
|
)
|
|||
Write-down of equity securities, available-for-sale
|
|
—
|
|
|
(3,021
|
)
|
|
(3,021
|
)
|
|||
|
|
$
|
24,434
|
|
|
$
|
(16,204
|
)
|
|
$
|
8,230
|
|
|
|
|
|
|
|
|
||||||
(Amounts in Thousands)
Three Months Ended September 30, 2015
|
|
Gross Gains
|
|
Gross Losses
|
|
Net Gains (Losses)
|
||||||
Fixed maturities, available-for-sale
|
|
$
|
21,435
|
|
|
$
|
(5,060
|
)
|
|
$
|
16,375
|
|
Equity securities, available-for-sale
|
|
—
|
|
|
(326
|
)
|
|
(326
|
)
|
|||
Equity securities, trading
|
|
12,310
|
|
|
(3,041
|
)
|
|
9,269
|
|
|||
Write-down of fixed maturities, available-for-sale
|
|
—
|
|
|
(7,552
|
)
|
|
(7,552
|
)
|
|||
Write-down of equity securities, available-for-sale
|
|
—
|
|
|
(84
|
)
|
|
(84
|
)
|
|||
|
|
$
|
33,745
|
|
|
$
|
(16,063
|
)
|
|
$
|
17,682
|
|
|
|
|
|
|
|
|
||||||
(Amounts in Thousands)
Nine Months Ended September 30, 2016 |
|
Gross Gains
|
|
Gross Losses
|
|
Net Gains (Losses)
|
||||||
Fixed maturities, available-for-sale
|
|
$
|
57,346
|
|
|
$
|
(4,199
|
)
|
|
$
|
53,147
|
|
Equity securities, available-for-sale
|
|
1,821
|
|
|
(1,862
|
)
|
|
(41
|
)
|
|||
Equity securities, trading
|
|
17,824
|
|
|
(14,396
|
)
|
|
3,428
|
|
|||
Other investments
|
|
1,189
|
|
|
(2
|
)
|
|
1,187
|
|
|||
Write-down of equity securities, available-for-sale
|
|
—
|
|
|
(19,977
|
)
|
|
(19,977
|
)
|
|||
Write-down of other investments
|
|
—
|
|
|
(6,440
|
)
|
|
(6,440
|
)
|
|||
|
|
$
|
78,180
|
|
|
$
|
(46,876
|
)
|
|
$
|
31,304
|
|
|
|
|
|
|
|
|
||||||
(Amounts in Thousands)
Nine Months Ended September 30, 2015 |
|
Gross Gains
|
|
Gross Losses
|
|
Net Gains (Losses)
|
||||||
Fixed maturities, available-for-sale
|
|
$
|
41,979
|
|
|
$
|
(12,902
|
)
|
|
$
|
29,077
|
|
Equity securities, available-for-sale
|
|
2,184
|
|
|
(1,955
|
)
|
|
229
|
|
|||
Equity securities, trading
|
|
19,047
|
|
|
(7,542
|
)
|
|
11,505
|
|
|||
Write-down of fixed maturities, available-for-sale
|
|
—
|
|
|
(8,842
|
)
|
|
(8,842
|
)
|
|||
Write-down of equity securities, available-for-sale
|
|
—
|
|
|
(1,276
|
)
|
|
(1,276
|
)
|
|||
|
|
$
|
63,210
|
|
|
$
|
(32,517
|
)
|
|
$
|
30,693
|
|
|
|
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
|
|
$
|
40,000
|
|
|
$
|
7,591
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
47,591
|
|
(1)
|
Notional amount is not representative of either market risk or credit risk and is not recorded in the consolidated balance sheet.
|
(Amounts in Thousands)
|
|
September 30, 2016
|
|
December 31, 2015
|
||||
Restricted cash and cash equivalents
|
|
$
|
557,159
|
|
|
$
|
380,699
|
|
Restricted investments - fixed maturities at fair value
|
|
1,880,536
|
|
|
1,490,547
|
|
||
Total restricted cash, cash equivalents, and investments
|
|
$
|
2,437,695
|
|
|
$
|
1,871,246
|
|
4.
|
Fair Value of Financial Instruments
|
(Amounts in Thousands)
As of September 30, 2016 |
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. treasury securities
|
|
$
|
295,721
|
|
|
$
|
295,721
|
|
|
$
|
—
|
|
|
$
|
—
|
|
U.S. government agencies
|
|
7,679
|
|
|
—
|
|
|
7,679
|
|
|
—
|
|
||||
Municipal bonds
|
|
875,989
|
|
|
—
|
|
|
875,989
|
|
|
—
|
|
||||
Foreign government
|
|
142,262
|
|
|
—
|
|
|
142,262
|
|
|
—
|
|
||||
Corporate bonds and other bonds:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Finance
|
|
1,569,606
|
|
|
—
|
|
|
1,569,606
|
|
|
—
|
|
||||
Industrial
|
|
2,183,448
|
|
|
—
|
|
|
2,183,448
|
|
|
—
|
|
||||
Utilities
|
|
213,703
|
|
|
—
|
|
|
213,703
|
|
|
—
|
|
||||
Commercial mortgage backed securities
|
|
179,717
|
|
|
—
|
|
|
171,846
|
|
|
7,871
|
|
||||
Residential mortgage backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Agency backed
|
|
1,061,245
|
|
|
—
|
|
|
1,061,245
|
|
|
—
|
|
||||
Non-agency backed
|
|
63,195
|
|
|
—
|
|
|
63,195
|
|
|
—
|
|
||||
Collateralized loan / debt obligations
|
|
425,669
|
|
|
—
|
|
|
403,936
|
|
|
21,733
|
|
||||
Asset-backed securities
|
|
25,581
|
|
|
—
|
|
|
25,581
|
|
|
—
|
|
||||
Equity securities, available-for-sale
|
|
165,743
|
|
|
111,489
|
|
|
21,075
|
|
|
33,179
|
|
||||
Equity securities, trading
|
|
34,439
|
|
|
34,439
|
|
|
—
|
|
|
—
|
|
||||
Short term investments
|
|
49,008
|
|
|
49,008
|
|
|
—
|
|
|
—
|
|
||||
Other investments
|
|
40,267
|
|
|
—
|
|
|
—
|
|
|
40,267
|
|
||||
Life settlement contracts
|
|
332,085
|
|
|
—
|
|
|
—
|
|
|
332,085
|
|
||||
|
|
$
|
7,665,357
|
|
|
$
|
490,657
|
|
|
$
|
6,739,565
|
|
|
$
|
435,135
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Equity securities sold but not yet purchased
|
|
$
|
23,770
|
|
|
$
|
23,770
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Life settlement contract profit commission
|
|
4,817
|
|
|
—
|
|
|
—
|
|
|
4,817
|
|
||||
Contingent consideration
|
|
59,267
|
|
|
—
|
|
|
—
|
|
|
59,267
|
|
||||
Derivatives
|
|
460
|
|
|
—
|
|
|
460
|
|
|
—
|
|
||||
|
|
$
|
88,314
|
|
|
$
|
23,770
|
|
|
$
|
460
|
|
|
$
|
64,084
|
|
(Amounts in Thousands)
As of December 31, 2015 |
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
U.S. treasury securities
|
|
$
|
70,759
|
|
|
$
|
70,759
|
|
|
$
|
—
|
|
|
$
|
—
|
|
U.S. government agencies
|
|
45,558
|
|
|
—
|
|
|
45,558
|
|
|
—
|
|
||||
Municipal bonds
|
|
540,426
|
|
|
—
|
|
|
540,426
|
|
|
—
|
|
||||
Foreign government
|
|
113,745
|
|
|
—
|
|
|
113,745
|
|
|
—
|
|
||||
Corporate bonds and other bonds:
|
|
|
|
|
|
|
|
|
||||||||
Finance
|
|
1,362,430
|
|
|
—
|
|
|
1,362,430
|
|
|
—
|
|
||||
Industrial
|
|
1,647,063
|
|
|
—
|
|
|
1,647,063
|
|
|
—
|
|
||||
Utilities
|
|
149,500
|
|
|
—
|
|
|
149,500
|
|
|
—
|
|
||||
Commercial mortgage backed securities
|
|
151,318
|
|
|
—
|
|
|
151,318
|
|
|
—
|
|
||||
Residential mortgage backed securities:
|
|
|
|
|
|
|
|
|
||||||||
Agency backed
|
|
974,838
|
|
|
—
|
|
|
974,838
|
|
|
—
|
|
||||
Non-agency backed
|
|
120,229
|
|
|
—
|
|
|
120,229
|
|
|
—
|
|
||||
Collateralized loan / debt obligations
|
|
226,094
|
|
|
—
|
|
|
226,094
|
|
|
—
|
|
||||
Asset-backed securities
|
|
31,837
|
|
|
—
|
|
|
31,837
|
|
|
—
|
|
||||
Equity securities, available-for-sale
|
|
104,497
|
|
|
38,563
|
|
|
28,723
|
|
|
37,211
|
|
||||
Equity securities, trading
|
|
27,271
|
|
|
27,271
|
|
|
—
|
|
|
—
|
|
||||
Short term investments
|
|
84,266
|
|
|
84,266
|
|
|
—
|
|
|
—
|
|
||||
Other investments
|
|
30,309
|
|
|
—
|
|
|
—
|
|
|
30,309
|
|
||||
Life settlement contracts
|
|
264,001
|
|
|
—
|
|
|
—
|
|
|
264,001
|
|
||||
|
|
$
|
5,944,141
|
|
|
$
|
220,859
|
|
|
$
|
5,391,761
|
|
|
$
|
331,521
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Equity securities sold but not yet purchased
|
|
$
|
18,163
|
|
|
$
|
18,163
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Fixed maturity securities sold but not yet purchased
|
|
20,455
|
|
|
—
|
|
|
20,455
|
|
|
—
|
|
||||
Life settlement contract profit commission
|
|
15,406
|
|
|
—
|
|
|
—
|
|
|
15,406
|
|
||||
Contingent consideration
|
|
77,457
|
|
|
—
|
|
|
—
|
|
|
77,457
|
|
||||
Derivatives
|
|
1,077
|
|
|
—
|
|
|
1,077
|
|
|
—
|
|
||||
|
|
$
|
132,558
|
|
|
$
|
18,163
|
|
|
$
|
21,532
|
|
|
$
|
92,863
|
|
•
|
Level 1 – Valuations are based on unadjusted quoted market prices in active markets for identical financial assets or liabilities.
|
•
|
Level 2 – Valuations of financial assets and liabilities are based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or liabilities in inactive markets obtained from third party pricing services or valuations based on models where the significant inputs are observable (e.g., interest rates, yield curves, prepayment speeds, default rates, loss severities, etc.) or can be corroborated by observable market data. The fair value of securities in this category are determined by management after reviewing market prices obtained from independent pricing services and brokers.
|
•
|
Level 3 – While the vast majority of the Company's investments are included in Level 2, the Company holds a number of investments that are not valued by a pricing service and estimates the fair value of these investments using various broker/dealers that use bid or ask prices. Due to the limited amount of observable market information, the Company includes the fair value estimates for these particular investments in Level 3. In conjunction with our investment portfolio managers, these fair value measurements are reviewed for reasonableness. Other investment valuations are based on unobservable inputs for assets and liabilities where there is little or no market activity. Management’s assumptions are used in internal valuation pricing models to determine the fair value of financial assets or liabilities, which may include projected cash flows, collateral performance or liquidity circumstances in the security or similar securities that may have occurred since the prior pricing period.
|
(Amounts in Thousands)
|
|
Balance as of June 30, 2016
|
|
Net income
|
|
Other comprehensive income
|
|
Purchases and issuances
|
|
Sales and settlements
|
|
Net transfers into (out of) Level 3
|
|
Balance as of September 30,
2016 |
||||||||||||||
Other investments
|
|
$
|
38,039
|
|
|
$
|
(6,403
|
)
|
|
$
|
6,124
|
|
|
$
|
249
|
|
|
$
|
(79
|
)
|
|
$
|
2,337
|
|
|
$
|
40,267
|
|
Equity securities, available-for-sale
|
|
24,764
|
|
|
(16,983
|
)
|
|
17,168
|
|
|
(2
|
)
|
|
(7,753
|
)
|
|
15,985
|
|
|
33,179
|
|
|||||||
Commercial mortgage backed securities
|
|
—
|
|
|
—
|
|
|
(194
|
)
|
|
—
|
|
|
—
|
|
|
8,065
|
|
|
7,871
|
|
|||||||
Collateralized loan / debt obligations
|
|
—
|
|
|
—
|
|
|
(15
|
)
|
|
—
|
|
|
—
|
|
|
21,748
|
|
|
21,733
|
|
|||||||
Life settlement contracts
|
|
304,434
|
|
|
23,290
|
|
|
—
|
|
|
4,550
|
|
|
(189
|
)
|
|
—
|
|
|
332,085
|
|
|||||||
Life settlement contract profit commission
|
|
(9,054
|
)
|
|
(763
|
)
|
|
—
|
|
|
—
|
|
|
5,000
|
|
|
—
|
|
|
(4,817
|
)
|
|||||||
Contingent consideration
|
|
(64,817
|
)
|
|
(400
|
)
|
|
—
|
|
|
(5,443
|
)
|
|
11,393
|
|
|
—
|
|
|
(59,267
|
)
|
|||||||
Total
|
|
$
|
293,366
|
|
|
$
|
(1,259
|
)
|
|
$
|
23,083
|
|
|
$
|
(646
|
)
|
|
$
|
8,372
|
|
|
$
|
48,135
|
|
|
$
|
371,051
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
(Amounts in Thousands)
|
|
Balance as of December 31, 2015
|
|
Net income
|
|
Other comprehensive income
|
|
Purchases and issuances
|
|
Sales and settlements
|
|
Net transfers into (out of) Level 3
|
|
Balance as of September 30,
2016 |
||||||||||||||
Other investments
|
|
$
|
30,309
|
|
|
$
|
(7,889
|
)
|
|
$
|
6,124
|
|
|
$
|
944
|
|
|
$
|
(365
|
)
|
|
$
|
11,144
|
|
|
$
|
40,267
|
|
Equity securities, available-for-sale
|
|
37,211
|
|
|
(16,983
|
)
|
|
4,719
|
|
|
—
|
|
|
(7,753
|
)
|
|
15,985
|
|
|
33,179
|
|
|||||||
Commercial mortgage backed securities
|
|
—
|
|
|
—
|
|
|
(194
|
)
|
|
—
|
|
|
—
|
|
|
8,065
|
|
|
7,871
|
|
|||||||
Collateralized loan / debt obligations
|
|
—
|
|
|
—
|
|
|
(15
|
)
|
|
—
|
|
|
—
|
|
|
21,748
|
|
|
21,733
|
|
|||||||
Life settlement contracts
|
|
264,001
|
|
|
82,451
|
|
|
—
|
|
|
15,880
|
|
|
(30,247
|
)
|
|
—
|
|
|
332,085
|
|
|||||||
Life settlement contract profit commission
|
|
(15,406
|
)
|
|
(9,817
|
)
|
|
—
|
|
|
—
|
|
|
20,406
|
|
|
—
|
|
|
(4,817
|
)
|
|||||||
Contingent consideration
|
|
(77,457
|
)
|
|
(2,746
|
)
|
|
—
|
|
|
(13,903
|
)
|
|
34,839
|
|
|
—
|
|
|
(59,267
|
)
|
|||||||
Total
|
|
$
|
238,658
|
|
|
$
|
45,016
|
|
|
$
|
10,634
|
|
|
$
|
2,921
|
|
|
$
|
16,880
|
|
|
$
|
56,942
|
|
|
$
|
371,051
|
|
(Amounts in Thousands)
|
|
Balance as of June 30, 2015
|
|
Net income
|
|
Other comprehensive income
|
|
Purchases and issuances
|
|
Sales and settlements
|
|
Net transfers into (out of) Level 3
|
|
Balance as of September 30, 2015
|
||||||||||||||
Other investments
|
|
$
|
14,759
|
|
|
$
|
(793
|
)
|
|
$
|
(5,300
|
)
|
|
$
|
160
|
|
|
$
|
—
|
|
|
$
|
13,000
|
|
|
$
|
21,826
|
|
Equity securities, available-for-sale
|
|
40,232
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
(46
|
)
|
|
—
|
|
|
40,189
|
|
|||||||
Life settlement contracts
|
|
267,393
|
|
|
13,875
|
|
|
—
|
|
|
—
|
|
|
(10,019
|
)
|
|
—
|
|
|
271,249
|
|
|||||||
Life settlement contract profit commission
|
|
(16,994
|
)
|
|
1,175
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15,819
|
)
|
|||||||
Contingent consideration
|
|
(76,790
|
)
|
|
68
|
|
|
—
|
|
|
403
|
|
|
11,261
|
|
|
—
|
|
|
(65,058
|
)
|
|||||||
Total
|
|
$
|
228,600
|
|
|
$
|
14,325
|
|
|
$
|
(5,297
|
)
|
|
$
|
563
|
|
|
$
|
1,196
|
|
|
$
|
13,000
|
|
|
$
|
252,387
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
(Amounts in Thousands)
|
|
Balance as of December 31, 2014
|
|
Net income
|
|
Other comprehensive income
|
|
Purchases and issuances
|
|
Sales and settlements
|
|
Net transfers into (out of) Level 3
|
|
Balance as of September 30, 2015
|
||||||||||||||
Other investments
|
|
$
|
13,315
|
|
|
$
|
(379
|
)
|
|
$
|
(5,300
|
)
|
|
$
|
1,527
|
|
|
$
|
(337
|
)
|
|
$
|
13,000
|
|
|
$
|
21,826
|
|
Equity securities, available-for-sale
|
|
34,886
|
|
|
—
|
|
|
5,395
|
|
|
—
|
|
|
(92
|
)
|
|
|
|
40,189
|
|
||||||||
Life settlement contracts
|
|
264,517
|
|
|
52,765
|
|
|
—
|
|
|
—
|
|
|
(46,033
|
)
|
|
—
|
|
|
271,249
|
|
|||||||
Life settlement contract profit commission
|
|
(16,534
|
)
|
|
715
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15,819
|
)
|
|||||||
Contingent consideration
|
|
(41,704
|
)
|
|
68
|
|
|
—
|
|
|
(44,557
|
)
|
|
21,135
|
|
|
—
|
|
|
(65,058
|
)
|
|||||||
Total
|
|
$
|
254,480
|
|
|
$
|
53,169
|
|
|
$
|
95
|
|
|
$
|
(43,030
|
)
|
|
$
|
(25,327
|
)
|
|
$
|
13,000
|
|
|
$
|
252,387
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(Amounts in Thousands)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net income
|
|
$
|
23,290
|
|
|
$
|
13,875
|
|
|
$
|
82,451
|
|
|
$
|
52,765
|
|
Premiums paid
|
|
(16,434
|
)
|
|
(11,326
|
)
|
|
(41,890
|
)
|
|
(33,614
|
)
|
||||
Profit commission
|
|
(763
|
)
|
|
1,175
|
|
|
(9,817
|
)
|
|
715
|
|
||||
Other expenses
|
|
(608
|
)
|
|
892
|
|
|
(1,853
|
)
|
|
(781
|
)
|
||||
Gain on investment in life settlement contracts
|
|
$
|
5,485
|
|
|
$
|
4,616
|
|
|
$
|
28,891
|
|
|
$
|
19,085
|
|
•
|
Equity and Fixed Income Investments:
Fair value disclosures for these investments are disclosed above in this note. As of
September 30, 2016
, the Company's Level 3 equity securities consisted primarily of privately placed warrants of companies that have publicly traded common stock. The fair value of these equity securities as of
September 30, 2016
was derived from the quoted price of the underlying common stock adjusted for other inputs that are not market observable.
|
•
|
Cash and cash equivalents, restricted cash and cash equivalents, and short term investments:
The carrying value of cash and cash equivalents, restricted cash and cash equivalents, and short term investments approximate their respective fair value and are classified as Level 1 in the fair value hierarchy.
|
•
|
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 are classified as Level 1 in the fair value hierarchy.
|
•
|
Other Investments:
Other investments that are reported at fair value consisted primarily of investments in private limited partnerships, certain foreign investments, and other. Other investments reported at fair value accounted for approximately
0.4%
of the Company's investment portfolio as of
September 30, 2016
, which the Company believes is immaterial to its overall financial position or its results of operations. The Company
|
•
|
Equity Investment in Unconsolidated Subsidiaries - Related Party:
The Company has an ownership percentage of approximately
12%
in National General Holdings Corp. ("NGHC"), a publicly held insurance holding company (Nasdaq: NGHC). The Company accounts for this investment under the equity method of accounting as it has the ability to exert significant influence on NGHC. The fair value and carrying value of the investment was approximately
$273,450
and
$153,040
, respectively, as of
September 30, 2016
.
|
•
|
Subordinated Debentures and Debt:
The fair value of the Company's material debt arrangements as of
September 30, 2016
was as follows:
|
|
Carrying Value
|
|
Fair Value
|
||||
7.25% Subordinated Notes due 2055
|
$
|
145,171
|
|
|
$
|
156,180
|
|
7.50% Subordinated Notes due 2055
|
130,656
|
|
|
146,826
|
|
||
2.75% Convertible senior notes due 2044
|
164,828
|
|
|
202,984
|
|
||
6.125% Notes due 2023
|
248,116
|
|
|
268,125
|
|
||
Junior subordinated debentures due 2035-2037
|
122,006
|
|
|
90,310
|
|
||
Trust preferred securities due 2033-2037
|
92,786
|
|
|
92,739
|
|
||
Republic promissory note
|
104,685
|
|
|
106,562
|
|
||
Revolving credit facility
|
130,000
|
|
|
130,000
|
|
||
Other
|
97,068
|
|
|
97,068
|
|
•
|
Derivatives:
The Company classifies interest rate swaps as Level 2 in the fair value hierarchy. The Company uses these interest rate swaps to hedge floating interest rates on its debt, thereby changing the variable rate exposure to a fixed rate exposure for interest on these obligations. The estimated fair value of the interest rate swaps, which is obtained from a third party pricing service, is measured using discounted cash flow analysis that incorporates significant observable inputs, including the LIBOR forward curve and a measurement of volatility.
|
•
|
Contingent consideration:
The fair value of contingent consideration is based on a discounted cash flow methodology and is classified as Level 3 in the fair value hierarchy. The range of discount rates used for contingent consideration was primarily between
8%
and
14%
.
|
•
|
Life settlement contracts and life settlement contract profit commission:
Life settlement contracts are described in Note 5. "Investments in Life Settlements" elsewhere in this report. The fair value of life settlement contracts as well as life settlement profit commission liability is based on information available to the Company at the end of the reporting period. These financial instruments are classified as Level 3 in the fair value hierarchy. The Company considers the following factors in its fair value estimates: cost at date of purchase, recent purchases and sales of similar investments (if available and applicable), financial standing of the issuer, changes in economic conditions affecting the issuer, maintenance cost, premiums, benefits, standard actuarially developed mortality tables and life expectancy reports prepared by nationally recognized and independent third party medical underwriters. The Company estimates the fair value of a life insurance policy by applying an investment discount rate based on the cost of funding the Company's life settlement contracts as compared to returns on investments in asset classes with comparable credit quality, which the Company has determined to be
7.5%
, to the expected cash flow generated by the policies
|
|
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
Average age of insured
|
|
82.7 years
|
|
|
82.0 years
|
|
|||
Average life expectancy, months
(1)
|
|
107
|
|
|
114
|
|
|||
Average face amount per policy (Amounts in thousands)
|
|
$
|
6,569
|
|
|
$
|
6,564
|
|
|
Effective discount rate
(2)
|
|
12.7
|
%
|
|
13.7
|
%
|
(1)
|
Standard life expectancy as adjusted for specific circumstances.
|
(2)
|
Effective discount rate ("EDR") is the Company's estimated internal rate of return on its life settlement contract portfolio and is determined from the gross expected cash flows and valuation of the portfolio. The valuation of the portfolio is calculated net of all reserves using a
7.5%
discount rate. The EDR is inclusive of the reserves and the gross expected cash flows of the portfolio. The Company anticipates that the EDR's range is between
12.5%
and
17.5%
and reflects the uncertainty that exists surrounding the information available as of the reporting date. As the accuracy and reliability of information improves (declines), the EDR will decrease (increase).
|
|
|
Change in life expectancy
|
||||||
(Amounts in Thousands)
|
|
Plus 4 Months
|
|
Minus 4 Months
|
||||
Investment in life policies:
|
|
|
|
|
|
|
||
September 30, 2016
|
|
$
|
(42,844
|
)
|
|
$
|
46,044
|
|
December 31, 2015
|
|
$
|
(37,697
|
)
|
|
$
|
40,997
|
|
|
|
|
Change in discount rate
(1)
|
||||||
(Amounts in Thousands)
|
|
Plus 1%
|
|
Minus 1%
|
|||||
Investment in life policies:
|
|
|
|
|
|
|
|||
September 30, 2016
|
|
$
|
(28,584
|
)
|
|
$
|
31,712
|
|
|
December 31, 2015
|
|
$
|
(26,558
|
)
|
|
$
|
29,644
|
|
|
|
|
|
|
|
|
(1)
|
Discount rate is a present value calculation that considers legal risk, credit risk and liquidity risk and is a component of EDR.
|
5.
|
Investment in Life Settlements
|
(Amounts in Thousands, except number of Life Settlement Contracts)
Expected Maturity Term in Years
|
|
Number of Life Settlement Contracts
|
|
Fair Value
(1)
|
|
Face Value
|
|||||
As of September 30, 2016
|
|
|
|
|
|
|
|||||
0-1
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
1-2
|
|
2
|
|
|
8,776
|
|
|
12,500
|
|
||
2-3
|
|
7
|
|
|
37,572
|
|
|
61,000
|
|
||
3-4
|
|
9
|
|
|
35,839
|
|
|
64,422
|
|
||
4-5
|
|
12
|
|
|
36,209
|
|
|
99,000
|
|
||
Thereafter
|
|
226
|
|
|
213,689
|
|
|
1,405,313
|
|
||
Total
|
|
256
|
|
|
$
|
332,085
|
|
|
$
|
1,642,235
|
|
(Amounts in Thousands, except number of Life Settlement Contracts)
Expected Maturity Term in Years
|
|
Number of Life Settlement Contracts
|
|
Fair Value
(1)
|
|
Face Value
|
||||||
As of December 31, 2015
|
|
|
|
|
|
|
||||||
0-1
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
1-2
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
2-3
|
|
8
|
|
|
31,261
|
|
|
70,500
|
|
|||
3-4
|
|
8
|
|
|
20,117
|
|
|
46,500
|
|
|||
4-5
|
|
4
|
|
|
6,760
|
|
|
20,000
|
|
|||
Thereafter
|
|
235
|
|
|
205,863
|
|
|
1,481,313
|
|
|||
Total
|
|
255
|
|
|
$
|
264,001
|
|
|
$
|
1,618,313
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The Company determined the fair value as of
September 30, 2016
based on
224
policies out of
256
policies, as the Company assigned no value to
32
of the policies as of
September 30, 2016
. The Company determined the fair value as of
December 31, 2015
based on
213
policies out of
255
policies, as the Company assigned no value to
42
of the policies as of
December 31, 2015
. The Company estimated the fair value of a life insurance policy using a cash flow model with an appropriate discount rate. In some cases, the cash flow model calculates the value of an individual policy to be negative, and therefore the fair value of the policy is zero as no liability exists when a negative value is calculated. The Company is not contractually bound to pay the premium on its life settlement contracts and, therefore, would not pay a willing buyer to assume title of these contracts. Additionally, certain of the Company's acquired policies were structured to have low premium payments at inception of the policy term, which later escalate greatly towards the tail end of the policy term. At the current time, the Company expenses all premium paid, even on policies with zero fair value. Once the premium payments escalate, the Company may allow the policies to lapse. In the event that death benefits are realized in the time frame between initial acquisition and premium escalation, it is a benefit to cash flow.
|
(Amounts in Thousands, except number of Life Settlement Contracts)
|
|
September 30, 2016
|
|
December 31, 2015
|
||||
Number of policies with a negative value from discounted cash flow model as of period end
|
|
32
|
|
|
42
|
|
||
Premiums paid for the preceding twelve month period for period ended
|
|
$
|
4,941
|
|
|
$
|
4,971
|
|
Death benefit received
|
|
$
|
—
|
|
|
$
|
—
|
|
(Amounts in Thousands)
|
|
Premiums Due on Life Settlement Contracts
|
||
2016
|
|
$
|
66,685
|
|
2017
|
|
46,386
|
|
|
2018
|
|
47,392
|
|
|
2019
|
|
44,589
|
|
|
2020
|
|
40,979
|
|
|
Thereafter
|
|
469,780
|
|
|
Total
|
|
$
|
715,811
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(Amounts in Thousands)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Balance, beginning of period
|
|
$
|
873,641
|
|
|
$
|
695,150
|
|
|
$
|
704,243
|
|
|
$
|
628,383
|
|
Acquisition costs deferred
|
|
289,790
|
|
|
190,632
|
|
|
820,154
|
|
|
582,091
|
|
||||
Amortization
|
|
(198,789
|
)
|
|
(171,556
|
)
|
|
(559,755
|
)
|
|
(496,248
|
)
|
||||
Balance, end of period
|
|
$
|
964,642
|
|
|
$
|
714,226
|
|
|
$
|
964,642
|
|
|
$
|
714,226
|
|
(Amounts in Thousands)
|
|
September 30, 2016
|
|
December 31, 2015
|
||||
Revolving credit facility
|
|
$
|
130,000
|
|
|
$
|
130,000
|
|
5.5% Convertible senior notes due 2021 (the "2021 Notes")
|
|
5,190
|
|
|
5,103
|
|
||
2.75% Convertible senior notes due 2044 (the "2044 Notes")
|
|
164,828
|
|
|
160,258
|
|
||
6.125% Senior notes due 2023 (the "2023 Notes")
|
|
248,116
|
|
|
247,911
|
|
||
Junior subordinated debentures (the "2035-2037 Notes")
|
|
122,006
|
|
|
118,226
|
|
||
Trust preferred securities (the "2033-2037 TPS Notes")
|
|
92,786
|
|
|
—
|
|
||
7.25% Subordinated Notes due 2055 (the "7.25% 2055 Notes")
|
|
145,171
|
|
|
145,078
|
|
||
7.50% Subordinated Notes due 2055 (the "7.50% 2055 Notes")
|
|
130,656
|
|
|
130,572
|
|
||
Secured loan agreements
|
|
77,971
|
|
|
38,455
|
|
||
Promissory notes
|
|
118,592
|
|
|
13,753
|
|
||
|
|
$
|
1,235,316
|
|
|
$
|
989,356
|
|
(1)
|
Amount includes debt outstanding under the 2021 Notes and 2044 Notes, which is net of unamortized original issue discount of
$764
and
$47,440
, respectively.
|
(Amounts in Thousands)
|
|
Letters of Credit Limit
|
|
Letters of Credit Outstanding
|
|
Letters of Credit Available
|
||||||
Revolving credit facility
|
|
$
|
175,000
|
|
|
$
|
114,156
|
|
|
$
|
60,844
|
|
Funds at Lloyd's facility, in USD equivalent
|
|
389,280
|
|
|
380,494
|
|
|
8,786
|
|
|||
ING Bank N.V. and Deutsche Bank Netherlands N.V. facilities, in USD equivalent
|
|
88,404
|
|
|
63,217
|
|
|
25,187
|
|
|||
Comerica bank letters of credit
|
|
75,000
|
|
|
48,134
|
|
|
26,866
|
|
|||
Other letters of credit, in aggregate
|
|
1,550
|
|
|
1,550
|
|
|
—
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(Amounts in Thousands)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revolving credit facility
|
|
$
|
1,134
|
|
|
$
|
1,092
|
|
|
$
|
3,388
|
|
|
$
|
2,636
|
|
Funds at Lloyd's facility
|
|
1,065
|
|
|
639
|
|
|
3,387
|
|
|
2,320
|
|
||||
2021 Notes
|
|
116
|
|
|
117
|
|
|
345
|
|
|
711
|
|
||||
2023 Notes
|
|
3,897
|
|
|
3,897
|
|
|
11,690
|
|
|
11,690
|
|
||||
2035-2037 Notes
|
|
1,548
|
|
|
1,442
|
|
|
4,609
|
|
|
5,157
|
|
||||
2033-2037 TPS Notes
|
|
981
|
|
|
—
|
|
|
1,750
|
|
|
—
|
|
||||
2044 Notes
|
|
3,170
|
|
|
3,065
|
|
|
9,402
|
|
|
9,096
|
|
||||
7.25% 2055 Notes
|
|
2,750
|
|
|
2,750
|
|
|
8,250
|
|
|
3,118
|
|
||||
7.50% 2055 Notes
|
|
2,559
|
|
|
408
|
|
|
7,677
|
|
|
408
|
|
||||
Secured loan agreements
|
|
756
|
|
|
212
|
|
|
1,768
|
|
|
671
|
|
||||
Promissory notes
|
|
1,698
|
|
|
157
|
|
|
3,253
|
|
|
467
|
|
||||
Other, including interest income
|
|
4,276
|
|
|
(917
|
)
|
|
5,869
|
|
|
(3,511
|
)
|
||||
|
|
$
|
23,950
|
|
|
$
|
12,862
|
|
|
$
|
61,388
|
|
|
$
|
32,763
|
|
(Amounts in Thousands)
Name of Trust |
|
Aggregate
Liquidation Amount of Trust Preferred Securities |
|
Aggregate
Liquidation Amount of Common Securities |
|
Aggregate
Principal Amount of Notes |
|
Stated
Maturity of Notes |
|
Per Annum
Interest Rate of Notes |
|||||||
RIG Capital Trust I
|
|
$
|
10,000
|
|
|
$
|
310
|
|
|
$
|
10,310
|
|
|
9/30/2033
|
|
4.631
|
(1)
|
RIG Capital Statutory Trust II
|
|
20,000
|
|
|
619
|
|
|
20,619
|
|
|
10/29/2033
|
|
4.449
|
(2)
|
|||
RIG Capital Trust III
|
|
20,000
|
|
|
619
|
|
|
20,619
|
|
|
12/15/2036
|
|
3.853
|
(3)
|
|||
RIG Capital Trust IV
|
|
25,000
|
|
|
774
|
|
|
25,774
|
|
|
6/15/2037
|
|
3.853
|
(3)
|
|||
RIG Capital Trust V
|
|
15,000
|
|
|
464
|
|
|
15,464
|
|
|
9/15/2037
|
|
3.950
|
(4)
|
|||
Total trust preferred securities
|
|
$
|
90,000
|
|
|
$
|
2,786
|
|
|
$
|
92,786
|
|
|
|
|
|
|
|
|
(1)
|
The interest rate is three-month LIBOR plus
4.00%
.
|
(2)
|
The interest rate is three-month LIBOR plus
3.85%
.
|
(3)
|
The interest rate is three-month LIBOR plus
3.20%
.
|
(4)
|
The interest rate is three-month LIBOR plus
3.30%
.
|
8.
|
Acquisition Costs and Other Underwriting Expenses
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(Amounts in Thousands)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Policy acquisition expenses
|
|
$
|
116,434
|
|
|
$
|
131,083
|
|
|
$
|
365,804
|
|
|
$
|
336,977
|
|
Salaries and benefits
|
|
140,300
|
|
|
112,769
|
|
|
424,834
|
|
|
355,927
|
|
||||
Other insurance general and administrative expenses
|
|
27,224
|
|
|
14,164
|
|
|
56,757
|
|
|
35,498
|
|
||||
|
|
$
|
283,958
|
|
|
$
|
258,016
|
|
|
$
|
847,395
|
|
|
$
|
728,402
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(Amounts in Thousands, except for earnings per share)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Basic earnings per share:
|
|
|
|
|
|
|
|
|
||||||||
Net income attributable to AmTrust common shareholders
|
|
$
|
103,550
|
|
|
$
|
182,708
|
|
|
$
|
338,598
|
|
|
$
|
408,152
|
|
Less: Net income allocated to participating securities and redeemable non-controlling interest
|
|
—
|
|
|
469
|
|
|
—
|
|
|
1,072
|
|
||||
Net income allocated to AmTrust common shareholders
|
|
$
|
103,550
|
|
|
$
|
182,239
|
|
|
$
|
338,598
|
|
|
$
|
407,080
|
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding – basic
|
|
170,928
|
|
|
165,608
|
|
|
173,173
|
|
|
164,470
|
|
||||
Less: Weighted average participating shares outstanding
|
|
—
|
|
|
426
|
|
|
—
|
|
|
432
|
|
||||
Weighted average common shares outstanding - basic
|
|
170,928
|
|
|
165,182
|
|
|
173,173
|
|
|
164,038
|
|
||||
Net income per AmTrust common share - basic
|
|
$
|
0.61
|
|
|
$
|
1.10
|
|
|
$
|
1.96
|
|
|
$
|
2.48
|
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income attributable to AmTrust common shareholders
|
|
$
|
103,550
|
|
|
$
|
182,708
|
|
|
$
|
338,598
|
|
|
$
|
408,152
|
|
Less: Net income allocated to participating securities and redeemable non-controlling interest
|
|
—
|
|
|
469
|
|
|
—
|
|
|
1,072
|
|
||||
Net income allocated to AmTrust common shareholders
|
|
$
|
103,550
|
|
|
$
|
182,239
|
|
|
$
|
338,598
|
|
|
$
|
407,080
|
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding – basic
|
|
170,928
|
|
|
165,182
|
|
|
173,173
|
|
|
164,038
|
|
||||
Plus: Dilutive effect of stock options, convertible debt, other
|
|
2,193
|
|
|
3,090
|
|
|
1,978
|
|
|
3,454
|
|
||||
Weighted average common shares outstanding – dilutive
|
|
173,121
|
|
|
168,272
|
|
|
175,151
|
|
|
167,492
|
|
||||
Net income per AmTrust common shares – diluted
|
|
$
|
0.60
|
|
|
$
|
1.09
|
|
|
$
|
1.93
|
|
|
$
|
2.43
|
|
|
2016
|
|
2015
|
||||||||||
|
Shares
|
|
Weighted Average Exercise Price
|
|
Shares
|
|
Weighted Average Exercise Price
|
||||||
Outstanding at beginning of period
|
2,783,880
|
|
|
$
|
6.99
|
|
|
3,868,740
|
|
|
$
|
5.80
|
|
Granted
|
—
|
|
|
—
|
|
|
85,000
|
|
|
27.09
|
|
||
Exercised
|
(411,913
|
)
|
|
3.96
|
|
|
(1,018,950
|
)
|
|
4.65
|
|
||
Canceled or terminated
|
(13,872
|
)
|
|
24.69
|
|
|
(75,148
|
)
|
|
9.17
|
|
||
Outstanding at end of period
|
2,358,095
|
|
|
7.41
|
|
|
2,859,642
|
|
|
6.75
|
|
|
|
2015
|
|
Volatility
|
|
40.95
|
%
|
Risk-free interest rate
|
|
1.95
|
%
|
Weighted average expected lives in years
|
|
6.25
|
|
Dividend rate
|
|
1.85
|
%
|
Forfeiture rate
|
|
0.50
|
%
|
|
2016
|
|
2015
|
||||||||||
|
Shares or
Units
|
|
Weighted Average Grant Date Fair Value
|
|
Shares or
Units
|
|
Weighted Average Grant Date Fair Value
|
||||||
Non-vested at beginning of period
|
1,853,516
|
|
|
$
|
20.54
|
|
|
2,611,022
|
|
|
$
|
16.70
|
|
Granted
|
873,388
|
|
|
26.03
|
|
|
465,400
|
|
|
29.19
|
|
||
Vested
|
(816,538
|
)
|
|
17.50
|
|
|
(838,918
|
)
|
|
14.53
|
|
||
Forfeited
|
(49,951
|
)
|
|
24.17
|
|
|
(33,648
|
)
|
|
20.95
|
|
||
Non-vested at end of period
|
1,860,415
|
|
|
24.35
|
|
|
2,203,856
|
|
|
20.10
|
|
|
2016
|
|
2015
|
||||||||||
|
Shares or
Units
|
|
Weighted Average Grant Date Fair Value
|
|
Shares or
Units
|
|
Weighted Average Grant Date Fair Value
|
||||||
Non-vested at beginning of period
|
752,466
|
|
|
$
|
24.58
|
|
|
549,670
|
|
|
$
|
19.42
|
|
Granted
|
198,881
|
|
|
26.16
|
|
|
373,628
|
|
|
29.93
|
|
||
Vested
|
(234,358
|
)
|
|
22.89
|
|
|
(155,842
|
)
|
|
18.86
|
|
||
Forfeited
|
(35,766
|
)
|
|
25.57
|
|
|
(9,406
|
)
|
|
27.07
|
|
||
Non-vested at end of period
|
681,223
|
|
|
25.57
|
|
|
758,050
|
|
|
24.62
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(Amounts in Thousands)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Income before equity in earnings of unconsolidated subsidiaries
|
|
$
|
151,663
|
|
|
$
|
166,882
|
|
|
$
|
461,978
|
|
|
$
|
453,476
|
|
Tax at federal statutory rate of 35%
|
|
$
|
53,082
|
|
|
$
|
58,409
|
|
|
$
|
161,692
|
|
|
$
|
158,717
|
|
Tax effects resulting from:
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Tax rate differences
|
|
7,898
|
|
|
(8,797
|
)
|
|
(42,738
|
)
|
|
(32,286
|
)
|
||||
Adjustment to prior year taxes
|
|
(402
|
)
|
|
(74,385
|
)
|
|
(402
|
)
|
|
(82,689
|
)
|
||||
Permanent adjustments
|
|
(23,820
|
)
|
|
(9,657
|
)
|
|
(22,615
|
)
|
|
(12,474
|
)
|
||||
Valuation allowance
|
|
(319
|
)
|
|
—
|
|
|
(10,255
|
)
|
|
—
|
|
||||
Other, net
|
|
(923
|
)
|
|
21,781
|
|
|
5,478
|
|
|
7,367
|
|
||||
|
|
$
|
35,516
|
|
|
$
|
(12,649
|
)
|
|
$
|
91,160
|
|
|
$
|
38,635
|
|
Effective tax rate
|
|
23.4
|
%
|
|
(7.6
|
)%
|
|
19.7
|
%
|
|
8.5
|
%
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(Amounts in Thousands)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Results of operations:
|
|
|
|
|
|
|
|
|
||||||||
Premium written – ceded
|
|
$
|
(514,802
|
)
|
|
$
|
(453,981
|
)
|
|
$
|
(1,587,757
|
)
|
|
$
|
(1,504,701
|
)
|
Change in unearned premium – ceded
|
|
(1,023
|
)
|
|
(13,522
|
)
|
|
126,379
|
|
|
204,170
|
|
||||
Earned premium - ceded
|
|
$
|
(515,825
|
)
|
|
$
|
(467,503
|
)
|
|
$
|
(1,461,378
|
)
|
|
$
|
(1,300,531
|
)
|
Ceding commission on premium written
|
|
$
|
183,457
|
|
|
$
|
144,625
|
|
|
$
|
512,995
|
|
|
$
|
473,480
|
|
Ceding commission – deferred
|
|
(25,241
|
)
|
|
(6,589
|
)
|
|
(72,434
|
)
|
|
(87,535
|
)
|
||||
Ceding commission – earned
|
|
$
|
158,216
|
|
|
$
|
138,036
|
|
|
$
|
440,561
|
|
|
$
|
385,945
|
|
Incurred loss and loss adjustment expense – ceded
|
|
$
|
334,878
|
|
|
$
|
346,123
|
|
|
$
|
994,212
|
|
|
$
|
932,053
|
|
•
|
The borrower became ACP Re Holdings, LLC, a Delaware limited liability company owned by the Trust;
|
•
|
The Trust will cause ACP Re Holdings, LLC to maintain assets having a value greater than
115%
of the value of the then outstanding loan balance, and if there is a shortfall, the Trust will make a contribution to ACP Re Holdings, LLC of assets having a market value of at least the shortfall (the “Maintenance Covenant”);
|
•
|
The amounts borrowed are secured by equity interests, cash and cash equivalents, other investments held by ACP Re Holdings, LLC and proceeds of the foregoing in an amount equal to the requirements of the Maintenance Covenant;
|
•
|
The maturity date changed from
September 15, 2021
to September 20, 2036;
|
•
|
Interest on the outstanding principal balance of
$250,000
is a fixed annual rate of
3.70%
(payable in cash, semi-annually in arrears), provided that up to
1.20%
thereof may be paid in kind;
|
•
|
Commencing on September 20, 2026, and for each year thereafter,
2%
of the then outstanding principal balance of the loan (inclusive of any amounts previously paid in kind) is due and payable;
|
•
|
At the Lenders’ discretion, ACP Re Holdings, LLC may repay the loan using cash or tradeable stock of an equivalent market value of any publicly traded company on the NYSE, NASDAQ or London stock exchange; and
|
•
|
A change of control of greater than
50%
and an uncured breach of the Maintenance Covenant are included as events of default.
|
(Amounts in Thousands)
|
|
|
|||
Assets
|
|
|
|||
|
Cash and investments
|
|
$
|
229,607
|
|
|
Premium receivable
|
|
4,301
|
|
|
|
Accrued interest and dividends
|
|
83
|
|
|
|
Reinsurance recoverable
|
|
4,322
|
|
|
|
Other assets
|
|
8,414
|
|
|
|
Property and equipment
|
|
10,319
|
|
|
|
Goodwill and intangible assets
|
|
64,328
|
|
|
Total assets
|
|
$
|
321,374
|
|
|
|
|
|
|
||
Liabilities
|
|
|
|||
|
Loss and loss adjustment expense reserves
|
|
$
|
87,813
|
|
|
Unearned premiums
|
|
24,782
|
|
|
|
Accrued expenses and other liabilities
|
|
29,196
|
|
|
Total liabilities
|
|
$
|
141,791
|
|
|
Acquisition price
|
|
$
|
179,583
|
|
(Amounts in Thousands)
|
|
|
|||
Assets
|
|
|
|||
|
Cash and investments
|
|
$
|
239,695
|
|
|
Reinsurance recoverable
|
|
27,570
|
|
|
|
Other assets
|
|
8,422
|
|
|
|
Property and equipment
|
|
964
|
|
|
Total assets
|
|
$
|
276,651
|
|
|
|
|
|
|
||
Liabilities
|
|
|
|||
|
Loss and loss adjustment expense reserves
|
|
$
|
84,463
|
|
|
Unearned premiums
|
|
76,308
|
|
|
|
Accrued expenses and other liabilities
|
|
13,060
|
|
|
Total liabilities
|
|
$
|
173,831
|
|
|
Acquisition price
|
|
$
|
54,500
|
|
|
Acquisition gain
|
|
$
|
48,320
|
|
(Amounts in Thousands)
|
|
|
|||
Assets
|
|
|
|||
|
Cash and investments
|
|
$
|
621,068
|
|
|
Premium receivable, net
|
|
85,455
|
|
|
|
Accrued interest and dividends
|
|
4,779
|
|
|
|
Reinsurance recoverable
|
|
629,488
|
|
|
|
Deferred tax assets
|
|
42,745
|
|
|
|
Other assets
|
|
223,619
|
|
|
|
Property and equipment
|
|
1,511
|
|
|
|
Goodwill and intangible assets
|
|
119,106
|
|
|
Total assets
|
|
$
|
1,727,771
|
|
|
|
|
|
|
||
Liabilities
|
|
|
|||
|
Loss and loss adjustment expense reserves
|
|
$
|
885,898
|
|
|
Unearned premiums
|
|
301,972
|
|
|
|
Trust preferred outstanding
|
|
92,786
|
|
|
|
Accrued expenses and other liabilities
|
|
131,092
|
|
|
|
Funds held under reinsurance treaties
|
|
83,331
|
|
|
Total liabilities
|
|
$
|
1,495,079
|
|
|
Acquisition price
|
|
$
|
232,692
|
|
(Amounts in Thousands)
|
|
|
|||
Assets
|
|
|
|||
|
Cash and investments
|
|
$
|
53,917
|
|
|
Premium receivable, net
|
|
15,577
|
|
|
|
Accrued interest and dividends
|
|
375
|
|
|
|
Reinsurance recoverable
|
|
17,554
|
|
|
|
Other assets
|
|
2,116
|
|
|
|
Intangible assets
|
|
1,097
|
|
|
Total assets
|
|
$
|
90,636
|
|
|
|
|
|
|
||
Liabilities
|
|
|
|||
|
Loss and loss adjustment expense reserves
|
|
$
|
59,723
|
|
|
Unearned premiums
|
|
18,672
|
|
|
|
Accrued expenses and other liabilities
|
|
7,968
|
|
|
Total liabilities
|
|
$
|
86,363
|
|
|
Acquisition price
|
|
$
|
3,819
|
|
|
Acquisition gain
|
|
$
|
454
|
|
(Amounts in Thousands)
|
|
|
|||
Assets
|
|
|
|||
|
Cash and investments
|
|
$
|
93,837
|
|
|
Premium receivable, net
|
|
4,651
|
|
|
|
Accrued interest and dividends
|
|
470
|
|
|
|
Other assets
|
|
2,752
|
|
|
|
Deferred tax asset
|
|
1,905
|
|
|
|
Property and equipment
|
|
1,376
|
|
|
|
Goodwill
|
|
4,253
|
|
|
Total assets
|
|
$
|
109,244
|
|
|
|
|
|
|
||
Liabilities
|
|
|
|||
|
Loss and loss adjustment expense reserves
|
|
$
|
65,725
|
|
|
Unearned premiums
|
|
7,006
|
|
|
|
Accrued expenses and other liabilities
|
|
4,199
|
|
|
|
Reinsurance payable on paid losses
|
|
740
|
|
|
Total liabilities
|
|
$
|
77,670
|
|
|
Acquisition price
|
|
$
|
31,574
|
|
(Amounts in Thousands)
|
|
|
|||
Assets
|
|
|
|||
|
Cash and investments
|
|
$
|
192,015
|
|
|
Prepaid reinsurance premium
|
|
77,777
|
|
|
|
Other assets
|
|
16,346
|
|
|
|
Deferred tax asset
|
|
26,481
|
|
|
|
Goodwill and intangible assets
|
|
117,504
|
|
|
Total assets
|
|
$
|
430,123
|
|
|
|
|
|
|
||
Liabilities
|
|
|
|||
|
Loss and loss expense reserves
|
|
$
|
3,013
|
|
|
Unearned premiums
|
|
182,441
|
|
|
|
Accrued expenses and other liabilities
|
|
88,422
|
|
|
Total liabilities
|
|
$
|
273,876
|
|
|
Acquisition price
|
|
$
|
156,247
|
|
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||
|
|
2016
|
|
2015
|
||||||||||||||||||||
(Amounts in Thousands)
|
|
AmTrust
|
|
Non-Controlling Interest
|
|
Total
|
|
AmTrust
|
|
Non-Controlling Interest
|
|
Total
|
||||||||||||
Balance, December 31,
|
|
$
|
2,909,060
|
|
|
$
|
176,455
|
|
|
$
|
3,085,515
|
|
|
$
|
2,037,020
|
|
|
$
|
159,181
|
|
|
$
|
2,196,201
|
|
Net income
|
|
370,541
|
|
|
12,222
|
|
|
382,763
|
|
|
430,949
|
|
|
5,978
|
|
|
436,927
|
|
||||||
Unrealized holding gain (loss)
|
|
270,574
|
|
|
—
|
|
|
270,574
|
|
|
(68,968
|
)
|
|
—
|
|
|
(68,968
|
)
|
||||||
Reclassification adjustment
|
|
(17,993
|
)
|
|
—
|
|
|
(17,993
|
)
|
|
634
|
|
|
—
|
|
|
634
|
|
||||||
Foreign currency translation
|
|
(173,883
|
)
|
|
—
|
|
|
(173,883
|
)
|
|
(49,204
|
)
|
|
6
|
|
|
(49,198
|
)
|
||||||
Unrealized gain on interest rate swap
|
|
540
|
|
|
—
|
|
|
540
|
|
|
297
|
|
|
—
|
|
|
297
|
|
||||||
Extinguishment of 2021 senior notes, equity component
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
(3,764
|
)
|
|
|
|
|
(3,764
|
)
|
||||||
Share exercises, compensation and other
|
|
10,545
|
|
|
—
|
|
|
10,545
|
|
|
16,459
|
|
|
—
|
|
|
16,459
|
|
||||||
Common share (purchase) issuance, net
|
|
(152,047
|
)
|
|
—
|
|
|
(152,047
|
)
|
|
171,672
|
|
|
—
|
|
|
171,672
|
|
||||||
Common share dividends
|
|
(81,167
|
)
|
|
—
|
|
|
(81,167
|
)
|
|
(66,121
|
)
|
|
—
|
|
|
(66,121
|
)
|
||||||
Preferred stock issuance, net of fees
|
|
417,264
|
|
|
—
|
|
|
417,264
|
|
|
176,529
|
|
|
—
|
|
|
176,529
|
|
||||||
Preferred stock dividends
|
|
(31,943
|
)
|
|
—
|
|
|
(31,943
|
)
|
|
(22,797
|
)
|
|
—
|
|
|
(22,797
|
)
|
||||||
Capital contribution (distribution), net
|
|
—
|
|
|
(5,413
|
)
|
|
(5,413
|
)
|
|
—
|
|
|
11,609
|
|
|
11,609
|
|
||||||
Balance, September 30,
|
|
$
|
3,521,490
|
|
|
$
|
183,264
|
|
|
$
|
3,704,754
|
|
|
$
|
2,622,706
|
|
|
$
|
176,774
|
|
|
$
|
2,799,480
|
|
(Amounts in Thousands)
|
|
Foreign Currency Items
|
|
Unrealized Gains (Losses) on Investments
|
|
Interest Rate Swap Hedge
|
|
Net Benefit Plan Assets and Obligations Recognized in Stockholders' Equity
|
|
Accumulated Other Comprehensive Income (Loss)
|
||||||||||
Balance, June 30, 2016
|
|
$
|
(176,878
|
)
|
|
$
|
145,607
|
|
|
$
|
(413
|
)
|
|
$
|
(107
|
)
|
|
$
|
(31,791
|
)
|
Other comprehensive income (loss) before reclassification
|
|
(89,218
|
)
|
|
31,529
|
|
|
390
|
|
|
—
|
|
|
(57,299
|
)
|
|||||
Amounts reclassed from accumulated other comprehensive income
|
|
—
|
|
|
(3,399
|
)
|
|
—
|
|
|
—
|
|
|
(3,399
|
)
|
|||||
Income tax benefit (expense)
|
|
—
|
|
|
41,602
|
|
|
(137
|
)
|
|
—
|
|
|
41,465
|
|
|||||
Net current-period other comprehensive (loss) income
|
|
(89,218
|
)
|
|
69,732
|
|
|
253
|
|
|
—
|
|
|
(19,233
|
)
|
|||||
Balance, September 30, 2016
|
|
$
|
(266,096
|
)
|
|
$
|
215,339
|
|
|
$
|
(160
|
)
|
|
$
|
(107
|
)
|
|
$
|
(51,024
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance, June 30, 2015
|
|
$
|
(66,108
|
)
|
|
$
|
21,487
|
|
|
$
|
(1,131
|
)
|
|
$
|
(2,793
|
)
|
|
$
|
(48,545
|
)
|
Other comprehensive income before reclassification
|
|
3,274
|
|
|
(25,611
|
)
|
|
165
|
|
|
—
|
|
|
(22,172
|
)
|
|||||
Amounts reclassed from accumulated other comprehensive income
|
|
—
|
|
|
2,830
|
|
|
—
|
|
|
—
|
|
|
2,830
|
|
|||||
Income tax benefit (expense)
|
|
(1,146
|
)
|
|
7,973
|
|
|
(58
|
)
|
|
—
|
|
|
6,769
|
|
|||||
Net current-period other comprehensive income
|
|
2,128
|
|
|
(14,808
|
)
|
|
107
|
|
|
—
|
|
|
(12,573
|
)
|
|||||
Balance, September 30, 2015
|
|
$
|
(63,980
|
)
|
|
$
|
6,679
|
|
|
$
|
(1,024
|
)
|
|
$
|
(2,793
|
)
|
|
$
|
(61,118
|
)
|
(Amounts in Thousands)
|
|
Foreign Currency Items
|
|
Unrealized Gains (Losses) on Investments
|
|
Interest Rate Swap Hedge
|
|
Net Benefit Plan Assets and Obligations Recognized in Stockholders' Equity
|
|
Accumulated Other Comprehensive Income (Loss)
|
||||||||||
Balance, December 31, 2015
|
|
$
|
(92,213
|
)
|
|
$
|
(37,242
|
)
|
|
$
|
(700
|
)
|
|
$
|
(107
|
)
|
|
$
|
(130,262
|
)
|
Other comprehensive income (loss) before reclassification
|
|
(173,883
|
)
|
|
331,761
|
|
|
831
|
|
|
—
|
|
|
158,709
|
|
|||||
Amounts reclassed from accumulated other comprehensive income
|
|
—
|
|
|
(17,993
|
)
|
|
—
|
|
|
—
|
|
|
(17,993
|
)
|
|||||
Income tax benefit (expense)
|
|
—
|
|
|
(61,187
|
)
|
|
(291
|
)
|
|
—
|
|
|
(61,478
|
)
|
|||||
Net current-period other comprehensive income (loss)
|
|
(173,883
|
)
|
|
252,581
|
|
|
540
|
|
|
—
|
|
|
79,238
|
|
|||||
Balance, September 30, 2016
|
|
$
|
(266,096
|
)
|
|
$
|
215,339
|
|
|
$
|
(160
|
)
|
|
$
|
(107
|
)
|
|
$
|
(51,024
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance, December 31, 2014
|
|
$
|
(14,776
|
)
|
|
$
|
75,013
|
|
|
$
|
(1,321
|
)
|
|
$
|
(2,793
|
)
|
|
$
|
56,123
|
|
Other comprehensive income before reclassification
|
|
(75,698
|
)
|
|
(106,105
|
)
|
|
457
|
|
|
—
|
|
|
(181,346
|
)
|
|||||
Amounts reclassed from accumulated other comprehensive income
|
|
—
|
|
|
976
|
|
|
—
|
|
|
—
|
|
|
976
|
|
|||||
Income tax benefit (expense)
|
|
26,494
|
|
|
36,795
|
|
|
(160
|
)
|
|
—
|
|
|
63,129
|
|
|||||
Net current-period other comprehensive (loss) income
|
|
(49,204
|
)
|
|
(68,334
|
)
|
|
297
|
|
|
—
|
|
|
(117,241
|
)
|
|||||
Balance, September 30, 2015
|
|
$
|
(63,980
|
)
|
|
$
|
6,679
|
|
|
$
|
(1,024
|
)
|
|
$
|
(2,793
|
)
|
|
$
|
(61,118
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
(Amounts in Thousands)
|
|
Small Commercial Business
|
|
Specialty Risk and Extended Warranty
|
|
Specialty Program
|
|
Corporate and Other
|
|
Total
|
||||||||||
Three Months Ended September 30, 2016:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross written premium
|
|
$
|
998,071
|
|
|
$
|
598,977
|
|
|
$
|
437,050
|
|
|
$
|
—
|
|
|
$
|
2,034,098
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net written premium
|
|
457,869
|
|
|
448,847
|
|
|
309,334
|
|
|
—
|
|
|
1,216,050
|
|
|||||
Change in unearned premium
|
|
59,127
|
|
|
(21,526
|
)
|
|
(57,415
|
)
|
|
—
|
|
|
(19,814
|
)
|
|||||
Net earned premium
|
|
516,996
|
|
|
427,321
|
|
|
251,919
|
|
|
—
|
|
|
1,196,236
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Loss and loss adjustment expense
|
|
(344,531
|
)
|
|
(293,956
|
)
|
|
(172,561
|
)
|
|
—
|
|
|
(811,048
|
)
|
|||||
Acquisition costs and other underwriting expenses
|
|
(125,412
|
)
|
|
(89,784
|
)
|
|
(68,762
|
)
|
|
—
|
|
|
(283,958
|
)
|
|||||
|
|
(469,943
|
)
|
|
(383,740
|
)
|
|
(241,323
|
)
|
|
—
|
|
|
(1,095,006
|
)
|
|||||
Underwriting income
|
|
47,053
|
|
|
43,581
|
|
|
10,596
|
|
|
—
|
|
|
101,230
|
|
|||||
Service and fee income
|
|
26,800
|
|
|
95,228
|
|
|
106
|
|
|
24,477
|
|
|
146,611
|
|
|||||
Investment income and realized gain
|
|
29,249
|
|
|
24,538
|
|
|
14,424
|
|
|
(62
|
)
|
|
68,149
|
|
|||||
Other expenses
|
|
(67,621
|
)
|
|
(40,503
|
)
|
|
(29,418
|
)
|
|
—
|
|
|
(137,542
|
)
|
|||||
Interest expense
|
|
(11,883
|
)
|
|
(7,053
|
)
|
|
(5,014
|
)
|
|
—
|
|
|
(23,950
|
)
|
|||||
Foreign currency loss
|
|
—
|
|
|
(8,320
|
)
|
|
—
|
|
|
—
|
|
|
(8,320
|
)
|
|||||
Gain on life settlement contracts
|
|
2,521
|
|
|
1,614
|
|
|
1,350
|
|
|
—
|
|
|
5,485
|
|
|||||
Acquisition gain (reduction) on purchase
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Provision for income taxes
|
|
(5,929
|
)
|
|
(24,810
|
)
|
|
1,418
|
|
|
(6,195
|
)
|
|
(35,516
|
)
|
|||||
Equity in earnings of unconsolidated subsidiary – related party
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,954
|
|
|
1,954
|
|
|||||
Net income
|
|
$
|
20,190
|
|
|
$
|
84,275
|
|
|
$
|
(6,538
|
)
|
|
$
|
20,174
|
|
|
$
|
118,101
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
(Amounts in Thousands)
|
|
Small Commercial Business
|
|
Specialty Risk and Extended Warranty
|
|
Specialty Program
|
|
Corporate and Other
|
|
Total
|
||||||||||
Three Months Ended September 30, 2015:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross written premium
|
|
$
|
797,654
|
|
|
$
|
577,284
|
|
|
$
|
405,875
|
|
|
$
|
—
|
|
|
$
|
1,780,813
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net written premium
|
|
459,290
|
|
|
380,600
|
|
|
303,093
|
|
|
—
|
|
|
1,142,983
|
|
|||||
Change in unearned premium
|
|
34,364
|
|
|
(30,218
|
)
|
|
(101,721
|
)
|
|
—
|
|
|
(97,575
|
)
|
|||||
Net earned premium
|
|
493,654
|
|
|
350,382
|
|
|
201,372
|
|
|
—
|
|
|
1,045,408
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Loss and loss adjustment expense
|
|
(320,391
|
)
|
|
(253,136
|
)
|
|
(136,077
|
)
|
|
—
|
|
|
(709,604
|
)
|
|||||
Acquisition costs and other underwriting expenses
|
|
(130,792
|
)
|
|
(69,876
|
)
|
|
(57,348
|
)
|
|
—
|
|
|
(258,016
|
)
|
|||||
|
|
(451,183
|
)
|
|
(323,012
|
)
|
|
(193,425
|
)
|
|
—
|
|
|
(967,620
|
)
|
|||||
Underwriting income
|
|
42,471
|
|
|
27,370
|
|
|
7,947
|
|
|
—
|
|
|
77,788
|
|
|||||
Service and fee income
|
|
24,793
|
|
|
79,064
|
|
|
482
|
|
|
21,804
|
|
|
126,143
|
|
|||||
Investment income and realized gain
|
|
24,359
|
|
|
21,312
|
|
|
12,423
|
|
|
13
|
|
|
58,107
|
|
|||||
Other expenses
|
|
(53,047
|
)
|
|
(37,471
|
)
|
|
(26,382
|
)
|
|
—
|
|
|
(116,900
|
)
|
|||||
Interest expense and loss on extinguishment of debt
|
|
(6,038
|
)
|
|
(4,333
|
)
|
|
(3,048
|
)
|
|
—
|
|
|
(13,419
|
)
|
|||||
Foreign currency loss
|
|
—
|
|
|
24,721
|
|
|
—
|
|
|
—
|
|
|
24,721
|
|
|||||
Gain on life settlement contracts
|
|
1,926
|
|
|
1,584
|
|
|
1,106
|
|
|
—
|
|
|
4,616
|
|
|||||
(Provision) benefit for income taxes
|
|
2,880
|
|
|
7,898
|
|
|
245
|
|
|
1,626
|
|
|
12,649
|
|
|||||
Equity in earnings of unconsolidated subsidiary – related party
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,477
|
|
|
13,477
|
|
|||||
Net income
|
|
$
|
43,170
|
|
|
$
|
120,145
|
|
|
$
|
(7,227
|
)
|
|
$
|
36,920
|
|
|
$
|
193,008
|
|
(Amounts in Thousands)
|
|
Small Commercial Business
|
|
Specialty Risk and Extended Warranty
|
|
Specialty Program
|
|
Corporate and Other
|
|
Total
|
||||||||||
Nine Months Ended September 30, 2016:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross written premium
|
|
$
|
3,124,761
|
|
|
$
|
1,779,984
|
|
|
$
|
1,135,539
|
|
|
$
|
—
|
|
|
$
|
6,040,284
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net written premium
|
|
1,684,035
|
|
|
1,233,741
|
|
|
787,389
|
|
|
—
|
|
|
3,705,165
|
|
|||||
Change in unearned premium
|
|
(89,967
|
)
|
|
(126,695
|
)
|
|
(36,233
|
)
|
|
—
|
|
|
(252,895
|
)
|
|||||
Net earned premium
|
|
1,594,068
|
|
|
1,107,046
|
|
|
751,156
|
|
|
—
|
|
|
3,452,270
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Loss and loss adjustment expense
|
|
(1,060,165
|
)
|
|
(736,220
|
)
|
|
(514,129
|
)
|
|
—
|
|
|
(2,310,514
|
)
|
|||||
Acquisition costs and other underwriting expenses
|
|
(405,854
|
)
|
|
(237,967
|
)
|
|
(203,574
|
)
|
|
—
|
|
|
(847,395
|
)
|
|||||
|
|
(1,466,019
|
)
|
|
(974,187
|
)
|
|
(717,703
|
)
|
|
—
|
|
|
(3,157,909
|
)
|
|||||
Underwriting income
|
|
128,049
|
|
|
132,859
|
|
|
33,453
|
|
|
—
|
|
|
294,361
|
|
|||||
Service and fee income
|
|
85,082
|
|
|
268,128
|
|
|
1,623
|
|
|
74,249
|
|
|
429,082
|
|
|||||
Investment income and realized gain
|
|
84,296
|
|
|
63,214
|
|
|
43,935
|
|
|
(62
|
)
|
|
191,383
|
|
|||||
Other expenses
|
|
(206,256
|
)
|
|
(117,491
|
)
|
|
(74,951
|
)
|
|
—
|
|
|
(398,698
|
)
|
|||||
Interest expense
|
|
(31,757
|
)
|
|
(18,090
|
)
|
|
(11,541
|
)
|
|
—
|
|
|
(61,388
|
)
|
|||||
Foreign currency loss
|
|
—
|
|
|
(70,428
|
)
|
|
—
|
|
|
—
|
|
|
(70,428
|
)
|
|||||
Gain on life settlement contracts
|
|
14,946
|
|
|
8,514
|
|
|
5,431
|
|
|
—
|
|
|
28,891
|
|
|||||
Acquisition gain on purchase
|
|
455
|
|
|
48,320
|
|
|
—
|
|
|
—
|
|
|
48,775
|
|
|||||
(Provision) benefit for income taxes
|
|
(14,373
|
)
|
|
(60,521
|
)
|
|
394
|
|
|
(16,660
|
)
|
|
(91,160
|
)
|
|||||
Equity in earnings of unconsolidated subsidiary – related party
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,532
|
|
|
12,532
|
|
|||||
Net income
|
|
$
|
60,442
|
|
|
$
|
254,505
|
|
|
$
|
(1,656
|
)
|
|
$
|
70,059
|
|
|
$
|
383,350
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
(Amounts in Thousands)
|
|
Small Commercial Business
|
|
Specialty Risk and Extended Warranty
|
|
Specialty Program
|
|
Corporate and Other
|
|
Total
|
||||||||||
Nine Months Ended September 30, 2015:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross written premium
|
|
$
|
2,574,602
|
|
|
$
|
1,528,017
|
|
|
$
|
1,087,719
|
|
|
$
|
—
|
|
|
$
|
5,190,338
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net written premium
|
|
1,499,922
|
|
|
975,073
|
|
|
719,898
|
|
|
—
|
|
|
3,194,893
|
|
|||||
Change in unearned premium
|
|
(99,218
|
)
|
|
(11,592
|
)
|
|
(120,328
|
)
|
|
—
|
|
|
(231,138
|
)
|
|||||
Net earned premium
|
|
1,400,704
|
|
|
963,481
|
|
|
599,570
|
|
|
—
|
|
|
2,963,755
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Loss and loss adjustment expense
|
|
(909,081
|
)
|
|
(647,121
|
)
|
|
(405,160
|
)
|
|
—
|
|
|
(1,961,362
|
)
|
|||||
Acquisition costs and other underwriting expenses
|
|
(365,184
|
)
|
|
(197,450
|
)
|
|
(165,768
|
)
|
|
—
|
|
|
(728,402
|
)
|
|||||
|
|
(1,274,265
|
)
|
|
(844,571
|
)
|
|
(570,928
|
)
|
|
—
|
|
|
(2,689,764
|
)
|
|||||
Underwriting income
|
|
126,439
|
|
|
118,910
|
|
|
28,642
|
|
|
—
|
|
|
273,991
|
|
|||||
Service and fee income
|
|
76,468
|
|
|
208,596
|
|
|
846
|
|
|
60,856
|
|
|
346,766
|
|
|||||
Investment income and realized gain
|
|
63,209
|
|
|
49,859
|
|
|
28,789
|
|
|
117
|
|
|
141,974
|
|
|||||
Other expenses
|
|
(155,502
|
)
|
|
(92,289
|
)
|
|
(65,696
|
)
|
|
—
|
|
|
(313,487
|
)
|
|||||
Interest expense and loss on extinguishment of debt
|
|
(18,866
|
)
|
|
(11,197
|
)
|
|
(7,971
|
)
|
|
—
|
|
|
(38,034
|
)
|
|||||
Foreign currency loss
|
|
—
|
|
|
17,355
|
|
|
—
|
|
|
—
|
|
|
17,355
|
|
|||||
Loss on life settlement contracts
|
|
9,466
|
|
|
5,619
|
|
|
4,000
|
|
|
—
|
|
|
19,085
|
|
|||||
(Provision) benefit for income taxes
|
|
(8,678
|
)
|
|
(24,068
|
)
|
|
923
|
|
|
(6,812
|
)
|
|
(38,635
|
)
|
|||||
Equity in earnings of unconsolidated subsidiary – related party
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23,048
|
|
|
23,048
|
|
|||||
Net income
|
|
$
|
98,362
|
|
|
$
|
272,785
|
|
|
$
|
(10,467
|
)
|
|
$
|
77,209
|
|
|
$
|
437,889
|
|
(Amounts in Thousands)
|
|
Small
Commercial
Business
|
|
Specialty
Risk and
Extended
Warranty
|
|
Specialty
Program
|
|
Total
|
||||||||
Three Months Ended September 30, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Workers' compensation
|
|
$
|
349,030
|
|
|
$
|
—
|
|
|
$
|
149,246
|
|
|
$
|
498,276
|
|
Warranty
|
|
—
|
|
|
180,333
|
|
|
—
|
|
|
180,333
|
|
||||
Other liability
|
|
11,292
|
|
|
26,169
|
|
|
47,332
|
|
|
84,793
|
|
||||
Commercial auto and liability, physical damage
|
|
47,751
|
|
|
9,164
|
|
|
32,118
|
|
|
89,033
|
|
||||
Medical malpractice
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Other
|
|
108,923
|
|
|
211,655
|
|
|
23,223
|
|
|
343,801
|
|
||||
Total net earned premium
|
|
$
|
516,996
|
|
|
$
|
427,321
|
|
|
$
|
251,919
|
|
|
$
|
1,196,236
|
|
|
|
|
|
|
|
|
|
|
||||||||
(Amounts in Thousands)
|
|
Small
Commercial
Business
|
|
Specialty
Risk and
Extended
Warranty
|
|
Specialty
Program
|
|
Total
|
||||||||
Three Months Ended September 30, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Workers' compensation
|
|
$
|
328,099
|
|
|
$
|
—
|
|
|
$
|
86,454
|
|
|
$
|
414,553
|
|
Warranty
|
|
—
|
|
|
143,202
|
|
|
—
|
|
|
143,202
|
|
||||
Other liability
|
|
12,081
|
|
|
36,042
|
|
|
58,072
|
|
|
106,195
|
|
||||
Commercial auto and liability, physical damage
|
|
89,078
|
|
|
(413
|
)
|
|
27,170
|
|
|
115,835
|
|
||||
Medical malpractice
|
|
—
|
|
|
52,879
|
|
|
—
|
|
|
52,879
|
|
||||
Other
|
|
64,396
|
|
|
118,672
|
|
|
29,676
|
|
|
212,744
|
|
||||
Total net earned premium
|
|
$
|
493,654
|
|
|
$
|
350,382
|
|
|
$
|
201,372
|
|
|
$
|
1,045,408
|
|
|
|
|
|
|
|
|
|
|
||||||||
(Amounts in Thousands)
|
|
Small
Commercial
Business
|
|
Specialty
Risk and
Extended
Warranty
|
|
Specialty
Program
|
|
Total
|
||||||||
Nine Months Ended September 30, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Workers' compensation
|
|
$
|
1,053,967
|
|
|
$
|
—
|
|
|
$
|
456,663
|
|
|
$
|
1,510,630
|
|
Warranty
|
|
—
|
|
|
527,835
|
|
|
—
|
|
|
527,835
|
|
||||
Other liability
|
|
16,541
|
|
|
100,187
|
|
|
130,713
|
|
|
247,441
|
|
||||
Commercial auto and liability, physical damage
|
|
245,647
|
|
|
26,340
|
|
|
97,863
|
|
|
369,850
|
|
||||
Medical malpractice
|
|
—
|
|
|
106,750
|
|
|
—
|
|
|
106,750
|
|
||||
Other
|
|
277,913
|
|
|
345,934
|
|
|
65,917
|
|
|
689,764
|
|
||||
Total net earned premium
|
|
$
|
1,594,068
|
|
|
$
|
1,107,046
|
|
|
$
|
751,156
|
|
|
$
|
3,452,270
|
|
|
|
|
|
|
|
|
|
|
||||||||
(Amounts in Thousands)
|
|
Small
Commercial
Business
|
|
Specialty
Risk and
Extended
Warranty
|
|
Specialty
Program
|
|
Total
|
||||||||
Nine Months Ended September 30, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Workers' compensation
|
|
$
|
942,867
|
|
|
$
|
—
|
|
|
$
|
250,400
|
|
|
$
|
1,193,267
|
|
Warranty
|
|
—
|
|
|
439,049
|
|
|
—
|
|
|
439,049
|
|
||||
Other liability
|
|
37,025
|
|
|
101,338
|
|
|
133,925
|
|
|
272,288
|
|
||||
Commercial auto and liability, physical damage
|
|
208,489
|
|
|
11,741
|
|
|
96,868
|
|
|
317,098
|
|
||||
Medical malpractice
|
|
—
|
|
|
129,333
|
|
|
—
|
|
|
129,333
|
|
||||
Other
|
|
212,323
|
|
|
282,020
|
|
|
118,377
|
|
|
612,720
|
|
||||
Total net earned premium
|
|
$
|
1,400,704
|
|
|
$
|
963,481
|
|
|
$
|
599,570
|
|
|
$
|
2,963,755
|
|
|
|
|
|
|
|
|
|
|
(Amounts in Thousands)
|
|
September 30, 2016
|
|
December 31, 2015
|
||||
Small Commercial Business
|
|
$
|
9,861,162
|
|
|
$
|
7,781,045
|
|
Specialty Risk and Extended Warranty
|
|
7,448,937
|
|
|
6,370,861
|
|
||
Specialty Program
|
|
4,209,439
|
|
|
2,936,710
|
|
||
Corporate and Other
|
|
—
|
|
|
2,403
|
|
||
|
|
$
|
21,519,538
|
|
|
$
|
17,091,019
|
|
•
|
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 narrowly defined classes of insureds, requiring an in-depth knowledge of the insured’s industry segment, through general and other wholesale agents.
|
•
|
N.V. Nationale Borg-Maatschappij and its affiliates (collectively, "Nationale Borg")
|
•
|
First Nationwide Title Agency and its subsidiaries (collectively, "First Nationwide")
|
•
|
Republic Underwriters Insurance Company, Republic-Vanguard Insurance Company, Southern Underwriters Insurance Company, Republic Fire & Casualty Insurance Company, Southern Insurance Company, Republic Diversified Services, Inc., Republic Lloyds, Republic Group No. Two Company, Southern County Mutual Insurance Company, Canyon State Auto Insurance Services, Inc., and Eagle General Agency, Inc. (collectively, "Republic")
|
•
|
Genworth Financial Mortgage Insurance Limited and Genworth Financial Mortgage Services Limited (collectively, "Genworth")
|
•
|
ARI Insurance Company and ARI Casualty Company (collectively, "ARI")
|
•
|
Springfield Insurance Company, Springfield Insurance Company Limited, and Unified Grocers Insurance Services (collectively, "Springfield")
|
•
|
Product warranty registration and service — Our Specialty Risk and Extended Warranty business generates fee revenue for product warranty registration and claims handling services provided to unaffiliated third party retailers, manufacturers and dealerships. Additionally, we provide credit monitoring services for a fee.
|
•
|
Servicing carrier — We act as a servicing carrier for workers’ compensation assigned risk plans in multiple states. In addition, we also offer claims adjusting and loss control services for fees to unaffiliated third parties.
|
•
|
Management services — We provide services to insurance consumers, traditional insurers and insurance producers by offering flexible and cost effective alternatives to traditional insurance tools in the form of various risk retention groups and captive management companies, as well as management of workers’ compensation and commercial property programs. We also offer programs and alternative funding options for non-profit and public sector organizations for the management of their state unemployment insurance obligations.
|
•
|
Insurance fees — We recognize fee income associated with the issuance of workers’ compensation policies for installment fees, in jurisdictions where it is permitted and approved, and reinstatement fees, which are fees charged to reinstate a policy after it has been canceled for non-payment, in jurisdictions where it is permitted and approved. Additionally, we recognize broker commissions and policy management fees associated with general liability policies placed by one of our managing general agencies.
|
•
|
Broker services — We provide brokerage services to Maiden Holdings Ltd. ("Maiden") in connection with our reinsurance agreement for which we receive a fee.
|
•
|
Asset management services — We currently manage the investment portfolios of certain subsidiaries of Maiden, National General Holdings Corp. ("NGHC") and ACP Re, Ltd. ("ACP Re") for which we receive a management fee.
|
•
|
Information technology services — We provide information technology and printing and mailing services to NGHC and its affiliates for a fee.
|
•
|
Policy acquisition expenses comprise commissions directly attributable to those agents, wholesalers or brokers that produce premiums written on our behalf. In most instances, we pay commissions based on collected premium, which reduces our credit risk exposure associated with producers in case a policyholder does not pay a premium. We pay state and local taxes, licenses and fees, assessments and contributions to various state guaranty funds based on our premiums or losses in each state. Surcharges that we may be required to charge and collect from insureds in certain jurisdictions are recorded as accrued liabilities, rather than expense. These expenses are offset by ceding commissions received.
|
•
|
Salaries and benefits expenses are those salaries and benefits expenses for employees that are directly involved in the origination, issuance and maintenance of policies, claims adjustment and accounting for insurance transactions that are associated with successful acquisition of insurance contracts. We classify salaries and benefits associated with employees that are involved in fee generating activities as other expenses.
|
•
|
General and administrative expenses are comprised of other costs associated with our insurance activities, such as federal excise tax, postage, telephones and internet access charges, as well as legal and auditing fees and board and bureau charges.
|
•
|
Ceding commission on reinsurance transactions is a commission we receive from ceding gross written premium to third party reinsurers, and is netted against acquisition costs and other underwriting expenses. In connection with the Maiden Quota Share, which is our primary source of ceding commissions, the amount we receive is a blended rate based on a contractual formula contained in the individual reinsurance agreements, and the rate may not correlate specifically to the cost structure of the individual segments. The ceding commissions we receive cover a portion of our capitalized direct acquisition costs and a portion of other underwriting expenses. Ceding commissions received from reinsurance transactions that represent recovery of capitalized direct acquisition costs are recorded as a reduction of capitalized unamortized deferred acquisition costs and the net amount is charged to expense in proportion to net premium revenue recognized. Ceding commissions received from reinsurance transactions that represent the recovery of other underwriting expenses are recognized in the income statement over the insurance contract period in proportion to the insurance protection provided and classified as a reduction of acquisition costs and other underwriting expenses. Ceding commissions received, but not yet earned, that represent the recovery of other underwriting expenses are classified as a component of accrued expenses and other current liabilities. We allocate earned ceding commissions to our segments based on each segment’s proportionate share of total acquisition costs and other underwriting expenses recognized during the period.
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(Amounts in Thousands)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Gross written premium
|
|
$
|
2,034,098
|
|
|
$
|
1,780,813
|
|
|
$
|
6,040,284
|
|
|
$
|
5,190,338
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net written premium
|
|
$
|
1,216,050
|
|
|
$
|
1,142,983
|
|
|
$
|
3,705,165
|
|
|
$
|
3,194,893
|
|
Change in unearned premium
|
|
(19,814
|
)
|
|
(97,575
|
)
|
|
(252,895
|
)
|
|
(231,138
|
)
|
||||
Net earned premium
|
|
1,196,236
|
|
|
1,045,408
|
|
|
3,452,270
|
|
|
2,963,755
|
|
||||
Service and fee income (related parties - three months $19,367; $19,250 and nine months $61,137; $57,935)
|
|
146,611
|
|
|
126,143
|
|
|
429,082
|
|
|
346,766
|
|
||||
Net investment income
|
|
59,919
|
|
|
40,425
|
|
|
160,079
|
|
|
111,281
|
|
||||
Net realized and unrealized gain (loss) on investments
|
|
8,230
|
|
|
17,682
|
|
|
31,304
|
|
|
30,693
|
|
||||
Total revenues
|
|
1,410,996
|
|
|
1,229,658
|
|
|
4,072,735
|
|
|
3,452,495
|
|
||||
Loss and loss adjustment expense
|
|
811,048
|
|
|
709,604
|
|
|
2,310,514
|
|
|
1,961,362
|
|
||||
Acquisition costs and other underwriting expenses (net of ceding commission - related party - three months $158,216; $138,036 and nine months $440,561; $385,945)
|
|
283,958
|
|
|
258,016
|
|
|
847,395
|
|
|
728,402
|
|
||||
Other
|
|
137,542
|
|
|
116,900
|
|
|
398,698
|
|
|
313,487
|
|
||||
Total expenses
|
|
1,232,548
|
|
|
1,084,520
|
|
|
3,556,607
|
|
|
3,003,251
|
|
||||
Income before other income (expense), income taxes and equity in earnings of unconsolidated subsidiaries
|
|
178,448
|
|
|
145,138
|
|
|
516,128
|
|
|
449,244
|
|
||||
Other income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense (net of interest income - related party - three months $2,061; $2,115 and nine months $6,436; $6,514)
|
|
(23,950
|
)
|
|
(12,862
|
)
|
|
(61,388
|
)
|
|
(32,763
|
)
|
||||
Loss on extinguishment of debt
|
|
—
|
|
|
(557
|
)
|
|
—
|
|
|
(5,271
|
)
|
||||
Net gain on investment in life settlement contracts net of profit commission
|
|
5,485
|
|
|
4,616
|
|
|
28,891
|
|
|
19,085
|
|
||||
Foreign currency (loss) gain
|
|
(8,320
|
)
|
|
24,721
|
|
|
(70,428
|
)
|
|
17,355
|
|
||||
Acquisition gain on purchase
|
|
—
|
|
|
5,826
|
|
|
48,775
|
|
|
5,826
|
|
||||
Total other (loss) income
|
|
(26,785
|
)
|
|
21,744
|
|
|
(54,150
|
)
|
|
4,232
|
|
||||
Income before income taxes and equity in earnings (loss) of unconsolidated subsidiaries
|
|
151,663
|
|
|
166,882
|
|
|
461,978
|
|
|
453,476
|
|
||||
Provision (benefit) for income taxes
|
|
35,516
|
|
|
(12,649
|
)
|
|
91,160
|
|
|
38,635
|
|
||||
Income before equity in earnings of unconsolidated subsidiaries
|
|
116,147
|
|
|
179,531
|
|
|
370,818
|
|
|
414,841
|
|
||||
Equity in earnings of unconsolidated subsidiaries – related parties
|
|
1,954
|
|
|
13,477
|
|
|
12,532
|
|
|
23,048
|
|
||||
Net income
|
|
118,101
|
|
|
193,008
|
|
|
383,350
|
|
|
437,889
|
|
||||
Net income attributable to redeemable non-controlling interest and non-controlling interest of subsidiaries
|
|
(2,975
|
)
|
|
(1,511
|
)
|
|
(12,809
|
)
|
|
(6,940
|
)
|
||||
Net income attributable to AmTrust Financial Services, Inc.
|
|
115,126
|
|
|
191,497
|
|
|
370,541
|
|
|
430,949
|
|
||||
Dividends on preferred stock
|
|
(11,576
|
)
|
|
(8,789
|
)
|
|
(31,943
|
)
|
|
(22,797
|
)
|
||||
Net income attributable to AmTrust common shareholders
|
|
$
|
103,550
|
|
|
$
|
182,708
|
|
|
$
|
338,598
|
|
|
$
|
408,152
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net realized gain (loss) on investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total other-than-temporary impairment loss
|
|
$
|
(9,461
|
)
|
|
$
|
(7,636
|
)
|
|
$
|
(26,417
|
)
|
|
$
|
(10,118
|
)
|
Portion of loss recognized in other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net impairment losses recognized in earnings
|
|
(9,461
|
)
|
|
(7,636
|
)
|
|
(26,417
|
)
|
|
(10,118
|
)
|
||||
Net realized gain (loss) on available for sale securities
|
|
14,380
|
|
|
16,049
|
|
|
53,106
|
|
|
29,306
|
|
||||
Net unrealized gain on trading securities
|
|
3,311
|
|
|
9,269
|
|
|
4,615
|
|
|
11,505
|
|
||||
Net realized investment gain (loss)
|
|
$
|
8,230
|
|
|
$
|
17,682
|
|
|
$
|
31,304
|
|
|
$
|
30,693
|
|
|
|
|
|
|
|
|
|
|
||||||||
Key measures:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss ratio
|
|
67.8
|
%
|
|
67.9
|
%
|
|
66.9
|
%
|
|
66.2
|
%
|
||||
Net expense ratio
|
|
23.7
|
%
|
|
24.7
|
%
|
|
24.6
|
%
|
|
24.6
|
%
|
||||
Net combined ratio
|
|
91.5
|
%
|
|
92.6
|
%
|
|
91.5
|
%
|
|
90.8
|
%
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(Amounts in Thousands)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Gross written premium
|
|
$
|
998,071
|
|
|
$
|
797,654
|
|
|
$
|
3,124,761
|
|
|
$
|
2,574,602
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net written premium
|
|
$
|
457,869
|
|
|
$
|
459,290
|
|
|
$
|
1,684,035
|
|
|
$
|
1,499,922
|
|
Change in unearned premium
|
|
59,127
|
|
|
34,364
|
|
|
(89,967
|
)
|
|
(99,218
|
)
|
||||
Net earned premium
|
|
516,996
|
|
|
493,654
|
|
|
1,594,068
|
|
|
1,400,704
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Loss and loss adjustment expense
|
|
(344,531
|
)
|
|
(320,391
|
)
|
|
(1,060,165
|
)
|
|
(909,081
|
)
|
||||
Acquisition costs and other underwriting expenses
|
|
(125,412
|
)
|
|
(130,792
|
)
|
|
(405,854
|
)
|
|
(365,184
|
)
|
||||
|
|
(469,943
|
)
|
|
(451,183
|
)
|
|
(1,466,019
|
)
|
|
(1,274,265
|
)
|
||||
Underwriting income
|
|
$
|
47,053
|
|
|
$
|
42,471
|
|
|
$
|
128,049
|
|
|
$
|
126,439
|
|
|
|
|
|
|
|
|
|
|
||||||||
Key measures:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss ratio
|
|
66.6
|
%
|
|
64.9
|
%
|
|
66.5
|
%
|
|
64.9
|
%
|
||||
Net expense ratio
|
|
24.3
|
%
|
|
26.5
|
%
|
|
25.5
|
%
|
|
26.1
|
%
|
||||
Net combined ratio
|
|
90.9
|
%
|
|
91.4
|
%
|
|
92.0
|
%
|
|
91.0
|
%
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(Amounts in Thousands)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Gross written premium
|
|
$
|
598,977
|
|
|
$
|
577,284
|
|
|
$
|
1,779,984
|
|
|
$
|
1,528,017
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net written premium
|
|
$
|
448,847
|
|
|
$
|
380,600
|
|
|
$
|
1,233,741
|
|
|
$
|
975,073
|
|
Change in unearned premium
|
|
(21,526
|
)
|
|
(30,218
|
)
|
|
(126,695
|
)
|
|
(11,592
|
)
|
||||
Net earned premium
|
|
427,321
|
|
|
350,382
|
|
|
1,107,046
|
|
|
963,481
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Loss and loss adjustment expense
|
|
(293,956
|
)
|
|
(253,136
|
)
|
|
(736,220
|
)
|
|
(647,121
|
)
|
||||
Acquisition costs and other underwriting expenses
|
|
(89,784
|
)
|
|
(69,876
|
)
|
|
(237,967
|
)
|
|
(197,450
|
)
|
||||
|
|
(383,740
|
)
|
|
(323,012
|
)
|
|
(974,187
|
)
|
|
(844,571
|
)
|
||||
Underwriting income
|
|
$
|
43,581
|
|
|
$
|
27,370
|
|
|
$
|
132,859
|
|
|
$
|
118,910
|
|
|
|
|
|
|
|
|
|
|
||||||||
Key measures:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss ratio
|
|
68.8
|
%
|
|
72.2
|
%
|
|
66.5
|
%
|
|
67.2
|
%
|
||||
Net expense ratio
|
|
21.0
|
%
|
|
20.0
|
%
|
|
21.5
|
%
|
|
20.5
|
%
|
||||
Net combined ratio
|
|
89.8
|
%
|
|
92.2
|
%
|
|
88.0
|
%
|
|
87.7
|
%
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(Amounts in Thousands)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Gross written premium
|
|
$
|
437,050
|
|
|
$
|
405,875
|
|
|
$
|
1,135,539
|
|
|
$
|
1,087,719
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net written premium
|
|
$
|
309,334
|
|
|
$
|
303,093
|
|
|
$
|
787,389
|
|
|
$
|
719,898
|
|
Change in unearned premium
|
|
(57,415
|
)
|
|
(101,721
|
)
|
|
(36,233
|
)
|
|
(120,328
|
)
|
||||
Net earned premium
|
|
251,919
|
|
|
201,372
|
|
|
751,156
|
|
|
599,570
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Loss and loss adjustment expense
|
|
(172,561
|
)
|
|
(136,077
|
)
|
|
(514,129
|
)
|
|
(405,160
|
)
|
||||
Acquisition costs and other underwriting expenses
|
|
(68,762
|
)
|
|
(57,348
|
)
|
|
(203,574
|
)
|
|
(165,768
|
)
|
||||
|
|
(241,323
|
)
|
|
(193,425
|
)
|
|
(717,703
|
)
|
|
(570,928
|
)
|
||||
Underwriting income
|
|
$
|
10,596
|
|
|
$
|
7,947
|
|
|
$
|
33,453
|
|
|
$
|
28,642
|
|
|
|
|
|
|
|
|
|
|
||||||||
Key measures:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss ratio
|
|
68.5
|
%
|
|
67.6
|
%
|
|
68.4
|
%
|
|
67.6
|
%
|
||||
Net expense ratio
|
|
27.3
|
%
|
|
28.5
|
%
|
|
27.1
|
%
|
|
27.6
|
%
|
||||
Net combined ratio
|
|
95.8
|
%
|
|
96.1
|
%
|
|
95.5
|
%
|
|
95.2
|
%
|
|
|
Nine Months Ended September 30,
|
||||||
(Amounts in Thousands)
|
|
2016
|
|
2015
|
||||
Cash and cash equivalents provided by (used in):
|
|
|
|
|
|
|
||
Operating activities
|
|
$
|
839,914
|
|
|
$
|
468,108
|
|
Investing activities
|
|
(835,920
|
)
|
|
(959,608
|
)
|
||
Financing activities
|
|
182,325
|
|
|
507,624
|
|
(Amounts in thousands)
|
|
September 30, 2016
|
|
December 31, 2015
|
||||
Selected Assets:
|
|
|
|
|
||||
Fixed maturities, available-for-sale
|
|
$
|
7,043,815
|
|
|
$
|
5,433,797
|
|
Premium receivable, net
|
|
2,405,638
|
|
|
2,115,653
|
|
||
Reinsurance recoverable
|
|
4,040,073
|
|
|
3,008,670
|
|
||
|
|
|
|
|
||||
Selected Liabilities:
|
|
|
|
|
||||
Loss and loss expense reserve
|
|
9,427,770
|
|
|
7,208,367
|
|
||
Unearned premium
|
|
4,900,926
|
|
|
4,014,728
|
|
||
Debt
|
|
1,235,316
|
|
|
989,356
|
|
Series
|
|
Dividend rate per year %
|
|
Shares of Preferred Stock issued
|
|
Depositary shares issued
|
|
Liquidation preference amount per share of Preferred Stock $
|
|
Net proceeds ($ in thousands)
|
|
Dividend paid during the nine months ended September 30, 2016 ($ in thousands)
|
||||||
A
|
|
6.75
|
|
4,600,000
|
|
N/A
|
|
$
|
25
|
|
|
$
|
111,130
|
|
|
$
|
1,941
|
|
B
|
|
7.25
|
|
105,000
|
|
4,200,000
|
|
1,000
|
|
|
101,702
|
|
|
1,903
|
|
|||
C
|
|
7.625
|
|
80,000
|
|
3,200,000
|
|
1,000
|
|
|
77,480
|
|
|
1,525
|
|
|||
D
|
|
7.50
|
|
182,500
|
|
7,300,000
|
|
1,000
|
|
|
176,529
|
|
|
3,422
|
|
|||
E
|
|
7.75
|
|
143,750
|
|
5,750,000
|
|
1,000
|
|
|
139,042
|
|
|
2,785
|
|
|||
F
|
|
6.95
|
|
287,500
|
|
11,500,000
|
|
1,000
|
|
|
278,222
|
|
|
—
|
|
|
|
September 30, 2016
|
|
December 31, 2015
|
||||||||||
(Amounts in Thousands)
|
|
Carrying Value
|
|
Percentage of Portfolio
|
|
Carrying Value
|
|
Percentage of Portfolio
|
||||||
Cash, cash equivalents and restricted cash
|
|
$
|
1,649,995
|
|
|
18.4
|
%
|
|
$
|
1,312,669
|
|
|
18.9
|
%
|
Short-term investments
|
|
49,008
|
|
|
0.5
|
|
|
84,266
|
|
|
1.2
|
|
||
U.S. treasury securities
|
|
295,721
|
|
|
3.3
|
|
|
70,759
|
|
|
1.0
|
|
||
U.S. government agencies
|
|
7,679
|
|
|
0.1
|
|
|
45,558
|
|
|
0.7
|
|
||
Municipals
|
|
875,989
|
|
|
9.8
|
|
|
540,426
|
|
|
7.8
|
|
||
Foreign government
|
|
142,262
|
|
|
1.6
|
|
|
113,745
|
|
|
1.6
|
|
||
Commercial mortgage back securities
|
|
179,717
|
|
|
2.0
|
|
|
151,318
|
|
|
2.2
|
|
||
Residential mortgage backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Agency backed
|
|
1,061,245
|
|
|
11.9
|
|
|
974,838
|
|
|
14.0
|
|
||
Non-agency backed
|
|
63,195
|
|
|
0.7
|
|
|
120,229
|
|
|
1.7
|
|
||
Collateralized loan / debt obligations
|
|
425,669
|
|
|
4.8
|
|
|
226,094
|
|
|
3.2
|
|
||
Asset-backed securities
|
|
25,581
|
|
|
0.3
|
|
|
31,837
|
|
|
0.5
|
|
||
Corporate bonds
|
|
3,966,757
|
|
|
44.4
|
|
|
3,158,993
|
|
|
45.3
|
|
||
Preferred stocks
|
|
3,996
|
|
|
—
|
|
|
4,989
|
|
|
0.1
|
|
||
Common stocks
|
|
196,186
|
|
|
2.2
|
|
|
126,779
|
|
|
1.8
|
|
||
|
|
$
|
8,943,000
|
|
|
100.0
|
%
|
|
$
|
6,962,500
|
|
|
100.0
|
%
|
|
September 30, 2016
|
|
December 31, 2015
|
||
U.S. Treasury
|
4.2
|
%
|
|
1.3
|
%
|
AAA
|
5.3
|
|
|
12.2
|
|
AA
|
33.0
|
|
|
29.0
|
|
A
|
29.7
|
|
|
28.8
|
|
BBB, BBB+, BBB-
|
24.8
|
|
|
25.8
|
|
BB, BB+, BB-
|
2.0
|
|
|
1.9
|
|
B, B+, B-
|
0.6
|
|
|
0.1
|
|
Other
|
0.4
|
|
|
0.9
|
|
Total
|
100.0
|
%
|
|
100.0
|
%
|
|
September 30, 2016
|
|
December 31, 2015
|
||||||
|
Average Yield %
|
|
Average Duration in Years
|
|
Average Yield %
|
|
Average Duration in Years
|
||
U.S. treasury securities
|
1.19
|
|
2.9
|
|
|
1.73
|
|
3.9
|
|
U.S. government agencies
|
1.71
|
|
4.5
|
|
|
2.63
|
|
4.2
|
|
Foreign government
|
1.84
|
|
5.9
|
|
|
2.27
|
|
5.7
|
|
Corporate bonds
|
3.36
|
|
5.9
|
|
|
3.33
|
|
6.1
|
|
Municipal bonds
|
3.03
|
|
7.4
|
|
|
3.33
|
|
6.9
|
|
Collateralized loan / debt obligations
|
4.98
|
|
0.6
|
|
|
4.22
|
|
1.1
|
|
Mortgage and asset backed securities
|
3.18
|
|
5.3
|
|
|
3.38
|
|
4.6
|
|
•
|
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 its 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 material outstanding obligations or the issuer seeking protection under bankruptcy laws; and
|
•
|
other items, including company management, media exposure, sponsors, marketing and advertising agreements, debt restructuring, regulatory changes, acquisitions and dispositions, pending litigation, distribution agreements and general industry trends.
|
(Amounts in Thousands)
|
|
2016
|
|
2015
|
||||
Equity securities
|
|
$
|
19,977
|
|
|
$
|
1,276
|
|
Fixed maturity securities
|
|
—
|
|
|
8,842
|
|
||
Other investments
|
|
6,440
|
|
|
$
|
—
|
|
|
|
|
$
|
26,417
|
|
|
$
|
10,118
|
|
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
|
|
$
|
6,396,955
|
|
|
$
|
(646,860
|
)
|
|
(17.5
|
)%
|
100 basis point increase
|
|
6,704,445
|
|
|
(339,370
|
)
|
|
(9.2
|
)%
|
||
No change
|
|
7,043,815
|
|
|
—
|
|
|
—
|
|
||
100 basis point decrease
|
|
7,391,031
|
|
|
347,216
|
|
|
9.4
|
%
|
||
200 basis point decrease
|
|
7,754,123
|
|
|
710,308
|
|
|
19.2
|
%
|
Hypothetical Change in S&P 500 Index
|
|
Fair Value
|
|
Estimated Change in Fair Value
|
|
Hypothetical Percentage (Increase) Decrease in Shareholders’ Equity
|
|||||
(Amounts in Thousands)
|
|||||||||||
25% increase
|
|
$
|
250,228
|
|
|
$
|
50,046
|
|
|
1.0
|
%
|
No change
|
|
200,182
|
|
|
—
|
|
|
|
|||
25% decrease
|
|
150,136
|
|
|
(50,046
|
)
|
|
(1.0
|
)%
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plan or Program
|
|
Maximum Number (or approximate dollar value) of Shares that May Yet be Purchased Under Plan or Program (1)
|
||||||
July 1 - 31, 2016
|
|
1,899,645
|
|
|
24.39
|
|
|
1,899,645
|
|
|
$
|
140,380,405
|
|
|
August 1 - 31, 2016
|
|
103,390
|
|
|
24.34
|
|
|
103,390
|
|
|
137,864,237
|
|
||
September 1 - 30, 2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
137,864,237
|
|
||
Total
|
|
2,003,035
|
|
|
|
|
2,003,035
|
|
|
$
|
137,864,237
|
|
||
|
|
|
|
|
|
|
|
|
|
Exhibit
Number
|
|
Description
|
3.1
|
|
Certificate of Designations of 6.95% Non-Cumulative Preferred Stock, Series F (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K (No. 001-33143) filed on September 27, 2016).
|
|
|
|
4.1
|
|
Form of Stock Certificate evidencing 6.95% Non-Cumulative Preferred Stock, Series F (incorporated by reference to Exhibit 4.3 to the Company's Current Report on Form 8-K (No. 001-33143) filed on September 27, 2016).
|
|
|
|
4.2
|
|
Deposit Agreement, dated September 27, 2016, among the Company, American Stock Transfer & Trust Company, LLC and the holders from time to time of the depositary receipts described therein (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K (No. 001-33143) filed on September 27, 2016).
|
|
|
|
4.3
|
|
Form of depositary receipt (included as Exhibit A to Exhibit 4.2) (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K (No. 001-33143) filed on September 27, 2016).
|
|
|
|
10.1
|
|
Endorsement No. 3 to the Quota Share Reinsurance Agreement among AmTrust Europe Ltd., AmTrust International Underwriters Limited and Maiden Reinsurance Ltd. (filed herewith)
.
|
|
|
|
10.2
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Endorsement No. 4 to the Quota Share Reinsurance Agreement among AmTrust Europe Ltd., AmTrust International Underwriters Limited and Maiden Reinsurance Ltd. (filed herewith).
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10.3
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Amendment No. 6, dated July 13, 2016, to the Credit Agreement, dated September 12, 2014, among the Company, JPMorgan Chase Bank, N.A., as Administrative Agent, and the various lending institutions party thereto (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (No. 001-33143) filed on July 15, 2016).
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10.4
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Restatement Agreement, dated July 28, 2016, among the Company as Administrative Agent, ACP Re, Ltd., Tower Group International, Ltd., ACP Re Holdings, LLC, and AmTrust International Insurance, Ltd. and National General Re Ltd., as Lenders (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (No. 001-33143) filed on September 21, 2016).
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10.5
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Amended and Restated Credit Agreement, dated September 20, 2016, among the Company as Administrative Agent. ACP Re Holdings, LLC, the Michael Karfunkel Family 2005 Trust, and AmTrust International Insurance, Ltd. and National General Re Ltd., as Lenders (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K (No. 001-33143) filed on September 21, 2016).
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31.1
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Certification of the Chief Executive Officer, pursuant to Rule 13a-14(a) or 15d-14(a), for the quarter ended September 30, 2016.
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31.2
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Certification of the Chief Financial Officer, pursuant to Rule 13a-14(a) or 15d-14(a), for the quarter ended September 30, 2016.
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32.1
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Certification of the Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, for the quarter ended September 30, 2016.
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32.2
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Certification of the Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, for the quarter ended September 30, 2016.
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101.1
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The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets at September 30, 2016 and December 31, 2015; (ii) the Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2016 and 2015; (iii) the Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2016 and 2015; (iv) the Consolidated Statements of Cash Flows for the nine months ended September 30, 2016 and 2015; and (v) the Notes to Unaudited Condensed Consolidated Financial Statements.
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AmTrust Financial Services, Inc.
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(Registrant)
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Date:
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November 9, 2016
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/s/ Barry D. Zyskind
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Barry D. Zyskind
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Chairman, President and Chief Executive Officer
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/s/ Ronald E. Pipoly, Jr.
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Ronald E. Pipoly, Jr.
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Chief Financial Officer
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1.
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The name of the Reinsurer, as amended by Endorsement No. 1 to the Contract, shall be amended to “Maiden Reinsurance Ltd.” in all places it appears in the Contract.
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2.
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The section entitled “Security”, as previously amended by Endorsement No. 1 to the Contract shall be deleted and the following substituted therefor:
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3.
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The section of the Contract entitled “Treaty Detail”, as previously amended by Endorsement No. 2 to the Contract, shall be deleted and the following substituted therefor:
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1.
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The section of the Contract entitled “Treaty Detail,” as previously amended by Endorsement 2 and Endorsement 3 to the Contract, shall be deleted and the following substituted therefor:
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(a)
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in respect of AmTrust International Underwriters Limited, Eire, forty percent (40%) of all business written or renewed with effect from the inception of the Contract until such time as otherwise agreed in writing between the parties;
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(b)
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in respect of AmTrust Europe Limited, forty percent (40%) of all business written or renewed with effect from the inception of the Contract until 30 June 2016, thirty-two and a half percent (32.5%) of all business written or renewed on or after 1 July 2016 until 30 June 2017, and twenty percent (20%) of all business written or renewed on or after 1 July 2017 until such time as otherwise agreed in writing between the parties.
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1.
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I have reviewed this Quarterly Report on Form 10-Q of AmTrust Financial Services, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date:
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November 9, 2016
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By:
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/s/ Barry Zyskind
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Barry Zyskind
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Chairman, President and Chief Executive Officer
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(Principal Executive Officer)
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1.
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I have reviewed this Quarterly Report on Form 10-Q of AmTrust Financial Services, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date:
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November 9, 2016
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By:
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/s/ Ronald Pipoly
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Ronald Pipoly
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Chief Financial Officer
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(Principal Financial and Accounting Officer)
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1.
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The Quarterly Report on Form 10-Q for the quarter ended
September 30, 2016
(the “Report”) of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date:
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November 9, 2016
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By:
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/s/ Barry Zyskind
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Barry Zyskind
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Chairman, President and Chief Executive Officer
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(Principal Executive Officer)
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1.
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The Quarterly Report on Form 10-Q for the quarter ended
September 30, 2016
(the “Report”) of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date:
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November 9, 2016
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By:
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/s/ Ronald Pipoly
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Ronald Pipoly
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Chief Financial Officer
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(Principal Financial and Accounting Officer)
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