15.

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 six months ended June 30, 2012, the Company derived over ten percent of gross written premium from one broker in its Specialty Risk and Extended Warranty segment and was approximately $85,000.

The following tables summarize the results of operations of the business segments for the three and six months ended June 30, 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 June 30, 2012:
Gross written premium	$	214,127		$	272,610		$	121,878		$	28,823		$	—		$	637,438

Net written premium		104,270			172,259			86,237			28,823			—			391,589
Change in unearned premium		(10,702	)		(30,652	)		(15,369	)		(872	)		—			(57,595	)
Net earned premium		93,568			141,607			70,868			27,951			—			333,994

Ceding commission - primarily related party		15,458			16,174			12,918			—			—			44,550

Loss and loss adjustment expense		(60,305	)		(85,628	)		(47,826	)		(18,028	)		—			(211,787	)
Acquisition costs and other underwriting expenses		(42,165	)		(44,038	)		(34,985	)		(8,525	)		—			(129,713	)
		(102,470	)		(129,666	)		(82,811	)		(26,553	)		—			(341,500	)
Underwriting income		6,556			28,115			975			1,398			—			37,044

Service and fee income		10,545			15,429			10			—			7,027			33,011
Investment income and realized gain (loss)		6,759			8,123			3,475			690			—			19,047
Other expenses		(10,742	)		(14,078	)		(6,062	)		(1,438	)		—			(32,320	)
Interest expense		(2,343	)		(3,035	)		(1,307	)		(309	)		—			(6,994	)
Foreign currency loss		—			(2,455	)		—			—			—			(2,455	)
Gain on life settlement contracts		714			813			352			82			—			1,961
Provision for income taxes		(2,576	)		(7,379	)		575			(95	)		(2,267	)		(11,742	)
Equity in earnings of unconsolidated subsidiary – related party		—			—			—			—			3,088			3,088
Non-controlling interest		(100	)		(119	)		(51	)		(12	)		—			(282	)
Net income attributable to AmTrust Financial Services, Inc.	$	8,813		$	25,414		$	(2,033	)	$	316		$	7,848		$	40,358

(Amounts in Thousands)	Small Commercial Business			Specialty Risk and Extended Warranty			Specialty Program			Personal Lines Reinsurance			Corporate and Other			Total
Three months ended June 30, 2011:
Gross written premium	$	174,607		$	265,502		$	93,354		$	24,999		$	—		$	558,462

Net written premium		113,221			185,178			52,283			24,999			—			375,681
Change in unearned premium		(39,187	)		(75,547	)		(12,145	)		(520	)		—			(127,399	)
Net earned premium		74,034			109,631			40,138			24,479			—			248,282

Ceding commission - primarily related party		13,570			13,787			8,057			—			—			35,414

Loss and loss adjustment expense		(49,927	)		(70,053	)		(28,362	)		(15,666	)		—			(170,008	)
Acquisition costs and other underwriting expenses		(31,653	)		(31,658	)		(18,314	)		(7,955	)		—			(89,580	)
		(81,580	)		(107,711	)		(46,676	)		(23,621	)		—			(259,588	)

Underwriting income		6,024			15,707			1,519			858						24,108
Service and fee income		5,177			14,904			1			—			4,460			24,542
Investment income and realized gain (loss)		7,059			4,491			1,902			331			—			13,783
Other expenses		(4,713	)		(10,488	)		(2,732	)		(631	)		—			(18,564	)
Interest expense		(1,150	)		(2,394	)		(625	)		(165	)		—			(4,334	)
Foreign currency gain		—			2,520			—			—			—			2,520
Gain on life settlement contracts		6,045			12,464			3,259			870			—			22,638
Provision for income taxes		(2,066	)		(4,228	)		(335	)		(143	)		(517	)		(7,289	)
Equity in earnings of unconsolidated subsidiary – related party		—			—			—			—			2,514			2,514
Non-controlling interest		(2,604	)		(5,372	)		(1,404	)		(376	)		—			(9,756	)
Net income attributable to AmTrust Financial Services, Inc.	$	13,772		$	27,604		$	1,585		$	744		$	6,457		$	50,162

(Amounts in Thousands)	Small Commercial Business			Specialty Risk and Extended Warranty			Specialty Program			Personal Lines Reinsurance			Corporate and Other			Total
Six months ended June 30, 2012:
Gross written premium	$	446,478		$	506,699		$	226,516		$	59,432		$	—		$	1,239,125

Net written premium		223,160			313,420			155,354			59,432			—			751,366
Change in unearned premium		(37,264	)		(36,240	)		(24,825	)		(5,019	)		—			(103,348	)
Net earned premium		185,896			277,180			130,529			54,413			—			648,018

Ceding commission - primarily related party		32,590			33,368			24,866			—			—			90,824

Loss and loss adjustment expense		(119,529	)		(169,071	)		(88,020	)		(35,096	)		—			(411,716	)
Acquisition costs and other underwriting expenses		(85,095	)		(87,123	)		(64,924	)		(16,596	)		—			(253,738	)
		(204,624	)		(256,194	)		(152,944	)		(51,692	)		—			(665,454	)
Underwriting income		13,862			54,354			2,451			2,721			—			73,388

Service and fee income		25,980			33,647			19			—			13,903			73,549
Investment income and realized gain (loss)		12,252			13,164			5,808			1,193			—			32,417
Other expenses		(24,865	)		(28,113	)		(12,167	)		(2,814	)		—			(67,959	)
Interest expense		(5,153	)		(5,827	)		(2,522	)		(583	)		—			(14,085	)
Foreign currency loss		—			(2,034	)		—			—			—			(2,034	)
Gain on life settlement contracts		751			848			367			85			—			2,051
Provision for income taxes		(5,090	)		(14,726	)		1,348			(135	)		(4,316	)		(22,919	)
Equity in earnings of unconsolidated subsidiary – related party		—			—			—			—			5,452			5,452
Non-controlling interest		(153	)		(172	)		(74	)		(17	)		—			(416	)
Net income attributable to AmTrust Financial Services, Inc.	$	17,584		$	51,141		$	(4,770	)	$	450		$	15,039		$	79,444

(Amounts in Thousands)	Small Commercial Business			Specialty Risk and Extended Warranty			Specialty Program			Personal Lines Reinsurance			Corporate and Other			Total
Six months ended June 30, 2011:
Gross written premium	$	315,323		$	493,250		$	143,330		$	50,586		$	—		$	1,002,489

Net written premium		190,872			289,725			78,517			50,586			—			609,700
Change in unearned premium		(54,977	)		(95,517	)		(7,609	)		(2,977	)		—			(161,080	)
Net earned premium		135,895			194,208			70,908			47,609			—			448,620

Ceding commission - primarily related party		31,895			26,686			12,517			—			—			71,098

Loss and loss adjustment expense		(86,690	)		(133,477	)		(48,067	)		(30,470	)		—			(298,704	)
Acquisition costs and other underwriting expenses		(66,409	)		(58,306	)		(30,626	)		(15,473	)		—			(170,814	)
		(153,099	)		(191,783	)		(78,693	)		(45,943	)		—			(469,518	)

Underwriting income		14,691			29,111			4,732			1,666			—			50,200
Service and fee income		10,418			31,410			5			—			7,898			49,731
Investment income and realized gain (loss)		12,809			10,006			4,505			1,070			—			28,390
Other expenses		(12,025	)		(19,509	)		(5,163	)		(2,063	)		—			(38,760	)
Interest expense		(2,509	)		(4,071	)		(1,077	)		(431	)		—			(8,088	)
Foreign currency gain		—			2,236			—			—			—			2,236
Gain on life settlement contracts		12,882			20,900			5,532			2,210			—			41,524
Provision for income taxes		(4,727	)		(9,136	)		(1,113	)		(320	)		(1,030	)		(16,326	)
Equity in earnings of unconsolidated subsidiary – related party		—			—			—			—			4,333			4,333
Non-controlling interest		(5,551	)		(9,007	)		(2,384	)		(953	)		—			(17,895	)
Net income	$	25,988		$	51,940		$	5,037		$	1,179		$	11,201		$	95,345

The following tables summarize long lived assets and total assets of the business segments as of June 30, 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 June 30, 2012:
Property and equipment, net	$	25,725	$	29,084	$	12,588	$	2,911	$	—	$	70,308
Goodwill and intangible assets		182,165		161,453		22,591		—		—		366,209
Total assets		2,497,782		2,398,983		1,212,625		159,549		—		6,268,939

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