| Results of Operations of Business Segments |
The following tables summarize the results of operations of the business segments for the three and nine months ended September 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 September 30, 2012: | | | | | | | | | | | | Gross written premium | $ | 243,603 |
| | $ | 260,415 |
| | $ | 202,280 |
| | $ | 30,258 |
| | $ | — |
| | $ | 736,556 |
| Net written premium | 133,492 |
| | 137,106 |
| | 182,803 |
| | 30,258 |
| | — |
| | 483,659 |
| Change in unearned premium | (9,686 | ) | | (21,371 | ) | | (63,560 | ) | | (1,595 | ) | | — |
| | (96,212 | ) | Net earned premium | 123,806 |
| | 115,735 |
| | 119,243 |
| | 28,663 |
| | — |
| | 387,447 |
| Ceding commission - primarily related party | 17,845 |
| | 13,226 |
| | 18,789 |
| | — |
| | — |
| | 49,860 |
| Loss and loss adjustment expense | (81,727 | ) | | (72,812 | ) | | (82,619 | ) | | (18,488 | ) | | — |
| | (255,646 | ) | Acquisition costs and other underwriting expenses | (48,317 | ) | | (36,126 | ) | | (50,551 | ) | | (8,742 | ) | | — |
| | (143,736 | ) | | (130,044 | ) | | (108,938 | ) | | (133,170 | ) | | (27,230 | ) | | — |
| | (399,382 | ) | Underwriting income | 11,607 |
| | 20,023 |
| | 4,862 |
| | 1,433 |
| | — |
| | 37,925 |
| Service and fee income | 12,403 |
| | 23,605 |
| | 1,294 |
| | — |
| | 7,259 |
| | 44,561 |
| Investment income and realized gain (loss) | 6,803 |
| | 7,519 |
| | 5,624 |
| | 696 |
| | — |
| | 20,642 |
| Other expenses | (13,660 | ) | | (14,713 | ) | | (11,771 | ) | | (2,193 | ) | | — |
| | (42,337 | ) | Interest expense | (2,288 | ) | | (2,444 | ) | | (2,102 | ) | | (384 | ) | | — |
| | (7,218 | ) | Foreign currency loss | — |
| | (951 | ) | | — |
| | — |
| | — |
| | (951 | ) | Gain on life settlement contracts | 1,100 |
| | 1,211 |
| | 784 |
| | 156 |
| | — |
| | 3,251 |
| Provision for income taxes | (3,563 | ) | | (7,646 | ) | | 292 |
| | 66 |
| | (2,336 | ) | | (13,187 | ) | Equity in earnings of unconsolidated subsidiary – related party | — |
| | — |
| | — |
| | — |
| | 3,207 |
| | 3,207 |
| Non-controlling interest | (922 | ) | | (1,024 | ) | | (594 | ) | | (123 | ) | | — |
| | (2,663 | ) | Net income attributable to AmTrust Financial Services, Inc. | $ | 11,480 |
| | $ | 25,580 |
| | $ | (1,611 | ) | | $ | (349 | ) | | $ | 8,130 |
| | $ | 43,230 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | (Amounts in Thousands) | Small Commercial Business | | Specialty Risk and Extended Warranty | | Specialty Program | | Personal Lines Reinsurance | | Corporate and Other | | Total | Three Months Ended September 30, 2011: | | | | | | | | | | | | Gross written premium | $ | 145,418 |
| | $ | 256,493 |
| | $ | 132,621 |
| | $ | 26,690 |
| | $ | — |
| | $ | 561,222 |
| Net written premium | 79,070 |
| | 149,238 |
| | 66,905 |
| | 26,690 |
| | — |
| | 321,903 |
| Change in unearned premium | 10,807 |
| | (22,454 | ) | | (19,958 | ) | | (1,450 | ) | | — |
| | (33,055 | ) | Net earned premium | 89,877 |
|
| 126,784 |
| | 46,947 |
| | 25,240 |
| | — |
| | 288,848 |
| Ceding commission - primarily related party | 16,312 |
| | 14,928 |
| | 9,492 |
| | — |
| | — |
| | 40,732 |
| Loss and loss adjustment expense | (55,721 | ) | | (83,102 | ) | | (30,376 | ) | | (16,153 | ) | | — |
| | (185,352 | ) | Acquisition costs and other underwriting expenses | (42,074 | ) | | (39,187 | ) | | (23,806 | ) | | (8,203 | ) | | — |
| | (113,270 | ) | | (97,795 | ) | | (122,289 | ) | | (54,182 | ) | | (24,356 | ) | | — |
|
| (298,622 | ) | Underwriting income | 8,394 |
| | 19,423 |
| | 2,257 |
| | 884 |
| | — |
| | 30,958 |
| Service and fee income | 6,347 |
| | 18,413 |
| | 5 |
| | — |
| | 4,050 |
| | 28,815 |
| Investment income and realized gain (loss) | 6,590 |
| | 4,956 |
| | 2,997 |
| | 463 |
| | — |
| | 15,006 |
| Other expenses | (7,432 | ) | | (9,857 | ) | | (6,386 | ) | | (370 | ) | | — |
| | (24,045 | ) | Interest expense | (1,219 | ) | | (1,556 | ) | | (1,136 | ) | | (35 | ) | | — |
| | (3,946 | ) | Foreign currency loss | — |
| | (4,063 | ) | | — |
| | — |
| | — |
| | (4,063 | ) | Gain on life settlement contracts | 2,096 |
| | 1,705 |
| | 3,358 |
| | (337 | ) | | — |
| | 6,822 |
| Bargain purchase on Majestic transaction | 5,850 |
| | — |
| | — |
| | — |
| | — |
| | 5,850 |
| Provision for income taxes | (4,918 | ) | | (7,666 | ) | | (519 | ) | | (198 | ) | | (996 | ) | | (14,297 | ) | Equity in earnings of unconsolidated subsidiary – related party | — |
| | — |
| | — |
| | — |
| | (918 | ) | | (918 | ) | Non-controlling interest | (928 | ) | | (770 | ) | | (1,461 | ) | | 143 |
| | — |
| | (3,016 | ) | Net income attributable to AmTrust Financial Services, Inc. | $ | 14,780 |
| | $ | 20,585 |
| | $ | (885 | ) | | $ | 550 |
| | $ | 2,136 |
| | $ | 37,166 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | (Amounts in Thousands) | Small Commercial Business | | Specialty Risk and Extended Warranty | | Specialty Program | | Personal Lines Reinsurance | | Corporate and Other | | Total | Nine months ended September 30, 2012: | | | | | | | | | | | | Gross written premium | $ | 690,081 |
| | $ | 767,114 |
| | $ | 428,796 |
| | $ | 89,690 |
| | $ | — |
| | $ | 1,975,681 |
| Net written premium | 356,652 |
| | 450,526 |
| | 338,157 |
| | 89,690 |
| | — |
| | 1,235,025 |
| Change in unearned premium | (46,950 | ) | | (57,611 | ) | | (88,385 | ) | | (6,614 | ) | | — |
| | (199,560 | ) | Net earned premium | 309,702 |
| | 392,915 |
| | 249,772 |
| | 83,076 |
| | — |
| | 1,035,465 |
| Ceding commission - primarily related party | 50,435 |
| | 46,594 |
| | 43,655 |
| | — |
| | — |
| | 140,684 |
| Loss and loss adjustment expense | (201,256 | ) | | (241,883 | ) | | (170,639 | ) | | (53,584 | ) | | — |
| | (667,362 | ) | Acquisition costs and other underwriting expenses | (133,412 | ) | | (123,249 | ) | | (115,475 | ) | | (25,338 | ) | | — |
| | (397,474 | ) | | (334,668 | ) | | (365,132 | ) | | (286,114 | ) | | (78,922 | ) | | — |
| | (1,064,836 | ) | Underwriting income | 25,469 |
| | 74,377 |
| | 7,313 |
| | 4,154 |
| | — |
| | 111,313 |
| Service and fee income | 38,383 |
| | 57,252 |
| | 1,313 |
| | — |
| | 21,162 |
| | 118,110 |
| Investment income and realized gain (loss) | 19,055 |
| | 20,683 |
| | 11,432 |
| | 1,889 |
| | — |
| | 53,059 |
| Other expenses | (38,525 | ) | | (42,826 | ) | | (23,938 | ) | | (5,007 | ) | | — |
| | (110,296 | ) | Interest expense | (7,441 | ) | | (8,271 | ) | | (4,624 | ) | | (967 | ) | | — |
| | (21,303 | ) | Foreign currency loss | — |
| | (2,985 | ) | | — |
| | — |
| | — |
| | (2,985 | ) | Gain on life settlement contracts | 1,851 |
| | 2,059 |
| | 1,151 |
| | 241 |
| | — |
| | 5,302 |
| Provision for income taxes | (8,653 | ) | | (22,372 | ) | | 1,640 |
| | (69 | ) | | (6,652 | ) | | (36,106 | ) | Equity in earnings of unconsolidated subsidiary – related party | — |
| | — |
| | — |
| | — |
| | 8,659 |
| | 8,659 |
| Non-controlling interest | (1,075 | ) | | (1,196 | ) | | (668 | ) | | (140 | ) | | — |
| | (3,079 | ) | Net income attributable to AmTrust Financial Services, Inc. | $ | 29,064 |
| | $ | 76,721 |
| | $ | (6,381 | ) | | $ | 101 |
| | $ | 23,169 |
| | $ | 122,674 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | (Amounts in Thousands) | Small Commercial Business | | Specialty Risk and Extended Warranty | | Specialty Program | | Personal Lines Reinsurance | | Corporate and Other | | Total | Nine months ended September 30, 2011: | | | | | | | | | | | | Gross written premium | $ | 460,741 |
| | $ | 749,743 |
| | $ | 275,951 |
| | $ | 77,276 |
| | $ | — |
| | $ | 1,563,711 |
| Net written premium | 269,942 |
| | 438,963 |
| | 145,422 |
| | 77,276 |
| | — |
| | 931,603 |
| Change in unearned premium | (44,170 | ) | | (117,971 | ) | | (27,567 | ) | | (4,427 | ) | | — |
| | (194,135 | ) | Net earned premium | 225,772 |
| | 320,992 |
| | 117,855 |
| | 72,849 |
| | — |
| | 737,468 |
| Ceding commission - primarily related party | 48,207 |
| | 41,614 |
| | 22,009 |
| | — |
| | — |
| | 111,830 |
| Loss and loss adjustment expense | (142,411 | ) | | (216,579 | ) | | (78,443 | ) | | (46,623 | ) | | — |
| | (484,056 | ) | Acquisition costs and other underwriting expenses | (108,483 | ) | | (97,493 | ) | | (54,432 | ) | | (23,676 | ) | | — |
| | (284,084 | ) | | (250,894 | ) | | (314,072 | ) | | (132,875 | ) | | (70,299 | ) | | — |
| | (768,140 | ) | Underwriting income | 23,085 |
| | 48,534 |
| | 6,989 |
| | 2,550 |
| | — |
| | 81,158 |
| Service and fee income | 16,765 |
| | 49,823 |
| | 10 |
| | — |
| | 11,948 |
| | 78,546 |
| Investment income and realized gain (loss) | 19,399 |
| | 14,962 |
| | 7,502 |
| | 1,533 |
| | — |
| | 43,396 |
| Other expenses | (19,457 | ) | | (29,366 | ) | | (11,549 | ) | | (2,433 | ) | | — |
| | (62,805 | ) | Interest expense | (3,728 | ) | | (5,627 | ) | | (2,213 | ) | | (466 | ) | | — |
| | (12,034 | ) | Foreign currency loss | — |
| | (1,827 | ) | | — |
| | — |
| | — |
| | (1,827 | ) | Gain on life settlement contracts | 14,978 |
| | 22,605 |
| | 8,890 |
| | 1,873 |
| | — |
| | 48,346 |
| Bargain purchase on Majestic transaction | 5,850 |
| | — |
| | — |
| | — |
| | — |
| | 5,850 |
| Provision for income taxes | (9,645 | ) | | (16,802 | ) | | (1,632 | ) | | (518 | ) | | (2,026 | ) | | (30,623 | ) | Equity in earnings of unconsolidated subsidiary – related party | — |
| | — |
| | — |
| | — |
| | 3,415 |
| | 3,415 |
| Non-controlling interest | (6,479 | ) | | (9,777 | ) | | (3,845 | ) | | (810 | ) | | — |
| | (20,911 | ) | Net income | $ | 40,768 |
| | $ | 72,525 |
| | $ | 4,152 |
| | $ | 1,729 |
| | $ | 13,337 |
| | $ | 132,511 |
|
|