Earnings Per Share

Effective January 1, 2009, the Company adopted ASC subtopic 260-10, Determining Whether Instruments Granted in Share-Based Payments Transactions Are Participating Securities. ASC 260-10 provides that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are participating securities and are to be included in the computation of earnings per share under the two-class method. The Company’s unvested restricted shares contain rights to receive nonforfeitable dividends and are participating securities, requiring the two-class method of computing earnings per share.

In August 2012, the Company declared a ten percent stock dividend that was paid in September 2012. As a result, the Company's prior year's basic and diluted earnings per share have been retroactively adjusted for the three and nine months ended September 30, 2011. The adjustment negatively impacted basic and diluted shares by $0.02 per share in both periods.

The following table is a summary of the elements used in calculating basic and diluted earnings per share for the three and nine months ended September 30, 2012 and 2011:



	Three Months Ended September 30,				Nine Months Ended September 30,
(Amounts in Thousands except per share)	2012		2011		2012		2011
Basic earnings per share:
Net income attributable to AmTrust Financial Services, Inc. shareholders	$	43,230	$	37,166	$	122,674	$	132,511
Less: Net income allocated to participating securities and redeemable non-controlling interest	206		16		513		80
Net income allocated to AmTrust Financial Services, Inc. common shareholders	$	43,024	$	37,150	$	122,161	$	132,431

Weighted average common shares outstanding – basic	62,642		61,700		61,156		60,414
Less: Weighted average participating shares outstanding	297		32		255		40
Weighted average common shares outstanding - basic	62,345		61,668		60,901		60,374
Net income per AmTrust Financial Services, Inc. common share - basic	$	0.69	$	0.60	$	2.01	$	2.19

Net income attributable to AmTrust Financial Services, Inc. shareholders	$	43,230	$	37,166	$	122,674	$	132,511
Less: Net income allocated to participating securities and redeemable non-controlling interest	206		16		513		80
Net income allocated to AmTrust Financial Services, Inc. common shareholders	$	43,024	$	37,150	$	122,161	$	132,431

Weighted average common shares outstanding – basic	62,345		61,668		60,901		60,374
Plus: Dilutive effect of stock options, other	2,779		1,984		2,515		1,719
Weighted average common shares outstanding – dilutive	65,124		63,652		63,416		62,093
Net income per AmTrust Financial Services, Inc. common shares – diluted	$	0.66	$	0.58	$	1.93	$	2.13

As of September 30, 2012, there were less than 10,000 anti-dilutive securities excluded from diluted earnings per share.