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 June 30, 2017
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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
o
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Non-Accelerated Filer
o
(Do not check if a smaller
reporting company)
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Smaller Reporting Company
o
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Emerging growth company
o
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
o
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Page
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Notes to Consolidated Financial Statements
(unaudited)
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June 30,
2017 |
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December 31,
2016 |
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ASSETS
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Investments:
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Fixed maturity securities, available-for-sale, at fair value (amortized cost $7,641,124; $7,315,041)
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$
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7,774,559
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$
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7,398,134
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Fixed maturity securities, trading, at fair value (amortized cost $28,162; $29,081)
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24,803
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33,782
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Equity securities, available-for-sale, at fair value (cost $81,478; $126,670)
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108,830
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137,162
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Equity securities, trading, at fair value (cost $92,700; $76,163)
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84,574
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81,960
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Short-term investments
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239
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—
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Equity investment in unconsolidated subsidiaries – related party
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—
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151,332
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Other investments (related party $71,057; $72,328)
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139,661
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152,187
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Total investments
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8,132,666
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7,954,557
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Cash and cash equivalents
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891,591
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567,771
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Restricted cash and cash equivalents
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855,672
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713,338
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Accrued interest and dividends
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60,916
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54,680
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Premiums receivable, net
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3,093,247
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2,802,167
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Reinsurance recoverable (related party $2,779,753; $2,452,242)
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5,395,374
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4,329,521
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Prepaid reinsurance premium (related party $1,257,767; $1,133,485)
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2,168,554
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1,994,092
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Other assets (related party $152,297; $189,223; recorded at fair value $396,782; $356,856)
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1,798,475
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1,712,165
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Deferred policy acquisition costs
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1,121,172
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928,920
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Property and equipment, net
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462,343
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314,332
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Goodwill
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808,208
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686,565
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Intangible assets
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539,978
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556,560
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Total assets
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$
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25,328,196
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$
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22,614,668
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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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11,149,511
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$
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10,140,716
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Unearned premiums
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5,297,190
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4,880,066
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Ceded reinsurance premiums payable (related party $755,666; $633,638)
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856,995
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804,882
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Funds held under reinsurance treaties
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121,940
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70,868
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Note payable on collateral loan – related party
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167,975
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167,975
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Securities sold but not yet purchased, at fair value
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64,947
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36,394
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Securities sold under agreements to repurchase, at contract value
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31,698
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160,270
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Accrued expenses and other liabilities (recorded at fair value $103,329; $76,840)
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2,455,657
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1,651,626
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Debt (net of debt issuance cost of $15,611, $15,960)
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1,284,629
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1,234,900
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Total liabilities
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21,430,542
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19,147,697
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Commitments and contingencies
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Redeemable non-controlling interest
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1,180
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1,358
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Stockholders’ equity:
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Common stock, $0.01 par value; 500,000 shares authorized; 210,751 and 196,455 issued in 2017 and 2016, respectively; 195,787 and 170,508 outstanding in 2017 and 2016, respectively
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2,108
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1,965
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Preferred stock, $0.01 par value; 10,000 shares authorized; 5,399 issued and outstanding; $913,750 aggregated liquidation preference in 2017 and 2016, respectively
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913,750
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913,750
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Additional paid-in capital
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1,625,974
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1,384,922
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Treasury stock at cost; 14,964 and 25,947 shares in 2017 and 2016, respectively
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(243,669
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)
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(310,883
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)
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Accumulated other comprehensive loss, net of tax
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(4,835
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)
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(125,722
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)
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Retained earnings
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1,370,190
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1,405,071
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Total AmTrust Financial Services, Inc. equity
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3,663,518
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3,269,103
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Non-controlling interest
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232,956
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196,510
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Total stockholders’ equity
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3,896,474
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3,465,613
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Total liabilities and stockholders’ equity
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$
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25,328,196
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$
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22,614,668
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Three Months Ended June 30,
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Six Months Ended June 30,
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2017
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2016
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2017
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2016
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( As restated)
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( As restated)
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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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1,371,902
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$
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1,268,436
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$
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2,715,968
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$
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2,489,115
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Change in unearned premium
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8,807
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(86,684
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)
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(112,727
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)
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(233,081
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)
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Net earned premium
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1,380,709
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1,181,752
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2,603,241
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2,256,034
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Service and fee income (related parties - three months $35,596; $21,608 and six months $55,931 and $41,771)
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168,446
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124,306
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305,942
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253,111
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Net investment income
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49,226
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50,745
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112,551
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100,160
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Net realized gain on investments
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23,455
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15,099
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32,070
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23,074
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Total revenues
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1,621,836
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1,371,902
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3,053,804
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2,632,379
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Expenses:
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||||
Loss and loss adjustment expense
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1,024,478
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784,393
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1,864,812
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1,499,466
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||||
Acquisition costs and other underwriting expenses (net of ceding commission - related party - three months $158,231; $145,610, and six months $311,933; $284,001)
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373,195
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294,477
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701,410
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566,945
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|
||||
Other
|
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199,860
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134,344
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362,713
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263,611
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||||
Total expenses
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1,597,533
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1,213,214
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2,928,935
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2,330,022
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||||
Income before other income (loss), (benefit) provision for income taxes, equity in earnings of unconsolidated subsidiaries and non-controlling interest
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24,303
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158,688
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124,869
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302,357
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|
||||
Other income (loss):
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||||
Interest expense (net of interest income - related party - three months $1,160; $2,187 and six months $2,318 and $4,375)
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(24,229
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)
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(17,912
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)
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(47,830
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)
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(33,786
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)
|
||||
(Loss) gain on investment in life settlement contracts net of profit commission
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(1,261
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)
|
|
12,676
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7,349
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23,406
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|
||||
Foreign currency loss
|
|
(58,948
|
)
|
|
(28,995
|
)
|
|
(76,916
|
)
|
|
(67,228
|
)
|
||||
Gain on acquisition
|
|
—
|
|
|
39,097
|
|
|
—
|
|
|
48,775
|
|
||||
Total other (loss) income
|
|
(84,438
|
)
|
|
4,866
|
|
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(117,397
|
)
|
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(28,833
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)
|
||||
(Loss) income before (benefit) provision for income taxes, equity in earnings of unconsolidated subsidiaries and non-controlling interest
|
|
(60,135
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)
|
|
163,554
|
|
|
7,472
|
|
|
273,524
|
|
||||
(Benefit) provision for income taxes
|
|
(19,727
|
)
|
|
23,807
|
|
|
1,629
|
|
|
42,767
|
|
||||
(Loss) income before equity in earnings of unconsolidated subsidiaries
|
|
(40,408
|
)
|
|
139,747
|
|
|
5,843
|
|
|
230,757
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|
||||
Equity in earnings of unconsolidated subsidiaries – related parties
|
|
69,531
|
|
|
4,802
|
|
|
73,488
|
|
|
10,578
|
|
||||
Net income
|
|
$
|
29,123
|
|
|
$
|
144,549
|
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$
|
79,331
|
|
|
$
|
241,335
|
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Net income attributable to non-controlling interest and redeemable non-controlling interest of subsidiaries
|
|
(6,723
|
)
|
|
(5,817
|
)
|
|
(17,728
|
)
|
|
(9,834
|
)
|
||||
Net income attributable to AmTrust Financial Services, Inc.
|
|
$
|
22,400
|
|
|
$
|
138,732
|
|
|
$
|
61,603
|
|
|
$
|
231,501
|
|
Dividends on preferred stock
|
|
(16,571
|
)
|
|
(11,576
|
)
|
|
(33,142
|
)
|
|
(20,367
|
)
|
||||
Net income attributable to AmTrust common stockholders
|
|
$
|
5,829
|
|
|
$
|
127,156
|
|
|
$
|
28,461
|
|
|
$
|
211,134
|
|
Earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic earnings per share
|
|
$
|
0.03
|
|
|
$
|
0.73
|
|
|
$
|
0.16
|
|
|
$
|
1.21
|
|
Diluted earnings per share
|
|
$
|
0.03
|
|
|
$
|
0.73
|
|
|
$
|
0.16
|
|
|
$
|
1.20
|
|
Dividends declared per common share
|
|
$
|
0.17
|
|
|
$
|
0.15
|
|
|
$
|
0.34
|
|
|
$
|
0.30
|
|
|
Three Months Ended June 30,
|
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Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
|
(As restated)
|
|
|
|
(As restated)
|
||||||||
Net income
|
$
|
29,123
|
|
|
$
|
144,549
|
|
|
$
|
79,331
|
|
|
$
|
241,335
|
|
Other comprehensive income, net of tax:
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
62,663
|
|
|
(32,809
|
)
|
|
76,526
|
|
|
(80,003
|
)
|
||||
Change in fair value of interest rate swap
|
28
|
|
|
168
|
|
|
120
|
|
|
287
|
|
||||
Unrealized gain on securities:
|
|
|
|
|
|
|
|
||||||||
Gross unrealized holding gain
|
66,029
|
|
|
170,466
|
|
|
98,060
|
|
|
298,119
|
|
||||
Tax expense arising during period
|
16,521
|
|
|
62,093
|
|
|
22,961
|
|
|
106,772
|
|
||||
Net unrealized holding gain
|
49,508
|
|
|
108,373
|
|
|
75,099
|
|
|
191,347
|
|
||||
Reclassification adjustments for investment gain included in net income, net of tax:
|
|
|
|
|
|
|
|
||||||||
Other-than-temporary impairment loss
|
—
|
|
|
(10,537
|
)
|
|
—
|
|
|
(10,537
|
)
|
||||
Other net realized (gain) loss on investments
|
(19,228
|
)
|
|
2,920
|
|
|
(30,858
|
)
|
|
2,492
|
|
||||
Reclassification adjustments for investment gain included in net income:
|
(19,228
|
)
|
|
(7,617
|
)
|
|
(30,858
|
)
|
|
(8,045
|
)
|
||||
Other comprehensive income, net of tax
|
92,971
|
|
|
68,115
|
|
|
120,887
|
|
|
103,586
|
|
||||
Comprehensive income
|
122,094
|
|
|
212,664
|
|
|
200,218
|
|
|
344,921
|
|
||||
Less: Comprehensive income attributable to redeemable non-controlling interest and non-controlling interest
|
6,723
|
|
|
5,817
|
|
|
17,728
|
|
|
9,834
|
|
||||
Comprehensive income attributable to AmTrust Financial Services, Inc.
|
$
|
115,371
|
|
|
$
|
206,847
|
|
|
$
|
182,490
|
|
|
$
|
335,087
|
|
|
Six Months Ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
|
|
|
(As restated)
|
||||
Cash flows from operating activities:
|
|
|
|
|
|
||
Net income
|
$
|
79,331
|
|
|
$
|
241,335
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|||
Depreciation and amortization
|
81,503
|
|
|
59,865
|
|
||
Net amortization of bond premium or discount
|
10,841
|
|
|
9,707
|
|
||
Equity earnings on investment in unconsolidated subsidiaries
(1)
|
(73,488
|
)
|
|
(10,578
|
)
|
||
Gain on investment in life settlement contracts, net
|
(7,349
|
)
|
|
(23,406
|
)
|
||
Net realized gain on investments
|
(32,070
|
)
|
|
(40,030
|
)
|
||
Non-cash write-down of investments
|
—
|
|
|
16,956
|
|
||
Discount on notes payable
|
3,256
|
|
|
2,910
|
|
||
Stock based compensation
|
11,099
|
|
|
11,542
|
|
||
Bad debt expense
|
17,407
|
|
|
8,241
|
|
||
Foreign currency loss
|
76,916
|
|
|
67,228
|
|
||
Gain on acquisition
|
—
|
|
|
(48,775
|
)
|
||
Changes in assets - (increase) decrease:
|
|
|
|
|
|||
Premiums and notes receivables
|
(188,177
|
)
|
|
(376,594
|
)
|
||
Reinsurance recoverable
|
(1,051,177
|
)
|
|
(174,241
|
)
|
||
Deferred policy acquisition costs
|
(184,328
|
)
|
|
(104,759
|
)
|
||
Prepaid reinsurance premiums
|
(172,816
|
)
|
|
(392,881
|
)
|
||
Other assets
|
(77,869
|
)
|
|
205,431
|
|
||
Changes in liabilities - increase (decrease):
|
|
|
|
||||
Ceded reinsurance premium payable
|
102,322
|
|
|
185,275
|
|
||
Loss and loss adjustment expense reserve
|
685,405
|
|
|
780,599
|
|
||
Unearned premiums
|
304,162
|
|
|
383,135
|
|
||
Funds held under reinsurance treaties
|
46,751
|
|
|
(28,041
|
)
|
||
Accrued expenses and other liabilities
|
645,831
|
|
|
(124,170
|
)
|
||
Net cash provided by operating activities
|
277,550
|
|
|
648,749
|
|
||
Cash flows from investing activities:
|
|
|
|
|
|
||
Purchases of fixed maturities, available-for-sale
|
(1,112,415
|
)
|
|
(1,100,754
|
)
|
||
Purchases of equity securities, available-for-sale
|
(11,223
|
)
|
|
(20,424
|
)
|
||
Purchase of equity securities, trading
|
(312,912
|
)
|
|
(100,087
|
)
|
||
Purchase of other investments
|
(15,593
|
)
|
|
(11,345
|
)
|
||
Sales, maturities, paydowns of fixed maturities, available-for-sale
|
988,305
|
|
|
699,304
|
|
||
Sales of equity securities, available-for-sale
|
151,676
|
|
|
11,697
|
|
||
Sales of equity securities, trading
|
309,415
|
|
|
102,267
|
|
||
Sales of other investments
|
65,730
|
|
|
1,242
|
|
||
Net sale of short term investments
|
34
|
|
|
7,303
|
|
||
Net sale (purchase) of securities sold but not purchased
|
21,486
|
|
|
(17,448
|
)
|
||
Payment of life settlement contracts
|
(16,473
|
)
|
|
—
|
|
||
Receipt of life settlement contract proceeds
|
33,163
|
|
|
8,058
|
|
||
Acquisition of subsidiaries, net of cash received
(2)
|
(97,786
|
)
|
|
(118,607
|
)
|
||
Sale of equity method investment
(1)
|
211,290
|
|
|
—
|
|
||
Increase in restricted cash and cash equivalents
|
(129,264
|
)
|
|
(211,285
|
)
|
||
Purchase of property and equipment
|
(188,743
|
)
|
|
(84,094
|
)
|
||
Net cash used in investing activities
|
(103,310
|
)
|
|
(834,173
|
)
|
||
|
|
|
|
||||
|
|
|
|
||||
|
|
|
|
|
Six Months Ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
|
|
|
As restated
|
||||
Cash flows from financing activities:
|
|
|
|
|
|||
Repurchase agreements, net
|
(128,572
|
)
|
|
366,860
|
|
||
Secured loan agreements borrowings
|
105,559
|
|
|
39,361
|
|
||
Secured loan agreements payments
|
(7,488
|
)
|
|
(3,569
|
)
|
||
Promissory notes payments
|
(52,343
|
)
|
|
—
|
|
||
Financing fees
|
(154
|
)
|
|
—
|
|
||
Common stock issuance
|
298,747
|
|
|
276
|
|
||
Common stock repurchase
|
—
|
|
|
(103,509
|
)
|
||
Preferred stock issuance
|
—
|
|
|
139,070
|
|
||
Contingent consideration payments
|
(5,011
|
)
|
|
(23,446
|
)
|
||
Non-controlling interest capital contributions from consolidated subsidiaries, net
|
12,437
|
|
|
(5,301
|
)
|
||
Stock option exercise and other
|
(1,438
|
)
|
|
(7,084
|
)
|
||
Dividends distributed on common stock
|
(58,097
|
)
|
|
(52,624
|
)
|
||
Dividends distributed on preferred stock
|
(33,142
|
)
|
|
(20,367
|
)
|
||
Net cash provided by financing activities
|
130,498
|
|
|
329,667
|
|
||
Effect of exchange rate changes on cash
|
19,082
|
|
|
(20,613
|
)
|
||
Net increase in cash and cash equivalents
|
323,820
|
|
|
123,630
|
|
||
Cash and cash equivalents, beginning of the year
|
567,771
|
|
|
1,003,916
|
|
||
Cash and cash equivalents, end of the period
|
$
|
891,591
|
|
|
$
|
1,127,546
|
|
1.
|
Basis of Reporting
|
3.
|
Investments
|
As of June 30, 2017 |
|
Cost or amortized cost
|
|
Gross unrealized gains
|
|
Gross unrealized losses
|
|
Fair Value
|
||||||||
Fixed Maturity Securities:
|
|
|
|
|
|
|
|
|
||||||||
U.S. treasury securities
|
|
$
|
356,281
|
|
|
$
|
1,177
|
|
|
$
|
(1,711
|
)
|
|
$
|
355,747
|
|
U.S. government agencies
|
|
13,762
|
|
|
41
|
|
|
(7
|
)
|
|
13,796
|
|
||||
Municipal bonds
|
|
925,039
|
|
|
15,092
|
|
|
(5,318
|
)
|
|
934,813
|
|
||||
Foreign government
|
|
190,445
|
|
|
4,238
|
|
|
(1,113
|
)
|
|
193,570
|
|
||||
Corporate bonds:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Finance
|
|
1,554,129
|
|
|
44,021
|
|
|
(3,080
|
)
|
|
1,595,070
|
|
||||
Industrial
|
|
2,220,747
|
|
|
61,374
|
|
|
(8,288
|
)
|
|
2,273,833
|
|
||||
Utilities
|
|
369,235
|
|
|
10,948
|
|
|
(1,430
|
)
|
|
378,753
|
|
||||
Commercial mortgage-backed securities
|
|
474,262
|
|
|
4,594
|
|
|
(4,551
|
)
|
|
474,305
|
|
||||
Residential mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Agency backed
|
|
902,351
|
|
|
13,527
|
|
|
(6,099
|
)
|
|
909,779
|
|
||||
Non-agency backed
|
|
4,326
|
|
|
2
|
|
|
(95
|
)
|
|
4,233
|
|
||||
Collateralized loan / debt obligation
|
|
501,560
|
|
|
9,747
|
|
|
(385
|
)
|
|
510,922
|
|
||||
Asset backed securities
|
|
128,987
|
|
|
878
|
|
|
(127
|
)
|
|
129,738
|
|
||||
Total fixed maturity securities
|
|
$
|
7,641,124
|
|
|
$
|
165,639
|
|
|
$
|
(32,204
|
)
|
|
$
|
7,774,559
|
|
Equity Securities:
|
|
|
|
|
|
|
|
|
||||||||
Preferred stock
|
|
$
|
756
|
|
|
$
|
21
|
|
|
$
|
—
|
|
|
$
|
777
|
|
Common stock
|
|
80,722
|
|
|
28,358
|
|
|
(1,027
|
)
|
|
108,053
|
|
||||
Total equity securities
|
|
$
|
81,478
|
|
|
$
|
28,379
|
|
|
$
|
(1,027
|
)
|
|
$
|
108,830
|
|
As of December 31, 2016 |
|
Cost or amortized cost
|
|
Gross unrealized gains
|
|
Gross unrealized losses
|
|
Fair value
|
||||||||
Fixed Maturity Securities:
|
|
|
|
|
|
|
|
|
||||||||
U.S. treasury securities
|
|
$
|
331,036
|
|
|
$
|
1,235
|
|
|
$
|
(1,617
|
)
|
|
$
|
330,654
|
|
U.S. government agencies
|
|
63,467
|
|
|
282
|
|
|
(17
|
)
|
|
63,732
|
|
||||
Municipal bonds
|
|
860,444
|
|
|
9,603
|
|
|
(15,877
|
)
|
|
854,170
|
|
||||
Foreign government
|
|
149,365
|
|
|
4,237
|
|
|
(726
|
)
|
|
152,876
|
|
||||
Corporate bonds:
|
|
|
|
|
|
|
|
|
||||||||
Finance
|
|
1,535,606
|
|
|
38,404
|
|
|
(7,722
|
)
|
|
1,566,288
|
|
||||
Industrial
|
|
2,222,843
|
|
|
62,133
|
|
|
(17,115
|
)
|
|
2,267,861
|
|
||||
Utilities
|
|
195,607
|
|
|
4,433
|
|
|
(1,210
|
)
|
|
198,830
|
|
||||
Commercial mortgage backed securities
|
|
178,092
|
|
|
2,464
|
|
|
(2,562
|
)
|
|
177,994
|
|
||||
Residential mortgage backed securities:
|
|
|
|
|
|
|
|
|
||||||||
Agency backed
|
|
1,210,229
|
|
|
13,685
|
|
|
(13,529
|
)
|
|
1,210,385
|
|
||||
Non-agency backed
|
|
61,646
|
|
|
586
|
|
|
(1,003
|
)
|
|
61,229
|
|
||||
Collateralized loan / debt obligations
|
|
476,767
|
|
|
8,389
|
|
|
(751
|
)
|
|
484,405
|
|
||||
Asset backed securities
|
|
29,939
|
|
|
31
|
|
|
(260
|
)
|
|
29,710
|
|
||||
Total fixed maturity securities
|
|
$
|
7,315,041
|
|
|
$
|
145,482
|
|
|
$
|
(62,389
|
)
|
|
$
|
7,398,134
|
|
Equity Securities:
|
|
|
|
|
|
|
|
|
||||||||
Preferred stock
|
|
$
|
4,044
|
|
|
$
|
—
|
|
|
$
|
(59
|
)
|
|
$
|
3,985
|
|
Common stock
|
|
122,626
|
|
|
12,899
|
|
|
(2,348
|
)
|
|
133,177
|
|
||||
Total equity securities
|
|
$
|
126,670
|
|
|
$
|
12,899
|
|
|
$
|
(2,407
|
)
|
|
$
|
137,162
|
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||||||||||
|
|
Amortized Cost
|
|
Fair Value
|
|
Amortized Cost
|
|
Fair Value
|
||||||||
Due in one year or less
|
|
$
|
265,819
|
|
|
$
|
266,562
|
|
|
$
|
319,275
|
|
|
$
|
319,882
|
|
Due after one through five years
|
|
3,152,712
|
|
|
3,216,906
|
|
|
2,956,429
|
|
|
2,998,711
|
|
||||
Due after five through ten years
|
|
1,737,598
|
|
|
1,780,579
|
|
|
1,645,211
|
|
|
1,683,112
|
|
||||
Due after ten years
|
|
473,509
|
|
|
481,535
|
|
|
437,452
|
|
|
432,702
|
|
||||
Mortgage and asset backed securities
|
|
2,011,486
|
|
|
2,028,977
|
|
|
1,956,674
|
|
|
1,963,727
|
|
||||
Total fixed maturity securities
|
|
$
|
7,641,124
|
|
|
$
|
7,774,559
|
|
|
$
|
7,315,041
|
|
|
$
|
7,398,134
|
|
|
|
Less Than 12 Months
|
12 Months or More
|
Total
|
||||||||||||||||||||
As of June 30, 2017
|
|
Fair Value
|
|
Unrealized Losses
|
|
Fair Value
|
|
Unrealized Losses
|
|
Fair Value
|
|
Unrealized Losses
|
||||||||||||
Fixed Maturity Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. treasury securities
|
|
$
|
296,565
|
|
|
$
|
(1,709
|
)
|
|
$
|
689
|
|
|
$
|
(2
|
)
|
|
$
|
297,254
|
|
|
$
|
(1,711
|
)
|
U.S. government agencies
|
|
4,261
|
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
4,261
|
|
|
(7
|
)
|
||||||
Municipal bonds
|
|
382,730
|
|
|
(5,087
|
)
|
|
8,526
|
|
|
(231
|
)
|
|
391,256
|
|
|
(5,318
|
)
|
||||||
Foreign government
|
|
78,986
|
|
|
(1,046
|
)
|
|
1,933
|
|
|
(67
|
)
|
|
80,919
|
|
|
(1,113
|
)
|
||||||
Corporate bonds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Finance
|
|
295,860
|
|
|
(3,068
|
)
|
|
4,032
|
|
|
(12
|
)
|
|
299,892
|
|
|
(3,080
|
)
|
||||||
Industrial
|
|
459,696
|
|
|
(8,024
|
)
|
|
11,821
|
|
|
(264
|
)
|
|
471,517
|
|
|
(8,288
|
)
|
||||||
Utilities
|
|
79,036
|
|
|
(1,429
|
)
|
|
507
|
|
|
(1
|
)
|
|
79,543
|
|
|
(1,430
|
)
|
||||||
Commercial mortgage-backed securities
|
|
254,002
|
|
|
(4,118
|
)
|
|
8,165
|
|
|
(433
|
)
|
|
262,167
|
|
|
(4,551
|
)
|
||||||
Residential mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Agency backed
|
|
405,149
|
|
|
(6,038
|
)
|
|
2,488
|
|
|
(61
|
)
|
|
407,637
|
|
|
(6,099
|
)
|
||||||
Non-agency backed
|
|
1,569
|
|
|
(10
|
)
|
|
2,539
|
|
|
(85
|
)
|
|
4,108
|
|
|
(95
|
)
|
||||||
Collateralized loan / debt obligations
|
|
61,780
|
|
|
(379
|
)
|
|
800
|
|
|
(6
|
)
|
|
62,580
|
|
|
(385
|
)
|
||||||
Asset backed securities
|
|
21,888
|
|
|
(98
|
)
|
|
1,587
|
|
|
(29
|
)
|
|
23,475
|
|
|
(127
|
)
|
||||||
Total fixed maturity securities
|
|
$
|
2,341,522
|
|
|
$
|
(31,013
|
)
|
|
$
|
43,087
|
|
|
$
|
(1,191
|
)
|
|
$
|
2,384,609
|
|
|
$
|
(32,204
|
)
|
Equity Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Common stock
|
|
$
|
12,077
|
|
|
$
|
(1,027
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12,077
|
|
|
$
|
(1,027
|
)
|
|
|
Less Than 12 Months
|
12 Months or More
|
Total
|
||||||||||||||||||||
As of December 31, 2016
|
|
Fair Value
|
|
Unrealized Losses
|
|
Fair Value
|
|
Unrealized Losses
|
|
Fair Value
|
|
Unrealized Losses
|
||||||||||||
Fixed Maturity Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. treasury securities
|
|
$
|
293,155
|
|
|
$
|
(1,613
|
)
|
|
$
|
22,989
|
|
|
$
|
(4
|
)
|
|
$
|
316,144
|
|
|
$
|
(1,617
|
)
|
U.S. government agencies
|
|
7,866
|
|
|
(17
|
)
|
|
—
|
|
|
—
|
|
|
7,866
|
|
|
(17
|
)
|
||||||
Municipal bonds
|
|
519,578
|
|
|
(15,207
|
)
|
|
15,742
|
|
|
(670
|
)
|
|
535,320
|
|
|
(15,877
|
)
|
||||||
Foreign government
|
|
128,863
|
|
|
(688
|
)
|
|
12,659
|
|
|
(38
|
)
|
|
141,522
|
|
|
(726
|
)
|
||||||
Corporate bonds:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Finance
|
|
1,071,982
|
|
|
(7,210
|
)
|
|
16,840
|
|
|
(512
|
)
|
|
1,088,822
|
|
|
(7,722
|
)
|
||||||
Industrial
|
|
1,200,129
|
|
|
(13,648
|
)
|
|
114,035
|
|
|
(3,467
|
)
|
|
1,314,164
|
|
|
(17,115
|
)
|
||||||
Utilities
|
|
119,488
|
|
|
(423
|
)
|
|
10,391
|
|
|
(787
|
)
|
|
129,879
|
|
|
(1,210
|
)
|
||||||
Commercial mortgage-backed securities
|
|
71,780
|
|
|
(1,654
|
)
|
|
10,910
|
|
|
(908
|
)
|
|
82,690
|
|
|
(2,562
|
)
|
||||||
Residential mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Agency backed
|
|
718,098
|
|
|
(13,469
|
)
|
|
8,144
|
|
|
(60
|
)
|
|
726,242
|
|
|
(13,529
|
)
|
||||||
Non-agency backed
|
|
24,372
|
|
|
(869
|
)
|
|
4,462
|
|
|
(134
|
)
|
|
28,834
|
|
|
(1,003
|
)
|
||||||
Collateralized loan / debt obligations
|
|
97,923
|
|
|
(433
|
)
|
|
32,937
|
|
|
(318
|
)
|
|
130,860
|
|
|
(751
|
)
|
||||||
Asset backed securities
|
|
9,220
|
|
|
(124
|
)
|
|
4,926
|
|
|
(136
|
)
|
|
14,146
|
|
|
(260
|
)
|
||||||
Total fixed maturity securities
|
|
$
|
4,262,454
|
|
|
$
|
(55,355
|
)
|
|
$
|
254,035
|
|
|
$
|
(7,034
|
)
|
|
$
|
4,516,489
|
|
|
$
|
(62,389
|
)
|
Equity Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Preferred stock
|
|
$
|
529
|
|
|
$
|
(30
|
)
|
|
$
|
—
|
|
|
$
|
(29
|
)
|
|
$
|
529
|
|
|
$
|
(59
|
)
|
Common stock
|
|
46,254
|
|
|
(1,394
|
)
|
|
9,991
|
|
|
(954
|
)
|
|
56,245
|
|
|
(2,348
|
)
|
||||||
Total equity securities
|
|
$
|
46,783
|
|
|
$
|
(1,424
|
)
|
|
$
|
9,991
|
|
|
$
|
(983
|
)
|
|
$
|
56,774
|
|
|
$
|
(2,407
|
)
|
As of June 30, 2017
|
|
Original or amortized cost
|
|
Gross unrealized gains
|
|
Gross unrealized losses
|
|
Fair value
|
||||||||
Fixed Maturity Securities
|
|
|
|
|
|
|
|
|
||||||||
Municipal bonds
|
|
$
|
837
|
|
|
$
|
—
|
|
|
$
|
(8
|
)
|
|
$
|
829
|
|
Corporate bonds:
|
|
|
|
|
|
|
|
|
||||||||
Industrial
|
|
27,325
|
|
|
140
|
|
|
(3,491
|
)
|
|
23,974
|
|
||||
Total Fixed Maturity Securities
|
|
$
|
28,162
|
|
|
$
|
140
|
|
|
$
|
(3,499
|
)
|
|
$
|
24,803
|
|
Common stock
|
|
$
|
92,700
|
|
|
$
|
2,847
|
|
|
$
|
(10,973
|
)
|
|
$
|
84,574
|
|
As of December 31, 2016
|
|
Original or amortized cost
|
|
Gross unrealized gains
|
|
Gross unrealized losses
|
|
Fair value
|
||||||||
Fixed Maturity Securities
|
|
|
|
|
|
|
|
|
||||||||
Corporate bonds:
|
|
|
|
|
|
|
|
|
||||||||
Industrial
|
|
$
|
24,151
|
|
|
$
|
4,379
|
|
|
$
|
—
|
|
|
$
|
28,530
|
|
Utilities
|
|
4,930
|
|
|
322
|
|
|
—
|
|
|
5,252
|
|
||||
Total Fixed Maturity Securities
|
|
$
|
29,081
|
|
|
$
|
4,701
|
|
|
$
|
—
|
|
|
$
|
33,782
|
|
Common stock
|
|
$
|
76,163
|
|
|
$
|
9,842
|
|
|
$
|
(4,045
|
)
|
|
$
|
81,960
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net gains and losses recognized during the period on trading securities
|
|
$
|
(11,980
|
)
|
|
$
|
(260
|
)
|
|
$
|
(15,240
|
)
|
|
$
|
2,496
|
|
Less: Net gains and losses recognized during the period on trading securities sold during the period
|
|
(2,065
|
)
|
|
1,014
|
|
|
651
|
|
|
7,387
|
|
||||
Unrealized gains and losses recognized during the reporting period on trading securities still held at the reporting date
|
|
$
|
(9,915
|
)
|
|
$
|
(1,274
|
)
|
|
$
|
(15,891
|
)
|
|
$
|
(4,891
|
)
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Fixed maturity securities, available-for-sale
|
|
$
|
69,381
|
|
|
$
|
46,235
|
|
|
$
|
126,650
|
|
|
$
|
92,428
|
|
|
Equity securities, available-for-sale
|
|
169
|
|
|
4,098
|
|
|
1,569
|
|
|
6,462
|
|
|||||
Fixed maturity securities, trading
|
|
—
|
|
|
—
|
|
|
1,032
|
|
|
—
|
|
|||||
Equity securities, trading
|
|
2
|
|
|
(125
|
)
|
|
20
|
|
|
(278
|
)
|
|||||
Cash and short term investments
|
|
1,888
|
|
|
686
|
|
|
3,282
|
|
|
1,772
|
|
|||||
Other invested assets
(1)
|
|
(19,240
|
)
|
|
—
|
|
|
(15,001
|
)
|
|
—
|
|
|||||
|
|
|
52,200
|
|
|
50,894
|
|
|
117,552
|
|
|
100,384
|
|
||||
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Investment expenses
|
|
|
(2,974
|
)
|
|
(149
|
)
|
|
(5,001
|
)
|
|
(224
|
)
|
||||
|
|
|
$
|
49,226
|
|
|
$
|
50,745
|
|
|
$
|
112,551
|
|
|
$
|
100,160
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
(1)
Includes losses from equity method investments.
|
Three Months Ended June 30, 2017
|
|
Gross Gains
|
|
Gross Losses
|
|
Net Gains (Losses)
|
||||||
Fixed maturity securities, available-for-sale
|
|
$
|
14,136
|
|
|
$
|
(793
|
)
|
|
$
|
13,343
|
|
Equity securities, available-for-sale
|
|
7,288
|
|
|
(958
|
)
|
|
6,330
|
|
|||
Fixed maturity securities, trading
|
|
2,819
|
|
|
(4,335
|
)
|
|
(1,516
|
)
|
|||
Equity securities, trading
|
|
2,401
|
|
|
(12,865
|
)
|
|
(10,464
|
)
|
|||
Other investments
|
|
15,762
|
|
|
—
|
|
|
15,762
|
|
|||
|
|
$
|
42,406
|
|
|
$
|
(18,951
|
)
|
|
$
|
23,455
|
|
|
|
|
|
|
|
|
||||||
Three Months Ended June 30, 2016
|
|
Gross Gains
|
|
Gross Losses
|
|
Net Gains (Losses)
|
||||||
Fixed maturity securities, available-for-sale
|
|
$
|
35,008
|
|
|
$
|
(1,571
|
)
|
|
$
|
33,437
|
|
Equity securities, available-for-sale
|
|
608
|
|
|
(658
|
)
|
|
(50
|
)
|
|||
Equity securities, trading
|
|
5,315
|
|
|
(5,575
|
)
|
|
(260
|
)
|
|||
Other investments
|
|
4
|
|
|
(1,076
|
)
|
|
(1,072
|
)
|
|||
Write-down of equity securities, available-for-sale
|
|
—
|
|
|
(16,956
|
)
|
|
(16,956
|
)
|
|||
|
|
$
|
40,935
|
|
|
$
|
(25,836
|
)
|
|
$
|
15,099
|
|
Six Months Ended June 30, 2017
|
|
Gross Gains
|
|
Gross Losses
|
|
Net Gains (Losses)
|
||||||
Fixed maturity securities, available-for-sale
|
|
$
|
22,447
|
|
|
$
|
(2,056
|
)
|
|
$
|
20,391
|
|
Equity securities, available-for-sale
|
|
12,511
|
|
|
(1,599
|
)
|
|
10,912
|
|
|||
Fixed maturity securities, trading
|
|
5,193
|
|
|
(9,769
|
)
|
|
(4,576
|
)
|
|||
Equity securities, trading
|
|
8,487
|
|
|
(19,151
|
)
|
|
(10,664
|
)
|
|||
Other investments
|
|
16,027
|
|
|
(20
|
)
|
|
16,007
|
|
|||
|
|
$
|
64,665
|
|
|
$
|
(32,595
|
)
|
|
$
|
32,070
|
|
|
|
|
|
|
|
|
||||||
Six Months Ended June 30, 2016
|
|
Gross Gains
|
|
Gross Losses
|
|
Net Gains (Losses)
|
||||||
Fixed maturity securities, available-for-sale
|
|
$
|
39,811
|
|
|
$
|
(1,617
|
)
|
|
$
|
38,194
|
|
Equity securities, available-for-sale
|
|
1,268
|
|
|
(799
|
)
|
|
469
|
|
|||
Equity securities, trading
|
|
14,927
|
|
|
(12,431
|
)
|
|
2,496
|
|
|||
Other investments
|
|
4
|
|
|
(1,133
|
)
|
|
(1,129
|
)
|
|||
Write-down of equity securities, available-for-sale
|
|
—
|
|
|
(16,956
|
)
|
|
(16,956
|
)
|
|||
|
|
$
|
56,010
|
|
|
$
|
(32,936
|
)
|
|
$
|
23,074
|
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
Restricted cash and cash equivalents
|
|
$
|
855,672
|
|
|
$
|
713,338
|
|
Restricted investments - fixed maturity at fair value
|
|
2,602,094
|
|
|
2,126,216
|
|
||
Total restricted cash, cash equivalents, and investments
|
|
$
|
3,457,766
|
|
|
$
|
2,839,554
|
|
4.
|
Fair Value of Financial Instruments
|
As of June 30, 2017
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Financial Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. treasury securities
|
|
$
|
355,747
|
|
|
$
|
355,747
|
|
|
$
|
—
|
|
|
$
|
—
|
|
U.S. government agencies
|
|
13,796
|
|
|
—
|
|
|
13,796
|
|
|
—
|
|
||||
Municipal bonds
|
|
935,642
|
|
|
—
|
|
|
935,642
|
|
|
—
|
|
||||
Foreign government
|
|
193,570
|
|
|
—
|
|
|
191,359
|
|
|
2,211
|
|
||||
Corporate bonds and other bonds:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Finance
|
|
1,595,070
|
|
|
—
|
|
|
1,581,452
|
|
|
13,618
|
|
||||
Industrial
|
|
2,297,807
|
|
|
—
|
|
|
2,295,722
|
|
|
2,085
|
|
||||
Utilities
|
|
378,753
|
|
|
—
|
|
|
378,753
|
|
|
—
|
|
||||
Commercial mortgage-backed securities
|
|
474,305
|
|
|
—
|
|
|
450,707
|
|
|
23,598
|
|
||||
Residential mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Agency backed
|
|
909,779
|
|
|
—
|
|
|
909,779
|
|
|
—
|
|
||||
Non-agency backed
|
|
4,233
|
|
|
—
|
|
|
4,233
|
|
|
—
|
|
||||
Collateralized loan / debt obligations
|
|
510,922
|
|
|
—
|
|
|
510,922
|
|
|
—
|
|
||||
Asset-backed securities
|
|
129,738
|
|
|
—
|
|
|
129,738
|
|
|
—
|
|
||||
Equity securities, available-for-sale
|
|
108,830
|
|
|
86,584
|
|
|
898
|
|
|
21,348
|
|
||||
Equity securities, trading
|
|
84,574
|
|
|
82,498
|
|
|
25
|
|
|
2,051
|
|
||||
Life settlement contracts
|
|
396,782
|
|
|
—
|
|
|
—
|
|
|
396,782
|
|
||||
Total Financial Assets
|
|
$
|
8,389,548
|
|
|
$
|
524,829
|
|
|
$
|
7,403,026
|
|
|
$
|
461,693
|
|
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Securities sold but not yet purchased, at fair value
|
|
$
|
64,947
|
|
|
$
|
64,947
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Securities sold under agreements to repurchase, at contract value
|
|
31,698
|
|
|
—
|
|
|
31,698
|
|
|
—
|
|
||||
Life settlement contract profit commission
|
|
5,714
|
|
|
—
|
|
|
—
|
|
|
5,714
|
|
||||
Contingent consideration
|
|
97,615
|
|
|
—
|
|
|
—
|
|
|
97,615
|
|
||||
Total Financial Liabilities
|
|
$
|
199,974
|
|
|
$
|
64,947
|
|
|
$
|
31,698
|
|
|
$
|
103,329
|
|
As of December 31, 2016
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Financial Assets:
|
|
|
|
|
|
|
|
|
||||||||
U.S. treasury securities
|
|
$
|
330,654
|
|
|
$
|
330,654
|
|
|
$
|
—
|
|
|
$
|
—
|
|
U.S. government agencies
|
|
63,732
|
|
|
—
|
|
|
63,732
|
|
|
—
|
|
||||
Municipal bonds
|
|
854,170
|
|
|
—
|
|
|
854,170
|
|
|
—
|
|
||||
Foreign government
|
|
152,876
|
|
|
—
|
|
|
149,298
|
|
|
3,578
|
|
||||
Corporate bonds and other bonds:
|
|
|
|
|
|
|
|
|
||||||||
Finance
|
|
1,566,288
|
|
|
—
|
|
|
1,559,800
|
|
|
6,488
|
|
||||
Industrial
|
|
2,296,391
|
|
|
—
|
|
|
2,291,351
|
|
|
5,040
|
|
||||
Utilities
|
|
204,082
|
|
|
—
|
|
|
199,503
|
|
|
4,579
|
|
||||
Commercial mortgage-backed securities
|
|
177,994
|
|
|
—
|
|
|
177,994
|
|
|
—
|
|
||||
Residential mortgage-backed securities:
|
|
|
|
|
|
|
|
|
||||||||
Agency backed
|
|
1,210,385
|
|
|
—
|
|
|
1,186,315
|
|
|
24,070
|
|
||||
Non-agency backed
|
|
61,229
|
|
|
—
|
|
|
58,109
|
|
|
3,120
|
|
||||
Collateralized loan / debt obligations
|
|
484,405
|
|
|
—
|
|
|
484,405
|
|
|
—
|
|
||||
Asset-backed securities
|
|
29,710
|
|
|
—
|
|
|
29,710
|
|
|
—
|
|
||||
Equity securities, available-for-sale
|
|
137,162
|
|
|
66,228
|
|
|
49,618
|
|
|
21,316
|
|
||||
Equity securities, trading
|
|
81,960
|
|
|
78,827
|
|
|
—
|
|
|
3,133
|
|
||||
Life settlement contracts
|
|
356,856
|
|
|
—
|
|
|
—
|
|
|
356,856
|
|
||||
Total Financial Assets
|
|
$
|
8,007,894
|
|
|
$
|
475,709
|
|
|
$
|
7,104,005
|
|
|
$
|
428,180
|
|
Financial Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Securities sold but not yet purchased, at fair value
|
|
$
|
36,394
|
|
|
$
|
36,394
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Fixed maturity securities sold but not yet purchased
|
|
160,270
|
|
|
—
|
|
|
160,270
|
|
|
—
|
|
||||
Life settlement contract profit commission
|
|
4,940
|
|
|
—
|
|
|
—
|
|
|
4,940
|
|
||||
Contingent consideration (as restated)
|
|
71,657
|
|
|
—
|
|
|
—
|
|
|
71,657
|
|
||||
Derivatives
|
|
243
|
|
|
—
|
|
|
243
|
|
|
—
|
|
||||
Total Financial Liabilities
|
|
$
|
273,504
|
|
|
$
|
36,394
|
|
|
$
|
160,513
|
|
|
$
|
76,597
|
|
|
|
Balance as of March 31, 2017
|
|
Net income (loss)
|
|
Other comprehensive income
|
|
Purchases and issuances
|
|
Sales and settlements
|
|
Net transfers into (out of) Level 3
|
|
Balance as of June 30,
2017 |
||||||||||||||
Equity securities, trading
|
|
$
|
4,117
|
|
|
$
|
(74
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1,992
|
)
|
|
$
|
2,051
|
|
Equity securities, available-for-sale
|
|
17,383
|
|
|
—
|
|
|
93
|
|
|
76
|
|
|
(16,748
|
)
|
|
20,544
|
|
|
21,348
|
|
|||||||
Fixed maturities, available-for-sale
|
|
35,173
|
|
|
—
|
|
|
225
|
|
|
5,166
|
|
|
(2,312
|
)
|
|
3,260
|
|
|
41,512
|
|
|||||||
Life settlement contracts
|
|
397,493
|
|
|
13,121
|
|
|
—
|
|
|
1,250
|
|
|
(15,082
|
)
|
|
—
|
|
|
396,782
|
|
|||||||
Life settlement contract profit commission
|
|
(5,599
|
)
|
|
(115
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,714
|
)
|
|||||||
Contingent consideration
|
|
(72,330
|
)
|
|
(3,117
|
)
|
|
—
|
|
|
(27,179
|
)
|
|
5,011
|
|
|
—
|
|
|
(97,615
|
)
|
|||||||
Total
|
|
$
|
376,237
|
|
|
$
|
9,815
|
|
|
$
|
318
|
|
|
$
|
(20,687
|
)
|
|
$
|
(29,131
|
)
|
|
$
|
21,812
|
|
|
$
|
358,364
|
|
|
|
Balance as of December 31, 2016
|
|
Net income (loss)
|
|
Other comprehensive income (loss)
|
|
Purchases and issuances
|
|
Sales and settlements
|
|
Net transfers into (out of) Level 3
|
|
Balance as of June 30, 2017
|
||||||||||||||
Equity securities, trading
|
|
$
|
3,133
|
|
|
$
|
(422
|
)
|
|
$
|
—
|
|
|
$
|
4,484
|
|
|
$
|
(2,134
|
)
|
|
$
|
(3,010
|
)
|
|
$
|
2,051
|
|
Equity securities, available-for-sale
|
|
21,316
|
|
|
—
|
|
|
338
|
|
|
76
|
|
|
(16,748
|
)
|
|
16,366
|
|
|
21,348
|
|
|||||||
Fixed maturities, available-for-sale
|
|
46,875
|
|
|
—
|
|
|
(489
|
)
|
|
7,505
|
|
|
(2,775
|
)
|
|
(9,604
|
)
|
|
41,512
|
|
|||||||
Life settlement contracts
|
|
356,856
|
|
|
48,616
|
|
|
—
|
|
|
16,473
|
|
|
(25,163
|
)
|
|
—
|
|
|
396,782
|
|
|||||||
Life settlement contract profit commission
|
|
(4,940
|
)
|
|
(774
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,714
|
)
|
|||||||
Contingent consideration
|
|
(71,657
|
)
|
|
(3,790
|
)
|
|
—
|
|
|
(27,179
|
)
|
|
5,011
|
|
|
—
|
|
|
(97,615
|
)
|
|||||||
Total
|
|
$
|
351,583
|
|
|
$
|
43,630
|
|
|
$
|
(151
|
)
|
|
$
|
1,359
|
|
|
$
|
(41,809
|
)
|
|
$
|
3,752
|
|
|
$
|
358,364
|
|
|
|
Balance as of March 31, 2016
|
|
Net income (loss)
|
|
Other comprehensive loss
|
|
Purchases and issuances
|
|
Sales and settlements
|
|
Net transfers into (out of) Level 3
|
|
Balance as of June 30,
2016 |
||||||||||||||
Equity securities, available-for-sale
|
|
$
|
25,556
|
|
|
$
|
—
|
|
|
$
|
(776
|
)
|
|
$
|
(16
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
24,764
|
|
Life settlement contracts
|
|
294,573
|
|
|
28,532
|
|
|
—
|
|
|
11,330
|
|
|
(30,001
|
)
|
|
—
|
|
|
304,434
|
|
|||||||
Life settlement contract profit commission
|
|
(7,168
|
)
|
|
(1,886
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,054
|
)
|
|||||||
Contingent consideration
|
|
(73,867
|
)
|
|
(3,587
|
)
|
|
—
|
|
|
(11,461
|
)
|
|
13,143
|
|
|
—
|
|
|
(75,772
|
)
|
|||||||
Total
|
|
$
|
239,094
|
|
|
$
|
23,059
|
|
|
$
|
(776
|
)
|
|
$
|
(147
|
)
|
|
$
|
(16,858
|
)
|
|
$
|
—
|
|
|
$
|
244,372
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
Balance as of January 1, 2016
|
|
Net income (loss)
|
|
Other comprehensive loss
|
|
Purchases and issuances
|
|
Sales and settlements
|
|
Net transfers into (out of) Level 3
|
|
Balance as of June 30,
2016 |
||||||||||||||
Equity securities, available-for-sale
|
|
$
|
37,211
|
|
|
$
|
—
|
|
|
$
|
(12,449
|
)
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
24,764
|
|
Life settlement contracts
|
|
264,001
|
|
|
59,161
|
|
|
—
|
|
|
11,330
|
|
|
(30,058
|
)
|
|
—
|
|
|
304,434
|
|
|||||||
Life settlement contract profit commission
|
|
(15,406
|
)
|
|
(9,054
|
)
|
|
—
|
|
|
—
|
|
|
15,406
|
|
|
—
|
|
|
(9,054
|
)
|
|||||||
Contingent consideration (as restated)
|
|
(84,760
|
)
|
|
(5,998
|
)
|
|
—
|
|
|
(8,460
|
)
|
|
23,446
|
|
|
—
|
|
|
(75,772
|
)
|
|||||||
Total
|
|
$
|
201,046
|
|
|
$
|
44,109
|
|
|
$
|
(12,449
|
)
|
|
$
|
2,872
|
|
|
$
|
8,794
|
|
|
$
|
—
|
|
|
$
|
244,372
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income
|
|
$
|
13,121
|
|
|
$
|
28,532
|
|
|
$
|
48,616
|
|
|
$
|
59,161
|
|
Premiums paid
|
|
(13,460
|
)
|
|
(13,354
|
)
|
|
(38,734
|
)
|
|
(25,456
|
)
|
||||
Profit commission
|
|
(115
|
)
|
|
(1,886
|
)
|
|
(774
|
)
|
|
(9,054
|
)
|
||||
Other expenses
|
|
(807
|
)
|
|
(616
|
)
|
|
(1,759
|
)
|
|
(1,245
|
)
|
||||
(Loss) gain on investment in life settlement contracts
|
|
$
|
(1,261
|
)
|
|
$
|
12,676
|
|
|
$
|
7,349
|
|
|
$
|
23,406
|
|
•
|
Equity and Fixed Maturity Investments:
As of
June 30, 2017
, 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
June 30, 2017
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, Accrued Interest, Reinsurance Recoverables:
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 financial hierarchy.
|
•
|
Equity Investment in Unconsolidated Subsidiaries - Related Party:
In June 2017, the Company sold
10,586
common shares of NGHC. As a result of the sale, the Company ceased accounting for this investment under the equity method and has classified its remaining
$36,069
investment in NGHC common stock as equity securities, available-for-sale. Refer to Notes 3 and 10 for more information.
|
•
|
Subordinated Debentures and Debt:
The fair value of the Company's debt arrangements as of
June 30, 2017
was as follows:
|
|
Carrying Value
|
|
Fair Value
|
||||
6.125% Notes due 2023
|
$
|
248,322
|
|
|
$
|
246,684
|
|
2.75% Convertible senior notes due 2044
|
169,615
|
|
|
176,132
|
|
||
7.25% Subordinated Notes due 2055
|
145,265
|
|
|
150,120
|
|
||
7.50% Subordinated Notes due 2055
|
130,739
|
|
|
137,268
|
|
||
Revolving credit facility
|
130,000
|
|
|
130,000
|
|
||
Junior subordinated debentures due 2035-2037
|
122,072
|
|
|
98,600
|
|
||
Trust preferred securities due 2033-2037
|
92,786
|
|
|
85,811
|
|
||
Republic promissory note
|
52,343
|
|
|
53,484
|
|
||
Other
|
193,487
|
|
|
193,487
|
|
||
Total
|
$
|
1,284,629
|
|
|
$
|
1,271,586
|
|
•
|
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
30%
.
|
•
|
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 policies in the portfolio based on the expected cash flow to be generated by the policies (death benefit less premium payments), discounted to reflect the cost of funding, policy specific adjustments and reserves. In order to confirm the integrity of their calculation of fair value, the Company, quarterly, retains an independent third-party actuary to verify that the actuarial modeling used
|
|
|
|
June 30,
2017 |
|
December 31,
2016 |
||||
Average age of insured (years)
|
|
83.0
|
|
|
82.8
|
|
|||
Average life expectancy, months
(1)
|
|
103
|
|
|
107
|
|
|||
Average face amount per policy
|
|
$
|
6,658
|
|
|
$
|
6,572
|
|
|
Effective discount rate
(2)
|
|
13.0
|
%
|
|
12.4
|
%
|
|||
|
|
|
|
|
|
(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 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
|
||||||
|
|
Plus 4 Months
|
|
Minus 4 Months
|
||||
Investment in life policies:
|
|
|
|
|
|
|
||
June 30, 2017
|
|
$
|
(47,918
|
)
|
|
$
|
47,529
|
|
December 31, 2016
|
|
$
|
(44,207
|
)
|
|
$
|
43,492
|
|
|
|
|
Change in discount rate
(1)
|
||||||
|
|
Plus 1%
|
|
Minus 1%
|
|||||
Investment in life policies:
|
|
|
|
|
|
|
|||
June 30, 2017
|
|
$
|
(32,702
|
)
|
|
$
|
36,213
|
|
|
December 31, 2016
|
|
$
|
(29,881
|
)
|
|
$
|
33,155
|
|
|
|
|
|
|
|
|
(1)
|
Discount rate is a present value calculation that considers legal risk, credit risk and liquidity risk and is a component of EDR.
|
Expected Maturity Term in Years
|
Number of Life Settlement Contracts
(in whole numbers)
|
|
Fair Value
(1)
|
|
Face Value
|
|||||
As of June 30, 2017
|
|
|
|
|
|
|||||
0-1
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
1-2
|
1
|
|
|
1,935
|
|
|
2,500
|
|
||
2-3
|
9
|
|
|
46,545
|
|
|
90,422
|
|
||
3-4
|
10
|
|
|
34,553
|
|
|
81,000
|
|
||
4-5
|
14
|
|
|
38,547
|
|
|
85,900
|
|
||
Thereafter
|
224
|
|
|
275,202
|
|
|
1,437,413
|
|
||
Total
|
258
|
|
|
$
|
396,782
|
|
|
$
|
1,697,235
|
|
Expected Maturity Term in Years
|
Number of Life Settlement Contracts
(in whole numbers)
|
|
Fair Value
(1)
|
|
Face Value
|
||||||
As of December 31, 2016
|
|
|
|
|
|
||||||
0-1
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
1-2
|
2
|
|
|
8,873
|
|
|
12,500
|
|
|||
2-3
|
7
|
|
|
39,495
|
|
|
63,000
|
|
|||
3-4
|
10
|
|
|
37,436
|
|
|
75,422
|
|
|||
4-5
|
10
|
|
|
34,003
|
|
|
82,900
|
|
|||
Thereafter
|
225
|
|
|
237,049
|
|
|
1,405,414
|
|
|||
Total
|
254
|
|
|
$
|
356,856
|
|
|
$
|
1,639,236
|
|
|
|
|
|
|
|
|
|
(1)
|
As of
June 30, 2017
and
December 31, 2016
, the Company determined the fair value of
10
and
18
policies, respectively, to be negative and, therefore, assigned a fair value of zero to those policies. For these contracts, the table below details the amount of premiums paid and the death benefits received during the twelve months preceding
June 30, 2017
and
December 31, 2016
:
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
Number of policies with a negative value from discounted cash flow model as of period end (in whole numbers)
|
10
|
|
|
18
|
|
||
Premiums paid for the preceding twelve month period for period ended
|
$
|
974
|
|
|
$
|
2,640
|
|
Death benefit received
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Premiums Due on Life Settlement Contracts
|
||
2017
|
|
$
|
51,704
|
|
2018
|
|
53,042
|
|
|
2019
|
|
51,922
|
|
|
2020
|
|
47,867
|
|
|
2021
|
|
46,039
|
|
|
Thereafter
|
|
509,478
|
|
|
Total
|
|
$
|
760,052
|
|
|
|
2017
|
|
2016
|
||||
Loss and LAE, gross of related reinsurance recoverables at beginning of period
|
|
$
|
10,630,162
|
|
|
$
|
7,516,089
|
|
Less: Reinsurance recoverables at beginning of period
|
|
4,042,932
|
|
|
2,731,397
|
|
||
Net balance, beginning of period
|
|
6,587,230
|
|
|
4,784,692
|
|
||
Incurred related to:
|
|
|
|
|
|
|
||
Current year
|
|
951,409
|
|
|
758,212
|
|
||
Prior year
|
|
73,069
|
|
|
26,181
|
|
||
Total incurred during the period
|
|
1,024,478
|
|
|
784,393
|
|
||
Paid related to:
|
|
|
|
|
|
|
||
Current year
|
|
(230,377
|
)
|
|
(174,915
|
)
|
||
Prior year
|
|
(535,417
|
)
|
|
(468,347
|
)
|
||
Total paid during the period
|
|
(765,794
|
)
|
|
(643,262
|
)
|
||
Loss portfolio transfers
|
|
—
|
|
|
143,667
|
|
||
Acquired loss and loss adjustment reserves
|
|
—
|
|
|
463,115
|
|
||
Retroactive reinsurance adjustment
|
|
(698,069
|
)
|
|
—
|
|
||
Effect of foreign exchange rates
|
|
59,522
|
|
|
(4,060
|
)
|
||
Net balance, end of period
|
|
6,207,367
|
|
|
5,528,545
|
|
||
Plus reinsurance recoverables at end of period
|
|
4,942,144
|
|
|
3,568,863
|
|
||
Loss and LAE, gross of related reinsurance recoverables at end of period
|
|
$
|
11,149,511
|
|
|
$
|
9,097,408
|
|
|
|
2017
|
|
2016
|
||||
Loss and LAE, gross of related reinsurance recoverables at beginning of period
|
|
$
|
10,140,716
|
|
|
$
|
7,208,367
|
|
Less: Reinsurance recoverables at beginning of period
|
|
3,873,786
|
|
|
2,665,187
|
|
||
Net balance, beginning of period
|
|
6,266,930
|
|
|
4,543,180
|
|
||
Incurred related to:
|
|
|
|
|
|
|
||
Current year
|
|
1,772,892
|
|
|
1,397,334
|
|
||
Prior year
|
|
91,920
|
|
|
102,132
|
|
||
Total incurred during the period
|
|
1,864,812
|
|
|
1,499,466
|
|
||
Paid related to:
|
|
|
|
|
|
|
||
Current year
|
|
(366,242
|
)
|
|
(268,779
|
)
|
||
Prior year
|
|
(1,148,277
|
)
|
|
(947,334
|
)
|
||
Total paid during the period
|
|
(1,514,519
|
)
|
|
(1,216,113
|
)
|
||
Loss portfolio transfers
|
|
—
|
|
|
312,049
|
|
||
Acquired loss and loss adjustment reserves
|
|
200,802
|
|
|
463,115
|
|
||
Retroactive reinsurance adjustment
|
|
(698,069
|
)
|
|
—
|
|
||
Effect of foreign exchange rates
|
|
87,411
|
|
|
(73,152
|
)
|
||
Net balance, end of period
|
|
6,207,367
|
|
|
5,528,545
|
|
||
Plus reinsurance recoverables at end of period
|
|
4,942,144
|
|
|
3,568,863
|
|
||
Loss and LAE, gross of related reinsurance recoverables at end of period
|
|
$
|
11,149,511
|
|
|
$
|
9,097,408
|
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
6.125% Notes due 2023 (the "2023 Notes")
|
|
$
|
248,322
|
|
|
$
|
248,185
|
|
Secured loan agreements
|
|
174,136
|
|
|
75,762
|
|
||
2.75% Convertible senior notes due 2044 (the "2044 Notes")
|
|
169,615
|
|
|
166,387
|
|
||
7.25% Subordinated notes due 2055 (the "7.25% 2055 Notes")
|
|
145,265
|
|
|
145,202
|
|
||
7.50% Subordinated notes due 2055 (the "7.50% 2055 Notes")
|
|
130,739
|
|
|
130,684
|
|
||
Revolving credit facility
|
|
130,000
|
|
|
130,000
|
|
||
Junior subordinated debentures (the "2035-2037 Notes")
|
|
122,072
|
|
|
122,028
|
|
||
Trust preferred securities (the "2033-2037 TPS Notes")
|
|
92,786
|
|
|
92,786
|
|
||
Promissory notes
|
|
66,402
|
|
|
118,643
|
|
||
5.5% Convertible senior notes due 2021 (the "2021 Notes")
|
|
5,292
|
|
|
5,223
|
|
||
|
|
$
|
1,284,629
|
|
|
$
|
1,234,900
|
|
|
Limit
|
|
Outstanding
|
|
Available
|
||||||
Revolving credit facility
|
$
|
175,000
|
|
|
$
|
174,267
|
|
|
$
|
733
|
|
Funds at Lloyd's facility
|
670,942
|
|
|
647,889
|
|
|
23,053
|
|
|||
ING Bank N.V., BHF-BANK Aktiengesellschaft, and Deutsche Bank Netherlands N.V. facilities
|
87,715
|
|
|
68,724
|
|
|
18,991
|
|
|||
Comerica bank letters of credit
|
75,000
|
|
|
53,067
|
|
|
21,933
|
|
|||
UniCredit Bank
|
100,000
|
|
|
100,000
|
|
|
—
|
|
|||
Other letters of credit, in aggregate
|
102,857
|
|
|
102,857
|
|
|
—
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revolving credit facility
|
$
|
1,529
|
|
|
$
|
1,098
|
|
|
$
|
3,039
|
|
|
$
|
2,254
|
|
2021 Notes
|
117
|
|
|
114
|
|
|
234
|
|
|
229
|
|
||||
2044 Notes
|
3,224
|
|
|
3,116
|
|
|
6,449
|
|
|
6,232
|
|
||||
2023 Notes
|
3,896
|
|
|
3,896
|
|
|
7,793
|
|
|
7,793
|
|
||||
2035-2037 Notes
|
1,420
|
|
|
1,546
|
|
|
2,888
|
|
|
3,061
|
|
||||
2033-2037 TPS Notes
|
1,078
|
|
|
769
|
|
|
2,109
|
|
|
769
|
|
||||
7.25% 2055 Notes
|
2,750
|
|
|
2,750
|
|
|
5,500
|
|
|
5,500
|
|
||||
7.50% 2055 Notes
|
2,559
|
|
|
2,559
|
|
|
5,118
|
|
|
5,118
|
|
||||
Secured loan agreements
|
1,493
|
|
|
178
|
|
|
2,827
|
|
|
367
|
|
||||
Promissory notes
|
1,045
|
|
|
1,397
|
|
|
2,708
|
|
|
1,555
|
|
||||
Funds at Lloyd's facility
|
1,236
|
|
|
1,123
|
|
|
2,715
|
|
|
2,322
|
|
||||
Other, including interest income
|
3,882
|
|
|
(634
|
)
|
|
6,450
|
|
|
(1,414
|
)
|
||||
Total
|
$
|
24,229
|
|
|
$
|
17,912
|
|
|
$
|
47,830
|
|
|
$
|
33,786
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
|
|
As restated
|
|
|
|
As restated
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
|
||||||||
Net income attributable to AmTrust common stockholders
|
|
$
|
5,829
|
|
|
$
|
127,156
|
|
|
$
|
28,461
|
|
|
$
|
211,134
|
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator:
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding – basic
|
|
180,679
|
|
|
173,182
|
|
|
175,799
|
|
|
174,346
|
|
||||
Plus: Dilutive effect of stock options, convertible debt, other
|
|
849
|
|
|
1,865
|
|
|
1,115
|
|
|
1,881
|
|
||||
Weighted average common shares outstanding – dilutive
|
|
181,528
|
|
|
175,047
|
|
|
176,914
|
|
|
176,227
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net income per AmTrust common share - basic
|
|
$
|
0.03
|
|
|
$
|
0.73
|
|
|
$
|
0.16
|
|
|
$
|
1.21
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per AmTrust common share – diluted
|
|
$
|
0.03
|
|
|
$
|
0.73
|
|
|
$
|
0.16
|
|
|
$
|
1.20
|
|
|
|
|
|||
Assets
|
|
|
|||
|
Cash and investments
|
|
$
|
275,351
|
|
|
Premium receivable
|
|
45,288
|
|
|
|
Accrued interest and dividends
|
|
1,162
|
|
|
|
Reinsurance recoverable
|
|
14,512
|
|
|
|
Other assets
|
|
43,696
|
|
|
|
Goodwill and intangible assets
|
|
17,509
|
|
|
Total assets
|
|
$
|
397,518
|
|
|
Liabilities
|
|
|
|||
|
Loss and loss adjustment expense reserves
|
|
$
|
227,865
|
|
|
Unearned premiums
|
|
49,284
|
|
|
|
Accrued expenses and other liabilities
|
|
27,583
|
|
|
Total liabilities
|
|
$
|
304,732
|
|
|
Acquisition price
|
|
$
|
92,786
|
|
|
|
|
|||
Assets
|
|
|
|||
|
Cash and investments
|
|
$
|
11,826
|
|
|
Premium receivable
|
|
29,188
|
|
|
|
Other assets
|
|
705
|
|
|
|
Property and equipment
|
|
776
|
|
|
|
Goodwill and intangible assets
|
|
55,586
|
|
|
Total assets
|
|
$
|
98,081
|
|
|
|
|
|
|
||
Liabilities
|
|
|
|||
|
Accrued expenses and other liabilities
|
|
$
|
35,659
|
|
Total liabilities
|
|
$
|
35,659
|
|
|
Acquisition price
|
|
$
|
62,422
|
|
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||
|
|
2017
|
|
2016
|
||||||||||||||||||||
|
|
AmTrust
|
|
Non-Controlling Interest
|
|
Total
|
|
AmTrust
|
|
Non-Controlling Interest
|
|
Total
|
||||||||||||
|
|
|
|
|
|
|
|
(As restated)
|
|
|
|
|
(As restated)
|
|
||||||||||
Balance, December 31,
|
|
$
|
3,269,103
|
|
|
$
|
196,510
|
|
|
$
|
3,465,613
|
|
|
$
|
2,723,780
|
|
|
$
|
176,455
|
|
|
$
|
2,900,235
|
|
Net income
|
|
61,603
|
|
|
17,148
|
|
|
78,751
|
|
|
231,501
|
|
|
9,493
|
|
|
240,994
|
|
||||||
Unrealized holding gain
|
|
75,099
|
|
|
—
|
|
|
75,099
|
|
|
191,347
|
|
|
—
|
|
|
191,347
|
|
||||||
Reclassification adjustment
|
|
(30,858
|
)
|
|
—
|
|
|
(30,858
|
)
|
|
(8,045
|
)
|
|
—
|
|
|
(8,045
|
)
|
||||||
Foreign currency translation
|
|
76,526
|
|
|
—
|
|
|
76,526
|
|
|
(80,007
|
)
|
|
—
|
|
|
(80,007
|
)
|
||||||
Unrealized gain on interest rate swap
|
|
120
|
|
|
—
|
|
|
120
|
|
|
287
|
|
|
—
|
|
|
287
|
|
||||||
Share exercises, compensation and other
|
|
9,662
|
|
|
—
|
|
|
9,662
|
|
|
4,421
|
|
|
—
|
|
|
4,421
|
|
||||||
Common stock issuance
|
|
298,747
|
|
|
—
|
|
|
298,747
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Common share purchase, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(103,164
|
)
|
|
—
|
|
|
(103,164
|
)
|
||||||
Common stock dividends
|
|
(63,342
|
)
|
|
—
|
|
|
(63,342
|
)
|
|
(52,189
|
)
|
|
(10,229
|
)
|
|
(62,418
|
)
|
||||||
Preferred stock issuance, net of fees
|
|
—
|
|
|
—
|
|
|
—
|
|
|
139,070
|
|
|
—
|
|
|
139,070
|
|
||||||
Preferred stock dividends
|
|
(33,142
|
)
|
|
—
|
|
|
(33,142
|
)
|
|
(20,367
|
)
|
|
—
|
|
|
(20,367
|
)
|
||||||
Capital contribution, net
|
|
—
|
|
|
19,298
|
|
|
19,298
|
|
|
—
|
|
|
5,500
|
|
|
5,500
|
|
||||||
Balance, June 30,
|
|
$
|
3,663,518
|
|
|
$
|
232,956
|
|
|
$
|
3,896,474
|
|
|
$
|
3,026,634
|
|
|
$
|
181,219
|
|
|
$
|
3,207,853
|
|
|
|
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, March 31, 2017
|
|
$
|
(174,340
|
)
|
|
$
|
79,791
|
|
|
$
|
(80
|
)
|
|
$
|
(3,177
|
)
|
|
$
|
(97,806
|
)
|
Other comprehensive income (loss) before reclassification
|
|
62,663
|
|
|
66,029
|
|
|
28
|
|
|
—
|
|
|
128,720
|
|
|||||
Amounts reclassed from accumulated other comprehensive income (loss)
|
|
—
|
|
|
(19,228
|
)
|
|
—
|
|
|
—
|
|
|
(19,228
|
)
|
|||||
Income tax (expense)
|
|
—
|
|
|
(16,521
|
)
|
|
—
|
|
|
—
|
|
|
(16,521
|
)
|
|||||
Net current-period other comprehensive income (loss)
|
|
62,663
|
|
|
30,280
|
|
|
28
|
|
|
—
|
|
|
92,971
|
|
|||||
Balance, June 30, 2017
|
|
$
|
(111,677
|
)
|
|
$
|
110,071
|
|
|
$
|
(52
|
)
|
|
$
|
(3,177
|
)
|
|
$
|
(4,835
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance, March 31, 2016 (As restated)
|
|
$
|
(145,268
|
)
|
|
$
|
48,035
|
|
|
$
|
(581
|
)
|
|
$
|
(107
|
)
|
|
$
|
(97,921
|
)
|
Other comprehensive income (loss) before reclassification
|
|
(32,809
|
)
|
|
158,930
|
|
|
258
|
|
|
—
|
|
|
126,379
|
|
|||||
Amounts reclassed from accumulated other comprehensive income (loss)
|
|
—
|
|
|
(3,920
|
)
|
|
—
|
|
|
—
|
|
|
(3,920
|
)
|
|||||
Income tax (expense)
|
|
—
|
|
|
(54,254
|
)
|
|
(90
|
)
|
|
—
|
|
|
(54,344
|
)
|
|||||
Net current-period other comprehensive income
|
|
(32,809
|
)
|
|
100,756
|
|
|
168
|
|
|
—
|
|
|
68,115
|
|
|||||
Balance, June 30, 2016 (As restated)
|
|
$
|
(178,077
|
)
|
|
$
|
148,791
|
|
|
$
|
(413
|
)
|
|
$
|
(107
|
)
|
|
$
|
(29,806
|
)
|
|
|
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, 2016
|
|
$
|
(188,203
|
)
|
|
$
|
65,830
|
|
|
$
|
(172
|
)
|
|
$
|
(3,177
|
)
|
|
$
|
(125,722
|
)
|
Other comprehensive income before reclassification
|
|
76,526
|
|
|
98,060
|
|
|
120
|
|
|
—
|
|
|
174,706
|
|
|||||
Amounts reclassed from accumulated other comprehensive income (loss)
|
|
—
|
|
|
(30,858
|
)
|
|
—
|
|
|
—
|
|
|
(30,858
|
)
|
|||||
Income tax benefit (expense)
|
|
—
|
|
|
(22,961
|
)
|
|
—
|
|
|
—
|
|
|
(22,961
|
)
|
|||||
Net current-period other comprehensive income
|
|
76,526
|
|
|
44,241
|
|
|
120
|
|
|
—
|
|
|
120,887
|
|
|||||
Balance, June 30, 2017
|
|
$
|
(111,677
|
)
|
|
$
|
110,071
|
|
|
$
|
(52
|
)
|
|
$
|
(3,177
|
)
|
|
$
|
(4,835
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance, December 31, 2015 (As restated)
|
|
$
|
(98,074
|
)
|
|
$
|
(34,511
|
)
|
|
$
|
(700
|
)
|
|
$
|
(107
|
)
|
|
$
|
(133,392
|
)
|
Other comprehensive income (loss) before reclassification
|
|
(80,003
|
)
|
|
286,588
|
|
|
441
|
|
|
—
|
|
|
207,026
|
|
|||||
Amounts reclassed from accumulated other comprehensive (loss)
|
|
—
|
|
|
(4,578
|
)
|
|
—
|
|
|
—
|
|
|
(4,578
|
)
|
|||||
Income tax benefit (expense)
|
|
—
|
|
|
(98,708
|
)
|
|
(154
|
)
|
|
—
|
|
|
(98,862
|
)
|
|||||
Net current-period other comprehensive (loss) income
|
|
(80,003
|
)
|
|
183,302
|
|
|
287
|
|
|
—
|
|
|
103,586
|
|
|||||
Balance, June 30, 2016 (As restated)
|
|
$
|
(178,077
|
)
|
|
$
|
148,791
|
|
|
$
|
(413
|
)
|
|
$
|
(107
|
)
|
|
$
|
(29,806
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Small Commercial Business
|
|
Specialty Risk and Extended Warranty
|
|
Specialty Program
|
|
Corporate and Other
|
|
Total
|
||||||||||
Three Months Ended June 30, 2017:
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross written premium
|
$
|
1,123,292
|
|
|
$
|
795,932
|
|
|
$
|
280,523
|
|
|
$
|
—
|
|
|
$
|
2,199,747
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net written premium
|
$
|
638,762
|
|
|
$
|
555,486
|
|
|
$
|
177,654
|
|
|
$
|
—
|
|
|
$
|
1,371,902
|
|
Change in unearned premium
|
(6,898
|
)
|
|
(16,483
|
)
|
|
32,188
|
|
|
—
|
|
|
8,807
|
|
|||||
Net earned premium
|
631,864
|
|
|
539,003
|
|
|
209,842
|
|
|
—
|
|
|
1,380,709
|
|
|||||
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Loss and loss adjustment expense
|
(466,901
|
)
|
|
(370,840
|
)
|
|
(186,737
|
)
|
|
—
|
|
|
(1,024,478
|
)
|
|||||
Acquisition costs and other underwriting expenses
|
(170,179
|
)
|
|
(140,310
|
)
|
|
(62,706
|
)
|
|
—
|
|
|
(373,195
|
)
|
|||||
Total expenses
|
(637,080
|
)
|
|
(511,150
|
)
|
|
(249,443
|
)
|
|
—
|
|
|
(1,397,673
|
)
|
|||||
Underwriting (loss) income
|
(5,216
|
)
|
|
27,853
|
|
|
(39,601
|
)
|
|
—
|
|
|
(16,964
|
)
|
|||||
Other income (loss)
|
|
|
|
|
|
|
|
|
|
||||||||||
Service and fee income
|
30,990
|
|
|
98,178
|
|
|
443
|
|
|
38,835
|
|
|
168,446
|
|
|||||
Investment income and realized gain
|
32,519
|
|
|
27,719
|
|
|
12,443
|
|
|
—
|
|
|
72,681
|
|
|||||
Other expenses
|
(51,496
|
)
|
|
(35,748
|
)
|
|
(12,686
|
)
|
|
(99,930
|
)
|
|
(199,860
|
)
|
|||||
Interest expense
|
(12,403
|
)
|
|
(8,740
|
)
|
|
(3,086
|
)
|
|
—
|
|
|
(24,229
|
)
|
|||||
Foreign currency loss
|
—
|
|
|
(58,948
|
)
|
|
—
|
|
|
—
|
|
|
(58,948
|
)
|
|||||
Loss on life settlement contracts
|
(859
|
)
|
|
(268
|
)
|
|
(134
|
)
|
|
—
|
|
|
(1,261
|
)
|
|||||
Benefit (provision) for income taxes
|
7,477
|
|
|
28,595
|
|
|
(281
|
)
|
|
(16,064
|
)
|
|
19,727
|
|
|||||
Equity in earnings of unconsolidated subsidiary – related party
|
—
|
|
|
—
|
|
|
—
|
|
|
69,531
|
|
|
69,531
|
|
|||||
Net income (loss)
|
$
|
1,012
|
|
|
$
|
78,641
|
|
|
$
|
(42,902
|
)
|
|
$
|
(7,628
|
)
|
|
$
|
29,123
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Small Commercial Business
|
|
Specialty Risk and Extended Warranty
|
|
Specialty Program
|
|
Corporate and Other
|
|
Total
|
||||||||||
Three Months Ended June 30, 2016
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross written premium
|
$
|
1,060,558
|
|
|
$
|
651,561
|
|
|
$
|
360,993
|
|
|
$
|
—
|
|
|
$
|
2,073,112
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net written premium
|
$
|
601,638
|
|
|
$
|
447,061
|
|
|
$
|
219,737
|
|
|
$
|
—
|
|
|
$
|
1,268,436
|
|
Change in unearned premium
|
(28,660
|
)
|
|
(89,177
|
)
|
|
31,153
|
|
|
—
|
|
|
(86,684
|
)
|
|||||
Net earned premium
|
572,978
|
|
|
357,884
|
|
|
250,890
|
|
|
—
|
|
|
1,181,752
|
|
|||||
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Loss and loss adjustment expense
|
(382,950
|
)
|
|
(231,328
|
)
|
|
(170,115
|
)
|
|
—
|
|
|
(784,393
|
)
|
|||||
Acquisition costs and other underwriting expenses
|
(150,149
|
)
|
|
(78,773
|
)
|
|
(65,555
|
)
|
|
—
|
|
|
(294,477
|
)
|
|||||
Total expenses
|
(533,099
|
)
|
|
(310,101
|
)
|
|
(235,670
|
)
|
|
—
|
|
|
(1,078,870
|
)
|
|||||
Underwriting income (As restated)
|
39,879
|
|
|
47,783
|
|
|
15,220
|
|
|
—
|
|
|
102,882
|
|
|||||
Other income (loss)
|
|
|
|
|
|
|
|
|
|
||||||||||
Service and fee income (As restated)
|
25,745
|
|
|
69,155
|
|
|
1,228
|
|
|
28,178
|
|
|
124,306
|
|
|||||
Investment income and realized gain (loss)
|
28,193
|
|
|
19,506
|
|
|
18,211
|
|
|
(66
|
)
|
|
65,844
|
|
|||||
Other expenses (As restated)
|
(34,321
|
)
|
|
(21,154
|
)
|
|
(11,697
|
)
|
|
(67,172
|
)
|
|
(134,344
|
)
|
|||||
Interest expense (As restated)
|
(9,180
|
)
|
|
(5,612
|
)
|
|
(3,120
|
)
|
|
—
|
|
|
(17,912
|
)
|
|||||
Foreign currency loss (As restated)
|
—
|
|
|
(28,995
|
)
|
|
—
|
|
|
—
|
|
|
(28,995
|
)
|
|||||
Gain on life settlement contracts
|
6,507
|
|
|
3,961
|
|
|
2,208
|
|
|
—
|
|
|
12,676
|
|
|||||
(Loss) gain on acquisition
|
(9,223
|
)
|
|
48,320
|
|
|
—
|
|
|
—
|
|
|
39,097
|
|
|||||
(Provision) benefit for income taxes (As restated)
|
(6,256
|
)
|
|
(19,030
|
)
|
|
(3,184
|
)
|
|
4,663
|
|
|
(23,807
|
)
|
|||||
Equity in earnings of unconsolidated subsidiary – related party
|
—
|
|
|
—
|
|
|
—
|
|
|
4,802
|
|
|
4,802
|
|
|||||
Net income (loss) (As restated)
|
$
|
41,344
|
|
|
$
|
113,934
|
|
|
$
|
18,866
|
|
|
$
|
(29,595
|
)
|
|
$
|
144,549
|
|
|
Small Commercial Business
|
|
Specialty Risk and Extended Warranty
|
|
Specialty Program
|
|
Corporate and Other
|
|
Total
|
||||||||||
Six Months Ended June 30, 2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross written premium
|
$
|
2,380,577
|
|
|
$
|
1,528,374
|
|
|
$
|
557,076
|
|
|
$
|
—
|
|
|
$
|
4,466,027
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net written premium
|
$
|
1,297,741
|
|
|
$
|
1,065,694
|
|
|
$
|
352,533
|
|
|
$
|
—
|
|
|
$
|
2,715,968
|
|
Change in unearned premium
|
(112,252
|
)
|
|
(53,201
|
)
|
|
52,726
|
|
|
—
|
|
|
(112,727
|
)
|
|||||
Net earned premium
|
1,185,489
|
|
|
1,012,493
|
|
|
405,259
|
|
|
—
|
|
|
2,603,241
|
|
|||||
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Loss and loss adjustment expense
|
(844,338
|
)
|
|
(683,444
|
)
|
|
(337,030
|
)
|
|
—
|
|
|
(1,864,812
|
)
|
|||||
Acquisition costs and other underwriting expenses
|
(324,820
|
)
|
|
(258,773
|
)
|
|
(117,817
|
)
|
|
—
|
|
|
(701,410
|
)
|
|||||
Total expenses
|
(1,169,158
|
)
|
|
(942,217
|
)
|
|
(454,847
|
)
|
|
—
|
|
|
(2,566,222
|
)
|
|||||
Underwriting (loss) income
|
16,331
|
|
|
70,276
|
|
|
(49,588
|
)
|
|
—
|
|
|
37,019
|
|
|||||
Other income (loss)
|
|
|
|
|
|
|
|
|
|
||||||||||
Service and fee income
|
59,644
|
|
|
185,119
|
|
|
1,980
|
|
|
59,199
|
|
|
305,942
|
|
|||||
Investment income and realized gain
|
62,209
|
|
|
53,847
|
|
|
28,565
|
|
|
—
|
|
|
144,621
|
|
|||||
Other expenses
|
(96,670
|
)
|
|
(62,064
|
)
|
|
(22,622
|
)
|
|
(181,357
|
)
|
|
(362,713
|
)
|
|||||
Interest expense
|
(25,496
|
)
|
|
(16,368
|
)
|
|
(5,966
|
)
|
|
—
|
|
|
(47,830
|
)
|
|||||
Foreign currency loss
|
—
|
|
|
(76,916
|
)
|
|
—
|
|
|
—
|
|
|
(76,916
|
)
|
|||||
Gain on life settlement contracts
|
3,917
|
|
|
2,515
|
|
|
917
|
|
|
—
|
|
|
7,349
|
|
|||||
(Provision) benefit for income taxes
|
(401
|
)
|
|
(3,147
|
)
|
|
940
|
|
|
979
|
|
|
(1,629
|
)
|
|||||
Equity in earnings of unconsolidated subsidiary – related party
|
—
|
|
|
—
|
|
|
—
|
|
|
73,488
|
|
|
73,488
|
|
|||||
Net income (loss)
|
$
|
19,534
|
|
|
$
|
153,262
|
|
|
$
|
(45,774
|
)
|
|
$
|
(47,691
|
)
|
|
$
|
79,331
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Small Commercial Business
|
|
Specialty Risk and Extended Warranty
|
|
Specialty Program
|
|
Corporate and Other
|
|
Total
|
||||||||||
Six Months Ended June 30, 2016
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross written premium
|
$
|
2,126,690
|
|
|
$
|
1,181,007
|
|
|
$
|
698,489
|
|
|
$
|
—
|
|
|
$
|
4,006,186
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net written premium
|
$
|
1,226,166
|
|
|
$
|
784,894
|
|
|
$
|
478,055
|
|
|
$
|
—
|
|
|
$
|
2,489,115
|
|
Change in unearned premium
|
(149,094
|
)
|
|
(105,169
|
)
|
|
21,182
|
|
|
—
|
|
|
(233,081
|
)
|
|||||
Net earned premium
|
1,077,072
|
|
|
679,725
|
|
|
499,237
|
|
|
—
|
|
|
2,256,034
|
|
|||||
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Loss and loss adjustment expense
|
(715,634
|
)
|
|
(442,264
|
)
|
|
(341,568
|
)
|
|
—
|
|
|
(1,499,466
|
)
|
|||||
Acquisition costs and other underwriting expenses
|
(283,681
|
)
|
|
(151,624
|
)
|
|
(131,640
|
)
|
|
—
|
|
|
(566,945
|
)
|
|||||
Total expenses
|
(999,315
|
)
|
|
(593,888
|
)
|
|
(473,208
|
)
|
|
—
|
|
|
(2,066,411
|
)
|
|||||
Underwriting income (As restated)
|
77,757
|
|
|
85,837
|
|
|
26,029
|
|
|
—
|
|
|
189,623
|
|
|||||
Other income (loss)
|
|
|
|
|
|
|
|
|
|
||||||||||
Service and fee income (As restated)
|
58,282
|
|
|
143,539
|
|
|
1,517
|
|
|
49,773
|
|
|
253,111
|
|
|||||
Investment income and realized gain
|
55,047
|
|
|
38,676
|
|
|
29,511
|
|
|
—
|
|
|
123,234
|
|
|||||
Other expenses (As restated)
|
(69,968
|
)
|
|
(38,856
|
)
|
|
(22,981
|
)
|
|
(131,806
|
)
|
|
(263,611
|
)
|
|||||
Interest expense (As restated)
|
(17,935
|
)
|
|
(9,960
|
)
|
|
(5,891
|
)
|
|
—
|
|
|
(33,786
|
)
|
|||||
Foreign currency loss (As restated)
|
—
|
|
|
(67,228
|
)
|
|
—
|
|
|
—
|
|
|
(67,228
|
)
|
|||||
Gain on life settlement contracts
|
12,425
|
|
|
6,900
|
|
|
4,081
|
|
|
—
|
|
|
23,406
|
|
|||||
Gain on acquisition
|
455
|
|
|
48,320
|
|
|
—
|
|
|
—
|
|
|
48,775
|
|
|||||
(Provision) benefit for income taxes (As restated)
|
(17,471
|
)
|
|
(31,195
|
)
|
|
(4,857
|
)
|
|
10,756
|
|
|
(42,767
|
)
|
|||||
Equity in earnings of unconsolidated subsidiary – related party
|
—
|
|
|
—
|
|
|
—
|
|
|
10,578
|
|
|
10,578
|
|
|||||
Net income (loss) (As restated)
|
$
|
98,592
|
|
|
$
|
176,033
|
|
|
$
|
27,409
|
|
|
$
|
(60,699
|
)
|
|
$
|
241,335
|
|
|
Small
Commercial
Business
|
|
Specialty
Risk and
Extended
Warranty
|
|
Specialty
Program
|
|
Total
|
||||||||
Three Months Ended June 30, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Workers' compensation
|
$
|
373,088
|
|
|
$
|
—
|
|
|
$
|
114,643
|
|
|
$
|
487,731
|
|
Warranty
|
—
|
|
|
255,794
|
|
|
16
|
|
|
255,810
|
|
||||
Other liability
|
—
|
|
|
46,198
|
|
|
52,131
|
|
|
98,329
|
|
||||
Commercial auto and liability, physical damage
|
95,556
|
|
|
—
|
|
|
28,520
|
|
|
124,076
|
|
||||
Medical malpractice
|
—
|
|
|
53,874
|
|
|
—
|
|
|
53,874
|
|
||||
Other
|
163,220
|
|
|
183,137
|
|
|
14,532
|
|
|
360,889
|
|
||||
Total net earned premium
|
$
|
631,864
|
|
|
$
|
539,003
|
|
|
$
|
209,842
|
|
|
$
|
1,380,709
|
|
|
|
|
|
|
|
|
|
||||||||
|
Small
Commercial
Business
|
|
Specialty
Risk and
Extended
Warranty
|
|
Specialty
Program
|
|
Total
|
||||||||
Three Months Ended June 30, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Workers' compensation
|
$
|
358,894
|
|
|
$
|
—
|
|
|
$
|
199,704
|
|
|
$
|
558,598
|
|
Warranty
|
—
|
|
|
179,169
|
|
|
—
|
|
|
179,169
|
|
||||
Other liability
|
—
|
|
|
33,305
|
|
|
12,800
|
|
|
46,105
|
|
||||
Commercial auto and liability, physical damage
|
111,992
|
|
|
8,684
|
|
|
30,602
|
|
|
151,278
|
|
||||
Medical malpractice
|
—
|
|
|
62,733
|
|
|
—
|
|
|
62,733
|
|
||||
Other
|
102,092
|
|
|
73,993
|
|
|
7,784
|
|
|
183,869
|
|
||||
Total net earned premium
|
$
|
572,978
|
|
|
$
|
357,884
|
|
|
$
|
250,890
|
|
|
$
|
1,181,752
|
|
|
|
|
|
|
|
|
|
||||||||
|
Small
Commercial
Business
|
|
Specialty
Risk and
Extended
Warranty
|
|
Specialty
Program
|
|
Total
|
||||||||
Six Months Ended June 30, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Workers' compensation
|
$
|
709,413
|
|
|
$
|
—
|
|
|
$
|
223,638
|
|
|
$
|
933,051
|
|
Warranty
|
—
|
|
|
470,321
|
|
|
19
|
|
|
470,340
|
|
||||
Other liability
|
—
|
|
|
89,507
|
|
|
106,670
|
|
|
196,177
|
|
||||
Commercial auto and liability, physical damage
|
196,702
|
|
|
—
|
|
|
54,475
|
|
|
251,177
|
|
||||
Medical malpractice
|
—
|
|
|
106,653
|
|
|
—
|
|
|
106,653
|
|
||||
Other
|
279,374
|
|
|
346,012
|
|
|
20,457
|
|
|
645,843
|
|
||||
Total net earned premium
|
$
|
1,185,489
|
|
|
$
|
1,012,493
|
|
|
$
|
405,259
|
|
|
$
|
2,603,241
|
|
|
|
|
|
|
|
|
|
||||||||
|
Small
Commercial
Business
|
|
Specialty
Risk and
Extended
Warranty
|
|
Specialty
Program
|
|
Total
|
||||||||
Six Months Ended June 30, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Workers' compensation
|
$
|
704,937
|
|
|
$
|
—
|
|
|
$
|
307,417
|
|
|
$
|
1,012,354
|
|
Warranty
|
—
|
|
|
347,502
|
|
|
—
|
|
|
347,502
|
|
||||
Other liability
|
5,249
|
|
|
74,018
|
|
|
83,381
|
|
|
162,648
|
|
||||
Commercial auto and liability, physical damage
|
197,896
|
|
|
17,176
|
|
|
65,745
|
|
|
280,817
|
|
||||
Medical malpractice
|
—
|
|
|
106,750
|
|
|
—
|
|
|
106,750
|
|
||||
Other
|
168,990
|
|
|
134,279
|
|
|
42,694
|
|
|
345,963
|
|
||||
Total net earned premium
|
$
|
1,077,072
|
|
|
$
|
679,725
|
|
|
$
|
499,237
|
|
|
$
|
2,256,034
|
|
|
|
|
|
|
|
|
|
•
|
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.
|
•
|
PDP Group, Incorporated, PDP Holdings, Inc., and Pitcher & Doyle, ULC (collectively, "PDP") - Specialty Risk and Extended Warranty segment
|
•
|
AmeriHealth Casualty Insurance Company ("AmeriHealth") - Small Commercial Business segment
|
•
|
ANV Holding B.V. and its affiliates (collectively, "ANV") - Specialty Risk and Extended Warranty segment
|
•
|
N.V. Nationale Borg-Maatschappij and its affiliates (collectively, "Nationale Borg") - Specialty Risk and Extended Warranty segment
|
•
|
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") - Small Commercial Business and Specialty Program segments
|
•
|
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
|
•
|
Salaries and benefit expenses are comprised of salary and benefit costs associated with employees that are directly involved in the origination, issuance and maintenance of policies, claims adjustment and accounting for insurance transactions that are associated with the 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 derived 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 deferred direct acquisition costs and a portion of other underwriting expenses. Ceding commissions received from reinsurance transactions that represent recovery of deferred direct acquisition costs are recorded as a reduction of unamortized deferred direct acquisition costs and the net amount is charged to expense in proportion to net earned premium recognized. Ceding commissions received from reinsurance transactions that represent the recovery of other underwriting expenses are recognized in the consolidated statements of income 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 in the consolidated balance sheets. 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 June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
(Amounts in Thousands)
|
|
|
(As restated)
|
|
|
|
(As restated)
|
||||||||
Gross written premium
|
$
|
2,199,747
|
|
|
$
|
2,073,112
|
|
|
$
|
4,466,027
|
|
|
$
|
4,006,186
|
|
|
|
|
|
|
|
|
|
||||||||
Net written premium
|
$
|
1,371,902
|
|
|
$
|
1,268,436
|
|
|
$
|
2,715,968
|
|
|
$
|
2,489,115
|
|
Change in unearned premium
|
8,807
|
|
|
(86,684
|
)
|
|
(112,727
|
)
|
|
(233,081
|
)
|
||||
Net earned premium
|
1,380,709
|
|
|
1,181,752
|
|
|
2,603,241
|
|
|
2,256,034
|
|
||||
Service and fee income (related parties - three months $35,596; $21,608 and six months $55,931 and $41,771)
|
168,446
|
|
|
124,306
|
|
|
305,942
|
|
|
253,111
|
|
||||
Net investment income
|
49,226
|
|
|
50,745
|
|
|
112,551
|
|
|
100,160
|
|
||||
Net realized gain on investments
|
23,455
|
|
|
15,099
|
|
|
32,070
|
|
|
23,074
|
|
||||
Total revenues
|
1,621,836
|
|
|
1,371,902
|
|
|
3,053,804
|
|
|
2,632,379
|
|
||||
Loss and loss adjustment expense
|
1,024,478
|
|
|
784,393
|
|
|
1,864,812
|
|
|
1,499,466
|
|
||||
Acquisition costs and other underwriting expenses (net of ceding commission - related party - three months $158,231; $145,610, and six months $311,933; $284,001)
|
373,195
|
|
|
294,477
|
|
|
701,410
|
|
|
566,945
|
|
||||
Other
|
199,860
|
|
|
134,344
|
|
|
362,713
|
|
|
263,611
|
|
||||
Total expenses
|
1,597,533
|
|
|
1,213,214
|
|
|
2,928,935
|
|
|
2,330,022
|
|
||||
Income before other income (loss), (benefit) provision for income taxes, equity in earnings of unconsolidated subsidiaries and non-controlling interest
|
24,303
|
|
|
158,688
|
|
|
124,869
|
|
|
302,357
|
|
||||
Other income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense (net of interest income - related party - three months $1,160; $2,187 and six months $2,318 and $4,375)
|
(24,229
|
)
|
|
(17,912
|
)
|
|
(47,830
|
)
|
|
(33,786
|
)
|
||||
(Loss) gain on investment in life settlement contracts net of profit commission
|
(1,261
|
)
|
|
12,676
|
|
|
7,349
|
|
|
23,406
|
|
||||
Foreign currency loss
|
(58,948
|
)
|
|
(28,995
|
)
|
|
(76,916
|
)
|
|
(67,228
|
)
|
||||
Gain on acquisition
|
—
|
|
|
39,097
|
|
|
—
|
|
|
48,775
|
|
||||
Total other (loss) income
|
(84,438
|
)
|
|
4,866
|
|
|
(117,397
|
)
|
|
(28,833
|
)
|
||||
(Loss) income (benefit) before provision for income taxes, equity in earnings of unconsolidated subsidiaries and non-controlling interest
|
(60,135
|
)
|
|
163,554
|
|
|
7,472
|
|
|
273,524
|
|
||||
(Benefit) provision for income taxes
|
(19,727
|
)
|
|
23,807
|
|
|
1,629
|
|
|
42,767
|
|
||||
(Loss) income before equity in earnings of unconsolidated subsidiaries
|
(40,408
|
)
|
|
139,747
|
|
|
5,843
|
|
|
230,757
|
|
||||
Equity in earnings of unconsolidated subsidiaries – related parties
|
69,531
|
|
|
4,802
|
|
|
73,488
|
|
|
10,578
|
|
||||
Net income
|
$
|
29,123
|
|
|
$
|
144,549
|
|
|
$
|
79,331
|
|
|
$
|
241,335
|
|
Net income attributable to non-controlling interest and redeemable non-controlling interest of subsidiaries
|
(6,723
|
)
|
|
(5,817
|
)
|
|
(17,728
|
)
|
|
(9,834
|
)
|
||||
Net income attributable to AmTrust Financial Services, Inc.
|
$
|
22,400
|
|
|
$
|
138,732
|
|
|
$
|
61,603
|
|
|
$
|
231,501
|
|
Dividends on preferred stock
|
(16,571
|
)
|
|
(11,576
|
)
|
|
(33,142
|
)
|
|
(20,367
|
)
|
||||
Net income attributable to AmTrust common shareholders
|
$
|
5,829
|
|
|
$
|
127,156
|
|
|
$
|
28,461
|
|
|
$
|
211,134
|
|
|
|
|
|
|
|
|
|
||||||||
Key measures:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss ratio
|
74.2
|
%
|
|
66.4
|
%
|
|
71.6
|
%
|
|
66.5
|
%
|
||||
Expense ratio
|
27.0
|
%
|
|
24.9
|
%
|
|
27.0
|
%
|
|
25.1
|
%
|
||||
Combined ratio
|
101.2
|
%
|
|
91.3
|
%
|
|
98.6
|
%
|
|
91.6
|
%
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
(Amounts in Thousands)
|
|
|
(As restated)
|
|
|
|
(As restated)
|
||||||||
Gross written premium
|
$
|
1,123,292
|
|
|
$
|
1,060,558
|
|
|
$
|
2,380,577
|
|
|
$
|
2,126,690
|
|
|
|
|
|
|
|
|
|
||||||||
Net written premium
|
$
|
638,762
|
|
|
$
|
601,638
|
|
|
$
|
1,297,741
|
|
|
$
|
1,226,166
|
|
Change in unearned premium
|
(6,898
|
)
|
|
(28,660
|
)
|
|
(112,252
|
)
|
|
(149,094
|
)
|
||||
Net earned premium
|
631,864
|
|
|
572,978
|
|
|
1,185,489
|
|
|
1,077,072
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Loss and loss adjustment expense
|
(466,901
|
)
|
|
(382,950
|
)
|
|
(844,338
|
)
|
|
(715,634
|
)
|
||||
Acquisition costs and other underwriting expenses
|
(170,179
|
)
|
|
(150,149
|
)
|
|
(324,820
|
)
|
|
(283,681
|
)
|
||||
|
(637,080
|
)
|
|
(533,099
|
)
|
|
(1,169,158
|
)
|
|
(999,315
|
)
|
||||
Underwriting (loss) income
|
$
|
(5,216
|
)
|
|
$
|
39,879
|
|
|
$
|
16,331
|
|
|
$
|
77,757
|
|
|
|
|
|
|
|
|
|
||||||||
Key measures:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss ratio
|
73.9
|
%
|
|
66.8
|
%
|
|
71.2
|
%
|
|
66.4
|
%
|
||||
Expense ratio
|
26.9
|
%
|
|
26.2
|
%
|
|
27.4
|
%
|
|
26.4
|
%
|
||||
Combined ratio
|
100.8
|
%
|
|
93.0
|
%
|
|
98.6
|
%
|
|
92.8
|
%
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
(Amounts in Thousands)
|
|
|
(As restated)
|
|
|
|
(As restated)
|
||||||||
Gross written premium
|
$
|
795,932
|
|
|
$
|
651,561
|
|
|
$
|
1,528,374
|
|
|
$
|
1,181,007
|
|
|
|
|
|
|
|
|
|
||||||||
Net written premium
|
$
|
555,486
|
|
|
$
|
447,061
|
|
|
$
|
1,065,694
|
|
|
$
|
784,894
|
|
Change in unearned premium
|
(16,483
|
)
|
|
(89,177
|
)
|
|
(53,201
|
)
|
|
(105,169
|
)
|
||||
Net earned premium
|
539,003
|
|
|
357,884
|
|
|
1,012,493
|
|
|
679,725
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Loss and loss adjustment expense
|
(370,840
|
)
|
|
(231,328
|
)
|
|
(683,444
|
)
|
|
(442,264
|
)
|
||||
Acquisition costs and other underwriting expenses
|
(140,310
|
)
|
|
(78,773
|
)
|
|
(258,773
|
)
|
|
(151,624
|
)
|
||||
|
(511,150
|
)
|
|
(310,101
|
)
|
|
(942,217
|
)
|
|
(593,888
|
)
|
||||
Underwriting income
|
$
|
27,853
|
|
|
$
|
47,783
|
|
|
$
|
70,276
|
|
|
$
|
85,837
|
|
|
|
|
|
|
|
|
|
||||||||
Key measures:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss ratio
|
68.8
|
%
|
|
64.6
|
%
|
|
67.5
|
%
|
|
65.1
|
%
|
||||
Expense ratio
|
26.0
|
%
|
|
22.0
|
%
|
|
25.6
|
%
|
|
22.3
|
%
|
||||
Combined ratio
|
94.8
|
%
|
|
86.6
|
%
|
|
93.1
|
%
|
|
87.4
|
%
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
(Amounts in Thousands)
|
|
|
(As restated)
|
|
|
|
(As restated)
|
||||||||
Gross written premium
|
$
|
280,523
|
|
|
$
|
360,993
|
|
|
$
|
557,076
|
|
|
$
|
698,489
|
|
|
|
|
|
|
|
|
|
||||||||
Net written premium
|
$
|
177,654
|
|
|
$
|
219,737
|
|
|
$
|
352,533
|
|
|
$
|
478,055
|
|
Change in unearned premium
|
32,188
|
|
|
31,153
|
|
|
52,726
|
|
|
21,182
|
|
||||
Net earned premium
|
209,842
|
|
|
250,890
|
|
|
405,259
|
|
|
499,237
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Loss and loss adjustment expense
|
(186,737
|
)
|
|
(170,115
|
)
|
|
(337,030
|
)
|
|
(341,568
|
)
|
||||
Acquisition costs and other underwriting expenses
|
(62,706
|
)
|
|
(65,555
|
)
|
|
(117,817
|
)
|
|
(131,640
|
)
|
||||
|
(249,443
|
)
|
|
(235,670
|
)
|
|
(454,847
|
)
|
|
(473,208
|
)
|
||||
Underwriting (loss) income
|
$
|
(39,601
|
)
|
|
$
|
15,220
|
|
|
$
|
(49,588
|
)
|
|
$
|
26,029
|
|
|
|
|
|
|
|
|
|
||||||||
Key measures:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss ratio
|
89.0
|
%
|
|
67.8
|
%
|
|
83.2
|
%
|
|
68.4
|
%
|
||||
Expense ratio
|
29.9
|
%
|
|
26.1
|
%
|
|
29.0
|
%
|
|
26.4
|
%
|
||||
Combined ratio
|
118.9
|
%
|
|
93.9
|
%
|
|
112.2
|
%
|
|
94.8
|
%
|
|
Six Months Ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
(Amounts in Thousands)
|
|
|
(As restated)
|
||||
Cash and cash equivalents provided by (used in):
|
|
|
|
|
|
||
Operating activities
|
$
|
277,550
|
|
|
$
|
648,749
|
|
Investing activities
|
(103,310
|
)
|
|
(834,173
|
)
|
||
Financing activities
|
130,498
|
|
|
329,667
|
|
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 six months ended June 30, 2017 ($ in thousands)
|
||||||
A
|
|
6.75
|
|
4,600,000
|
|
N/A
|
|
$
|
25
|
|
|
$
|
111,130
|
|
|
$
|
3,882
|
|
B
|
|
7.25
|
|
105,000
|
|
4,200,000
|
|
1,000
|
|
|
101,702
|
|
|
3,806
|
|
|||
C
|
|
7.625
|
|
80,000
|
|
3,200,000
|
|
1,000
|
|
|
77,480
|
|
|
3,050
|
|
|||
D
|
|
7.50
|
|
182,500
|
|
7,300,000
|
|
1,000
|
|
|
176,529
|
|
|
6,844
|
|
|||
E
|
|
7.75
|
|
143,750
|
|
5,750,000
|
|
1,000
|
|
|
139,070
|
|
|
5,570
|
|
|||
F
|
|
6.95
|
|
287,500
|
|
11,500,000
|
|
1,000
|
|
|
278,194
|
|
|
9,990
|
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||||||||
(Amounts in Thousands)
|
|
Carrying Value
|
|
Percentage of Portfolio
|
|
Carrying Value
|
|
Percentage of Portfolio
|
||||||
Cash, cash equivalents and restricted cash
|
|
$
|
1,747,263
|
|
|
17.9
|
%
|
|
$
|
1,281,109
|
|
|
14.3
|
%
|
Short-term investments
|
|
239
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
U.S. treasury securities
|
|
355,747
|
|
|
3.7
|
|
|
330,654
|
|
|
3.7
|
|
||
U.S. government agencies
|
|
13,796
|
|
|
0.1
|
|
|
63,732
|
|
|
0.7
|
|
||
Municipals
|
|
935,642
|
|
|
9.6
|
|
|
854,170
|
|
|
9.6
|
|
||
Foreign government
|
|
193,570
|
|
|
2.0
|
|
|
152,876
|
|
|
1.7
|
|
||
Commercial mortgage back securities
|
|
474,305
|
|
|
4.9
|
|
|
177,994
|
|
|
2.0
|
|
||
Residential mortgage backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|||
Agency backed
|
|
909,779
|
|
|
9.3
|
|
|
1,210,385
|
|
|
13.6
|
|
||
Non-agency backed
|
|
4,233
|
|
|
—
|
|
|
61,229
|
|
|
0.7
|
|
||
Collateralized loan / debt obligations
|
|
510,922
|
|
|
5.2
|
|
|
484,405
|
|
|
5.4
|
|
||
Asset-backed securities
|
|
129,738
|
|
|
1.3
|
|
|
29,710
|
|
|
0.3
|
|
||
Corporate bonds
|
|
4,271,630
|
|
|
44.0
|
|
|
4,066,761
|
|
|
45.6
|
|
||
Preferred stocks
|
|
777
|
|
|
—
|
|
|
3,985
|
|
|
—
|
|
||
Common stocks
|
|
192,627
|
|
|
2.0
|
|
|
215,137
|
|
|
2.4
|
|
||
|
|
$
|
9,740,268
|
|
|
100.0
|
%
|
|
$
|
8,932,147
|
|
|
100.0
|
%
|
|
June 30, 2017
|
|
December 31, 2016
|
||
U.S. Treasury
|
4.6
|
%
|
|
4.5
|
%
|
AAA
|
6.8
|
|
|
6.6
|
|
AA
|
29.3
|
|
|
32.6
|
|
A
|
29.4
|
|
|
28.9
|
|
BBB, BBB+, BBB-
|
24.8
|
|
|
24.2
|
|
BB, BB+, BB-
|
1.6
|
|
|
1.9
|
|
B, B+, B-
|
0.5
|
|
|
0.4
|
|
Other
|
3.0
|
|
|
0.9
|
|
Total
|
100.0
|
%
|
|
100.0
|
%
|
Exhibit
Number
|
|
Description
|
3.1
|
|
Amended and Restated By-Laws
(incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (No. 001-33143) filed on May 18, 2017).
|
|
|
|
10.1*
|
|
Form of Restricted Stock Unit Agreement
, amended and restated effective May 18, 2017 (filed herewith).
|
|
|
|
10.2
|
|
Common Stock Purchase Agreement
, dated May 25, 2017, by and among the Company and each of the Purchasers listed on
Exhibit A
thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (No. 001-33143) filed on May 25, 2017).
|
|
|
|
10.3
|
|
Form of Registration Rights Agreement
(incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (No. 001-33143) filed on May 25, 2017).
|
|
|
|
10.4*
|
|
Amended and Restated Employment Agreement
, dated June 13, 2017, by and between AmTrust Financial Services, Inc. and Ronald E. Pipoly, Jr. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (No. 001-33143) filed on June 13, 2017).
|
|
|
|
10.5
|
|
Letter Agreement
dated June 28, 2017, related to Term Promissory Note, dated April 18, 2016, issued by the Company in favor of Delek Finance US Inc. (filed herewith).
|
|
|
|
10.6^
|
|
Aggregate Reinsurance Agreement
, effective June 30, 2017, by and between AmTrust International Insurance Ltd., Technology Insurance Company, Wesco Insurance Company and Premia Reinsurance Ltd. (filed herewith).
|
|
|
|
31.1
|
|
Certification of the Chief Executive Officer
, pursuant to Rule 13a-14(a) or 15d-14(a), for the quarter ended June 30, 2017 (filed herewith).
|
|
|
|
31.2
|
|
Certification of the Chief Financial Officer
, pursuant to Rule 13a-14(a) or 15d-14(a), for the quarter ended June 30, 2017 (filed herewith).
|
|
|
|
32.1
|
|
Certification of the Chief Executive Officer
, pursuant to 18 U.S.C. Section 1350, for the quarter ended June 30, 2017 (furnished herewith).
|
|
|
|
32.2
|
|
Certification of the Chief Financial Officer
, pursuant to 18 U.S.C. Section 1350, for the quarter ended June 30, 2017 (furnished herewith).
|
|
|
|
101.1
|
|
The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets at June 30, 2017 and December 31, 2016; (ii) the Consolidated Statements of Income for the three and six months ended June 30, 2017 and 2016; (iii) the Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2017 and 2016; (iv) the Consolidated Statements of Cash Flows for the six months ended June 30, 2017 and 2016; and (v) the Notes to Unaudited Consolidated Financial Statements.
|
|
|
|
* Indicates management contract or compensatory plan, contract or arrangement in which one or more directors or executive officers of the Company may be participants.
|
||
^ Certain portions of this exhibit have been redacted pursuant to a request for confidential treatment and have been filed separately with the Securities and Exchange Commission.
|
|
|
|
|
AmTrust Financial Services, Inc.
|
|
|
|
(Registrant)
|
|
|
|
|
|
Date:
|
August 9, 2017
|
|
/s/ Barry D. Zyskind
|
|
|
|
Barry D. Zyskind
|
|
|
|
Chairman, President and Chief Executive Officer
|
|
|
|
|
|
|
|
/s/ Adam Karkowsky
|
|
|
|
Adam Karkowsky
|
|
|
|
Chief Financial Officer
|
•
|
You acknowledge that you have read and agree to the forfeiture and repayment provisions of Section 10 of the Plan (the “Restrictive Covenants”).
|
•
|
You understand that as a condition to your right to realize and retain value from your award of RSUs under this Agreement, you must comply with the terms and conditions of the Restrictive Covenants.
|
•
|
You agree to timely notify the Company in writing if you have, or reasonably should have, any questions regarding the applicability of the Restrictive Covenants.
|
a)
|
any liability arising out of any Policy or other evidence of insurance written or assumed on or after April 1, 2017, or any part of any Policy earned on or after April 1, 2017;
|
b)
|
any liability of the Reinsured Group to pay taxes or assessments, whether such have been paid or were directly paid by the Company or through any member of the Reinsured Group or through a policyholder or other insured, regardless of whether such tax is denominated as income tax, excise tax, premium tax, surplus lines tax or any other tax assessment;
|
c)
|
any Liability for Unallocated Loss Adjustment Expense (ULAE) paid on or after April 1, 2017 in excess of $206 million, being the carried ULAE as of April 1, 2017. This ULAE amount cannot be exceeded when determining the sum of the ULAE paid both below and above the Retention;
|
d)
|
any amounts payable by reinsurers under Inuring Reinsurance, whether or not billed or collected;
|
e)
|
any liability for Excess ECO Payments in excess of $30,000,000 in the aggregate.
|
f)
|
any liability of the Reinsured Group for retrospective premium;
|
g)
|
any liability of any divested Reinsured Group member immediately following the date of such divesture, except to the extent such liability is assumed by the Reinsured Group or a wholly-owned subsidiary of AmTrust Financial Services, Inc. acquired after the Effective Date;
|
h)
|
any liability of any company that became a subsidiary of AmTrust Financial Services, Inc. on or after April 1, 2017, or any liability assumed by the Reinsured Group on or
|
i)
|
any amounts paid by the Reinsured Group prior to April 1, 2017.
|
A.
|
The Company, on behalf of the Reinsured Group, shall retain an amount of Ultimate Net Loss of five billion, nine hundred sixty-three million dollars ($5.963 billion) (the “
Retention
”), and the Reinsurer shall have no liability whatsoever for any Ultimate Net Loss within the Retention.
|
B.
|
Subject to the terms of this Agreement, the Reinsurer agrees to pay the Company up to one billion, twenty-five million dollars ($1.025 billion) (the “
Limit
”) for Ultimate Net Loss arising from Covered Business in excess of the Retention.
|
C.
|
Notwithstanding anything herein that may be misconstrued to the contrary, under no circumstances shall the Reinsurer be obligated to pay or in fact pay any amount (exclusive of interest amounts on delayed payments) in excess of one billion, twenty-five million dollars ($1.025 billion) under this Agreement.
|
A.
|
Premium
|
B.
|
Any interest amounts payable under this Article shall be calculated as 1/365
th
of the specified interest annual rate, multiplied by the number of days elapsed from and including July 1, 2017 to but excluding date of deposit of the relevant cash or Qualifying Assets, multiplied by the unpaid amount.
|
a.
|
At all times, Reinsurer will have the right to associate in any claim subject to this Agreement at its own expense and in a manner to be mutually agreed to by the Parties in good faith, but the Reinsurer’s general right to associate shall not trigger any additional claim reporting obligations for the Reinsured Group beyond those in this Agreement.
|
b.
|
In addition to Reinsurer’s audit and access rights, the Company will make its claims and related managerial personnel available at the reasonable request of Reinsurer to review and discuss strategy and management of the Reinsured Group’s claims operation.
|
c.
|
In addition to the Company’s reporting obligations under Article 14, the Company will provide such other information and reports related to the Reinsured Group’s claims operation to the Reinsurer as reasonably requested, to the extent such reports are prepared by the Reinsured Group in the ordinary course of business.
|
d.
|
In the event that the Reinsured Group goes into Runoff or paid losses ceded by the Company to the Reinsurer exceed six hundred twenty-five million dollars ($625,000,000) (the “
Threshold
”) on or before January 1, 2025, the Reinsurer, on its own behalf or through its designated agent or contractor, shall have the right (but not the obligation) to assume claims handling services with respect to the Covered Business upon written notice to the Company delivered within sixty (60) days of the Reinsurer becoming aware that the Reinsured Group has gone into Runoff or paid losses have reached the Threshold, as the case may be,
provided
,
however
, that the Company shall retain claims handling services with respect to the Covered Business if, within thirty (30) days following receipt of such notice from the Reinsurer, the Company delivers written notice to the Reinsurer of its intent to retain such claims handling services. In the event of such determination to retain claims handling services, the Company shall pay the Reinsurer a claims administration retention fee in the amount of one million dollars ($1,000,000) annually, first payable within thirty (30) days after the Company delivers notice of its intention to retain claims handling services, and payable July 15 of each subsequent calendar year, but in no event for
|
e.
|
Notwithstanding the foregoing, (i) the right of the Reinsurer to assume claims handling services with respect to the Covered Business is subject to the Reinsurer, or the applicable agent or contractor proposed by the Reinsurer to perform such claims handling services, having demonstrated to the reasonable satisfaction of the Company that it will administer the Covered Business in accordance with the Assumption Conditions, (ii) the Reinsurer shall not engage any unaffiliated third party to perform such claims handling services without the prior written consent of the Company (such consent not to be unreasonably withheld, conditioned or delayed), and (iii) the Reinsured Group shall not be obligated to terminate or breach any agreement with respect to the provision of claims administration services with respect to the Covered Business that is in force at the time the Company delivers notice of its intention to assume claims handling services.
|
b.
|
Gross and net outstanding (case and IBNR) Loss, Allocated Loss Adjustment Expense and ULAE;
|
e.
|
The Company’s cumulative net paid for the Subject Business since April 1, 2017;
|
A.
|
The Reinsurer shall procure, as promptly as practicable following the date hereof, with and in the name of the Trustee, a trust account for the benefit of the Company (the “
Trust Account
”). The Trust Account shall be a segregated trust account maintained by the Trustee pursuant to a Trust Agreement for the benefit of the applicable beneficiaries. The Parties shall cooperate and use reasonable best efforts to cause the Trust Agreement to be executed and delivered, and the Trust Account to be established, at or before such time as the Company makes an initial deposit of assets pursuant to Article 9.
|
B.
|
In addition to the deposits pursuant to Article 9, the Reinsurer will deposit one hundred million dollars ($100,000,000) in Permitted Assets directly into the Trust Account upon establishment of the Trust Account as security, subject to the provisions of the Trust Agreement.
|
C.
|
[***]
|
D.
|
Investment income earned on assets held in the Trust Account will remain in the Trust Account, except that at such time as the result of (i) the amount of Permitted Assets held in the Trust Account (valued on the basis set forth in Paragraph C above) plus (ii) amounts previously paid by the Reinsurer to the Company or the Reinsured Group, or withdrawn by them from the Trust Account, in settlement of the Reinsurer’s liability for Ultimate Net Loss
|
E.
|
If combined payments from the Trust Account or directly by the Reinsurer to the Company are less than twenty-five million dollars ($25 million) annually for three consecutive calendar years after the Retention has been satisfied on a paid basis, the Parties, recognizing that the Trust Account is not intended to stay in place indefinitely, agree to meet and confer in good faith with the intent to agree to a reasonable and more efficient manner to secure the remaining payment obligations, if any, of the Reinsurer to the Company. At such time, the Reinsurer may also remove its collateral that exceeds 125% of the loss reserves then ceded to the Reinsurer.
|
F.
|
Permitted Assets in the Trust Account established hereunder may be withdrawn by the applicable beneficiary and shall be utilized and applied by the beneficiary or any successor by operation of law of the beneficiary including, without limitation, any liquidator, rehabilitator, receiver or conservator of the Company, without diminution because of insolvency on the part of the Company or the Reinsurer, only for the following purposes:
|
a.
|
to reimburse the Company for the Company's share of any Ultimate Net Loss paid by the Company but not recovered from the Reinsurer;
|
b.
|
to make payment to the Reinsurer of any amounts held in the Trust Account that exceed the Limit or otherwise agreed to be returned to the Reinsurer under this Agreement; and
|
c.
|
where the Company has received notification of termination of the Trust Account and where the Reinsurer's entire obligations under this Agreement remain unliquidated and undischarged ten (10) days prior to the termination date, to withdraw amounts equal to the obligations and deposit those amounts in a separate account, in the name of the Company, in any qualified U.S. financial institution apart from its general assets, in trust for such uses and purposes specified in Subparagraphs (a) and (b) above as may remain executory after such withdrawal and for any period after the termination date.
|
A.
|
All amounts payable hereunder shall be paid in United States Dollars.
|
B.
|
For purposes of this Agreement, where the Reinsured Group receives premiums or pays Loss, Loss Adjustment Expense or ULAE in currencies other than United States Dollars, such items shall be converted into United States Dollars at the actual rates of exchange at which these items are entered in the Company’s books and records, subject to the Currency Bands.
|
A.
|
The methods of allocating and recording reinsurance recoverables from this Agreement among the reinsured companies with respect to this Agreement will be as follows:
|
(i)
|
Reinsurance recoverables will be allocated among the reinsured companies in proportion to the losses incurred by each reinsured company applicable to this Agreement.
|
(ii)
|
Each reinsured company will be responsible for its proportionate share of the reinsurance premiums due to the Reinsurer.
|
B.
|
Records of these allocations will be maintained by or on behalf of the reinsured companies in sufficient detail to identify both the reinsurance recoverables and premium allocated to each reinsured company.
|
C.
|
Nothing herein will be construed to provide a separate retention or limit of liability for each reinsured company.
|
D.
|
Notwithstanding anything in this Article 22 that may be misconstrued to the contrary, the Reinsurers rights and obligation under this Agreement are not impacted by the Reinsurance Group’s internal allocations.
|
A.
|
Prior to commencing any arbitration in connection with any dispute, controversy or claim arising out of or relating to this Agreement or the breach, termination or validity thereof (a “Dispute”), the parties shall first engage in the following Steering Committee Procedures. Notwithstanding the previous sentence, in any Dispute in which a party seeks a temporary restraining order, preliminary injunction or attachment or other order in aid of arbitration pending the outcome of any Steering Committee (as defined below) meeting or arbitration procedure, such party may seek such order at any time without first following the procedures set forth in Sections (A), (B) and (C) of this Article 23.
|
B.
|
Following written request of one party to the other party, the Company, on the one hand, and the Reinsurer, on the other hand, shall use commercially reasonable efforts promptly to form a dispute steering committee (the “Steering Committee”), which shall consist of three (3) members appointed by the Company and three (3) members appointed by the Reinsurer;
provided
, that the number of members appointed to the Steering Committee may be modified by the mutual written consent of the parties. There shall be no restrictions placed on the
|
C.
|
The Company and the Reinsurer shall cause their respective Steering Committee members to use commercially reasonable efforts to resolve the relevant Dispute without the commencement of arbitration. Any party shall be permitted to commence arbitration to resolve such Dispute only after the occurrence of two (2) separate meetings with all of the members of the Steering Committee, which meetings may be in person, by telephone, videoconference or any other means by which all of the participants can hear each other, or as otherwise agreed by the parties hereto (it being agreed to by the parties that if for any reason such two (2) meetings have not occurred within thirty (30) days after any party first requests in writing that such Dispute be referred to the Steering Committee, the requirements of this Section (C) of Article 23 shall be deemed to have been met).
|
D.
|
Provided
that Sections (A), (B) and (C) of this Article 23 have been complied with, any dispute or claim arising out of or relating to this Agreement, including its formation and validity, shall be referred to arbitration. Arbitration shall be initiated by the delivery, by mail, email or other reliable means, of a written demand for arbitration by one party to the other. The arbitration shall be held in New York, New York or such other place as the parties may mutually agree. Arbitration shall be conducted before a three-person Arbitration Panel selected by mutual agreement of the Parties or, failing such agreement, pursuant to the ARIAS•U.S. Umpire Selection Procedure. The arbitrators and Umpire shall be either present or former executive officers of insurance or reinsurance companies or arbitrators certified by ARIAS•U.S. The arbitrators and Umpire shall not be under the control of either party, and shall have no financial interest in the outcome of the arbitration. The arbitrators and Umpire shall not be obligated to follow the strict rules of evidence. The Panel shall have the power to award costs, fees and interest if it so deems appropriate. The decision of a majority of the Arbitration Panel shall be final and binding to the fullest extent permitted by law. The Arbitration Panel shall render its award in writing. Judgment upon the award may be entered in any court having jurisdiction. Unless the Arbitration Panel orders otherwise, each party shall pay its own counsel and an equal share of the fees and expenses of the arbitrators and of the other mutual expenses of the arbitration.
|
AmTrust Financial Services, Inc.
59 Maiden Lane
New York, New York 10038
Attn: General Counsel
Telephone No.: (646) 458-7913
With copy to:
Debevoise & Plimpton LLP
919 Third Avenue
New York, New York 10022
Attn.: Marilyn A. Lion
Telephone No.: (212) 909-6108
|
If to the Reinsurer:
|
PREMIA REINSURANCE LTD.
Waterloo House 100 Pitts Bay Road, Pembroke, HM 08, BERMUDA Attention: President Telephone No.: (441) 278- 9176 |
|
a.
|
if delivered by hand or by overnight courier, when delivered, if delivered during business hours on any Business Day or, if delivered outside such business hours, at the commencement of business hours on the next following Business Day; or
|
b.
|
if delivered by email, at the time of transmission, if transmitted during business hours on any Business Day or, if transmitted outside such business hours, at the commencement of business hours on the next following Business Day.
|
a.
|
Organization, Standing and Authority
. It is an insurance company duly organized, validly existing and in good standing under the laws of its domicile and has all requisite corporate power and authority to enter into and perform its obligations under this Agreement and it shall maintain throughout the term of this Agreement all licenses, permits or permissions of any Governmental Authority that shall be required in order to perform its obligations under this Agreement;
|
b.
|
Authorization
. It has all requisite corporate power and authority to enter into this Agreement and to perform its obligations hereunder and thereunder. Its execution and delivery of this Agreement, and its performance of its obligations hereunder and thereunder, have been duly authorized by all necessary corporate action. This Agreement and the Trust Agreement, when duly executed and delivered by the Parties hereto and thereto, will be a valid and binding obligation, enforceable against it in accordance with its terms except as enforceability may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws affecting creditors’ rights generally, by applicable insurance insolvency and liquidation statutes and regulations and by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law); and
|
c.
|
No Conflict or Violation
. The execution, delivery and performance of this Agreement and its consummation of the transactions contemplated hereby and thereby will not (a) violate any provision of its Articles of Incorporation, Bylaws or other charter or organizational document applicable to it, (b) violate any order, judgment, injunction, award or decree of any court, arbitrator or Governmental Authority against, or binding upon it, or any agreement with, or condition imposed by, any Governmental Authority binding upon it, or (c) conflict with, result in a breach of or a default (with or without notice or lapse of time or both) under, give rise to, or result in a right of, acceleration, amendment or termination under, or, except for the Trust Agreement, result in the creation of any lien on any of its property or assets under, any contract or agreement to which it is a party or by which it or its property or assets are bound or subject except to the extent that such conflict, breach or default would not, individually or in the aggregate, reasonably be expected to result in a material adverse effect on the Parties hereunder, including in their to perform their obligations hereunder and thereunder.
|
1.
|
1/365th of the sum of the six-month United States Treasury Bill rate as quoted in The Wall Street Journal on the first Business Day of the month for which the calculation is made, plus the applicable Interest Rate Increase (as established in subparagraph (2) below), times the amount past due.
|
2.
|
If payment is made more than ninety (90) days after the overdue date, 4% per annum.
|
3.
|
Interest shall accumulate until payment of the original amount due plus interest has been received by the creditor party.
|
4.
|
Payments from the Reinsurer to the Company shall be due forty-five (45) days after the date a quarterly proof of loss supporting the demand for payment (including delivery of quarterly reports) is received by the Reinsurer, and shall be overdue thereafter.
|
5.
|
Payments from the Company to the Reinsurer shall be due on the dates specified within this Agreement. In the event a due date is not specifically stated for a given payment, the overdue date shall be thirty (30) days following the date of billing.
|
A.
|
The Parties (each, the “
Receiving Party
”) hereby covenant and agree, each on behalf of itself and on behalf of its affiliates, that from and after the date hereof, the Receiving Party and its affiliates will not disclose, give, sell, use or otherwise divulge any Confidential Information (as defined below) of the other Party (the “
Disclosing Party
”) or permit their respective representatives to do the same, except that each Receiving Party may disclose such Confidential Information or portions thereof (i) if legally compelled to do so or as required in connection with an examination by an insurance regulatory authority, (ii) to the extent
|
B.
|
For the purposes of this Agreement, “
Confidential Information
” means all confidential information (irrespective of the form of such information) of any kind, including any analyses, compilations, data, studies, notes, translations, memoranda or other documents, concerning the Disclosing Party or any of its affiliates obtained directly or indirectly from the Disclosing Party or any of its affiliates or representatives in connection with the transactions contemplated by this Agreement, including any information regarding the Subject Business or provisions or terms of this Agreement to the extent confidential treatment is sought from any securities regulator for such information (provided that, notwithstanding the foregoing, each Party may make such disclosures in its filings with the U.S. Securities and Exchange Commission as it believes are required), except information (i) which, at the time of the disclosure, was ascertainable or available to the public (other than as a result of a disclosure directly or indirectly by the Receiving Party or any of its affiliates, or representatives), (ii) that is or becomes available to the Receiving Party on a non-confidential basis from a source other than the Disclosing Party or any of its affiliates, or representatives; provided that, to the knowledge of such Receiving Party, such source was not prohibited from disclosing such information to the Receiving Party by a legal, contractual or fiduciary obligation owed to another person, (iii) that the Receiving Party can establish is already in its possession or the possession of any of its affiliates or representatives (other than information furnished by or on behalf of the Disclosing Party) or (iv) that is independently developed by the Receiving Party or its affiliates without the use or benefit of any information that would otherwise be Confidential Information.
|
C.
|
In addition, the Reinsurer hereby acknowledges and agrees that any personal information about individuals protected from disclosure (“
Personal Information
”) under any applicable state and federal privacy laws (including statutes and regulations enacted pursuant to the Gramm-Leach-Bliley Act, Public Law 106-102) (“
Privacy Laws
”) will not be used or disclosed by the Reinsurer if prohibited by Privacy Laws. The Reinsurer confirms that it has in place written and up-to-date administrative, technical and physical safeguards to protect the
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of AmTrust Financial Services, Inc.;
|
2.
|
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;
|
3.
|
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;
|
4.
|
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:
|
(a)
|
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;
|
(b)
|
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;
|
(c)
|
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
|
(d)
|
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
|
5.
|
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):
|
(a)
|
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
|
(b)
|
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.
|
Date:
|
August 9, 2017
|
By:
|
/s/ Barry Zyskind
|
|
|
|
Barry Zyskind
|
|
|
|
Chairman, President and Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of AmTrust Financial Services, Inc.;
|
2.
|
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;
|
3.
|
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;
|
4.
|
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:
|
(a)
|
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;
|
(b)
|
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;
|
(c)
|
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
|
(d)
|
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
|
5.
|
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):
|
(a)
|
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
|
(b)
|
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.
|
Date:
|
August 9, 2017
|
By:
|
/s/ Adam Karkowsky
|
|
|
|
Adam Karkowsky
|
|
|
|
Chief Financial Officer
|
|
|
|
(Principal Financial and Accounting Officer)
|
1.
|
The Quarterly Report on Form 10-Q for the quarter ended
June 30, 2017
(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
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
August 9, 2017
|
By:
|
/s/ Barry Zyskind
|
|
|
|
Barry Zyskind
|
|
|
|
Chairman, President and Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
1.
|
The Quarterly Report on Form 10-Q for the quarter ended
June 30, 2017
(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
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
August 9, 2017
|
By:
|
/s/ Adam Karkowsky
|
|
|
|
Adam Karkowsky
|
|
|
|
Chief Financial Officer
|
|
|
|
(Principal Financial and Accounting Officer)
|