AmTrust Financial Services, Inc. Reports First Quarter Operating

  


      AmTrust Financial Services, Inc. Reports First Quarter
    Operating Earnings of $30.2 Million and Net Income of $24.2
                              Million

NEW YORK, May 5, 2009 (GLOBE NEWSWIRE) -- AmTrust Financial Services,
Inc. (Nasdaq:AFSI) today reported operating earnings of $30.2 million
for the first quarter of 2009. Operating earnings is a non-GAAP
financial measure defined by the Company as net income, excluding
realized investment gains and losses, net of tax. Gross written premium
for the first quarter of 2009 was $267.5 million and net income was
$24.2 million. 
During the first quarter of 2009, the Company incurred a realized loss
on an after-tax basis of $6.0 million on its investment portfolio. The
realized loss related to certain fixed income and equity investments. 
First Quarter Overview: 
Gross written premium in the first quarter 2009 increased by $32.7
million to $267.5 million or 13.9% from $234.8 million in the first
quarter of 2008.The Company reported operating earnings of $30.2
million or basic operating earnings per share of $0.50 for the first
quarter of 2009, an increase of 16% from the first quarter of 2008. Net
income for the first quarter 2009 was $24.2 million, or $0.40 basic
earnings per share. 
First Quarter 2009 Highlights: 


  * Quarterly basic operating earnings per share was $.50 ($0.43 in
    2008)
  * Quarterly basic earnings per share was $0.40 ($0.37 in 2008)
  * Annualized return on equity on operating earnings for the first
    quarter was 30.4%
  * Book value per share was $6.77 as of March 31, 2009 ($6.54 as of
    December 31, 2008)
  * The combined ratio for the first quarter was 79.7% (77.2% in 2008)
  * Completed share repurchases of approximately 700,000 shares

First Quarter 2009 Results: 
Revenue: 
Gross written premium for the first quarter was $267.5 million, an
increase of 13.9% or $32.7 million from $234.8 million in the first
quarter 2008. The increases were attributable to both organic growth
and the continued successful integration of our recent acquisitions. 
Net written premium (gross written premium less cessions for
reinsurance, including cessions to Maiden Insurance Company (Maiden))
in the first quarter of 2009 increased by $18.8 million or 16.0%, to
$136.2 million from $117.4 million in the first quarter of 2008 and net
earned premium for the first quarter of 2009 increased by $35.0 million
or 35.9%, to $132.4 million from $97.4 million in the first quarter
2008. 
As previously disclosed, the Company entered into a reinsurance
agreement with Maiden effective July 1, 2007. Under the terms of this
reinsurance agreement, the Company ceded approximately $87.5 million
and $82.9 million of written premium to Maiden in the first quarter of
2009 and 2008, respectively. 
The Company's agreement with Maiden generated $27.6 million and $20.2
million of earned ceding commission for the first quarter of 2009 and
2008, respectively. The agreement continues to enable the Company to
leverage its balance sheet, increase its writings, decrease its expense
ratio and, most importantly, increase its return on equity. 
Commission and fee income (exclusive of ceding commission from Maiden)
for the first quarter 2009 increased by $1.2 million or 19.0% to $7.5
million from $6.3 million for the first quarter 2008. The increase was
attributable primarily to additional fees from Maiden and administrator
fees related to new warranty programs in 2009. 
Net investment income, excluding realized gains and losses in the first
quarter 2009, was $13.6 million compared to $13.5 million in the first
quarter 2008. Average invested assets for the three months ended March
31, 2009 and 2008 was approximately $1.4 billion. During the quarters
ended March 31, 2009 and 2008, the Company realized investment losses
of $6.0 million and $3.4 million, respectively, on an after-tax basis. 
Expenses: 
The Company's loss ratio for the quarter ended March 31, 2009 was 56.6%
and was consistent with the quarter ended March 31, 2008. 
Acquisition Costs and Other Underwriting Expenses less Ceding
Commission Revenue for the three months ended March 31, 2009 increased
by $17.3 million to $58.2 million from $40.9 million for the three
months ended March 31, 2008. The increase resulted, primarily, from
increased premium writings in 2009. The expense ratio for the three
months ended March 31, 2009 increased to 23.1% from 20.5% for the three
months ended March 31, 2008. 
Other Matters: 
During the first quarter the Company completed share repurchases of
approximately 700 thousand shares for $5.4 million. This leaves
approximately 2.3 million remaining under its share repurchase
authorization. The weighted average shares outstanding were reduced by
approximately 300 thousand shares for the first quarter of 2009. Book
value per common share grew 3.5% from December 31, 2008 and total
increase before dividend payment was 4.3% per share. 
Shareholders' Equity as of March 31, 2009 increased to $401.5 million
from $392.5 million as of December 31, 2008. During the quarter, the
Board of Directors declared a quarterly dividend of $0.05 per share. 
As of March 31, 2009, the Company's debt-to-capitalization ratio was
31.1%. During the second quarter of 2008, the Company entered into a
three-year $40 million term loan, which has been reduced as of March
31, 2009 to $30 million. Additionally, the Company has $123.7 million
of long-term trust preferred securities. 
Conference Call: 
On May 6, 2009 at 10 a.m. ET, the Company will hold a conference call
that can be accessed as follows: 


 Toll-free Dial-in:  877.857.6151
 Toll Dial-in (Int'l Callers): 719.325.4746

In order to participate in the conference call, you must register at:
http://ir.amtrustgroup.com 
A live broadcast of the call will be available online at the above
website. An online replay will follow shortly after the call. In
addition, a telephonic replay will be available for seven days and can
be accessed by dialing 888.203.1112 or 719.457.0820. Enter replay
passcode 2964661. 
About AmTrust Financial Services, Inc. 
AmTrust Financial Services, Inc., headquartered in New York City, is a
multinational insurance holding company, which, through its insurance
carriers, offers specialty property and casualty insurance products,
including workers' compensation, commercial automobile and general
liability; extended service and warranty coverage. For more information
about AmTrust, visit www.amtrustgroup.com, or call AmTrust toll-free at
866.203.3037. 
The AmTrust Financial Services, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=3280 
Forward-Looking Statement 
This news release contains "forward-looking statements" which are made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. The forward-looking statements are based
on the Company's current expectations and beliefs concerning future
developments and their potential effects on the Company. There can be
no assurance that actual developments will be those anticipated by the
Company. Actual results may differ materially from those projected as a
result of significant risks and uncertainties, including non-receipt of
the expected payments, changes in interest rates, effect of the
performance of financial markets on investment income and fair values
of investments, development of claims and the effect on loss reserves,
accuracy in projecting loss reserves, the impact of competition and
pricing environments, changes in the demand for the Company's products,
the effect of general economic conditions, adverse state and federal
legislation, regulations and regulatory investigations into industry
practices, developments relating to existing agreements, heightened
competition, changes in pricing environments, and changes in asset
valuations. The Company undertakes no obligation to publicly update any
forward-looking statements. 


                    AmTrust Financial Services, Inc.
                           Income Statement
                 (in thousands, except per share data)
                              (Unaudited)
 
                                                 Three Months Ended
                                                      March 31,
                                               ----------------------
                                                  2009       2008
                                               ----------  ----------
 
 Gross premium written                         $ 267,527   $ 234,756
                                               ==========  ==========
 
 Premium income
 
 Net premium written                           $ 136,179   $ 117,442
 Change in unearned premium                       (3,756)    (20,029)
                                               ----------  ----------
                                                 132,423      97,413
 
 Ceding commission (primarily related party)      27,591      20,875
 Commission and fee  income                        7,454       6,287
 Investment income, net                           13,589      13,531
 Net realized gains (losses)                      (9,238)     (5,220)
 Other investment gain (loss) on managed
  assets                                              --      (2,900)
                                               ----------  ----------
                                                  39,396      32,573
                                               ----------  ----------
 
 Total revenue                                   171,819     129,986
                                               ----------  ----------
 
 Loss and loss adjustment expense                 74,915      55,165
 Acquisition costs and other underwriting
  expenses                                        58,154      40,877
 Other                                             5,194       4,794
                                               ----------  ----------
                                                 138,263     100,836
                                               ----------  ----------
 
 Income from continuing operations                33,556      29,150
 
 Other income (expense):
 Foreign currency gain (loss)                         33         159
 Interest expense                                 (4,171)     (2,629)
                                               ----------  ----------
                                                  (4,138)     (2,470)
                                               ----------  ----------
 
 Income from continuing operations before
  provision for income taxes                      29,418      26,680
 
 Provision for income taxes                        5,256       7,317
 Minority interest in net loss of subsidiary          --      (2,900)
                                               ----------  ----------
 Net income available to common shareholders   $  24,162   $  22,263
                                               ==========  ==========
 
 Operating earnings(1)                         $  30,167   $  25,656
                                               ==========  ==========
 
 Earnings per common share:
 Basic earnings per share                      $    0.40   $    0.37
 Diluted earnings per share                    $    0.40   $    0.37
 Basic operating earnings per share(1)         $    0.50   $    0.43
 
 Weighted average number of basic shares
  outstanding                                     59,767      59,969
 Weighted average number of diluted shares
  outstanding                                     60,000      60,925
 
 Combined ratio                                     79.7%       77.2%

                AmTrust Financial Services, Inc.
                    Balance Sheet Highlights
                         (in thousands)
                           (Unaudited)
 
                                            March 31,     Dec. 31,
                                              2009          2008
                                            ----------   ----------
 Cash, cash equivalents and investments     $1,356,583   $1,361,440
 Premiums receivables                          390,338      419,577
 Goodwill and intangible assets                103,999      102,425
 Total assets                                3,177,753    3,143,893
 Loss and loss expense reserves              1,097,247    1,014,059
 Unearned premium                              765,157      759,915
 Trust preferred securities                    123,714      123,714
 Total stockholders' equity                 $  401,488   $  392,548

                   AmTrust Financial Services, Inc.
                      Non-GAAP Financial Measure
                 (in thousands, except per share data)
                              (Unaudited)
 
 
                                                   Three Months Ended
                                                        March 31,
                                                  --------------------
                                                    2009       2008
                                                  ---------  ---------
 
 Reconciliation of net income to operating
  earnings:
 Net income                                       $ 24,162   $ 22,263
 Less: Net realized gains (losses) net of taxes     (6,005)    (3,393)
                                                  ---------  ---------
 Operating earnings(1)                            $ 30,167   $ 25,656
                                                  =========  =========
 
 Operating earnings per common share:
 Basic earnings per share                         $   0.50   $   0.43
 Diluted earnings per share                       $   0.50   $   0.42

 (1) Net operating income is a non-GAAP financial measure defined by
     the Company as net income excluding realized investment gains and
     losses, net of tax, which provides a useful indicator of trends
     in the Company's underlying operations.

AFSI-F 


CONTACT:  AmTrust Financial Services, Inc.
          Investor Relations
          Devora Goldenberg
          212.220.7120 ext. 7041
          IR@amtrustgroup.com

  
Provider ID: 00164679
-0- May/05/2009 20:06 GMT
 
 
Press spacebar to pause and continue. Press esc to stop.