S | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2013 |
£ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 04-3106389 | |
(State or other jurisdiction of | (IRS Employer Identification No.) | |
incorporation or organization) | ||
59 Maiden Lane, 43rd Floor, New York, New York | 10038 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer x | Accelerated filer ¨ | |
Non-accelerated filer ¨ | Smaller reporting company ¨ | |
(Do not check if a smaller reporting company) |
Page | ||
June 30, 2013 | December 31, 2012 | ||||||
ASSETS | (Unaudited) | (Audited) | |||||
Investments: | |||||||
Fixed maturities, available-for-sale, at market value (amortized cost $2,731,738; $1,947,644) | $ | 2,730,830 | $ | 2,065,226 | |||
Equity securities, available-for-sale, at market value (cost $24,815; $20,943) | 25,895 | 20,465 | |||||
Short-term investments | 15,209 | 10,282 | |||||
Equity investment in unconsolidated subsidiaries – related party | 87,659 | 96,153 | |||||
Other investments | 24,779 | 11,144 | |||||
Total investments | 2,884,372 | 2,203,270 | |||||
Cash and cash equivalents | 449,634 | 414,370 | |||||
Restricted cash and cash equivalents | 163,868 | 78,762 | |||||
Accrued interest and dividends | 21,185 | 18,536 | |||||
Premiums receivable, net | 1,444,848 | 1,251,262 | |||||
Reinsurance recoverable (related party $942,360; $789,519) | 1,560,286 | 1,318,395 | |||||
Prepaid reinsurance premium (related party $657,615; $547,128) | 928,613 | 754,844 | |||||
Prepaid expenses and other assets (recorded at fair value $208,694; $193,927) | 517,052 | 421,163 | |||||
Federal income tax receivable | 3,414 | 16,609 | |||||
Deferred policy acquisition costs | 410,522 | 349,126 | |||||
Property and equipment, net | 92,531 | 75,933 | |||||
Goodwill | 246,719 | 229,780 | |||||
Intangible assets | 357,294 | 285,187 | |||||
$ | 9,080,338 | $ | 7,417,237 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Liabilities: | |||||||
Loss and loss expense reserves | $ | 3,065,792 | $ | 2,426,400 | |||
Unearned premiums | 2,385,190 | 1,773,593 | |||||
Ceded reinsurance premiums payable (related party $409,990; $333,962) | 524,000 | 528,322 | |||||
Reinsurance payable on paid losses | 17,207 | 13,410 | |||||
Funds held under reinsurance treaties | 32,717 | 33,946 | |||||
Note payable on collateral loan – related party | 167,975 | 167,975 | |||||
Securities sold but not yet purchased, at market | — | 56,711 | |||||
Securities sold under agreements to repurchase, at contract value | 205,161 | 234,911 | |||||
Accrued expenses and other current liabilities (recorded at fair value $12,513; $11,750) | 758,061 | 406,447 | |||||
Deferred income taxes | 188,483 | 225,484 | |||||
Debt | 309,150 | 301,973 | |||||
Total liabilities | 7,653,736 | 6,169,172 | |||||
Commitments and contingencies | |||||||
Redeemable non-controlling interest | 600 | 600 | |||||
Stockholders’ equity: | |||||||
Common stock, $.01 par value; 150,000 shares authorized, 91,335 and 91,216 issued in 2013 and 2012, respectively; 67,618 and 67,192 outstanding in 2013 and 2012, respectively | 912 | 912 | |||||
Preferred stock, $.01 par value; 10,000 shares authorized, 4,600 and 0 issued and outstanding in 2013 and 2012, respectively | 115,000 | — | |||||
Additional paid-in capital | 760,474 | 761,105 | |||||
Treasury stock at cost; 23,716 and 24,024 shares in 2013 and 2012, respectively | (289,305 | ) | (293,791 | ) | |||
Accumulated other comprehensive (loss) income | (26,620 | ) | 64,231 | ||||
Retained earnings | 756,916 | 611,664 | |||||
Total AmTrust Financial Services, Inc. equity | 1,317,377 | 1,144,121 | |||||
Non-controlling interest | 108,625 | 103,344 | |||||
Total stockholders’ equity | 1,426,002 | 1,247,465 | |||||
$ | 9,080,338 | $ | 7,417,237 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Revenues: | ||||||||||||||||
Premium income: | ||||||||||||||||
Net written premium | $ | 639,997 | $ | 391,589 | $ | 1,172,103 | $ | 751,366 | ||||||||
Change in unearned premium | (103,458 | ) | (57,595 | ) | (227,570 | ) | (103,348 | ) | ||||||||
Net earned premium | 536,539 | 333,994 | 944,533 | 648,018 | ||||||||||||
Ceding commission – primarily related party | 67,157 | 44,550 | 131,115 | 90,824 | ||||||||||||
Service and fee income (related parties – three months $14,414; $6,932 and six months $24,921; $13,024) | 88,102 | 33,011 | 148,615 | 73,549 | ||||||||||||
Net investment income | 22,634 | 16,344 | 40,729 | 30,862 | ||||||||||||
Net realized gain (loss) on investments | 2,067 | 2,703 | 19,351 | 1,555 | ||||||||||||
Total revenues | 716,499 | 430,602 | 1,284,343 | 844,808 | ||||||||||||
Expenses: | ||||||||||||||||
Loss and loss adjustment expense | 364,110 | 211,787 | 636,366 | 411,716 | ||||||||||||
Acquisition costs and other underwriting expenses | 192,559 | 129,713 | 349,379 | 253,738 | ||||||||||||
Other | 80,985 | 32,320 | 133,137 | 67,959 | ||||||||||||
Total expenses | 637,654 | 373,820 | 1,118,882 | 733,413 | ||||||||||||
Income before other income (expense), income taxes and equity in earnings of unconsolidated subsidiaries | 78,845 | 56,782 | 165,461 | 111,395 | ||||||||||||
Other income (expense): | ||||||||||||||||
Interest expense | (7,608 | ) | (6,994 | ) | (14,969 | ) | (14,085 | ) | ||||||||
Gain on investment in life settlement contracts net of profit commission | 1,080 | 1,961 | 4 | 2,051 | ||||||||||||
Foreign currency gain (loss) | 783 | (2,455 | ) | 2,055 | (2,034 | ) | ||||||||||
Acquisition gain on purchase | 31,956 | — | 58,023 | — | ||||||||||||
Total other income (expense) | 26,211 | (7,488 | ) | 45,113 | (14,068 | ) | ||||||||||
Income before income taxes and equity in earnings of unconsolidated subsidiaries | 105,056 | 49,294 | 210,574 | 97,327 | ||||||||||||
Provision for income taxes | 31,993 | 11,742 | 55,910 | 22,919 | ||||||||||||
Income before equity in earnings of unconsolidated subsidiaries | 73,063 | 37,552 | 154,664 | 74,408 | ||||||||||||
Equity in earnings of unconsolidated subsidiary – related party | 7,059 | 3,088 | 8,610 | 5,452 | ||||||||||||
Net income | 80,122 | 40,640 | 163,274 | 79,860 | ||||||||||||
Net (income) loss attributable to non-controlling interest of subsidiaries | — | (282 | ) | 877 | (416 | ) | ||||||||||
Net income attributable to AmTrust Financial Services, Inc. | $ | 80,122 | $ | 40,358 | $ | 164,151 | $ | 79,444 | ||||||||
Earnings per common share: | ||||||||||||||||
Basic earnings per share | $ | 1.19 | $ | 0.60 | $ | 2.44 | $ | 1.20 | ||||||||
Diluted earnings per share | $ | 1.14 | $ | 0.59 | $ | 2.34 | $ | 1.16 | ||||||||
Dividends declared per common share | $ | 0.14 | $ | 0.10 | $ | 0.28 | $ | 0.19 | ||||||||
Net realized gain on investments: | ||||||||||||||||
Total other-than-temporary impairment loss | $ | — | $ | (1,208 | ) | $ | — | $ | (1,208 | ) | ||||||
Portion of loss recognized in other comprehensive income | — | — | — | — | ||||||||||||
Net impairment losses recognized in earnings | — | (1,208 | ) | — | (1,208 | ) | ||||||||||
Other net realized gain (loss) on investments | 2,067 | 3,911 | 19,351 | 2,763 | ||||||||||||
Net realized investment gain | $ | 2,067 | $ | 2,703 | $ | 19,351 | $ | 1,555 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Net income | $ | 80,122 | $ | 40,640 | $ | 163,274 | $ | 79,860 | ||||||||
Other comprehensive income, net of tax: | ||||||||||||||||
Foreign currency translation adjustments | 166 | (7,057 | ) | (15,565 | ) | (2,860 | ) | |||||||||
Change in fair value of interest rate swap | 716 | (570 | ) | 936 | (627 | ) | ||||||||||
Unrealized gains on securities: | ||||||||||||||||
Unrealized holding (loss) gain arising during period | (64,197 | ) | 2,358 | (79,483 | ) | 33,117 | ||||||||||
Reclassification adjustment for (losses) gains included in net income | (275 | ) | (2,232 | ) | 3,261 | (4,676 | ) | |||||||||
Other comprehensive (loss) income, net of tax | $ | (63,590 | ) | $ | (7,501 | ) | $ | (90,851 | ) | $ | 24,954 | |||||
Comprehensive income | 16,532 | 33,139 | 72,423 | 104,814 | ||||||||||||
Less: Comprehensive income (loss) attributable to non-controlling interest | — | 282 | (877 | ) | 416 | |||||||||||
Comprehensive income attributable to AmTrust Financial Services, Inc. | $ | 16,532 | $ | 32,857 | $ | 73,300 | $ | 104,398 |
Six Months Ended June 30, | |||||||
2013 | 2012 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 163,274 | $ | 79,860 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 29,294 | 17,419 | |||||
Equity earnings on investment in unconsolidated subsidiaries | (8,610 | ) | (5,452 | ) | |||
Gain on investment in life settlement contracts, net | (4 | ) | (2,051 | ) | |||
Realized gain on marketable securities | (19,351 | ) | (2,763 | ) | |||
Non-cash write-down of marketable securities | — | 1,208 | |||||
Discount on notes payable | 1,454 | 1,515 | |||||
Stock based compensation | 4,781 | 2,746 | |||||
Bad debt expense | 9,754 | 2,479 | |||||
Foreign currency (gain) loss | (2,055 | ) | 2,034 | ||||
Acquisition gain | (58,023 | ) | — | ||||
Dividend received from equity investment | 12,203 | — | |||||
Changes in assets - (increase) decrease: | |||||||
Premiums and note receivables | (121,384 | ) | (41,556 | ) | |||
Reinsurance recoverable | (180,905 | ) | (36,866 | ) | |||
Deferred policy acquisition costs, net | (61,396 | ) | (54,707 | ) | |||
Prepaid reinsurance premiums | (173,769 | ) | (70,009 | ) | |||
Prepaid expenses and other assets | (11,982 | ) | (8,147 | ) | |||
Changes in liabilities - increase (decrease): | |||||||
Reinsurance premium payable | (7,752 | ) | (13,043 | ) | |||
Loss and loss expense reserve | 372,019 | 187,280 | |||||
Unearned premiums | 392,570 | 171,004 | |||||
Funds held under reinsurance treaties | (1,229 | ) | (10,062 | ) | |||
Accrued expenses and other current liabilities | 207,122 | 4,122 | |||||
Deferred tax liability | (49,408 | ) | (510 | ) | |||
Net cash provided by operating activities | 496,603 | 224,501 | |||||
Cash flows from investing activities: | |||||||
Net (purchases) sales of securities with fixed maturities | (363,514 | ) | (296,352 | ) | |||
Net (purchases) sales of equity securities | 21,904 | 12,199 | |||||
Net (purchases) sales of other investments | (3,289 | ) | (332 | ) | |||
Acquisition of and capitalized premiums for life settlement contracts | (18,546 | ) | (23,719 | ) | |||
Receipt of life settlement contract proceeds | 6,047 | 10,074 | |||||
Acquisition of subsidiaries, net of cash obtained | (72,867 | ) | (3,822 | ) | |||
Increase in restricted cash and cash equivalents | (85,106 | ) | (22,229 | ) | |||
Purchase of property and equipment | (23,355 | ) | (14,701 | ) | |||
Net cash used in investing activities | (538,726 | ) | (338,882 | ) | |||
Cash flows from financing activities: | |||||||
Preferred share issuance, net of fees | 111,130 | — | |||||
Common share issuance | 472 | — | |||||
Repurchase agreements, net | (29,750 | ) | 40,201 | ||||
Convertible senior notes proceeds | — | 25,000 | |||||
Secured loan agreements payments | (777 | ) | (482 | ) |
Promissory notes payments | — | (2,500 | ) | ||||
Financing fees | — | (750 | ) | ||||
Capital contribution to subsidiaries | 6,158 | 9,831 | |||||
Stock option exercise and other | 2,472 | 4,102 | |||||
Dividends distributed on common stock | (9,463 | ) | (10,824 | ) | |||
Net cash provided by financing activities | 80,242 | 64,578 | |||||
Effect of exchange rate changes on cash | (2,855 | ) | 716 | ||||
Net increase (decrease) in cash and cash equivalents | 35,264 | (49,087 | ) | ||||
Cash and cash equivalents, beginning of the period | 414,370 | 406,847 | |||||
Cash and cash equivalents, end of the period | $ | 449,634 | $ | 357,760 | |||
Supplemental Cash Flow Information | |||||||
Income tax payments | $ | 4,836 | $ | 7,769 | |||
Interest payments on debt | 10,602 | 10,706 |
1. | Basis of Reporting |
2. | Recent Accounting Pronouncements |
3. | Investments |
(Amounts in Thousands) As of June 30, 2013 | Original or amortized cost | Gross unrealized gains | Gross unrealized losses | Market value | ||||||||||||
Preferred stock | $ | 3,303 | $ | 90 | $ | (118 | ) | $ | 3,275 | |||||||
Common stock | 21,512 | 1,670 | (562 | ) | 22,620 | |||||||||||
U.S. treasury securities | 91,578 | 2,211 | (106 | ) | 93,683 | |||||||||||
U.S. government agencies | 8,594 | 206 | (19 | ) | 8,781 | |||||||||||
Municipal bonds | 447,303 | 7,188 | (15,272 | ) | 439,219 | |||||||||||
Foreign government | 75,486 | 548 | (1,680 | ) | 74,354 | |||||||||||
Corporate bonds: | ||||||||||||||||
Finance | 916,406 | 34,182 | (15,199 | ) | 935,389 | |||||||||||
Industrial | 570,658 | 12,429 | (26,071 | ) | 557,016 | |||||||||||
Utilities | 71,213 | 1,279 | (1,738 | ) | 70,754 | |||||||||||
Commercial mortgage backed securities | 24,836 | 28 | (296 | ) | 24,568 | |||||||||||
Residential mortgage backed securities: | ||||||||||||||||
Agency backed | 511,293 | 10,114 | (8,506 | ) | 512,901 | |||||||||||
Non-agency backed | 7,422 | — | (194 | ) | 7,228 | |||||||||||
Asset-backed securities | 6,949 | — | (12 | ) | 6,937 | |||||||||||
$ | 2,756,553 | $ | 69,945 | $ | (69,773 | ) | $ | 2,756,725 |
(Amounts in Thousands) As of December 31, 2012 | Original or amortized cost | Gross unrealized gains | Gross unrealized losses | Market value | ||||||||||||
Preferred stock | $ | 5,092 | $ | 112 | $ | (20 | ) | $ | 5,184 | |||||||
Common stock | 15,851 | 596 | (1,166 | ) | 15,281 | |||||||||||
U.S. treasury securities | 62,502 | 3,694 | (4 | ) | 66,192 | |||||||||||
U.S. government agencies | 39,594 | 707 | — | 40,301 | ||||||||||||
Municipal bonds | 287,361 | 12,833 | (752 | ) | 299,442 | |||||||||||
Corporate bonds: | ||||||||||||||||
Finance | 830,101 | 68,190 | (4,603 | ) | 893,688 | |||||||||||
Industrial | 387,980 | 20,914 | (1,094 | ) | 407,800 | |||||||||||
Utilities | 45,320 | 2,611 | (5 | ) | 47,926 | |||||||||||
Commercial mortgage backed securities | 10,065 | 135 | — | 10,200 | ||||||||||||
Residential mortgage backed securities: | ||||||||||||||||
Agency backed | 276,895 | 16,373 | (654 | ) | 292,614 | |||||||||||
Non-agency backed | 7,826 | — | (763 | ) | 7,063 | |||||||||||
$ | 1,968,587 | $ | 126,165 | $ | (9,061 | ) | $ | 2,085,691 |
June 30, 2013 | December 31, 2012 | |||||||||||||||
(Amounts in Thousands) | Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||
Due in one year or less | $ | 77,110 | $ | 77,711 | $ | 20,786 | $ | 21,945 | ||||||||
Due after one through five years | 449,566 | 455,158 | 400,865 | 414,016 | ||||||||||||
Due after five through ten years | 1,310,304 | 1,310,966 | 966,158 | 1,044,510 | ||||||||||||
Due after ten years | 344,258 | 335,361 | 265,049 | 274,878 | ||||||||||||
Mortgage and asset backed securities | 550,500 | 551,634 | 294,786 | 309,877 | ||||||||||||
Total fixed maturities | $ | 2,731,738 | $ | 2,730,830 | $ | 1,947,644 | $ | 2,065,226 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(Amounts in Thousands) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Fixed maturity securities | $ | 18,316 | $ | 16,059 | $ | 35,588 | $ | 29,723 | ||||||||
Equity securities | 3,887 | 100 | 4,289 | 498 | ||||||||||||
Cash and short term investments | 704 | 385 | 1,748 | 976 | ||||||||||||
22,907 | 16,544 | 41,625 | 31,197 | |||||||||||||
Less: | ||||||||||||||||
Investment expenses and interest expense on securities sold under agreement to repurchase | (273 | ) | (200 | ) | (896 | ) | (335 | ) | ||||||||
$ | 22,634 | $ | 16,344 | $ | 40,729 | $ | 30,862 |
Less Than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||||||||
(Amounts in Thousands) June 30, 2013 | Fair Market Value | Unrealized Losses | No. of Positions Held | Fair Market Value | Unrealized Losses | No. of Positions Held | Fair Market Value | Unrealized Losses | ||||||||||||||||||||||
Common and preferred stock | $ | 9,712 | $ | (680 | ) | 101 | $ | — | $ | — | — | $ | 9,712 | $ | (680 | ) | ||||||||||||||
U.S. treasury securities | 8,261 | (106 | ) | 23 | — | — | — | 8,261 | (106 | ) | ||||||||||||||||||||
U.S. government agencies | 4,143 | (19 | ) | 9 | — | — | — | 4,143 | (19 | ) | ||||||||||||||||||||
Municipal bonds | 271,039 | (15,229 | ) | 322 | 2,013 | (43 | ) | 1 | 273,052 | (15,272 | ) | |||||||||||||||||||
Foreign government | 63,677 | (1,675 | ) | 10 | 994 | (5 | ) | 1 | 64,671 | (1,680 | ) | |||||||||||||||||||
Corporate bonds: | ||||||||||||||||||||||||||||||
Finance | 418,558 | (13,805 | ) | 288 | 56,957 | (1,394 | ) | 8 | 475,515 | (15,199 | ) | |||||||||||||||||||
Industrial | 475,247 | (26,071 | ) | 300 | — | — | — | 475,247 | (26,071 | ) | ||||||||||||||||||||
Utilities | 48,414 | (1,738 | ) | 34 | — | — | — | 48,414 | (1,738 | ) | ||||||||||||||||||||
Commercial mortgage backed securities | 9,999 | (296 | ) | 14 | — | — | — | 9,999 | (296 | ) | ||||||||||||||||||||
Residential mortgage backed securities: | ||||||||||||||||||||||||||||||
Agency backed | 279,975 | (8,506 | ) | 143 | — | — | — | 279,975 | (8,506 | ) | ||||||||||||||||||||
Non-agency backed | 340 | (5 | ) | 7 | 6,887 | (189 | ) | 2 | 7,227 | (194 | ) | |||||||||||||||||||
Asset-backed securities | 6,937 | (12 | ) | 13 | — | — | — | 6,937 | (12 | ) | ||||||||||||||||||||
Total temporarily impaired securities | $ | 1,596,302 | $ | (68,142 | ) | 1,264 | $ | 66,851 | $ | (1,631 | ) | 12 | $ | 1,663,153 | $ | (69,773 | ) |
Less Than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||||||||
(Amounts in Thousands) December 31, 2012 | Fair Market Value | Unrealized Losses | No. of Positions Held | Fair Market Value | Unrealized Losses | No. of Positions Held | Fair Market Value | Unrealized Losses | ||||||||||||||||||||||
Common and preferred stock | $ | 7,643 | $ | (1,138 | ) | 25 | $ | 1,978 | $ | (48 | ) | 1 | $ | 9,621 | $ | (1,186 | ) | |||||||||||||
U.S. treasury securities | 997 | (4 | ) | 1 | — | — | — | 997 | (4 | ) | ||||||||||||||||||||
Municipal bonds | 63,577 | (752 | ) | 19 | — | — | — | 63,577 | (752 | ) | ||||||||||||||||||||
Corporate bonds: | ||||||||||||||||||||||||||||||
Finance | 52,398 | (899 | ) | 20 | 95,992 | (3,704 | ) | 13 | 148,390 | (4,603 | ) | |||||||||||||||||||
Industrial | 82,066 | (881 | ) | 28 | 9,105 | (213 | ) | 4 | 91,171 | (1,094 | ) | |||||||||||||||||||
Utilities | 5,860 | (5 | ) | 3 | — | — | — | 5,860 | (5 | ) | ||||||||||||||||||||
Residential mortgage backed securities: | ||||||||||||||||||||||||||||||
Agency backed | 24,554 | (654 | ) | 2 | — | — | — | 24,554 | (654 | ) | ||||||||||||||||||||
Non-agency backed | — | — | — | 7,062 | (763 | ) | 2 | 7,062 | (763 | ) | ||||||||||||||||||||
Total temporarily impaired securities | $ | 237,095 | $ | (4,333 | ) | 98 | $ | 114,137 | $ | (4,728 | ) | 20 | $ | 351,232 | $ | (9,061 | ) |
Remaining Life of Notional Amount (1) | ||||||||||||||||||||
(Amounts in Thousands) | One Year | Two Through Five Years | Six Through Ten Years | After Ten years | Total | |||||||||||||||
Interest rate swaps | $ | — | $ | 70,000 | $ | — | $ | — | $ | 70,000 |
(1) | Notional amount is not representative of either market risk or credit risk and is not recorded in the consolidated balance sheet. |
(Amounts in Thousands) | 2013 | 2012 | |||||
Restricted cash | $ | 163,868 | $ | 78,762 | |||
Restricted investments | 329,634 | 251,082 | |||||
Total restricted cash and investments | $ | 493,502 | $ | 329,844 |
4. | Fair Value of Financial Instruments |
(Amounts in Thousands) As of June 30, 2013 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Assets: | ||||||||||||||||
U.S. treasury securities | $ | 93,683 | $ | 93,683 | $ | — | $ | — | ||||||||
U.S. government agencies | 8,781 | — | 8,781 | — | ||||||||||||
Municipal bonds | 439,219 | — | 439,219 | — | ||||||||||||
Foreign government | 74,354 | — | 74,354 | — | ||||||||||||
Corporate bonds and other bonds: | ||||||||||||||||
Finance | 935,389 | — | 935,389 | — | ||||||||||||
Industrial | 557,016 | — | 557,016 | — | ||||||||||||
Utilities | 70,754 | — | 70,754 | — | ||||||||||||
Commercial mortgage backed securities | 24,568 | — | 24,568 | — | ||||||||||||
Residential mortgage backed securities: | ||||||||||||||||
Agency backed | 512,901 | — | 512,901 | — | ||||||||||||
Non-agency backed | 7,228 | — | 7,228 | — | ||||||||||||
Asset-backed securities | 6,937 | — | 6,937 | — | ||||||||||||
Equity securities | 25,895 | 25,895 | — | — | ||||||||||||
Short term investments | 15,209 | 15,209 | — | — | ||||||||||||
Other investments | 24,779 | — | — | 24,779 | ||||||||||||
Life settlement contracts | 208,694 | — | — | 208,694 | ||||||||||||
$ | 3,005,407 | $ | 134,787 | $ | 2,637,147 | $ | 233,473 | |||||||||
Liabilities: | ||||||||||||||||
Securities sold under agreements to repurchase, at carrying value | 205,161 | — | 205,161 | — | ||||||||||||
Life settlement contract profit commission | 12,513 | — | — | 12,513 | ||||||||||||
Derivatives | 3,195 | — | 3,195 | — | ||||||||||||
$ | 220,869 | $ | — | $ | 208,356 | $ | 12,513 |
(Amounts in Thousands) As of December 31, 2012 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Assets: | ||||||||||||||||
U.S. treasury securities | $ | 66,192 | $ | 66,192 | $ | — | $ | — | ||||||||
U.S. government agencies | 40,301 | — | 40,301 | — | ||||||||||||
Municipal bonds | 299,442 | — | 299,442 | — | ||||||||||||
Corporate bonds and other bonds: | ||||||||||||||||
Finance | 893,688 | — | 893,688 | — | ||||||||||||
Industrial | 407,800 | — | 407,800 | — | ||||||||||||
Utilities | 47,926 | — | 47,926 | — | ||||||||||||
Commercial mortgage backed securities | 10,200 | — | 10,200 | — | ||||||||||||
Residential mortgage backed securities: | ||||||||||||||||
Agency backed | 292,614 | — | 292,614 | — | ||||||||||||
Non-agency backed | 7,063 | — | 7,063 | — | ||||||||||||
Equity securities | 20,465 | 20,465 | — | — | ||||||||||||
Short term investments | 10,282 | 10,282 | — | — | ||||||||||||
Other investments | 11,144 | — | — | 11,144 | ||||||||||||
Life settlement contracts | 193,927 | — | — | 193,927 | ||||||||||||
$ | 2,301,044 | $ | 96,939 | $ | 1,999,034 | $ | 205,071 | |||||||||
Liabilities: | ||||||||||||||||
Equity securities sold but not yet purchased, market | $ | 11 | $ | 11 | $ | — | $ | — | ||||||||
Fixed maturity securities sold but not yet purchased, market | 56,700 | 56,700 | — | — | ||||||||||||
Securities sold under agreements to repurchase, at carrying value | 234,911 | — | 234,911 | — | ||||||||||||
Life settlement contract profit commission | 11,750 | — | — | 11,750 | ||||||||||||
Derivatives | 4,636 | — | 4,636 | — | ||||||||||||
$ | 308,008 | $ | 56,711 | $ | 239,547 | $ | 11,750 |
• | Level 1 – Valuations are based on unadjusted quoted market prices in active markets for identical financial assets or liabilities. |
• | Level 2 – Valuations of financial assets and liabilities are based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or liabilities in inactive markets obtained from third party pricing services or valuations based on models where the significant inputs are observable (e.g. interest rates, yield curves, prepayment speeds, default rates, loss severities, etc.) or can be corroborated by observable market data. |
• | Level 3 – Valuations are based on unobservable inputs for assets and liabilities where there is little or no market activity. Management’s assumptions are used in internal valuation pricing models to determine the fair value of financial assets or liabilities, which may include projected cash flows, collateral performance or liquidity circumstances in the security or similar securities that may have occurred since the prior pricing period. |
(Amounts in Thousands) | Balance as of March 31, 2013 | Net income | Other comprehensive income | Purchases and issuances | Sales and settlements | Net transfers into (out of) Level 3 | Balance as of June 30, 2013 | |||||||||||||||||||||
Other investments | $ | 16,052 | $ | (17 | ) | $ | — | $ | 9,770 | $ | (1,026 | ) | $ | — | $ | 24,779 | ||||||||||||
Life settlement contracts | 199,824 | 10,889 | — | — | (2,019 | ) | — | 208,694 | ||||||||||||||||||||
Life settlement contract profit commission | (12,237 | ) | (276 | ) | — | — | — | — | (12,513 | ) | ||||||||||||||||||
Total | $ | 203,639 | $ | 10,596 | $ | — | $ | 9,770 | $ | (3,045 | ) | $ | — | $ | 220,960 |
(Amounts in Thousands) | Balance as of December 31, 2012 | Net income | Other comprehensive income | Purchases and issuances | Sales and settlements | Net transfers into (out of) Level 3 | Balance as of June 30, 2013 | |||||||||||||||||||||
Other investments | $ | 11,144 | $ | 677 | $ | — | $ | 14,881 | $ | (1,923 | ) | $ | — | $ | 24,779 | |||||||||||||
Life settlement contracts | 193,927 | 20,815 | — | — | (6,048 | ) | — | 208,694 | ||||||||||||||||||||
Life settlement contract profit commission | (11,750 | ) | (763 | ) | — | — | — | — | (12,513 | ) | ||||||||||||||||||
Total | $ | 193,321 | $ | 20,729 | $ | — | $ | 14,881 | $ | (7,971 | ) | $ | — | $ | 220,960 |
(Amounts in Thousands) | Balance as of March 31, 2012 | Net income | Other comprehensive income | Purchases and issuances | Sales and settlements | Net transfers into (out of) Level 3 | Balance as of June 30, 2012 | |||||||||||||||||||||
Other investments | $ | 14,865 | $ | (403 | ) | $ | — | $ | 677 | $ | (36 | ) | $ | — | $ | 15,103 | ||||||||||||
Life settlement contracts | 142,575 | 7,456 | — | 11,135 | (10,074 | ) | — | 151,092 | ||||||||||||||||||||
Life settlement contract profit commission | (12,050 | ) | 585 | — | — | — | — | (11,465 | ) | |||||||||||||||||||
Derivatives | (3,595 | ) | — | (877 | ) | — | — | — | (4,472 | ) | ||||||||||||||||||
Total | $ | 141,795 | $ | 7,638 | $ | (877 | ) | $ | 11,812 | $ | (10,110 | ) | $ | — | $ | 150,258 |
(Amounts in Thousands) | Balance as of December 31, 2011 | Net income | Other comprehensive income | Purchases and issuances | Sales and settlements | Net transfers into (out of) Level 3 | Balance as of June 30, 2012 | |||||||||||||||||||||
Other investments | $ | 14,588 | $ | (4,352 | ) | $ | 4,535 | $ | 747 | $ | (415 | ) | $ | — | $ | 15,103 | ||||||||||||
Life settlement contracts | 131,387 | 15,416 | — | 14,363 | (10,074 | ) | — | 151,092 | ||||||||||||||||||||
Life settlement contract profit commission | (12,022 | ) | 557 | — | — | — | — | (11,465 | ) | |||||||||||||||||||
Derivatives | (3,508 | ) | — | (964 | ) | — | — | — | (4,472 | ) | ||||||||||||||||||
Total | $ | 130,445 | $ | 11,621 | $ | 3,571 | $ | 15,110 | $ | (10,489 | ) | $ | — | $ | 150,258 |
— | Equity and Fixed Income Investments: Fair value disclosures for these investments are disclosed above in this note. The carrying values of cash, short term investments and investment income accrued approximate their fair values and are classified as Level 1 in the financial hierarchy. |
— | Premiums Receivable: The carrying values reported in the accompanying balance sheets for these financial instruments approximate their fair values due to the short term nature of the asset and are classified as Level 1 in the financial hierarchy. |
— | Other Investments: The Company has less than 1% percent of its investment portfolio in limited partnerships or hedge funds where the fair value estimate is determined by a fund manager based on recent filings, operating results, balance sheet stability, growth and other business and market sector fundamentals. Due to the significant unobservable inputs in these valuations, the Company includes the estimate in the amount disclosed in Level 3 hierarchy. |
— | Equity Investment in Unconsolidated Subsidiaries - Related Party: The Company has an approximate ownership percentage of 15.4% in National General Holding Corp., which completed a 144A offering during the three months ended June 30, 2013. The Company accounts for this investment under the equity method of accounting as it has the ability to exert significant influence. The fair value of the equity investment was approximately $129,900 as of June 30, 2013. The Company includes the estimate in the amount disclosed in Level 2 hierarchy. |
— | Subordinated Debentures and Debt: The current fair value of the Company's convertible senior notes and subordinated debentures was $279,800 and $69,816 as of June 30, 2013, respectively. These financial liabilities are classified as Level 3 in the financial hierarchy. The fair value of the convertible senior notes was determined using a binomial lattice model. The fair value of the subordinated debentures was determined using the Black-Derman-Toy interest rate lattice model. |
— | Derivatives: The Company classifies interest rate swaps as Level 2 hierarchy. The Company uses these interest rate swaps to hedge floating interest rates on its debt, thereby changing the variable rate exposure to a fixed rate exposure for interest on these obligations. The estimated fair value of the interest rate swaps, which is obtained from a third party pricing service, is measured using discounted cash flow analysis that incorporates significant observable inputs, including the LIBOR forward curve and a measurement of volatility. |
— | Repurchase Agreements: The carrying value of repurchase agreements in the accompanying balance sheets represents their fair values and are classified as Level 2 in the financial hierarchy. |
June 30, 2013 | December 31, 2012 | ||||||
Average age of insured | 79.3 years | 78.8 years | |||||
Average life expectancy, months (1) | 135 | 139 | |||||
Average face amount per policy | $ | 6,748,000 | $ | 6,770,000 | |||
Effective discount rate | 17.3 | % | 17.7 | % |
(1) | Standard life expectancy as adjusted for specific circumstances. |
Change in life expectancy | |||||||
(Amounts in Thousands) | Plus 4 Months | Minus 4 Months | |||||
Investment in life policies: | |||||||
June 30, 2013 | $ | (27,995 | ) | $ | 30,488 | ||
December 31, 2012 | $ | (27,160 | ) | $ | 29,285 |
Change in discount rate | |||||||
(Amounts in Thousands) | Plus 1% | Minus 1% | |||||
Investment in life policies: | |||||||
June 30, 2013 | $ | (17,835 | ) | $ | 20,168 | ||
December 31, 2012 | $ | (17,591 | ) | $ | 19,926 |
5. | Investment in Life Settlements |
(Amounts in Thousands, except number of Life Settlement Contracts) Expected Maturity Term in Years | Number of Life Settlement Contracts | Fair Value (1) | Face Value | |||||||
0-1 | — | $ | — | $ | — | |||||
1-2 | 6 | 35,177 | 58,000 | |||||||
2-3 | 3 | 8,062 | 15,000 | |||||||
3-4 | 3 | 11,691 | 30,000 | |||||||
4-5 | 2 | 3,345 | 10,000 | |||||||
Thereafter | 247 | 150,419 | 1,588,909 | |||||||
Total | 261 | $ | 208,694 | $ | 1,701,909 |
(1) | The Company determined the fair value as of June 30, 2013 based on 176 policies out of 261 policies, as the Company assigned no value to 85 of the policies as of June 30, 2013. The Company estimated the fair value of a policy using present value calculations. If the estimate fair value is determined to be less than zero, then no value is assigned to that policy. |
(Amounts in Thousands) | Premiums Due on Life Settlement Contracts | Premiums Due on Premium Finance Loans | Total | ||||||||
2013 | $ | 30,318 | $ | 208 | $ | 30,526 | |||||
2014 | 32,799 | 273 | 33,072 | ||||||||
2015 | 34,487 | 283 | 34,770 | ||||||||
2016 | 52,034 | 392 | 52,426 | ||||||||
2017 | 31,479 | 265 | 31,744 | ||||||||
Thereafter | 522,233 | 3,209 | 525,442 | ||||||||
Total | $ | 703,350 | $ | 4,630 | $ | 707,980 |
6. | Debt |
(Amounts in Thousands) | 2013 | 2012 | |||||
Revolving credit facility | $ | — | $ | — | |||
Subordinated debentures | 123,714 | 123,714 | |||||
Convertible senior notes | 162,672 | 161,218 | |||||
Secured loan agreements | 8,264 | 9,041 | |||||
Promissory notes | 14,500 | 8,000 | |||||
$ | 309,150 | $ | 301,973 |
(Amounts in Thousands) | ||||
2013 | $ | 516 | ||
2014 | 1,068 | |||
2015 | 1,116 | |||
2016 | 1,167 | |||
2017 | 1,220 | |||
Thereafter | 304,063 | (1) |
(1) | Amount reflected in balance sheet for convertible senior notes is net of unamortized original issue discount of $37,328. |
(Amounts in Thousands) Name of Trust | Aggregate Liquidation Amount of Trust Preferred Securities | Aggregate Liquidation Amount of Common Securities | Aggregate Principal Amount of Notes | Stated Maturity of Notes | Per Annum Interest Rate % of Notes | ||||||||||||||
AmTrust Capital Financing Trust I | $ | 25,000 | $ | 774 | $ | 25,774 | 3/17/2035 | 8.275 | (1 | ) | |||||||||
AmTrust Capital Financing Trust II | 25,000 | 774 | 25,774 | 6/15/2035 | 7.710 | (1 | ) | ||||||||||||
AmTrust Capital Financing Trust III | 30,000 | 928 | 30,928 | 9/15/2036 | 3.573 | (2 | ) | ||||||||||||
AmTrust Capital Financing Trust IV | 40,000 | 1,238 | 41,238 | 3/15/2037 | 3.273 | (3 | ) | ||||||||||||
Total trust preferred securities | $ | 120,000 | $ | 3,714 | $ | 123,714 |
(1) | The interest rate will change to three-month LIBOR plus 3.40% after the tenth anniversary in 2015. |
(2) | The interest rate is LIBOR plus 3.30%. |
(3) | The interest rate is LIBOR plus 3.00%. |
(Amounts in Thousands) | June 30, 2013 | December 31, 2012 | |||||
Liability component | |||||||
Outstanding principal | $ | 200,000 | $ | 200,000 | |||
Unamortized OID | (37,328 | ) | (38,782 | ) | |||
Liability component | 162,672 | 161,218 | |||||
Equity component, net of tax | 27,092 | 27,092 |
7. | Acquisition Costs and Other Underwriting Expenses |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(Amounts in Thousands) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Policy acquisition expenses | $ | 120,630 | $ | 85,857 | $ | 222,318 | $ | 171,049 | ||||||||
Salaries and benefits | 65,982 | 40,832 | 111,111 | 76,617 | ||||||||||||
Other insurance general and administrative expenses | 5,947 | 3,024 | 15,950 | 6,072 | ||||||||||||
$ | 192,559 | $ | 129,713 | $ | 349,379 | $ | 253,738 |
8. | Earnings Per Share |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(Amounts in Thousands, except for earnings per share) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Basic earnings per share: | ||||||||||||||||
Net income attributable to AmTrust Financial Services, Inc. shareholders | $ | 80,122 | $ | 40,358 | $ | 164,151 | $ | 79,444 | ||||||||
Less: Net income allocated to participating securities and redeemable non-controlling interest | 105 | 182 | 173 | 197 | ||||||||||||
Net income allocated to AmTrust Financial Services, Inc. common shareholders | $ | 80,017 | $ | 40,176 | $ | 163,978 | $ | 79,247 | ||||||||
Weighted average common shares outstanding – basic | 67,399 | 66,728 | 67,258 | 66,424 | ||||||||||||
Less: Weighted average participating shares outstanding | 71 | 273 | 71 | 150 | ||||||||||||
Weighted average common shares outstanding - basic | 67,328 | 66,455 | 67,187 | 66,274 | ||||||||||||
Net income per AmTrust Financial Services, Inc. common share - basic | $ | 1.19 | $ | 0.60 | $ | 2.44 | $ | 1.20 | ||||||||
Diluted earnings per share: | ||||||||||||||||
Net income attributable to AmTrust Financial Services, Inc. shareholders | $ | 80,122 | $ | 40,358 | $ | 164,151 | $ | 79,444 | ||||||||
Less: Net income allocated to participating securities and redeemable non-controlling interest | 105 | 182 | 173 | 197 | ||||||||||||
Net income allocated to AmTrust Financial Services, Inc. common shareholders | $ | 80,017 | $ | 40,176 | $ | 163,978 | $ | 79,247 | ||||||||
Weighted average common shares outstanding – basic | 67,328 | 66,455 | 67,187 | 66,274 | ||||||||||||
Plus: Dilutive effect of stock options, convertible debt, other | 2,807 | 2,124 | 2,824 | 2,086 | ||||||||||||
Weighted average common shares outstanding – dilutive | 70,135 | 68,579 | 70,011 | 68,360 | ||||||||||||
Net income per AmTrust Financial Services, Inc. common shares – diluted | $ | 1.14 | $ | 0.59 | $ | 2.34 | $ | 1.16 |
9. | Share Based Compensation |
2013 | 2012 | ||||||||||||
Shares | Weighted Average Exercise Price | Shares | Weighted Average Exercise Price | ||||||||||
Outstanding at beginning of period | 3,341,543 | $ | 10.35 | 4,136,466 | $ | 9.96 | |||||||
Granted | 60,000 | 31.76 | 38,500 | 25.91 | |||||||||
Exercised | (301,558 | ) | 8.00 | (338,235 | ) | 8.26 | |||||||
Cancelled or terminated | — | — | (86,966 | ) | 12.98 | ||||||||
Outstanding end of period | 3,099,985 | $ | 11.00 | 3,749,765 | $ | 10.21 |
2013 | 2012 | ||||||||||||
Shares or Units | Weighted Average Grant Date Fair Value | Shares or Units | Weighted Average Grant Date Fair Value | ||||||||||
Non-vested at beginning of period | 807,357 | $ | 22.95 | 320,334 | $ | 16.65 | |||||||
Granted | 219,900 | 33.17 | 579,329 | 25.34 | |||||||||
Vested | (230,444 | ) | 22.05 | (84,755 | ) | 16.32 | |||||||
Forfeited | — | — | — | — | |||||||||
Non-vested at end of period | 796,813 | $ | 26.03 | 814,908 | $ | 22.86 |
10. | Income Taxes |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(Amounts in Thousands) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Income before equity in earnings of unconsolidated subsidiaries | $ | 105,056 | $ | 49,294 | $ | 210,574 | $ | 97,327 | ||||||||
Tax at federal statutory rate of 35% | $ | 36,770 | $ | 17,253 | $ | 73,701 | $ | 34,064 | ||||||||
Tax effects resulting from: | ||||||||||||||||
Net income of non-includible foreign subsidiaries | (10,605 | ) | (5,697 | ) | (25,169 | ) | (10,265 | ) | ||||||||
Other, net | 5,828 | 186 | 7,378 | (880 | ) | |||||||||||
$ | 31,993 | $ | 11,742 | $ | 55,910 | $ | 22,919 | |||||||||
Effective tax rate | 30.5 | % | 23.8 | % | 26.6 | % | 23.5 | % |
11. | Related Party Transactions |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(Amounts in Thousands) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Results of operations: | ||||||||||||||||
Premium written – ceded | $ | (283,052 | ) | $ | (196,380 | ) | $ | (588,838 | ) | $ | (387,281 | ) | ||||
Change in unearned premium – ceded | 31,060 | 26,378 | 109,156 | 50,961 | ||||||||||||
Earned premium - ceded | $ | (251,992 | ) | $ | (170,002 | ) | $ | (479,682 | ) | $ | (336,320 | ) | ||||
Ceding commission on premium written | $ | 82,511 | $ | 50,858 | $ | 172,010 | $ | 105,269 | ||||||||
Ceding commission – deferred | (15,354 | ) | (6,308 | ) | (40,895 | ) | (14,445 | ) | ||||||||
Ceding commission – earned | $ | 67,157 | $ | 44,550 | $ | 131,115 | $ | 90,824 | ||||||||
Incurred loss and loss adjustment expense – ceded | $ | 154,453 | $ | 125,970 | $ | 307,418 | $ | 248,780 |
12. | Acquisitions |
(Amounts in Thousands) | ||||
Assets | ||||
Cash and investments | $ | 134,780 | ||
Premium receivables | 23,085 | |||
Other assets | 42,151 | |||
Deferred tax asset | 5,358 | |||
Property and equipment | 2,684 | |||
Intangible assets | 6,132 | |||
Total assets | $ | 214,190 | ||
Liabilities | ||||
Loss and loss expense reserves | $ | 89,267 | ||
Unearned premium | 27,760 | |||
Accrued liabilities | 19,830 | |||
Deferred tax liability | 2,146 | |||
Notes payable | 6,500 | |||
Total liabilities | $ | 145,503 | ||
Cash paid | $ | 48,500 | ||
Acquisition gain | $ | 20,187 |
(Amounts in Thousands) | ||||
Assets | ||||
Cash and investments | $ | 215,473 | ||
Premium receivables | 32,870 | |||
Reinsurance recoverables | 43,793 | |||
Other assets | 4,014 | |||
Deferred tax asset | 7,780 | |||
Property and equipment | 1,022 | |||
Intangible assets | 11,848 | |||
Total assets | $ | 316,800 | ||
Liabilities | ||||
Loss and loss expense reserves | 165,487 | |||
Unearned premium | 59,773 | |||
Accrued liabilities | 15,624 | |||
Deferred tax liability | 4,147 | |||
Total liabilities | $ | 245,031 | ||
Purchase price | 60,000 | |||
Acquisition gain | $ | 11,769 |
(Amounts in Thousands) | ||||
Assets | ||||
Cash and investments | $ | 253,257 | ||
Premium receivables | 26,001 | |||
Reinsurance recoverables | 12,186 | |||
Other assets | 2,979 | |||
Property and equipment | 589 | |||
Intangible assets | 34,337 | |||
Total assets | $ | 329,349 | ||
Liabilities | ||||
Loss and loss expense reserves | $ | 12,619 | ||
Unearned premium | 131,494 | |||
Deferred tax liability | 6,215 | |||
Accrued liabilities | 82,534 | |||
Total liabilities | $ | 232,862 | ||
Purchase price | 70,420 | |||
Acquisition gain | $ | 26,067 |
13. | New Market Tax Credit |
(Amounts in Thousands) | Foreign Currency Items | Unrealized Gains (Losses) on Investments | Interest Rate Swap Hedge | Accumulated Other Comprehensive Income | ||||||||||||
Balance, December 31, 2011 | $ | (17,091 | ) | $ | 9,372 | $ | (2,280 | ) | $ | (9,999 | ) | |||||
Other comprehensive income before reclassifications | (2,860 | ) | 33,117 | (627 | ) | 29,630 | ||||||||||
Amounts reclassed from accumulated other comprehensive income | — | (4,676 | ) | — | (4,676 | ) | ||||||||||
Net current-period other comprehensive income | (2,860 | ) | 28,441 | (627 | ) | 24,954 | ||||||||||
Balance, June 30, 2012 | $ | (19,951 | ) | $ | 37,813 | $ | (2,907 | ) | $ | 14,955 | ||||||
Balance, December 31, 2012 | $ | (10,361 | ) | $ | 77,605 | $ | (3,013 | ) | $ | 64,231 | ||||||
Other comprehensive income before reclassifications | (15,565 | ) | (79,483 | ) | 936 | (94,112 | ) | |||||||||
Amounts reclassed from accumulated other comprehensive income | — | 3,261 | — | 3,261 | ||||||||||||
Net current-period other comprehensive (loss) income | (15,565 | ) | (76,222 | ) | 936 | (90,851 | ) | |||||||||
Balance, June 30, 2013 | $ | (25,926 | ) | $ | 1,383 | $ | (2,077 | ) | $ | (26,620 | ) |
2013 | 2012 | |||||||||||||||||||||||
(Amounts in Thousands) | AmTrust | Non-Controlling Interest | Total | AmTrust | Non-Controlling Interest | Total | ||||||||||||||||||
Beginning Balance | $ | 1,144,121 | $ | 103,344 | $ | 1,247,465 | $ | 890,563 | $ | 69,098 | $ | 959,661 | ||||||||||||
Net income (loss) | 164,151 | (877 | ) | 163,274 | 79,444 | 416 | 79,860 | |||||||||||||||||
Unrealized holding (loss) gain | (79,483 | ) | — | (79,483 | ) | 33,117 | — | 33,117 | ||||||||||||||||
Reclassification adjustment | 3,261 | — | 3,261 | (4,676 | ) | — | (4,676 | ) | ||||||||||||||||
Foreign currency translation | (15,565 | ) | — | (15,565 | ) | (2,860 | ) | — | (2,860 | ) | ||||||||||||||
Unrealized gain (loss) on interest rate swap | 936 | — | 936 | (627 | ) | — | (627 | ) | ||||||||||||||||
Share exercises, compensation and other | 7,253 | — | 7,253 | 5,834 | — | 5,834 | ||||||||||||||||||
Dividends | (18,899 | ) | — | (18,899 | ) | (11,512 | ) | — | (11,512 | ) | ||||||||||||||
Preferred share issuance, net of fees | 111,130 | — | 111,130 | — | — | — | ||||||||||||||||||
Common share issuance | 472 | — | 472 | — | — | — | ||||||||||||||||||
Capital contribution | — | 6,158 | 6,158 | — | 9,831 | 9,831 | ||||||||||||||||||
Equity component of convertible senior notes, net of income tax and issue costs | — | — | — | 3,306 | — | 3,306 | ||||||||||||||||||
Acquisition of non-controlling interest | — | — | — | 6,900 | (6,900 | ) | — | |||||||||||||||||
Ending Balance | $ | 1,317,377 | $ | 108,625 | $ | 1,426,002 | $ | 999,489 | $ | 72,445 | $ | 1,071,934 |
(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, 2013: | ||||||||||||||||||||||||
Gross written premium | $ | 389,911 | $ | 447,885 | $ | 173,843 | $ | 28,975 | $ | — | $ | 1,040,614 | ||||||||||||
Net written premium | 218,553 | 290,272 | 102,197 | 28,975 | — | 639,997 | ||||||||||||||||||
Change in unearned premium | (30,253 | ) | (82,122 | ) | 8,479 | 438 | — | (103,458 | ) | |||||||||||||||
Net earned premium | 188,300 | 208,150 | 110,676 | 29,413 | — | 536,539 | ||||||||||||||||||
Ceding commission - primarily related party | 28,322 | 23,405 | 15,430 | — | — | 67,157 | ||||||||||||||||||
Loss and loss adjustment expense | (124,368 | ) | (144,050 | ) | (75,820 | ) | (19,872 | ) | — | (364,110 | ) | |||||||||||||
Acquisition costs and other underwriting expenses | (76,931 | ) | (62,846 | ) | (43,799 | ) | (8,983 | ) | — | (192,559 | ) | |||||||||||||
(201,299 | ) | (206,896 | ) | (119,619 | ) | (28,855 | ) | — | (556,669 | ) | ||||||||||||||
Underwriting income | 15,323 | 24,659 | 6,487 | 558 | — | 47,027 | ||||||||||||||||||
Service and fee income | 21,233 | 52,347 | (5 | ) | — | 14,527 | 88,102 | |||||||||||||||||
Investment income and realized gain | 12,239 | 8,563 | 3,442 | 457 | — | 24,701 | ||||||||||||||||||
Other expenses | (30,607 | ) | (33,934 | ) | (14,138 | ) | (2,306 | ) | — | (80,985 | ) | |||||||||||||
Interest expense | (2,845 | ) | (3,295 | ) | (1,257 | ) | (211 | ) | — | (7,608 | ) | |||||||||||||
Foreign currency gain | — | 783 | — | — | — | 783 | ||||||||||||||||||
Gain on life settlement contracts | 430 | 376 | 239 | 35 | — | 1,080 | ||||||||||||||||||
Acquisition gain on purchase | 31,956 | — | — | — | — | 31,956 | ||||||||||||||||||
Provision for income taxes | (12,829 | ) | (14,946 | ) | 1,289 | 385 | (5,892 | ) | (31,993 | ) | ||||||||||||||
Equity in earnings of unconsolidated subsidiary – related party | — | — | — | — | 7,059 | 7,059 | ||||||||||||||||||
Non-controlling interest | (11 | ) | 38 | (25 | ) | (2 | ) | — | — | |||||||||||||||
Net income attributable to AmTrust Financial Services, Inc. | $ | 34,889 | $ | 34,591 | $ | (3,968 | ) | $ | (1,084 | ) | $ | 15,694 | $ | 80,122 |
(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 | 1,430 | (3,792 | ) | (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 | ) | $ | 1,841 | $ | 6,323 | $ | 40,358 |
(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, 2013: | ||||||||||||||||||||||||
Gross written premium | $ | 765,760 | $ | 776,214 | $ | 382,935 | $ | 59,627 | $ | — | $ | 1,984,536 | ||||||||||||
Net written premium | 392,293 | 474,714 | 245,469 | 59,627 | — | 1,172,103 | ||||||||||||||||||
Change in unearned premium | (77,393 | ) | (125,410 | ) | (23,315 | ) | (1,452 | ) | — | (227,570 | ) | |||||||||||||
Net earned premium | 314,900 | 349,304 | 222,154 | 58,175 | — | 944,533 | ||||||||||||||||||
Ceding commission - primarily related party | 52,488 | 41,413 | 37,214 | — | — | 131,115 | ||||||||||||||||||
Loss and loss adjustment expense | (208,698 | ) | (237,021 | ) | (151,374 | ) | (39,273 | ) | — | (636,366 | ) | |||||||||||||
Acquisition costs and other underwriting expenses | (132,761 | ) | (104,749 | ) | (94,126 | ) | (17,743 | ) | — | (349,379 | ) | |||||||||||||
(341,459 | ) | (341,770 | ) | (245,500 | ) | (57,016 | ) | — | (985,745 | ) | ||||||||||||||
Underwriting income | 25,929 | 48,947 | 13,868 | 1,159 | — | 89,903 | ||||||||||||||||||
Service and fee income | 43,336 | 80,066 | 67 | — | 25,146 | 148,615 | ||||||||||||||||||
Investment income and realized gain | 24,277 | 23,454 | 10,844 | 1,505 | — | 60,080 | ||||||||||||||||||
Other expenses | (51,373 | ) | (52,074 | ) | (25,690 | ) | (4,000 | ) | — | (133,137 | ) | |||||||||||||
Interest expense | (5,776 | ) | (5,855 | ) | (2,888 | ) | (450 | ) | — | (14,969 | ) | |||||||||||||
Foreign currency gain | — | 2,055 | — | — | — | 2,055 | ||||||||||||||||||
Gain on life settlement contracts | 1 | 2 | 1 | — | — | 4 | ||||||||||||||||||
Acquisition gain on purchase | 31,956 | 26,067 | — | — | — | 58,023 | ||||||||||||||||||
Provision for income taxes | (17,435 | ) | (31,289 | ) | 969 | 456 | (8,611 | ) | (55,910 | ) | ||||||||||||||
Equity in earnings of unconsolidated subsidiary – related party | — | — | — | — | 8,610 | 8,610 | ||||||||||||||||||
Non-controlling interest | 339 | 343 | 169 | 26 | — | 877 | ||||||||||||||||||
Net income attributable to AmTrust Financial Services, Inc. | $ | 51,254 | $ | 91,716 | $ | (2,660 | ) | $ | (1,304 | ) | $ | 25,145 | $ | 164,151 |
(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 | 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 | ||||||||||||||||||
As of June 30, 2013: | ||||||||||||||||||||||||
Property and equipment, net | $ | 35,704 | $ | 36,192 | $ | 17,855 | $ | 2,780 | $ | — | $ | 92,531 | ||||||||||||
Goodwill and intangible assets | 246,201 | 333,537 | 24,275 | — | — | 604,013 | ||||||||||||||||||
Total assets | 3,708,747 | 3,727,190 | 1,480,297 | 164,104 | — | 9,080,338 | ||||||||||||||||||
As of December 31, 2012: | ||||||||||||||||||||||||
Property and equipment, net | $ | 25,789 | $ | 30,897 | $ | 15,984 | $ | 3,263 | $ | — | $ | 75,933 | ||||||||||||
Goodwill and intangible assets | 245,330 | 245,139 | 24,498 | — | — | 514,967 | ||||||||||||||||||
Total assets | 2,778,136 | 3,127,543 | 1,330,005 | 181,553 | — | 7,417,237 |
• | Small Commercial Business. We provide workers’ compensation, commercial package and other commercial insurance lines produced by wholesale agents, retail agents and brokers in the United States. |
• | Specialty Risk and Extended Warranty. We provide coverage for consumer and commercial goods and custom designed coverages, such as accidental damage plans and payment protection plans offered in connection with the sale of consumer and commercial goods, in the United States and Europe, and certain niche property, casualty and specialty liability risks in the United States and Europe, including general liability, employers’ liability and professional and medical liability. |
• | Specialty Program. We write commercial insurance for narrowly defined classes of insureds, requiring an in-depth knowledge of the insured’s industry segment, through general and other wholesale agents. |
• | Personal Lines Reinsurance. We reinsure 10% of the net premiums of the GMACI personal lines business, pursuant to the Personal Lines Quota Share with the GMACI personal lines insurance companies. |
• | CNH Capital Insurance Agency Inc. and CNH Capital Canada Insurance Agency, Ltd., collectively known as “CNH Capital Insurance Agencies" or "CNH" |
• | First Nonprofit Companies, Inc. ("FNC") |
• | Car Care Plan (Holdings) Limited ("CCPH" or "Car Care") |
• | Sequoia Insurance Company, Sequoia Indemnity Company and Personal Express Insurance Company, collectively known as "Sequoia" |
• | Mutual Insurance Holding Company and First Nonprofit Insurance Company and subsidiaries, collectively known as "FNIC" |
• | CPPNA Holdings, Inc. and subsidiaries, collectively known as "CPPNA" |
• | Product warranty registration and service — Our Specialty Risk and Extended Warranty business generates fee revenue for product warranty registration and claims handling services provided to unaffiliated third parties. |
• | Servicing carrier — We act as a servicing carrier for workers’ compensation assigned risk plans in nine states. In addition, we also offer claims adjusting and loss control services for fees to unaffiliated third parties. |
• | Management services — We provide services to insurance consumers, traditional insurers and insurance producers by offering flexible and cost effective alternatives to traditional insurance tools in the form of various risk retention groups and captive management companies, as well as management of workers’ compensation and commercial property programs. We also offer programs and alternative funding options for non-profit and public sector organizations for the management of their state unemployment insurance obligations. |
• | Installment, reinstatement and policy fees — We recognize fee income associated with the issuance of workers’ compensation policies for installment fees, in jurisdictions where it is permitted and approved, and reinstatement fees, which are fees charged to reinstate a policy after it has been canceled for non-payment, in jurisdictions where it is permitted and approved. Additionally, we recognize policy fees associated with general liability policies placed by our subsidiary, Builders & Tradesmen's Insurance Services, Inc. |
• | Broker services — We provide brokerage services to Maiden in connection with our reinsurance agreement for which we receive a fee. |
• | Asset management services — We currently manage the investment portfolios of Maiden, National General Holdings Corp ("NGHC"), which changed its name from American Capital Acquisition Corp, or ACAC, in April 2013, and ACP Re, Ltd. for which we receive a management fee. |
• | Information technology services — We provide information technology and printing and mailing services to NGHC and its affiliates for a fee. |
• | Policy acquisition expenses comprise commissions directly attributable to those agents, wholesalers or brokers that produce premiums written on our behalf. In most instances, we pay commissions based on collected premium, which reduces our credit risk exposure associated with producers in case a policyholder does not pay a premium. We pay state and local taxes, licenses and fees, assessments and contributions to various state guaranty funds based on our premiums or losses in each state. Surcharges that we may be required to charge and collect from insureds in certain jurisdictions are recorded as accrued liabilities, rather than expense. |
• | Salaries and benefits expenses are those salaries and benefits expenses for employees that are directly involved in the origination, issuance and maintenance of policies, claims adjustment and accounting for insurance transactions. We classify salaries and benefits associated with employees that are involved in fee generating activities as other expenses. |
• | General and administrative expenses are comprised of other costs associated with our insurance activities, such as federal excise tax, postage, telephones and internet access charges, as well as legal and auditing fees and board and bureau charges. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(Amounts in Thousands) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Gross written premium | $ | 1,040,614 | $ | 637,438 | $ | 1,984,536 | $ | 1,239,125 | ||||||||
Net written premium | $ | 639,997 | $ | 391,589 | $ | 1,172,103 | $ | 751,366 | ||||||||
Change in unearned premium | (103,458 | ) | (57,595 | ) | (227,570 | ) | (103,348 | ) | ||||||||
Net earned premiums | 536,539 | 333,994 | 944,533 | 648,018 | ||||||||||||
Ceding commission – primarily related party | 67,157 | 44,550 | 131,115 | 90,824 | ||||||||||||
Service and fee income (related parties – three months $14,414; $6,932 and six months $24,921; $13,024) | 88,102 | 33,011 | 148,615 | 73,549 | ||||||||||||
Net investment income | 22,634 | 16,344 | 40,729 | 30,862 | ||||||||||||
Net realized gain (loss) on investments | 2,067 | 2,703 | 19,351 | 1,555 | ||||||||||||
Total revenues | 716,499 | 430,602 | 1,284,343 | 844,808 | ||||||||||||
Loss and loss adjustment expense | 364,110 | 211,787 | 636,366 | 411,716 | ||||||||||||
Acquisition costs and other underwriting expenses | 192,559 | 129,713 | 349,379 | 253,738 | ||||||||||||
Other | 80,985 | 32,320 | 133,137 | 67,959 | ||||||||||||
Total expenses | 637,654 | 373,820 | 1,118,882 | 733,413 | ||||||||||||
Income before other income (expense), income taxes and equity in earnings of unconsolidated subsidiaries | 78,845 | 56,782 | 165,461 | 111,395 | ||||||||||||
Other income (expense): | ||||||||||||||||
Interest expense | (7,608 | ) | (6,994 | ) | (14,969 | ) | (14,085 | ) | ||||||||
Net gain on investment in life settlement contracts net of profit commission | 1,080 | 1,961 | 4 | 2,051 | ||||||||||||
Foreign currency gain (loss) | 783 | (2,455 | ) | 2,055 | (2,034 | ) | ||||||||||
Acquisition gain on purchase | 31,956 | — | 58,023 | — | ||||||||||||
Total other income (expense) | 26,211 | (7,488 | ) | 45,113 | (14,068 | ) | ||||||||||
Income before income taxes and equity in earnings (loss) of unconsolidated subsidiaries | 105,056 | 49,294 | 210,574 | 97,327 | ||||||||||||
Provision for income taxes | 31,993 | 11,742 | 55,910 | 22,919 | ||||||||||||
Income before equity in earnings of unconsolidated subsidiaries | 73,063 | 37,552 | 154,664 | 74,408 | ||||||||||||
Equity in earnings of unconsolidated subsidiaries – related party | 7,059 | 3,088 | 8,610 | 5,452 | ||||||||||||
Net income | 80,122 | 40,640 | 163,274 | 79,860 | ||||||||||||
Non-controlling interest | — | (282 | ) | 877 | (416 | ) | ||||||||||
Net income attributable to AmTrust Financial Services, Inc. | $ | 80,122 | $ | 40,358 | $ | 164,151 | $ | 79,444 | ||||||||
Net realized gain (loss) on investments: | ||||||||||||||||
Total other-than-temporary impairment loss | $ | — | $ | (1,208 | ) | $ | — | $ | (1,208 | ) | ||||||
Portion of loss recognized in other comprehensive income | — | — | — | — | ||||||||||||
Net impairment losses recognized in earnings | — | (1,208 | ) | — | (1,208 | ) | ||||||||||
Other net realized gain on investments | 2,067 | 3,911 | 19,351 | 2,763 | ||||||||||||
Net realized investment gain (loss) | $ | 2,067 | $ | 2,703 | $ | 19,351 | $ | 1,555 | ||||||||
Key measures: | ||||||||||||||||
Net loss ratio | 67.9 | % | 63.4 | % | 67.4 | % | 63.5 | % | ||||||||
Net expense ratio | 23.4 | % | 25.5 | % | 23.1 | % | 25.1 | % | ||||||||
Net combined ratio | 91.3 | % | 88.9 | % | 90.5 | % | 88.7 | % |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(Amounts in Thousands) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Gross written premium | $ | 389,911 | $ | 214,127 | $ | 765,760 | $ | 446,478 | ||||||||
Net written premium | 218,553 | 104,270 | 392,293 | 223,160 | ||||||||||||
Change in unearned premium | (30,253 | ) | (10,702 | ) | (77,393 | ) | (37,264 | ) | ||||||||
Net earned premiums | 188,300 | 93,568 | 314,900 | 185,896 | ||||||||||||
Ceding commission – primarily related party | 28,322 | 15,458 | 52,488 | 32,590 | ||||||||||||
Loss and loss adjustment expense | (124,368 | ) | (60,305 | ) | (208,698 | ) | (119,529 | ) | ||||||||
Acquisition costs and other underwriting expenses | (76,931 | ) | (42,165 | ) | (132,761 | ) | (85,095 | ) | ||||||||
(201,299 | ) | (102,470 | ) | (341,459 | ) | (204,624 | ) | |||||||||
Underwriting income | $ | 15,323 | $ | 6,556 | $ | 25,929 | $ | 13,862 | ||||||||
Key measures: | ||||||||||||||||
Net loss ratio | 66.0 | % | 64.5 | % | 66.3 | % | 64.3 | % | ||||||||
Net expense ratio | 25.8 | % | 28.5 | % | 25.5 | % | 28.2 | % | ||||||||
Net combined ratio | 91.9 | % | 93.0 | % | 91.8 | % | 92.5 | % | ||||||||
Reconciliation of net expense ratio: | ||||||||||||||||
Acquisition costs and other underwriting expenses | $ | 76,931 | $ | 42,165 | $ | 132,761 | $ | 85,095 | ||||||||
Less: ceding commission revenue – primarily related party | 28,322 | 15,458 | 52,488 | 32,590 | ||||||||||||
48,609 | 26,707 | 80,273 | 52,505 | |||||||||||||
Net earned premium | $ | 188,300 | $ | 93,568 | $ | 314,900 | $ | 185,896 | ||||||||
Net expense ratio | 25.8 | % | 28.5 | % | 25.5 | % | 28.2 | % |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(Amounts in Thousands) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Gross written premium | $ | 447,885 | $ | 272,610 | $ | 776,214 | $ | 506,699 | ||||||||
Net written premium | 290,272 | 172,259 | 474,714 | 313,420 | ||||||||||||
Change in unearned premium | (82,122 | ) | (30,652 | ) | (125,410 | ) | (36,240 | ) | ||||||||
Net earned premiums | 208,150 | 141,607 | 349,304 | 277,180 | ||||||||||||
Ceding commission – primarily related party | 23,405 | 16,174 | 41,413 | 33,368 | ||||||||||||
Loss and loss adjustment expense | (144,050 | ) | (85,628 | ) | (237,021 | ) | (169,071 | ) | ||||||||
Acquisition costs and other underwriting expenses | (62,846 | ) | (44,038 | ) | (104,749 | ) | (87,123 | ) | ||||||||
(206,896 | ) | (129,666 | ) | (341,770 | ) | (256,194 | ) | |||||||||
Underwriting income | $ | 24,659 | $ | 28,115 | $ | 48,947 | $ | 54,354 | ||||||||
Key measures: | ||||||||||||||||
Net loss ratio | 69.2 | % | 60.5 | % | 67.9 | % | 61.0 | % | ||||||||
Net expense ratio | 18.9 | % | 19.7 | % | 18.1 | % | 19.4 | % | ||||||||
Net combined ratio | 88.2 | % | 80.1 | % | 86.0 | % | 80.4 | % | ||||||||
Reconciliation of net expense ratio: | ||||||||||||||||
Acquisition costs and other underwriting expenses | $ | 62,846 | $ | 44,038 | $ | 104,749 | $ | 87,123 | ||||||||
Less: ceding commission revenue – primarily related party | 23,405 | 16,174 | 41,413 | 33,368 | ||||||||||||
39,441 | 27,864 | 63,336 | 53,755 | |||||||||||||
Net earned premium | $ | 208,150 | $ | 141,607 | $ | 349,304 | $ | 277,180 | ||||||||
Net expense ratio | 18.9 | % | 19.7 | % | 18.1 | % | 19.4 | % |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(Amounts in Thousands) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Gross written premium | $ | 173,843 | $ | 121,878 | $ | 382,935 | $ | 226,516 | ||||||||
Net written premium | 102,197 | 86,237 | 245,469 | 155,354 | ||||||||||||
Change in unearned premium | 8,479 | (15,369 | ) | (23,315 | ) | (24,825 | ) | |||||||||
Net earned premium | 110,676 | 70,868 | 222,154 | 130,529 | ||||||||||||
Ceding commission – primarily related party | 15,430 | 12,918 | 37,214 | 24,866 | ||||||||||||
Loss and loss adjustment expense | (75,820 | ) | (47,826 | ) | (151,374 | ) | (88,020 | ) | ||||||||
Acquisition costs and other underwriting expenses | (43,799 | ) | (34,985 | ) | (94,126 | ) | (64,924 | ) | ||||||||
(119,619 | ) | (82,811 | ) | (245,500 | ) | (152,944 | ) | |||||||||
Underwriting income | $ | 6,487 | $ | 975 | $ | 13,868 | $ | 2,451 | ||||||||
Key measures: | ||||||||||||||||
Net loss ratio | 68.5 | % | 67.5 | % | 68.1 | % | 67.4 | % | ||||||||
Net expense ratio | 25.6 | % | 31.1 | % | 25.6 | % | 30.7 | % | ||||||||
Net combined ratio | 94.1 | % | 98.6 | % | 93.8 | % | 98.1 | % | ||||||||
Reconciliation of net expense ratio: | ||||||||||||||||
Acquisition costs and other underwriting expenses | $ | 43,799 | $ | 34,985 | $ | 94,126 | $ | 64,924 | ||||||||
Less: ceding commission revenue – primarily related party | 15,430 | 12,918 | 37,214 | 24,866 | ||||||||||||
28,369 | 22,067 | 56,912 | 40,058 | |||||||||||||
Net earned premium | $ | 110,676 | $ | 70,868 | $ | 222,154 | $ | 130,529 | ||||||||
Net expense ratio | 25.6 | % | 31.1 | % | 25.6 | % | 30.7 | % |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(Amounts in Thousands) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Gross written premium | $ | 28,975 | $ | 28,823 | $ | 59,627 | $ | 59,432 | ||||||||
Net written premium | 28,975 | 28,823 | 59,627 | 59,432 | ||||||||||||
Change in unearned premium | 438 | (872 | ) | (1,452 | ) | (5,019 | ) | |||||||||
Net earned premium | 29,413 | 27,951 | 58,175 | 54,413 | ||||||||||||
Loss and loss adjustment expense | (19,872 | ) | (18,028 | ) | (39,273 | ) | (35,096 | ) | ||||||||
Acquisition costs and other underwriting expenses | (8,983 | ) | (8,525 | ) | (17,743 | ) | (16,596 | ) | ||||||||
(28,855 | ) | (26,553 | ) | (57,016 | ) | (51,692 | ) | |||||||||
Underwriting income | $ | 558 | $ | 1,398 | $ | 1,159 | $ | 2,721 | ||||||||
Key measures: | ||||||||||||||||
Net loss ratio | 67.6 | % | 64.5 | % | 67.5 | % | 64.5 | % | ||||||||
Net expense ratio | 30.5 | % | 30.5 | % | 30.5 | % | 30.5 | % | ||||||||
Net combined ratio | 98.1 | % | 95.0 | % | 98.0 | % | 95.0 | % |
Six Months Ended June 30, | |||||||
(Amounts in Thousands) | 2013 | 2012 | |||||
Cash and cash equivalents provided by (used in): | |||||||
Operating activities | $ | 496,603 | $ | 224,501 | |||
Investing activities | (538,726 | ) | (338,882 | ) | |||
Financing activities | 80,242 | 64,578 |
(Amounts in thousands) | June 30, 2013 | December 31, 2012 | ||||||
Assets: | ||||||||
Fixed maturities, available for sale | $ | 2,730,830 | $ | 2,065,226 | ||||
Prepaid reinsurance premium | 928,613 | 754,844 | ||||||
Liabilities: | ||||||||
Loss and loss expense reserve | $ | 3,065,792 | $ | 2,426,400 | ||||
Unearned premium | 2,385,190 | 1,773,593 | ||||||
Accrued expenses and other current liabilities | 758,061 | 406,447 |
June 30, 2013 | December 31, 2012 | ||||||||||||
(Amounts in Thousands) | Carrying Value | Percentage of Portfolio | Carrying Value | Percentage of Portfolio | |||||||||
Cash, cash equivalents and restricted cash | $ | 613,502 | 18.1 | % | $ | 493,132 | 19.0 | % | |||||
Time and short-term deposits | 15,209 | 0.4 | 10,282 | 0.4 | |||||||||
U.S. treasury securities | 93,683 | 2.8 | 66,192 | 2.6 | |||||||||
U.S. government agencies | 8,781 | 0.3 | 40,301 | 1.6 | |||||||||
Municipals | 439,219 | 13.0 | 299,442 | 11.6 | |||||||||
Foreign government | 74,354 | 2.2 | — | — | |||||||||
Commercial mortgage back securities | 24,568 | 0.7 | 10,200 | 0.4 | |||||||||
Residential mortgage backed securities: | |||||||||||||
Agency backed | 512,901 | 15.2 | 292,614 | 11.3 | |||||||||
Non-agency backed | 7,228 | 0.2 | 7,063 | 0.2 | |||||||||
Asset-backed securities | 6,937 | 0.2 | — | — | |||||||||
Corporate bonds | 1,563,159 | 46.1 | 1,349,414 | 52.1 | |||||||||
Preferred stocks | 3,275 | 0.1 | 5,184 | 0.2 | |||||||||
Common stocks | 22,620 | 0.7 | 15,281 | 0.6 | |||||||||
$ | 3,385,436 | 100.0 | % | $ | 2,589,105 | 100.0 | % |
June 30, 2013 | December 31, 2012 | ||||
U.S. Treasury | 3.4 | % | 1.9 | % | |
AAA | 14.0 | 13.8 | |||
AA | 31.9 | 31.2 | |||
A | 22.8 | 24.4 | |||
BBB, BBB+, BBB- | 26.0 | 27.1 | |||
BB, BB+, BB- | 1.7 | 1.6 | |||
B, B+, B- | 0.1 | — | |||
Other | 0.1 | — | |||
Total | 100.0 | % | 100.0 | % |
June 30, 2013 | December 31, 2012 | ||||||||
Average Yield % | Average Duration in Years | Average Yield % | Average Duration in Years | ||||||
U.S. treasury securities | 2.21 | 5.6 | 2.18 | 2.4 | |||||
U.S. government agencies | 2.64 | 1.2 | 4.14 | 3.1 | |||||
Foreign government | 2.12 | 4.4 | 3.37 | 5.6 | |||||
Corporate bonds | 3.52 | 5.3 | 3.95 | 5.1 | |||||
Municipals | 3.66 | 7.5 | 4.30 | 6.2 | |||||
Mortgage and asset backed | 2.95 | 4.7 | 3.41 | 2.2 |
• | the current fair value compared to amortized cost; |
• | the length of time the security’s fair value has been below its amortized cost; |
• | specific credit issues related to the issuer such as changes in credit rating, reduction or elimination of dividends or non-payment of scheduled interest payments; |
• | whether management intends to sell the security and, if not, whether it is not more than likely than not that the Company will be required to sell the security before recovery of its amortized cost basis; |
• | the financial condition and near-term prospects of the issuer of the security, including any specific events that may affect its operations or earnings; |
• | the occurrence of a discrete credit event resulting in the issuer defaulting on material outstanding obligations or the issuer seeking protection under bankruptcy laws; and |
• | other items, including company management, media exposure, sponsors, marketing and advertising agreements, debt restructurings, regulatory changes, acquisitions and dispositions, pending litigation, distribution agreements and general industry trends. |
(Amounts in Thousands) | 2013 | 2012 | |||||
Equity securities | $ | — | $ | 1,208 | |||
Fixed maturity securities | — | — | |||||
$ | — | $ | 1,208 |
Hypothetical Change in Interest Rates | Fair Value | Estimated Change in Fair Value | Hypothetical Percentage (Increase)Decrease in Shareholders’ Equity | ||||||||
(Amounts in Thousands) | |||||||||||
200 basis point increase | $ | 2,449,222 | $ | (281,608 | ) | (13.9 | )% | ||||
100 basis point increase | 2,585,704 | (145,126 | ) | (7.2 | )% | ||||||
No change | 2,730,830 | — | — | ||||||||
100 basis point decrease | 2,883,232 | 152,402 | 7.5 | % | |||||||
200 basis point decrease | 3,043,489 | 312,659 | 15.4 | % |
Hypothetical Change in Interest Rates | Fair Value | Estimated Change in Fair Value | Hypothetical Percentage (Increase) Decrease in Shareholders’ Equity | ||||||||
(Amounts in Thousands) | |||||||||||
5% increase | $ | 27,190 | $ | 1,295 | 0.1 | % | |||||
No change | 25,895 | — | |||||||||
5 % decrease | 24,600 | (1,295 | ) | (0.1 | )% |
Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publically Announced Plan or Program | Maximum number (or approximate dollar value) of Shares that May Yet be Purchased Under Plan or Program | |||||||||
April 1 - 31, 2013 | — | $ | — | — | 2,223,713 | ||||||||
May 1 - 30, 2013 | — | — | — | 2,223,713 | |||||||||
June 30, 2013 | 1,201 | 35.70 | — | 2,223,713 | |||||||||
Total | 1,201 | $ | 35.70 | — | 2,223,713 |
(1) | Includes 1,201 shares that were withheld to satisfy tax withholding amounts due from employees upon the vesting of previously issued restricted shares. |
Exhibit Number | Description | |
3.1 | Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K (No. 001-33143) filed May 28, 2013). | |
3.2 | Certificate of Designations of 6.75% Non-Cumulative Preferred Stock, Series A (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K (No. 001-33143) filed June 10, 2013). | |
3.3 | Amended and Restated By-Laws of the Company. | |
4.1 | Form of stock certificate evidencing 6.75% Non-Cumulative Preferred Stock, Series A (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K (No. 001-33143) filed June 10, 2013). | |
10.1 | Amendment No. 1, dated June 26, 2013, to the Credit Agreement, dated August 10, 2012, among the Company, JPMorgan Chase Bank, N.A., as Administrative Agent, and the various lending institutions party thereto (incorporated by reference to Exhibit 10.1 to the Company's Current Report on form 8-K (No. 001-33143) filed July 1, 2013). | |
31.1 | Certification of the Chief Executive Officer, pursuant to Rule 13a-14(a) or 15d-14(a), for the quarter ended June 30, 2013. | |
31.2 | Certification of the Chief Financial Officer, pursuant to Rule 13a-14(a) or 15d-14(a), for the quarter ended June 30, 2013. | |
32.1 | Certification of the Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, for the quarter ended June 30, 2013. | |
32.2 | Certification of the Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, for the quarter ended June 30, 2013. | |
101.1 | The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets at June 30, 2013 and December 31, 2012; (ii) the Condensed Consolidated Statements of Income for the three and six months ended June 30, 2013 and 2012; (iii) the Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2013 and 2012; (iv) the Consolidated Statements of Cash Flows for the six months ended June 30, 2013 and 2012; and (v) the Notes to Unaudited Condensed Consolidated Financial Statements (submitted electronically herewith). | |
In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101.1 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be part of any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. |
AmTrust Financial Services, Inc. | |||
(Registrant) | |||
Date: | August 9, 2013 | /s/ Barry D. Zyskind | |
Barry D. Zyskind | |||
President and Chief Executive Officer | |||
/s/ Ronald E. Pipoly, Jr. | |||
Ronald E. Pipoly, Jr. | |||
Chief Financial Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of AmTrust Financial Services, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | August 9, 2013 | By: | /s/ Barry Zyskind |
Barry Zyskind | |||
President and Chief Executive Officer | |||
(Principal Executive Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of AmTrust Financial Services, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | August 9, 2013 | By: | /s/ Ronald Pipoly |
Ronald Pipoly | |||
Chief Financial Officer | |||
(Principal Financial and Accounting Officer) |
1. | The Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 (the “Report”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | August 9, 2013 | By: | /s/ Barry Zyskind |
Barry Zyskind | |||
President and Chief Executive Officer | |||
(Principal Executive Officer) |
1. | The Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 (the “Report”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | August 9, 2013 | By: | /s/ Ronald Pipoly |
Ronald Pipoly | |||
Chief Financial Officer | |||
(Principal Financial and Accounting Officer) |
Shareholder Equity and Accumulated Other Comprehensive Income Shareholder Equity and Accumulated Other Comprehensive Income - Stock Issued (Details) (USD $)
|
0 Months Ended | |||
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Jun. 10, 2013
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Jun. 30, 2013
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May 10, 2013
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Dec. 31, 2012
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Class of Stock [Line Items] | ||||
Preferred shares issued during the period | 4,600,000 | 0 | ||
Dividend rate, percentage | 6.75% | |||
Common stock issued | 91,335,000 | 18,000 | 91,216,000 | |
Common stock, par value | $ 26.17 | |||
Noncumulative Preferred Stock
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Class of Stock [Line Items] | ||||
Preferred shares issued during the period | 4,600,000 |
Income Taxes
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Jun. 30, 2013
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Income Taxes | Income Taxes The following table is a reconciliation of the Company’s statutory income tax expense to its effective tax rate for the three and six months ended June 30, 2013 and 2012:
The Company’s management believes that it will realize the benefits of its deferred tax assets, which is included as a component of the Company’s net deferred tax liability, and, accordingly, no valuation allowance has been recorded for the periods presented. The earnings of certain of the Company’s foreign subsidiaries have been indefinitely reinvested in foreign operations. Therefore, no provision has been made for any U.S. taxes or foreign withholding taxes that may be applicable upon any repatriation or disposition. The determination of any unrecognized deferred tax liability for temporary differences related to investments in certain of the Company’s foreign subsidiaries is not practicable. At June 30, 2013 and December 31, 2012, the financial reporting basis in excess of the tax basis for which no deferred taxes have been recognized was approximately $347,000 and $296,000, respectively. The Company’s major taxing jurisdictions include the U.S. (federal and state), the United Kingdom and Ireland. The years subject to potential audit vary depending on the tax jurisdiction. Generally, the Company’s statute of limitation is open for tax years ended December 31, 2009 and forward. As permitted by FASB ASC 740-10, the Company has an accounting policy to prospectively classify accrued interest and penalties related to any unrecognized tax benefits in its income tax provision. At June 30, 2013, the Company does not have any accrued interest and penalties related to unrecognized tax benefits in accordance with FASB ASC 740-10. |
Debt - Borrowings (Detail) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
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Dec. 31, 2012
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Debt Disclosure [Abstract] | ||
Revolving credit facility | $ 0 | $ 0 |
Subordinated debentures | 123,714 | 123,714 |
Convertible senior notes | 162,672 | 161,218 |
Secured loan agreements | 8,264 | 9,041 |
Promissory notes | 14,500 | 8,000 |
Debt, Long-term and Short-term, Combined Amount, Total | $ 309,150 | $ 301,973 |
Investments
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Jun. 30, 2013
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments |
(a) Available-for-Sale Securities The amortized cost, estimated market value and gross unrealized appreciation and depreciation of available-for-sale securities as of June 30, 2013 and December 31, 2012, are presented in the table below:
Investments in foreign government securities include securities issued by national entities as well as instruments that are unconditionally guaranteed by such entities. As of June 30, 2013, the Company's foreign government securities were issued or guaranteed primarily by France, the European Investment Bank, Israel and the United Kingdom.
A summary of the Company’s available-for-sale fixed securities as of June 30, 2013 and December 31, 2012, by contractual maturity, is shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
Proceeds from the sale of investments in available-for-sale securities during the six months ended June 30, 2013 and 2012 were approximately $1,198,185 and $380,614, respectively. (b) Investment Income Net investment income for the three months ended June 30, 2013 and 2012 was derived from the following sources:
(c) Other-Than-Temporary Impairment The table below summarizes the gross unrealized losses of our fixed maturity and equity securities by length of time the security has continuously been in an unrealized position as of June 30, 2013 and December 31, 2012:
There are 1,276 and 118 securities at June 30, 2013 and December 31, 2012, respectively, that account for the gross unrealized loss, none of which is deemed by the Company to be OTTI. Significant factors influencing the Company’s determination that unrealized losses were temporary included the magnitude of the unrealized losses in relation to each security’s cost, the nature of the investment and management’s intent not to sell these securities and it being not more likely than not that the Company will be required to sell these investments before anticipated recovery of fair value to the Company’s cost basis. (d) Derivatives The Company from time to time invests in a limited number of derivatives and other financial instruments as part of its investment portfolio to manage interest rate changes or other exposures to a particular financial market. The Company records changes in valuation on its derivative positions not designated as a hedge as a component of net realized gains and losses. The Company records changes in valuation on its hedge positions as a component of other comprehensive income. As of June 30, 2013 and December 31, 2012, the Company had two interest rate swaps designated as hedges that were recorded as a liability in the total amount of $3,195 and $4,636, respectively, and were included as a component of accrued expenses and other liabilities. The following table presents the notional amounts by remaining maturity of the Company’s interest rate swaps as of June 30, 2013:
(e) Restricted Cash and Investments The Company, in order to conduct business in certain states, is required to maintain letters of credit or assets on deposit to support state mandated regulatory requirements and certain third party agreements. The Company also utilizes trust accounts to collateralize business with its reinsurance counterparties. These assets are primarily in the form of cash and certain high grade securities. The fair values of our restricted assets as of June 30, 2013 and December 31, 2012 are as follows:
(f) Other The Company entered into repurchase agreements that are subject to a master netting arrangement, which are accounted for as collateralized borrowing transactions and are recorded at contract amounts. The Company receives cash or securities that it invests or holds in short term or fixed income securities. As of June 30, 2013, the Company had sixteen repurchase agreements with a market value of $205,161 principal amount outstanding at interest rates between .00% and .53%. The sixteen agreements are with one counter-party. Interest expense associated with these repurchase agreements for the three months ended June 30, 2013 and 2012 was $214 and $200, respectively, of which $0 was accrued as of June 30, 2013. The Company has approximately $266,399 of collateral pledged in support of these agreements. Interest expense related to repurchase agreements is recorded as a component of investment income. Additionally, during the three months ended June 30, 2013, the Company closed its reverse repurchase agreement and did not incur any gain or loss as a result of this agreement. |
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Subsequent Events | Subsequent Events Entry into Agreement to Acquire Sagicor Europe Limited On July 29, 2013, the Company announced that one of its wholly-owned subsidiaries entered into an agreement to acquire Sagicor Europe Limited from Sagicor Financial Corporation for approximately £56,000, which is £15,000 above Sagicor Europe Limited's net asset value as of December 31, 2012. Among the assets to be acquired are a managing agency and two Lloyd's syndicates; a property/casualty insurance syndicate 1206 with stamp capacity of £200,000 and a life insurance syndicate 44 with stamp capacity of £7,000, as well as a Cayman Islands domiciled reinsurance entity. The transaction is expected to close in the fourth quarter of 2013. Termination Notice of Personal Lines Quota Share On August 1, 2013, the Company and its wholly-owned subsidiary, Technology Insurance Company, Inc. (“TIC”) received notice from Integon National Insurance Company (“Integon”), a wholly-owned subsidiary of NGHC, that Integon was terminating, effective August 1, 2013, TIC's participation in the Personal Lines Quota Share. As a result of this agreement, TIC assumed approximately $59,627 of business during the six months ended June 30, 2013, resulting in $1,159 of underwriting income for that period. The termination is on a run-off basis, meaning TIC will continue to receive net premiums and assume related net losses with respect to policies in force as of July 31, 2013 through the expiration of such policies. As the Company will retain all assumed written premium through July 31, 2013 and the continuing cash flows associated with the business, the Company will not present the Personal Lines Segment as a discontinued operation in accordance with ASC 205-20 Discontinued Operations. |
Income Taxes - Reconciliation of Statutory Federal Income Tax Rate to Effective Tax Rate (Parenthetical) (Detail)
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Disclosure Reconciliation Of Statutory Federal Income Tax Rate To Effective Tax Rate [Abstract] | ||||
Federal statutory rate | 35.00% | 35.00% | 35.00% | 35.00% |
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Related Party Transactions | Related Party Transactions Maiden The Company has various reinsurance and service agreements with Maiden Holdings, Ltd. (“Maiden”). Maiden is a publicly-held Bermuda insurance holding company (Nasdaq: MHLD) formed by Michael Karfunkel, George Karfunkel and Barry Zyskind, principal shareholders, and, respectively, the chairman of the board of directors, a director, and the chief executive officer and director of the Company. As of June 30, 2013, our principal shareholders, Michael Karfunkel, Leah Karfunkel (wife of Michael Karfunkel and sole trustee of the Michael Karfunkel 2005 Grantor Retained Annuity Trust), George Karfunkel and Barry Zyskind, own or control approximately 6.2%, 7.6%, 9.4% and 5.1%, respectively, of the issued and outstanding capital stock of Maiden. Mr. Zyskind serves as the non-executive chairman of the board of Maiden’s board of directors. Maiden Insurance Company, Ltd (“Maiden Insurance”), a wholly-owned subsidiary of Maiden, is a Bermuda reinsurer. The following section describes the agreements in place between the Company and its subsidiaries and Maiden and its subsidiaries. Reinsurance Agreements with Maiden Holdings, Ltd. In 2007, the Company and Maiden entered into a master agreement, as amended, by which the parties caused the Company’s Bermuda subsidiary, AmTrust International Insurance, Ltd. (“AII”) and Maiden Insurance to enter into a quota share reinsurance agreement (the “Maiden Quota Share”), as amended, by which AII retrocedes to Maiden Insurance an amount equal to 40% of the premium written by the Company’s U.S., Irish and U.K. insurance companies (the “AmTrust Ceding Insurers”), net of the cost of unaffiliated inuring reinsurance (and in the case of the Company’s U.K. insurance subsidiary, AmTrust Europe Ltd. ("AEL"), net of commissions) and 40% of losses excluding certain specialty risk programs that the Company commenced writing after the effective date, including the Company’s European medical liability business discussed below, and risks, other than workers’ compensation risks and certain business written by the Company’s Irish subsidiary, AmTrust International Underwriters Limited (“AIU”), for which the AmTrust Ceding Insurers’ net retention exceeds $5,000 (“Covered Business”). On March 5, 2013, after receipt of approval from each of the Company’s and Maiden’s Audit Committee, the Company and Maiden executed an amendment to the Maiden Quota Share. The amendment provides that, effective January 1, 2013, AII receives a ceding commission of 31% of ceded written premiums with respect to all Covered Business other than retail commercial package business, for which the ceding commission remains 34.375%. With regards to the Specialty Program portion of Covered Business only, excluding workers’ compensation business included in the Company’s Specialty Program segment from July 1, 2007 through December 31, 2012, the Company will be responsible for ultimate net loss otherwise recoverable from Maiden Insurance to the extent that the loss ratio to Maiden Insurance, which shall be determined on an inception to date basis from July 1, 2007 through the date of calculation, is between 81.5% and 95%. The Maiden Quota Share was renewed through July 1, 2016 and will automatically renew for successive three-year terms unless either AII or Maiden Insurance notifies the other of its election not to renew not less than nine months prior to the end of any such three-year term. In addition, either party is entitled to terminate on thirty days’ notice or less upon the occurrence of certain early termination events, which include a default in payment, insolvency, change in control of AII or Maiden Insurance, run-off, or a reduction of 50% or more of the shareholders’ equity of Maiden Insurance or the combined shareholders’ equity of AII and the AmTrust Ceding Insurers. Effective April 1, 2011, the Company, through its subsidiaries AEL and AIU, entered into a reinsurance agreement with Maiden Insurance by which the Company cedes to Maiden Insurance 40% of its European medical liability business, including business in force at April 1, 2011. The quota share had an initial term of one year and was renewed through March 31, 2014. The agreement can be terminated by either party on four months’ prior written notice. Maiden Insurance pays the Company a 5% ceding commission, and the Company will earn a profit commission of 50% of the amount by which the ceded loss ratio is lower than 65%. Effective September 1, 2010, the Company, through its subsidiary, Security National Insurance Company (“SNIC”), entered into a reinsurance agreement with Maiden Reinsurance Company and an unrelated third party. Under the agreement, which had an initial term of one year and has been extended to August 31, 2013, SNIC cedes 80% of the gross liabilities produced under the Southern General Agency program to Maiden Reinsurance Company and 20% of the gross liabilities produced to the unrelated third party. SNIC receives a five percent commission on ceded written premiums. Excess of Loss Reinsurance with Maiden Reinsurance Company In 2012, the Company, through its insurance company subsidiaries, entered into an excess of loss reinsurance arrangement with Maiden Reinsurance Company applicable to select automobile liability and general liability policies written in conjunction with a for-hire commercial automobile insurance program. This reinsurance arrangement allows the Company's insurance company subsidiaries to offer $2,000 limits, with the first $1,000 of ultimate net loss from any one policy and any one loss occurrence to be retained by the Company. Maiden Reinsurance Company would be responsible for the amount of ultimate net loss from any one policy and any one loss occurrence over $1,000, but not to exceed $2,000. There is no aggregate limit on this reinsurance arrangement. During the six months ended June 30, 2013, the Company wrote approximately $500 of gross written premium related to this arrangement. The following is the effect on the Company’s results of operations for the three months ended June 30, 2013 and 2012 related to Maiden Reinsurance agreements:
Fronting Arrangement with Maiden Specialty Insurance Company Effective September 1, 2010, the Company, through its subsidiary Technology Insurance Company, Inc. (“TIC”), entered into a quota share reinsurance agreement with Maiden Specialty Insurance Company (“Maiden Specialty”) by which TIC assumes a portion (generally 90%) of premiums and losses with respect to certain surplus lines programs written by Maiden Specialty on behalf of the Company (the “Surplus Lines Facility”). The Surplus Lines Facility enables the Company to write business on a surplus lines basis throughout the United States. Currently, the Company is utilizing the Surplus Lines Facility for two programs for which Maiden Specialty receives a five percent ceding commission on all premiums ceded by Maiden Specialty to TIC. The Surplus Lines Facility shall remain continuously in force until terminated. The Company has obtained surplus lines authority for two of its insurance company subsidiaries, which has significantly decreased the need for the Surplus Lines Facility. As a result of this agreement, the Company assumed approximately $429 and $300 of written premium during the six months ended June 30, 2013 and 2012, respectively. The Company recorded earned premium of approximately $198 and $679 and incurred losses of approximately $16 and $314 for the three and six months ended June 30, 2013. The Company recorded earned premium of approximately $600 and $4,000 and incurred losses of approximately $700 and $2,800 for the three and six months ended June 30, 2012. Note Payable to Maiden – Collateral for Proportionate Share of Reinsurance Obligations In conjunction with the Maiden Quota Share, as described above, AII entered into a loan agreement with Maiden Insurance during the fourth quarter of 2007, whereby Maiden Insurance loaned to AII the amount equal to its quota share of the obligations of the AmTrust Ceding Insurers that AII was then obligated to secure. The loan agreement provides for interest at a rate of LIBOR plus 90 basis points and is payable on a quarterly basis. Advances under the loan are secured by a promissory note and totaled $167,975 as of June 30, 2013. The Company recorded $772 and $914 of interest expense during the three months ended June 30, 2013 and 2012, respectively, and $1,471 and $1,542 of interest expense during the six months ended June 30, 2013 and 2012, respectively. Effective December 1, 2008, AII and Maiden Insurance entered into a Reinsurer Trust Assets Collateral agreement whereby Maiden Insurance is required to provide AII the assets required to secure Maiden’s proportional share of the Company’s obligations to its U.S. subsidiaries. The amount of this collateral as of June 30, 2013 was approximately $947,581. Maiden retains ownership of the collateral in the trust account. Reinsurance Brokerage Agreement Effective July 1, 2007, the Company, through a subsidiary, entered into a reinsurance brokerage agreement with Maiden. Pursuant to the brokerage agreement, the Company provides brokerage services relating to the Maiden Quota Share for a fee equal to 1.25% of reinsured premium. The Company recorded $6,783 and $2,151 of brokerage commission (recorded as a component of service and fee income) during the three months ended June 30, 2013 and 2012, respectively, and $10,442 and $4,345 of brokerage commission during the six months ended June 30, 2013 and 2012, respectively. Asset Management Agreement Effective July 1, 2007, the Company, through a subsidiary, entered into an asset management agreement with Maiden, pursuant to which the Company provides investment management services to Maiden and its affiliates. As of June 30, 2013, the Company managed approximately $2,830,000 of assets related to this agreement. The investment management services fee is an annual rate of 0.20% for periods in which average invested assets are $1,000,000 or less and an annual rate of 0.15% for periods in which the average invested assets exceeds $1,000,000. As a result of this agreement, the Company earned approximately $1,061 and $830 of investment management fees (recorded as a component of service and fee income) for the three months ended June 30, 2013 and 2012, respectively, and $2,102 and $1,660 of investment management fees for the six months ended June 30, 2013 and 2012, respectively. Senior Notes In June 2011, the Company, through a subsidiary, participated as a purchaser in a registered public offering by Maiden Holdings North America, Ltd., a subsidiary of Maiden, for $12,500 of an aggregate $107,500 principal amount of 8.25% Senior Notes due 2041 (the “Notes”) that are fully and unconditionally guaranteed by Maiden. The Notes are redeemable for cash, in whole or in part, on or after June 15, 2016, at 100% of the principal amount of the Notes to be redeemed plus accrued and unpaid interest to, but not including, the redemption date. The Company had an unrealized gain of $307 on the senior notes as of June 30, 2013. National General Holding Corp. The Company has a strategic investment in National General Holding Corp. (“NGHC”), which was formally known as American Capital Acquisition Corporation, or ACAC. NGHC was formed by The Michael Karfunkel 2005 Grantor Retained Annuity Trust (the “Trust”) and the Company for the purpose of acquiring from GMAC Insurance Holdings, Inc. and Motor Insurance Corporation (“MIC”, together with GMAC Insurance Holdings, Inc., “GMACI”), GMACI’s U.S. consumer property and casualty insurance business (the “GMACI Business”), a writer of automobile coverages through independent agents in the United States. Its coverages include standard/preferred auto, RVs, non-standard auto and commercial auto. The acquisition included ten statutory insurance companies (the “GMACI Insurers”). From the time of the acquisition in 2010 until June 2013, Michael Karfunkel, individually, and the Trust owned 100% of NGHC’s common stock (subject to the Company’s conversion rights described below). Michael Karfunkel is the chairman of the board of directors of the Company and the father-in-law of Barry D. Zyskind, the chief executive officer of the Company. The ultimate beneficiaries of the Trust include Michael Karfunkel’s children, one of whom is married to Mr. Zyskind. In addition, Michael Karfunkel is the Chairman of the Board of Directors of NGHC. Pursuant to the Amended Stock Purchase Agreement, NGHC issued and sold to the Company for an initial purchase price of approximately $53,000, which was equal to 25% of the capital initially required by NGHC, 53,054 shares of Series A Preferred Stock, which provided an 8% cumulative dividend, was non-redeemable and was convertible, at the Company’s option, into 21.25% of the issued and outstanding common stock of NGHC (the “Preferred Stock”). The Company had pre-emptive rights with respect to any future issuances of securities by NGHC and the Company’s conversion rights were subject to customary anti-dilution protections. The Company had the right to appoint two members of NGHC’s board of directors, which consists of up to six members. Subject to certain limitations, the board of directors of NGHC could not take any action at a meeting without at least one of the Company’s appointees in attendance and NGHC could not take certain corporate actions without the approval of a majority of its board of directors (including the Company’s two appointees). On June 5, 2013, the Company converted its 53,054 shares of Series A Preferred Stock of NGHC into 42,958 shares of NGHC common stock, par value $0.01 per share, which became 12,295,430 shares of common stock after NGHC effected a 286.22:1 stock split on June 6, 2013. In addition, on June 5, 2013, NGHC declared the Company's cumulative dividend of approximately $12,203 on the Series A Preferred Stock payable through that date. On June 6, 2013, NGHC issued 21,850,000 shares in a 144A offering, which resulted in the Company owning 15.4% of the issued and outstanding common stock of NGHC. In accordance with ASC 323-10-15, Investments-Equity Method and Joint Ventures, the Company continues to account for its investment in NGHC under the equity method as it has the ability to exert significant influence on NGHC's operations. The Company recorded a gain on the sale of its investment of $8,644 as a result of the stock issuance, which is included in equity in earnings of unconsolidated subsidiary. In total, the Company recorded $7,059 and $3,088 of income during the three months ended June 30, 2013 and 2012, respectively, and $8,610 and $5,452 of income during the six months ended June 30, 2013 and 2012, respectively, related to its equity investment in NGHC. Personal Lines Quota Share The Company reinsures 10% of the net premiums of the GMACI Business, pursuant to a 50% quota share reinsurance agreement (“Personal Lines Quota Share”) among Integon National Insurance Company, lead insurance company on behalf of the GMACI Insurers, as cedents, and the Company, ACP Re, Ltd., a Bermuda reinsurer that is a wholly-owned indirect subsidiary of the Trust, and Maiden Insurance Company, Ltd., as reinsurers. The Personal Lines Quota Share provides that the reinsurers, severally, in accordance with their participation percentages, receive 50% of the net premium of the GMACI Insurers and assume 50% of the related net losses. The Company has a 20% participation in the Personal Lines Quota Share, by which it receives 10% of the net premiums of the personal lines business and assumes 10% of the related net losses. The Personal Lines Quota Share, as amended on October 1, 2012, provides that the reinsurers pay a provisional ceding commission equal to 32.0% of ceded earned premium, net of premiums ceded by the personal lines companies for inuring reinsurance, subject to adjustment to a maximum of 34.5% if the loss ratio for the reinsured business is 60.0% or less and a minimum of 30.0% if the loss ratio is 64.5% or higher. The Personal Lines Quota Share is subject to a premium cap that limits the premium that could be ceded by the GMACI Insurers to the Company to $146,410 during calendar year 2013 to the extent the Company was to determine, in good faith, that it could not assume additional premium. The premium cap increases by 10% per annum. As a result of this agreement, the Company assumed $28,975 and $28,823 of business from the GMACI Insurers during the three months ended June 30, 2013 and 2012, respectively, and $59,627 and $59,432 of business from the GMACI Insurers during the six months ended June 30, 2013 and 2012, respectively. Accident and Health Portfolio Transfer and Quota Share Effective January 1, 2013, the Company, through one of its subsidiaries, entered into a Portfolio Transfer and Quota Share Agreement (the “A&H Quota Share”) with National Health Insurance Company (“NHIC”), a subsidiary of NGHC, related to the assumption by NHIC of the Company's book of A&H business. Pursuant to the A&H Quota Share, NHIC assumed 100% of the Company's loss and unearned premium reserves related to the book of A&H business, which total approximately $2,544. For the existing book of business, NHIC paid the Company a ceding commission equal to the Company's acquisition costs and reinsurance costs of $474. In addition, the Company agreed to continue to issue policies with respect to certain programs assumed by NHIC and certain new A&H programs for such new policies, for which the Company will cede 100% of the premiums related to such policies subject to a ceding commission of five percent plus its acquisition costs and reinsurance costs. The Company recorded approximately $115 and $210 of ceding commission for the three and six months ended June 30, 2013, related to the A&H Quota Share. Master Services Agreement The Company provides NGHC and its affiliates information technology development services in connection with the development and licensing of a policy management system at a cost which is currently 1.25% of gross written premium of NGHC and its affiliates plus the Company’s costs for development and support services. In addition, the Company provides NGHC and its affiliates printing and mailing services at a per piece cost for policy and policy related materials, such as invoices, quotes, notices and endorsements, associated with the policies the Company processes for NGHC and its affiliates on the policy management system. The Company recorded approximately $5,996 and $3,577 of fee income for the three months ended June 30, 2013 and 2012, respectively, and $11,372 and $6,039 of fee income for the six months ended June 30, 2013 and 2012, respectively, related to this agreement. Asset Management Agreement The Company manages the assets of NGHC and its subsidiaries for an annual fee equal to 0.20% of the average aggregate value of the assets under management for the preceding quarter if the average aggregate value for the preceding quarter is $1,000,000 or less and 0.15% of the average aggregate value of the assets under management for the preceding quarter if the average aggregate value for that quarter is more than $1,000,000. The Company managed approximately $856,000 of assets as of June 30, 2013 related to this agreement. As a result of this agreement, the Company earned approximately $490 and $373 of investment management fees for the three months ended June 30, 2013 and 2012, respectively, and $853 and $746 of investment management fees for the six months ended June 30, 2013 and 2012, respectively. As a result of the above service agreements with NGHC, the Company recorded fees totaling approximately $6,486 and $3,950 for the three months ended June 30, 2013 and 2012, respectively, and $12,225 and $6,785 for the six months ended June 30, 2013 and 2012, respectively. As of June 30, 2013, the outstanding balance payable by NGHC related to these service fees and reimbursable costs was approximately $10,011. 800 Superior In August 2011, the Company formed 800 Superior, LLC with a subsidiary of NGHC for the purposes of acquiring an office building in Cleveland, Ohio. The Company and NGHC each have a fifty percent ownership interest in 800 Superior, LLC. The cost of the building was approximately $7,500. The Company has been appointed managing member of the LLC. Additionally, in conjunction with the Company’s 15.4% ownership percentage of NGHC, the Company ultimately receives 57.7% of the profits and losses of the LLC. As such, in accordance with ASC 810-10, Consolidation, the Company has been deemed the primary beneficiary and, therefore, consolidates this entity. Additionally in 2012, NGHC entered into an office lease with 800 Superior, LLC for approximately 134,000 square feet. The lease period is for fifteen years and NGHC paid 800 Superior, LLC $1,071 and $345 for the six months ended June 30, 2013 and 2012. As discussed in Note 13. "New Market Tax Credit," 800 Superior, LLC, the Company and NGHC participated in a financing transaction related to capital improvements on the office building. As part of that transaction, NGHC and the Company entered into an agreement related to the payment and performance guaranties provided by the Company to the various parties to the financing transaction whereby NGHC has agreed to contribute 50% toward any payments the Company is required to make pursuant to the guaranties. Lease Agreements The Company has an office lease for its office space at 59 Maiden Lane in New York, New York from 59 Maiden Lane Associates, LLC, an entity that is wholly-owned by Michael Karfunkel and George Karfunkel. The Company currently leases 39,992 square feet of office space and the lease term is through May 2023. The Company paid approximately $163 and $181 for the leased office space for the three months ended June 30, 2013 and 2012, respectively, and $364 and $363 for the six months ended June 30, 2013 and 2012, respectively. In November 2012, the Company entered into an agreement for its office space in Chicago, Illinois. The lease is with 135 LaSalle Property, LLC, an entity that is wholly-owned by entities controlled by Michael Karfunkel and George Karfunkel. The lease term is through November 30, 2022. The aforementioned lease replaced an existing lease with another entity wholly-owned by the Karfunkels. The Company paid approximately $109 and $67 for these leases for the three months ended June 30, 2013 and 2012, respectively, and $253 and $134 for the six months ended June 30, 2013 and 2012, respectively. Asset Management Agreement with ACP Re, Ltd. The Company provides investment management services to ACP Re, Ltd. at (i) an annual rate of 0.20% of the average value of ACP Re, Ltd.’s invested assets, excluding investment in AmTrust stock, for the preceding calendar quarter if the average value of such assets for the quarter was $1,000,000 or less, or (ii) an annual rate of 0.15% of the average value of ACP Re, Ltd.’s invested assets, excluding investment in AmTrust stock, for the preceding calendar quarter if the average value of such assets for the quarter was greater than $1,000,000. During the three months ended March 31, 2012, the Company also provided accounting and administrative services to ACP Re, Ltd. for a monthly fee of $10. The Company managed approximately $109,000 of assets as of June 30, 2013. The Company recorded approximately $58 and $0 for these services for the three months ended June 30, 2013 and 2012, respectively, and $110 and $233 for the six months ended June 30, 2013 and 2012, respectively. Use of the Company Aircraft The Company’s wholly-owned subsidiary, AmTrust Underwriters, Inc. (“AUI”), is a party to an aircraft time share agreement with each of Maiden and NGHC. The agreements provide for payment to AUI for usage of its company-owned aircraft and covers actual expenses incurred and permissible under federal aviation regulations, including travel and lodging expenses of the crew, in-flight catering, flight planning and weather contract services, ground transportation, fuel, landing and hanger fees, airport taxes, among others. AUI does not charge Maiden or NGHC for the fixed costs that would be incurred in any event to operate the aircraft (for example, aircraft purchase costs, insurance and flight crew salaries). During the three and six months ended June 30, 2013, and 2012, Maiden paid AUI $32 and NGHC paid AUI $109 for the use of AUI’s aircraft under these agreements. In addition, during the three and six months ended June 30, 2012, Maiden paid AUI $1 and $20, respectively, and NGHC paid AUI $29 and $96, respectively, for the use of AUI’s aircraft under these agreements. In addition, for personal travel, Mr. Zyskind, the Company’s President and Chief Executive Officer and Michael Karfunkel, the Chairman of the Board, each entered into an aircraft reimbursement agreement with AUI and, since entering into such agreement, has fully reimbursed AUI for the incremental cost billed by AUI for their personal use of AUI’s aircraft. Mr. Zyskind reimbursed the Company $57 for his personal use of AUI's aircraft during the three and six months ended June 30, 2013, respectively, and reimbursed the Company $36 and $89 for his personal use during the three and six months ended June 30, 2012, respectively. |
Fair Value of Financial Instruments - Additional Information (Details) (USD $)
In Thousands, unless otherwise specified |
6 Months Ended | |||||
---|---|---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2013
Senior Notes
|
Jun. 30, 2013
Subordinate Debenture
|
Jun. 30, 2013
NGHC
|
Jun. 06, 2013
NGHC
|
Jun. 05, 2013
NGHC
|
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fair value | $ 279,800 | $ 69,816 | ||||
Investment discount rate | 7.50% | |||||
Maximum investment in Limited Partnership and Hedge Funds | 1.00% | |||||
Percentage of ownership in NGHC | 15.40% | 25.00% | ||||
Fair value of equity investments in NGHC | $ 129,900 |
Debt - Trust Preferred Securities (Parenthetical) (Detail)
|
Jun. 30, 2013
|
---|---|
Three Month LIBOR | After tenth anniversary in 2015
|
|
Debt Instrument [Line Items] | |
Debt instrument interest rate, margin | 3.40% |
LIBOR | After fifth anniversary in 2011
|
|
Debt Instrument [Line Items] | |
Debt instrument interest rate, margin | 3.30% |
LIBOR | After fifth anniversary in 2012
|
|
Debt Instrument [Line Items] | |
Debt instrument interest rate, margin | 3.00% |
Investments - Amortized Cost, Estimated Market Value and Gross Unrealized Appreciation and Depreciation of Available-for-sale Securities (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
---|---|---|
Schedule of Available-for-sale Securities [Line Items] | ||
Original or amortized cost | $ 2,756,553 | $ 1,968,587 |
Gross unrealized gains | 69,945 | 126,165 |
Gross unrealized losses | (69,773) | (9,061) |
Market value | 2,756,725 | 2,085,691 |
Preferred stock
|
||
Schedule of Available-for-sale Securities [Line Items] | ||
Original or amortized cost | 3,303 | 5,092 |
Gross unrealized gains | 90 | 112 |
Gross unrealized losses | (118) | (20) |
Market value | 3,275 | 5,184 |
Common stock
|
||
Schedule of Available-for-sale Securities [Line Items] | ||
Original or amortized cost | 21,512 | 15,851 |
Gross unrealized gains | 1,670 | 596 |
Gross unrealized losses | (562) | (1,166) |
Market value | 22,620 | 15,281 |
U.S. treasury securities
|
||
Schedule of Available-for-sale Securities [Line Items] | ||
Original or amortized cost | 91,578 | 62,502 |
Gross unrealized gains | 2,211 | 3,694 |
Gross unrealized losses | (106) | (4) |
Market value | 93,683 | 66,192 |
U.S. government agencies
|
||
Schedule of Available-for-sale Securities [Line Items] | ||
Original or amortized cost | 8,594 | 39,594 |
Gross unrealized gains | 206 | 707 |
Gross unrealized losses | (19) | 0 |
Market value | 8,781 | 40,301 |
Municipal bonds
|
||
Schedule of Available-for-sale Securities [Line Items] | ||
Original or amortized cost | 447,303 | 287,361 |
Gross unrealized gains | 7,188 | 12,833 |
Gross unrealized losses | (15,272) | (752) |
Market value | 439,219 | 299,442 |
Foreign government
|
||
Schedule of Available-for-sale Securities [Line Items] | ||
Original or amortized cost | 75,486 | |
Gross unrealized gains | 548 | |
Gross unrealized losses | (1,680) | |
Market value | 74,354 | |
Finance | Corporate bonds
|
||
Schedule of Available-for-sale Securities [Line Items] | ||
Original or amortized cost | 916,406 | 830,101 |
Gross unrealized gains | 34,182 | 68,190 |
Gross unrealized losses | (15,199) | (4,603) |
Market value | 935,389 | 893,688 |
Industrial | Corporate bonds
|
||
Schedule of Available-for-sale Securities [Line Items] | ||
Original or amortized cost | 570,658 | 387,980 |
Gross unrealized gains | 12,429 | 20,914 |
Gross unrealized losses | (26,071) | (1,094) |
Market value | 557,016 | 407,800 |
Utilities | Corporate bonds
|
||
Schedule of Available-for-sale Securities [Line Items] | ||
Original or amortized cost | 71,213 | 45,320 |
Gross unrealized gains | 1,279 | 2,611 |
Gross unrealized losses | (1,738) | (5) |
Market value | 70,754 | 47,926 |
Commercial mortgage backed securities
|
||
Schedule of Available-for-sale Securities [Line Items] | ||
Original or amortized cost | 24,836 | 10,065 |
Gross unrealized gains | 28 | 135 |
Gross unrealized losses | (296) | 0 |
Market value | 24,568 | 10,200 |
Agency, residential mortgage backed securities
|
||
Schedule of Available-for-sale Securities [Line Items] | ||
Original or amortized cost | 511,293 | 276,895 |
Gross unrealized gains | 10,114 | 16,373 |
Gross unrealized losses | (8,506) | (654) |
Market value | 512,901 | 292,614 |
Non-agency, residential mortgage backed securities
|
||
Schedule of Available-for-sale Securities [Line Items] | ||
Original or amortized cost | 7,422 | 7,826 |
Gross unrealized gains | 0 | 0 |
Gross unrealized losses | (194) | (763) |
Market value | 7,228 | 7,063 |
Asset-backed Securities
|
||
Schedule of Available-for-sale Securities [Line Items] | ||
Original or amortized cost | 6,949 | |
Gross unrealized gains | 0 | |
Gross unrealized losses | (12) | |
Market value | $ 6,937 |
Investment in Life Settlements (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Investments, All Other Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment in Life Settlements | The following table describes the Company’s investment in life settlements as of June 30, 2013:
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Premiums to be Paid for Each of Five Succeeding Fiscal Years to keep Life Insurance Policies in Force | Premiums to be paid for each of the five succeeding fiscal years to keep the life insurance policies in force as of June 30, 2013, are as follows:
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Fair Value of Financial Instruments (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurement of Financial Assets and Financial Liabilities on Recurring Basis | The following tables present the level within the fair value hierarchy at which the Company’s financial assets and financial liabilities are measured on a recurring basis as of June 30, 2013 and December 31, 2012:
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Changes in Fair Value of Level 3 Financial Assets And Liabilities | The following table provides a summary of changes in fair value of the Company’s Level 3 financial assets and liabilities for the three and six months ended June 30, 2013 and 2012:
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Fair Value of Portfolio of Life Insurance Policies | The following summarizes data utilized in estimating the fair value of the portfolio of life insurance policies as of June 30, 2013 and December 31, 2012 and, as described in Note 5. "Investments in Life Settlements", only includes data for policies to which the Company assigned value at those dates:
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Increase or (Decrease) in Carrying Value of Investment in Life Insurance Policies | These assumptions are, by their nature, inherently uncertain and the effect of changes in estimates may be significant. The fair value measurements used in estimating the present value calculation are derived from valuation techniques generally used in the industry that include inputs for the asset that are not based on observable market data. The extent to which the fair value could reasonably vary in the near term has been quantified by evaluating the effect of changes in significant underlying assumptions used to estimate the fair value amount. If the life expectancies were increased or decreased by 4 months and the discount factors were increased or decreased by 1% while all other variables were held constant, the carrying value of the investment in life insurance policies would increase or (decrease) by the unaudited amounts summarized below as of June 30, 2013 and December 31, 2012:
|
Fair Value of Financial Instruments - Fair Value of Portfolio of Life Insurance Policies (Detail) (USD $)
|
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2013
|
Dec. 31, 2012
|
|
Disclosure Fair Value Of Portfolio Of Life Insurance Policies [Abstract] | ||
Average age of insured | 79 years 3 months | 78 years 9 months 18 days |
Average life expectancy, months | 135 months | 139 months |
Average face amount per policy | $ 6,748,000 | $ 6,770,000 |
Implicit discount rate | 17.30% | 17.70% |
Acquisitions Acquistions (Tables)
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
|
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MIHC
|
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Business Acquisition [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Preliminary Assets Acquired and Liabilities Assumed | A summary of the preliminary assets acquired and liabilities assumed for MIHC are as follows:
|
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Sequoia
|
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Business Acquisition [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Preliminary Assets Acquired and Liabilities Assumed | A summary of the preliminary assets acquired and liabilities assumed for Sequoia are as follows:
|
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Car Care Plan (Holding) Limited
|
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Business Acquisition [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Preliminary Assets Acquired and Liabilities Assumed | A summary of the preliminary assets acquired and liabilities assumed for CCPH are as follows:
|
Investments - Net Investment Income (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
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Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||
Gross investment income | $ 22,907 | $ 16,544 | $ 41,625 | $ 31,197 |
Less: Investment expenses and interest expense on securities sold under agreement to repurchase | (273) | (200) | (896) | (335) |
Net investment income | 22,634 | 16,344 | 40,729 | 30,862 |
Fixed maturities
|
||||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||
Gross investment income | 18,316 | 16,059 | 35,588 | 29,723 |
Equity securities
|
||||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||
Gross investment income | 3,887 | 100 | 4,289 | 498 |
Cash and cash equivalents
|
||||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||
Gross investment income | $ 704 | $ 385 | $ 1,748 | $ 976 |
Investment in Life Settlements - Additional Information (Detail) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | 6 Months Ended | 6 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
Contract
|
Jun. 30, 2012
|
Jun. 30, 2013
Contract
|
Jun. 30, 2012
|
Dec. 31, 2012
|
Jun. 30, 2013
Tiger Capital LLC
Contract
|
Jun. 30, 2013
NGHC
|
Aug. 31, 2011
NGHC
|
Jun. 30, 2013
Tiger Capital LLC
|
Jun. 30, 2013
Life settlement contracts
|
Jun. 30, 2012
Life settlement contracts
|
Jun. 30, 2013
Life settlement contracts
Parent
|
Jun. 30, 2012
Life settlement contracts
Parent
|
|
Schedule of Cost-method Investments [Line Items] | |||||||||||||
Percentage of ownership interest | 15.40% | 15.40% | 50.00% | ||||||||||
Profits and losses of investment in life insurance policies and premium finance loans | 57.70% | ||||||||||||
Capital contributions | $ 10,797 | $ 20,642 | $ 5,388 | $ 10,321 | |||||||||
Investments in life settlements and cash value loans | 208,694 | 208,694 | 193,927 | ||||||||||
Gain on investment in life settlement contracts net of profit commission | 1,080 | 1,961 | 4 | 2,051 | |||||||||
Number of life settlement contracts | 261 | 261 | |||||||||||
Number of premium finance loans | 2 | ||||||||||||
Value of premium finance loans | 0 | ||||||||||||
Face value of life settlement contracts | 1,701,909 | 1,701,909 | |||||||||||
Face value of premium finance loans | $ 0 |
Share Based Compensation (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
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Text Block [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Option Granted, Exercised and Expired | The following information and tables below for stock options, restricted stock and RSUs have been adjusted retroactively in all periods presented. The following schedule shows all options granted, exercised, and expired under the Plan for the six months ended June 30, 2013 and 2012:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Restricted Stock and RSU Activity | A summary of the Company’s restricted stock and RSU activity for the six months ended June 30, 2013 and 2012 is shown below:
|
Share Based Compensation - Schedule of Option Granted, Exercised and Expired (Detail) (USD $)
|
6 Months Ended | |
---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Shares | ||
Outstanding at beginning of period | 3,341,543 | 4,136,466 |
Granted | 60,000 | 38,500 |
Exercised | (301,558) | (338,235) |
Cancelled or terminated | 0 | (86,966) |
Outstanding end of period | 3,099,985 | 3,749,765 |
Weighted Average Exercise Price | ||
Outstanding at beginning of period | $ 10.35 | $ 9.96 |
Granted | $ 31.76 | $ 25.91 |
Exercised | $ 8.00 | $ 8.26 |
Cancelled or terminated | $ 0.00 | $ 12.98 |
Outstanding end of period | $ 11.00 | $ 10.21 |
Acquisitions - Purchase Price Allocation (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | 0 Months Ended | 6 Months Ended | 6 Months Ended | 6 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
Dec. 31, 2012
|
May 13, 2013
MIHC
|
Jun. 30, 2013
MIHC
|
May 03, 2013
CPPNA
|
Jun. 30, 2013
Sequoia
|
Apr. 19, 2013
Sequoia
|
Jun. 30, 2013
Car Care Plan (Holding) Limited
|
Feb. 28, 2013
Car Care Plan (Holding) Limited
|
|
Business Acquisition [Line Items] | ||||||||||||
Cash and investments | $ 134,780 | $ 215,473 | $ 253,257 | |||||||||
Premium receivables | 23,085 | 32,870 | 26,001 | |||||||||
Reinsurance recoverables | 43,793 | 12,186 | ||||||||||
Other assets | 42,151 | 4,014 | 2,979 | |||||||||
Deferred tax asset | 5,358 | 7,780 | ||||||||||
Property and equipment | 2,684 | 1,022 | 589 | |||||||||
Intangible assets | 6,132 | 34,700 | 11,848 | 34,337 | ||||||||
Goodwill | 246,719 | 246,719 | 229,780 | 17,327 | ||||||||
Total assets | 214,190 | 316,800 | 329,349 | |||||||||
Loss and loss expense reserves | 89,267 | 165,487 | 12,619 | |||||||||
Unearned premium | 27,760 | 59,773 | 131,494 | |||||||||
Accrued liabilities | 19,830 | 15,624 | 82,534 | |||||||||
Deferred tax liability | 2,146 | 12,145 | 4,147 | 6,215 | ||||||||
Notes payable | 6,500 | |||||||||||
Total liabilities | 145,503 | 245,031 | 232,862 | |||||||||
Purchase price | 14,500 | 40,000 | 60,000 | 70,420 | ||||||||
Cash paid | 48,500 | |||||||||||
Acquisition gain | $ 31,956 | $ 0 | $ 58,023 | $ 0 | $ 20,187 | $ 11,769 | $ 26,067 |
Share Based Compensation - Additional Information (Detail) (USD $)
In Thousands, except Share data, unless otherwise specified |
3 Months Ended | 6 Months Ended | 6 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Mar. 31, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
Omnibus Incentive Plan
|
Dec. 31, 2010
Omnibus Incentive Plan
|
Jun. 30, 2013
Stock Options
|
Jun. 30, 2013
Restricted Stock Units (RSUs)
Minimum
|
Jun. 30, 2013
Restricted Stock Units (RSUs)
Maximum
|
Jun. 30, 2013
Performance Share Units
|
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Total Intrinsic Value | $ 6,341 | $ 7,485 | |||||||||
PSU's granted during the period | 219,900 | 579,329 | 420,180 | ||||||||
Number of shares authorized for stock award, maximum | 6,650,062 | ||||||||||
Common stock remained available for grants | 5,000,000 | ||||||||||
Stock options, expiration term | 10 years | ||||||||||
Share based award, vesting period | 4 years | 2 years | 4 years | ||||||||
Exercise period of vested option after employment relationship end | 3 months | 3 months | |||||||||
Weighted average grant date fair value of options granted | $ 8.94 | $ 8.47 | |||||||||
Intrinsic value of stock options | 76,580 | 73,133 | 76,580 | 73,133 | |||||||
Stock option exercise and other | 2,472 | 4,102 | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value, Total Shares, Value | 12,052 | ||||||||||
Stock based compensation | 2,673 | 1,565 | 4,781 | 2,746 | |||||||
Excess tax benefit from award exercised | $ 2,419 | $ 1,097 |
Investments - Fair Values of Restricted Assets (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
---|---|---|
Investments, Debt and Equity Securities [Abstract] | ||
Restricted cash | $ 163,868 | $ 78,762 |
Restricted investments | 329,634 | 251,082 |
Total restricted cash and investments | $ 493,502 | $ 329,844 |
Related Party Transactions - Additional information (Detail) (USD $)
In Thousands, except Share data, unless otherwise specified |
0 Months Ended | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | 1 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 6 Months Ended | 3 Months Ended | 5 Months Ended | 6 Months Ended | 0 Months Ended | 0 Months Ended | 1 Months Ended | 1 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 1 Months Ended | 6 Months Ended | 1 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 1 Months Ended | 0 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 05, 2013
|
Jun. 30, 2011
|
Jun. 30, 2013
|
Jun. 30, 2012
|
Mar. 31, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
Dec. 31, 2012
|
May 10, 2013
|
Mar. 01, 2010
|
Mar. 01, 2010
Personal Lines Reinsurance
|
Jun. 30, 2013
Personal Lines Reinsurance
|
Jun. 30, 2012
Personal Lines Reinsurance
|
Jun. 30, 2013
Personal Lines Reinsurance
|
Jun. 30, 2012
Personal Lines Reinsurance
|
Mar. 01, 2010
Minimum
Personal Lines Reinsurance
|
Mar. 01, 2010
Maximum
Personal Lines Reinsurance
|
Aug. 31, 2011
800 Superior LLC
|
Jun. 30, 2013
Maiden
|
Jun. 30, 2012
Maiden
|
Mar. 31, 2012
Maiden
|
Jun. 30, 2013
Maiden
|
Jun. 30, 2012
Maiden
|
Jun. 30, 2013
Maiden
Minimum
|
Jun. 30, 2013
Maiden
Maximum
|
Jun. 30, 2012
Maiden
Board of Directors Chairman
|
Jun. 30, 2012
Maiden
Board of Directors Chairman
|
Jun. 30, 2013
Maiden
Board of Directors Chairman
|
Jun. 30, 2013
Maiden
Director
|
Jun. 30, 2013
Maiden
Chief Executive Officer
|
Jun. 30, 2013
NGHC
|
Jun. 30, 2012
NGHC
|
Mar. 31, 2012
NGHC
|
Jun. 04, 2013
NGHC
|
Jun. 30, 2013
NGHC
|
Jun. 30, 2012
NGHC
|
Jun. 06, 2013
NGHC
|
Jun. 05, 2013
NGHC
|
Aug. 31, 2011
NGHC
|
Jun. 05, 2013
NGHC
Series A Preferred Stock
|
Jun. 30, 2013
NGHC
Series A Preferred Stock
|
Jun. 05, 2013
NGHC
Common stock
|
Jun. 06, 2013
NGHC
Common stock
|
Jun. 30, 2012
NGHC
Minimum
|
Jun. 30, 2013
NGHC
Minimum
|
Jun. 30, 2012
NGHC
Maximum
|
Jun. 30, 2013
NGHC
Maximum
|
Jun. 30, 2013
NGHC
Board of Directors Chairman
|
Jun. 30, 2013
NGHC
800 Superior LLC
sqft
|
Jun. 30, 2013
NGHC
800 Superior LLC
sqft
|
Jun. 30, 2012
NGHC
800 Superior LLC
|
Aug. 31, 2011
NGHC
800 Superior LLC
|
Jun. 30, 2013
AII
|
Mar. 31, 2012
AII
|
Dec. 31, 2007
AII
|
Sep. 30, 2007
AII
|
Jun. 30, 2013
AII
|
Jun. 30, 2012
AII
|
Jun. 30, 2013
AII
Scenario 3
|
Sep. 30, 2007
AII
Minimum
|
Apr. 30, 2011
AII
Maiden
Retail Business
|
Jun. 30, 2013
AII
Maiden
Minimum
|
Jun. 30, 2013
AII
Maiden
Maximum
|
Apr. 30, 2011
Maiden Insurance
|
Apr. 30, 2011
Maiden Insurance
Minimum
|
Apr. 30, 2011
Maiden Insurance
Maximum
|
Jun. 30, 2013
Unrelated Third Party Investors
|
Jun. 30, 2013
Maiden Reinsurance Company
|
Jun. 30, 2013
SNIC
|
Mar. 01, 2010
GMACI
|
Mar. 01, 2010
GMACI
Personal Lines Reinsurance
|
Jun. 30, 2013
NHIC
Accident and Health Insurance Segment
|
Jun. 30, 2013
NHIC
Accident and Health Insurance Segment
|
Jun. 30, 2013
59 Maiden Lane Associates, LLC
sqft
|
Mar. 31, 2012
59 Maiden Lane Associates, LLC
|
Jun. 30, 2013
59 Maiden Lane Associates, LLC
sqft
|
Jun. 30, 2012
59 Maiden Lane Associates, LLC
|
Jun. 30, 2013
33 West Monroe Associates, LLC
|
Mar. 31, 2012
33 West Monroe Associates, LLC
|
Jun. 30, 2013
33 West Monroe Associates, LLC
|
Jun. 30, 2012
33 West Monroe Associates, LLC
|
Jun. 30, 2013
TIC
|
Jun. 30, 2012
TIC
|
Jun. 30, 2013
TIC
|
Jun. 30, 2012
TIC
|
Jun. 30, 2013
ACP Re, Ltd
|
Mar. 31, 2012
ACP Re, Ltd
|
Jun. 30, 2013
ACP Re, Ltd
|
Jun. 30, 2012
ACP Re, Ltd
|
Jun. 30, 2013
ACP Re, Ltd
Scenario 1
|
Jun. 30, 2013
ACP Re, Ltd
Scenario 3
|
Jun. 30, 2012
ACP Re, Ltd
Minimum
Scenario 3
|
Jun. 30, 2012
ACP Re, Ltd
Maximum
Scenario 2
|
Aug. 31, 2011
ACP Re, Ltd
800 Superior LLC
|
Jun. 06, 2013
Private Placement [Member]
NGHC
|
|
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Percentage of capital stock | 7.60% | 7.60% | 6.20% | 9.40% | 5.10% | 100.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Percentage of net premium provided by personal lines quota share | 10.00% | 40.00% | 50.00% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Percentage of reinsurance related losses assumed | 10.00% | 40.00% | 50.00% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ceded credit risk retention amount | $ 5,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Term of reinsurance agreement | 1 year | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Extension period of reinsurance agreement term | 3 years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expiration date reinsurance agreement | Apr. 01, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ceding commission percentage of ceded written premiums | 31.00% | 34.375% | 5.00% | 5.00% | 5.00% | 5.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Percentage of premiums | 40.00% | 10.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reinsurance ceded profit ratio | 50.00% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reinsurance ceded loss ratio | 81.50% | 95.00% | 65.00% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Provisional ceding commission percentage | 32.00% | 80.00% | 80.00% | 20.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portion of premiums and losses with respect to certain surplus lines programs | 90.00% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assumed premiums written | 429 | 300 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assumed premiums earned | 198 | 600 | 679 | 4,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Losses incurred on premium | 16 | 700 | 314 | 2,800 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest rate | 0.90% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note payable on collateral loan – related party | 167,975 | 167,975 | 167,975 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest expense on collateral loan | 772 | 914 | 1,471 | 1,542 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Collateral debt issued by maiden insurance | 947,581 | 947,581 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Percentage of reinsurance brokerage commissions | 1.25% | 1.25% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Brokerage commission | 6,783 | 2,151 | 10,442 | 4,345 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Asset management services fee percentage | 0.15% | 0.20% | 0.15% | 0.20% | 0.20% | 0.15% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets managed under asset management agreement | 2,830,000 | 2,830,000 | 856,000 | 856,000 | 109,000 | 109,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average value of assets under management | 1,000,000 | 1,000,000 | 1,000,000 | 1,000,000 | 1,000,000 | 1,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment management fee | 1,061 | 830 | 2,102 | 1,660 | 490 | 373 | 853 | 746 | 10 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase of senior notes | 12,500 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principal amount of senior notes | 107,500 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Senior notes, maturity year | 2041 | 2021 | 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Senior notes, interest rate | 8.25% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Senior notes, redemption year | Jun. 15, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Senior notes, percentage of cash redemption price | 100.00% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized gain on senior notes | 307 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock purchased | 53,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Percentage of ownership in NGHC | 15.40% | 25.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gain on sale of investment | 8,644 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock purchased, shares | 53,054 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rate of cumulative dividend | 8.00% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Percentage of convertible preferred stock | 21.25% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares converted | 53,054 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Conversion of Series A preferred stock of NGHC into common stock (shares) | 42,958 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock, par value | $ 26.17 | $ 0.01 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock split during the period | 12,295,430 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock split, conversion ratio | 286 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividend income on series A preferred stock | 12,203 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued by the company as a part of the agreement | 21,850,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity in earnings of unconsolidated subsidiary – related party | 7,059 | 3,088 | 8,610 | 5,452 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Percentage of personal lines quota share | 20.00% | 50.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Provisional ceding commission rate adjustment | 30.00% | 34.50% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reinsurance business loss ratio | 64.50% | 60.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Premium cap for ceded premiums | 146,410 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Percentage increase in premium cap for ceded premiums per annum | 10.00% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net written premium | 639,997 | 391,589 | 1,172,103 | 751,366 | 28,975 | 28,823 | 59,627 | 59,432 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Percentage of reinsurance related losses and unearned premiums assumed | 100.00% | 100.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reinsurance related losses and unearned premiums assumed | 2,544 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ceding commission received | 474 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Percentage of comission cedded by company | 100.00% | 100.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ceding commission - earned | 115 | 210 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
License fee percentage | 1.25% | 1.25% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Technology services fee income | 5,996 | 3,577 | 11,372 | 6,039 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Asset management fees | 6,486 | 3,950 | 12,225 | 6,785 | 58 | 0 | 110 | 233 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Asset management fees payable | 10,011 | 10,011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Percentage of ownership interest | 50.00% | 15.40% | 15.40% | 15.40% | 50.00% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cost of acquiring office building | 7,500 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Percentage of profits and losses | 57.70% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Office lease period | 15 years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Office lease expenses | 1,071 | 345 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Office area under lease | 134,000 | 134,000 | 39,992 | 39,992 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease payments | 163 | 181 | 364 | 363 | 109 | 67 | 253 | 134 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Aircraft use payments | 1 | 32 | 20 | 36 | 89 | 57 | 29 | 109 | 96 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reinsurance, maximum coverage | 2,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assumed premiums written | 1,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reinsurance, minimum coverage | 1,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Premium written - ceded | $ 500 |
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