AmTrust
Financial Services, Inc. (Nasdaq:AFSI) ("the Company") today
announced solid profit growth for the first quarter ended March 31, 2015.
Operating earnings(1) were $121.4 million, or $1.45 per diluted share, an
increase of 24.6%, compared to $97.4 million, or $1.24 per diluted share, in
the first quarter of 2014. First quarter 2015 net income attributable to common
stockholders grew to $154.7 million, or $1.85 per diluted share, an increase of
54.9% from $99.9 million, or $1.27 per diluted share, in the first quarter
2014. First quarter 2015 annualized operating return on common equity(1)was
26.1% compared to 27.8% in the first quarter 2014. Annualized return on common
equity was 33.3% for the first quarter of 2015 compared to 28.5% for the first
quarter of 2014.
Financial Highlights
First Quarter 2015
o Gross written premium of $1.73 billion, up 16.0%
after excluding from first quarter 2014 the impact of $174 million of
non-recurring gross written premium related to the Cut Through Reinsurance
Agreement with Tower Group International, Ltd.
o Net earned premium of $949.4 million, up 14.5%
from first quarter 2014
o Operating diluted EPS(1) of $1.45 ($0.07
attributable to gain on life settlements) compared to $1.24 ($0.02 attributable
to gain on life settlements) in the first quarter 2014
o Diluted EPS of $1.85 compared with $1.27 in the
first quarter 2014
o Annualized operating return on common equity(1)
of 26.1% and annualized return on common equity of 33.3%
o Service and fee income of $112.9 million, up
24.1% from the first quarter 2014
o Operating earnings(1) of $121.4 million compared
to $97.4 million from the first quarter 2014
o Net income attributable to common stockholders
of $154.7 million compared to $99.9 million in the first quarter 2014
o Combined ratio of 89.0% compared to 89.9% in the
first quarter 2014
o Book value per common share of $24.00, up from
$22.34 at December 31, 2014
o AmTrust's stockholders' equity was $2.46 billion
as of March 31, 2015
First Quarter 2015 Results
Total
revenue was $1.11 billion, an increase of $0.16 billion, or 16.6%, from $0.95
billion in the first quarter 2014. Gross written premium was $1.73 billion, an
increase of $0.24 billion, or 16.0%, from $1.49 billion in the same period a
year ago after excluding from the first quarter 2014 $174 million in
non-recurring gross written premium from the Cut Through Reinsurance Agreement
with Tower Group International, Ltd. in first quarter 2014. In addition, first
quarter 2015 gross written premium was negatively impacted by $36.5 million due
to declines in European currencies. Net written premium was $1.04 billion
compared to $1.13 billion in the first quarter 2014. Net earned premium of
$949.4 million increased $120.3 million, or 14.5%, from $829.1 million in the
first quarter 2014. The combined ratio was 89.0% compared to 89.9% in first
quarter 2014.
Total
service and fee income of $112.9 million increased $21.9 million, or 24.1%,
from $91.0 million in first quarter of 2014 and included $17.4 million from
related parties in the first quarter 2015 compared with $12.2 million in the
first quarter 2014.
Investment
income, excluding net realized gains and losses, totaled $34.6 million, an
increase of 21.2% from $28.5 million in the first quarter of 2014. In addition,
first quarter 2015 results included net realized investment gains of $15.7
million, or $10.2 million after-tax, on certain fixed income and equity
investments compared with net realized investment gains of $5.4 million, or
$3.5 million after-tax, in the first quarter of 2014.
Loss
and loss adjustment expense totaled $613.3 million in the first quarter 2015,
compared to $558.6 million in the first quarter 2014, and resulted in a loss
ratio of 64.6% compared with 67.4% for the first quarter 2014.
Acquisition
costs and other underwriting expense of $231.7 million increased $45.1 million
from $186.6 million for the first quarter 2014. The expense ratio was 24.4%, an
increase from 22.5% in the first quarter 2014. Ceding commissions, primarily
related to the reinsurance agreements with Maiden Holdings, Ltd.
("Maiden"), totaled $118.7 million, up 34.7% from $88.1 million in
the first quarter 2014. During the three months ended March 31, 2015, AmTrust
ceded $528.3 million of gross written premium and $399.7 million of earned
premium to Maiden compared to $408.6 million of gross written premium and
$312.7 million of earned premium ceded in the first quarter 2014.
Other
expense of $98.5 million increased $10.9 million, or 12.4%, from $87.6 million
in the first quarter 2014.
Total
assets of approximately $14.81 billion increased $0.96 billion, or 7.0%, from
$13.85 billion at December 31, 2014. Total cash, cash equivalents and
investments of $5.97 billion increased $0.31 billion, or 5.4%, from $5.66
billion as of December 31, 2014. AmTrust's stockholder's equity of $2.46
billion increased 20.9% from $2.04 billion at December 31, 2014.
As
of March 31, 2015, the Company's long-term debt-to-capitalization ratio was 19.4%,
compared with 27.1% as of December 31, 2014.
During the three months
ended March 31, 2015, the Company issued an aggregate of 3.45 million shares of
Common Stock in an underwritten public offering. The net proceeds from the
offering were approximately $172.5 million. In addition, on March 19, 2015, the
Company completed the sale of 7.3 million of its depository shares, each
representing 1/40th interest in a share of its 7.50% Non-Cumulative Preferred
Stock, Series D. The net proceeds from the sale of depository shares were
approximately $176.5 million.
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