| Segments |
The Company currently operates four business segments, Small
Commercial Business; Specialty Risk and Extended Warranty;
Specialty Program and Personal Lines Reinsurance. The
“Corporate & Other” segment represents the
activities of the holding company as well as a portion of service
and fee revenue. In determining total assets (excluding cash and
invested assets) by segment, the Company identifies those assets
that are attributable to a particular segment such as deferred
acquisition cost, reinsurance recoverable, goodwill, intangible
assets and prepaid reinsurance while the remaining assets are
allocated based on net written premium by segment. In determining
cash and invested assets by segment, the Company matches certain
identifiable liabilities such as unearned premium and loss and loss
adjustment expense reserves by segment. The remaining cash and
invested assets are then allocated based on net written premium by
segment. Investment income and realized gains (losses) are
determined by calculating an overall annual return on cash and
invested assets and applying that overall return to the cash and
invested assets by segment. Ceding commission revenue is allocated
to each segment based on that segment’s proportionate share
of the Company’s overall acquisition costs. Interest expense
is allocated based on net written premium by segment. Income taxes
are allocated on a pro-rata basis based on the Company’s
effective tax rate. Additionally, management reviews the
performance of underwriting income in assessing the performance of
and making decisions regarding the allocation of resources to the
segments. Underwriting income excludes, primarily, service and fee
revenue, investment income and other revenues, other expenses,
interest expense and income taxes. Management believes that
providing this information in this manner is essential to providing
Company’s shareholders with an understanding of the
Company’s business and operating performance.
During the three months ended March 31, 2012, the Company derived
over ten percent of gross premium in its Specialty Risk and
Extended Warranty segment from one broker of approximately $35,000.
During the three months ended March 31, 2012, the Company derived
ten percent of gross premium in its Specialty Program segment from
two individual programs for an aggregate of approximately
$20,400.
The following tables summarize the results of operations of
the business segments for the three months ended March 31, 2012 and
2011:
| (Amounts in Thousands) |
|
Small
Commercial
Business |
|
|
Specialty Risk
and Extended
Warranty |
|
|
Specialty
Program |
|
|
Personal
Lines
Reinsurance |
|
|
Corporate
and Other |
|
|
Total |
|
| Three months ended March 31,
2012: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross written premium |
|
$ |
232,351 |
|
|
$ |
234,089 |
|
|
$ |
104,638 |
|
|
$ |
30,609 |
|
|
$ |
— |
|
|
$ |
601,687 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net
written premium |
|
|
118,890 |
|
|
|
141,161 |
|
|
|
69,117 |
|
|
|
30,609 |
|
|
|
— |
|
|
|
359,777 |
|
| Change in unearned premium |
|
|
(26,562 |
) |
|
|
(5,588 |
) |
|
|
(9,456 |
) |
|
|
(4,147 |
) |
|
|
— |
|
|
|
(45,753 |
) |
| Net earned premium |
|
|
92,328 |
|
|
|
135,573 |
|
|
|
59,661 |
|
|
|
26,462 |
|
|
|
— |
|
|
|
314,024 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ceding commission - primarily
related party |
|
|
17,132 |
|
|
|
17,194 |
|
|
|
11,948 |
|
|
|
— |
|
|
|
— |
|
|
|
46,274 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss and
loss adjustment expense |
|
|
(59,224 |
) |
|
|
(83,443 |
) |
|
|
(40,194 |
) |
|
|
(17,068 |
) |
|
|
— |
|
|
|
(199,929 |
) |
|
Acquisition costs and other
underwriting expenses |
|
|
(42,930 |
) |
|
|
(43,085 |
) |
|
|
(29,939 |
) |
|
|
(8,071 |
) |
|
|
— |
|
|
|
(124,025 |
) |
| |
|
|
(102,154 |
) |
|
|
(126,528 |
) |
|
|
(70,133 |
) |
|
|
(25,139 |
) |
|
|
— |
|
|
|
(323,954 |
) |
| Underwriting income |
|
|
7,306 |
|
|
|
26,239 |
|
|
|
1,476 |
|
|
|
1,323 |
|
|
|
— |
|
|
|
36,344 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Service
and fee income |
|
|
15,435 |
|
|
|
18,218 |
|
|
|
9 |
|
|
|
6,876 |
|
|
|
— |
|
|
|
40,538 |
|
|
Investment income and realized gain
(loss) |
|
|
5,493 |
|
|
|
5,041 |
|
|
|
2,333 |
|
|
|
503 |
|
|
|
— |
|
|
|
13,370 |
|
| Other
expenses |
|
|
(14,123 |
) |
|
|
(14,035 |
) |
|
|
(6,105 |
) |
|
|
(1,376 |
) |
|
|
— |
|
|
|
(35,639 |
) |
| Interest
expense |
|
|
(2,810 |
) |
|
|
(2,792 |
) |
|
|
(1,215 |
) |
|
|
(274 |
) |
|
|
— |
|
|
|
(7,091 |
) |
| Foreign
currency gain |
|
|
— |
|
|
|
421 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
421 |
|
| Gain on
life settlement contracts |
|
|
37 |
|
|
|
35 |
|
|
|
15 |
|
|
|
3 |
|
|
|
— |
|
|
|
90 |
|
| Provision
for income taxes |
|
|
(2,514 |
) |
|
|
(7,347 |
) |
|
|
773 |
|
|
|
(1,565 |
) |
|
|
(524 |
) |
|
|
(11,177 |
) |
|
Equity in earnings of unconsolidated
subsidiaries – related party |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,364 |
|
|
|
2,364 |
|
| Non-controlling interest |
|
|
(53 |
) |
|
|
(53 |
) |
|
|
(23 |
) |
|
|
(5 |
) |
|
|
— |
|
|
|
(134 |
) |
|
Net income attributable to AmTrust
Financial Services, Inc. |
|
$ |
8,771 |
|
|
$ |
25,727 |
|
|
$ |
(2,737 |
) |
|
$ |
5,485 |
|
|
$ |
1,840 |
|
|
$ |
39,086 |
|
| (Amounts in Thousands) |
|
Small
Commercial
Business |
|
|
Specialty Risk
and Extended
Warranty |
|
|
Specialty
Program |
|
|
Personal
Lines
Reinsurance |
|
|
Corporate
and Other |
|
|
Total |
|
| Three months ended March 31,
2011: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross written premium |
|
$ |
140,716 |
|
|
$ |
227,748 |
|
|
$ |
49,976 |
|
|
$ |
25,587 |
|
|
$ |
— |
|
|
$ |
444,027 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net
written premium |
|
|
77,651 |
|
|
|
104,547 |
|
|
|
26,234 |
|
|
|
25,587 |
|
|
|
— |
|
|
|
234,019 |
|
| Change in unearned premium |
|
|
(15,790 |
) |
|
|
(19,970 |
) |
|
|
4,536 |
|
|
|
(2,457 |
) |
|
|
— |
|
|
|
(33,681 |
) |
| Net earned premium |
|
|
61,861 |
|
|
|
84,577 |
|
|
|
30,770 |
|
|
|
23,130 |
|
|
|
— |
|
|
|
200,338 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ceding commission - primarily
related party |
|
|
18,325 |
|
|
|
12,899 |
|
|
|
4,460 |
|
|
|
— |
|
|
|
— |
|
|
|
35,684 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss and
loss adjustment expense |
|
|
(36,763 |
) |
|
|
(57,424 |
) |
|
|
(19,705 |
) |
|
|
(14,804 |
) |
|
|
— |
|
|
|
(128,696 |
) |
|
Acquisition costs and other
underwriting expenses |
|
|
(34,756 |
) |
|
|
(26,648 |
) |
|
|
(12,312 |
) |
|
|
(7,518 |
) |
|
|
— |
|
|
|
(81,234 |
) |
| |
|
|
(71,519 |
) |
|
|
(84,072 |
) |
|
|
(32,017 |
) |
|
|
(22,322 |
) |
|
|
— |
|
|
|
(209,930 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Underwriting income |
|
|
8,667 |
|
|
|
13,404 |
|
|
|
3,213 |
|
|
|
808 |
|
|
|
|
|
|
|
26,092 |
|
| Service
and fee income |
|
|
5,241 |
|
|
|
16,506 |
|
|
|
4 |
|
|
|
— |
|
|
|
3,438 |
|
|
|
25,189 |
|
|
Investment income and realized gain
(loss) |
|
|
5,750 |
|
|
|
5,515 |
|
|
|
2,603 |
|
|
|
739 |
|
|
|
— |
|
|
|
14,607 |
|
| Other
expenses |
|
|
(7,312 |
) |
|
|
(9,021 |
) |
|
|
(2,431 |
) |
|
|
(1,432 |
) |
|
|
— |
|
|
|
(20,196 |
) |
| Interest
expense |
|
|
(1,359 |
) |
|
|
(1,677 |
) |
|
|
(452 |
) |
|
|
(266 |
) |
|
|
— |
|
|
|
(3,754 |
) |
| Foreign
currency loss |
|
|
— |
|
|
|
(284 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(284 |
) |
| Gain on
life settlement contracts |
|
|
6,837 |
|
|
|
8,436 |
|
|
|
2,273 |
|
|
|
1,340 |
|
|
|
— |
|
|
|
18,886 |
|
| Provision
for income taxes |
|
|
(2,661 |
) |
|
|
(4,908 |
) |
|
|
(778 |
) |
|
|
(177 |
) |
|
|
(513 |
) |
|
|
(9,037 |
) |
|
Equity in earnings of unconsolidated
investment – related parties |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,819 |
|
|
|
1,819 |
|
| Non-controlling interest |
|
|
(2,947 |
) |
|
|
(3,635 |
) |
|
|
(980 |
) |
|
|
(577 |
) |
|
|
— |
|
|
|
(8,139 |
) |
|
Net income attributable to AmTrust
Financial Services, Inc. |
|
$ |
12,216 |
|
|
$ |
24,336 |
|
|
$ |
3,452 |
|
|
$ |
435 |
|
|
$ |
4,744 |
|
|
$ |
45,183 |
|
The following tables summarize long lived assets and total
assets of the business segments as of March 31, 2012 and December
31, 2011:
|
(Amounts in Thousands) |
|
Small
Commercial
Business |
|
|
Specialty Risk
and Extended
Warranty |
|
|
Specialty
Program |
|
|
Personal
Lines
Reinsurance |
|
|
Corporate
and other |
|
|
Total |
|
| As of March 31, 2012: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Property and equipment, net |
|
$ |
25,283 |
|
|
$ |
25,125 |
|
|
$ |
10,929 |
|
|
$ |
2,464 |
|
|
$ |
— |
|
|
$ |
63,801 |
|
| Goodwill
and intangible assets |
|
|
180,800 |
|
|
|
165,010 |
|
|
|
22,702 |
|
|
|
— |
|
|
|
— |
|
|
|
368,512 |
|
| Total
assets |
|
|
2,523,163 |
|
|
|
2,462,815 |
|
|
|
957,172 |
|
|
|
152,238 |
|
|
|
— |
|
|
|
6,095,388 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31, 2011: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Property
and equipment, net |
|
$ |
17,767 |
|
|
$ |
30,811 |
|
|
$ |
10,762 |
|
|
$ |
2,213 |
|
|
$ |
— |
|
|
$ |
61,553 |
|
| Goodwill
and intangible assets |
|
|
123,976 |
|
|
|
167,782 |
|
|
|
22,858 |
|
|
|
— |
|
|
|
— |
|
|
|
314,616 |
|
| Total
assets |
|
|
2,150,824 |
|
|
|
2,482,018 |
|
|
|
912,476 |
|
|
|
133,429 |
|
|
|
— |
|
|
|
5,678,747 |
|
|