10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2014

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from  to .

Commission File Number: 001-33143

AMTRUST FINANCIAL SERVICES, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	04-3106389
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification No.)

59 Maiden Lane, 43rd Floor New York, New York	10038
(Address of Principal Executive Offices)	(Zip Code)

(212) 220-7120

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Shares, $0.01 par value per share	The NASDAQ Stock Market LLC
Series A Preferred Stock, $0.01 par value per share	New York Stock Exchange, Inc.
Depositary Shares, each representing 1/40th of a share of 7.25% Non-Cumulative Preferred Stock, Series B	New York Stock Exchange, Inc.
Depositary Shares, each representing 1/40th of a share of 7.625% Non-Cumulative Preferred Stock, Series C	New York Stock Exchange, Inc.

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer x Accelerated Filer o Non-Accelerated Filer o (Do not check if a smaller reporting company) Smaller Reporting Company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes o No x

As of June 30, 2014, the last business day of the registrant’s most recently completed second quarter, the aggregate market value of the common stock held by non-affiliates was $1,305,118,675.

As of February 17, 2015, the number of common shares of the registrant outstanding was 81,917,831.

Documents incorporated by reference: Portions of the Proxy Statement for the 2015 Annual Meeting of Shareholders of the registrant to be filed subsequently with the SEC are incorporated by reference into Part III of this report.

AMTRUST FINANCIAL SERVICES, INC.

TABLE OF CONTENTS

		Page
PART I
Item 1.	Business	1
Item 1A.	Risk Factors	36
Item 1B.	Unresolved Staff Comments	53
Item 2.	Properties	54
Item 3.	Legal Proceedings	54
Item 4.	Mine Safety Disclosures	54
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	55
Item 6.	Selected Financial Data	58
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	60
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	97
Item 8.	Financial Statements and Supplementary Data	98
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	99
Item 9A.	Controls and Procedures	99
Item 9B.	Other Information	101
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	101
Item 11.	Executive Compensation	101
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	101
Item 13.	Certain Relationships and Related Transactions, and Director Independence	101
Item 14.	Principal Accounting Fees and Services	102
PART IV
Item 15.	Exhibits and Financial Statement Schedules	102

i

PART I

Note on Forward-Looking Statements

This Form 10-K contains certain forward-looking statements that are intended to be covered by the safe harbors created by The Private Securities Litigation Reform Act of 1995. When we use words such as “anticipate,” “intend,” “plan,” “believe,” “estimate,” “expect,” or similar expressions, we do so to identify forward-looking statements. Examples of forward-looking statements include the plans and objectives of management for future operations, including those relating to future growth of our business activities and availability of funds, and are based on current expectations that involve assumptions that are difficult or impossible to predict accurately and many of which are beyond our control. Actual results may differ materially from those expressed or implied in these statements as a result of significant risks and uncertainties, including, but not limited to, non-receipt of expected payments from insureds or reinsurers, changes in interest rates, a downgrade in the financial strength ratings of our insurance subsidiaries, the effect of the performance of financial markets on our investment portfolio, the amounts, timing and prices of any share repurchases made by us under our share repurchase program, our estimates of the fair value of our life settlement contracts, development of claims and the effect on loss reserves, accuracy in projecting loss reserves, the cost and availability of reinsurance coverage, the effects of emerging claim and coverage issues, changes in the demand for our products, our degree of success in integrating acquired businesses, the effect of general economic conditions, state and federal legislation, regulations and regulatory investigations into industry practices, risks associated with conducting business outside the United States, developments relating to existing agreements, disruptions to our business relationships with Maiden Holdings, Ltd., National General Holdings Corp., ACP Re, Ltd., or third party agencies and warranty administrators, breaches in data security or other disruptions with our technology, heightened competition, changes in pricing environments, and changes in asset valuations. Additional information about these risks and uncertainties, as well as others that may cause actual results to differ materially from those projected, is contained in “Item 1A. Risk Factors” in this Annual Report on Form 10-K. The projections and statements in this report speak only as of the date of this report and we undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Item 1. Business

Legal Organization

AmTrust Financial Services, Inc. is a Delaware corporation that was acquired by its principal stockholders in 1998 and began trading on the NASDAQ Global Select Market on November 13, 2006. References to “AmTrust,” the “Company,” “we,” “our,” or “us” in this Annual Report on Form 10-K and in other statements and information publicly disseminated by AmTrust Financial Services, Inc., refer to the consolidated operations of the holding company.

Business Overview

AmTrust underwrites and provides property and casualty insurance products, including workers' compensation, commercial automobile, general liability and extended service and warranty coverage, in the United States and internationally to niche customer groups that we believe are generally under served within the broader insurance market.

Our business model focuses on achieving superior returns and profit growth with the careful management of risk. We pursue these goals through geographic and product diversification, as well as an in-depth understanding of our insured exposures. Our product mix includes, primarily, workers’ compensation, extended warranty and other commercial property/casualty insurance products. Our workers’ compensation and property/casualty insurance policyholders in the United States are generally small and middle market businesses. Our extended warranty customers are manufacturers, distributors and retailers of commercial and consumer products. We have also built a strong and growing distribution of extended warranty and specialty risk products, including liability and other property/casualty products, in Europe. The majority of our products are sold through independent third-party brokers, agents, retailers or administrators. Our strategy is to target small to middle size customer markets throughout the U.S. and Europe where our proprietary technology platform enables us to efficiently manage the high volume of policies and claims that result from serving large numbers of small policyholders and warranty contract holders. The technology we have developed offers a level of service that is a competitive advantage in these high volume, lower risk markets by enhancing our ability to service, underwrite and adjudicate claims. Additionally, our ability to maintain and analyze high volumes of loss data over a long historical period allows us to better manage and forecast the underlying risk inherent in the portfolio. Since our inception in 1998, we have grown both organically and through an opportunistic acquisition strategy. We believe we approach acquisitions conservatively, and our strategy is to take relatively modest integration and balance sheet risk. Our acquisition activity has involved the purchase of companies, renewal rights to established books of insurance portfolios, access to distribution networks and the hiring of established teams of underwriters with expertise in our specialty lines.

1

We are committed to driving long-term stockholder value and industry-leading returns on equity by continuing to execute on our lower risk, lower volatility business model and leveraging technology to help maintain a more efficient cost structure, consistently generate solid underwriting profits and ensure strong customer service and retention rates. Additionally, we are focused on further enhancing our economies of scale by opportunistically expanding our geographic reach and product set, growing our network of agents and other distributors, developing new client relationships and executing our acquisition strategy. We are also focused on maintaining our disciplined approach to capital management while maximizing an appropriate risk-adjusted return on our growing investment portfolio. We continue to carefully monitor and maintain appropriate levels of reserves and seek to minimize our reinsurance recoverable exposure in order to maintain a strong balance sheet. We intend to expand our business and capital base to take advantage of profitable growth opportunities while maintaining or improving our A.M. Best ratings. Our principal insurance subsidiaries are rated “A” (Excellent) by A.M. Best Company (“A.M. Best”), which rating is the third highest of 16 rating levels.

Competition

The insurance industry, in general, is highly competitive and there is significant competition in the commercial business insurance sector. Competition in the insurance business is based on many factors, including coverage availability, claims management, safety services, payment terms, premium rates, policy terms, types of insurance offered, overall financial strength, financial ratings assigned by independent rating organizations, such as A.M. Best, and reputation. Some of the insurers with which we compete have greater financial, marketing and management resources than we do. In the future, we may also compete with new market entrants. Our competitors include other insurance companies, state insurance pools and self-insurance funds. We generally target niche sectors and clients where the market is not as competitive as the broader market and where we have particular expertise and provide differentiated offerings compared to our competitors.

More than one hundred insurance companies participate in the workers’ compensation market. The insurance companies with which we compete vary by state and by the industries we target. We believe our competitive advantages include our efficient underwriting and claims management practices and systems and our A.M. Best rating of “A” (Excellent). In addition, we believe our lower processing costs allow us to competitively price our insurance products.

We believe the niche markets in the Specialty Risk and Extended Warranty sector in which we do business are less competitive than most other insurance sectors (including workers’ compensation insurance). We believe our Specialty Risk and Extended Warranty teams are recognized for their knowledge and expertise in the targeted markets. Nonetheless, we face significant competition, including several internationally well-known insurers that have greater financial, marketing and management resources and experience than we have. We believe that our competitive advantages include our ownership of both a U.S. and U.K. warranty provider, which enables us to directly administer the business, the ability to provide technical assistance to non-affiliate warranty providers, experienced underwriting, resourceful claims management practices and good relations with warranty administrators in the European Union, Asia and the United States.

Our Specialty Program segment employs a niche strategy of targeting smaller businesses, which helps to differentiate our offerings from those of our competitors. Most of our competing carriers pursue larger risks. We do not compete for high exposure business and underwrite lower hazard classes of business where service and execution are the basis for attracting and retaining business as opposed to providing the lowest price. Our competitive A.M. Best rating and financial size allow us to compete favorably for target business.

Underwriting and Claims Management Philosophy

We believe that proactive and prompt claims management is essential to reducing losses and lowering loss adjustment expenses and enables us to more effectively and accurately measure reserves. To this end, we utilize our proprietary technology and extensive database of loss history in order to appropriately price and structure policies, maintain lower levels of loss, enhance our ability to accurately predict losses, and maintain lower claims costs than the industry as a whole. We believe a strong underwriting foundation is best accomplished through careful risk selection and continuous evaluation of underwriting guidelines relative to loss experience. We are committed to a consistent and thorough review of each new underwriting opportunity and our portfolio as a whole, and, where permissible and appropriate, we customize the terms, conditions and exclusions of our coverage in order to manage risk and enhance profitability.

2

Business Segments

We manage our business through three segments, Small Commercial Business, Specialty Risk and Extended Warranty, and Specialty Program, which are based on the products we provide and the markets we serve.

The following table provides our gross written premium by segment for the years ended December 31, 2014, 2013 and 2012:

(Amounts in Thousands)	2014		2013		2012
Small Commercial Business	$	2,999,714	$	1,659,980	$	933,740
Specialty Risk and Extended Warranty	1,983,052		1,511,649		1,118,710
Specialty Program	1,105,199		879,455		578,735
Personal Lines Reinsurance - Run off (1)	—		65,827		118,141
Total	$	6,087,965	$	4,116,911	$	2,749,326

⁽¹⁾The Personal Lines Reinsurance segment is a former segment related to the Personal Lines Quota Share with National General Holdings Corp.'s personal lines insurance companies. On August 1, 2013, we received notice, effective August 1, 2013, that our participation in the Personal Lines Quota Share was terminated on a run-off basis.

Additional financial information regarding our segments is presented in Note 25. “Segments” to our audited consolidated financial statements appearing elsewhere in this Form 10-K.

Small Commercial Business

This segment provides workers’ compensation insurance to small businesses that operate in low and medium hazard classes and commercial package and other property and casualty insurance products to small businesses, with average annual premiums of approximately $8,211. We are authorized to write our Small Commercial Business products in all 50 states. We distribute our policies through a network of over 9,400 select retail and wholesale agents who are paid commissions based on the annual policy premiums written. Workers’ compensation insurance pricing and coverage options are generally mandated and regulated on a state by state basis and provide coverage for the statutory obligations of employers to pay medical care expenses and lost wages for employees who are injured in the course of their employment. Commercial package products provide a broad array of insurance to small businesses, including commercial property, general liability, inland marine, automobile, workers’ compensation and umbrella coverage.

We believe the small business component of the workers’ compensation market is generally less competitive than the broader insurance market because the smaller policy size and low average premiums needed by these types of policyholders generally does not fit the underwriting and profitability criteria of many of our competitors. Our highly customized and proprietary technology platform enables us to individually underwrite, manage and control losses in a cost-effective manner for a large number of small policies while still providing quality customer service and responsive claims management to our clients and the agents that distribute our products. We believe these factors have been key to our ability to achieve high retention and renewal rates. Our policy renewal rate on voluntary business (excluding assigned risk plans), which represented approximately 95% of the segment’s gross written premiums in 2014, was 85%, 87%, and 86% in 2014, 2013 and 2012, respectively.

Some of our commonly written small business risks include:

• restaurants;

• retail;

• office and professional;

• service industries;

• schools;

• hospitality;

• light manufacturing;

• wholesale operations;

• auto service;

3

• surety;

• lumber;

• community banks;

• artisan contractors; and

• not-for-profits.

We are focused on continuing to broaden our market share by enhancing our current agent relationships as well as developing new agent relationships. Our on-line rating and submission system permits agents and brokers to easily determine in real-time if the risk and pricing parameters for a prospective workers’ compensation client meet our underwriting criteria and deliver an application for underwriting approval to us in a paperless environment. Our underwriting system will not allow business to be placed if it does not fit within our guidelines. These same types of efficiencies also exist for our commercial package product business. Our system handles most clerical duties, so that our underwriters can focus on making decisions on risk submissions.

We administer all Small Commercial Business claims in house. Our claims management process is structured to provide prompt service and personal attention with a designated adjuster assigned to each case. Our system guides the insured and other involved parties through the claims adjudication process in an effort to allow them to return to normal business operations as soon as possible. We seek to limit the number of claim disputes with all parties through early intervention in the claims process. We use a proprietary system of internet-based tools and applications that enable our claims staff to concentrate on investigating submitted claims, to seek subrogation opportunities and to determine the actual amount of damages involved in each claim. This system allows the claims process to begin as soon as a claim is submitted.

Our workers’ compensation claims adjusters have an average of 16 years of experience and have teams located in nine different states. Each adjuster handles an average monthly pending caseload of approximately 160 cases. Supervision of the adjusters is performed by internal supervisors and a claims manager in each region.

In 2014 and 2013, approximately 77% of our Small Commercial Business workers’ compensation claims were only for medical expenses with 23% of claims for medical expenses and lost wages.

As of December 31, 2014, approximately 1.5% of the 17,880 Small Commercial Business workers’ compensation claims reported for accident year 2009 were open, 2.0% of the 20,232 claims reported for accident year 2010 were open, 3.3% of the 23,880 claims reported for accident year 2011 were open, 5.9% of the 31,958 claims reported for accident year 2012 were open, 11% of the 45,342 claims reported for accident year 2013 were open and 40.9% of the 61,709 claims reported for accident year 2014 were open.

We maintain Small Commercial Business property and casualty claims operations in several of our domestic offices and the commercial package claims operation is separated into four processing units: casualty, property, cost-containment/recovery and a fast-track physical damage unit. As of December 31, 2014, we employed 202 property and casualty claim adjusters. Overall, our property and casualty claims adjusters handle an average monthly pending caseload of approximately 109 claims.

As of December 31, 2014, our Small Commercial Business property and casualty claims were approximately 60% automobile and 9% property and inland marine with the remaining 31% involving general liability and umbrella losses compared to 59%, 8% and 33%, respectively, in 2013. At the end of 2014, 43% of the 14,832 claims reported in accident year 2014 remained open, while 22% and 11% of the 17,038 claims and 17,781 claims from 2013 and 2012, respectively, remained open (2013 and 2012 number of claims adjusted for the impact of acquisitions).

Our Small Commercial Business property and casualty claims adjusters have an average of 22 years of experience. Supervision of the adjusters is performed by our internal claims management, comprised of a staff that has an average of over 28 years of experience. Increases in reserves over the authority of the claims adjuster must be approved by supervisors. Senior claims managers provide direct oversight on all claims with an incurred value of $50,000 or more. Any claim reserved or settled over $100,000 is reviewed by at least two levels of claim management including the Chief Claims Officer.

In addition to growing organically, we have further enhanced our marketing and customer liaison capabilities for small-business workers’ compensation and property and casualty insurance by acquiring distribution networks and renewal rights from companies that have long-standing, established agent relationships, underwriting and claims management expertise, and/or infrastructure to provide additional support to our platform. These transactions have also enabled us to further expand our geographic reach and offer additional products.

4

Specialty Risk and Extended Warranty

In our Specialty Risk and Extended Warranty segment 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. In 2011, we opened branch offices in Italy and Spain to support our European specialty risk business. Our model is focused on developing coverage plans by evaluating and analyzing historical product and industry data to establish appropriate pricing and contract terms and enhancing the profitability of the plans by limiting the frequency and severity of losses while delivering superior customer service. In 2013, we completed an acquisition of a managing agency that owns a Lloyd's property and casualty insurance syndicate that focuses on general insurance and provides access to Lloyd's underwriting platform for small brokers. We believe that our proprietary technology platform and strong industry expertise provide us a competitive advantage. We carefully select administrators with extensive industry knowledge and target industries and coverage plans that have demonstrated consistently favorable loss experience. Additionally, we utilize extensive historical claims data and detailed actuarial analysis to ensure our ability to more accurately forecast the frequency and severity of losses and draft restrictive, risk-specific coverage terms with clearly identified coverage restrictions to further reduce the level of losses. Our efficient and proactive claims management process enables us to ensure superior customer service, and if necessary, proactively adjust our premiums based on changes in actual loss experience. Our specialty risk business primarily covers the following risks:

• legal expenses in the event of unsuccessful litigation;

• property damage for residential properties;

• home emergency repairs caused by incidents affecting systems, such as plumbing, wiring or central heating;

• latent defects that materialize on real property after building or completion;

• payment protection to insureds if they become unable to meet financial obligations under finance contracts;

• guaranteed asset protection (“GAP”) to cover the difference between an insurer’s settlement and the asset value in the event of a total loss; and

• general liability, employers’ liability, public liability, negligence of advisers and liability of health care providers and medical facilities.

Our extended warranty business covers selected consumer and commercial goods and other risks, including:

• automotive;

• consumer electronics and appliances;

• commercial equipment; and

• recreational vehicle and power sports.

We also serve as a third party administrator to provide claims handling and call center services to the consumer products and automotive industries in the U.S., Canada, Europe and Asia.

In connection with our extended warranty business, we issue policies to our clients that provide for payment or replacement of goods to meet our clients’ contractual liabilities to the end purchasers of the warranty under contracts that have coverage terms with durations ranging from one month to 120 months depending on the type of product. Our U.S. warranty polices currently have an approximate term of 42 months, while our European warranty polices have an approximate term of 19 months and our European casualty policies have a term of 12 months. In the event that the frequency or the severity of loss on the claims of a program exceeds original projections, we generally have the right to increase premium rates for the balance of the term of the contract and, in Europe, the right to cancel prior to the end of the term. We believe that the profitability of each coverage plan we underwrite is largely dependent upon our ability to accurately forecast the frequency and severity of claims and manage the claims process efficiently. We continuously collect and analyze claims data in order to forecast future claims trends. We also provide warranty administration services in the United States.

We underwrite our specialty risk coverage on a coverage plan-level basis, which involves substantial data collection and actuarial analysis as well as analysis of applicable laws governing policy coverage language and exclusions. We prefer to apply a historical rating approach in which we analyze historical loss experience of the covered product or similar products rather than an

5

approach that attempts to estimate our total exposure without such historical data. In addition, we believe that the quality of the marketing and claims administration service provided by the warranty administrator is a significant driver of the profitability of the product. Accordingly, a critical evaluation of the prospective warranty administrator is an important component of underwriting a plan. The results of our underwriting analysis are used to determine the premium we charge and drive the description of the plan coverage and exclusions. The underwriting process generally takes three months or more to complete.

We market our extended warranty and GAP products in the United States and internationally primarily through brokers and third party warranty administrators, through a direct marketing group and our own warranty administrator AMT Warranty. Third party administrators generally handle claims on our policies and provide monthly loss reports. We review the monthly reports and if the losses were unexpectedly high, we generally have the right under our policies to adjust our pricing or cease underwriting new business under the coverage plan. We routinely audit the claims paid by the administrators. We hire third party experts to validate certain types of claims. For example, we engage engineering consultants to validate claims made on coverage we provide on heavy machinery. We generally settle our extended warranty claims in-kind — by repair or replacement — rather than in cash. When possible, we negotiate volume fixed-fee repair or replacement agreements with third parties to reduce our loss exposure.

In 2014, approximately 64% of gross written premium for this segment originated internationally, while 36% originated in the United States. During 2014 and 2013, we derived over ten percent of our gross written premium in this segment from one broker.

Specialty Program

Our Specialty Program segment provides workers’ compensation, general liability, commercial auto liability, property coverage, excess and surplus lines programs and other specialty commercial property and casualty insurance to a narrowly defined, homogeneous group of small and middle market companies whose business model and risk profile generally requires in-depth knowledge of a specific industry or sector focus in order to appropriately evaluate, price and manage the coverage risk. The type of risk covered by this segment is similar to the type of risk in our Small Commercial Business segment but also covers, to a small extent, certain higher risk businesses. We partner with managing general agents and other wholesale agents and claims administrators who have a strong track record and history underwriting certain types of risk and who, subject to our underwriting standards, originate and assist in managing a book of business and generally share in the portfolio risk. Our products and underwriting criteria often entail customized coverage, loss control and claims services as well as risk sharing mechanisms. The coverage is offered through accounts with various agents to multiple insureds.

Policyholders in this segment primarily include the following types of industries:

• public entities;

• retail;

• wholesale;

• service operations;

• artisan contracting;

• trucking;

• light and medium manufacturing;

• habitational; and

• professional employer organizations.

We establish the underwriting standards used with our agency partners by conducting detailed actuarial analysis using historical and industry data. Prior to entering into a relationship with an agency, we perform extensive due diligence on the agent including a review of underwriting, claims and financial control areas that generally takes three to nine months to complete. Additionally, once we have entered into a relationship with an agency, we carefully monitor the loss experience of the portfolio associated with each agent and conduct quarterly underwriting audits.

As of December 31, 2014, we underwrote 119 programs through 47 independent wholesale and managing general agents. Workers’ compensation insurance comprised approximately 37%, 32% and 27% of this business in 2014, 2013 and 2012, respectively. Other liability insurance comprised approximately 29%, 36% and 35% of this business in 2014, 2013 and 2012, respectively. Commercial auto liability and physical damage insurance combined comprised approximately 12%, 15% and 19% of this business in 2014, 2013 and 2012, respectively. Excess workers' compensation insurance comprised approximately 13%,

6

8% and 11% of this business in 2014, 2013 and 2012, respectively. During 2014 and 2013, we derived over ten percent of our gross written premium in this segment from one program.

Distribution

We market our Small Commercial Business products and Specialty Risk and Extended Warranty products through unaffiliated third parties that typically charge us a commission. In the case of our Specialty Risk and Extended Warranty segment, in lieu of a commission, these third parties often charge an administrative fee, based on the policy amount, to the manufacturer or retailer that offers the extended warranty or accidental damage coverage plan. Accordingly, the success of our business is dependent upon our ability to motivate these third parties to sell our products and support them in their sales efforts. The Specialty Program business is distributed through a limited number of qualified general and wholesale agents who charge us a commission. We restrict our agent network to experienced, professional agents that have the requisite licensing to conduct business with us. We incentivize the sales organizations through profit sharing arrangements to assure the profitability of the business written.

Geographic Diversity

Our insurance subsidiaries domiciled in the United States are collectively licensed to provide workers’ compensation insurance and commercial property and casualty insurance, including service contract reimbursement coverages related to our Specialty Risk and Extended Warranty segment, in 50 states, the District of Columbia and Puerto Rico, and in the year ended December 31, 2014, we wrote commercial property and casualty in 50 states and the District of Columbia.

The table below identifies, for the year ended December 31, 2014, the top ten producing states by percentage of direct gross written premium for our Small Commercial Business segment and the equivalent percentage for the years ended December 31, 2014, 2013 and 2012.

Percentage of Aggregate Small Commercial Business Direct Gross Written Premium by State⁽¹⁾ 

	Year Ended December 31,
State	2014		2013		2012
California	25.7	%	23.8	%	17.3	%
New York	15.8		14.3		11.3
Florida	9.8		8.6		10.2
New Jersey	6.1		5.8		6.6
Illinois	5.5		6.5		7.6
Georgia	4.1		4.2		5.5
Pennsylvania	3.0		4.5		3.9
Texas	2.6		2.9		3.8
Nevada	1.8		1.6		1.4
Connecticut	1.6		1.9		1.3
All Other States and the District of Columbia	24.0		25.9		31.1
	100.0	%	100.0	%	100.0	%

⁽¹⁾  Direct premiums consist of gross premiums written other than premiums assumed.

Through our insurance subsidiaries, we are licensed to provide specialty risk and extended warranty coverage in 50 states and the District of Columbia, and in Ireland and the United Kingdom, and pursuant to European Union law, certain other European Union member states. Through our subsidiary, AmTrust at Lloyd's, we are licensed to underwrite business internationally in locations where Lloyd's is licensed.

Based on coverage plans written or renewed in 2014, 2013 and 2012, the European Union accounted for approximately 57%, 72% and 72%, respectively, of our Specialty Risk and Extended Warranty business and in 2014, the United Kingdom, Italy and France accounted for approximately 43%, 20% and 6%, respectively, of our European Specialty Risk and Extended Warranty business. For a discussion of the various risks we face related to our foreign operations, see "Item 1A. Risk Factors."

The table below shows the geographic distribution of our annualized gross premiums written in our Specialty Risk and Extended Warranty segment with respect to coverage plans in effect at December 31, 2014.

7

Percentage of Specialty Risk and Extended Warranty Direct Gross Written Premiums by Country⁽²⁾ 

	Year Ended December 31,
Country	2014		2013		2012
United States	35	%	27	%	28	%
United Kingdom	28		32		26
Italy	14		20		29
France	4		5		5
Sweden	2		3		3
Other	17		13		9
Total	100	%	100	%	100	%

⁽²⁾  Direct premiums consist of gross premiums written other than premiums assumed.

The table below shows the distribution by state of our direct written premiums in our Specialty Program segment.

Percentage of Specialty Program Direct Gross Written Premiums by State⁽³⁾ 

	Year Ended December 31,
State	2014		2013		2012
California	38	%	39	%	35	%
New York	21		22		27
New Jersey	6		7		6
Florida	5		4		4
Texas	4		3		3
Georgia	2		2		2
Illinois	2		2		2
Pennsylvania	2		2		2
Arizona	1		1		1
Washington	1		1		1
All other States and the District of Columbia	18		17		17
Total	100	%	100	%	100	%

⁽³⁾  Direct premiums consist of gross premiums written other than premiums assumed.

Acquisitions and Strategic Investments

We have grown at an above-industry average rate through a combination of organic growth and strategic acquisitions of other companies or selected books of businesses. We have balanced our opportunistic acquisition strategy with a conservative approach to risk. We will continue to evaluate the acquisition of companies, distribution networks and renewal rights, and other alternative types of transactions as they present themselves. We seek transactions that we believe can be accretive to earnings and return on equity. The following is a summary of our major acquisition and strategic investment activity during 2014 and 2013.

Comp Options Insurance Company, Inc.

On October 1, 2014, we acquired Comp Options Insurance Company, Inc. ("Comp Options"), a Florida-based workers' compensation insurer, from an affiliate of Blue Cross & Blue Shield of Florida, for approximately $34.3 million in cash. Comp Options offers workers' compensation insurance to small businesses with low-hazard risk profiles in the state of Florida. As a result of this acquisition, we recorded approximately $18.6 million of written premium and $1.0 million of service and fee income for the year ended December 31, 2014.

8

Tower Renewal Rights Agreement

In January 2014, we entered into a cut through quota share reinsurance agreement (the "Cut Through Reinsurance Agreement") with Tower Group International, Ltd. ("Tower") to provide a 100% quota share for a majority of Tower's in force commercial lines policies and most new and renewal commercial lines business. At the inception of the Cut Through Reinsurance Agreement, we initially assumed $174 million of unearned premium. During 2014, we assumed approximately $475 million of premium through the Cut Through Reinsurance Agreement. In conjunction with ACP Re, Ltd.'s (“ACP Re”) merger with Tower, on September 15, 2014, we entered into various agreements with Tower including, primarily, a renewal rights agreement and a quota share reinsurance agreement. Based on the terms of the renewal rights agreement, we are required to pay a maximum amount of $30 million over a three year period based on 3% of gross written premium of the Tower commercial lines business. The quota share reinsurance agreement allows us to reinsure 100% of all losses for Tower’s new and renewal commercial lines business written after September 15, 2015. The quota share agreement replaced the Cut Through Reinsurance Agreement. As a result of the renewal rights transaction, we wrote approximately $133 million of gross written premium for the year ended December 31, 2014. Additionally, we loaned ACP Re $125 million to finance their purchase of Tower.

The Insco Dico Group

On January 3, 2014, we completed the acquisition of Insco Insurance Services, Inc. ("Insco Dico") and its subsidiaries for a purchase price of approximately $88.7 million. Insco Dico's subsidiaries include Developers Surety and Indemnity Company and Indemnity Company of California, which offer surety insurance to developers and contractors in all 50 states with California as the largest state. In addition, Insco Dico's subsidiary, Builders Insurance Services, markets general liability insurance policies to contractors in several states in the western region of the U.S. As a result of this acquisition, we recorded approximately $55.5 million of written premium and $3.7 million of fee income for the year ended December 31, 2014.

Sagicor Europe Limited

On December 23, 2013, we, through one of our subsidiaries, completed the acquisition of Sagicor Europe Limited (“Sagicor”) and its wholly owned subsidiaries, including Sagicor at Lloyd's Limited, from Sagicor Financial Corporation for approximately $93 million. Sagicor Europe Limited and Sagicor at Lloyd's Limited subsequently changed their names to AmTrust Lloyd's Holdings Limited and AmTrust at Lloyd's Limited, respectively. AmTrust at Lloyd's Limited is a managing agency and owner of Lloyd's property/casualty insurance syndicate 1206 with stamp capacity of $330 million and Lloyd's life insurance syndicate 44 with stamp capacity of $16.5 million. As a result of this acquisition, we recorded approximately $322.8 million of written premium for the year ended December 31, 2014.

Mutual Insurers Holding Company

On May 13, 2013, we completed the acquisition of Mutual Insurers Holding Company (“MIHC”) and its subsidiaries for approximately $49 million. MIHC's primary operating subsidiary, First Nonprofit Insurance Company (“FNIC”), is a provider of property and casualty insurance products to nonprofit organizations in the U.S. Immediately prior to the acquisition, MIHC converted from a mutual form to a stock form of ownership in a transaction “sponsored” by us. As a result of this acquisition, we recorded approximately $58.1 million and $32.1 million of written premium for the years ended December 31, 2014 and 2013, respectively.

AMTCS Holdings, Inc.

On May 3, 2013, we, through our wholly-owned subsidiary AMT Warranty Corp., completed the acquisition of CPPNA Holdings, Inc. (“CPPNA”) from CPP Group LLC, a company based in the United Kingdom, for approximately $40 million. CPPNA subsequently changed its name to AMTCS Holdings, Inc. (“AMTCS”). AMTCS provides administrative services for consumer protection products in the United States, including identity theft protection and warranties related to credit card purchases, to customers of AMTCS's financial services partners. As a result of this acquisition, we recorded approximately $58.4 million and $44.5 million of fee income during the years ended December 31, 2014 and 2013, respectively.

Sequoia Insurance Company

On April 19, 2013, we completed the acquisition of all the issued and outstanding shares of common stock of Sequoia Insurance Company and its subsidiaries (“Sequoia”) for approximately $60 million. Sequoia offers low hazard, property/casualty insurance products, including workers' compensation and commercial package insurance, to small businesses in several western states, with

9

California representing Sequoia's largest market. As a result of this acquisition, we recorded approximately $68.3 million and $79.7 million of written premium for the years ended December 31, 2014 and 2013, respectively.

Car Care

On February 28, 2013, we, through our wholly-owned subsidiary AmTrust International Limited (formerly known as IGI Group Limited, "AIL") acquired all of the issued and outstanding shares of capital stock of Car Care Plan (Holdings) Limited (“CCPH”) from Ally Insurance Holdings, Inc (“AIH”). CCPH is an administrator, insurer and provider of auto extended warranty, GAP, Wholesale Floorplan Insurance and other complementary insurance products. CCPH underwrites its products and the products of third-party administrators through its subsidiary Motors Insurance Company Limited (“MICL”), a United Kingdom based insurer. CCPH has operations in the United Kingdom, Europe, China, North America and Latin America. We paid $72 million for the purchase of CCPH. In connection with the closing of the transaction, the parties (or their affiliates) entered into certain other agreements, including a transition services agreement, pursuant to which AIH provides certain transitional services to AIL and us, and two reinsurance agreements, pursuant to which affiliates of AIH reinsure certain insurance contracts of such affiliates with affiliates of AIL. As a result of this acquisition, we recorded approximately $110.8 million and $98.9 million of written premium for the years ended December 31, 2014 and 2013, respectively, and recorded $42.4 million and $31.6 million of fee income for the years ended December 31, 2014 and 2013, respectively.

AHL

AmTrust Holdings Luxembourg S.A.R.L (“AHL”), a holding company that purchases Luxembourg reinsurance companies that allow us to obtain the benefit of the reinsurers’ capital and utilization of their existing and future loss reserves through a series of reinsurance arrangements with one of our subsidiaries, acquired Atlas COPCO Reinsurance S.A. and Re'A Fin S.A. in 2013. These transactions and the result of our utilization of the reinsurers’ equalization reserves are included in our Specialty Risk and Extended Warranty segment and are more fully described in "Significant Acquisitions" in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" appearing elsewhere in this Form 10-K.

Investment in National General Holdings Corp.

We have a 13.2% ownership interest in National General Holdings Corp. ("NGHC"). NGHC is publicly-held insurance holding company (Nasdaq: NGHC) that operates fifteen insurance companies in the United States and writes consumer property and casualty insurance business through independent agents for automobiles. Its coverages include standard/preferred auto, RVs, non-standard auto and commercial auto. NGHC's two largest stockholders are The Michael Karfunkel 2005 Grantor Retained Annuity Trust (the “Trust”) and Michael Karfunkel individually. Michael Karfunkel is the Chairman of our Board of Directors and the father-in-law of Barry D. Zyskind, our Chief Executive Officer. 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. In accordance with ASC 323-10-15, Investments-Equity Method and Joint Ventures, we account for our investment in NGHC under the equity method as we have the ability to exert significant influence on NGHC's operations. We recorded approximately $28.4 million, $11.6 million and $9.3 million of income during the years ended December 31, 2014, 2013 and 2012, respectively, related to our equity investment in NGHC.

Master Services Agreement

We provide 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 our costs for development and support services. In addition, we provide 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 we process for NGHC and its affiliates on the policy management system. We recorded approximately $25.6 million, $24.2 million and $14.4 million of fee income for the years ended December 31, 2014, 2013 and 2012, respectively, related to this agreement. Additionally, we provided certain consulting services to NGHC related to Luxembourg-domiciled reinsurance entities in 2014, for which we received $1.1 million for the year ended December 31, 2014.

Asset Management Agreement

We manage the assets of NGHC and certain of its subsidiaries, including the assets of reciprocal insurers managed by subsidiaries of NGHC, 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 billion 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 billion. We currently manage approximately $1.4 billion of assets as of December 31, 2014 related to this agreement. As a result

10

of this agreement, we earned approximately $2.0 million, $1.7 million and $1.5 million of asset management fees for the years ended December 31, 2014, 2013 and 2012, respectively.

As a result of the above service agreements with NGHC, the Company recorded fees totaling approximately $28.7 million, $25.9 million and $15.9 million for the years ended December 31, 2014, 2013 and 2012, respectively. As of December 31, 2014, the outstanding balance payable by NGHC related to these service fees and reimbursable costs was approximately $16.4 million.

Life Settlement Contracts

We currently have a 50% ownership interest in each of four entities for the purpose of acquiring life settlement contracts, with a subsidiary of NGHC owning the other 50%. A life settlement contract is a contract between the owner of a life insurance policy and a third-party who obtains the ownership and beneficiary rights of the underlying life insurance policy. The entities (collectively, the “LSC Entities”) are:

•Tiger Capital LLC (“Tiger”);

•AMT Capital Alpha, LLC (“AMT Alpha”);

•AMT Capital Holdings, S.A. (“AMTCH”); and

•AMT Capital Holdings II, S.A. (“AMTCH II”).

The LSC Entities may also acquire premium finance loans made in connection with the borrowers’ purchase of life insurance policies that are secured by the policies. The LSC Entities acquire the underlying policies through the borrowers’ voluntary surrender of the policy in satisfaction of the loan or foreclosure. A third party serves as the administrator of the Tiger and AMTCH II life settlement contract portfolios, for which it receives an administrative fee. The third party administrator is eligible to receive a percentage of profits after certain time and performance thresholds have been met. We provide certain actuarial and finance functions related to the LSC Entities. In conjunction with our 13.2% ownership percentage of NGHC, we ultimately receive 56.6% of the profits and losses of the LSC Entities. As such, in accordance with ASC 810-10, Consolidation, we have been deemed the primary beneficiary and, therefore, consolidate the LSC Entities.

We account for investments in life settlements in accordance with ASC 325-30, Investments in Insurance Contracts, which states that an investor shall elect to account for its investments in life settlement contracts by using either the investment method or the fair value method. The election is made on an instrument-by-instrument basis and is irrevocable. We have elected to account for these policies using the fair value method. We determine fair value based upon our estimate of the discounted cash flow related to policies (net of the reserves for improvements in mortality, the possibility that the high net worth individuals represented in our portfolio may have access to better health care, the volatility inherent in determining the life expectancy of insureds with significant reported health impairments, the possibility that the issuer of the policy or a third party will contest the payment of the death benefit payable to us, and the future expenses related to the administration of the portfolio), which incorporates current life expectancy assumptions, premium payments, the credit exposure to the insurance company that issued the life settlement contracts and the rate of return that a buyer would require on the contracts as no comparable market pricing is available.

Total capital contributions of $36.1 million and $70.8 million were committed to the LSC Entities during the years ended December 31, 2014 and 2013, respectively, of which our proportionate share was $17.9 million and $35.4 million in those same periods. $1.3 million of this $17.9 million capital contribution was funded in January 2015. The LSC Entities used the contributed capital to pay premiums and purchase policies. Our investments in life settlements and premium finance loans were approximately $264.5 million and $233.0 million as of December 31, 2014 and 2013, respectively, and are included in Prepaid expenses and other assets on the Consolidated Balance Sheet. We recorded a gain on investment in life settlement contracts net of profit commission of approximately $12.3 million, $3.8 million and $13.8 million, for the years ended December 31, 2014, 2013 and 2012, respectively.

Reinsurance

Reinsurance is a transaction between insurance companies in which the original insurer, or ceding company, remits a portion of its policy premiums to a reinsurer, or assuming company, as payment for the reinsurer assuming a portion of the insured policies’ risk. Reinsurance agreements may be proportional in nature, under which the assuming company shares proportionally in the premiums and losses of the ceding company. Under these “quota share reinsurance” arrangements, the ceding company transfers, or cedes, a percentage of the risk under each policy within the covered class or classes of business to the reinsurer and recovers the same percentage of the ceded loss and loss adjustment expenses. The ceding company pays the reinsurer that same percentage of the insurance premium on the ceded policies, less a ceding commission. Reinsurance agreements may also be structured so that the assuming company indemnifies the ceding company against all or a specified portion of losses on underlying insurance policies in excess of a specified amount, which is called an “attachment level” or “retention.” The assuming company provides this

11

indemnification for a premium, usually determined as a percentage of the ceding company’s insurance premiums for the covered class or classes of business. This arrangement is known as “excess of loss reinsurance.” Excess of loss reinsurance may be written in layers, in which a reinsurer or group of reinsurers accepts a band of coverage up to a specified amount. Any liability exceeding the coverage limits of the reinsurance program is retained by the ceding company.

We believe reinsurance is a valuable tool to appropriately manage the risk inherent in our insurance portfolio as well as to enable us to reduce earnings volatility and generate stronger returns. We also utilize reinsurance agreements to increase our capacity to write a greater amount of profitable business. Our insurance subsidiaries utilize reinsurance agreements to transfer portions of the underlying risk of the business we write to various affiliated and third-party reinsurance companies. Reinsurance does not discharge or diminish our obligation to pay claims covered by the insurance policies we issue; however, it does permit us to recover certain incurred losses from our reinsurers and our reinsurance recoveries reduce the total aggregate of losses that we may incur as a result of a covered loss event.

The total amount, cost and limits relating to the reinsurance coverage we purchase may vary from year to year based upon a variety of factors, including the availability of quality reinsurance at an acceptable price and the level of risk that we choose to retain for our own account. For a more detailed description of our reinsurance arrangements, including our quota share reinsurance agreement with Maiden Reinsurance Ltd. (“Maiden Reinsurance”), formerly known as Maiden Insurance Company Ltd., (the “Maiden Quota Share”), see “Reinsurance” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing elsewhere in this Form 10-K.

Loss Reserves

Workers’ Compensation Business

We record reserves for estimated losses under insurance policies that we write and for loss adjustment expenses related to the investigation and settlement of policy claims. Our reserves for loss and loss adjustment expenses represent the estimated cost of all reported and unreported loss and loss adjustment expenses incurred and unpaid at a given point in time. In establishing our reserves, we do not use loss discounting, which involves recognizing the time value of money and offsetting estimates of future payments by future expected investment income. Our process and methodology for estimating reserves applies to both our voluntary and assigned risk business and does not include our reserves for mandatory pooling arrangements that we participate in as a condition of doing business in a state that funds workers’ compensation assigned risk plans in that state. We record reserves for mandatory pooling arrangements as those reserves are reported to us by the pool administrators. We use a consulting actuary to assist in the evaluation of the adequacy of our reserves for loss and loss adjustment expenses.

When a claim is reported, we establish an initial case reserve for the estimated amount of our loss based on our estimate of the most likely outcome of the claim at that time. Generally, a case reserve is established within 30 days after the claim is reported and consists of anticipated medical costs, indemnity costs and specific adjustment expenses, which we refer to as defense and cost containment expenses (“DCC”). At any point in time, the amount paid on a claim, plus the reserve for future amounts to be paid, represents the estimated total cost of the claim, or the case incurred amount. The estimated amount of loss for a reported claim is based upon various factors, including:

• type of loss;

• severity of the injury or damage;

• age and occupation of the injured employee;

• estimated length of temporary disability;

• anticipated permanent disability;

• expected medical procedures, costs and duration;

• our knowledge of the circumstances surrounding the claim;

• insurance policy provisions, including coverage, related to the claim;

• jurisdiction of the occurrence; and

• other benefits defined by applicable statute.

The case incurred amount can vary due to uncertainties with respect to medical treatment and outcome, length and degree of disability, employment availability and wage levels and judicial determinations. As changes occur, the case incurred amount is adjusted. The initial estimate of the case incurred amount can vary significantly from the amount ultimately paid, especially in

12

circumstances involving severe injuries with comprehensive medical treatment. Changes in case incurred amounts, or case development, are an important component of our historical claim data.

In addition to case reserves, we establish reserves on an aggregate basis for loss and DCC expenses that have been incurred but not reported, or IBNR. Our IBNR reserves are also intended to provide for aggregate changes in case incurred amounts as well as the unpaid cost of recently reported claims for which an initial case reserve has not yet been established.

The third component of our reserves for loss and loss adjustment expenses is our adjusting and other reserve, or AO reserve. Our AO reserve is established for the costs of future unallocated loss adjustment expenses for all known and unknown claims. Our AO reserve covers primarily the estimated cost of administering claims. The final component of our reserves for loss and loss adjustment expenses is the reserve for mandatory pooling arrangements.

We began writing workers’ compensation in 2001. In order to establish IBNR reserves, we project ultimate losses by accident year both through use of our historical experience, and the use of industry experience by state. Our consulting actuary projects ultimate losses in two different ways:

• Quarterly Incurred Development Method (Use of AmTrust Factors).  Quarterly incurred loss development factors are derived from our historical, cumulative incurred losses by accident month. These factors are then applied to the latest actual incurred losses and DCC by month to estimate ultimate losses and DCC, based on the assumption that each accident month will develop to estimated ultimate cost in a similar manner to prior years. There is a substantial amount of judgment involved in this method.

• Annual Incurred Development (Use of AmTrust Factors). Yearly incurred loss development factors are derived from our historical, cumulative incurred losses by accident year. These factors are then applied to the latest actual incurred losses and DCC by year to estimate ultimate losses and DCC.

Each method produces estimated ultimate loss and DCC expenses net of amounts that will be ultimately paid by our excess of loss reinsurers. Our consulting actuary estimates a range of ultimate losses, along with a selection that gives more weight to the results from our monthly development factors and less weight to the results from industry development factors.

We establish IBNR reserves for our workers’ compensation segment by determining an “ultimate loss pick,” which is our estimate of our net loss ratio for a specific period, based on actual incurred losses and application of loss development factors. We estimate our ultimate incurred loss and DCC for a period by multiplying the ultimate loss pick for the period by the earned premium for the period. From that total, we subtract actual paid loss and DCC and actual case reserves for reported losses. The remainder constitutes our IBNR reserves. On a monthly basis, our consulting actuary reviews our IBNR reserves. On a monthly basis, we review our determination of our ultimate loss pick.

Management establishes our reserves by making judgments based on its application of our and industry-wide loss development factors, consideration of our consulting actuary’s application of the same loss development factors, and underwriting, claims handling and other operational considerations. In utilizing its judgment, management makes certain assumptions regarding our business, including, among other things, frequency of claims, severity of claims and claim closure rates.

Management makes its final selection of loss and DCC reserves after reviewing the actuary’s results; consideration of other underwriting, claim handling and operational factors; and the use of judgment. To establish our AO reserves, we review our past adjustment expenses in relation to past claims and estimate our future costs based on expected claims activity and duration.

As of December 31, 2014, our best estimate of our ultimate liability for workers’ compensation loss and loss adjustment expenses, net of amounts recoverable from reinsurers, was $1,533.3 billion, of which $55.3 million was reserves resulting from our participation in mandatory pooling arrangements, as reported by the pool administrators. This estimate was derived from the procedures and methods described above, which rely, substantially, on judgment.

The two methods described above are “incurred” development methods. These methods rely on historical development factors derived from changes in our incurred losses, which are estimates of paid claims and case reserves over time. As a result, if case reserving practices change over time, the two incurred methods may produce substantial variation in the estimate of ultimate losses. We have not used any “paid” development methods, which rely on actual claims payment patterns and, therefore, are not sensitive to changes in case reserving procedures. As our paid historical experience grows, we will consider using “paid” loss development methods.

13

Of the two methods above, the use of industry loss development factors has consistently produced higher estimates of workers’ compensation losses and DCC expenses. The table below shows this higher estimate, along with the lower estimate produced by our monthly factors as of December 31, 2014:

(Amounts in Millions)	Loss & DCC Expense Reserves		Mandatory Pooling Arrangements		Total
Gross Workers’ Compensation Reserves:
Lower estimate	$	2,149.7	$	55.3	$	2,205.0
Gross reserve	2,390.6		55.3		2,445.9
Higher estimate	2,566.9		55.3		2,622.2
Net Workers’ Compensation Reserves:
Lower estimate	$	1,331.3	$	55.3	$	1,386.6
Net reserve	1,478.0		55.3		1,533.3
Higher estimate	1,585.5		55.3		1,640.8

The higher estimate would increase net reserves by $107.5 million and reduce net income and stockholders’ equity by $69.8 million. The lower net estimate would decrease net reserves by $146.7 million and increase net income and stockholders equity by $95.4 million. A change in our net loss and DCC expense reserve would not have an immediate impact on our liquidity, but would affect cash flows in future years as claim and expense payments made.

We do not anticipate that we will make any material reserve adjustments but will continue to monitor the accuracy of our loss development factors and adequacy of our reserves. For a more detailed description of our liabilities for unpaid losses and loss and loss adjustment expenses (“LAE”) on a consolidated basis and by segment, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations."

Specialty Risk and Extended Warranty

Our actual net reserves, including IBNR, on Specialty Risk and Extended Warranty as of December 31, 2014 and 2013 were $1,089.0 million and $1,026.4 million, respectively. An upward movement of 5% on overall reserves would result in a reduction of income in 2014 of $54.5 million before tax and $35.4 million after tax. A downward movement of 5% on overall reserves would result in an increase of income of $54.5 million before tax and $35.4 million after tax.

Specialty Risk and Extended Warranty claims are usually paid quickly, development on known claims is negligible, and generally, case reserves are not established. IBNR reserves for warranty claims are generally “pure” IBNR, which refers to amounts for claims that occurred prior to an accounting date but are reported after that date. The reporting lag for warranty IBNR claims is generally small, usually in the range of one to three months. Management determines warranty IBNR by examining the experience of individual coverage plans. Our consulting actuary, at the end of each calendar year, reviews our IBNR by looking at our overall coverage plan experience, with assumptions of claim reporting lag and average monthly claim payouts. Our net IBNR as of December 31, 2014 and 2013 for our Specialty Risk and Extended Warranty segment was $375 million and $321 million, respectively. The increase in the net IBNR resulted primarily from an increase of written premium. Though we believe this is a reasonable best estimate of future claims development, this amount is subject to a substantial degree of uncertainty.

There is generally more uncertainty in the unearned premium reserve than in the IBNR reserve in our Specialty Risk and Extended Warranty segment because warranty is short-duration business. Claims are generally reported immediately after they occur and are closed within months of reporting. In the Specialty Risk and Extended Warranty segment, the reserve for unearned premium is, in general, an estimate of our liability for projected future losses emanating from the unearned portion of written policies and is inherently more uncertain. Approximately 69% of polices written have policy terms exceeding one year and currently range between 13 months and 120 months. A portion of these policies are not earned evenly over the contract period but over the period of risk in proportion to the amount of insurance protection provided. As of December 31, 2014, we had unearned premium of approximately of $749.5 million on these policies. An upward/downward movement of 5% on the entire pool of the earn out pattern for these policies would result in an increase/decrease in unearned premium of approximately $37.5 million. In 2014, we had no material changes to prior period estimates of these claim patterns. Our liability for return of unearned premium is not significant.

The reserve for Specialty Risk and Extended Warranty unearned premium is calculated by analyzing each coverage plan separately, subdivided by contract year, type of product and length of contract, ranging from one month to five years. These

14

subdivisions produced, in a recent analysis, about 150 separate reserve calculations. These individual reserve calculations may differ in actuarial methodologies depending on:

• the type of risk;

• the length of the exposure period;

• the availability of past loss experience; and

• the extent of current claim experience and potential experience of similar classes of risk underwritten by the program administrators.

The primary actuarial methodology used to project future losses for the unexpired terms of contracts is to project the future number of claims, then multiply them by an average claim cost. The future number of claims is derived by applying to unexpired months a selected ratio of the number of claims to expired months. The selected ratio is determined from a combination of:

• past experience of the same expired policies;

• current experience of the earned portion of the in-force policies or contracts; and

• past and/or current experience of similar type policies or contracts.

The average claim cost is also determined by using past and/or current experience of the same or similar contracts.

In order to confirm the validity of the projected future losses derived through application of the average claim cost method, we also utilize a loss ratio method. The loss ratio method entails the application of the projected ultimate loss ratio, which is based on historical experience, to the unearned portion of the premium. If the loss ratio method indicates that the average claim cost method has not produced a credible result for a particular coverage plan, we will make a judgment as to the appropriate reserve for that coverage plan. We generally will choose a point in the range between results generated by the average claim cost method and loss ratio method. In making our judgment, we consider, among other things, the historical performance of the subject coverage plan or similar plans, our analysis of the performance of the administrator and coverage terms.

Different Specialty Risk and Extended Warranty products have different patterns of incidence during the period of risk. Some products tend to show increasing incidence of claims during the risk period; others may show relatively uniform incidence of claims, while still others tend to show decreasing claim incidence. We have assumed, on average, a uniform incidence of claims for all contracts combined, based on our review of contract provisions and claim history. Incorrect earnings of warranty policy premiums, inadequate pricing of warranty products, changes in conditions during long contract durations or incorrect estimates of future warranty losses on unexpired contracts may produce a deficiency or a redundancy in the unearned premium reserve. Our unearned premium reserve as of December 31, 2014 and 2013 for our Specialty Risk and Extended Warranty segment was $1,086.3 million and $1,027.0 million, respectively. Although we believe this is a reasonable best estimate of our unearned premium reserve, this amount is subject to a substantial degree of uncertainty.

Property and Casualty Insurance

We record reserves for estimated losses under insurance policies that we write and for loss adjustment expense related to the investigation and settlement of policy related claims. Our reserves for loss and loss adjustment expenses represent the estimated costs of all reported and unreported loss and loss adjustment expenses incurred and unpaid at a given point in time. In establishing our reserves we do not use loss discounting. We utilize the services of an independent consulting actuary to assist in the evaluation of the adequacy of our reserves for loss and loss adjustment expenses.

When a claim is reported, an initial case reserve is established for the estimated amount of the loss based on the adjuster’s view of the most likely outcome of the claim at that time. Initial case reserves are established within 30 days of the claim report date and consist of anticipated liability payments, first party payments, medical costs, and DCC expenses. This establishes a case incurred amount for a particular claim. The estimated amount of loss for a reported claim is based upon various factors, such as:

• line of business — general liability, auto liability, or auto physical damage;

• severity of injury or property damage;

• number of claimants;

• statute of limitation and repose;

• insurance policy provisions, especially applicable policy limits and coverage limitations;

15

• expected medical procedures, costs, and duration treatment;

• our knowledge of circumstances surrounding the claim; and

• possible salvage and subrogation.

Case incurred amounts can vary greatly because of the uncertainties inherent in the estimates of severity of loss, costs of medical treatments, judicial rulings, litigation expenses, and other factors. As changes occur, the case reserves are adjusted. The initial estimate of a claim’s incurred amount can vary significantly from the amount ultimately paid when the claim is closed, especially in the circumstances involving litigation and severe personal injuries. Changes in case incurred amounts, also known as case development, are an important component of our historical claim data.

In addition to case reserves, we establish reserves on an aggregate basis for loss and DCC expenses that have been incurred but not yet reported, or IBNR. Our IBNR reserves are also intended to include aggregate development on known claims, provision for claims that re-open after they have been closed, and provision for claims that have been reported but have not yet been recorded.

The final component of the reserves for loss and loss adjustment expenses is the estimate of the AO reserve. This reserve is established for the costs of future unallocated loss adjustment expenses for all known and unknown claims. Our AO reserve covers primarily the estimated cost of administering claims by our claim staff.

We began writing general liability, commercial auto and commercial property (jointly known as CPP) business in 2006. In order to establish IBNR for CPP lines of business, we rely on three methods that utilize industry development patterns by line of business:

• Yearly Incurred Development (Use of Industry Factors by Line).  For each line, the development factors are taken directly from Insurance Services Office, Inc. (“ISO”) loss development publications for a specific line of business. These factors are then applied to the latest actual incurred losses and DCC by accident year, by line of business to estimate ultimate losses and DCC;

• Expected Loss Ratio.  For each line, an expected loss ratio is taken from our original account level pricing analysis. These loss ratios are then applied to the earned premiums by line by year to estimate ultimate losses and DCC; and

• Bornhuetter-Ferguson Method.  For each line, IBNR factors are developed from the applicable industry loss development factors and expected losses are taken from the original account level pricing analysis. IBNR factors are then applied to the expected losses to estimate IBNR and DCC.

For CPP lines of business, ultimate loss and IBNR selections are based on one of the above methods depending on the accident year and line of business. Our consulting actuary estimates a range of ultimate losses, along with the recommended IBNR and reserve amounts.

Because we determine our reserves based on industry incurred development patterns, our ultimate losses may differ substantially from our estimates produced by the above methods.

a

In 2008, we acquired retail commercial package business in connection with our acquisition of a subsidiary of Unitrin, Inc. (“UBI”). We were able to access UBI’s historical loss data for analysis of that business. Additionally, the claims adjusting has remained stable. As such, we are in the process of developing our own development patterns without the use of industry factors. Similar methods involved in determining reserves are consistent as described above for other property and casualty business.

16

Reconciliation of Loss and Loss Adjustment Expense Reserves

The table below shows the reconciliation of loss reserves on a gross and net basis for the years ended December 31, 2014, 2013 and 2012, reflecting changes in losses incurred and paid losses:

(Amounts in Thousands)	2014			2013			2012
Unpaid losses and LAE, gross of related reinsurance recoverables at beginning of year	$	4,368,234		$	2,426,400		$	1,879,175
Less: Reinsurance recoverables at beginning of year	1,739,689			1,180,212			972,392
Net balance, beginning of year	2,628,545			1,246,188			906,783
Incurred related to:
Current year	2,324,062			1,486,418			909,818
Prior year	18,557			30,943			12,857
Total incurred losses during the year	2,342,619			1,517,361			922,675
Paid losses and LAE related to:
Current year	(886,724		)	(617,539		)	(406,238		)
Prior year	(554,495		)	(335,621		)	(285,479		)
Total payments for losses and LAE	(1,441,219		)	(953,160		)	(691,717		)
Commuted loss reserves	—			—			91,529
Acquired outstanding loss and loss adjustment reserve	71,755			807,592			13,137
Effect of foreign exchange rates	(86,939		)	10,564			3,781
Net balance, December 31	3,514,761			2,628,545			1,246,188
Plus reinsurance recoverables at end of year	2,149,444			1,739,689			1,180,212
Unpaid losses and LAE, gross of related reinsurance recoverables at end of year	$	5,664,205		$	4,368,234		$	2,426,400
Gross loss reserves by segment:
Small Commercial Business	$	2,854,380		$	1,982,977		$	1,266,261
Specialty Risk and Extended Warranty	1,669,293			1,537,887			605,366
Specialty Program	1,126,435			817,272			524,928
Personal Lines Reinsurance - Run off	14,097			30,098			29,845
	$	5,664,205		$	4,368,234		$	2,426,400

For the years ended December 31, 2014, 2013 and 2012, our gross reserves for loss and loss adjustment expenses were $5,664.2 million, $4,368.2 million, and $2,426.4 million, of which our IBNR reserves constituted 49.6%, 42.4% and 34.5%, respectively.

Loss Development

The table below shows the net loss development for business written each year from 2004 through 2014. The table reflects the changes in our loss and loss adjustment expense reserves in subsequent years from the prior loss estimates based on experience as of the end of each succeeding year on a general accepted accounting principles (“GAAP”) basis.

The next section of the table sets forth the re-estimates in later years of incurred losses, including payments, for the years indicated. The next section of the table shows, by year, the cumulative amounts of loss and loss adjustment expense payments, net of amounts recoverable from reinsurers, as of the end of each succeeding year. For example, with respect to the net loss reserves of $84.9 million as of December 31, 2004, by December 31, 2006 (two years later), $25.1 million had actually been paid in settlement of the claims that relate to liabilities as of December 31, 2004.

The “cumulative redundancy (deficiency)” represents the aggregate change in the estimates over all prior years. Therefore, each amount in the table includes the effects of changes in reserves for all prior years. For example, assume a claim that occurred in 2004 is reserved for $4.0 million as of December 31, 2004. Assuming this claim estimate was changed in 2013 to $4.4 million, and was settled for $4.4 million in 2013, the $0.4 million deficiency would appear as a deficiency in each year from 2004 through

17

2012. A redundancy means that the original estimate was higher than the current estimate. A deficiency means that the current estimate is higher than the original estimate.

Analysis of Loss and Loss Adjustment Expense Reserve Development

	As of and for the Year Ended December 31,
(Amounts in Thousands)	2004		2005		2006		2007		2008		2009			2010			2011			2012			2013			2014
Reserve for loss and loss adjustment expenses, net of reinsurance recoverables	$	84,919	$	150,340	$	251,678	$	517,365	$	509,656	$	530,070		$	592,660		$	906,783		$	1,246,188		$	2,628,545		$	3,514,761
Net reserve estimated as of
One year later	83,957		150,854		253,767		516,821		504,829		538,016			604,302			919,640			1,277,132			2,647,102
Two years later	83,293		150,516		215,465		519,346		490,379		540,723			641,557			961,013			1,345,776
Three years later	82,906		122,601		221,362		518,877		491,613		559,251			669,883			1,003,525
Four years later	70,146		120,975		220,505		515,427		497,276		565,322			675,608
Five years later	71,012		121,716		216,830		517,866		493,967		557,913
Six years later	70,078		120,618		216,922		519,462		485,820
Seven years later	69,499		120,582		215,805		514,978
Eight years later	69,383		119,915		213,571
Nine years later	69,071		118,333
Ten years later	68,137
Net cumulative redundancy (deficiency)	16,782		32,007		38,107		2,387		23,836		(27,843		)	(82,948		)	(96,742		)	(99,588		)	(18,557		)

18

	Year Ended December 31,
(Amounts in Thousands)	2004		2005		2006		2007		2008		2009			2010			2011			2012			2013			2014
Cumulative amount of reserve paid, net of reinsurance recoverable through
One year later	$	14,436	$	24,050	$	38,010	$	141,992	$	102,644	$	158,737		$	253,309		$	354,768		$	333,460		$	554,495
Two years later	25,113		35,894		83,671		184,875		182,260		291,824			426,656			536,346			596,343
Three years later	33,049		49,625		98,495		229,227		261,397		388,821			516,315			686,421
Four years later	39,855		53,853		109,422		270,522		311,112		434,906			600,057
Five years later	42,628		55,885		116,282		295,135		331,733		476,843
Six years later	42,983		57,094		122,185		303,689		352,925
Seven years later	43,549		59,280		125,518		315,072
Eight years later	44,772		60,424		127,588
Nine years later	45,311		61,372
Ten years later	45,690
Net reserve – December 31,	84,919		150,340		251,678		517,365		509,656		530,070			592,660			906,783			1,246,188			2,628,545			3,514,761
Reinsurance Recoverable	14,445		17,667		44,127		258,027		504,404		561,874			670,877			972,392			1,180,212			1,739,689			2,149,444
Gross reserves –  December 31,	99,364		168,007		295,805		775,392		1,014,060		1,091,944			1,263,537			1,879,175			2,426,400			4,368,234			5,664,205
Net re-estimated reserve	68,137		118,333		213,571		514,978		485,820		557,913			675,608			1,003,525			1,345,776			2,647,102
Re-estimated reinsurance recoverable	11,590		13,906		37,446		256,836		480,814		591,387			764,772			1,059,640			1,274,528			1,782,568
Gross re-estimated reserve	79,727		132,239		251,017		771,814		966,634		1,149,300			1,440,380			2,063,165			2,620,304			4,429,670
Gross cumulative redundancy (deficiency)	19,637		35,768		44,788		3,578		47,426		(57,356		)	(176,843		)	(183,990		)	(193,904		)	(61,436		)

In 2014 and 2013, our liabilities for unpaid loss and LAE attributable to prior years increased by $18.6 million and $30.9 million, respectively, due to higher actuarial estimates based on actual losses.

19

Investments

Our investment portfolio exclusive of life settlement contracts and other investments is summarized in the table below by type of investment.

	December 31, 2014				December 31, 2013
(Amounts in Thousands)	Carrying Value		Percentage of Portfolio		Carrying Value		Percentage of Portfolio
Cash, cash equivalents and restricted cash	$	1,088,975	19.7	%	$	930,461	22.4	%
Time and short-term deposits	63,916		1.2		114,202		2.7
U.S. treasury securities	43,870		0.8		110,345		2.7
U.S. government agencies	13,538		0.2		10,489		0.3
Municipals	482,041		8.7		446,183		10.7
Foreign government	112,731		2.0		160,105		3.8
Commercial mortgage back securities	38,685		0.7		28,566		0.7
Residential mortgage backed securities:
Agency backed	975,782		17.7		423,137		10.2
Non-agency backed	22,503		0.4		6,749		0.2
Asset-backed securities	710		—		6,120		0.1
Corporate bonds	2,563,414		46.6		1,909,242		45.9
Preferred stocks	3,506		0.1		1,506		—
Common stocks	104,287		1.9		13,642		0.3
	$	5,513,958	100.0	%	$	4,160,747	100.0	%

Investments in foreign government securities include securities issued by national entities as well as instruments that are unconditionally guaranteed by such entities. As of December 31, 2014, our foreign government securities were issued or guaranteed primarily by governments in Canada and Europe.

The table below summarizes the credit quality of our fixed maturity securities as of December 31, 2014 and 2013, as rated by Standard and Poor’s.

	2014		2013
U.S. Treasury	1.0	%	4.7	%
AAA	6.7		11.6
AA	39.0		34.8
A	27.9		23.8
BBB, BBB+, BBB-	23.4		23.3
BB, BB+, BB-	1.6		1.5
B, B+, B-,	0.1		0.2
Other	0.3		0.1
Total	100.0	%	100.0	%

Our equity investments constitute approximately 2.0% of our investment portfolio and are generally split into two types of investment categories. One category consists mainly of large capitalized companies, for which the individual investments are generally liquid in nature and their market prices are typically reflective of their value. The second category is small capitalized companies with an average market capitalization of approximately $400 million, most without widespread distribution or trading of shares. We have invested in this second category of securities in which we believe true value is not properly reflected in the market price and where a catalyst, or event, will send the market price toward our estimate of true value. We typically have a holding period of 36 months for these equity securities. This catalyst, in many instances, takes up to 24 months to occur. Sometimes, a catalyst that does not occur soon after our initial investment requires the passage of another operating cycle, and the 24 month time frame allows for these types of situations. These equity securities tend to be relatively unknown stocks that have less trading volume than well-known or larger capitalized stocks and can, therefore, experience significant price fluctuations without

20

fundamental reasons. These price fluctuations can be large on a percentage basis because many stocks in this category are also low-priced stocks that are often distressed or in a turnaround phase. We believe that in down markets, equity securities with lower turnover are more heavily penalized by the market, even when the underlying fundamentals of the security have held up. Therefore, we believe, and our experience bears out, that, for investments in small cap stocks, an unrealized loss of 35% or less is not necessarily indicative of a fundamental problem with the issuer. Prices of lower turnover stocks can also react significantly to a catalyst or an event that causes market participants to take an interest. When the market participants’ interest increases in an equity security, causing trading volume and market bid to increase, we typically seek to exit these positions. For these reasons, we generally consider certain equity investments in this small capitalization category to be other than temporarily impaired when the investment is in an unrealized loss position in excess of 35% of cost basis for greater than 24 months.

We generally purchase life insurance policies through secondary market transactions. The policies we purchased are universal life insurance policies issued by rated life insurance companies. Before we purchase a life settlement contract, we conduct a rigorous underwriting review that includes obtaining life expectancy estimates on individual insureds from actuaries. The price we are willing to pay for a policy is primarily a function of: (i) the policy’s face value; (ii) the expected actuarial mortality of the insured; (iii) the premiums expected to be paid over the life of the insured; and (iv) market competition from other purchasers. We seek to earn profits by purchasing policies at discounts to the face value of the insurance benefit. The discounts at which we purchase are expected to exceed the costs necessary to pay premiums and financing and servicing costs through the date of the insured’s mortality.

Additional financial information regarding our investments is presented under the subheading “Investment Portfolio” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing elsewhere in this Form 10-K.

Certain International Tax Considerations

We operate our business in several foreign countries and are subject to taxation in several foreign jurisdictions. A brief description of certain international tax considerations affecting us appears below.

Bermuda

Bermuda currently does not impose any income, corporation or profits tax, withholding tax, capital gains tax or capital transfer tax on any of our Bermuda subsidiaries, or any estate duty or inheritance tax applicable to shares of any of our Bermuda subsidiaries (except in the case of shareholders resident in Bermuda). Except as set out in the following paragraph, our Bermuda subsidiaries may be subject to any such tax in the future.

Our significant operating Bermuda subsidiary, AmTrust International Insurance, Ltd. (“AII”), has received a written assurance from the Bermuda Minister of Finance under the Exempted Undertakings Tax Protection Act 1966 of Bermuda, as amended, that, if any legislation is enacted in Bermuda imposing tax computed on profits or income, or computed on any capital asset, gain or appreciation, or any tax in the nature of estate duty or inheritance tax, then the imposition of that tax would not be applicable to these Bermuda subsidiaries or to any of their operations, shares, debentures or obligations until March 31, 2035; provided that the assurance is subject to the condition that it will not be construed to prevent the application of such tax to people ordinarily resident in Bermuda, or to prevent the application of any taxes payable by our Bermuda subsidiaries in respect of real property or leasehold interests in Bermuda held by them. Our Bermuda subsidiaries may be subject to any such tax after March 31, 2035.

During 2012, AII made a Section 953(d) election.  This election, which became effective starting January 1, 2012, means that for U.S. federal income tax purposes, AII is now treated as a U.S. corporation that is subject to tax and is included in our consolidated U.S. tax return. The other remaining significant Bermuda operations are not currently subject to taxation in the U.S.  These operations meet certain legislative exceptions in the Internal Revenue Code that allow for deferral of taxation on the earnings generated by these operations until such earnings are repatriated to the U.S.

Ireland

AmTrust International Underwriters Limited (“AIU”), a company incorporated in Ireland, is managed and controlled in Ireland and, therefore, is resident in Ireland for Irish tax purposes and subject to Irish corporation tax on its worldwide profits (including revenue profits and capital gains). Income derived by AIU from an Irish trade (that is, a trade that is not carried on wholly outside of Ireland) is subject to Irish corporation tax at the current rate of 12.5%. Other income (that is, income from passive investments, income from non-Irish trades and income from certain dealings in land) is generally subject to Irish corporation tax at the current rate of 25%.

21

The Irish Revenue Commissioners have published a statement indicating that deposit interest earned by an insurance company on funds held for regulatory purposes is regarded as part of the insurance company’s trading income, and accordingly is part of the profits taxed at 12.5%. This statement also indicates acceptance of case law that states that investment income of an insurance company is likewise considered as trading income where it is derived from assets required to be held for regulatory capital purposes. Other investment income earned by AIU is generally taxed in Ireland at a rate of 25%.

For U.S. federal income tax purposes, AIU is a controlled foreign corporation and its earnings generally are included in our U.S. federal taxable income. A credit against U.S. federal income tax liability is available for any Irish tax paid on such earnings.

As long as our principal class of common stock is listed on a recognized stock exchange in an EU member state or country with which Ireland has a tax treaty (e.g., NASDAQ), and provided that such shares are substantially and regularly traded on that exchange, Irish dividend withholding tax does not apply to dividends and other distributions paid by AIU to its parent, provided that the parent makes an appropriate declaration, in prescribed form, to AIU before the dividend is paid.

AmTrust or any of our subsidiaries, other than AIU, will not be considered resident in Ireland for Irish tax purposes unless the central management and control of such companies is, as a matter of fact, located in Ireland.

Insurance companies are subject to an insurance premium tax in the form of a stamp duty charged at 3% of certain premium income. It applies to general insurance business, other than:

• reinsurance;

• life insurance;

• certain, maritime, aviation and transit insurance; and

• health insurance.

This tax applies to a premium in respect of a policy where the risk is located in Ireland. Legislation provides that risk is located in Ireland:

• in the case of insurance of buildings together with their contents, where the building is in Ireland;

• in the case of insurance of vehicles, where the vehicle is registered in Ireland;

• in the case of insurance of four months or less duration of travel or holiday if the policyholder took out the policy in Ireland; and

• in all three cases of insurance where the policyholder is resident in Ireland, or if not an individual, where the head office of the policyholder is in Ireland or its branch to which the insurance relates is in Ireland.

An additional contribution of 2% to the Insurance Compensation Fund applies to premiums received in relation to non-life insurance policies. Similar to the 3% non-life insurance level noted above, the contribution applies where premiums are received in respect of risks located in Ireland.

Luxembourg

We have eleven Luxembourg-based subsidiaries. AmTrust Insurance Luxembourg S.A., our non-life insurance company, is owned by AmTrust Equity Solutions, Ltd. AHL, a Luxembourg holding company, is owned by AII, our Bermuda insurance company. AHL owns all of the issued and outstanding stock of our seven Luxembourg-domiciled reinsurance companies. The reinsurance companies have accumulated equalization reserves, which are catastrophe reserves in excess of required reserves that are determined by a formula based on the volatility of the business reinsured. Because AII is an insurance company with the ability to cede premiums and losses, the reinsurance companies are well-positioned to either maintain or utilize their equalization reserves. Luxembourg does not impose any income, corporation or profits tax on AHL or its subsidiaries provided sufficient premium and/or associated losses cause the equalization reserves to be either maintained or exhausted. However, if the reinsurance companies cease to write business or are unable to utilize their equalization reserves, they will ultimately recognize income that will be taxed by Luxembourg at a rate of approximately 30%. To mitigate any potential tax liability, we restructured our Luxembourg operations by entering a fiscal unity structure for Luxembourg tax purposes. AHL entered into a common agreement, effective January 1, 2013, to benefit from the fiscal unity regime present in Luxembourg. Under the agreements, AHL and the Luxembourg reinsurance companies will benefit as any tax losses accrued by any members of the fiscal unity group will be available to offset any taxable profits to be realized by any other members of the group including, but not limited to, any income as a result of the reduction in the equalization reserves.

22

All of the Luxembourg-domiciled entities are subject to a Net Wealth Tax of 0.5% on their net wealth based on prescribed valuation methods.

Dividend payments made by AmTrust Insurance Luxembourg S.A. or AHL to their respective parent companies are subject to withholding taxes of 15%.

For U.S. federal income tax purposes, AmTrust Insurance Luxembourg S.A., AHL and all of its subsidiaries are controlled foreign corporations and their earnings generally are included in our U.S. federal taxable income. A credit against U.S. federal income tax liability is available for any Luxembourg income tax paid on such earnings.

United Kingdom

AIL, a company incorporated in the United Kingdom, is managed and controlled in the U.K. and, therefore, is treated as a resident in the U.K. for U.K. tax purposes and subject to corporation tax on its worldwide profits (including revenue profits and capital gains). AIL is a holding company of 44 subsidiaries, of which 26 are domiciled and managed in the U.K. Earnings derived by AIL and its U.K. domiciled subsidiaries are subject to British corporation tax at the rate of 21% from April 1, 2014 and 20% from April 1, 2015.

AIL's subsidiaries domiciled outside of the U.K. are subject to taxation in their respective countries. All of the foreign subsidiaries are treated as separate legal and taxing bodies that are not taxed in the U.K. These subsidiaries are located in Spain, Italy, Brazil, Germany, Singapore, Malaysia, Indonesia, India, Russia, Ireland, Cayman Island, and China.

For U.S. federal income tax purposes, AIL and all of its subsidiaries are controlled foreign corporations and their earnings are generally deferred from inclusion in our U.S. federal taxable income. If a portion of the earnings is either deemed repatriated or actually repatriated, a credit against U.S. federal income tax liability is available for any local income taxes paid on such earnings.

AIL may pay dividends to its parent free of U.K. withholding tax. Dividends paid to AIL from its subsidiaries could be subject to potential withholding taxes from the countries in which the subsidiaries are domiciled. The withholding rates are subject to provisions within the double tax treaties. In the current structure of AIL, dividends paid by its indirectly owned China entity would be subject to a 5% withholding tax. Dividends paid by its indirectly owned Russia entity would be subject to a 5% withholding tax, and dividends paid by its indirectly owned Indonesia entity would be subject to a 10% withholding tax.

We do not expect AmTrust or any of its subsidiaries, other than AIL and its U.K. subsidiaries, to be resident in the U.K. for tax purposes unless the central management and control of such companies is, as a matter of fact, located in the U.K. A company not resident in the U.K. for tax purposes can be subject to corporation tax if it carries on a trade through a branch or agency in the U.K. or disposes of certain specified assets (e.g., land, minerals, or mineral rights, or unquoted shares deriving the greater part of their value from such assets). In such cases, the charge to corporation tax is limited to trading income connected with the branch or agency, capital gains on the disposal of assets used in the branch or agency which are situated in the U.K. at or before the time of disposal, capital gains arising on the disposal of specified assets, with tax imposed at the rates discussed above, plus U.K. income tax (generally by way of withholding) on certain U.K. source income.

Insurance companies are subject to an insurance premium tax at 6%. The premium tax applies to premiums for most general insurance, such as for buildings and contents and motor insurance, where the insured risk is in the U.K. Life assurance and other long term insurance remain exempt, though there are anti-avoidance rules surrounding long term medical care policies. As an anti-avoidance measure, the rate increases to 20% for insurance sold by suppliers of specified goods or services, e.g. mechanical breakdown insurance, travel insurance (irrespective of supplier), insurance sold with televisions and car hire, and, from April 1, 2004 forward, any “non-financial” GAP insurance sold through suppliers of motor vehicles or persons connected with them.

Ratings

Our principal insurance subsidiaries are rated “A” (Excellent) by A.M. Best. An “A” rating is the third highest of the 16 categories used by A.M. Best, and is assigned to companies that have, in A.M. Best’s opinion, an excellent ability to meet their ongoing obligations to policyholders. Many insurance buyers, agents and brokers use the ratings assigned by A.M. Best and other agencies to assist them in assessing the financial strength and overall quality of the companies from which they are considering purchasing insurance.

These ratings were derived from an in-depth evaluation of these subsidiaries’ balance sheets strengths, operating performances and business profiles. A.M. Best evaluates, among other factors, the company’s capitalization, underwriting leverage, financial

23

leverage, asset leverage, capital structure, quality and appropriateness of reinsurance, adequacy of reserves, quality and diversification of assets, liquidity, profitability, spread of risk, revenue composition, market position, management, market risk and event risk. A.M. Best ratings are intended to provide an independent opinion of an insurer’s ability to meet its obligations to policyholders and are not an evaluation directed at investors.

Regulation

General

The business of insurance and reinsurance is regulated in most countries, although the degree and type of regulation vary significantly from one jurisdiction to another. We are subject to extensive regulation in the United States and in Europe, which primarily includes the United Kingdom, Ireland and Luxembourg, as well as in Bermuda.

United States

As of December 31, 2014, we had fifteen operating insurance subsidiaries domiciled in the United States: AmTrust Insurance Company of Kansas, Inc. (“AICK”), Associated Industries Insurance Company, Inc., AmTrust Lloyd’s Insurance Company of Texas (“ALIC”), Comp Options, Developers Surety and Indemnity Company, First Atlantic Title Insurance Corp., FNIC, Indemnity Company of California, Milwaukee Casualty Insurance Co. (“MCIC”), Rochdale Insurance Company (“RIC”), Sequoia Insurance Company (“SIC”), Sequoia Indemnity Company (“SID”), Security National Insurance Company (“SNIC”), Technology Insurance Company, Inc, ("TIC"), and Wesco Insurance Company (“WIC”) (the “U.S. Insurance Subsidiaries”).

Holding Company Regulation

We qualify as a holding company system under laws that regulate insurance holding company systems. Each insurance company in a holding company system is required to register with the insurance supervisory agency of its state of domicile (and in any other state in which the insurance company may be deemed to be commercially domiciled by reason of concentration of its business within such state) and periodically furnish information concerning its operations and transactions, particularly with other companies within the holding company system that may materially affect its operations, management or financial condition.

The insurance laws in most states provide that all transactions among members of an insurance holding company system must be fair and reasonable. These laws require disclosure of material transactions within the holding company system and, in some cases, prior notice of or approval for certain transactions, including, among other things, (a) the payment of certain dividends, (b) cost sharing agreements, (c) intercompany agency, service or management agreements, (d) acquisition or divestment of control of or merger with domestic insurers, (e) sales, purchases, exchanges, loans or extensions of credit, guarantees or investments if such transactions are equal to or exceed certain thresholds, and (f) reinsurance agreements. All transactions within a holding company system affecting an insurer must have fair and reasonable terms and are subject to other standards and requirements established by law and regulation.

Dividends

Our U.S. Insurance Subsidiaries are subject to statutory requirements as to maintenance of policyholders’ surplus and payment of dividends. In general, the maximum amount of dividends that the U.S. Insurance Subsidiaries may pay in any 12-month period without regulatory approval is the greater of adjusted statutory net income or 10% of statutory policyholders’ surplus as of the preceding calendar year end. Adjusted statutory net income is generally defined for this purpose to be statutory net income, net of realized capital gains, for the calendar year preceding the date of the dividend. Also, most states restrict an insurance company’s ability to pay dividends in excess of its statutory unassigned surplus or earned surplus. Lastly, state insurance regulators may limit or restrict an insurance company’s ability to pay stockholder dividends as a condition to issuance of a certificate of authority or as a condition to approval of a change of control, or for other regulatory reasons.

Change of Control

State insurance holding company laws require advance approval by the respective state insurance departments of any change of control of an insurer. “Control” is generally defined as the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of the company, whether through the ownership of voting securities, by contract or otherwise. Control is generally presumed to exist through the direct or indirect ownership of 10% or more of the voting securities of a domestic insurance company or any entity that controls a domestic insurance company. In addition, insurance laws in many states contain provisions that require pre- and post-notification to the insurance departments of a change of control of certain non-

24

domestic insurance companies licensed in those states, as well as post-notification of a change of control of certain agencies and third party administrators.

Any future transactions that would constitute a change of control, including a change of control of AmTrust and/or any of our U.S. Insurance Subsidiaries, would generally require the party acquiring or divesting control to obtain the prior approval of the department of insurance in the state in which the insurance company being acquired is domiciled (and in any other state in which the company may be deemed to be commercially domiciled by reason of concentration of its insurance business within such state) and may also require pre-notification in certain other states. Obtaining these approvals may result in the material delay of, or deter, any such transaction.

These laws may discourage potential acquisition proposals and may delay, deter or prevent a change of control of AmTrust, including through transactions, and in particular unsolicited transactions, that some or all of our stockholders might consider to be desirable.

State Insurance Regulation

Insurance companies are subject to regulation and supervision by the department of insurance in the state in which they are domiciled and, to a lesser extent, other states in which they are authorized to conduct business. The primary purpose of such regulatory powers is to protect individual policyholders. State insurance authorities have broad regulatory, supervisory and administrative powers, including, among other things, the power to (a) grant and revoke licenses to transact business, including individual lines of authority, (b) set the standards of solvency to be met and maintained, (c) determine the nature of, and limitations on, investments and dividends, (d) approve policy rules, rates and forms prior to issuance, (e) regulate and conduct specific examinations regarding marketing, unfair trade, claims and fraud prevention and investigation practices, and (f) conduct periodic comprehensive and risk-focused examinations of the financial condition of insurance companies domiciled in their state. In particular, the U.S. Insurance Subsidiaries’ commercial policy rates and forms, including workers’ compensation policies, are closely regulated in all states. Workers’ compensation insurers are also subject to regulation by the specific workers’ compensation regulators in the states in which they provide such insurance.

Our U.S. Insurance Subsidiaries are required to file detailed financial statements and other reports with the departments of insurance in all states in which they are licensed to transact business. These reports include details concerning claims reserves held by the insurer, specific investments held by the insurer, and numerous other disclosures about the insurer’s financial condition and operations. These financial statements are subject to periodic examination by the department of insurance in each state in which they are filed.

State insurance laws and insurance departments also regulate investments that insurers are permitted to make. Limitations are placed on the amounts an insurer may invest in a particular issuer, as well as the aggregate amount an insurer may invest in certain types of investments. Certain investments (such as real estate) are prohibited by certain jurisdictions. Each of our domiciliary states has its own regulations and limitations on the amounts an insurer may invest in a particular issuer and the aggregate amount an insurer may invest in certain types of investments. In general, investments may not exceed a certain percentage of surplus, admitted assets or total investments. To ensure compliance in each state, we review our investment portfolio quarterly based on each state’s regulations and limitations.

In addition, many states have laws and regulations that limit an insurer’s ability to withdraw from a particular market. For example, states may limit an insurer’s ability to cancel or not renew policies. Furthermore, certain states prohibit an insurer from withdrawing from one or more lines of business written in the state, except pursuant to a plan that is approved by the state insurance department. The state insurance department may disapprove any proposed plan that may lead to market disruption. Laws and regulations that limit cancellation and non-renewal and that subject program withdrawals to prior approval requirements may restrict the ability of our U.S. Insurance Subsidiaries to exit unprofitable markets.

Insurance agencies, producers, third party administrators, claims adjusters and service contract providers and administrators are subject to licensing requirements and regulation by insurance regulators in various states in which they conduct business. Many of our subsidiaries are subject to licensing requirements and regulation by insurance regulators in various states.

Federal and State Legislative and Regulatory Changes

From time to time, various regulatory and legislative changes have been proposed in the insurance industry. Among the proposals that have in the past been or are at present being considered are the possible introduction of federal regulation in addition to, or in lieu of, the current system of state regulation of insurers and proposals in various state legislatures (some of which have been enacted) to conform portions of their insurance laws and regulations to various model acts adopted by the National Association

25

of Insurance Commissioners (“NAIC”). The NAIC has undertaken a Solvency Modernization Initiative focused on updating the U.S. insurance solvency regulatory framework, including capital requirements, governance and risk management, group supervision, accounting and financial reporting and reinsurance. In December 2010, the NAIC adopted amendments to the Insurance Holding Company System Regulatory Act (“Model Act 440”) and the Insurance Holding Company System Model Regulation (the “Model Regulation 450”) to introduce the concept of “enterprise risk” within an insurance company holding system. “Enterprise risk” is defined as any activity, circumstance, event or series of events involving one or more affiliates of an insurer that, if not remedied promptly, is likely to have a material adverse effect upon the financial condition or the liquidity of the insurer or its insurance holding company system as a whole. Model Act 440 and Model Regulation 450 impose more extensive informational requirements on us in order to protect the licensed insurance companies from enterprise risk. For example, Model Act 440 requires the insurance companies to submit an enterprise risk report that identifies the material risks within the insurance company holding system that could pose enterprise risk to the licensed insurer, the requirements of which are outlined in Model Regulation 450 under “Form F.” This filing is submitted annually with the insurance company’s Form B holding company registration statement. In addition, the Model Act 440 and Model Regulation 450 require any controlling person of a domestic insurer seeking to divest its controlling interest to file a notice of its proposed divestiture, which may be subject to approval by the insurance commissioner. Model Act 440 and Model Regulation 450 have been adopted in all the states in which our U.S. Insurance Companies are domiciled. Additionally, the NAIC has adopted the Risk Management and Own Risk and Solvency Assessment (ORSA) Model Act, which requires insurers to perform an ORSA and, upon request of a state, file an ORSA Summary Report with the state. The ORSA Summary Report is required to be filed in 2015, subject to the various dates of adoption by states, and will describe our process for assessing our own solvency. Also, as part of the Solvency Modernization Initiative, the NAIC has adopted the Corporate Governance Annual Filing Model Regulation and Corporate Governance Annual Disclosure Model Act to become effective in 2016 that will require us to file a confidential report prepared by the insurer or insurance group, the purpose of which is to provide the most relevant information necessary to permit state regulators to gain an understanding of the corporate governance structure, policies and practices utilized by the insurer.

On July 21, 2010, the President signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) that established a Federal Insurance Office (the “FIO”) within the U.S. Department of the Treasury. The FIO was initially charged with monitoring certain aspects of the insurance industry, gathering data, and conducting a study on methods to modernize and improve the insurance regulatory system in the United States. In 2013, the FIO issued a report entitled “How to Modernize and Improve the System of Insurance Regulation in the United States” (the “Report”), which recommended that Congress consider direct federal involvement should the states fail to accomplish necessary modernization reforms in the near term.The FIO continues to support the current state-based regulatory regime, but may consider federal regulation should the states fail to take steps to greater uniformity.

In addition, the Dodd-Frank Act gives the Federal Reserve supervisory authority over a number of financial services companies, including insurance companies, if they are designated by the Financial Stability Oversight Council as “systemically important.” In such a case, the Federal Reserve’s supervisory authority could include the ability to impose heightened financial regulation upon that insurance company and could impact its capital, liquidity and leverage requirements as well as its business and investment conduct.

The Dodd-Frank Act also incorporates the Non-Admitted and Reinsurance Reform Act (“NRRA”), which became effective on July 21, 2011. Among other things, the NRRA establishes national uniform standards on how states may regulate and tax surplus lines insurance and sets national standards concerning the regulation of reinsurance. In particular, the NRRA gives regulators in the state where an insurer is domiciled (or, if it's an alien insurer, its port of entry) exclusive authority to regulate and tax surplus lines insurance transactions, and regulators in a ceding insurer’s state of domicile the sole responsibility for regulating the balance sheet credit that the ceding insurer may take for reinsurance recoverables.

The Terrorism Risk Insurance Act (“TRIA”), as extended by the Terrorism Risk Insurance Program Reauthorization Act of 2015 (“TRIPRA”), requires that commercial property and casualty insurance companies offer coverage (with certain exceptions, such as with respect to commercial auto liability) for certain acts of terrorism and has established a federal assistance program through the end of 2020 to help such insurers cover claims for terrorism-related losses. TRIA covers certified acts of terrorism, and the U.S. Secretary of the Treasury must declare the act to be a “certified act of terrorism” for it to be covered under this federal program. In addition, pursuant to TRIPRA, no certified act of terrorism will be covered by the TRIA program unless the aggregate insurance industry losses from the act exceed $100 million (increasing $20 million per year to $200 million in 2020). Under TRIPRA, the federal government covers 85% (decreasing 1% per year to 80% in 2020) for acts of the losses from covered certified acts of terrorism on commercial risks in the United States only, in excess of a deductible amount. This deductible is calculated as a percentage of an affiliated insurance group’s prior year premiums on commercial lines policies (with certain exceptions, such as commercial auto policies) covering risks in the United States. This deductible amount is 20% of such premiums.

26

Specific federal regulatory developments include the introduction of legislation in Congress that would repeal the McCarran-Ferguson Act antitrust exemption for the insurance industry. The antitrust exemption allows insurers to compile and share loss data, develop standard policy forms and manuals and predict future loss costs with greater reliability, among other things. The ability of the industry, under the exemption permitted in the McCarran-Ferguson Act, to collect loss cost data and build a credible database as a means of predicting future loss costs is an important part of cost-based pricing. If the ability to collect this data were removed, the predictability of future loss costs and the reliability of pricing could be undermined.

State Insurance Department Examinations

As part of their regulatory oversight process, state insurance departments conduct periodic detailed and risk-focused financial examinations of insurance companies domiciled in their states, generally once every three to five years. Examinations are generally carried out in cooperation with the insurance departments of other states under guidelines promulgated by the NAIC. The following is a list of our insurance companies that have scheduled or ongoing financial examinations and the periods under examination:

Company	State Insurance Department	Years of Examination
TIC	New Hampshire	2010-2013
RIC	New York	2009-2013
SIC	California	2009-2013
SID	Nevada	2009-2013
COIC	Florida	2009-2013

A second type of regulatory oversight examination of insurance companies involves a review by an insurance department of an authorized company’s market conduct, which entails a review and examination of a company’s compliance with laws governing marketing, underwriting, rating, policy-issuance, claims-handling and other aspects of its insurance business during a specified period of time. The following is a list of insurance companies that have scheduled or ongoing market conduct reviews and the periods under examination:

Company	State Insurance Department	Period of Examination
TIC	California	2013

Guaranty Fund Assessments

Most, if not all, of the states where we are licensed to transact business require that property and casualty insurers doing business within the state participate in a guaranty association, which is organized to pay contractual benefits owed pursuant to insurance policies issued by impaired, insolvent or failed insurers. These associations levy assessments, up to prescribed limits, on all member insurers in a particular state on the basis of the proportionate share of the premiums written by the member insurers in the lines of business in which the impaired, insolvent or failed insurer is engaged. Some states permit member insurers to recover assessments paid through full or partial premium tax offsets.

Property and casualty insurance company insolvencies or failures may result in additional guaranty association assessments to our U.S. Insurance Subsidiaries at some future date. At this time, we are unable to determine the impact, if any, such assessments may have on their financial positions or results of their operations. As of December 31, 2014, each of our U.S. Insurance Subsidiaries has established accruals for guaranty fund assessments with respect to insurers that are currently subject to insolvency proceedings.

Residual Market Programs

Many of the states in which our U.S. Insurance Subsidiaries conduct business or intend to conduct business require that all licensed insurers that provide workers’ compensation insurance participate in a program to provide workers’ compensation insurance to those employers that have not or cannot procure coverage from an insurer on a voluntary basis. The level of required participation in such residual market programs of insurers is generally determined by calculating the volume of the voluntarily issued business in that state of the particular insurer as a percentage of all voluntarily issued business in that state by all insurers. The resulting factor is the proportion of the premiums the insurer must accept as a percentage of all premiums for policies issued in that state’s residual market program.

27

Insurance companies generally can fulfill their residual market obligations by either issuing insurance policies to employers assigned to them, or participating in national and state reinsurance pools managed by a Plan Administrator where the results of all policies provided through these administered pools are shared by the participating companies. Currently, our U.S. Insurance Subsidiaries satisfy their residual market obligations by participating in the administered pools. None of our U.S. Insurance Subsidiaries issues policies to employers assigned to them except to the extent that TIC acts as a servicing carrier for workers’ compensation assigned risk plans in multiple states (“Assigned Risk Plans”) administered by NCCI, ICRB/CIS and AON.

Coverage provided by the Assigned Risk Plans is offered through servicing carriers, which issue policies to employers assigned to them by the Assigned Risk Plan’s administrator. Polices issued pursuant to the Assigned Risk Plans are 100% reinsured by the administered pools, which are funded by assessments on insurers which write workers’ compensation insurance in the states which participate in the pools.

As noted above, TIC acts as a servicing carrier for the Assigned Risk Plans. Servicing carrier contracts are generally awarded based on a competitive bidding process. As a servicing carrier, we receive fee income for our services but do not retain any underwriting risk, which is fully reinsured by the NCCI pools.

Second Injury Funds

A number of states operate trust funds that reimburse insurers and employers for claims paid to injured employees for aggravation of prior conditions or injuries. These state-managed trust funds are funded through assessments against insurers and self-insurers providing workers’ compensation coverage in a particular state. We received recoveries of approximately $5.7 million, $2.8 million and $2.7 million from such state-managed trust funds in 2014, 2013 and 2012, respectively. The aggregate amount of cash we paid for assessments to state-managed trust funds for the years ended December 31, 2014, 2013 and 2012 was approximately $14.6 million, $11.7 million and $8.8 million, respectively.

Risk-Based Capital Regulations

Our U.S. Insurance Subsidiaries are required to report their risk-based capital based on a formula developed and adopted by the NAIC that attempts to measure statutory capital and surplus needs based on the risks in the insurer’s mix of products and investment portfolio. The formula is designed to allow insurance regulators to identify weakly-capitalized companies. Under the formula, a company determines its “risk-based capital” by taking into account certain risks related to the insurer’s assets (including risks related to its investment portfolio and ceded reinsurance) and the insurer’s liabilities (including underwriting risks related to the nature and experience of its insurance business). The insurance departments in our domiciliary states generally require a minimum total adjusted risk-based capital equal to 150% of an insurance company’s authorized control level risk-based capital. At December 31, 2014, our U.S. Insurance Subsidiaries’ risk-based capital levels exceeded the minimum level that would trigger regulatory attention.

Insurance Regulatory Information System Ratios

The NAIC Insurance Regulatory Information System, or IRIS, is part of a collection of analytical tools designed to provide state insurance regulators with an integrated approach to screening and analyzing the financial condition of insurance companies operating in their respective states. IRIS is intended to assist state insurance regulators in targeting resources to those insurers in greatest need of regulatory attention. IRIS consists of two phases: statistical and analytical. In the statistical phase, the NAIC database generates key financial ratio results based on financial information obtained from insurers’ annual statutory statements. The analytical phase is a review of the annual statements, financial ratios and other automated solvency tools. The primary goal of the analytical phase is to identify companies that appear to require immediate regulatory attention. A ratio result falling outside the usual range of IRIS ratios is not considered a failing result; rather, unusual values are viewed as part of the regulatory early monitoring system. Furthermore, in some years, it may not be unusual for financially sound companies to have several ratios with results outside of the usual ranges. An insurance company may fall out of the usual range for one or more ratios because of specific transactions that are in themselves immaterial or because of certain reinsurance or pooling structures or changes in such structures.

In 2014, three of our U.S. Insurance Subsidiaries, SNIC, TIC and WIC, had four or more ratios departing from the usual values. All three of these subsidiaries had unusual values for net written premium, which resulted from increased premium writings due to premium related to the Tower business and our expansion in the state of California. The investment yields were below the usual range in SNIC and TIC because their respective investment portfolios contained a high concentration of shorter duration, higher quality investments, for which interest rates have remained low compared to historical averages. All three subsidiaries had unusual values for gross change in policyholders' surplus. In addition, SNIC had an unusual value for change in adjusted policyholders' surplus. These two unusual values resulted from increased underwriting income due to additional premium described above and capital contributions to support the increase in premium writing. TIC's and WIC's other two and three unusual values,

28

respectively, were caused by our intercompany reinsurance structure. Our intercompany reinsurance structure, by which TIC cedes 70% of written premium to AII and 10% to another affiliate, and WIC cedes 20% of written premium to TIC and 70% of written premium to AII, causes certain IRIS ratios to generate results that are outside of the usual ranges:

• Adjusted Liabilities to Liquid Assets - for purposes of calculating this ratio, insurance companies are required to adjust total liabilities by that portion of premium receivables that are classified as “deferred and not yet due.” However, there is no corresponding offset to liquid assets for current receivables, which are known as “Uncollected premiums and agents balance in the course of collections.” WIC/TIC’s liabilities associated with its reinsurance structure (e.g., reinsurance payable or funds held under reinsurance agreements) are based on WIC/TIC’s full amount of written premium, but WIC/TIC does not receive credit in the calculation for current receivables as a liquid asset.

• Gross Agent’s balance (in collection) to Policyholder Surplus - WIC/TIC’s policyholder surplus is maintained at a level sufficient for its net retained premium, as opposed to gross premium.

• Surplus Aid to Policyholder Surplus - This ratio compares ceding commissions on unearned ceded reinsurance premiums to the insurance company’s policyholder surplus. If a large portion of policyholder surplus is dependent on surplus aid (and the insurance company’s continued participation in its existing reinsurance treaties), there could be an impact on the insurance company’s solvency. The NAIC considers a ratio above 15% to be unusual and WIC’s ratio in 2014 was 26%. Within our intercompany reinsurance structure, WIC only retains 10% of its written premium, thereby generating a large amount of ceding commission on unearned premium and inflating its amount of surplus aid.

All of our remaining U.S. Insurance Subsidiaries had fewer than four ratios outside of the usual values.

Statutory Accounting Principles

Statutory accounting principles, or SAP, are a basis of accounting developed to assist insurance regulators in monitoring and regulating the solvency of insurance companies. SAP is primarily concerned with measuring an insurer’s solvency. Statutory accounting focuses on valuing assets and liabilities of insurers at financial reporting dates in accordance with appropriate insurance law and regulatory provisions applicable in each insurer’s domiciliary state.

GAAP, like SAP, is concerned with a company’s solvency, but it is also concerned with other financial measurements, principally income and cash flows. Accordingly, GAAP gives more consideration to appropriately matching revenue and expenses and accounting for management’s stewardship of assets than does SAP. As a direct result, different assets and liabilities and different amounts of assets and liabilities will be reflected in financial statements prepared in accordance with GAAP as compared to SAP.

Credit for Reinsurance

In addition to regulatory requirements imposed by the jurisdictions in which they are licensed, reinsurers’ business operations are affected by regulatory requirements in various states governing “credit for reinsurance” that are imposed on their ceding companies. The NRRA, discussed above under “- Federal and State Legislative and Regulatory Changes,” provides that if the state of domicile of a ceding insurer is an NAIC accredited state, or has financial solvency requirements substantially similar to the requirements necessary for NAIC accreditation, and recognizes credit for reinsurance for the insurer’s ceded risk, then no other state may deny such credit for reinsurance. Because all states are currently accredited by the NAIC, the NRRA prohibits a state in which a U.S. ceding insurer is licensed but not domiciled from denying credit for reinsurance for the insurer’s ceded risk if the cedant’s domestic state regulator recognizes credit for reinsurance. The ceding company in this instance is permitted to reflect in its statutory financial statements a credit in an aggregate amount equal to the ceding company’s liability for unearned premium (which are that portion of premiums written that apply to the unexpired portion of the policy period), loss reserves and loss expense reserves to the extent ceded to the reinsurer. AII, which reinsures risks of our U.S. Insurance Subsidiaries, is not licensed, accredited or approved in any state in the United States. The great majority of states, however, permit a credit to statutory surplus resulting from reinsurance obtained from a non-licensed or non-accredited reinsurer to be recognized to the extent that the reinsurer provides a letter of credit, trust fund or other acceptable security arrangement. AII posts security to permit our U.S. Insurance Subsidiaries to receive credit for reinsurance on business ceded to AII pursuant to our intercompany reinsurance agreements.

Privacy Regulations

In 1999, Congress enacted the Gramm-Leach-Bliley Act, which, among other things, protects consumers from the unauthorized dissemination of certain personal information. Subsequently, states have implemented additional regulations to address privacy issues. Certain aspects of these laws and regulations apply to all financial institutions, including insurance and finance companies, and require us to maintain appropriate policies and procedures for managing and protecting certain personal information of our policyholders. We may also be subject to future privacy laws and regulations, which could impose additional costs and impact our

29

results of operations or financial condition. In 2000, the NAIC adopted the Privacy of Consumer Financial and Health Information Model Regulation, which assisted states in promulgating regulations to comply with the Gramm-Leach-Bliley Act. In 2002, to further facilitate the implementation of the Gramm-Leach-Bliley Act, the NAIC adopted the Standards for Safeguarding Customer Information Model Regulation. Several states have now adopted similar provisions regarding the safeguarding of policyholder information. To the best of our knowledge, we are in compliance with all applicable privacy laws and regulations.

Telephone and Email Sales Regulations

The U.S. Congress, the Federal Communications Commission, the Federal Trade Commission and various states have promulgated and enacted rules and laws that govern telephone and email solicitations. There are numerous state statutes and regulations governing telephone sales activities and email solicitations that do or may apply to our operations, including the operations of our call centers. For example, some states place restrictions on the methods and timing of calls and require that certain mandatory disclosures be made during the course of a telephone sales call. Federal and state “Do Not Call” regulations must be followed for us to engage in telephone sales activities. In addition, both the federal and state statutes have rules governing commercial email messages restricting the content of the messages, as well as the method and manner of distribution, including requiring certain opt-out mechanisms.

Regulatory Coordination

State regulators in the United States and regulatory agencies outside the United States are increasingly coordinating the regulation of internationally active insurance groups ("IAIG") through participation in supervisory colleges. An IAIG is an insurance group that (a) writes business in not fewer than three jurisdictions and not less than 10% of its premium outside its home jurisdiction, which in our case is the United States, and (b) has, based on a rolling three-year average, total assets of not less than $50 billion or gross written premium of not less than $10 billion. A supervisory college, as defined by the International Association of Insurance Supervisors, is a forum for cooperation and communication between the involved supervisors established for the fundamental purpose of facilitating the effectiveness of supervision of entities that belong to an insurance group; facilitating both the supervision of the group as a whole on a group-wide basis and improving the legal entity supervision of the entities within the insurance group. Model Act 440 and Model Regulation 450, discussed above under “–Federal and State Legislative and Regulatory Changes” provide an insurance commissioner with the power to participate in a supervisory college for any domestic insurer with international operations with other regulators charged with supervision of the insurer or its affiliates, including other state, federal, and international regulatory agencies, in order to determine compliance by the insurer with the Holding Company Act.  The powers of the commissioner with respect to supervisory colleges include, but are not limited to, the following: initiating the establishment of a supervisory college; clarifying the membership and participation of other supervisors in the supervisory college; clarifying the functions of the supervisory college and the role of other regulators, including the establishment of a group-wide supervisor; coordinating the ongoing activities of the supervisory college, including planning meetings, supervisory activities, and processes for information sharing; and establishing a crisis management plan. Notwithstanding the size limitations, we expect our regulators to establish a supervisory college for our insurance group.

Ireland

AIU is a non-life insurance company organized under the laws of Ireland. AIU is subject to the regulation and supervision of the Central Bank of Ireland (the “Irish Central Bank”) pursuant to the Insurance Acts 1909 to 2000, as amended (the “Insurance Acts”), and the European Communities (Non Life Framework) Regulations 1994 (as amended) (the “Regulations”). AIU has been authorized to underwrite various classes of non-life insurance business. AIU,as an Irish authorized insurance company, is permitted to carry on insurance business in any other member state of the European Economic Area by way of freedom to provide services, on the basis that it has notified the Irish Central Bank of its intention to do so, or by way of freedom of establishment, subject to the approval of the Irish Central Bank, and subject to complying with such conditions as may be laid down by the regulator of the jurisdiction in which the insurance activities are carried out for reasons of the “general good.”

Qualifying Shareholders

The Insurance Acts and Regulations require that anyone acquiring or disposing of a “qualifying holding” in an insurance company (such as AIU), or anyone who proposes to decrease or increase that holding to “specified levels,” must first notify the Irish Central Bank of their intention to do so. It also requires any insurance company that becomes aware of any acquisitions or disposals of its capital, such that such holdings amount to a qualifying holding exceeding or falling below the “specified levels,” to notify the Irish Central Bank. If the Irish Central Bank is not satisfied as to the suitability of the acquirer in view of the necessity to “ensure the sound and prudent management of the insurance undertaking,” it may oppose the proposed transaction. Under the European Communities (Assessment of Acquisitions in the Financial Sector) Regulations 2009, there is a strict time-frame for the assessment of a proposed transaction, which may take up to 80 working days. A “qualifying holding” means a direct or indirect

30

holding in an insurance company that represents 10% or more of the capital or of the voting rights of such company or that makes it possible to exercise a significant influence over the management of such company. The “specified levels” are 20%, 33% and 50%, or such other level of ownership that results in the insurance company becoming the acquirer’s subsidiary.

Any person having a shareholding of 10% or more of the issued share capital in AmTrust Financial Services, Inc. or AmTrust Equity Solutions, Ltd. (the direct parent of AIU) or a 20% or more holding in the intermediate companies between AmTrust Financial Services, Inc. and AmTrust Equity Solutions, Ltd. would be considered to have an indirect holding in AIU at or over the 20% limit. Any change that resulted in the indirect acquisition or disposal of a shareholding of greater than or equal to 10% in the share capital of AIU, or a change that resulted in an increase to or decrease below one of the specified levels, would need to be approved with the Irish Central Bank prior to the transaction. The Irish Central Bank’s approval would be required if any person were to acquire a shareholding equal to or in excess of 10% of AIU’s outstanding common stock or in excess of one of the specified levels.

AIU is required, at such times as may be specified by the Irish Central Bank, and at least once a year, to notify the Irish Central Bank of the names of shareholders possessing qualifying holdings and the size of such holdings.

Financial Requirements and Regulatory Guidelines

AIU is required to establish and maintain an adequate solvency margin and a minimum guarantee fund, both of which must be free from all foreseeable liabilities. Currently, the solvency margin is calculated as the higher amount of a percentage of the annual amount of premiums (premiums basis) or the average burden of claims for the last three years (claims basis).

The amount of the minimum guarantee fund that AIU is required to maintain is equal to the minimum solvency margin, which at December 31, 2014 was approximately €31.3 million. The amount of the minimum guarantee fund may never be less than €3.7 million. In addition to the Insurance Acts and Regulations, AIU is expected to comply with various guidelines and codes issued by the Irish Central Bank.

Restrictions on Dividends

As a matter of Irish company law, AIU is restricted to declaring dividends only out of “profits available for distribution.” Profits available for distribution are a company’s accumulated realized profits less its accumulated realized losses. Such profits may not include profits previously distributed or capitalized and such losses do not include amounts previously written off in a reduction or reorganization of capital. In addition, one of the conditions imposed on AIU when authorized was a restriction on making dividend payments without the Irish Central Bank’s prior approval.

Bermuda

Classification

AII is registered as a Class 3 insurer under the Insurance Act 1978 of Bermuda (the “Insurance Act - Bermuda”). As a Class 3 insurer, AII can carry on general business, broadly including all types of insurance business other than long-term business. AII is also licensed as a Class C insurer to carry on long-term business. Long-term business broadly includes life insurance and disability insurance with terms in excess of five years.

Principal Representative

AII, as an insurer, is required to maintain a principal office in Bermuda and to appoint and maintain a principal representative in Bermuda.

Independent Approved Auditor

Every registered insurer must appoint an independent auditor (the “approved auditor”) who annually audits and reports on the statutory financial statements and the statutory financial return of the insurer, both of which, in the case of AII, are required to be filed annually with the Bermuda Monetary Authority (“BMA”). The approved auditor of AII must be approved by the BMA. AII’s approved auditor is Arthur Morris & Company Limited.

31

Loss Reserve Specialist

As a registered Class 3 insurer, AII is required to submit an opinion of an approved loss reserve specialist with its statutory financial return in respect of its loss and loss adjustment expense provisions. The loss reserve specialist, who is normally a qualified casualty actuary, must be approved by the BMA.

Approved Actuary

Long-term insurers, such as AII, are required to submit an annual actuary’s certificate when filing their statutory financial returns. The actuary, who is normally a qualified life actuary, must be approved by the BMA.

Annual Statutory Financial Return

AII is required to file with the BMA statutory financial returns no later than four months after its financial year end (unless specifically extended). The statutory financial return for an insurer includes, among other matters, a report of the approved auditor on the statutory financial statements of such insurer, the solvency certificates, the declaration of statutory ratios, the statutory financial statements themselves, the opinion of the loss reserve specialist and the approved actuary’s certificate. The solvency certificates must be signed by the principal representative and at least two directors of the insurer who are required to certify, among other matters, whether the minimum solvency margin has been met and whether the insurer complied with the conditions attached to its certificate of registration. The approved auditor is required to state whether, in his opinion, it was reasonable for the directors to so certify. Where an insurer’s accounts have been audited for any purpose other than compliance with the Insurance Act - Bermuda, a statement to that effect must be filed with the statutory financial return. In addition, in compliance with the Insurance Code of Conduct, AII must confirm with the submission of its annual statutory financial return, in the form of a statutory declaration sworn by the principal representative and directors of AII, that its Board, assisted by management, has reviewed the provisions of the Insurance Code of Conduct and has determined that AII has complied with those provisions given the nature, scale and complexity of its operations.

Minimum Solvency Margin and Restrictions on Dividends and Distributions

Under the Insurance Act - Bermuda, the value of the general business assets of a Class 3 insurer, such as AII, must exceed the amount of its general business liabilities by an amount greater than the prescribed minimum solvency margin. AII is required, with respect to its general business, to maintain a minimum solvency margin equal to the greatest of: $1.0 million; 20% of net premiums written up to $6.0 million plus 15% of net premiums written over $6.0 million; and 15% of loss and other insurance reserves.

AII would be prohibited from declaring or paying any dividends during any financial year if it is in breach of its minimum solvency margin or minimum liquidity ratio or if the declaration or payment of such dividends would cause it to fail to meet such margin or ratio. In addition, if it has failed to meet its minimum solvency margin or minimum liquidity ratio on the last day of any financial year, AII is prohibited, without the approval of the BMA, from declaring or paying any dividends during the next financial year.

AII is prohibited, without the approval of the BMA, from reducing by 15% or more its total statutory capital as set out in its previous year’s financial statements. AII is required to establish and maintain a long-term business fund and no payment may be made directly or indirectly from AII’s long-term business fund for any purpose other than a purpose related to AII’s long-term business, unless such payment can be made out of any surplus certified by AII’s approved actuary to be available for distribution otherwise than to policyholders. AII is required, with respect to its long-term business, to maintain a minimum solvency margin of $0.25 million. AII is required to obtain a certification from its approved actuary prior to declaring or paying any dividends. Such certificate will not be given unless the value of its long-term business assets exceeds its long-term business liabilities (as certified by the approved actuary) by the amount of the dividend and at least $0.25 million. The amount of any such dividend shall not exceed the aggregate of the excess referenced in the preceding sentence and other funds properly available for the payment of dividends, being funds arising out of its business, other than its long-term business.

Minimum Liquidity Ratio

The Insurance Act provides a minimum liquidity ratio for general business insurers. An insurer engaged in general business, such as AII, is required to maintain the value of its relevant assets at not less than 75% of the amount of its relevant liabilities. Relevant assets include cash and time deposits, quoted investments, unquoted bonds and debentures, first liens on real estate, investment income due and accrued, accounts and premiums receivable and reinsurance balances receivable. There are certain categories of assets which, unless specifically permitted by the BMA, do not automatically qualify as relevant assets, such as

32

unquoted equity securities, investments in and advances to affiliates and real estate and collateral loans. The relevant liabilities are total general business insurance reserves and total other liabilities less deferred income tax and sundry liabilities (by interpretation, those not specifically defined) and letters of credit and guarantees.

Notification of New or Increased Shareholder Control

Pursuant to Section 30E of the Insurance Act - Bermuda, any person who becomes a holder of at least 10%, 20%, 33% or 50% of our shares or AII’s shares (a “shareholder controller”) must notify the BMA in writing within 45 days of becoming such a holder. Pursuant to Section 30J of the Insurance Act - Bermuda, AII must notify the BMA in writing of the fact that any person has become a shareholder controller of AII within 45 days of becoming aware of the relevant facts. The BMA may, by written notice, object to such a person if it appears to the BMA that the person is not fit and proper to be such a holder. A person that does not comply with such a notice from the BMA will be guilty of an offense. AII must also list every person who has become or ceased to be a shareholder controller during the financial year at the time of filing its annual financial statements for that year, specifying the dates when such person either became or ceased to be an shareholder controller.

Objection to Existing Shareholder Controller

For so long as we have a subsidiary that is an insurer registered under the Insurance Act - Bermuda, the BMA may at any time, by written notice, object to a person holding 10% or more of our shares if it appears to the BMA that the person is not or is no longer fit and proper to be such a holder. In such a case, the BMA may require the shareholder to reduce its holding of our shares and direct, among other things, that such shareholder’s voting rights shall not be exercisable. A person who does not comply with such a notice or direction from the BMA will be guilty of an offense.

Notification of Change of Officer

As a licensed insurer, AII must notify the BMA in writing of the fact that any person has become or ceased to be an officer of AII. Such notice must be served before the end of a period of 45 days beginning with the day on which AII became aware of the relevant facts. AII must also list every person who has become or ceased to be an officer during the financial year at the time of filing its annual financial statements for that year, specifying the dates when such person either became or ceased to be an officer. For these purposes, “officer” means a director, chief executive or senior executive performing duties of underwriting, actuarial, risk management, compliance, internal audit, finance or investment matters.

Luxembourg

AmTrust Insurance Luxembourg S.A. is a non-life insurance company, having its registered office in Luxembourg-city, organized under the laws of the Grand-Duchy of Luxembourg and governed by the law dated August 10, 1915 on commercial companies, as amended (the “Companies Act”) and the law dated December 6, 1991 on the insurance sector as amended (the “Insurance Act - Luxembourg”).

On January 19, 2012, AmTrust Insurance Luxembourg S.A. received its authorization from the Ministry of Treasury and Budget to carry out non-life insurance business in or from Luxembourg in compliance with Article 27 of the Insurance Act - Luxembourg. AmTrust Insurance Luxembourg S.A. is supervised by the Commissariat aux Assurances (the “CAA”).

AmTrust Holdings Luxembourg S.A.R.L. owns seven reinsurance companies (the “ReinsuranceCompanies”). The Reinsurance Companies also have their registered offices in Luxembourg-city, are organized under the laws of the Grand-Duchy of Luxembourg and governed by the Companies Act and the Insurance Act - Luxembourg. In the Grand-Duchy of Luxembourg, a reinsurance company is a company created or owned by an industrial, commercial or financial group, which aims at reinsuring exclusively all or part of the risks of the group to which it belongs and is subject to the same rules applicable to reinsurance undertakings. The Reinsurance Companies are also supervised by theCAA.

Qualifying Shareholders

Under the Insurance Act - Luxembourg, in order to obtain a license to do insurance and reinsurance business in the Grand-Duchy of Luxembourg, the reinsurance and insurance companies must provide the CAA with the identity of the shareholders or members, direct or indirect, private individuals or legal bodies, that hold in the undertaking a “qualified participation,” as well as the amount of these participations. A qualified participation is a participation of at least 10% in the share capital of the company or the right to exert a significant influence on the management of the company.

33

Change of Control

The Insurance Act - Luxembourg provides that any natural person or legal person that intends to directly or indirectly acquire a qualifying holding in a Luxembourg reinsurer or insurer must inform the CAAthereof in advance and indicate the amount of his/its holding. Any natural or legal person must also inform the CAAif it is contemplated to increase his/its qualifying holding in such a way that the proportion of voting rights or shares held by him/it would reach or exceed the thresholds of 20%, 33% or 50%, or if the Luxembourg reinsurance undertaking would become a subsidiary.

Financial Requirements and Regulatory Guidelines

• Solvency margin: The Grand-Ducal regulation dated December 14, 1994, as amended as of November 14, 2012 (“Regulation 1”), provides that insurance companies must at all times have a solvency margin that is adequate for their entire business. Regulation 1 requires the solvency margin correspond to the business assets of the insurance company, free of any financial commitments after deduction of the intangible assets. The Grand-Ducal regulation dated December 5, 2007, as amended as of July 4, 2014 (applicable as of January 1, 2015), provides that reinsurance companies must at all times have a solvency margin that is adequate for their entire business.

• Guarantee fund: Insurance companies and reinsurance companies must establish minimum guarantee funds that constitute one-third of their respective solvency margin.According to the Grand-Ducal regulation dated July 4, 2014 (applicable January 1, 2015), the size of the guarantee fund cannot be less than €3.6 million for professional reinsurance companies and €1.225 million for captive reinsurance companies.

• Equalization Reserves: The Insurance Act - Luxembourg provides that reinsurance undertakings must establish a compulsory volatility or catastrophe reserve in excess of required reserves determined by a formula based on the volatility of the business ceded to the reinsurance company.

As of December 31, 2014, our Luxembourg insurance and reinsurance companies were in compliance with these financial requirements and regulatory guidelines.

Restrictions on Dividends

A Luxembourg insurance company’s articles of association and the Companies Act govern annual dividend distributions. The Companies Act also provides specific conditions for the payment of interim dividends. Except for cases of reductions of subscribed capital, a Luxembourg insurance company cannot make a distribution to shareholders when, on the closing date of the financial year, the net assets as set out in the annual accounts are, or following such a distribution would become, lower than the amount of the subscribed capital plus the reserves. In addition, the amount of a distribution to shareholders may not exceed the amount of the profits at the end of the last financial year plus any profits carried forward and any amounts drawn from reserves that are available for that purpose, less any losses carried forward and sums to be placed to reserve.

United Kingdom

AmTrust Europe Ltd. ("AEL") and MICL are non-life insurance companies organized under the laws of the United Kingdom (including the Companies Act 2006 and the Financial Services and Markets Act 2000 (FSMA)). As insurance companies, AEL and MICL are “dual regulated” by both the Prudential Regulation Authority (PRA), a subsidiary of the Bank of England, and the Financial Conduct Authority (FCA). The stated objective of the United Kingdom government for this dual regulation is to foster a regulatory culture of judgment, expertise and proactive supervision. The FCA takes a more proactive, interventionist approach and has been given a product intervention power that enables it to act quickly to ban or impose restrictions on financial products. The FCA can also make public (through a warning notice), at a much earlier stage in enforcement proceedings, a statement that enables consumers, firms and market users to understand the nature of its concerns that will usually name the company under investigation and, in certain circumstances, name an individual.

AEL and MICL are both authorized to underwrite various classes of non-life insurance business within the United Kingdom and, for certain of these classes, they are authorized to underwrite risks within some member states of the European Economic Area under the European Council Non-Life Insurance Directives. This is either on a “freedom of services” or on a “freedom of establishment” basis and is subject to complying with such “general good” conditions as may be laid down by the local regulatory authorities.

34

Change in Control

The FSMA requires controllers of insurers to be approved by the PRA and the FCA. This includes individuals or corporate bodies who wish to take, or increase, control in an authorized insurer. A change in control also occurs when an existing controller decreases control.

A controller is a person or entity who (i) owns or controls 10% or more of the issued share capital or voting power of the authorized insurer, (ii) owns or controls 10% or more of the issued share capital or voting power of a controller of the authorized insurer, or (iii) who otherwise can exercise significant management control of the authorized insurer or one of its controllers. In the case of AEL, this includes AmTrust Financial Services, Inc., AII, AII Insurance Management Limited, AII Reinsurance Broker Ltd., AmTrust Equity Solutions, Ltd., AmTrust International Limited, AmTrust North America, Inc. and Barry Zyskind, Michael Karfunkel, Leah Karfunkel and George Karfunkel. In the case of MICL, it includes the aforementioned and Car Care Plan (Holdings) Limited.

Financial Requirements and Regulatory Guidelines

AEL and MICL are required to maintain regulatory capital resources equal to or in excess of the individual capital guidance (“ICG” or “Required Minimum Capital”) that the PRA issues in respect of each company. The ICG is the amount of capital resources that the PRA considers a company should maintain, taking into account the company’s business profile, structure and risk management systems. As of December 31, 2014, AEL and MICL each maintained capital resources in excess of their respective required ICG.

Restrictions on Dividends

AEL and MICL may only make distributions out of profits available for distribution. Profits available for distribution are the accumulated, realized profits of an insurer so far as not previously distributed or capitalized, less the insurer's accumulated, realized losses so far as not previously written off in a reduction or reorganization of capital. The test of whether the distribution is legal is applied by reference to relevant accounts complying with specified requirements.

Lloyd's

We participate in the Lloyd’s market through our ownership of AmTrust at Lloyd’s Limited, a managing agent for syndicates 1206 and 44, both of which are “fully aligned” AmTrust syndicates (i.e., AmTrust provides 100% of the syndicate capital). AmTrust at Lloyd’s Limited is in the process of becoming the managing agent for syndicate 2526, for which AmTrust provides 99.5% of the syndicate capital. AmTrust at Lloyd’s Limited is dual-regulated by the FCA and PRA. The Society of Lloyd’s, the FCA and the PRA have statutory responsibilities, including under the Lloyd’s Acts 1871 - 1982 and the Financial Services and Markets Act 2000, in relation to the supervision of insurance business underwritten in the Lloyd’s markets and the supervision of managing agents operating in the market at Lloyd’s.

The FCA, the PRA and Lloyd's have complementary objectives in ensuring that the Lloyd's market is appropriately regulated. To minimize duplication, there are arrangements between them for co-operation on supervision and enforcement.

Our Lloyd’s operations are also governed by The Council of Lloyd’s, which, through the Lloyd’s Franchise Board, is responsible for regulating and directing the business of insurance at Lloyd’s in line with its statutory powers, subject to its bylaws and in furtherance of the objects of Lloyd’s. Lloyd’s prescribes, in respect of its managing agents and corporate members, certain minimum standards relating to their management and control, solvency and various other requirements. By entering into a membership agreement with Lloyd’s, AmTrust at Lloyd’s Limited undertook to comply with Lloyd’s bylaws and regulations as well as the provisions of the Lloyd’s Acts and the Financial Services and Markets Act that are applicable to them. The operation of syndicates 1206 and 44, as well as the managing agent and its directors, is subject to the Lloyd’s supervisory regime.

Members of Lloyd’s must support their underwriting capacity by providing a deposit (referred to as “Funds at Lloyd’s” or “FAL”) in the form of cash, securities or letters of credit in an amount determined by Lloyd’s equal to a specified percentage of the member’s underwriting capacity. Each member calculates the amount of such deposit through the completion of an annual capital adequacy exercise and submits the results of this exercise to Lloyd’s for approval. Lloyd’s then advises the member of the amount of deposit that is required. When a managing agent of a syndicate proposes to increase underwriting capacity for the following underwriting year, the consent of the Council of Lloyd’s may be required.

The Council of Lloyd’s has wide discretionary powers to regulate members’ underwriting at Lloyd’s. It may, for instance, change the basis on which syndicate expenses are allocated or vary the FAL ratio or the investment criteria applicable to the

35

provision of FAL. Exercising any of these powers might affect the return on an investment of the corporate member in a given underwriting year. Further, the annual business plans of a syndicate are subject to the review and approval of the Lloyd’s Franchise Board, which is responsible for setting risk management and profitability targets for the Lloyd’s market and operates a business planning and monitoring process for all syndicates.

If a member of Lloyd’s is unable to pay its debts to policyholders, such debts may be payable by the Lloyd’s Central Fund, which acts similarly to state guaranty funds in the United States. If Lloyd’s determines that the Central Fund needs to be increased, it has the power to assess premium levies on current Lloyd’s members. The Council of Lloyd’s has discretion to call or assess up to 3% of a member’s underwriting capacity in any one year as a Central Fund contribution.

Solvency II

The European Union’s executive body, the European Commission, is implementing new capital adequacy and risk management regulations called “Solvency II” that will apply to our businesses across the European Union (including the United Kingdom) and will impact AEL, MICL, our Lloyd's syndicates, AIU and our Luxembourg entities. Solvency II will become effective January 1, 2016, and during 2015, we will be required to ensure that we are able to comply with its requirements. Solvency II will impose new requirements with respect to capital structure, technical provisions, solvency calculations, governance, disclosure and risk management and we have undertaken considerable preparatory work to ensure that the impacted businesses will be compliant upon implementation. In addition, under Solvency II, it is possible that the U.S. parent of a European Union subsidiary could be subject to certain Solvency II requirements if the regulator determines that the subsidiary’s capital position is dependent on the parent company and the U.S. parent is not already subject to regulations deemed “equivalent” to Solvency II. Such regulation could result in a need for additional capital, increased costs of compliance, increased disclosure and less flexibility in our capital management.

Offices

Our principal executive offices are located at 59 Maiden Lane, 43rd Floor, New York, New York 10038, and our telephone number at that location is (212) 220-7120. Our website is www.amtrustgroup.com. Our internet website and the information contained therein or connected thereto are not intended to be incorporated by reference into this Annual Report on Form 10-K.

Employees

As of December 31, 2014, we had approximately 5,100 employees worldwide.

None of our employees are covered by a collective bargaining agreement. Certain members of our management team have employment agreements. The remainder of our employees are at-will employees.

Available Information

We file our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements on Schedule 14A and all amendments to those reports with the Securities and Exchange Commission (the “SEC”). You may read or obtain copies of these documents by visiting the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549, by calling the SEC at 1-800-SEC-0330 or by accessing the SEC’s website at www.sec.gov. Our internet website address is www.amtrustgroup.com. You can also obtain on our website’s Investor Relations page, free of charge, a copy of our annual report on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K, and any amendments to those reports, as soon as reasonably practicable after we electronically file such reports or amendments with, or furnish them to, the SEC.

Also available at the “Corporate Governance” section of the Investor Relations page of our website, free of charge, are copies of our Code of Business Conduct and Ethics, our Corporate Governance Guidelines, and the charters for our Audit, Compensation, and Nominating and Corporate Governance Committees. Copies of our Code of Business Conduct and Ethics, our Corporate Governance Guidelines, and Charters are also available in print free of charge, upon request by any stockholder. You can obtain such copies in print by contacting Investor Relations by mail at our corporate office. We intend to disclose on our website any amendment to, or waiver of, any provision of our Code of Business Conduct and Ethics applicable to our directors and executive officers that would otherwise be required to be disclosed under the rules of the SEC or NASDAQ.

36

Item 1A. Risk Factors

You should carefully consider the following risks and all of the other information set forth in this report, including our consolidated financial statements and the notes thereto. Included below are the primary risks and uncertainties that, if realized, could have a material adverse effect on our business, financial condition, results of operations or cash flows, or our access to liquidity. The following discussion of risk factors includes forward-looking statements and our actual results may differ substantially from those discussed in such forward-looking statements. See “Note on Forward-Looking Statements.”

Risks Related to Our Business

During or following a period of systemic disruption in the financial markets, as markets continue a slow recovery, our business could be materially and adversely affected.

The financial markets have experienced significant volatility worldwide over the past seven years, and the United States, European and other foreign economies are experiencing a prolonged period of slow or limited economic growth, resulting in heightened credit risk, reduced valuation of investments and decreased economic activity. While economic conditions have improved over the most recent three years, financial markets continue to experience periodic volatility and uncertainty remains regarding the duration and strength of any economic recovery. The trend toward recovery and growth may not continue. Although the United States, European and other foreign governments have taken various actions to try to stabilize the financial markets, it is unclear what the effects of those actions will be over the long term and those actions could lead to an inflationary environment or could cease before the economic conditions sufficiently improve.

Additional uncertainty may come from the efforts and proposals of lawmakers to reduce the debt of the federal government through tax increases and/or spending cuts, or the failure of lawmakers to timely agree on a budget or appropriation legislation to fund the operations of the federal government, and financial markets’ and businesses’ reactions to those efforts, proposals or failures, which could impair economic growth and disrupt financial markets.

If financial markets experience significant disruption, it could materially adversely affect our results of operations, financial position and liquidity. Several of the risks we face, including those related to our investment portfolio, reinsurance arrangements, our estimates of loss reserves, emerging claim and coverage issues, the competitive environment and regulatory developments result from, or are made worse by, an economic slowdown or financial disruption.

Many of these risks could materialize, and our financial results could be negatively impacted, even as the economy is slowly recovering. During or following an economic downturn, lower levels of economic activity could reduce (and historically have reduced) exposure changes at renewal. An inflationary environment (which may follow government efforts to stabilize the economy) may also adversely impact our loss reserves and could adversely impact the valuation of our investment portfolio. Any or all of these risks could adversely affect our business.

Our loss reserves are based on estimates and may be inadequate to cover our actual losses.

We are liable for losses and loss adjustment expenses under the terms of the insurance policies we underwrite. Therefore, we must establish and maintain reserves for our estimated liability for loss and loss adjustment expenses with respect to our entire insurance business. If we fail to accurately assess the risks associated with the business and property that we insure, our reserves may be inadequate to cover our actual losses. We establish loss reserves that represent an estimate of amounts needed to pay and administer claims with respect to insured events that have occurred, including events that have occurred but have not yet been reported to us. Our loss reserves are based on estimates of the ultimate cost of individual claims and on actuarial estimation techniques. These estimates are based on historical information and on estimates of future trends that may affect the frequency of claims and changes in the average cost of claims that may arise in the future. They are inherently uncertain and do not represent an exact measure of actual liability. Judgment is required to determine the relevance of historical payment and claim settlement patterns under current facts and circumstances. The interpretation of this historical data can be impacted by external forces, principally legislative changes, economic fluctuations and legal trends.

If we change our reserve estimates for any line of business, these changes will result in adjustments to our reserves and our loss and loss adjustment expenses incurred in the period in which the estimates are changed. If the estimate is increased, our pre-tax income for the period in which we make the change will decrease by a corresponding amount. An increase in reserves could result in a reduction in our surplus, which could result in a downgrade in our A.M. Best rating. Such a downgrade could, in turn, adversely affect our ability to sell insurance policies.

37

In particular, workers’ compensation claims are often paid over a long period of time and there are no policy limits on our liability for workers’ compensation claims as there are for other forms of insurance. Therefore, estimating reserves for workers’ compensation claims may be more uncertain than estimating reserves for other types of insurance claims with shorter or more definite periods between occurrence of the claim and final determination of the loss and with policy limits on liability for claim amounts.

Catastrophic losses, including those resulting from the negative effects of climate change, or the frequency of smaller insured losses may exceed our expectations as well as the limits of our reinsurance, which could adversely affect our financial condition or results of operations.

Property and casualty insurers are subject to claims arising from catastrophes. Catastrophes can cause losses in multiple property and casualty lines, including property and workers’ compensation. Workers’ compensation constitutes approximately 40% of our business and we write commercial property insurance in our Specialty Program segment and our Small Commercial Business segment. In addition, we have a 50% investment in a crop insurance managing general agency through which we will issue policies that cover crop-related revenue shortfalls or production losses due to natural causes and other perils such as drought, excessive moisture, hail, wind, frost, insects, and disease. The incidence and severity of catastrophes, such as those due to natural disasters and also large-scale terrorist attacks, are inherently unpredictable, and our losses from catastrophes could be substantial.

Longer-term weather trends are changing and new types of catastrophe losses may be developing due to climate change, a phenomenon that may be associated with extreme weather events linked to rising temperatures, including effects on global weather patterns, sea, land and air temperature, sea levels, rain and snow. Climate change could increase the frequency and severity of catastrophe losses we experience in both coastal and non-coastal areas.

In addition, it is possible that we may experience an unusual frequency of smaller losses in a particular period, which could cause substantial volatility in our financial condition or results of operations for any fiscal quarter or year, which could have a material adverse effect on our financial condition or results of operations and our ability to write new business. Although we attempt to manage our exposure to these types of catastrophic and cumulative losses, including through the use of reinsurance, the severity or frequency of these types of losses may exceed our expectations as well as the limits of our reinsurance coverage.

If we do not accurately price our policies, our results of operations will be adversely affected.

In general, the premiums for our insurance policies are established at the time the policy is issued and, therefore, before all of our underlying costs are known. Like other insurance companies, we rely on estimates and assumptions in setting our premium rates. Establishing adequate premiums is necessary, together with investment income, to generate sufficient revenue to offset losses, loss adjustment expenses and other underwriting expenses and to earn a profit. If we do not accurately assess the risks that we assume, we may not charge adequate premiums to cover our losses and expenses, which could reduce our net income and cause us to become unprofitable. For example, when initiating workers’ compensation coverage on a policyholder, we estimate future claims expense based, in part, on prior claims information provided by the policyholder’s previous insurance carriers. If this prior claims information were incomplete or inaccurate, we may underprice premiums by using claims estimates that are too low. As a result, our actual costs for providing insurance coverage to our policyholders may be significantly higher than our premiums. In order to accurately price our policies, we:

• collect and properly analyze a substantial volume of data from our insureds;

• develop, test and apply appropriate rating formulas;

• closely monitor and timely recognize changes in trends; and

• project both frequency and severity of our insureds’ losses with reasonable accuracy.

Our ability to undertake these efforts successfully and, as a result, accurately price our policies, is subject to a number of risks and uncertainties, principally:

• insufficient reliable data;

• incorrect or incomplete analysis of available data;

• uncertainties generally inherent in estimates and assumptions;

• our failure to implement appropriate rating formulas or other pricing methodologies;

• regulatory constraints on rate increases;

• increases or changes in taxes;

38

• unexpected escalation in the costs of ongoing medical treatment;

• our failure to accurately estimate investment yields and the duration of our liability for loss and loss adjustment expenses; and

• unanticipated court decisions, legislation or regulatory action.

Our premium rates, generally, are established for the term of the policy. Consequently, we could set our premiums too low, which would negatively affect our results of operations and our profitability, or we could set our premiums too high, which could reduce our competitiveness and lead to lower revenues.

A downgrade in the A.M. Best rating of our principal insurance subsidiaries would likely reduce the amount of business we are able to write and could adversely impact the competitive positions of our insurance subsidiaries.

A.M. Best evaluates insurance companies based on their ability to pay claims. Our principal insurance subsidiaries are rated “A” (Excellent) by A.M. Best. An “A” rating is the third highest of the 16 categories used by A.M. Best, and is assigned to companies that have, in A.M. Best’s opinion, an excellent ability to meet their ongoing obligations to policyholders. The ratings of A.M. Best are subject to periodic review using, among other things, proprietary capital adequacy models, and are subject to revision or withdrawal at any time. Our competitive position relative to other companies is determined in part by the A.M. Best rating of our insurance subsidiaries. A.M. Best ratings are directed toward the concerns of policyholders and insurance agencies and are not intended for the protection of investors or as a recommendation to buy, hold or sell securities.

Any downgrade in ratings would likely adversely affect our business through the loss of certain existing and potential policyholders and the loss of relationships with independent agencies that might move to other companies with higher ratings. Some of our policyholders are required to maintain workers’ compensation coverage with an insurance company with an A.M. Best rating of “A-” (Excellent) or better. We are not able to quantify the percentage of our business, in terms of premiums or otherwise, that would be affected by a downgrade in our A.M. Best rating.

If market conditions cause our reinsurance to be more costly or unavailable, we may be required to bear increased risks or reduce the level of our underwriting commitments.

As part of our overall risk and capacity management strategy, we purchase quota share reinsurance and excess of loss and catastrophe reinsurance. The Maiden Quota Share and the reinsurance agreement for our European medical liability business reinsure approximately 40% of our net retained premiums. In addition, we purchase reinsurance on an excess of loss and catastrophe basis for protection against catastrophic events and other large losses. Market conditions beyond our control, in terms of price and available capacity, may affect the level of our business and profitability. The Maiden Quota Share was renewed through July 1, 2016 and our excess of loss and catastrophe reinsurance facilities are generally subject to annual renewal.

We may be unable to maintain our current reinsurance facilities, including the Maiden Quota Share, or to obtain other reinsurance in adequate amounts and at favorable rates. Increases in the cost of reinsurance would adversely affect our profitability. In addition, if we are unable to renew our expiring facilities or to obtain new reinsurance on favorable terms, either our net exposure to risk would increase, which would increase our costs, or, if we are unwilling to bear an increase in net risk exposures, we would have to reduce the amount of risk we underwrite, which would reduce our revenues.

Retentions in various lines of business expose us to potential losses.

We retain risk for our own account on business underwritten by our insurance subsidiaries. The determination to reduce the amount of reinsurance we purchase or not to purchase reinsurance for a particular risk or line of business is based on a variety of factors, including market conditions, pricing, availability of reinsurance, the level of our capital and our loss history. Such determinations have the effect of increasing our financial exposure to losses associated with such risks or in such lines of business and, in the event of significant losses associated with such risks or lines of business, could have a material adverse effect on our financial position, results of operations and cash flows.

We may not be able to recover amounts due from our third-party reinsurers, which would adversely affect our financial condition.

Reinsurance does not discharge our obligations under the insurance policies we write; it merely provides us with a contractual right to seek reimbursement on certain claims. We remain liable to our policyholders even if we are unable to make recoveries that we are entitled to receive under our reinsurance contracts. As a result, we are subject to credit risk with respect to our reinsurers. Losses are recovered from our reinsurers after underlying policy claims are paid. The creditworthiness of our reinsurers may

39

change before we recover amounts to which we are entitled. Therefore, if a reinsurer were unable to meet its obligations to us, we would be responsible for claims and claim settlement expenses for which we would have otherwise received payment from the reinsurer. If we were unable to collect these amounts from our reinsurers, our costs would increase and our financial condition would be adversely affected. As of December 31, 2014, we had an aggregate amount of approximately $2.4 billion of recoverables from third-party reinsurers on paid and unpaid losses.

Our relationships with Maiden Holdings, Ltd., NGHC and ACP Re, Ltd. and their subsidiaries may present, and make us vulnerable to, difficult conflicts of interest, business opportunity issues and legal challenges.

As of December 31, 2014, our principal stockholders, Michael Karfunkel, Leah Karfunkel (the wife of Michael Karfunkel and sole trustee of the Trust), George Karfunkel and Barry Zyskind own or control approximately 6.2%, 7.6%, 9.3% and 5.1%, respectively, of the issued and outstanding capital stock of Maiden Holdings, Ltd. (“Maiden”), a publicly-held Bermuda insurance holding company. Our Chief Executive Officer, Barry Zyskind, serves as the non-executive chairman of Maiden’s board of directors.

We own 13.2% of the issued and outstanding common stock of NGHC, a publicly-held insurance holding company. NGHC's two largest stockholders, who collectively own 48.8% of the issued and outstanding stock of NGHC, are the Trust and Michael Karfunkel, individually. Michael Karfunkel is our Chairman and the father-in-law of Barry Zyskind, our Chief Executive Officer. 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, President and Chief Executive Offer of NGHC.

ACP Re, Ltd. (“ACP Re”) is a privately-held Bermuda reinsurance holding company formed by Michael Karfunkel, and a subsidiary of the Trust. As of December 31, 2014, the Trust beneficially owned 12.9% of our issued and outstanding stock. Michael Karfunkel is the chairman of ACP Re.

Conflicts of interest could arise with respect to business opportunities that could be advantageous to Maiden, NGHC, ACP Re or their subsidiaries, on the one hand, and us or our subsidiaries, on the other hand. In addition, potential conflicts of interest may arise should our interests and those of Maiden, NGHC or ACP Re diverge.

In addition to the relationships discussed above, two members of our Board of Directors, Donald T. DeCarlo, who is an independent member of our Board of Directors, and Mr. Zyskind, are also members of NGHC’s board of directors. Mr. Zyskind’s service as our President and Chief Executive Officer, as non-executive chairman of the board of Maiden, and as a member of NGHC’s board, and Mr. DeCarlo’s services as a member of our Board and NGHC’s board could raise a potential challenge under anti-trust laws. Section 8 of the Clayton Antitrust Act prohibits a person from serving as a director or officer in any two competing corporations under certain circumstances. If we and Maiden or NGHC were in the future deemed to be competitors within the meaning of the Clayton Antitrust Act and certain thresholds relating to direct competition between us and Maiden or NGHC are met, the Department of Justice and Federal Trade Commission could challenge the arrangement.

For additional information about our relationships with Maiden, NGHC and ACP Re, see the discussion found in Note 14. “Related Party Transactions.”

We receive significant ceding commission from Maiden.

We receive significant ceding commission from Maiden through the Maiden Quota Share and our reinsurance agreement with Maiden Reinsurance for our European medical liability business. A detailed description of these reinsurance arrangements is found in “Reinsurance” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

We may be unable to maintain these reinsurance arrangements beyond their current terms, and we may not be able to readily replace these arrangements if they terminate. If we were unable to continue or replace these arrangements on equally favorable terms, our underwriting capacity and commission and fee income could decline, we could experience a downgrade in our A.M. Best rating, and our results of operations and financial condition may be adversely affected.

We receive significant service and fee income from NGHC and Maiden.

We receive significant service and fee income from NGHC and Maiden through asset management agreements, by which we manage the invested assets of certain of Maiden’s and NGHC’s subsidiaries, a reinsurance brokerage agreement with Maiden, by which we provide Maiden Reinsurance certain reinsurance brokerage services, and a master services agreement with NGHC, by which we provide NGHC and its affiliates information technology development services in connection with the development and licensing of a policy management system and printing and mailing services for policy and policy related materials, such as invoices,

40

quotes, notices and endorsements, associated with the policies we process for NGHC and its affiliates on the policy management system.

Pursuant to the asset management agreements, we receive from each of Maiden and NGHC fees at an annual rate of 0.20% for periods in which each company's respective average invested assets are $1.0 billion or less and an annual rate of 0.15% for periods in which each company’s respective average invested assets exceeds $1.0 billion. Pursuant to the brokerage agreement with Maiden Reinsurance, we provide brokerage services relating to the Maiden Quota Share for a fee equal to 1.25% of reinsured premium.

Pursuant to the master services agreement with NGHC, we provide NGHC and its affiliates the information technology development services described above at a cost of 1.25% of gross written premium of NGHC and its affiliates plus our costs for development and support services. We provide the printing and mailing services at a per piece cost for policy and policy related materials.

We may be unable to maintain these arrangements. If we no longer provide these services to Maiden and NGHC and do not replace them with services provided to other parties on equally favorable terms and at similar levels, our service and fee income could decline, which may adversely affect our results of operations and financial condition.

We may not be able to successfully acquire or integrate additional business or manage the growth of our operations, which could make it difficult for us to compete and could negatively affect our profitability.

From time to time we may pursue acquisition opportunities if we believe that such opportunities are consistent with our long-term objectives. The process of integrating an acquired business or company can be complex and costly, may create unforeseen operating difficulties and expenditures and will require substantial management attention. We may not be able to successfully identify and acquire additional existing business on acceptable terms or integrate any business that we acquire.

In addition, our growth strategy of expanding in our existing markets, opportunistically acquiring books of business, other insurance companies or producers, entering new geographic markets and further developing our relationships with independent agencies and extended warranty/service contract administrators subjects us to various risks, including risks associated with our ability to:

• identify profitable new geographic markets for entry;

• attract and retain qualified personnel for expanded operations;

• identify, recruit and integrate new independent agencies and extended warranty/service contract administrators;

• integrate information technology systems;

• manage risks associated with the acquisition of entities in foreign markets with which we are less familiar;

• expand existing agency relationships; and

• augment our internal monitoring and control systems as we expand our business.

We may not be able to effectively manage our growth and any new business may not be profitable. If we are unable to manage our growth effectively, our results of operations and financial condition could be adversely affected.

We rely on our information technology and telecommunications systems to conduct our business, and our success and profitability rely, in part, on our ability to continue to develop and implement technology improvements.

We depend in large part on our technology systems for conducting business and processing claims, and thus our business success is dependent on maintaining the effectiveness of existing technology systems and on continuing to develop and enhance technology systems that support our business processes and strategic initiatives in a cost and resource efficient manner. Some system development projects are long-term in nature, may negatively impact our expense ratios as we invest in the projects and may cost more than we expect to complete. In addition, system development projects may not deliver the benefits we expect once they are complete, or may be replaced or become obsolete more quickly than expected, which could result in accelerated recognition of expenses. If we do not effectively and efficiently manage and upgrade our technology platform, or if the costs of doing so are higher than we expect, our ability to provide competitive services to new and existing customers in a cost effective manner and our ability to implement our strategic initiatives could be adversely impacted.

41

If we experience security breaches or other disruptions involving our technology, our ability to conduct our business could be adversely affected, we could be liable to third parties and our reputation could suffer.

Our business is dependent upon the uninterrupted functioning of our information technology and telecommunication systems. We rely upon our systems, as well as the systems of our vendors, to perform business functions, such as underwriting and administering policies, processing claim payments, providing customer support, and complying with insurance regulatory requirements. Our operations are dependent upon our ability to process our business timely and efficiently and protect our information systems from physical loss or unauthorized access. In the event one or more of our facilities cannot be accessed due to a natural catastrophe, terrorist attack or power outage, or systems and telecommunications failures or outages, external attacks such as computer viruses, malware or cyber-attacks, or other disruptions occur, our ability to perform business operations on a timely basis could be significantly impaired and may cause our systems to be inaccessible for an extended period of time. A sustained business interruption or system failure could adversely impact our ability to perform necessary business operations in a timely manner and affect our financial condition and results of operations.

Our operations depend on the reliable and secure processing, storage and transmission of confidential and other information in our computer systems and networks. Computer viruses, hackers, employee misconduct and other external hazards could expose our data systems to security breaches, cyber-attacks or other disruptions. In addition, we routinely transmit and receive personal, confidential and proprietary information by electronic means. Our systems and networks may be subject to breaches or interference. Any such event may result in operational disruptions as well as unauthorized access to or the disclosure or loss of our proprietary information or our customers' information, which in turn may result in legal claims, regulatory scrutiny and liability, damage to our reputation, the incurrence of costs to eliminate or mitigate further exposure, the loss of customers or affiliated advisers or other damage to our business. In addition, the trend toward broad consumer and general public notification of such incidents and negative media attention could exacerbate the harm to our business, financial condition or results of operations. Even if we successfully protect our technology infrastructure and the confidentiality of sensitive data, we could suffer harm to our business and reputation if attempted security breaches are publicized. Advances in criminal capabilities, discovery of new vulnerabilities, attempts to exploit vulnerabilities in our systems, data thefts, physical system or network break-ins or inappropriate access, or other developments could compromise or breach the technology or other security measures protecting the networks and systems used in connection with our business.

Operational risks, including the risk of fraud, are inherent in our business, and we may not be successful in preventing internal control failures or detecting all errors or fraud.

As a result of limitations inherent in all control systems, we may not be able to adequately prevent fraud or errors from occurring. Our controls and procedures for prevention and detection of fraud may not prevent errors or instances of human fraud. Judgments in decision making can be faulty and breakdowns may occur through simple human error. In addition, controls can be circumvented by individuals or multiple persons acting in collusion. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and any design may not succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in maintaining a cost-effective control system, operational errors or fraud may occur and may not be detected. Any ineffectiveness in our internal controls resulting from fraud or error could have a material adverse effect on our business.

If our businesses do not perform well, we may be required to recognize an impairment of our goodwill or intangible assets, which could have a material adverse effect on our results of operations and financial condition.

Goodwill represents the excess of the amounts we paid to acquire subsidiaries and other businesses over the fair value of their net assets at the date of acquisition. We are required to perform goodwill impairment tests at least annually and whenever events or circumstances indicate that the carrying value may not be recoverable from estimated future cash flows. If we determine that the goodwill has been impaired, we would be required to write down the goodwill by the amount of the impairment, with a corresponding charge to net income. Such write downs could have a material adverse effect on our results of operations or financial position.

Intangible assets represent the amount of fair value assigned to certain assets when we acquire a subsidiary or a book of business. Intangible assets are classified as having either a finite or an indefinite life. We test the recoverability of our intangible assets at least annually. We test the recoverability of finite life intangibles whenever events or changes in circumstances indicate that the carrying value of a finite life intangible may not be recoverable. We recognize an impairment if the carrying value of an intangible asset is not recoverable and exceeds its fair value, in which circumstances we must write down the intangible asset by the amount of the impairment with a corresponding charge to net income. Such write downs could have a material adverse effect on our results of operations or financial position.

42

Our Specialty Risk and Extended Warranty business is dependent upon the sale by third parties of products covered by warranties and service contracts.

Our Specialty Risk and Extended Warranty segment primarily covers manufacturers, administrators, service providers and retailers for the cost of performing their obligations under extended warranties and service contracts (and, as required by applicable law, insurance products) provided in connection with the sale or lease of various types of consumer electronics, automobiles, light and heavy construction equipment and other consumer and commercial products. Thus, any decrease in the sale or leasing of these products, whether due to economic factors or otherwise, is likely to have an adverse impact upon our Specialty Risk and Extended Warranty business. We cannot materially influence the success of our specialty risk clients’ primary product sales and leasing efforts.

Some of the largest purchasers of our specialty risk insurance products in the United States are manufacturers, administrators, service providers and retailers that issue extended warranties or service contracts for consumer and commercial-grade goods, including coverage against accidental damage to the goods covered by the warranty or service contract (where currently permitted in the applicable jurisdiction). We insure these policyholders against the cost of repairing or replacing such goods in the event of such accidental damage. State insurance regulators may take the position that certain of the extended warranties or service contracts issued by our policyholders constitute insurance contracts that may only be issued by entities licensed to sell insurance. In that event, the extended warranty or service contract business of our policyholders may have to be restructured, which could adversely affect our Specialty Risk and Extended Warranty business.

If we cannot sustain our business relationships, including our relationships with independent agencies and third-party warranty administrators, manufacturers, services providers or retailers, we may be unable to operate profitably.

Our business relationships are generally governed by agreements with manufacturers, services providers and retailers, agents and warranty administrators that may be terminated on short notice. We market our insurance and specialty risk and extended warranty products primarily through independent wholesale and retail agencies, in addition to working directly with manufacturers, services providers and retailers. Except in connection with certain acquisitions, independent agencies generally are not obligated to promote our products and may sell insurance and specialty risk and extended warranty products offered by our competitors. As a result, our continued profitability depends, in part, on the marketing efforts of our independent agencies and on our ability to offer our products and insurance and maintain financial strength ratings that meet the requirements and preferences of our independent agencies and their policyholders.

We use third-party managing general agents and administrators to underwrite policies and manage claims on our behalf for some portions of our business, including our Specialty Risk and Extended Warranty segment and our Specialty Program Business segment. We are dependent on the skills and performance of these parties, and we cannot control their actions, although we do provide underwriting guidelines and periodically audit their performance. The loss of the services of these providers, or our inability to contract and retain other skilled service providers from a limited pool of qualified insurance service providers, could delay or prevent us from fully implementing our business strategy or could otherwise adversely affect us.

Our significant level of indebtedness could limit cash flow available for our operations and expose us to risks that could adversely affect our business, financial condition and results of operations, and impair our ability to satisfy our indebtedness obligations.

We have a significant amount of indebtedness. As of December 31, 2014, our total consolidated indebtedness was approximately $758 million. This $758 million does not include approximately $168 million aggregate principal amount of a loan made by Maiden Reinsurance to us in connection with a reinsurance agreement between AII and Maiden Reinsurance that requires Maiden Reinsurance to provide sufficient collateral to secure its proportionate share of AII’s obligations. This amount is accounted for as a note payable on our balance sheet. We may incur additional indebtedness to meet future financing needs. Our indebtedness could have significant negative consequences for our business, results of operations and financial condition, including:

• increasing our vulnerability to adverse economic and industry conditions;

• limiting our ability to obtain additional financing;

• requiring the dedication of portions of our cash flow from operations to service our indebtedness, thereby reducing the amount of our cash flow available for other purposes;

• limiting our flexibility in planning for, or reacting to, changes in our business;

• restricting our operational flexibility due to restrictive covenants that will limit our ability to explore certain business opportunities, dispose of assets and take other actions;

43

• increasing dilution experienced by our existing stockholders as a result of the conversion of our convertible senior notes due 2021 into shares of common stock; and

• placing us at a possible competitive disadvantage with less leveraged competitors and competitors that may have better access to capital resources.

As of December 31, 2014, our annual debt service obligation on our outstanding indebtedness was approximately $24 million. We may be unable to maintain sufficient cash reserves, our business may not generate cash flow from operations at levels sufficient to permit us to pay principal, premium, if any, and interest on our indebtedness, or our cash needs may increase. If we were unable to generate sufficient cash flow or otherwise obtain funds necessary to make required payments, or if we failed to comply with the various requirements of any indebtedness that we have incurred or may incur in the future, we would be in default, which would permit the holders of the affected indebtedness to accelerate the maturity of such indebtedness and could cause us to default under our other indebtedness. Any default under any indebtedness that we have incurred or may incur in the future could have a material adverse effect on our business, results of operations and financial condition.

Additional capital that we may require in the future may not be available to us, or only available to us on unfavorable terms.

Our future capital requirements will depend on many factors, including regulatory requirements, the financial stability of our reinsurers, future acquisitions and our ability to write new business and establish premium rates sufficient to cover our estimated claims. We may need to raise additional capital or curtail our growth to support future operating requirements or cover claims. If we have to raise additional capital, equity or debt financing may not be available to us or may be available only on terms that are not favorable, such as terms resulting in dilution to our stockholders, or the securities sold may have rights, preferences and privileges senior to our currently issued and outstanding common stock. In addition, under certain circumstances, we may sell our common stock, or securities convertible or exchangeable into shares of our common stock, at a price per share less than the market value of our common stock. If we cannot obtain adequate additional capital on favorable terms or at all, we may be unable to support future growth or operating requirements and, as a result, our business, financial condition and results of operations could be adversely affected.

The covenants in our credit facilities and indentures governing our convertible senior notes due 2021 and 2044 and 6.125% notes due 2023 limit our financial and operational flexibility, which could have an adverse effect on our financial condition.

Our credit facilities and indentures governing our convertible senior notes and 6.125% notes due 2023 contain covenants that limit our ability, among other things, to borrow money, make particular types of investments or other restricted payments, sell assets, merge or consolidate. These covenants could restrict our ability to achieve our business objectives, and therefore, could have an adverse effect on our financial condition. In addition, our credit facilities and the indenture governing our 6.125% notes due 2023 also require us to maintain specific financial ratios. If we fail to comply with these covenants or meet these financial ratios, the lenders under our credit facilities could cancel their commitments to lend and/or issue letters of credit and the lenders under our credit facilities and our noteholders could declare a default and demand immediate repayment of all amounts owed to them.

If we were unable to realize our investment objectives, our financial condition and results of operations may be adversely affected.

Investment income is an important component of our net income. We primarily manage our investment portfolio internally under investment guidelines approved by our Board of Directors and the boards of directors of our subsidiaries. Our investments are subject to a variety of risks, including risks related to general economic conditions, interest rate fluctuations, market volatility, various regulatory issues, credit risk, potential litigation, tax audits, tax law changes and disputes, failure to monetize in an effective and/or cost-efficient manner and poor operating results. General economic conditions may be adversely affected by U.S. involvement in hostilities with other countries and large-scale acts of terrorism, or the threat of hostilities or terrorist acts.

We may be forced to liquidate investments at times and prices that are not optimal, which could have an adverse impact on our results of operations. Investment losses could decrease our asset base and adversely affect our ability to conduct business and pay claims. Any significant decline in our investment income would adversely affect our revenues and net income and, as a result, decrease our surplus and stockholders’ equity.

44

A significant amount of our assets is invested in fixed income securities and is subject to market fluctuations.

Our investment portfolio consists substantially of fixed income securities. As of December 31, 2014, our investment in fixed income securities was approximately $4.25 billion, or 77% of our total investment portfolio.

The fair market value of these assets and the investment income from these assets fluctuate depending on general economic and market conditions. The fair market value of fixed income securities generally decreases as interest rates rise. Conversely, if interest rates decline, the fair market value of fixed income securities generally increases. However, investment income earned from future investments in fixed income securities will decrease due to being reinvested at lower interest rates. In addition, some fixed income securities, such as mortgage-backed and other asset-backed securities, carry prepayment risk as a result of interest rate fluctuations. Based upon the composition and duration of our investment portfolio at December 31, 2014, a 100 basis point increase in interest rates would result in a decrease in the fair value of our investments of approximately $207.3 million.

The value of investments in fixed income securities, and particularly our investments in high-yield securities, is subject to impairment as a result of deterioration in the credit worthiness of the issuer or increases in market interest rates. Our investments are subject to losses as a result of a general decrease in commercial and economic activity for an industry sector in which we invest, as well as risks inherent in particular securities. These conditions could result in lower than expected yields on our fixed securities and short term investment portfolio. In addition, our investment in less liquid investments, such as our investment in NGHC and life settlement contracts, is subject to increased valuation uncertainty because the valuation is more subjective, thereby increasing the risk that the estimated fair value (i.e., the carrying cost) does not reflect the price at which an actual transaction would occur.

To a large degree, the credit risk we face is a function of the economy; accordingly, we face a greater risk in an economic downturn or recession. As a result of the risks set forth above, the value of our investment portfolio could decrease, our net investment income could decrease, or we could experience realized and/or unrealized investment losses, all of which could materially and adversely affect our results of operations and liquidity.

A portion of our financial assets consist of life settlement contracts that are subject to certain risks.

As of December 31, 2014, the fair value of our portfolio of life settlement contracts was approximately $265 million and constituted approximately 4.5% of the fair value of our cash and investment portfolio (inclusive of these life settlement contracts). We have a 50% ownership interest in the entities that hold the life settlement contracts.

Our estimates of fair value of the life settlement contracts we hold are subjective and based upon, among other factors, the cost of the policy at the date of purchase, recent purchases and sales of similar investments (if available and applicable), financial standing of the issuer, changes in economic conditions affecting the issuer, maintenance cost, premiums, benefits, standard mortality tables and life expectancy reports prepared by nationally recognized and independent third party medical underwriters. The actual value to us of any life settlement contract we acquire cannot be determined until the policy matures (i.e., the insured has died and the insurance carrier has paid out the death benefit to the holder). A significant negative difference between the estimated fair value of a contract and actual death benefits received at maturity for any life settlement contract we hold could adversely affect our financial condition and results of operations.

We apply an investment discount rate to the expected cash flow generated by the policies in our portfolio, net of policy-specific adjustments and reserves, which accounts for the cost of borrowing, liquidity risk and credit risk associated with the portfolio. We establish policy-specific reserves for the following uncertainties: improvements in mortality, the possibility that high net worth individuals represented in the portfolio may have access to better health care, the volatility inherent in determining the life expectancy of insureds with significant reported health impairments, the possibility that the issuer of the policy or a third party will contest the payment of the death benefit payable to us, and the future expenses related to the administration of the portfolio. The application of the investment discount rate to the expected cash flow generated by the portfolio, net of these policy-specific reserves, yields the fair value of the portfolio. If the discount rate changes, the value of the life settlement contract will also change. Generally, if discount rates increase, the fair value of a life settlement contract decreases. If a life settlement contract is sold or otherwise disposed of in the future under a relatively higher interest rate environment, the contract may have a lower value than the value it had when we acquired it.

In addition, our results of operations and earnings may fluctuate depending on the number of life settlement contracts acquired in a given period and the fair value of those assets at the end of the applicable period. Any reduction in the fair value of these assets will be a charge to our gross income in the period in which the reduction occurs and could adversely affect our financial results for that period.

45

Furthermore, the market for life settlement contracts is relatively illiquid when compared to that for other asset classes, and there is currently no established trading platform or market by which investors in the life settlement market buy and sell life settlement contracts. Although we do not currently intend to sell significant numbers of life settlement contracts in the secondary life settlement market, if we were (or needed) to sell a life settlement contract, it is possible that the lack of liquidity at that time could make the sale of such life settlement contract difficult or impossible. Therefore, we bear the risks of having to sell life settlement contracts at substantial discounts or not being able to sell life settlement contracts in a timely manner or at all which may result in a material adverse effect on our financial condition and results of operations.

We are subject to a number of risks associated with our business outside the United States.

We conduct business outside the United States primarily in the United Kingdom, Bermuda, Italy, Ireland, France, and Luxembourg. While our business outside of the United States currently constitutes approximately 21% of our gross written premium, we are subject to a number of significant risks in conducting such business. These risks include restrictions such as price controls, capital controls, exchange controls and other restrictive government actions, which could have an adverse effect on our business and our reputation. Investments outside the United States also subject us to additional domestic and foreign laws and regulations, including the Foreign Corrupt Practices Act, the U.K. Bribery Act and similar laws in other countries that prohibit the making of improper payments to foreign officials. If our controls are ineffective and an employee or intermediary fails to comply with applicable laws and regulations, we could suffer civil and criminal penalties and our business and our reputation could be adversely affected. In addition, some countries have laws and regulations that lack clarity and, even with local expertise and effective controls, it can be difficult to determine the exact requirements of the local laws. Failure to comply with local laws in a particular market could have a significant and negative effect not only on our business in that market but also on our reputation generally.

Our operating results may be adversely affected by currency fluctuations and our ability to repatriate cash from our foreign operations.

Our functional currency is the U.S. dollar. For the years ended December 31, 2014 and 2013, approximately 21% and 27%, respectively, of our gross written premiums written were written in currencies other than the U.S. dollar. As of December 31, 2014 and 2013, approximately 21% and 27%, respectively, of our cash and investments were denominated in non-U.S. currencies. We hold investments denominated in Euros and British Pounds because we write business in the EU and the United Kingdom, and may, from time to time, experience losses resulting from fluctuations in the values of these non-U.S. currencies or be unable to repatriate cash to the United States, or otherwise make available cash in the United States, and to do so at a favorable foreign exchange rate and with favorable tax ramifications, all of which could adversely affect our operating results.

We may be subject to taxes on our Luxembourg affiliates’ equalization reserves.

During the past six years, we have made several acquisitions of Luxembourg-domiciled reinsurance companies. In connection with these transactions, we acquire cash and the associated equalization reserves of the reinsurance companies. An “equalization reserve” is a catastrophe reserve in excess of required reserves determined by a formula based on the volatility of the business ceded to the reinsurance company and is established pursuant to Luxembourg law. Luxembourg reinsurance companies are required to establish equalization reserves for Luxembourg statutory and tax purposes, but the equalization reserves are not recognized under U.S. GAAP. For a more detailed description of the acquisitions of these Luxembourg-domiciled reinsurance companies, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Acquisitions - AHL.”

Provided that we are able to cede business that generates a net loss to the reinsurance companies through intercompany reinsurance arrangements sufficient to offset the reinsurers’ required reductions of the equalization reserves, Luxembourg would not, under laws currently in effect, impose any income, corporation or profits tax on the reinsurance companies. However, if the reinsurance companies were to cease reinsuring business without exhausting the equalization reserves, they would be taxed by Luxembourg at a rate of approximately 30%. As of December 31, 2014, we had approximately $314 million of unutilized equalization reserves and an associated deferred tax liability of approximately $94 million. During the year ended December 31, 2014, we were able to reduce our overall expenses by a net amount of approximately $30 million to reflect the net reduction of the deferred tax liability offset by goodwill impairment charges related to the utilization of the equalization reserves.

Resolution of uncertain tax matters and changes in tax laws or taxing authority interpretations of tax laws could result in actual tax benefits or deductions that are different than we have estimated, both with regard to amounts recognized and the timing of recognition. Such differences could affect our results of operations or cash flows.

Our provision for income taxes, our recorded tax liabilities and net deferred tax assets, including any valuation allowances, are recorded based on estimates. These estimates require us to make significant judgments regarding a number of factors, including, among others, the applicability of various federal and state laws, our interpretation of tax laws and the interpretations given to

46

those tax laws by taxing authorities and courts, the timing of future income and deductions, and our expected levels and sources of future taxable income. Additionally, from time to time there are changes to tax laws and interpretations of tax laws that could change our estimates of the amount of tax benefits or deductions expected to be available to us in future periods. In either case, changes to our prior estimates would be reflected in the period changed and could have a material effect on our effective tax rate, financial position, results of operations and cash flows.

We are subject to U.S. federal and various state and foreign jurisdiction taxes. We are periodically under routine examination by various federal, state, local and foreign authorities regarding tax matters and our tax positions could be successfully challenged and the costs of defending our tax positions could be considerable, both of which could negatively affect our results of operations.

Our business is dependent on the efforts of our principal executive officers.

Our success is dependent on the efforts of our principal executive officers, Barry D. Zyskind, Ronald E. Pipoly, Jr., Michael Saxon, Christopher Longo and Max Caviet, because of their industry expertise, knowledge of our markets and relationships with our independent agencies and warranty administrators. Although we have entered into employment agreements with all of our principal executive officers, should any of these executive officers cease working for us, we may be unable to find acceptable replacements with comparable skills and experience in the workers’ compensation insurance industry and/or the specialty risk sectors that we target, and our business may be adversely affected. We do not currently maintain life insurance policies with respect to our executive officers or other employees.

We are an insurance holding company and do not have any direct operations.

Our operations are substantially conducted through direct and indirect subsidiaries As a holding company, we do not own any significant assets other than equity in our subsidiaries. Payments from our insurance subsidiaries pursuant to management agreements and tax sharing agreements, as well as fee income we generate from providing services discussed throughout this report, are our primary source of funds to pay our direct expenses. The ability of our insurance subsidiaries to pay dividends or make distributions or other payments to us depends on the availability of cash flow from operations and proceeds from the sale of assets and other capital-raising activities. Dividends or other distributions from our subsidiaries to us may be subject to contractual and other restrictions and are subject to other business considerations.

Payment of dividends by our insurance subsidiaries is restricted by insurance laws of various states, and the laws of certain foreign countries in which we do business (primarily Ireland, United Kingdom and Bermuda), including laws establishing minimum solvency and liquidity thresholds. As a result, at times, we may not be able to receive dividends from our insurance subsidiaries, which would affect our ability to pay dividends on our common stock and preferred stock, as discussed below. As of December 31, 2014, our insurance subsidiaries collectively could pay dividends to us of $844 million without prior regulatory approval. Any dividends paid by our subsidiaries would reduce their surplus. The inability of our operating subsidiaries to pay dividends and other permitted payments in an amount sufficient to enable us to meet our cash requirements at the holding company level would have a material adverse effect on our operations.

Risks Related to Our Industry

The property and casualty insurance industry is cyclical in nature, which may affect our overall financial performance.

Historically, the financial performance of the property and casualty insurance industry has tended to fluctuate in cyclical periods of price competition and excess capacity (known as a soft market) followed by periods of high premium rates and shortages of underwriting capacity (known as a hard market). Although an individual insurance company’s financial performance is also dependent on its own specific business characteristics, the profitability of most property and casualty insurance companies tends to follow this cyclical market pattern. We cannot predict with certainty the timing or duration of changes in the market cycle because the cyclicality is due in large part to the actions of our competitors and general economic factors beyond our control. We have experienced increased price competition in certain of our target markets, and these cyclical patterns, the actions of our competitors, and general economic factors could cause our revenues and net income to fluctuate, which may cause the price of our common stock to be volatile.

Negative developments in the workers’ compensation insurance industry would adversely affect our financial condition and results of operations.

Although we engage in other businesses, approximately 40% of our gross written premium currently is attributable to workers’ compensation insurance. As a result, negative developments in the economic, competitive or regulatory conditions affecting the workers’ compensation insurance industry could have an adverse effect on our financial condition and results of operations. For

47

example, in certain states in which we do business, insurance regulators set the premium rates we may charge. In addition, if legislators in one of our larger markets were to enact legislation to increase the scope or amount of benefits for employees under workers’ compensation insurance policies without related premium increases or loss control measures, this could negatively affect the workers’ compensation insurance industry. Negative developments in the workers’ compensation insurance industry could have a greater effect on us than on more diversified insurance companies that also sell many other types of insurance.

A decline in the level of business activity of our policyholders could negatively affect our earnings and profitability.

Primarily all of our workers’ compensation gross premiums written were derived from small businesses. Because workers’ compensation premium rates are calculated, in general, as a percentage of a policyholder’s payroll expense, premiums fluctuate depending upon the level of business activity and number of employees of our policyholders. Small businesses may be more vulnerable to changes in economic conditions because of their size. We believe that the most common reason for policyholder non-renewals is business failure. As a result, our workers’ compensation gross premiums written are primarily dependent upon economic conditions where our policyholders operate.

We operate in a highly competitive industry and may lack the financial resources to compete effectively.

We compete with other insurance companies, both domestic and foreign, and many of our existing and potential competitors are significantly larger, have longer operating histories, and possess greater financial, marketing and management resources than we do. In our Small Commercial Business segment, we also compete with individual self-insured companies, state insurance pools and self-insurance funds. We compete on the basis of many factors, including coverage availability, responsiveness to the needs of our independent producers, claims management, payment/settlement terms, premium rates, policy terms, types of insurance offered, overall financial strength, financial ratings and reputation. If any of our competitors offer premium rates, policy terms or types of insurance that are more competitive than ours, we could lose market share. We may be unable to maintain our current competitive position in the markets in which we currently operate or establish a competitive position in new markets into which we may expand.

The effects of emerging claim and coverage issues on our business are uncertain.

As industry practices and legal, judicial, social and other environmental conditions change, unexpected and unintended issues related to claims and coverage may emerge. These issues may adversely affect our business by either extending coverage beyond our underwriting intent or by increasing the number or size of claims. In some instances, these changes may not become apparent until after we have issued insurance policies that are affected by the changes. As a result, the full extent of our liability under an insurance policy may not be known until many years after the policy is issued. For example, medical costs associated with permanent and partial disabilities may increase more rapidly or be higher than we currently expect. Changes of this nature may expose us to higher claims than we anticipated when we wrote the underlying policy. Unexpected increases in our claim costs many years after policies are issued may also result in our inability to recover from certain of our reinsurers the full amount that they would otherwise owe us for such claims costs because certain of the reinsurance agreements covering our business include commutation clauses that permit the reinsurers to terminate their obligations by making a final payment to us based on an estimate of their remaining liabilities. In addition, the potential passage of new legislation designed to expand the right to sue, to remove limitations on recovery, to deem by statute the existence of a covered occurrence, to extend the statutes of limitations or otherwise repeal or weaken tort reforms could have an adverse impact on our business. The effects of these and other unforeseen emerging claim and coverage issues are extremely hard to predict and could be harmful to our business and have a material adverse effect on our results of operations.

We are heavily regulated, and changes in regulation may reduce our profitability, limit our growth or restrict our ability to transact business.

Our insurance subsidiaries are subject to extensive regulation in the jurisdictions in which they do business. For a discussion of the various types of regulation we face, see “Item 1. Business – Regulation.” Insurance regulation generally is intended to protect policyholders, not stockholders. In the United States, insurance regulation generally is administered by each state through its state insurance department. States regulate, among other things:

• solvency;

• the lines of business we may transact;

• certain transactions between our insurance subsidiaries and affiliates, including us;

• the nature, quality and concentration of our investments;

48

• rates we may charge and the terms and conditions of our policy forms; and

• dividends paid by our insurance subsidiaries.

As more fully described in “Item 1. Business – Regulation – United States – Federal and State Legislative and Regulatory Changes,” in recent years, the state insurance regulatory framework has come under increased scrutiny, and some state legislatures have considered or enacted laws that may alter or increase state authority to regulate insurance companies and insurance holding companies. Further, the NAIC and state insurance regulators are continually reexamining existing laws and regulations, specifically focusing on modifications to statutory accounting principles, interpretations of existing laws and the development of new laws and regulations. The NAIC has undertaken a Solvency Modernization Initiative focused on updating the U.S. insurance solvency regulation framework, including capital requirements, governance and risk management, group supervision, accounting and financial reporting and reinsurance.

Although the U.S. federal government has not historically regulated the insurance business, there have been proposals from time to time, including during and after the financial crisis in 2008, to impose federal regulation on the insurance industry. On July 21, 2010, the U.S. President signed into law the Dodd-Frank Act, which is more fully described in “Item 1. Business – Regulation – United States – Federal and State Legislative and Regulatory Changes.” In addition, our business can be indirectly affected by changes in healthcare, occupational safety and health, and tax and financial regulations. Since healthcare costs are a large component of our claims costs, we may be impacted by changes in healthcare legislation, such as the ongoing implementation of the Affordable Care Act, which could affect healthcare costs and delivery in the future. These types of state and federal regulations could impose significant burdens on us, including impacting the ways in which we conduct our business, increasing compliance costs, and could result in a competitive disadvantage.

Our non-U.S. subsidiaries are subject to regulation in the jurisdictions in which they operate. In the event that a regulatory authority determines that we have failed to comply with regulatory requirements applicable to our business, we could be subject to actions that could have a material adverse effect on our business, such as fines, penalties or orders to cease transacting business. Furthermore, the enactment of new laws and regulations and changes in the interpretations of existing laws and regulations that are not yet contemplated could have a material adverse effect on our business.

The European Union’s executive body, the European Commission, is implementing new capital adequacy and risk management regulations called “Solvency II” that will apply to our businesses across the European Union (including the United Kingdom), as more fully described in “Item 1. Business – Regulation –  Solvency II.” Such regulation could result in a need for additional capital, increased costs of compliance, increased disclosure and less flexibility in our capital management. It is possible that Solvency II may increase our capital requirements and the new regulations have the potential to adversely affect the profitability of our businesses subject to Solvency II. In addition, at this point, it is unclear whether the new regulations will apply only to our businesses across the European Union (including the United Kingdom) or to all of our operations, both within and outside of the European Union. If the regulations do apply to our holding company in the U.S., we could be subject to even more onerous requirements under the new regulations, which could have a significant adverse effect on our ability to operate profitably.

Regulators in Bermuda and other jurisdictions in which we operate are also considering various proposals for financial and regulatory reform. The future impact of such initiatives, if any, on our results of operations or our financial condition cannot be determined at this time. We are unable to predict whether any of these laws and regulations will be adopted, the form in which any such laws and regulations would be adopted, or the effect, if any, these developments would have on our operations and financial condition.

We may have exposure to losses from terrorism for which we are required by law to provide coverage regarding such losses.

U.S. insurers are required by state and federal law to offer coverage for terrorism in certain commercial lines, including workers’ compensation. As discussed under “Item 1. Business – Regulation – United States – Federal and State Legislative and Regulatory Changes,” in response to the September 11, 2001 terrorist attacks, the U.S. Congress enacted legislation designed to ensure, among other things, the availability of insurance coverage for foreign terrorist acts, including the requirement that insurers offer such coverage in certain commercial lines. The Terrorism Risk Insurance Act, or TRIA, as extended by the Terrorism Risk Insurance Program Reauthorization Act of 2015, or TRIPRA, requires commercial property and casualty insurance companies to offer coverage for acts of terrorism, whether foreign or domestic, and established a federal assistance program through the end of 2020 to help such insurers cover claims related to future terrorism-related losses. The impact of any terrorist act is unpredictable, and the ultimate impact on us would depend upon the nature, extent, location and timing of such an act. Although we reinsure a portion of the terrorism risk we retain under the program, our terrorism reinsurance does not provide full coverage for an act stemming from nuclear, biological or chemical terrorism.

49

Our policies providing specialty risk and extended warranty coverage are not intended to provide coverage for losses arising from acts of terrorism. Accordingly, we have not obtained reinsurance for terrorism losses nor taken any steps to preserve our rights to the benefits of the TRIA program for this line of business and would not be entitled to recover from our reinsurers or the TRIA program if we were required to pay any terrorism losses under our Specialty Risk and Extended Warranty segment. There have been no claims filed under the TRIA program as of yet, so there is still a great deal of uncertainty regarding how the federal government will implement the rules governing such claims. It is possible that the fact that we have not taken steps to preserve our right to the benefits of the TRIA program for the U.S. portion of our Specialty Risk and Extended Warranty segment may adversely affect our ability to collect under the program generally.

The effects of litigation on our business are uncertain.

Although we are not currently involved in any material litigation with our customers, other members of the insurance industry are the target of class action lawsuits and other types of litigation, some of which involve claims for substantial or indeterminate amounts, and the outcomes of which are unpredictable. This litigation is based on a variety of issues, including insurance and claim settlement practices. If we become subject to such litigation, it could have a material adverse effect on our business.

Risks Related to our Common Stock, Preferred Stock and Outstanding Indebtedness

Our revenues and results of operations may fluctuate as a result of developments beyond our control, which may cause volatility in the price of our shares of common stock and the market price of our Series A, B and C Preferred Stock.

Our common stock is listed on the NASDAQ Global Select Market under the symbol “AFSI.” Our Series A, B and C Preferred Stock are listed on the New York Stock Exchange under the symbols “AFSI-A,” “AFSI-B” and “AFSI-C.” Our performance, as well as the risks discussed herein, government or regulatory action, tax laws, interest rates and general market conditions could have a significant impact on the future market price of our common stock and the market price of our Preferred Stock. Developments that could negatively affect our share price or result in fluctuations in the price of our common stock or Preferred Stock include:

• actual or anticipated variations in our quarterly results of operations;

• changes to our earnings estimates or publications of research reports about us or the industry;

• rising levels of claims costs, changes in the frequency or severity of claims or new types of claims and new or changing judicial interpretations relating to the scope of insurance company liability;

• the financial stability of our third-party reinsurers, changes in the level of reinsurance capacity, termination of reinsurance arrangements and changes in our capital capacity;

• increases in market interest rates that may lead purchasers of common or preferred stock to demand a higher yield;

• changes in market valuations of other insurance companies;

• adverse market reaction to any increased indebtedness we incur in the future;

• fluctuations in interest rates or inflationary pressures and other changes in the investment environment that affect returns on invested assets;

• changes to our credit worthiness;

• the market for similar securities;

• additions or departures of key personnel;

• reaction to the sale or purchase of company stock by our principal stockholders or our executive officers;

• changes in the economic environment in the markets in which we operate, including reduction in the business activities of our policyholders;

• changes in tax law;

• speculation in the press or investment community; and

• general market, economic and political conditions.

50

If securities or industry analysts fail to continue publishing research about our business, if they change their recommendations adversely or if our results of operations do not meet their expectations, our stock price and trading volume could decline.

The trading market for our common stock is influenced by the research and reports that industry or securities analysts publish about us or our business. If one or more of these analysts cease coverage or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. In addition, it is possible that in some future period our operating results will be below the expectations of securities analysts or investors. If one or more of the analysts who cover us downgrade our stock, or if our results of operations do not meet their expectations, our stock price could decline.

Our share repurchase program could affect the price of our common stock and increase volatility.

Repurchases of our common stock pursuant to our share repurchase program could affect our stock price and increase its volatility. The existence of a stock repurchase program could also cause our stock price to be higher than it would be in the absence of such a program and could potentially reduce the market liquidity for our stock. Stock repurchases may not enhance stockholder value because the market price of our common stock may decline below the levels at which we repurchased shares of common stock. Although our stock repurchase program is intended to enhance long-term stockholder value, short-term stock price fluctuations could reduce the program’s effectiveness.

Failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could have a material adverse effect on our common stock price and the market price of our Series A, B and C Preferred Stock.

Section 404 of the Sarbanes-Oxley Act of 2002 and the related rules and regulations of the SEC require an annual management assessment of the effectiveness of our internal control over financial reporting and a report by our independent registered public accounting firm attesting to the effectiveness of our internal control over financial reporting at the end of the fiscal year. If we fail to maintain the adequacy of our internal control over financial reporting, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 and the related rules and regulations of the SEC. If we cannot in the future favorably assess, or our independent registered public accounting firm is unable to provide an unqualified attestation report on, the effectiveness of our internal control over financial reporting, investor confidence in the reliability of our financial reports may be adversely affected, which could have a material adverse effect on our common and preferred stock prices.

Our principal stockholders have the ability to control our business, which may be disadvantageous to other stockholders.

Based on the number of shares outstanding as of December 31, 2014, Barry D. Zyskind, Michael Karfunkel, Leah Karfunkel (wife of Michael Karfunkel and sole trustee of the Trust) and George Karfunkel, directly or indirectly, collectively own or control approximately 57% of our outstanding common stock. As a result, these stockholders, acting together, have the ability to control all matters requiring approval by our stockholders, including the election and removal of directors, amendments to our certificate of incorporation and bylaws, any proposed merger, consolidation or sale of all or substantially all of our assets and other corporate transactions. These stockholders may have interests that are different from other stockholders. In addition, we are a “controlled company” as defined in NASDAQ Listing Rule 5615(c). At present, a majority of the members of our Board of Directors are independent. As a controlled company, each of our Board committees, except our audit committee, may include non-independent directors. The audit committee independence requirements imposed by the Sarbanes-Oxley Act of 2002 apply to us, and we have organized our audit committee to meet these requirements.

If we were to cease being a controlled company as a result of the issuance of common stock by us or dispositions of common stock beneficially held by Barry D. Zyskind, Michael Karfunkel, Leah Karfunkel and George Karfunkel, we would have to comply with the board committee independence requirements of the NASDAQ Global Select Market within specified periods, which would involve having an entirely independent compensation committee and nominating and corporate governance committees within one year after ceasing to be a controlled company. If we are unable to achieve compliance with these requirements, our common stock could be de-listed from the NASDAQ Global Select Market.

In addition, Michael Karfunkel and George Karfunkel, through entities that each of them controls, have entered into transactions with us and may from time to time in the future enter into other transactions with us. As a result, these individuals may have interests that are different from, or in addition to, their interest as our stockholders. Such transactions may adversely affect our results of operations or financial condition.

51

Our principal stockholders could delay or prevent an acquisition or merger of our company even if the transaction could benefit other stockholders. Moreover, this concentration of share ownership makes it impossible for other stockholders to replace directors and management without the consent of the controlling stockholders. In addition, this significant concentration of share ownership may adversely affect the price prospective buyers are willing to pay for our common stock because investors often perceive disadvantages in owning stock in companies with controlling stockholders, which could, in turn, materially and adversely affect the trading price of our convertible senior notes.

We may be unable to pay dividends on our common stock or Series A, B and C Preferred Stock.

As discussed above, the ability of our insurance subsidiaries to pay dividends is regulated and under certain circumstances, restricted, pursuant to applicable law. If our insurance subsidiaries could not pay dividends, we may not, in turn, be able to pay dividends to stockholders. In addition, the terms of our junior subordinated debentures and our credit facilities limit, in some circumstances, our ability to pay dividends on our common stock and Series A, B and C Preferred Stock, and future financing arrangements may include prohibitions on dividends or other restrictions. For these reasons, we may be unable to pay dividends on our common stock or Series A, B and C Preferred Stock.

We have a history of paying dividends to our stockholders. However, future cash dividends will depend upon our results of operations, financial condition, cash requirements and other factors including the ability of our subsidiaries to make distributions to us, which ability is restricted in the manner discussed above. Also, we may be unable to continue to pay dividends even if the necessary financial conditions are met and if sufficient cash is available for distribution.

Our shares of Series A Preferred Stock and the Series B and C Preferred Stock represented by depositary shares are equity interests and are subordinate to our existing and future indebtedness.

Our shares of Series A Preferred Stock and the Series B and C Preferred Stock represented by depositary shares are equity interests and do not constitute indebtedness. As such, the Series A Preferred Stock and the Series B and C Preferred Stock represented by depositary shares rank junior to all of our indebtedness and other non-equity claims of our creditors with respect to assets available to satisfy our claims, including our liquidation, dissolution and winding up. As of December 31, 2014, our total consolidated debt was $758 million and our total consolidated liabilities were approximately $11.7 billion. We may incur additional debt and liabilities in the future. Our existing and future indebtedness may restrict payments of dividends on the Series A Preferred Stock and the Series B and C Preferred Stock represented by depositary shares. Additionally, unlike indebtedness, where principal and interest would customarily be payable on specified due dates, in the case of the Series A Preferred Stock and the Series B and C Preferred Stock represented by depositary shares, dividends are payable only if declared by our Board of Directors (or a duly authorized committee of the Board of Directors). Our ability to pay dividends on the Series A Preferred Stock and the Series B and C Preferred Stock represented by depositary shares may be limited by the terms of our agreements governing our existing and future indebtedness and by the provisions of other existing and future agreements.

Dividends on the Series A Preferred Stock and the Series B and C Preferred Stock represented by depositary shares are non-cumulative.

Dividends on the Series A Preferred Stock and the Series B and C Preferred Stock represented by depositary shares are non-cumulative and payable only out of our legally available funds. Consequently, if our Board of Directors (or a duly authorized committee of the Board of Directors) does not authorize and declare a dividend for any dividend period with respect to the Series A Preferred Stock and the Series B and C Preferred Stock represented by depositary shares, holders of the Series A, B and C Preferred Stock and, in turn, the depositary shares, will not be entitled to receive any such dividend, and such unpaid dividend will not accumulate and will never be payable. We have no obligation to pay dividends for a dividend period on or after the dividend payment date for such period if our Board of Directors (or a duly authorized committee of the Board of Directors) has not declared such dividend before the related dividend payment date. If dividends on the Series A Preferred Stock and the Series B and C Preferred Stock represented by depositary shares are authorized and declared with respect to any subsequent dividend period, we will be free to pay dividends on any other series of preferred stock and/or our common shares.

We may not have the ability to raise the funds necessary to finance any required purchases of our convertible senior notes due 2021 and 2044 upon the occurrence of a “fundamental change,” which would constitute an event of default under the indentures.

If a fundamental change (as such term is defined in the indentures governing our convertible senior notes due 2021 and 2044) occurs, holders of our convertible senior notes will have the right, at their option, to require us to purchase for cash any or all of the notes, or any portion of the principal amount thereof such that the principal amount that remains outstanding of each note

52

purchased in part equals $1,000 or an integral multiple of $1,000 in excess thereof. The fundamental change purchase price will equal 100% of the principal amount of the convertible senior notes to be purchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change purchase date. However, we may not have sufficient funds at the time we are required to purchase the convertible senior notes surrendered therefor and we may not be able to arrange necessary financing on acceptable terms, if at all.

We have not established a sinking fund for payment of the convertible senior notes due 2021 or 2044, nor do we anticipate doing so. In addition, our ability to purchase the convertible senior notes may be limited by law, by regulatory authority or we may in the future enter into credit agreements or other agreements that may contain provisions prohibiting redemption or repurchase of the notes under certain circumstances, or may provide that a designated event constitutes an event of default under that agreement. If a fundamental change occurs at a time when we are prohibited from purchasing the convertible senior notes, we could seek a waiver from the holders of these notes or attempt to refinance these notes. If we were not able to obtain consent, we would not be permitted to purchase the convertible senior notes. Our failure to purchase tendered convertible senior notes would constitute an event of default under the indenture governing the notes, which might constitute a default under the terms of our other indebtedness.

The conditional conversion features of the convertible senior notes due 2021 and 2044, if triggered, may adversely affect our financial condition.

If one of the conversion contingencies in our convertible senior notes due 2021 and 2044 is triggered, holders of our convertible senior notes will be entitled to convert the notes at any time during specified periods. If one or more holders elect to convert their convertible senior notes, we may be required to settle all or a portion of our conversion obligation through the payment of cash, which could adversely affect our liquidity and various aspects of our business.

As discussed in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under “Convertible Senior Notes,” as of December 31 2014, the price of our common stock exceeded the conversion price threshold trigger for our convertible senior notes due 2021. Accordingly, the convertible senior notes due 2021 were convertible at the option of each holder through December 31, 2014. If a holder elects to convert its convertible notes due 2021, we are permitted to settle the conversion value in cash, stock, or a combination thereof. If we choose to settle in a combination of cash and stock, we currently have the intent and the ability, based on current facts and circumstances, to settle the principal amount of the convertible senior notes due 2021 in cash. However, if the principal amount of the convertible senior notes due 2021 that holders actually elect to convert exceeds our cash on hand and cash from operations, we may elect to settle in stock or may need to draw cash from existing financing or pursue additional sources of financing to settle the convertible senior notes due 2021 in cash. We may not be able to obtain new sources of financing on terms acceptable to us or at all.

Certain provisions in our convertible senior notes due 2021 and 2044 could delay or prevent an otherwise beneficial takeover or takeover attempt of us.

Certain provisions in our convertible senior notes could make it more difficult or more expensive for a third party to acquire us. For example, if an acquisition event constitutes a fundamental change within the meaning of our outstanding convertible senior notes, holders of our convertible senior notes will have the right to require us to purchase their notes in cash. In addition, if an acquisition event constitutes a make-whole fundamental change within the meaning of our outstanding convertible senior notes, we may be required to increase the conversion rate for holders who convert their notes in connection with such make-whole fundamental change. In any of these cases, and in other cases, our obligations under the convertible senior notes as well as provisions of our organizational documents and other agreements could increase the cost of acquiring us or otherwise discourage a third party from acquiring us or removing incumbent management.

53

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

The following is a list of locations of buildings we own and their approximate size:

Location	Square Feet
Alpharetta, Georgia	66,000
Boca Raton, Florida	51,000
Cleveland, Ohio	63,000
Cleveland, Ohio(1)	475,000	(1)

⁽¹⁾  The building is owned through a subsidiary that is 50% owned.

In addition, we lease an aggregate of approximately 829,200 square feet of office space in 95 locations. See Item 13. “Certain Relationships and Related Transactions, and Director Independence.”

Item 3. Legal Proceedings

We and certain of our officers are defendants in related putative securities class action lawsuits filed in February 2014 in the United States District Court for the Southern District of New York. Plaintiffs in the lawsuits purport to represent a class of our stockholders who purchased shares between February 15, 2011 and December 11, 2013. On April 24, 2014, the court issued an order consolidating the related actions, appointing lead plaintiff and approving the selection of co-lead counsel. On September 4, 2014, the plaintiffs filed a consolidated amended complaint. The amended complaint asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, Section 11 of the Securities Act of 1933, as amended, and seeks damages in an unspecified amount, attorney’s fees and other relief. Plaintiffs assert the Section 11 claim on behalf of persons or entities who purchased our Series A preferred stock in or traceable to our public offering on June 5, 2013 and did not sell those shares of Series A preferred stock prior to December 12, 2013. We believe the allegations to be unfounded and will vigorously pursue its defenses; however, we cannot reasonably estimate the potential range of loss, if any. In addition, we have received three stockholder demands for production, pursuant to Section 220 of the Delaware General Corporation Law, of our books and records.

Other than as discussed above, we are not involved presently in any material litigation nor, to our knowledge, is any material litigation threatened against us or our properties.

Item 4. Mine Safety Disclosures

None.

54

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Shareholders

Our common stock trades on the NASDAQ Global Market under the symbol “AFSI”. We have one class of authorized common stock for 150,000,000 shares at a par value of $0.01 per share. As of February 17, 2015, there were approximately 151 registered record holders of our common stock. This figure does not include beneficial owners who hold shares in nominee name.

Price Range of Common Stock

The following table shows the high and low sales prices per share for our common stock and the cash dividends declared with respect to such shares:

2014	High		Low		Dividends Declared
First quarter	$	39.64	$	30.29	$	0.20
Second quarter	$	47.10	$	35.55	$	0.20
Third quarter	$	46.02	$	38.25	$	0.20
Fourth quarter	$	59.31	$	39.80	$	0.25

2013	High		Low		Dividends Declared
First quarter (1)	$	33.10	$	26.39	$	0.14
Second quarter (1)	$	33.51	$	26.24	$	0.14
Third quarter (1)	$	41.72	$	32.45	$	0.14
Fourth quarter	$	42.64	$	27.90	$	0.14

⁽¹⁾ The prices have been adjusted for a ten percent stock dividend that was paid during the third quarter of 2013.

On February 17, 2015, the closing price per share for our common stock was $55.55.

Dividend Policy

Our Board of Directors has historically declared the payment of quarterly cash dividends. Any determination to pay cash dividends will be at the discretion of the Board of Directors and will be dependent upon our results of operations and cash flows, our financial position and capital requirements. On August 6, 2013, our Board of Directors declared a 10% stock dividend applicable to all stockholders as of the close of business on August 20, 2013. Such stock dividend was paid on September 4, 2013. Each of our stockholders as of the record date received 0.10 additional shares of common stock for each one share of common stock they held as of the close of business on the record date. Holders of fractional shares of common stock received cash in lieu of fractional shares.

We are a holding company that transacts business through our operating subsidiaries. Our primary assets are the capital stock of these operating subsidiaries. Payments from our insurance subsidiaries pursuant to management agreements and tax sharing agreements, as well as fee income we generate from providing services discussed throughout this report, are our primary source of funds to pay our direct expenses. We anticipate that such payments, together with dividends paid to us by our subsidiaries, will continue to be the primary source of funds. The ability to pay dividends to our stockholders largely depends upon the surplus and earnings of our subsidiaries and their ability to pay dividends to us. Payment of dividends by our insurance subsidiaries is regulated by insurance laws of various states, and the laws of certain foreign countries in which we do business, including laws establishing minimum solvency and liquidity thresholds. In addition, the terms of our junior subordinated debentures, revolving credit facility and convertible senior notes limit, in the event of certain circumstances, our ability to pay dividends on our common stock, and future borrowings may include prohibitions and restrictions on dividends. As a result, at times, we may not be able to receive dividends from our insurance subsidiaries and may not receive dividends in amounts necessary to pay dividends on our capital stock. As of December 31, 2014, our insurance subsidiaries could pay dividends to us of $844 million without prior regulatory approval. Any dividends paid by our subsidiaries would reduce their surplus. During 2014, our insurance subsidiaries paid us dividends of $7.4 million.

55

Share Repurchase Plan

In December 2013, our Board of Directors approved a $150 million share repurchase program. The Board of Directors may suspend, modify or terminate the repurchase program at any time without prior notice. Under this repurchase program, we are not obligated to repurchase any particular number of shares. Unless terminated earlier by resolution of our Board of Directors, the program will expire when we have repurchased the full value of the shares authorized. During the three months ended December 31, 2014 we repurchased 367,379 shares pursuant to the authorized plan from December 2013.

During the three months ended December 31, 2014, we repurchased 92,448 shares of our common stock from one employee in connection with the vesting of restricted stock issued to this employee under our 2010 Omnibus Incentive Plan, as amended ("the Plan"). The shares were withheld at the direction of the employee as permitted under the Plan in order to pay the minimum amount of tax liability owned by the employee from the vesting of restricted stock.

The following table summarizes our stock repurchases for the three-month period ended December 31, 2014:

Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan or Program	Maximum Number (or approximate dollar value) of Shares that May Yet be Purchased Under Plan or Program
October 1 - 31, 2014	367,379	$	39.69	367,379	$	90,875,816
November 1 - 30, 2014	—	—		—	—
December 1 - 31, 2014	92,448	56.25		—	$	90,875,816
Total	459,827	$	39.72	367,379	$	90,875,816

⁽¹⁾ Includes 92,448 shares that were withheld to satisfy tax withholding amounts due from the employee upon the vesting of previously issued restricted shares.

56

Common Stock Performance Graph

Set forth below is a line graph comparing the cumulative total stockholder return on our common stock for the period beginning December 31, 2009 and ending on December 31, 2014 with the cumulative total return on the NASDAQ Global Market Index and a peer group comprised of the NASDAQ Insurance Index. The graph shows the change in value of an initial $100 investment on December 31, 2009.

Comparative Cumulative Total Returns Since 12/31/09 for AmTrust Financial

Services, Inc.: NASDAQ Composite and NASDAQ Insurance

This information is not deemed to be “soliciting material” or to be “filed” with the SEC or subject to the liabilities of Section 18 of the Exchange Act, nor shall it be deemed incorporated by reference in any of our filings under the Securities Act or the Exchange Act.

57

Item 6. Selected Financial Data

The following tables set forth our selected historical consolidated financial and operating information for the periods ended and as of the dates indicated. The selected consolidated income statement data for the years ended December 31, 2014, 2013 and 2012 and the balance sheet data as of December 31, 2014 and 2013 are derived from our audited financial statements included elsewhere in this report, which have been audited by BDO USA, LLP, our independent auditors. These historical results are not necessarily indicative of results to be expected from any future period. You should read the following selected consolidated financial information together with the other information contained in this report, including “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes included elsewhere in Part IV of this report.

	Year Ended December 31,
	2014			2013			2012			2011			2010
	(Amounts in Thousands)
Selected Income Statement Data(1)
Gross written premium	$	6,087,965		$	4,116,911		$	2,749,326		$	2,150,472		$	1,560,822
Ceded gross written premium	(2,131,347		)	(1,551,238		)	(1,101,289		)	(873,875		)	(733,596		)
Net written premium	$	3,956,618		$	2,565,673		$	1,648,037		$	1,276,597		$	827,226
Change in unearned premium	(430,054		)	(299,683		)	(229,185		)	(239,736		)	(81,567		)
Net earned premium	$	3,526,564		$	2,265,990		$	1,418,852		$	1,036,861		$	745,659
Service and fee income	409,743			331,559			172,174			108,660			62,067
Net investment income	131,601			84,819			68,167			55,515			50,517
Net realized gain (loss) on investments	16,423			15,527			8,981			2,768			5,953
Total revenues	$	4,084,331		$	2,697,895		$	1,668,174		$	1,203,804		$	864,196
Loss and loss adjustment expense	2,342,619			1,517,361			922,675			678,333			471,481
Acquisition costs and other underwriting expenses (2)	856,923			533,162			356,005			271,367			157,711
Other(3)	436,350			291,617			177,709			117,090			56,403
Total expenses	$	3,635,892		$	2,342,140		$	1,456,389		$	1,066,790		$	685,595
Income before other income (expense), income taxes and equity in earnings of unconsolidated subsidiaries	$	448,439		$	355,755		$	211,785		$	137,014		$	178,601
Other income (expense):
Interest expense	(45,857		)	(34,691		)	(28,508		)	(16,079		)	(12,902		)
Loss on extinguishment of debt	(9,831		)	—			—			—			—
Gain on investment in life settlement contracts net of profit commission	12,306			3,800			13,822			46,892			11,855
Foreign currency gain (loss)	60,245			(6,533		)	(242		)	(2,418		)	684
Acquisition gain on purchase	—			48,715			—			5,850			—
Gain on sale of subsidiary	6,631			—			—			—			—
Total other income (expense)	$	23,494		$	11,291		$	(14,928	)	$	34,245		$	(363	)
Income before income taxes and equity in earnings of unconsolidated subsidiaries	$	471,933		$	367,046		$	196,857		$	171,259		$	178,238
Provision (benefit) for income taxes	53,686			98,019			21,292			(15,023		)	53,890
Income before equity in earnings of unconsolidated subsidiaries and non-controlling interest	418,247			269,027			175,565			186,282			124,348
Equity in earnings of unconsolidated subsidiaries – related party	28,351			11,566			9,295			4,882			23,226
Net income	446,598			280,593			184,860			191,164			147,574
Net loss (income) attributable to non-controlling and redeemable non-controlling interest of subsidiaries	416			1,633			(6,873		)	(20,730		)	(5,109		)
Net income attributable to AmTrust Financial Services, Inc.	$	447,014		$	282,226		$	177,987		$	170,434		$	142,465
Dividends on preference stock	(12,738		)	(3,989		)	—			—			—
Net income attributable to AmTrust common stockholders	$	434,276		$	278,237		$	177,987		$	170,434		$	142,465

58

	Year Ended December 31,
	2014			2013			2012			2011			2010
	(Amounts in Thousands, Except Percentages and per Share Data)
Per Share Data
Net income allocated to AmTrust Financial Services, Inc. common stockholders – basic	$	5.78		$	3.75		$	2.42		$	2.34		$	1.97
Basic weighted average common shares outstanding	74,933			74,163			73,269			72,685			72,302
Diluted Income Per Share:
Net income allocated to AmTrust Financial Services, Inc. common stockholders – diluted	$	5.45		$	3.56		$	2.34		$	2.29		$	1.95
Diluted weighted average common shares outstanding	79,517			77,984			75,620			74,431			73,194
Dividend declared per common share	$	0.85		$	0.56		$	0.39		$	0.34		$	0.29
Selected Insurance Ratios and Operating Information
Net loss ratio(4)	66.4		%	67.0		%	65.0		%	65.4		%	63.2		%
Net expense ratio(5)	24.3		%	23.5		%	25.1		%	26.2		%	22.1		%
Net combined ratio(6)	90.7		%	90.5		%	90.1		%	91.6		%	85.3		%
Return on equity(7)	28.4		%	22.5		%	17.5		%	21.2		%	22.2		%

	As of December 31,
	2014		2013		2012		2011		2010
	(Amounts in Thousands)
Selected Balance Sheet Data
Cash, cash equivalents and restricted cash	$	1,088,975	$	930,461	$	493,132	$	429,951	$	201,949
Investments	4,575,881		3,657,309		2,203,270		1,656,687		1,357,012
Reinsurance recoverable	2,440,627		1,929,848		1,318,395		1,098,569		775,432
Premiums receivable, net	1,851,682		1,593,975		1,251,262		932,992		727,561
Goodwill and intangibles assets	667,681		665,393		532,839		392,455		204,139
Total assets	13,847,368		11,279,126		7,436,511		5,762,419		4,205,741
Reserves for loss and loss adjustment expense	5,664,205		4,368,234		2,426,400		1,879,175		1,263,537
Unearned premiums	3,447,203		2,680,982		1,773,593		1,366,170		1,024,965
Deferred income tax liability	106,363		274,519		264,032		148,297		33,171
Revolving credit facility	120,000		—		—		—		—
Notes payable	250,000		250,000		—		—		6,667
2.75% Convertible senior notes due 2044	157,679		—		—		—		—
5.5% Convertible senior notes due 2021	56,745		164,218		161,218		138,506		—
Junior subordinated debt	123,714		123,714		123,714		123,714		123,714
Common stock, preferred stock and additional paid in capital less treasury stock	1,026,163		864,173		468,226		282,805		249,086
Total AmTrust Financial Services, Inc. equity	2,037,020		1,441,005		1,144,121		890,563		716,514

(1) Results for a number of periods were affected by our various acquisitions from 2010 to 2014.

(2) Acquisition costs and other underwriting expenses include policy acquisition expenses, commissions paid directly to producers, premium taxes and assessments, salary and benefits and other insurance general and administrative expenses which represent other costs that are directly attributable to insurance activities. These costs and expenses are reduced by ceding commission earned through external reinsurance agreements.

(3) Other operating expenses are those expenses including non-cash amortization of tangible and intangible assets, goodwill impairment and non-insurance revenue generating activities in which we engage.

(4) Net loss ratio is calculated by dividing the loss and loss adjustment expense by net premiums earned.

(5) Net expense ratio is calculated by dividing the total of acquisition costs and other underwriting expenses by net premiums earned.

(6) Net combined ratio is calculated by adding net loss ratio and net expense ratio together.

(7) Return on equity is calculated by dividing net income by the average stockholders’ equity for the period.

59

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. This Form 10-K contains certain forward-looking statements that are intended to be covered by the safe harbors created by The Private Securities Litigation Reform Act of 1995. See “Note on Forward-Looking Statements.”

Overview

We are a multinational specialty property and casualty insurer focused on generating consistent underwriting profits. We provide insurance coverage for small businesses and products with high volumes of insureds and loss profiles that we believe are predictable. We target lines of insurance that we believe generally are under served by the market. We have grown by hiring teams of underwriters with expertise in our specialty lines, through acquisitions of companies and assets that, in each case, provide access to distribution networks and renewal rights to established books of specialty insurance business. We have operations in three business segments:

• 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.

Our former segment, Personal Lines Reinsurance, is in run-off. Through July 31, 2013, we reinsured 10% of the net premiums of National General Holdings Corp.'s personal lines business, pursuant to the Personal Lines Quota Share with National General Holdings Corp.'s personal lines insurance companies. On August 1, 2013, we received notice, effective August 1, 2013, terminating our participation in the Personal Lines Quota Share. The termination was on a run-off basis, meaning we continued to receive net premiums and assume net losses with respect to policies in force as of July 31, 2013 through the expiration of such policies. As we retained all assumed written premium through July 31, 2013 and the continuing cash flows associated with the business, we did not present the Personal Lines Reinsurance segment as a discontinued operation in accordance with ASC 205-20 Discontinued Operations.

We transact business primarily through our fifteen insurance subsidiaries domiciled in the United States and five insurance subsidiaries domiciled in Europe. We are authorized to write business in all 50 states in the United States and in the European Union. Through our subsidiary, AmTrust at Lloyd's, we are licensed to underwrite business internationally in locations where Lloyd's is licensed. Our principal operating subsidiaries are rated "A" (Excellent) by A.M. Best Company ("A.M. Best").

Insurance, particularly workers’ compensation, is, generally affected by seasonality. The first quarter generally produces greater premiums than subsequent quarters. Nevertheless, the impact of seasonality on our Small Commercial Business and Specialty Program segments has not been significant. We believe that this is because we serve many small businesses in different geographic locations. We believe seasonality may be muted by our acquisition activity. Additionally, our Specialty Risk and Extended Warranty segment may be impacted by seasonality due to consumer trends in the automotive and consumer electronic markets.

We evaluate our operations by monitoring key measures of growth and profitability, including return on equity and net combined ratio. Our return on equity was 28.4%, 22.5% and 17.5% for the years ended December 31, 2014, 2013 and 2012, respectively. Our overall financial objective is to produce a return on equity of 15.0% or more over the long term. In addition, we target a net combined ratio of 95.0% or lower over the long term, while seeking to maintain optimal operating leverage in our insurance subsidiaries commensurate with our A.M. Best rating objectives. Our net combined ratio was 90.7%, 90.5% and 90.1% for the years ended December 31, 2014, 2013 and 2012, respectively. A key factor in achieving our targeted net combined ratio is a continuous focus on our net expense ratio. Our strategy across our segments is to maintain premium rates, deploy capital judiciously, manage our expenses and focus on the businesses in which we have expertise, which we believe should provide opportunities for greater returns.

60

Investment income is also an important part of our business. Because the period of time between our receipt of premiums and the ultimate settlement of claims is often several years or longer, we are able to invest cash from premiums for significant periods of time. Our net investment income was $131.6 million, $84.8 million and $68.2 million for the years ended December 31, 2014, 2013 and 2012, respectively. We held 19.7% and 20.8% of total invested assets in cash and cash equivalents as of December 31, 2014 and 2013, respectively.

Our most significant balance sheet liability is our reserves for loss and loss adjustment expense. We record reserves for estimated losses under insurance policies that we write and for loss adjustment expenses related to the investigation and settlement of policy claims. Our reserves for loss and loss adjustment expenses represent the estimated cost of all reported and unreported loss and loss adjustment expenses incurred and unpaid at any given point in time based on known facts and circumstances. Our reserves for loss and loss adjustment expenses incurred and unpaid are not discounted using present value factors. Our loss reserves are reviewed at least annually by our external actuaries. Reserves are based on estimates of the most likely ultimate cost of individual claims. These estimates are inherently uncertain. Judgment is required to determine the relevance of our historical experience and industry information under current facts and circumstances. The interpretation of this historical and industry data can be impacted by external forces, principally frequency and severity of future claims, length of time to achieve ultimate settlement of claims, inflation of medical costs and wages, insurance policy coverage interpretations, jury determinations and legislative changes. Accordingly, our reserves may prove to be inadequate to cover our actual losses. If we change our estimates, these changes would be reflected in our results of operations during the period in which they are made, with increases in our reserves resulting in decreases in our earnings.

Significant Acquisitions

Comp Options Insurance Company, Inc.

On October 1, 2014, we acquired Comp Options Insurance Company, Inc. (“Comp Options”), a Florida-based workers' compensation insurer, from an affiliate of Blue Cross & Blue Shield of Florida, for approximately $34.3 million in cash. Comp Options offers workers' compensation insurance to small businesses with low-hazard risk profiles in the state of Florida and generated approximately $70.0 million of premium during the 12 months prior to acquisition. The goodwill and intangible assets, as well as Comp Options results of operations, are included as a component of the Small Commercial Business segment. We are in the process of completing our acquisition accounting and expect to have it completed in 2015. As a result of this acquisition, we recorded approximately $18.7 million of written premium and $1.0 million of service and fee income for the year ended December 31, 2014.

Tower Renewal Rights Agreement

In January 2014, we entered into a cut through quota share reinsurance agreement (the “Cut Through Reinsurance Agreement”) with Tower Group International, Ltd. (“Tower”) to provide a 100% quota share for a majority of Tower's in force commercial lines policies and most new and renewal commercial lines business. At the inception of the Cut Through Reinsurance Agreement, we initially assumed $174 million of unearned premium. During 2014, we assumed approximately $475 million of premium, earned approximately $387 million of premium, and incurred approximately $225 million of loss and loss adjustment expense, respectively, related to the Cut Through Reinsurance Agreement. During the year ended December 31, 2014, we also incurred approximately $92 million of commission expense and approximately $16 million of unallocated claims expense as part of the Cut Through Reinsurance Agreement. Additionally, we recorded approximately $34 million of prepaid claim expense as of December 31, 2014, which is reported as a component of other assets.

In conjunction with ACP Re, Ltd.'s (“ACP Re”) merger with Tower, on September 15, 2014, we entered into various agreements with Tower including, primarily, a renewal rights agreement and a quota share reinsurance agreement. Based on the terms of the renewal rights agreement, we are required to pay a maximum amount of $30 million over a three year period based on 3% of gross written premium of the Tower commercial lines business. The quota share reinsurance agreement allows us to reinsure 100% of all losses for Tower’s new and renewal commercial lines business written after September 15, 2015. The quota share agreement replaced the Cut Through Reinsurance Agreement. As a result of the renewal rights transaction, we generated approximately $133 million of gross written premium for the year ended December 31, 2014. Additionally, we loaned ACP Re $125 million to finance their purchase of Tower.

61

The Insco Dico Group

On January 3, 2014, we completed the acquisition of Insco Insurance Services, Inc. (“Insco Dico”) and its subsidiaries for a purchase price of approximately $88.7 million. The transaction was funded with our existing working capital. Insco Dico's subsidiaries include Developers Surety and Indemnity Company and Indemnity Company of California, which offer surety insurance to developers and contractors in all 50 states with California as the largest state. In addition, Insco Dico's subsidiary, Builders Insurance Services, markets general liability insurance policies to contractors in several states in the western region of the U.S. The goodwill and intangible assets, as well as Insco Dico's results of operations, are included as a component of the Small Commercial Business segment. The identifiable intangible assets consist of agency relationships, which have a 20 year life, and licenses that have an indefinite life. As a result of this transaction, we recorded approximately $55.5 million of written premium and approximately $3.7 million of service and fee income for the year ended December 31, 2014.

Sagicor Europe Limited

On December 23, 2013, we, through one of its subsidiaries, completed the acquisition of Sagicor Europe Limited and its wholly owned subsidiaries, including Sagicor at Lloyd's Limited (“Sagicor”), from Sagicor Financial Corporation for approximately $93.1 million. Sagicor Europe Limited and Sagicor at Lloyd's Limited subsequently changed their names to AmTrust Lloyd's Holdings Limited and AmTrust at Lloyd's Limited, respectively. AmTrust at Lloyd's Limited is a managing agency and owner of Lloyd's property/casualty insurance syndicate 1206 with stamp capacity of $330.0 million and Lloyd's life insurance syndicate 44 with stamp capacity of $16.5 million. The goodwill and intangible assets, as well as AmTrust Lloyd's Holdings Limited's results of operations, are included as a component of the Specialty Risk and Extended Warranty segment. As a result of this transaction, we recorded approximately $322.8 million of written premium for the year ended December 31, 2014.

Mutual Insurers Holding Company

On May 13, 2013, we completed the acquisition of Mutual Insurers Holding Company (“MIHC”) and its subsidiaries. MIHC's primary operating subsidiary, First Nonprofit Insurance Company (“FNIC”), is a of property and casualty insurance products to nonprofit organizations in the U.S. Immediately prior to the acquisition, MIHC converted from a mutual form to a stock form of ownership in a transaction “sponsored” by us. As required by the plan of conversion and applicable Delaware law, we offered shares of our common stock, at a discount to the market price, to the members of MIHC who held policies as of December 31, 2012 and the directors, officers and employees of MIHC and its subsidiaries. We received subscriptions for approximately $0.5 million, resulting in the issuance by us of 18,052 shares of our common stock at a discounted price of 20% from our market trading price, or approximately $0.1 million. Pursuant to the stock purchase agreement, after the expiration of the offering, we purchased all of the authorized shares of capital stock of MIHC at a purchase price equal to the greater of the gross proceeds received by us in the offering, and $8.0 million. We made a payment to MIHC of $48.5 million, which included the $0.5 million in proceeds we received in the offering, for the stock of FNIC. Additionally, as part of the transaction, we were required to make a contribution to First Nonprofit Foundation, a tax exempt corporation principally funded by FNIC's predecessor and managed for the benefit of nonprofit organizations, in the amount of $7.9 million, which represented $8.0 million, as discussed above, less the discount of approximately $0.1 million on the shares issued by us in the transaction. The remaining $40.6 million of cash contributed to MIHC was retained by us. Additionally, we assumed $6.5 million of debt in the transaction. In accordance with FASB ASC 805-10 Business Combinations, we recorded an acquisition price of approximately $14.5 million.

In accordance with FASB ASC 944-805 Business Combinations, we adjusted to fair value FNIC's loss and LAE reserves by taking the acquired loss reserves recorded and discounting them based on expected reserve payout pattern using a current risk free rate. This risk free interest rate was then adjusted based on different cash flow scenarios that use different payout and ultimate reserve assumptions deemed to be reasonably possible based upon the inherent uncertainties present in determining the amount and timing of payment of such reserves. The difference between the acquired loss and LAE reserves and our best estimate of the fair value of such reserves at acquisition date is amortized ratably over the payout period of the acquired loss and LAE reserves and was approximately $4.5 million. Additionally, we recorded intangible assets in the amount of $6.1 million, which consisted of state licenses and have an indefinite life. The intangible assets, as well as FNIC's results of operations from the date of acquisition, are included as a component of the Small Commercial Business segment. As a result of this transaction, we recorded an acquisition gain of approximately $18.0 million.

As a result of this transaction, we recorded approximately $58.1 million and $32.1 million of written premium for the years ended December 31, 2014 and 2013, respectively.

62

AMTCS Holdings, Inc.

On May 3, 2013, we, through our wholly-owned subsidiary AMT Warranty Corp., completed the acquisition of CPPNA Holdings, Inc. (“CPPNA”) from CPP Group LLC, a company based in the United Kingdom, for approximately $40.0 million. CPPNA subsequently changed its name to AMTCS Holdings, Inc. (“AMTCS”). AMTCS provides administrative services for consumer protection products in the United States, including identity theft protection and warranties related to credit card purchases, to customers of AMTCS's financial services partners. In accordance with FASB ASC 805-10 Business Combinations, we recorded a purchase price of approximately $40.0 million, which consisted primarily of goodwill and an intangible asset of approximately $17.3 million and $34.7 million, respectively, and a deferred tax liability of $12.1 million. The intangible asset consisted of customer relationships and has a life of 12 years. The goodwill and intangibles, as well as AMTCS's results of operations, are included as a component of the Specialty Risk and Extended Warranty segment from the date of acquisition. As a result of this transaction, we recorded approximately $58.4 million and $44.5 million of fee income during the years ended December 31, 2014 and 2013, respectively.

Sequoia Insurance Company

On April 19, 2013, we completed the acquisition of all the issued and outstanding shares of common stock of Sequoia Insurance Company and its subsidiaries, Sequoia Indemnity Company and Personal Express Insurance Company (“Sequoia”) for approximately $60.0 million. Sequoia offers low hazard, property/casualty insurance products, including workers' compensation and commercial package insurance, to small businesses in several western states, with California representing Sequoia's largest market.

In accordance with FASB ASC 944-805 Business Combinations, we adjusted to fair value Sequoia's loss and LAE reserves by taking the acquired loss reserves recorded and discounting them based on expected reserve payout pattern using a current risk free rate. This risk free interest rate was then adjusted based on different cash flow scenarios that use different payout and ultimate reserve assumptions deemed to be reasonably possible based upon the inherent uncertainties present in determining the amount and timing of payment of such reserves. The difference between the acquired loss and LAE reserves and our best estimate of the fair value of such reserves at acquisition date is amortized ratably over the payout period of the acquired loss and LAE reserves and was approximately $7.4 million. Additionally, we recorded $11.8 million of intangible assets that consist primarily of licenses and trademarks and have an indefinite life. The intangible assets, as well as Sequoia's results of operations, are included as a component of the Small Commercial Business segment from the date of acquisition. As a result of this transaction, we recorded an acquisition gain of approximately $5.2 million.

We recorded approximately $68.3 million and $79.7 million of written premium for the years ended December 31, 2014 and 2013, respectively.

Car Care

On February 28, 2013, we, through our wholly-owned subsidiary AmTrust International Limited (“AIL”), acquired all of the issued and outstanding shares of capital stock of Car Care Plan (Holdings) Limited (“CCPH”) from Ally Insurance Holdings, Inc (“AIH”). CCPH is an administrator, insurer and provider of auto extended warranty, guaranteed asset protection (GAP), Wholesale Floorplan Insurance and other complementary insurance products. CCPH underwrites its products and the products of third-party administrators through its subsidiary Motors Insurance Company Limited, a United Kingdom based insurer. CCPH has operations in the United Kingdom, Europe, China, North America and Latin America. We paid $72.4 million for the purchase of CCPH. In connection with the closing of the transaction, the parties (or their affiliates) entered into certain other agreements, including a transition services agreement, pursuant to which AIH provides certain transitional services to AIL and us, and two reinsurance agreements, pursuant to which affiliates of AIH reinsure certain insurance contracts of such affiliates with affiliates of AIL.

We recorded intangible assets of approximately $34.3 million related to customer relationships and assigned a life of fifteen years. CCPH is included as a component of our Specialty Risk and Extended Warranty segment. As a result of this transaction, we recognized a gain on the acquisition of approximately $25.5 million.

As a result of this transaction, we recorded approximately $110.8 million and $98.9 million of written premium for the years ended December 31, 2014 and 2013, respectively. In addition, we recorded $42.4 million and $31.6 million of fee income for the years ended December 31, 2014 and 2013, respectively.

63

AHL

During 2013, AHL completed two acquisitions described below. AHL is a holding company that purchases Luxembourg-domiciled reinsurance entities. In connection with these transactions, we acquire cash and equalization reserves of the reinsurance companies. An equalization reserve is a catastrophe reserve in excess of required reserves established pursuant to Luxembourg law. Equalization reserves are required to be established for Luxembourg statutory and tax purposes, but are not recognized under U.S. GAAP. The equalization reserves originally established by the seller under Luxembourg law allowed the reinsurer to offset any taxable income. Equalization reserves are calculated on a line of business basis and are subject to a theoretical maximum amount, or cap, based on the expected premium volume described in the business plan of the reinsurance company as approved by the Luxembourg regulators and is subject to reassessment every five years. Each year, the Luxembourg reinsurer is required to adjust its equalization reserves by an amount equal to its statutory net income or net loss, determined based on premiums and investment income less incurred losses and other operating expenses. The yearly adjustment of the equalization reserve generally results in zero pretax income on a Luxembourg statutory and tax basis, as follows: in a year in which the reinsurer’s operations result in a statutory loss, the equalization reserves are taken down in an amount to balance the income statement to zero pretax income, and in a year in which the operations result in a gain, the equalization reserves are increased in an amount to balance the income statement to zero pretax income. If the reinsurer were to produce underwriting income in excess of the equalization reserve cap, or if the cap were to be reduced below the amount of the carried equalization reserves, the reinsurer would incur Luxembourg tax on the amount of such excess income or the amount by which the reserves exceeded the reduced cap, as applicable.

If a Luxembourg reinsurer can assume sufficient premium to maintain its equalization reserves or assume losses, which then reduce the equalization reserves, the reinsurer can permanently defer the income tax. Subsequent to the acquisition, we cede premium and associated losses to the reinsurance companies through intercompany reinsurance arrangements. Provided we are able to cede business that generates a net loss to the reinsurance companies through intercompany reinsurance arrangements sufficient to offset the reinsurers’ required reductions of the equalization reserves, Luxembourg would not, under laws currently in effect, impose any income, corporation or profits tax on the reinsurance companies. However, if the reinsurance companies were to cease reinsuring business without exhausting the equalization reserves, they would be taxed by Luxembourg at a rate of approximately 30%. As of December 31, 2014, we had approximately $314 million of unutilized equalization reserves and an associated deferred tax liability of approximately $94 million. During 2014, 2013 and 2012, we were able to reduce the overall expenses by a net amount of approximately $30.4 million, $0.2 million, and $9.3 million, respectively, to reflect the net reduction of the deferred tax liability offset by goodwill impairment charges related to the utilization of the equalization reserves. Under our business plans currently in effect, we expect that the ceded losses and expenses net of reinsurance premiums paid under the intercompany reinsurance agreements will cause the equalization reserves to be fully utilized in three to five years subsequent to the acquisition of the Luxembourg reinsurer, at which point the deferred tax liability relating to the equalization reserves will be extinguished. The effects of these intercompany reinsurance agreements are appropriately eliminated in consolidation and did not impact our gross and net loss reserves or loss ratio.

In December 2013, AHL acquired all the issued and outstanding stock of Atlas COPCO Reinsurance S.A., a Luxembourg domiciled reinsurance company, from ATLAS COPCO AB. The purchase price of Atlas COPCO Reinsurance S.A. was approximately $80.7 million. We recorded approximately $89.1 million of cash, goodwill of $16.9 million and a deferred tax liability of $25.3 million. Atlas COPCO Reinsurance S.A. subsequently changed its name to AmTrust Re Aries S.A.

In November 2013, AHL acquired all the issued and outstanding stock of Re'A FIN S.A., a Luxembourg domiciled reinsurance company, from SRIW Finance SA and SPARXIS SA. The purchase price of Re'A FIN S.A. was approximately $93.4 million. We recorded approximately $102.8 million of cash, goodwill of $18.7 million and a deferred tax liability of $28.1 million. Re'A FIN S.A. subsequently changed its name to AmTrust Re Taurus S.A.

Strategic Investments

Investment in National General Holdings Corp.

We have a 13.2% ownership interest in National General Holding Corp. (“NGHC”). NGHC is publicly-held insurance holding company (Nasdaq: NGHC) that operates fifteen insurance companies in the United States and writes consumer property and casualty insurance business through independent agents for automobiles. Its coverages include standard/preferred auto, RVs, non-standard auto and commercial auto. NGHC's two largest stockholders are The Michael Karfunkel 2005 Grantor Retained Annuity Trust (the “Trust”) and Michael Karfunkel individually. Michael Karfunkel is the Chairman of our Board of Directors and the father-in-law of Barry D. Zyskind, our Chief Executive Officer. 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. In accordance with ASC 323-10-15, Investments-Equity Method and Joint Ventures, we continue to account for our investment in NGHC under the equity method as we have the ability to exert significant influence on NGHC's operations. We

64

recorded $28.4 million, $11.6 million and $9.3 million of income during the years ended December 31, 2014, 2013 and 2012, respectively, related to our equity investment in NGHC.

Master Services Agreement

We provide 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 our costs for development and support services. In addition, we provide 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 we process for NGHC and its affiliates on the policy management system. We recorded recorded approximately $25.6 million, $24.2 million and $14.4 million of fee income for the years ended December 31, 2014, 2013 and 2012, respectively, related to this agreement. Additionally, we provided certain consulting services to NGHC related to Luxembourg-domiciled reinsurance entities in 2014, for which we received $1.1 million for the year ended December 31, 2014.

Asset Management Agreement

We manage the assets of NGHC and certain of its subsidiaries, including the assets of reciprocal insurers managed by subsidiaries of NGHC, 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 billion 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 billion. We managed approximately $1.4 billion of assets as of December 31, 2014 related to this agreement. As a result of this agreement, we earned approximately $2.0 million, $1.7 million and $1.5 million of asset management fees for the years ended December 31, 2014, 2013 and 2012, respectively.

As a result of the above service agreements with NGHC, we recorded fees totaling approximately $28.7 million, $25.9 million and $15.9 million for the years ended December 31, 2014, 2013 and 2012, respectively. As of December 31, 2014, the outstanding balance payable by NGHC related to these service fees and reimbursable costs was approximately $16.4 million.

Life Settlement Contracts

We currently have a 50% ownership interest in each of four entities for the purpose of acquiring life settlement contracts, with a subsidiary of NGHC owning the other 50%. A life settlement contract is a contract between the owner of a life insurance policy and a third-party who obtains the ownership and beneficiary rights of the underlying life insurance policy. The entities (collectively, the “LSC Entities”) are:

•Tiger Capital LLC (“Tiger”);

•AMT Capital Alpha, LLC (“AMT Alpha”);

•AMT Capital Holdings, S.A. (“AMTCH”); and

•AMT Capital Holdings II, S.A. (“AMTCH II”).

The LSC Entities may also acquire premium finance loans made in connection with the borrowers’ purchase of life insurance policies that are secured by the policies. The LSC Entities acquire the underlying policies through the borrowers’ voluntary surrender of the policy in satisfaction of the loan or foreclosure. A third party serves as the administrator of the Tiger and AMTCH II life settlement contract portfolios, for which it receives an administrative fee. The third party administrator is eligible to receive a percentage of profits after certain time and performance thresholds have been met. We provide certain actuarial and finance functions related to the LSC Entities. In conjunction with our 13.2% ownership percentage of NGHC, we ultimately receive 56.6% of the profits and losses of the LSC Entities. As such, in accordance with ASC 810-10, Consolidation, we have been deemed the primary beneficiary and, therefore, consolidate the LSC Entities.

We account for investments in life settlements in accordance with ASC 325-30, Investments in Insurance Contracts, which states that an investor shall elect to account for its investments in life settlement contracts by using either the investment method or the fair value method. The election is made on an instrument-by-instrument basis and is irrevocable. We have elected to account for these policies using the fair value method. We determine fair value based upon our estimate of the discounted cash flow related to policies (net of the reserves for improvements in mortality, the possibility that the high net worth individuals represented in our portfolio may have access to better health care, the volatility inherent in determining the life expectancy of insureds with significant reported health impairments, the possibility that the issuer of the policy or a third party will contest the payment of the death benefit payable to us, and the future expenses related to the administration of the portfolio), which incorporates current life expectancy assumptions, premium payments, the credit exposure to the insurance company that issued the life settlement contracts and the rate of return that a buyer would require on the contracts as no comparable market pricing is available.

65

Total capital contributions of $36.1 million and $70.8 million were committed to the LSC Entities during the years ended December 31, 2014 and 2013, respectively, of which our proportionate share was $17.9 million and $35.4 million in those same periods. $1.3 million of this $17.9 million capital contribution was funded in January 2015. The LSC Entities used the contributed capital to pay premiums and purchase policies. Our investments in life settlements and premium finance loans were approximately $264.5 million and $233.0 million as of December 31, 2014 and 2013, respectively, and are included in Prepaid expenses and other assets on the Consolidated Balance Sheet. We recorded a gain on investment in life settlement contracts net of profit commission of approximately $12.3 million, $3.8 million and $13.8 million, for the years ended December 31, 2014, 2013 and 2012, respectively.

Principal Revenue and Expense Items

Gross Written Premium.  Gross written premium represents estimated premiums from each insurance policy that we write, including as a servicing carrier for assigned risk plans, during a reporting period based on the effective date of the individual policy. Certain policies that we underwrite are subject to premium audit at that policy’s cancellation or expiration. The final actual gross premiums written may vary from the original estimate based on changes to the final rating parameters or classifications of the policy.

Net Written Premium.  Net written premium is gross written premium less that portion of premium that we cede to third party reinsurers under reinsurance agreements. The amount ceded under these reinsurance agreements is based on a contractual formula contained in the individual reinsurance agreement.

Net Earned Premium.  Net earned premium is the earned portion of our net written premiums. We earn insurance premiums on a pro rata basis over the term of the policy. At the end of each reporting period, premiums written that are not earned are classified as unearned premiums, which are earned in subsequent periods over the remaining term of the policy. Our workers’ compensation insurance and commercial package policies typically have a term of one year. Thus, for a one-year policy written on July 1, 2014 for an employer with a constant payroll during the term of the policy, we would earn half of the premiums in 2014 and the other half in 2015. We earn our specialty risk and extended warranty coverages over the estimated exposure time period. The terms vary depending on the risk.The coverages range in duration from one month to 120 months. Our U.S. warranty business has an average duration of 42 months, while our European warranty business has an average duration of 19 months and our European casualty business has average duration of 12 months.

Service and Fee Income.  We currently generate service and fee income from the following sources:

• 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 party retailers, manufacturers and dealerships. Additionally, we provide credit monitoring services for a fee.

• Servicing carrier — We act as a servicing carrier for workers’ compensation assigned risk plans in multiple 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.

• Insurance 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 broker commissions and policy management fees associated with general liability policies placed by one of our managing general agencies.

• 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, NGHC, 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.

66

Net Investment Income and Realized Gains and (Losses). We invest our statutory surplus funds and the funds supporting our insurance liabilities primarily in cash and cash equivalents, fixed maturity and equity securities. Our net investment income includes interest and dividends earned on our invested assets. We report net realized gains and losses on our investments separately from our net investment income. Net realized gains occur when we sell our investment securities for more than their costs or amortized costs, as applicable. Net realized losses occur when we sell our investment securities for less than their costs or amortized costs, as applicable, or we write down the investment securities as a result of other-than-temporary impairment. We classify equity securities and our fixed maturity securities primarily as available-for-sale. We report net unrealized gains (losses) on those securities classified as available-for-sale separately within accumulated other comprehensive income on our balance sheet. Additionally, we have a small portfolio of equity securities classified as trading securities. We report unrealized gains (losses) on those securities classified as trading securities within net realized gains (losses) on investment on the consolidated statement of income.

Loss and Loss Adjustment Expenses Incurred.  Loss and loss adjustment expenses (“LAE”) incurred represent our largest expense item and, for any given reporting period, include estimates of future claim payments, changes in those estimates from prior reporting periods and costs associated with investigating, defending and servicing claims. These expenses fluctuate based on the amount and types of risks we insure. We record loss and loss adjustment expenses related to estimates of future claim payments based on case-by-case valuations and statistical analysis. We seek to establish all reserves at the most likely ultimate exposure based on our historical claims experience. It is typical for our more serious bodily injury claims to take several years to settle, and we revise our estimates as we receive additional information about the condition of injured employees and claimants and the costs of their medical treatment. Our ability to estimate loss and loss adjustment expenses accurately at the time of pricing our insurance policies is a critical factor in our profitability.

Acquisition Costs and Other Underwriting Expenses.  Acquisition costs and other underwriting expenses consist of policy acquisition expenses, salaries and benefits and general and administrative expenses, net of ceding commissions. These items are described below:

• 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. These expenses are offset by ceding commissions received.

• 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.

• Ceding commission on reinsurance transactions is a commission we receive from ceding gross written premium to third party reinsurers, and is netted against acquisition costs and other underwriting expenses. In connection with the Maiden Quota Share, which is our primary source of ceding commissions, the amount we receive is a blended rate based on a contractual formula contained in the individual reinsurance agreements, and the rate may not correlate specifically to the cost structure of the individual segments. The ceding commissions we receive cover a portion of our capitalized direct acquisition costs and a portion of other underwriting expenses. Ceding commissions received from reinsurance transactions that represent recovery of capitalized direct acquisition costs are recorded as a reduction of capitalized unamortized deferred acquisition costs and the net amount is charged to expense in proportion to net premium revenue recognized. Ceding commissions received from reinsurance transactions that represent the recovery of other underwriting expenses are recognized in the income statement over the insurance contract period in proportion to the insurance protection provided and classified as a reduction of acquisition costs and other underwriting expenses. Ceding commissions received, but not yet earned, that represent the recovery of other underwriting expenses are classified as a component of accrued expenses and other current liabilities. We allocate earned ceding commissions to its segments based on each segment’s proportionate share of total acquisition costs and other underwriting expenses recognized during the period.

Gain (loss) on Investment in Life Settlement Contracts. The gain (loss) on investment in life settlement contracts includes the gain (loss) on acquisition of life settlement contracts, the gain (loss) realized upon a mortality event and the change in fair value of the investments in life settlements as evaluated at the end of each reporting period. We determine fair value based upon our estimate of the discounted cash flow related to policies (net of the reserves for improvements in mortality, the possibility that the high net worth individuals represented in our portfolio may have access to better health care, the volatility inherent in determining

67

the life expectancy of insureds with significant reported health impairments, the possibility that the issuer of the policy or a third party will contest the payment of the death benefit payable to us and the future expenses related to the administration of the portfolio), which incorporates current life expectancy assumptions, premium payments, the credit exposure to the insurance company that issued the life settlement contracts and the rate of return that a buyer would require on the policies as no comparable market pricing is available. The gain (loss) realized upon a mortality event is the difference between the death benefit received and the recorded fair value of that particular policy. We allocate gain (loss) on investment in life settlement contracts to our segments based on gross written premium by segment.

Other Expense. Other expense includes those charges that are related to the amortization of tangible and intangible assets and non-insurance fee generating activities in which we engage, including salaries and benefits expenses and other charges directly attributable to non-insurance fee generating activities, such as those generated by Builders & Tradesman's Insurance Services, Inc. ("BTIS"), CNH Industrial Canada Insurance and CNH Industrial Insurance Agency Inc. (collectively, "CNH"), First Nonprofit Insurance Company ("FNIC"), RS Acquisition Holdco, LLC and it subsidiaries (collectively, "Risk Services") and Warrantech Corporation and its subsidiaries (collectively, "Warrantech").

Interest Expense. Interest expense represents amounts we incur on our outstanding indebtedness at the then-applicable interest rates.

Income Tax Expense. We incur federal income tax expense as well as income tax expense in certain foreign jurisdictions in which we operate.

Net Loss Ratio. The net loss ratio is a measure of the underwriting profitability of an insurance company’s business. Expressed as a percentage, this is the ratio of net losses and LAE incurred to net premiums earned.

Net Expense Ratio. The net expense ratio is a measure of an insurance company’s operational efficiency in administering its business. Expressed as a percentage, this is the ratio of the sum of acquisition costs and other underwriting expenses to net premiums earned. As we allocate certain acquisition costs and other underwriting expenses based on premium volume to our segments, net loss ratio on a segment basis may be impacted period over period by a shift in the mix of net written premium.

Net Combined Ratio. The net combined ratio is a measure of an insurance company’s overall underwriting profit. This is the sum of the net loss and net expense ratios. If the net combined ratio is at or above 100 percent, an insurance company cannot be profitable without investment income, and may not be profitable if investment income is insufficient.

Net Premiums Earned less Expenses Included in Combined Ratio (Underwriting Income). Underwriting income is a measure of an insurance company’s overall operating profitability before items such as investment income, interest expense and income taxes.

Return on Equity. We calculate return on equity by dividing net income by the average of stockholders’ equity.

Critical Accounting Policies

It is important to understand our accounting policies in order to understand our financial statements. These policies require us to make estimates and assumptions. Our management has discussed the development, selection and disclosure of the estimates and assumptions we use with the Audit Committee of our Board of Directors. These estimates and assumptions affect the reported amounts of our assets, liabilities, revenues and expenses and the related disclosures. Some of the estimates result from judgments that can be subjective and complex, and, consequently, actual results in future periods might differ significantly from these estimates.

Our significant accounting policies are discussed in Note 2. "Significant Accounting Policies" in the audited consolidated financial statements included elsewhere in this report. We believe that our most critical accounting policies relate to the reporting of earned premium, reserves for loss and loss adjustment expenses, including losses that have occurred but have not been reported prior to the reporting date, amounts recoverable from third party reinsurers, deferred policy acquisition costs, valuation of investments, valuation of life settlement contracts and related profit commission, business combinations, goodwill and intangible assets, and income taxes and valuation allowance, each of which is discussed below.

68

The following is a description of our critical accounting policies.

Premiums.  We recognize insurance premiums, other than in our Specialty Risk and Extended Warranty segment, as earned on the straight-line basis over the contract period. Insurance premiums on Specialty Risk and Extended Warranty business are earned based on estimated program coverage periods. We base these estimates on the expected distribution of coverage periods by contract at inception, and because a single contract may contain multiple coverage period options, we revise these estimates based on the actual coverage periods selected by the insured. Unearned premiums represent the portion of premiums written that is applicable to the unexpired term of the contract or policy in force. We base premium adjustments on contracts and audit premiums on estimates made over the contract period. Earned but unbilled premium (“EBUB”) estimates the amount of audit premium for those policies that have yet to be audited as of the date of the quarter or year end. Workers’ compensation policies are subject to audit and the final premium may increase or decrease materially from the original premium due to revisions to actual payroll and/or employee classification. Based on guidance in FASB ASC 944 as well as Statement of Statutory Accounting Principles 53, we determine EBUB using statistically supported aggregate calculations based on our historical premium audit results. We have not had a material adjustment as a result of actual premium audits materially differing from the estimates used in calculating EBUB. We also estimate an allowance for doubtful accounts based on a percentage of premium.

Reserves for Loss and Loss Adjustment Expenses and Unearned Premium Reserves.  We record reserves for estimated losses under insurance policies that we write and for loss adjustment expenses related to the investigation and settlement of policy claims. Our reserves for loss and loss adjustment expenses represent the estimated cost of all reported and unreported loss and loss adjustment expenses incurred and unpaid at any given point in time based on known facts and circumstances. In establishing our reserves, we do not use loss discounting, which would involve recognizing the time value of money and offsetting estimates of future payments by future expected investment income. Our reserves for loss and loss adjustment expenses are estimated using case-by-case valuations and statistical analysis.

We utilize a combination of our incurred loss development factors and industry-wide incurred loss development factors. Our actuaries generates a range within which it is reasonably likely that our ultimate loss and loss adjustment expenses for claims incurred in a particular time period, typically the calendar year, will fall. The low end of the range is established by assigning a weight of 100% to our ultimate losses obtained by application of our own loss development factors. The high end is established by assigning a weight of 50% each to our ultimate losses as developed through application of Company and industry wide loss development factors. The determination to assign particular weights to ultimate losses developed through application of our loss development factors and industry-wide loss development factors is made by our actuary and is a matter of actuarial judgment. In the selection of our reserves, we have given greater consideration over time to the results attributable to our own loss development factors.

We believe this method, by which we track the development of claims incurred in a particular time period, is the best method for projecting our ultimate liability. Loss development factors are dependent on a number of elements, including frequency and severity of claims, length of time to achieve ultimate settlement of claims, projected inflation of medical costs and wages (for workers’ compensation), insurance policy coverage interpretations, judicial determinations and existing laws and regulations. The predictive ability of loss development factors is dependent on consistent underwriting, claims handling, and inflation, among other factors, and predictable legislatively and judicially imposed legal requirements. If all things remain equal, losses incurred in 2015 should develop similarly to losses incurred in 2014 and prior years. Thus, if the Net Loss Ratio for premiums written in year one is 55.0%, we expect that the Net Loss Ratio for premiums written in year two also would be 55.0%. However, due to the inherent uncertainty in the loss development factors, our actual liabilities may differ significantly from our original estimates.

Notwithstanding the inherent uncertainty, we have not experienced material variability in our loss development factors. We believe that it is reasonably likely that we could experience a 5% deviation in our loss and loss adjustment expense reserves due to changes in the elements that underlie loss development, such as claims frequency or severity. For example, as of December 31, 2014, the average cost per workers’ compensation claim was $11,277, which was a 4.1% decrease over the claims severity from 2001 – 2013 of $11,763. In 2014, claims frequency (number of claims per $1.0 million of payroll) increased to 1.018 from .948, an increase of 7.4%, for the period between 2001 and 2014.

In the event of a 5% increase in claims frequency as measured by our workers compensation insureds’ payroll, which we believe is the most important assumption regarding our business, our loss reserves as of December 31, 2014 would be understated by $40 million and would result in an after tax reduction in stockholders’ equity of $26 million. In the event of a 5% increase in claim severity, which is the average incurred loss per claim, our loss and loss adjustment expense reserves would be understated by $18.1 million and would result in an after tax reduction in stockholders’ equity of $11.7 million.

69

On a monthly basis, we review our reserves to determine whether they are consistent with our actual results. In the event of a discrepancy, we would seek to determine the causes (underwriting, claims, inflation, regulatory) and would adjust our reserves accordingly. For example, if the development of our total incurred losses were 5% greater than the loss development factors would have predicted, we would adjust our reserves for the periods in question. In 2014, 2013 and 2012, our liabilities for unpaid losses and LAE attributable to prior years increased by $18.6 million, $30.9 million and $12.9 million, respectively, primarily as result of unfavorable loss development in our Small Commercial Business and Specialty Program segments as well as a portion of our European Casualty business in 2013 and in our Specialty Program segment in 2013 and 2012, due to higher actuarial estimates based on actual losses. We do not anticipate that we will make any material reserve adjustments, but will continue to monitor the accuracy of our loss development factors and adequacy of our reserves.

There is generally more uncertainty in the unearned premium reserve than in the IBNR reserve in our Specialty Risk and

Extended Warranty segment because warranty is short-duration business. Claims are generally reported immediately after they occur and are closed within months of reporting. In the Specialty Risk and Extended Warranty segment, the reserve for unearned premium is, in general, an estimate of our liability for projected future losses emanating from the unearned portion of written policies and is inherently more uncertain. Approximately 69% of polices written have policy terms exceeding one year and currently range between 13 months and 120 months. A portion of these policies are earned on a method other than evenly over the contract period. For those policies that are not earned evenly over the contract period, they are earned over the period of risk in proportion to the amount of insurance protection provided. As of December 31, 2014, we had unearned premium of approximately $749.4 million on these policies. An upward/downward movement of 5% on the entire pool of the earn out pattern for these policies would result in an increase/decrease in unearned premium of approximately $37.5 million. In 2014, we had no material changes to prior period estimates of these claim patterns. Our liability for return of unearned premium is not significant.

Additional information regarding our reserves for loss and loss adjustment expenses can be found in “Item 1A. Risk Factors” and “Item 1. Business — Loss Reserves.”

Reinsurance.  We account for reinsurance premiums, losses and LAE ceded to other companies on a basis consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. We record premiums earned and losses incurred ceded to other companies as reductions of premium revenue and losses and LAE. We account for commissions allowed by reinsurers on business ceded as ceding commission, which is a reduction of acquisition costs and other underwriting expenses. Reinsurance recoverables relate to the portion of reserves and paid losses and LAE that are ceded to other companies. We remain contingently liable for all loss payments in the event of failure to collect from the reinsurer.

Deferred Policy Acquisition Costs.  We defer commission expenses, premium taxes and assessments as well as certain underwriting and safety costs that vary with and are primarily related to the successful acquisition of insurance policies. These acquisition costs are capitalized and charged to expense ratably as premiums are earned. We may realize deferred policy acquisition costs only if the ratio of loss and loss adjustment expense reserves (calculated on a discounted basis) to the premiums to be earned is less than 100%, as it historically has been. If, hypothetically, that ratio were to be above 100%, we could not continue to record deferred policy acquisition costs as an asset and may be required to establish a liability for a premium deficiency reserve.

Fair Value of Financial Instruments. Our estimates of fair value for financial assets and financial liabilities are based on the framework established in ASC 820 Fair Value Measurements and Disclosures. The framework is based on the inputs used in valuation and gives the highest priority to quoted prices in active markets and requires that observable inputs be used in the valuations when available. The disclosure of fair value estimates in the ASC 820 hierarchy is based on whether the significant inputs into the valuation are observable. In determining the level of the hierarchy in which the estimate is disclosed, the highest priority is given to unadjusted quoted prices in active markets and the lowest priority to unobservable inputs that reflect our significant market assumptions. Additionally, valuation of fixed maturity investments is more subjective when markets are less liquid due to lack of market based inputs, which may increase the potential that the estimated fair value of an investment is not reflective of the price at which an actual transaction could occur. Fair values of other financial instruments approximate their carrying values. We report fixed maturity securities and equity securities classified as available-for-sale at their estimated fair values based on quoted market prices or a recognized pricing service, with unrealized gains and losses, net of tax effects, reported as a separate component of comprehensive income in stockholders’ equity. Equity securities classified as trading securities are stated at estimated fair market value. Gains and losses, both realized and unrealized, are included in the net realized gain or loss on investment on the consolidated statement of income. For both available-for-sale and trading securities, we determine realized gains and losses on the specific identification method.

70

For investments that have quoted market prices in active markets, we use the quoted market prices as fair value and include these prices in the amounts disclosed in the Level 1 hierarchy. We receive the quoted market prices from nationally recognized third party pricing services (“pricing service”). When quoted market prices are unavailable, we utilize a pricing service to determine an estimate of fair value. This pricing method is used, primarily, for fixed maturities. The fair value estimates provided by the pricing service are included in the Level 2 hierarchy. If we determine that the fair value estimate provided by the pricing service does not represent fair value or if quoted market prices and an estimate from pricing services are unavailable, we produce an estimate of fair value based on dealer quotations of the bid price for recent activity in positions with the same or similar characteristics to that being valued or through consensus pricing of a pricing service. Depending on the level of observable inputs, we will then determine if the estimate is Level 2 or Level 3 hierarchy.

Fixed Maturities. We utilize a pricing service to estimate fair value measurements for all of our fixed maturities. The pricing service utilizes market quotations for fixed maturity securities that have quoted market prices in active markets. Since fixed maturities other than U.S. treasury securities generally do not trade on a daily basis, the pricing service prepares estimates of fair value measurements using relevant market data, benchmark curves, sector groupings and matrix pricing. The pricing service we utilize has indicated it will produce an estimate of fair value only if there is verifiable information to produce a valuation. As the fair value estimates of most fixed maturity investments are based on observable market information rather than market quotes, the estimates of fair value other than U.S. Treasury securities are included in Level 2 of the hierarchy. U.S. Treasury securities are included in the amount disclosed in Level 1 as the estimates are based on unadjusted prices. Our Level 2 investments include obligations of U.S. government agencies, municipal bonds, corporate debt securities and other mortgage backed securities.

Equity Securities. We utilize a pricing service to estimate the fair value of the majority of our available-for-sale and trading equity securities. The pricing service utilizes market quotations for equity securities that have quoted market prices in active markets and their respective quoted prices are provided as fair value. We classify the values of these equity securities as Level 1. The pricing service also provides fair value estimates for certain equity securities whose fair value is based on observable market information rather than market quotes. We classify the value of these equity securities as Level 2. We also hold certain equity securities that are issued by privately-held entities or direct equity investments that do not have an active market. We estimate the fair value of these securities primarily based on inputs such as third party broker quote, issuers' book value, market multiples, and other inputs. These equity securities are classified as Level 3 due to significant unobservable inputs used in the valuation.

Other Investments. Other investments consisted primarily of investments in limited partnerships, an interest in a syndicated term loan, and annuities. Other investments accounted for only approximately 0.6% of our investment portfolio as of December 31, 2014. We estimate the fair value of other investments based on significant unobservable inputs in the valuation process. As a result, we classified the fair value estimates as Level 3 in the financial hierarchy. We have determined that our investments in Level 3 securities are not material to our financial position or results of operations.

Other-than-temporary-impairment (“OTTI”). Quarterly, our Investment Committee (“Committee”) evaluates each security that has an unrealized loss as of the end of the subject reporting period for “OTTI”. We generally consider an investment to be impaired when it has been in a significant unrealized loss position (in excess of 35% of cost if the issuer has a market capitalization of under $1 billion and in excess of 25% of cost if the issuer has a market capitalization of $1 billion or more) for over 24 months. In addition, the Committee uses a set of quantitative and qualitative criteria to review our investment portfolio to evaluate the necessity of recording impairment losses for other-than-temporary declines in the fair value of our investments. The criteria the Committee primarily considers include:

• 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 we 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 restructuring, regulatory changes, acquisitions and dispositions, pending litigation, distribution agreements and general industry trends.

71

Impairment of investment securities results in a charge to operations when a market decline below cost is deemed to be other-than-temporary. We write down investments immediately that we consider to be impaired based on the above criteria collectively.

Based on guidance in FASB ASC 320-10-65, in the event of the decline in fair value of a debt security, a holder of that security that does not intend to sell the debt security and for whom it is not more than likely than not that such holder will be required to sell the debt security before recovery of its amortized cost basis, is required to separate the decline in fair value into (a) the amount representing the credit loss and (b) the amount related to other factors. The amount of total decline in fair value related to the credit loss shall be recognized in earnings as an OTTI with the amount related to other factors recognized in accumulated other comprehensive loss, net of tax. OTTI credit losses result in a permanent reduction of the cost basis of the underlying investment. The determination of OTTI is a subjective process, and different judgments and assumptions could affect the timing of the loss realization. During 2014, 2013 and 2012, we recorded impairment write-downs of approximately $8.0 million, $2.9 million and $3.0 million, respectively, after determining that certain of our investments were OTTI.

Life Settlements. When we become the owner of a life insurance policy, the life insurance premium for such policy is accounted for as an investment in life settlements. Investments in life settlements are accounted for in accordance with ASC 325-30, Investments in Insurance Contracts, which states that an investor shall elect to account for its investments in life settlement contracts using either the investment method or the fair value method. The election is made on an instrument-by-instrument basis and is irrevocable. We have elected to account for these investments using the fair value method.

Life Settlement Profit Commission. We retain a third party service provider to perform certain administration functions to effectively manage the life settlement contracts held by Tiger Capital, LLC and AMT Capital Holdings II S.A. and a portion of their fee is contingent on the overall profitability of the life settlement contracts. We accrue the related profit commission on life settlements at fair value, in relation to life settlements purchased prior to December 31, 2010. This profit commission is calculated based on the discounted anticipated cash flows and the provisions of the underlying contract. In addition, we accrue a best estimate in relation to profit commission due on certain life settlement contracts acquired subsequent to December 31, 2010 as no contractual relationship currently exists.

Business Combinations. We account for business combinations under the acquisition method of accounting, which requires us to record assets acquired, liabilities assumed and any non-controlling interest in the acquiree at their respective fair values as of the acquisition date in our consolidated financial statements. We account for the insurance and reinsurance contracts under the acquisition method as new contracts, which requires us to record assets and liabilities at fair value. We adjust the fair value of loss and LAE reserves by recording the acquired loss reserves based on our existing accounting policies and then discounting them based on expected reserve payout patterns using a current risk-free rate of interest. This risk free interest rate is then adjusted based on different cash flow scenarios that use different payout and ultimate reserve assumptions deemed to be reasonably possible based upon the inherent uncertainties present in determining the amount and timing of payment of such reserves. The difference between the acquired loss and LAE reserves and our best estimate of the fair value of such reserves at the acquisition date is recorded either as an intangible asset or another liability, as applicable, and amortized proportionately to the decrease in the acquired loss and LAE reserves over the payout period for the acquired loss and LAE reserves. We record contingent consideration at fair value based on the terms of the purchase agreement with subsequent changes in fair value recorded through earnings. The determination of fair value may require management to make significant estimates and assumptions. The purchase price is the fair value of the total consideration conveyed to the seller and we record the excess of the purchase price over the fair value of the acquired net assets, where applicable, as goodwill. We assign fair values to intangible assets based on valuation techniques including the income and market approaches. We expense costs associated with the acquisition of a business in the period incurred. We include the results of operations of an acquired business in our consolidated financial statements from the date of the acquisition.

Goodwill and Intangible Assets. We account for goodwill and intangible assets in accordance with ASC 820, Business Combinations and ASC 350, Intangibles — Goodwill and Other. We record a purchase price paid that is in excess of net assets (“goodwill”) arising from a business combination as an asset, and it is not amortized. We amortize intangible assets with a finite life over the estimated useful life of the asset. We do not amortize intangible assets with an indefinite useful life. We test goodwill and intangible assets for impairment on an annual basis or more frequently if events or changes in circumstances indicate that the carrying amount may not be recoverable. If the goodwill or intangible asset is impaired, it is written down to its realizable value with a corresponding expense reflected in the consolidated statement of operations.

72

Income Taxes. We file a consolidated United States ("US") income tax return for our eligible domestic subsidiaries. Our non-domestic subdivisions file income tax returns in their respective local jurisdictions. As part of the US consolidated income tax return filing, we are party to federal income tax allocation agreements amongst the includible entities. Under the tax allocation agreements, we pay to or receive from our subsidiaries the amount, if any, by which the group’s federal income tax liability was affected by virtue of inclusion of the subsidiary in the consolidated federal return.

Deferred income taxes reflect the impact of “temporary differences” between the amount of assets and liabilities for financial reporting purposes and such amounts as measured by tax laws and regulations. The deferred tax asset primarily consists of book versus tax differences for premiums earned, loss and loss adjustment expense reserve discounting, policy acquisition costs, earned but unbilled premiums, and unrealized holding gains and losses on marketable equity securities. We record changes in deferred income tax assets and liabilities that are associated with components of other comprehensive income, primarily unrealized investment gains and losses, directly to other comprehensive income. Otherwise, we include changes in deferred income tax assets and liabilities as a component of income tax expense.

In assessing the recoverability of deferred tax assets, management considers whether it is more likely than not that we will generate future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, tax planning strategies and projected future taxable income in making this assessment. If necessary, we establish a valuation allowance to reduce the deferred tax assets to the amounts that are more likely than not to be realized.

73

Results of Operations

Consolidated Results of Operations

	Year End December 31,
	2014			2013			2012
	(Amounts in Thousands)
Gross written premium	$	6,087,965		$	4,116,911		$	2,749,326
Net written premium	$	3,956,618		$	2,565,673		$	1,648,037
Change in unearned premium	(430,054		)	(299,683		)	(229,185		)
Net earned premium	3,526,564			2,265,990			1,418,852
Service and fee income (related parties – $58,428, $51,545, and $29,041)	409,743			331,559			172,174
Net investment income	131,601			84,819			68,167
Net realized gain on investments	16,423			15,527			8,981
Total revenues	4,084,331			2,697,895			1,668,174
Loss and loss adjustment expense	2,342,619			1,517,361			922,675
Acquisition costs and other underwriting expenses (net of ceding commission - related party - $405,071, $276,556, and $196,982)	856,923			533,162			356,005
Other	436,350			291,617			177,709
Total expenses	3,635,892			2,342,140			1,456,389
Income before other income (expense), income taxes and equity in earnings of unconsolidated subsidiaries	448,439			355,755			211,785
Other income (expense):
Interest expense	(45,857		)	(34,691		)	(28,508		)
Loss on extinguishment of debt	(9,831		)	—			—
Net gain on investment in life settlement contracts net of profit commission	12,306			3,800			13,822
Foreign currency gain (loss)	60,245			(6,533		)	(242		)
Acquisition gain on purchase	—			48,715			—
Gain on sale of subsidiary	6,631			—			—
Total other income (expense)	23,494			11,291			(14,928		)
Income before income taxes and equity in earnings of unconsolidated subsidiaries	471,933			367,046			196,857
Provision for income taxes	53,686			98,019			21,292
Income before equity in earnings of unconsolidated subsidiaries	418,247			269,027			175,565
Equity in earnings of unconsolidated subsidiaries – related party	28,351			11,566			9,295
Net income	$	446,598		$	280,593		$	184,860
Non-controlling and redeemable non-controlling interest	416			1,633			(6,873		)
Net income attributable to AmTrust Financial Services, Inc.	$	447,014		$	282,226		$	177,987
Dividends on preference stock	(12,738		)	(3,989		)	—
Net income attributable to AmTrust common stockholders	$	434,276		$	278,237		$	177,987
Net realized gain on investments:
Total other-than-temporary impairment losses	$	(8,039	)	$	(2,869	)	$	(2,965	)
Portion of loss recognized in other comprehensive income	—			—			—
Net impairment losses recognized in earnings	(8,039		)	(2,869		)	(2,965		)
Other net realized gain on investments	24,462			18,396			11,946
Net realized investment gain	$	16,423		$	15,527		$	8,981

74

Consolidated Results of Operations 2014 Compared to 2013

Gross Written Premium.  Gross written premium increased $1,971.1 million, or 47.9%, to $6,088.0 million from $4,116.9 million for the years ended December 31, 2014 and 2013, respectively. The increase of $1,971.1 million was attributable to growth in all three of our segments and we grew both organically as well as from acquisitions. The increase in Small Commercial Business resulted primarily from the assumption of premium through the Cut Through Reinsurance Agreement with Tower, the acquisitions of Comp Options, FNIC, Insco Dico, and Sequoia, and increases in the number of policies issued. The largest increases came from the states of California, Florida, New Jersey and New York. The increase in Specialty Risk and Extended Warranty resulted from the acquisition of AmTrust at Lloyd's in 2013 and expansion of existing programs in the U.S. The increase in Specialty Program resulted primary from growth in existing programs.

Net Written Premium.  Net written premium increased $1,390.9 million, or 54.2%, to $3,956.6 million from $2,565.7 million for the years ended December 31, 2014 and 2013, respectively. The increase by segment was: Small Commercial Business — $947.1 million; Specialty Risk and Extended Warranty — $389.7 million; and Specialty Program — $120.0 million. The increase was partially offset by a decrease in Personal Lines Reinsurance — $65.8 million. Net written premium increased for the year ended December 31, 2014 compared to the same period in 2013 due to the increase in gross written premium in 2014 compared to 2013, and the increase in retention of gross written premium because of growth in lines of business in our Small Commercial Business segment and Specialty Risk and Extended Warranty segment that are not covered by the Maiden Quota Share. Our overall retention of gross written premium was 65.0% and 62.3% for the years ended December 31, 2014 and 2013, respectively.

Net Earned Premium.  Net earned premium increased $1,260.6 million, or 55.6%, to $3,526.6 million from $2,266.0 million for the years ended December 31, 2014 and 2013, respectively. The increase by segment was: Small Commercial Business — $773.0 million; Specialty Risk and Extended Warranty — $420.4 million; and Specialty Program — $158.2 million. The increase was partially offset by a decrease in Personal Lines Reinsurance — $91.1 million. The increase in net earned premium resulted from the increase in gross written premium in 2014 and the increase in retention of gross written premium to 65.0% in 2014 compared to 62.3% in 2013.

Service and Fee Income. Service and fee income increased $78.2 million, or 23.6%, to $409.7 million from $331.6 million for the years ended December 31, 2014 and 2013, respectively. The Specialty Risk and Extended Warranty segment increased fees by approximately $54.1 million during the year ended December 31, 2014 for the administration of commercial property and casualty insurance, and from product warranty registration and claims handling services. Additionally, we had an increase of $11.0 million in fees related to a small acquisition during the second quarter of 2014. Finally, services provided to ACP Re, Maiden and NGHC also generated higher fees of approximately $6.9 million during 2014 compared to 2013.

Net Investment Income.  Net investment income increased $46.8 million, or 55.2%, to $131.6 million from $84.8 million for the years ended December 31, 2014 and 2013, respectively. The increase resulted primarily from having a higher average portfolio of fixed security investment securities during 2014 compared to 2013, as a result of the acquisitions of AmTrust at Lloyd's, Insco Dico and Comp Options, the issuance of preferred stock and cash generated from operations, partially offset by lower overall yields.

Net Realized Gains (Losses) on Investments. We had net realized gains on investments of $16.4 million and $15.5 million for the years ended December 31, 2014 and 2013, respectively. We impaired approximately $8.0 million and $2.9 million of investments in 2014 and 2013, respectively, which reduced our overall gains. The increase in realized gains, excluding impairments, resulted primarily from having a larger portfolio of investments in 2014 compared to 2013.

Loss and Loss Adjustment Expenses; Loss Ratio. Loss and loss adjustment expenses increased $825.3 million, or 54.4%, to $2,342.6 million for the year ended December 31, 2014 from $1,517.4 million for the year ended December 31, 2013. Our loss ratio for the years ended December 31, 2014 and 2013 was 66.4% and 67.0%, respectively. The loss ratio remained stable year over year as current accident year selected ultimate losses remained consistent with selected ultimate losses from prior years in our Specialty Risk and Extended Warranty and Specialty Program segments. Current accident year selected ultimate losses were lower than selected ultimate losses from prior years in our Small Commercial Business segment. This was partially offset by premium assumed in 2014 through the Cut Through Reinsurance Agreement with Tower, which had higher ultimate loss selections than our policies in similar lines of business, and having a higher percentage of earned premium from worker's compensation policies in the state of California in 2014, for which we assign a higher ultimate loss selection than for worker's compensation policies written in other states. We did not have any material increases or decreases as a result of prior year loss development.

Acquisition Costs and Other Underwriting Expenses; Expense Ratio.  Acquisition costs and other underwriting expenses increased $323.8 million, or 60.7%, to $856.9 million for the year ended December 31, 2014 from $533.2 million for the year ended December 31, 2013. Acquisition costs and other underwriting expenses were reduced in each period by ceding commission

75

primarily earned through the Maiden Quota Share, whereby we receive a ceding commission of 31% of premiums ceded for all business except retail commercial package business, and 34.375% for retail commercial package business. The ceding commission earned during the years ended December 31, 2014 and 2013 was $405.1 million and $276.6 million, respectively. Ceding commission increased period over period as a result of increased premium writings and was reasonably consistent period over period as a percentage of ceded earned premiums. The expense ratio increased to 24.3% in 2014 from 23.5% in 2013, and was impacted primarily by higher policy acquisition expenses in 2014 in our Specialty Risk and Extended Warranty segment.

Other.  Other expenses increased $144.7 million, or 49.6%, to $436.4 million for the year ended December 31, 2014 from $291.6 million for the year ended December 31, 2013. The increase resulted primarily from the expansion of our business attributable to product warranty registration and claims handling services for CNH and AMTCS. Additionally, 2014 goodwill impairment related to our Luxembourg reinsurance companies increased by approximately $51.3 million compared to 2013.

Income Before Other Income (Expense), Income Taxes and Equity in Earnings of Unconsolidated Subsidiaries.  Income before other income (expense), income taxes and equity in earnings of unconsolidated subsidiaries increased $92.7 million, or 26.1%, to $448.4 million from $355.8 million for the years ended December 31, 2014 and 2013, respectively. The change in income from 2014 to 2013 resulted primarily from the increase in underwriting income of approximately $112 million and an increase in income from our investment portfolio of $47 million, partially offset by higher goodwill impairment in 2014.

Interest Expense.  Interest expense for the years ended December 31, 2014 and 2013 was $45.9 million and $34.7 million, respectively. The increase was primarily related to interest expense on the $250 million of 6.125% notes due 2023 issued in August of 2013 and the letter of credits outstanding under our ING Credit Agreement.

Net Gain on Investment in Life Settlement Contracts.  We recognized a gain on investment in life settlement contracts of $12.3 million for the year ended December 31, 2014 compared to a gain of $3.8 million for the year ended December 31, 2013. The increase in the gain from the life settlement contracts resulted from a higher number of maturities in 2014 than in 2013.

Acquisition Gain on Purchase. We recognized a gain on acquisition of approximately $48.7 million related to the purchases of CCPH, FNIC and Sequoia during 2013. We did not recognize any gains on acquisition during 2014.

Provision for Income Tax.  Income tax expense for the year ended December 31, 2014 was $53.7 million, which resulted in an effective tax rate of 11.4%. Income tax expense for the year ended December 31, 2013 was $98.0 million, which resulted in an effective tax rate of 26.7%. The majority of the decrease in the effective tax rate in 2014 related to a tax benefit attributable to the reduction of our deferred tax liability associated with the equalization reserves of our Luxembourg reinsurers, which was $92.4 million and $10.0 million during the years ended December 31, 2014 and 2013, respectively. The effect of this benefit decreased our effective rate by approximately 19.6% and 2.7% in 2014 and 2013, respectively.

Equity in Earnings of Unconsolidated Subsidiaries — Related Party. Equity in earnings of unconsolidated subsidiaries — related party increased by $16.8 million for the year ended December 31, 2014 to $28.4 million compared to $11.6 million for the year ended December 31, 2013. A majority of the increase resulted from an increase in earnings from our proportionate share of equity income from NGHC's results of operations. Additionally, we had equity income from NGHC of $14.7 million and $8.6 million in 2014 and 2013, respectively, related to decreases in our ownership percentages of NGHC related to their public offerings in 2014 and 2013.

Consolidated Results of Operations 2013 Compared to 2012

Gross Written Premium.  Gross written premium increased $1,367.6 million, or 49.7%, to $4,116.9 million from $2,749.3 million for the years ended December 31, 2013 and 2012, respectively. The increase of $1,367.6 million was primarily attributable to growth in our three primary segments. The increase in Small Commercial Business resulted primarily from increases in the number of policies issued as well as average policy size and the impact of the Sequoia and FNIC acquisitions. The largest increases came from the states of California, Florida, Illinois, New Jersey, New York and Pennsylvania. Additionally, in our Small Commercial Business segment, we had an increase in our assigned risk premium. The increase in Specialty Risk and Extended Warranty resulted from organic growth in Europe and domestically, the acquisition of CCPH and non-recurring insurance policies written in the second quarter of 2013. The increase in Specialty Program resulted primary from growth in existing workers' compensation programs and commercial package programs.

Net Written Premium.  Net written premium increased $917.6 million, or 55.7%, to $2,565.7 million from $1,648.0 million for the years ended December 31, 2013 and 2012, respectively. The increase by segment was: Small Commercial Business - $460.9 million; Specialty Risk and Extended Warranty - $319.5 million; and Specialty Program - $189.5 million. The increase was partially offset by a decrease in Personal Lines Reinsurance - $52.3 million. Net written premium increased for the year ended December 31,

76

2013 compared to the same period in 2012 due to the increase in gross written premium in 2013 compared to 2012, as well as higher retention of business in our Small Commercial Business segment and Specialty Risk and Extended Warranty segment that is not covered by the Maiden Quota Share. Our overall retention of gross written premium was 62.3% and 59.9% for the years ended December 31, 2013 and 2012, respectively.

Net Earned Premium.  Net earned premium increased $847.1 million, or 59.7%, to $2,266.0 million from $1,418.9 million for the years ended December 31, 2013 and 2012, respectively. The increase by segment was: Small Commercial Business - $417.2 million; Specialty Risk and Extended Warranty - $270.3 million; and Specialty Program - $171.8 million. The increase was partially offset by a decrease in Personal Lines Reinsurance - $12.2 million. The increase in net earned premium resulted from the increase in gross written premium in 2013 and the increase in retention of gross written premium to 62.3% in 2013 compared to 59.9% in 2012.

Service and Fee Income.  Service and fee income increased $159.4 million, or 92.6%, to $331.6 million from $172.2 million for the years ended December 31, 2013 and 2012, respectively. The increase primarily related to additional fee income from acquisitions, as well as organic growth. We produced additional fee income of approximately $115 million during the year ended December 31, 2013 related to the acquisitions of CCPH and AMTCS in 2013, and FNC and CNH in the second half of 2012. We also increased our warranty administration fees by approximately $13 million in 2013 compared to 2012. Additionally, we had higher technology fee income from NGHC of approximately $10 million and higher reinsurance brokerage fees from Maiden of approximately $9 million.

Net Investment Income.  Net investment income increased $16.7 million, or 24.4%, to $84.8 million from $68.2 million for the years ended December 31, 2013 and 2012, respectively. The increase resulted primarily from having a higher average portfolio of fixed security investment securities during 2013 compared to 2012, as a result of the acquisitions of CCPH, Sequoia and FNIC, and the net cash proceeds obtained through the issuance of $250 million of 6.125% notes due 2023 and $115 million of preferred stock in 2013, partially offset by lower overall yields.

Net Realized Gains (Losses) on Investments.  We had net realized gains on investments of $15.5 million and $9.0 million for the years ended December 31, 2013 and 2012, respectively. The increase in 2013 resulted from our decision to sell more positions in 2013 than in 2012 as a result of the increase in market values of our equity securities in 2013. We impaired approximately $3 million of investments in 2013 and 2012.

Loss and Loss Adjustment Expenses; Loss Ratio.  Loss and loss adjustment expenses increased $594.7 million, or 64.5%, to $1,517.4 million for the year ended December 31, 2013 from $922.7 million for the year ended December 31, 2012. Our loss ratio for the years ended December 31, 2013 and 2012 was 67.0% and 65.0%, respectively. The increase in the loss ratio in 2013 primarily impacted our Specialty Risk and Extended Warranty segment and our Small Commercial Business segment. The increases resulted from higher ultimate loss selections in our European casualty business and changes in the proportionate share of business written by segment. Additionally, in 2013, our workers' compensation business in the state of California, for which we assign a higher ultimate loss selection than for workers' compensation policies written in other states, increased to approximately 24% of total written premium in the Small Commercial Business segment compared to 17% of total written premium in 2012. We did not have any material increases or decreases as a result of prior year loss development.

Acquisition Costs and Other Underwriting Expenses; Expense Ratio.  Acquisition costs and other underwriting expenses increased $177.2 million, or 49.8%, to $533.2 million for the year ended December 31, 2013 from $356.0 million for the year ended December 31, 2012. Acquisition costs and other underwriting expenses were reduced in each period by ceding commission primarily earned through the Maiden Quota Share, whereby we receive a ceding commission of 31% of premiums ceded for all business except retail commercial package business, and 34.375% for retail commercial package business. The ceding commission earned during the years ended December 31, 2013 and 2012 was $276.6 million and $197.0 million, respectively. Ceding commission increased period over period as a result of increased premium writings and was consistent period over period as a percentage of earned premiums. The expense ratio decreased to 23.5% in 2013 from 25.1% in 2012, and was distributed across our three primary segments. The decrease in the expense ratio resulted from both a change in our business mix and economies of scale. During the year ended December 31, 2013, a higher percentage of the gross written premium was attributable to workers' compensation business in both the Small Commercial Business and Specialty Program segments, which have lower policy acquisition expenses.

Other.  Other expenses increased $113.9 million, or 64.1%, to $291.6 million for the year ended December 31, 2013 from $177.7 million for the year ended December 31, 2012. The increase resulted primarily from the inclusion of operating costs for FNC and AMTCS in 2013, as well as the inclusion of operating costs for CNH for all of 2013 compared to six months in 2012. The increase was partially offset by a decrease in goodwill impairment on our Luxembourg reinsurance companies in 2013 compared to 2012.

77

Income Before Other Income (Expense), Income Taxes and Equity in Earnings of Unconsolidated Subsidiaries.  Income before other income (expense), income taxes and equity in earnings of unconsolidated subsidiaries increased $144.0 million, or 68.0%, to $355.8 million from $211.8 million for the years ended December 31, 2013 and 2012, respectively. The change in income from 2013 from 2012 resulted primarily from the increase in underwriting income of approximately $75 million, income from our investment portfolio of $17 million and income derived from service and fee income of approximately $45 million.

Interest Expense.  Interest expense for the years ended December 31, 2013 and 2012 was $34.7 million and $28.5 million, respectively. The increase was primarily related to interest expense on the $250 million of 6.125% notes due 2023 issued in August of 2013.

Net Gain on Investment in Life Settlement Contracts.  We recognized a gain on investment in life settlement contracts of $3.8 million for the year ended December 31, 2013 compared to a gain of $13.8 million for the year ended December 31, 2012. The decrease in the gain from the life settlement contracts resulted from a lower net increase in fair value of the life settlement contracts.

Acquisition Gain on Purchase. We recognized a gain on acquisition related to the purchase of CCPH, FNIC and Sequoia during the year ended December 31, 2013 of approximately $48.7 million compared to recognizing no gain on acquisition for the year ended December 31, 2012.

Provision for Income Tax.  Income tax expense for the year ended December 31, 2013 was $98.0 million, which resulted in an effective tax rate of 26.7%. Income tax expense for the year ended December 31, 2012 was $21.3 million, which resulted in an effective tax rate of 10.8%. The increase in our effective tax rate during 2013 compared to 2012 resulted primarily from the gain recognized on the acquisitions of CCPH, Sequoia and FNIC and the recognition of non-recurring gains related to a third quarter internal reorganization of our European operations. Additionally, for the years ended December 31, 2013 and 2012, income tax expense included a tax benefit of $10.0 million and $25.6 million, respectively, attributable to the reduction of the deferred tax liability associated with the equalization reserves of our Luxembourg reinsurers. The effect of this $10.0 million and $25.6 million tax benefit reduced the effective rate by approximately 3% and 10% in 2013 and 2012, respectively.

Equity in Earnings of Unconsolidated Subsidiaries - Related Party.  Equity in earnings of unconsolidated subsidiaries - related party increased by $2.3 million for the year ended December 31, 2013 to $11.6 million compared to $9.3 million for the year ended December 31, 2012. The increase resulted primarily from a realized gain of approximately $8.6 million from a decrease in our ownership percentage of NGHC from 21.25% to 15.4% as a result of NGHC's sale of shares in a Rule 144A offering in June 2013, partially offset by a decline in earnings from our proportionate share of equity income from NGHC's results of operations.

Small Commercial Business Segment — Results of Operations

	Year End December 31,
	2014			2013			2012
	(Amounts in Thousands)
Gross written premium	$	2,999,714		$	1,659,980		$	933,740
Net written premium	$	1,882,383		$	935,313		$	474,381
Change in unearned premium	(275,578		)	(101,501		)	(57,816		)
Net earned premium	1,606,805			833,812			416,565
Loss and loss adjustment expense	(1,055,521		)	(548,598		)	(270,843		)
Acquisition costs and other underwriting expenses	(416,965		)	(212,824		)	(110,895		)
	(1,472,486		)	(761,422		)	(381,738		)
Underwriting income	$	134,319		$	72,390		$	34,827
Key Measures:
Net loss ratio	65.7		%	65.8		%	65.0		%
Net expense ratio	25.9		%	25.5		%	26.6		%
Net combined ratio	91.6		%	91.3		%	91.6		%

78

Small Commercial Business Segment Results of Operations 2014 Compared to 2013

Gross Written Premium. Gross written premium increased $1,339.7 million, or 80.7%, to $2,999.7 million for the year ended December 31, 2014 from $1,660.0 million for the year ended December 31, 2013. The majority of the increase, approximately $669 million, resulted from an increase in the number of policies issued as well as average policy size for both workers compensation policies and commercial package policies. Approximately 70% of this increase were from the states of California, Florida, New Jersey and New York. During 2014, we entered into the Cut Through Reinsurance Agreement with Tower, which resulted in our assumption of approximately $475 million of premium. Additionally, we wrote approximately $133 million of direct written premium from the renewal of Tower's commercial lines business. We also had incremental growth in gross written premium of approximately $90 million in 2014 related to the acquisitions of Comp Options, FNIC, Insco Dico and Sequoia.

Net Written Premium. Net written premium increased $947.1 million, or 101.3%, to $1,882.4 million from $935.3 million for the years ended December 31, 2014 and 2013, respectively. The increase in net premium resulted from an increase in gross written premium for the year ended December 31, 2014 compared to the year ended December 31, 2013, as well as an increase in the retention of gross written premium period over period caused by growth in lines of business that are not covered by the Maiden Quota Share. Our retention of gross written premium for the segment was 62.8% and 56.3% for the years ended December 31, 2014 and 2013, respectively.

Net Earned Premium. Net earned premium increased $773.0 million, or 92.7%, to $1,606.8 million for the year ended December 31, 2014 from $833.8 million for the year ended December 31, 2013. As premiums written earn ratably over an annual period, the increase in net premium earned resulted from higher net written premium for the year ended December 31, 2014 compared to the year ended December 31, 2013, as well as an increase in our retention of gross written premium to 62.8% in 2014 from 56.3% in 2013. Additionally, during the year ended December 31, 2014, we earned, in full, the $174 million of unearned premium we assumed from Tower during the first quarter of 2014 pursuant to the Cut Through Reinsurance Agreement with Tower.

Loss and Loss Adjustment Expenses; Loss Ratio. Loss and loss adjustment expenses increased $506.9 million, or 92.4%, to $1,055.5 million for the year ended December 31, 2014 from $548.6 million for the year ended December 31, 2013. Our loss ratio for the segment for the year ended December 31, 2014 decreased to 65.7% from 65.8% for the year ended December 31, 2013. The loss ratio remained stable year over year as current accident year selected ultimate losses were lower than selected ultimate losses from prior years. This was partially offset by premium assumed in 2014 through the Cut Through Reinsurance Agreement with Tower, which had higher ultimate loss selections than our policies in similar lines of business. Additionally, we wrote approximately 25.7% of the segment's gross written premium in the state of California in 2014 compared to 23.8% in 2013. We assign a higher ultimate loss selection to policies written in the state of California than for workers' compensation policies written in other states. We did not have any material increases or decreases as a result of prior year loss development.

Acquisition Costs and Other Underwriting Expenses; Expense Ratio.  Acquisition costs and other underwriting expenses increased $204.1 million, or 95.9%, to $417.0 million for the year ended December 31, 2014 from $212.8 million for the year ended December 31, 2013. Acquisition costs and other underwriting expenses were reduced by ceding commission earned during the years ended December 31, 2014 and 2013 of $197.7 million and $117.1 million, respectively. The ceding commission increased period over period as a result of an increase in net earned premium, as the segment received a larger allocation of ceding commission for its proportionate share of our overall policy acquisition expense. The expense ratio increased to 25.9% for the year ended December 31, 2014 compared to 25.5% for the year ended December 31, 2013. The slight increase in expense ratio period over period was attributable to higher policy acquisition costs in 2014 from changes in business mix, which resulted from the assumption of business through the Cut Through Reinsurance Agreement, and an increase in commercial package and excess and surplus lines business, which have higher policy acquisition costs than other business we write.

Net Earned Premium Less Expenses Included in Combined Ratio (Underwriting Income).  Net earned premium less expenses included in combined ratio increased to $134.3 million for the year ended December 31, 2014 compared to $72.4 million for the year ended December 31, 2013. The increase resulted primarily from an increase in the level of earned premium during the year ended December 31, 2014 compared to 2013, partially offset by higher loss and loss adjustment expenses during the year ended December 31, 2014 as compared to the year ended December 31, 2013.

79

Small Commercial Business Segment Results of Operations 2013 Compared to 2012

Gross Written Premium.  Gross written premium increased $726.2 million, or 77.8%, to $1,660.0 million for the year ended December 31, 2013 from $933.7 million for the year ended December 31, 2012. The increase resulted primarily from the increase in the number of policies issued as well as average policy size. The majority of the increase, which was approximately $506 million, related to workers' compensation policies. The increase came primarily from the states of California, Florida, Illinois, New Jersey, New York and Pennsylvania. The segment also benefited in 2013 from the acquisition of Sequoia and FNIC, which added approximately $110 million of total gross written premium. Additionally, we had an increase in our assigned risk premium of approximately $56 million.

Net Written Premium.  Net written premium increased $460.9 million, or 97.2%, to $935.3 million from $474.4 million for the years ended December 31, 2013 and 2012, respectively. The increase in net premium resulted from an increase in gross written premium for the year ended December 31, 2013 compared to the year ended December 31, 2012, as well as an increase in the retention rate of gross written premium period over period. Our retention of gross written premium for the segment was 56.3% and 50.8% for the years ended December 31, 2013 and 2012, respectively. This was partially offset by an increase in our assigned risk business in 2013, for which we cede 100 percent of our gross written business.

Net Earned Premium.  Net earned premium increased $417.2 million, or 100.2%, to $833.8 million for the year ended December 31, 2013 from $416.6 million for the year ended December 31, 2012. As premiums written earn ratably over an annual period, the increase in net premium earned resulted from higher net written premium for the year ended December 31, 2013 compared to the year ended December 31, 2012, as well as an increase in the retention of gross written premium to 56.3% in 2013 from 50.8% in 2012.

Loss and Loss Adjustment Expenses; Loss Ratio.  Loss and loss adjustment expenses increased $277.8 million, or 102.6%, to $548.6 million for the year ended December 31, 2013 from $270.8 million for the year ended December 31, 2012. Our loss ratio for the segment for the year ended December 31, 2013 increased to 65.8% from 65.0% for the year ended December 31, 2012. The increase in the loss ratio in the year ended December 31, 2013 resulted primarily from higher current accident year selected ultimate losses as compared to selected ultimate losses in prior accident years.The higher current accident year selected ultimate losses resulted primarily from writing approximately 23.8% of gross written premium in the state of California in 2013 compared to approximately 17.3% in 2012, consisting primarily of workers' compensation business. We believe the ultimate loss ratio on California policies, on average, is higher than other states in which we conduct business. The increase in the loss ratio was not the result of adverse reserve development. We did not have any material increases or decreases as a result of prior year loss development.

Acquisition Costs and Other Underwriting Expenses; Expense Ratio.  Acquisition costs and other underwriting expenses increased $101.9 million, or 91.9%, to $212.8 million for the year ended December 31, 2013 from $110.9 million for the year ended December 31, 2012. The expense ratio decreased to 25.5% for the year ended December 31, 2013 compared to 26.6% for the year ended December 31, 2012. The decrease in the expense ratio resulted both from a change in our business mix and economies of scale. During the year ended December 31, 2013, a higher percentage of the gross written premium increase was attributable to workers' compensation business, which has lower policy acquisition expenses. Additionally, salary expense increased at a slower rate than earned premium due to the leveraging of our existing employee base. Acquisition costs and other underwriting expenses were reduced by ceding commission earned during the years ended December 31, 2013 and 2012 of $117.1 million and $69.9 million, respectively. The ceding commission increased period over period as a result of an increase in net earned premium, as the segment received its allocation of ceding commission for its proportionate share of our overall policy acquisition expense.

Net Earned Premium Less Expenses Included in Combined Ratio (Underwriting Income).  Net earned premium less expenses included in combined ratio increased to $72.4 million for the year ended December 31, 2013 compared to $34.8 million for the year ended December 31, 2012. This increase resulted primarily from an increase in the level of earned premium during the year ended December 31, 2013 compared to 2012, partially offset by higher loss and loss adjustment expenses during the year ended December 31, 2013 as compared to the year ended December 31, 2012.

80

Specialty Risk and Extended Warranty Segment — Results of Operations

	Year End December 31,
	2014			2013			2012
	(Amounts in Thousands)
Gross written premium	$	1,983,052		$	1,511,649		$	1,118,710
Net written premium	$	1,333,747		$	944,081		$	624,555
Change in unearned premium	(101,509		)	(132,244		)	(82,982		)
Net earned premium	1,232,238			811,837			541,573
Loss and loss adjustment expense	(817,780		)	(545,516		)	(341,196		)
Acquisition costs and other underwriting expenses	(253,794		)	(151,188		)	(112,491		)
	(1,071,574		)	(696,704		)	(453,687		)
Underwriting income	$	160,664		$	115,133		$	87,886
Key measures:
Net loss ratio	66.4		%	67.2		%	63.0		%
Net expense ratio	20.6		%	18.6		%	20.8		%
Net combined ratio	87.0		%	85.8		%	83.8		%

Specialty Risk and Extended Warranty Segment Results of Operations 2014 Compared to 2013

Gross Written Premium.  Gross written premium increased $471.4 million, or 31.2%, to $1,983.1 million for the year ended December 31, 2014 from $1,511.6 million for the year ended December 31, 2013. The majority of the increase, approximately $323 million, related to the acquisition of AmTrust at Lloyd's in 2013. Additionally, the segment experienced growth in our existing business in both the U.S. and in Europe. We also benefited from an increase in the British Pound Sterling's average exchange rate in 2014 compared to 2013, which represented approximately 7% of the increase in gross written premium.

Net Written Premium.  Net written premium increased $389.7 million, or 41.3%, to $1,333.7 million from $944.1 million for the years ended December 31, 2014 and 2013, respectively. The increase in net written premium resulted from an increase of gross written premium for the year ended December 31, 2014 compared to the year ended December 31, 2013, as well as a higher retention of business during 2014 compared to 2013. Our overall retention of gross written premium for the segment was 67.3% and 62.5% for the years ended December 31, 2014 and 2013, respectively, as certain new programs written during the year ended December 31, 2014 are not covered by the Maiden Quota Share.

Net Earned Premium.  Net earned premium increased $420.4 million, or 51.8%, to $1,232.2 million for the year ended December 31, 2014 from $811.8 million for the year ended December 31, 2013. As premiums written earn ratably over the term of a policy, the increase in net premium earned resulted from growth in net written premium in 2014 and 2013. The increase related to the assumption of approximately $222 million of unearned premium from the acquisition of AmTrust at Lloyd's in 2013, which consisted primarily of specialty property and casualty business and earned at a faster rate than warranty business in this segment.

Loss and Loss Adjustment Expenses; Loss Ratio.  Loss and loss adjustment expense increased $272.3 million, or 49.9%, to $817.8 million for the year ended December 31, 2014 from $545.5 million for the year ended December 31, 2013. Our loss ratio for the segment for the year ended December 31, 2014 decreased to 66.4% from 67.2% for the year ended December 31, 2013. The decrease in the loss ratio for the year ended December 31, 2014 resulted primarily from lower ultimate loss selections in our European casualty business and U.S. business in the year ended December 31, 2014 compared to 2013. We did not have any material increases or decreases as a result of prior year loss development.

Acquisition Costs and Other Underwriting Expenses; Expense Ratio. Acquisition costs and other underwriting expenses increased $102.7 million, or 67.9%, to $253.8 million for the year ended December 31, 2014 from $151.2 million for the years ended December 31, 2013. Acquisition costs and other underwriting expenses were reduced by ceding commission earned during the year ended December 31, 2014 and 2013 of $120.3 million and $83.2 million, respectively. Although ceding commission increased period over period, the segment received a smaller allocation of ceding commission for its proportionate share of our

81

overall policy acquisition expense as a result of the growth in our Small Commercial Business segment. As a result, our expense ratio increased to 20.6% for the year ended December 31, 2014 compared to 18.6% for the year ended December 31, 2013. Additionally, the increase in the expense ratio in 2014 related to higher policy acquisition costs incurred by AmTrust at Lloyd's, which was acquired at the end of 2013.

Net Earned Premium Less Expenses Included in Combined Ratio (Underwriting Income).  Net earned premium less expenses included in combined ratio increased to $160.7 million for the year ended December 31, 2014 compared to $115.1 million for the year ended December 31, 2013. This increase resulted primarily from an increase in the level of earned premium during the year ended December 31, 2014 compared to 2013, partially offset by a higher expense ratio during the year ended December 31, 2014 as compared to the year ended December 31, 2013.

Specialty Risk and Extended Warranty Segment Results of Operations 2013 Compared to 2012

Gross Written Premium.  Gross written premium increased $392.9 million, or 35.1%, to $1,511.6 million for the year ended December 31, 2013 from $1,118.7 million for the year ended December 31, 2012. This segment experienced growth both in Europe and the United States. The growth in Europe was driven primarily by the acquisition of CCPH, which had premium writings of approximately $99 million, a non-recurring insurance policy totaling approximately $78 million and a new program written by a European subsidiary of approximately $47 million. The growth in the United States resulted from the underwriting of new programs, including programs related to our acquisition of CNH in July 2012 and AMTCS in 2013.

Net Written Premium.  Net written premium increased $319.5 million, or 51.2%, to $944.1 million from $624.6 million for the years ended December 31, 2013 and 2012, respectively. The increase in net written premium resulted from an increase of gross written premium for the year ended December 31, 2013 compared to the year ended December 31, 2012, as well as a higher retention of business during 2013 compared to 2012. Our overall retention of the gross written premium for the segment was 62.5% and 55.8% for the years ended December 31, 2013 and 2012, respectively, as certain new programs written during the year ended December 31, 2013 are not covered by the Maiden Quota Share.

Net Earned Premium.  Net earned premium increased $270.3 million, or 49.9%, to $811.8 million for the year ended December 31, 2013 from $541.6 million for the year ended December 31, 2012. As premiums written earn ratably over the term of a policy, the increase in net premium earned resulted from growth in net written premium in 2013 and 2012.

Loss and Loss Adjustment Expenses; Loss Ratio.  Loss and loss adjustment expense increased $204.3 million, or 59.9%, to $545.5 million for the year ended December 31, 2013 from $341.2 million for the year ended December 31, 2012. Our loss ratio for the segment for the year ended December 31, 2013 increased to 67.2% from 63.0% for the year ended December 31, 2012. The increase in the loss ratio for the year ended December 31, 2013 resulted primarily from higher ultimate loss selections in our European casualty business in the year ended December 31, 2013 compared to 2012. We did not have any material increases or decreases as a result of prior year loss development.

Acquisition Costs and Other Underwriting Expenses; Expense Ratio. Acquisition costs and other underwriting expenses increased $38.8 million, or 34.5%, to $151.2 million for the year ended December 31, 2013 from $112.5 million for the year ended December 31, 2012. The expense ratio decreased to 18.6% for the year ended December 31, 2013 compared to 20.8% for the year ended December 31, 2012. The decrease resulted from a decline in writing of legal expense policies, which have a higher commission structure, coupled with premium expansion in businesses that have lower direct acquisition costs. Acquisition costs and other underwriting expenses were reduced by ceding commission earned during the years ended December 31, 2013 and 2012 of $83.2 million and $65.1 million, respectively. The ceding commission increased period over period as a result of an increase in net earned premium, as the segment received its allocation of ceding commission for its proportionate share of our overall policy acquisition expense.

Net Earned Premium Less Expenses Included in Combined Ratio (Underwriting Income).  Net earned premium less expenses included in combined ratio increased to $115.1 million for the year ended December 31, 2013 compared to $87.9 million for the year ended December 31, 2012. This increase resulted primarily from an increase in the level of earned premium during the year ended December 31, 2013 compared to 2012, partially offset by higher loss and loss adjustment expenses during the year ended December 31, 2013 as compared to the year ended December 31, 2012.

82

Specialty Program Segment — Results of Operations

	Year End December 31,
	2014			2013			2012
	(Amounts in Thousands)
Gross written premium	$	1,105,199		$	879,455		$	578,735
Net written premium	$	740,488		$	620,452		$	430,960
Change in unearned premium	(61,876		)	(100,081		)	(82,392		)
Net earned premium	678,612			520,371			348,568
Loss and loss adjustment expense	(456,422		)	(355,067		)	(238,302		)
Acquisition costs and other underwriting expenses	(183,541		)	(138,650		)	(98,415		)
	(639,963		)	(493,717		)	(336,717		)
Underwriting income	$	38,649		$	26,654		$	11,851
Key measures:
Net loss ratio	67.3		%	68.2		%	68.4		%
Net expense ratio	27.0		%	26.6		%	28.2		%
Net combined ratio	94.3		%	94.9		%	96.6		%

Specialty Program Segment Results of Operations 2014 Compared to 2013

Gross Written Premium. Gross written premium increased $225.7 million, or 25.7%, to $1,105.2 million for the year ended December 31, 2014 from $879.5 million for the year ended December 31, 2013. The segment benefited primarily from the growth in existing programs, primarily in general liability and workers' compensation programs. Additionally, the segment had an increase of approximately 10% in gross written premium related to new programs.

Net Written Premium. Net written premium increased $120.0 million, or 19.3%, to $740.5 million for the year ended December 31, 2014 from $620.5 million for the year ended December 31, 2013. The increase in net written premium resulted from an increase of gross written premium for the year ended December 31, 2014 compared to the year ended December 31, 2013, partially offset by a lower retention of gross written premium during 2014 compared to 2013. Our overall retention of gross written premium for the segment was 67.0% and 70.5% for the years ended December 31, 2014 and 2013, respectively. The decrease in the retention of gross written premium in 2014 related to an increase in business covered under the Maiden Quota Share.

Net Earned Premium.  Net earned premium increased $158.2 million, or 30.4%, to $678.6 million for the year ended December 31, 2014 from $520.4 million for the year ended December 31, 2013. As premiums written earn ratably over an annual period, the increase in net premium earned resulted from higher net written premium for 2014 compared to 2013. Additionally, increase in net earned premium was positively impacted in 2014 from the segment having 81% of its total net written premium for the year generated during the first nine months of 2014 compared to 77% in 2013.

Loss and Loss Adjustment Expenses; Loss Ratio.  Loss and loss adjustment expenses increased $101.4 million, or 28.6%, to $456.4 million for the year ended December 31, 2014 compared to $355.1 million for the year ended December 31, 2013. Our loss ratio for the segment for the year ended December 31, 2014 decreased to 67.3% from 68.2% for the year ended December 31, 2013. The decrease in the loss ratio for the year ended December 31, 2014 resulted primarily from a change in business mix. During the year ended December 31, 2014, we wrote a higher percentage of workers' compensation policies, which have lower ultimate loss selections than other types of policies issued in this segment. We did not have any material increases or decreases as a result of prior year loss development.

Acquisition Costs and Other Underwriting Expenses; Expense Ratio. Acquisition costs and other underwriting expenses increased $44.9 million, or 32.4%, to $183.5 million for the year ended December 31, 2014 from $138.7 million for the year ended December 31, 2013. Acquisition costs and other underwriting expenses were reduced by ceding commission earned during the years ended December 31, 2014 and 2013 by $87.1 million and $76.3 million, respectively. Although ceding commission increased period over period, the segment received a smaller allocation of ceding commission for its proportionate share of our overall policy acquisition expense. The expense ratio increased to 27.0% for the year ended December 31, 2014 from 26.6% for the year ended

83

December 31, 2013. The increase related primarily to receiving a smaller allocation of ceding commission in 2014 compared to 2013.

Net Earned Premium Less Expenses Included in Combined Ratio (Underwriting Income).  Net earned premium less expenses included in combined ratio were $38.6 million and $26.7 million for the years ended December 31, 2014 and 2013, respectively. The increase of $12.0 million resulted primarily from an increase in earned premium and by a reduction in the combined ratio in 2014 compared to 2013.

Specialty Program Segment Results of Operations 2013 Compared to 2012

Gross Written Premium.  Gross written premium increased $300.7 million, or 52.0%, to $879.5 million for the year ended December 31, 2013 from $578.7 million for the year ended December 31, 2012. The segment benefited from growth in new programs and existing programs, including both workers' compensation and commercial package policy programs. Increases in written premium on existing programs accounted for approximately 60% of the total growth, while new programs accounted for approximately 27% of the total increase in gross written premium for the year ended December 31, 2013.

Net Written Premium.  Net written premium increased $189.5 million, or 44.0%, to $620.5 million for the year ended December 31, 2013 from $431.0 million for the year ended December 31, 2012. The increase in net written premium resulted from an increase of gross written premium for the year ended December 31, 2013 compared to the year ended December 31, 2012, partially offset by a lower retention of gross written premium during 2013 compared to 2012. Our overall retention of gross written premium for the segment was 70.5% and 74.5% for the years ended December 31, 2013 and 2012, respectively.

Net Earned Premium.  Net earned premium increased $171.8 million, or 49.3%, to $520.4 million for the year ended December 31, 2013 from $348.6 million for the year ended December 31, 2012. As premiums written earn ratably over an annual period, the increase in net premium earned resulted from higher net written premium for 2013 compared to 2012.

Loss and Loss Adjustment Expenses; Loss Ratio.  Loss and loss adjustment expenses increased $116.8 million, or 49.0%, to $355.1 million for the year ended December 31, 2013 compared to $238.3 million for the year ended December 31, 2012. Our loss ratio for the segment for the year ended December 31, 2013 decreased to 68.2% from 68.4% for the year ended December 31, 2012. The loss ratio for 2013 and 2012 were consistent as current accident year selected ultimate losses were consistent with selected ultimate losses from prior years. We did not have any material increases or decreases as a result of prior year loss development.

Acquisition Costs and Other Underwriting Expenses; Expense Ratio. Acquisition costs and other underwriting expenses increased $40.2 million, or 40.8%, to $138.7 million for the year ended December 31, 2013 from $98.4 million for the year ended December 31, 2012. The expense ratio decreased to 26.6% for the year ended December 31, 2013 from 28.2% for the year ended December 31, 2012. The decrease in the expense ratio resulted both from a change in business mix and economies of scale. During the year ended December 31, 2013, a higher percentage of gross written premium was attributable to workers' compensation business, which has lower policy acquisition expenses than other types of business written in this segment. Acquisition costs and other underwriting expenses were reduced by ceding commission earned during the years ended December 31, 2013 and 2012 of $76.3 million and $62.0 million, respectively. The ceding commission increased period over period as a result of an increase in net earned premium, as the segment received its allocation of ceding commission for its proportionate share of our overall policy acquisition expense.

Net Earned Premium Less Expenses Included in Combined Ratio (Underwriting Income).  Net earned premium less expenses included in combined ratio were $26.7 million and $11.9 million for the years ended December 31, 2013 and 2012, respectively. The increase of $14.8 million resulted primarily from an increase in earned premium and by a reduction in the expense ratio in 2013 compared to 2012.

84

Personal Lines Reinsurance - Run Off  — Results of Operations

	Year End December 31,
	2014			2013			2012
	(Amounts in Thousands)
Gross written premium	$	—		$	65,827		$	118,141
Net written premium	—			65,827			118,141
Change in unearned premium	8,909			34,143			(5,995		)
Net earned premium	8,909			99,970			112,146
Loss and loss adjustment expense	(12,896		)	(68,180		)	(72,334		)
Acquisition costs and other underwriting expenses	(2,623		)	(30,500		)	(34,204		)
	(15,519		)	(98,680		)	(106,538		)
Underwriting income	$	(6,610	)	$	1,290		$	5,608
Key measures:
Net loss ratio	144.8		%	68.2		%	64.5		%
Net expense ratio	29.4		%	30.5		%	30.5		%
Net combined ratio	174.2		%	98.7		%	95.0		%

Personal Lines Reinsurance - Run Off Segment Results of Operations 2014 Compared to 2013

On August 1, 2013, we received a termination notice from Integon National Insurance Company related to our participation in the Personal Lines Quota Share effective August 1, 2013. The termination was on a run-off basis, meaning we are involved with the continuing cash flows associated with this business with respect to policies in force as of July 31, 2013. As such, the Personal Lines Reinsurance segment, which contains the results of operations from the Personal Lines Quota Share, is not presented as a discontinued operation in accordance with ASC 205-20 Discontinued Operations. The overall results of the Personal Lines Reinsurance segment were immaterial for the years ended 2014 and 2013, respectively.

Personal Lines Reinsurance - Run Off Segment Results of Operations 2013 Compared to 2012

We assumed $65.8 million and $118.1 million of premium from the insurance companies of NGHC for the years ended December 31, 2013 and 2012, respectively. The assumption of premium was flat between 2013 and 2012, as increases in assumed premium during the first seven months in 2013 were offset by the termination of the Personal Lines Quota Share in August 2013. Net earned premium decreased 10.9% in 2013 compared to 2012 due to termination of the quota share arrangement. Loss and loss adjustment expense increased 5.8% in 2013 compared to 2012, which resulted in a higher loss ratio. The increase in the net loss ratio in 2013 from 2012 resulted from experiencing higher ultimate losses in 2013 compared to 2012. The net expense ratio in 2013 compared to 2012 was consistent year over year.

Investment Portfolio

The first priority of our investment strategy is preservation of capital, with a secondary focus on maximizing an appropriate risk adjusted return. We expect to maintain sufficient liquidity from funds generated from operations to meet our anticipated insurance obligations and operating and capital expenditure needs, including debt service and additional payments in connection with our past producer network and renewal rights acquisitions. The excess funds will be invested in accordance with both the overall corporate investment guidelines as well as an individual subsidiary’s investment guidelines. Our investment guidelines are designed to maximize investment returns through a prudent distribution of cash and cash equivalents, fixed maturities and equity positions. Cash and cash equivalents include cash on deposit, commercial paper, pooled short-term money market funds and certificates of deposit with an original maturity of 90 days or less. Our fixed maturity securities include obligations of the U.S. Treasury or U.S. government agencies, obligations of local governments, obligations of foreign governments, obligations of U.S. and Canadian corporations, mortgages guaranteed by the Federal National Mortgage Association, the Government National

85

Mortgage Association, the Federal Home Loan Mortgage Corporation, Federal Farm Credit entities, and asset-backed securities and commercial mortgage obligations. Our equity securities include common stocks of U.S. and Canadian corporations.

Our investment portfolio, which consists of cash, cash equivalents, restricted cash and cash equivalents, fixed maturity securities, equity securities, and short-term investments, but excludes life settlement contracts, other investments, and equity investments, increased $1.0 billion, or 23.3%, to $5.5 billion at December 31, 2014 from $4.5 billion as of December 31, 2013. Our investment portfolio is classified as available-for-sale, as defined by ASC 320, Investments — Debt and Equity Securities. This increase in our investment portfolio during the year ended December 31, 2014 related, primarily, to the acquisitions of Insco Dico and Comp Options, the issuance of preferred stock and the utilization of cash from higher gross written premium. Our fixed maturity securities, gross, had a fair value of $4.3 billion and an amortized cost of $4.1 billion as of December 31, 2014. Our equity securities, including equity securities classified as trading securities, are reported at fair value and totaled $107.8 million with a cost of $109.5 million as of December 31, 2014. Securities sold but not yet purchased represent our obligations to deliver the specified security at the contracted price and thereby create a liability to purchase the security in the market at prevailing rates. We account for sales of securities under repurchase agreements as collateralized borrowing transactions and we record these sales at their contracted amounts.

Our investment portfolio exclusive of our life settlement contracts and other investments is summarized in the table below by type of investment:

	December 31, 2014				December 31, 2013
	Carrying Value		Percentage of Portfolio		Carrying Value		Percentage of Portfolio
	(Amounts in Thousands)
Cash, cash equivalents and restricted cash	$	1,088,975	19.7	%	$	930,461	20.8	%
Time and short-term deposits	63,916		1.2		114,202		2.6
U.S. treasury securities	43,870		0.8		159,260		3.6
U.S. government agencies	13,538		0.2		10,489		0.2
Municipals	482,041		8.7		446,183		10.0
Foreign government	112,731		2.0		160,105		3.6
Commercial mortgage back securities	38,685		0.7		28,566		0.6
Residential mortgage back securities:
Agency backed	975,782		17.7		685,740		15.3
Non-agency backed	22,503		0.4		6,749		0.2
Asset-backed securities	710		—		6,120		0.1
Corporate bonds	2,563,414		46.6		1,909,242		42.7
Preferred stocks	3,506		0.1		1,506		—
Common stocks	104,287		1.9		13,642		0.3
	$	5,513,958	100.0	%	$	4,472,265	100.0	%
Less: Securities pledged	—				311,518
	$	5,513,958			$	4,160,747

86

The table below summarizes the credit quality of our fixed maturity securities as of December 31, 2014 and 2013, as rated by Standard and Poor’s.

	December 31, 2014		December 31, 2013
U.S. Treasury	1.0	%	4.7	%
AAA	6.7		11.6
AA	39.0		34.8
A	27.9		23.8
BBB, BBB+, BBB-	23.4		23.3
BB, BB+, BB-	1.6		1.5
B, B+, B-	0.1		0.2
Other	0.3		0.1
Total	100.0	%	100.0	%

The table below summarizes the average duration by type of fixed maturity as well as detailing the average yield as of December 31, 2014 and 2013:

	December 31, 2014		December 31, 2013
	Average Yield%	Average Duration in Years	Average Yield%	Average Duration in Years
U.S. treasury securities	1.95	3.9	1.80	4.0
U.S. government agencies	2.80	4.5	3.16	2.0
Foreign government	2.30	5.8	1.91	4.0
Corporate bonds	3.09	5.3	3.36	5.3
Municipals	3.48	5.3	3.72	7.3
Mortgage and asset backed	3.24	4.1	3.41	5.1

As of December 31, 2014, the weighted average duration of our fixed income securities was 5.0 years and had a yield of 3.1%.

Other investments represented approximately 0.6% of our total investment portfolio as of December 31, 2014 and 2013. At December 31, 2014, other investments consisted primarily of limited partnerships totaling $16.1 million, an interest in a syndicated term loan of $13.0 million, and an annuity of $2.0 million. At December 31, 2013, other investments consisted primarily of limited partnerships or hedge funds totaling $13.7 million, a mutual fund of $6.6 million, an interest in a biopharmaceutical company of $4.2 million and an annuity of $1.3 million.

Quarterly, our Investment Committee (“Committee”) evaluates each security that has an unrealized loss as of the end of the subject reporting period for OTTI. We generally consider an investment to be impaired when it has been in a significant unrealized loss position (in excess of 35% of cost if the issuer has a market capitalization of under $1 billion and in excess of 25% of cost if the issuer has a market capitalization of $1 billion or more) for over 24 months. In addition, the Committee uses a set of quantitative and qualitative criteria to review our investment portfolio to evaluate the necessity of recording impairment losses for other-than-temporary declines in the fair value of our investments. The criteria the Committee primarily considers include:

• 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

87

• other items, including company management, media exposure, sponsors, marketing and advertising agreements, debt restructuring, regulatory changes, acquisitions and dispositions, pending litigation, distribution agreements and general industry trends.

Impairment of investment securities results in a charge to operations when a market decline below cost is deemed to be other-than-temporary. We write down investments immediately that we consider to be impaired based on the above criteria collectively.

The impairment charges of our fixed-maturities and equity securities for the years ended December 31, 2014, 2013 and 2012 are presented in the table below:

	2014		2013		2012
	(Amounts in Thousands)
Equity securities	$	2,646	$	2,869	$	2,965
Fixed maturity securities	5,393		—		—
	$	8,039	$	2,869	$	2,965

Additionally, we had gross unrealized losses of $34.5 million related to fixed maturity securities and $7.9 million related to marketable equity securities as of December 31, 2014, none of which we deem to be OTTI.

Corporate bonds represent 60.3% of the fair value of our fixed maturities and 88.2% of the total unrealized losses of our fixed maturities. We own 1,439 corporate bonds in the industrial, bank and financial and other sectors, which have a fair value of approximately 28.8%, 28.3% and 3.2%, respectively, and 15.9%, 67.4% and 4.9% of total unrealized losses, respectively, of our fixed maturities as of December 31, 2014. We believe that the unrealized losses in these securities are the result, primarily, of general economic conditions and not the condition of the issuers, which we believe are solvent and have the ability to meet their obligations. Therefore, we expect that the market price for these securities should recover within a reasonable time. Additionally, we do not intend to sell the investments and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost basis.

Our investment in marketable equity securities consist of investments in preferred and common stock across a wide range of sectors. We evaluated the near-term prospects for recovery of fair value in relation to the severity and duration of the impairment and have determined in each case that the probability of recovery is reasonable and we have the ability and intent to hold these investments until a recovery of fair value. We believe the gross unrealized losses of $7.9 million as of December 31, 2014 are not material to our financial position.

88

The table below summarizes the gross unrealized losses of our available-for-sale fixed maturity and available-for-sale equity securities by length of time the security has continuously been in an unrealized loss position as of December 31, 2014:

	Less than 12 Months						12 Months or More						Total
	Fair Market Value		Unrealized Losses			No. of Positions Held	Fair Market Value		Unrealized Losses			No. of Positions Held	Fair Market Value		Unrealized Losses
	(Amounts in Thousands)
Common and preferred stock	$	38,970	$	(7,764	)	21	$	400	$	(98	)	2	$	39,370	$	(7,862	)
U.S. treasury securities	1,030		(54		)	7	3,219		(50		)	9	4,249		(104		)
U.S. government securities	1,736		(3		)	3	222		(2		)	4	1,958		(5		)
Municipal bonds	24,695		(240		)	64	93,201		(1,315		)	98	117,896		(1,555		)
Foreign government	7,644		(83		)	4	—		—			—	7,644		(83		)
Corporate bonds:
Finance	192,520		(4,297		)	143	66,715		(1,174		)	27	259,235		(5,471		)
Industrial	236,845		(17,230		)	194	60,511		(6,045		)	43	297,356		(23,275		)
Utilities	12,188		(490		)	22	13,908		(1,187		)	3	26,096		(1,677		)
Commercial mortgage backed securities	15		—			2	4,729		(169		)	8	4,744		(169		)
Residential mortgage backed securities:
Agency backed	41,187		(101		)	10	66,172		(1,777		)	29	107,359		(1,878		)
Non-agency backed	5,092		(263		)	3	28		(1		)	2	5,120		(264		)
Asset-backed securities	148		—			1	110		(1		)	2	258		(1		)
Total temporarily impaired	$	562,070	$	(30,525	)	474	$	309,215	$	(11,819	)	227	$	871,285	$	(42,344	)

There are 701 securities at December 31, 2014 that account for the gross unrealized loss, none of which we deem to be OTTI. Significant factors influencing our 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 we will be required to sell these investments before anticipated recovery of fair value to our cost basis.

For further information on our investments and related performance, see Note 3. “Investments” in the audited consolidated financial statements included elsewhere in this report.

Liquidity and Capital Resources

We are organized as a holding company with fifteen domestic and four international insurance company subsidiaries, as well as various other non-insurance subsidiaries. Our primary liquidity needs include payment of interest on various debt facilities, stockholder dividends and taxes. Our income is generated primarily from our insurance subsidiaries, service and fee income and investment income.

We may generate liquidity through a combination of debt or equity securities issuances, as well as financing through borrowing and sales of securities. During 2014, we issued $185 million of preferred stock and completed a convertible debt exchange and issuance, which resulted in cash proceeds of approximately $68 million. Additionally, we amended our existing revolving credit facility to increase our borrowing capacity from $200 million to $350 million, and we amended our £200 million funds at Lloyd's credit facility to increase our borrowing capacity to £235 million. In 2013, we issued $250 million of our 6.125% notes due 2023, $115 million of preferred stock and entered into a £200 million credit facility to support our Lloyd's underwriting capacity.

Our principal sources of operating funds are premiums, service and fee income, investment income and proceeds from sales and maturities of investments. Our primary uses of operating funds include payments of claims and operating expenses. Currently, we pay claims using cash flow from operations and invest our excess cash primarily in fixed maturity and equity securities. We expect that projected cash flow from operations will provide us sufficient liquidity to fund our anticipated growth, by providing capital to increase the surplus of our insurance subsidiaries, as well as for payment of claims and operating expenses, payment of interest and principal on debt facilities and other holding company expenses for at least the next twelve months. However, if our

89

growth attributable to potential acquisitions, internally generated growth or a combination of these, exceeds our projections, we may have to raise additional capital sooner to support our growth. If we cannot obtain adequate capital on favorable terms or at all, we may be unable to support future growth or operating requirements and, as a result, our business, financial condition and results of operations could be adversely affected.

The laws of the jurisdictions in which our insurance subsidiaries are organized regulate and restrict, under certain circumstances, their ability to pay dividends to us. As of December 31, 2014 and 2013, respectively, our insurance subsidiaries would have been permitted to pay dividends in the aggregate of approximately $844.0 million and $473.3 million, respectively. Our insurance subsidiaries paid dividends to us of $7.4 million, $6.9 million and $7.2 million in 2014, 2013 and 2012, respectively. In addition, the terms of our debt arrangements limit our ability to pay dividends on our common stock, and future borrowings may include prohibitions and restrictions on dividends. Additional information regarding our dividends is presented in “Item 1. Business — Regulation”, in “Item 1A. Risk Factors” and in “Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchase of Equity Securities — Dividend Policy” appearing elsewhere in this Form 10-K.

We forecast claim payments based on our historical trends. We seek to manage the funding of claim payments by actively managing available cash and forecasting cash flows on a short-term and long-term basis. Cash payments for claims were $1,441.2 million, $953.2 million, and 691.7 million in 2014, 2013 and 2012, respectively. Historically, we have funded claim payments from cash flow from operations (principally premiums) net of amounts ceded to our third party reinsurers. We presently expect to maintain sufficient cash flow from operations to meet our anticipated claim obligations and operating and capital expenditure needs. Our total investment portfolio has increased from $4.47 billion (excluding $25.7 million of other investments) at December 31, 2013 to $5.51 billion (excluding $31.2 million of other investments) at December 31, 2014. We do not anticipate selling securities in our investment portfolio to pay claims or to fund operating expenses. Should circumstances arise that would require us to do so, we may incur losses on such sales, which would adversely affect our results of operations and financial condition and could reduce investment income in future periods.

We also purchase life settlement contracts that require us to make premium payments on individual life insurance policies to maintain the policies. We seek to manage the funding of premium payments required. Historically, we have funded these premium payments from operations. We presently expect to maintain sufficient cash flow from operations to meet future premium payments.

Comparison of Years Ended December 31, 2014 and 2013

Net cash provided by operating activities was approximately $1,155.5 million for the year ended December 31, 2014, compared to $915.4 million for the same period in 2013. The increase in cash provided from operations resulted primarily from an increase in gross written premium written in 2014 compared to 2013.

Net cash used in investing activities was $1,052.0 million for the year ended December 31, 2014. Net cash used in investing activities was $929.6 million for the year ended December 31, 2013. In 2014, net cash used in investing activities primarily included approximately $736 million for the net purchase of fixed maturity and equity securities, $125 million for a loan to ACP Re, approximately $81 million for acquisitions, approximately $25 million for the acquisition of life settlement contracts, approximately $77 million for capital expenditures and approximately $85 million for an increase of restricted cash, partially offset by the receipt of cash for approximately $10 million from life settlement contract payouts and $20 million from the sale of a subsidiary. In 2013, net cash used in investing activities primarily included approximately $816 million for the net purchase of fixed maturities and equity securities, approximately $51 million for the acquisition of life settlement contracts, approximately $40 million for capital expenditures and approximately $21 million for an increase of restricted cash, partially offset by the receipt of cash for approximately $20 million from life settlement contract payouts.

Net cash used in financing activities was $15.1 million for the year ended December 31, 2014 compared to net cash provided by financing activities in 2013 of $426.9 million. In 2014, we paid approximately $293 million to settle repurchase agreements, approximately $68 million for preferred and common share dividends and approximately $59 million for share repurchases, which was partially offset by proceeds received of approximately $99 million and $179 million from the issuance of notes and preferred shares, respectively, as well as $120 million from borrowings under our revolving credit facility. Additionally, we received approximately $18 million from non-controlling interest capital contributions to our subsidiaries. In 2013, we received net proceeds of approximately $247 million and $111 million from the issuance of notes and preferred shares, respectively, as well as $58 million from repurchase agreements. Additionally, we received approximately $36 million from non-controlling interest capital contributions to our subsidiaries, partially offset by approximately $33 million of total dividend payments.

90

Credit Sources

Credit Facilities

$350 million credit facility

Our five-year, $350 million credit facility is a revolving credit facility with a letter of credit sublimit of $175 million and an expansion feature of not more than an additional $150 million. In September 2014, we replaced our $200 million credit facility with this current facility. As of December 31, 2014, we had outstanding borrowings of $120 million and outstanding letters of credit of $97.3 million, which reduced the availability for letters of credit to $77.7 million, and the total aggregate availability under the facility to $132.7 million.

Borrowings under this facility bear interest at either the Alternate Base Rate or the LIBO rate. Borrowings bearing interest at a rate determined by reference to the Alternate Base Rate bear interest at (x) the greatest of (a) the administrative agent’s prime rate, (b) the federal funds effective rate plus 0.5%, or (c) the adjusted LIBO rate for a one-month interest period on such day plus 1.0%, plus (y) a margin ranging from 0.125% to 0.625%, adjusted on the basis of our consolidated leverage ratio. Eurodollar borrowings bear interest at the adjusted LIBO rate for the interest period in effect plus a margin ranging from 1.125% to 1.625%, adjusted on the basis of our consolidated leverage ratio. The interest rate as of December 31, 2014 was 1.563%.

Fees payable under this facility include a letter of credit participation fee (equal to the margin applicable to Eurodollar borrowings), a letter of credit fronting fee with respect to each letter of credit (0.125%) and a commitment fee on the available commitments of the lenders (a range of 0.15% to 0.25% based on our consolidated leverage ratio, which was 0.175%).

Interest expense, including amortization of the deferred origination costs and fees associated with letters of credit, was approximately $1.7 million, $1.8 million, and $1.9 million for the years ended December 31, 2014, 2013 and 2012, respectively.

ING letter of credit facility

We use this £235 million letter of credit facility to support our capacity at Lloyd’s as a member and/or reinsurer of Syndicates 2526, 1206 and 44 for the 2015 underwriting year of account, as well as prior open years of account. The facility is 40% secured by a pledge of a collateral account.

Fees payable under this letter of credit facility include a letter of credit issuance fee payable on the secured portion of the letters of credit at the rate of 0.50% and on the unsecured portion of the letters of credit determined based on AII’s then-current financial strength rating issued by A.M. Best. As of December 31, 2014, the applicable letter of credit fee rate on the unsecured portion was 1.15% based on AII’s A.M. Best financial strength rating of “A”. We also pay a commitment fee of 0.35% per year on the aggregate unutilized and un-canceled amount of the facility, and paid a facility fee upon closing of 0.15% of the total aggregate commitment.

As of December 31, 2014, we had outstanding letters of credit of £228.0 million (or $355.2 million) in place under this letter of credit facility. The aggregate unutilized amount under the facility was £7.0 million (or $10.9 million) as of December 31, 2014. We recorded total interest expense of $2.8 million for the year ended December 31, 2014. Interest expense recorded in 2013 was not material.

Other Letter of Credit Facilities

We, through one of our subsidiaries, have a secured letter of credit facility with Comerica Bank that we utilize to comply with the deposit requirements of the State of California and the U.S. Department of Labor as security for our obligations to workers’ compensation and federal Longshore and Harbor Workers’ Compensation Act policyholders. The credit limit is for $75 million, of which $48.5 million was utilized as of December 31, 2014. We are required to pay a letter of credit participation fee for each letter of credit in the amount of 0.40%. In addition, we, through certain subsidiaries, have additional existing stand-by letters of credit with various lenders in the amount of $6.3 million as of December 31, 2014.

For further information on these credit facilities, including applicable restrictive covenants and events of default, see Note 12. “Debt” in the audited consolidated financial statements included elsewhere in this report.

91

Outstanding Notes

Convertible Debt

We have outstanding $158 million of Convertible Senior Notes due 2044 (“2044 Notes”) that bear interest at a rate equal to 2.75% per year, payable semiannually in arrears on June 15th and December 15th of each year. Additionally, we have outstanding $57 million of Convertible Senior Notes due 2021 (“2021 Notes”) that bear interest at a rate equal to 5.5% per year, payable semiannually in arrears on June 15th and December 15th of each year. Interest expense recognized on the 2021 Notes was $13.9 million, $14.5 million, and $14.0 million for the years ended December 31, 2014, 2013 and 2012, respectively. Interest expense recognized on the 2044 Notes was $0.5 million for the year ended December 31, 2014. For further information on the 2044 Notes and the 2021 Notes, including contingent interest on the 2044 Notes, conversion triggers, redemption and repurchase features and the exchange of 2021 Notes for 2044 Notes, see Note 12. “Debt” in the audited consolidated financial statements included elsewhere in this report.

6.125% Notes due 2023

We have outstanding $250 million aggregate principal amount of our 6.125% notes due 2023 that bear interest at a rate equal to 6.125% per year, payable semiannually in arrears on February 15th and August 15th of each year. The interest rate will increase by 0.50% per year if our consolidated leverage ratio exceeds 30% and will increase an additional 1.00% per year (for an aggregate increase of 1.50% per year) if our consolidated leverage ratio exceeds 35%. As of December 31, 2014, the consolidated leverage ratio was less than 30%. Interest expense, including amortization of deferred origination costs, recognized on these notes was approximately $15.6 million and $5.8 million for the year ended December 31, 2014 and 2013, respectively. For further information on these notes, including restrictive covenants and events of default, see Note 12. “Debt” in the audited consolidated financial statements included elsewhere in this report.

Short-term borrowings

During the last three years, we did not engage in short-term borrowings to fund our operations. As discussed above, our insurance subsidiaries create liquidity by collecting and investing insurance premiums in advance of paying claims. Details about our investment portfolio can be found under “— Investment Portfolio” appearing elsewhere in this Form 10-K.

Other Material Changes in Financial Position

	December 31,
	2014		2013
	(Amounts in Thousands)
Selected Assets:
Fixed maturities, available-for-sale	$	4,253,274	$	3,100,936
Securities pledged	—		311,518
Reinsurance recoverable, net	2,440,627		1,929,848
Other assets	1,094,943		890,333
Selected Liabilities:
Loss and loss expense reserves	$	5,664,205	$	4,368,234
Unearned premium	3,447,203		2,680,982
Accrued expenses and other current liabilities	795,877		672,575
Securities sold under agreements to repurchase, at contract value	—		293,222
Debt	757,871		560,174

In 2014, fixed maturities increased $1,152.3 million and resulted primarily from acquisitions during 2014, utilizing cash from preferred share offerings and use of cash generated from operations. Securities pledged and securities sold under agreements to repurchase, at contract value, decreased as a result of settling all repurchase agreements outstanding in 2014. The increase in reinsurance recoverable is directly related to the increase in loss and loss expense reserves. Other assets increased $204.6 million and resulted primarily from our continued investment in life settlement contracts and a loan of $125 million to ACP Re in conjunction with its merger with Tower.

92

Loss and loss expense reserves increased $1,296.0 million and unearned premium increased $766.2 million in 2014 due primarily to higher premium writings in 2014 compared to 2013 as well as assumed amounts from acquisitions in 2014. Accrued expenses and other liabilities increased $123.3 million primarily from acquisitions and increases in premium taxes, assessments and surcharges payable related to growth in premiums. Debt increased by $197.7 million in 2014 primarily as a result of borrowings on our revolving credit facility of $120 million and a net increase of approximately $50 million related to convertible debt associated with an exchange of 2021 Notes and issuance of 2044 Notes in 2014.

Reinsurance

We structure our reinsurance programs by analyzing our tolerance for risk in each line of business and on an overall consolidated basis, based on a number of factors, including market conditions, pricing, competition and the inherent risks associated with each business type. Based on our analysis of these factors, we may determine not to purchase reinsurance for some lines of business. We generally purchase reinsurance to reduce our net liability on individual risks and to protect against catastrophe losses and volatility. We retain underwriting risk in certain lines of business in order to retain a greater proportion of expected underwriting profits. We have chosen not to purchase any reinsurance on businesses where volatility or catastrophe risks are considered remote and policy limits are within our risk tolerance.

We purchase reinsurance on a proportional basis to cover loss frequency, individual risk severity and catastrophe exposure. We also purchase reinsurance on an excess of loss basis to cover individual risk severity and catastrophe exposure. Additionally, we may obtain facultative reinsurance protection on a single risk. The type and amount of reinsurance we purchase varies year to year based on our risk assessment, our desired retention levels based on profitability and other considerations, and the market availability of quality reinsurance at prices we consider acceptable. Our reinsurance programs renew throughout the year, and the price changes in recent years have not been material to our net underwriting results. Our reinsurance generally does not cover war or nuclear, biological, chemical or radiological terrorism risks.

In our proportional reinsurance programs, we generally receive a commission on the premium ceded to reinsurers. This “ceding commission” compensates our insurance companies for the direct costs associated with production of the business, the servicing of the business during the term of the policies ceded, and the costs associated with placement of reinsurance that benefits the proportional programs. In addition, certain of our reinsurance treaties allow us to share in any net profits generated under such treaties with the reinsurers. Various reinsurance brokers may arrange for the placement of this reinsurance coverage on our behalf and are compensated, directly or indirectly, by the reinsurers. We also place reinsurance with direct markets and enter reinsurance relationships with third-party captives formed by agents and other business partners as a mechanism for sharing risk and profit. In order to reduce our exposure to reinsurance credit risk, we evaluate the financial condition of our reinsurers and place our reinsurance with a diverse group of companies and syndicates that we believe to be financially sound. We carefully monitor the credit quality of our reinsurers when we place new and renewal reinsurance, as well as on an ongoing, current basis. We use objective criteria to select and retain our reinsurers, including requiring minimum surplus of $500 million and a financial strength rating of “A-” or better from A.M. Best or Standard & Poor's Corporation. We approve exceptions to these criteria when warranted.

We monitor our financial exposure to the reinsurance market and take necessary actions in an attempt to mitigate our exposure to possible loss. We limit our liquidity exposure for uncollected recoverables by holding funds, letters of credit or other security, with the result that net balances due from reinsurers are significantly less than the gross balances shown in our consolidated balance sheets. We monitor the collectability of our reinsurance recoverables and record a reserve for uncollectible reinsurance when we determine an amount is potentially uncollectible. Our evaluation is based on our periodic reviews of our disputed and aged recoverables, as well as our assessment of recoverables due from reinsurers known to be in financial difficulty. In some cases, we make estimates as to what portion of a recoverable may be uncollectible. Our estimates and judgment about the collectability of the recoverables and the financial condition of reinsurers can change, and these changes can affect the level of reserve required.

93

The following table summarizes the top ten reinsurers that account for approximately 83% of our reinsurance recoverables on paid and unpaid losses and loss adjustment expenses as of December 31, 2014:

Reinsurer	A.M. Best Rating	Amount Recoverable as of December 31, 2014
	(Amounts in Thousands)
Maiden Reinsurance Ltd.	A-	$	1,517,499
National Workers’ Compensation Reinsurance Pool (NWCRP)(1)	NR	231,586
American Home Assurance Company	A+	59,590
Twin Bridges Ltd.(2)	NR	48,080
Hannover Ruckversicherungs AG	A+	47,596
Midwest Employers Casualty Company	A+	33,071
Trinity Universal Insurance Company(3)	A-	32,033
Motors Insurance Corporation	B++	20,149
Markel Bermuda Ltd	A	19,303
Lloyd's Underwriter Syndicate No. 2003 SJC	A	15,547

(1) As per the NWCRP Articles of Agreement, reinsurance is provided through a 100% quota share reinsurance agreement entered into among the servicing carrier (TIC) and the participating companies (all carriers writing in the state) pursuant to the Articles of Agreement.

(2) At the time of the Majestic loss portfolio transfer, this entity was a reinsurer of Majestic. We currently hold collateral of approximately $28 million in a trust account related to cessions for Twin Bridges, as well as approximately $20 million of funds held.

(3) Amount recoverable from Trinity Universal is the result of the UBI acquisition. Prior to our acquisition, MCIC, SNIC, AICK and ALIC ceded all of their net retention to Trinity Universal.

Reinsurance Programs and Retentions

The following tables provide a summary of our primary treaty reinsurance programs as of December 31, 2014 for the United States and internationally:

	2014 Domestic Reinsurance Program
Type of Reinsurance	Retention		Event Protection		Coverage
Workers’ Compensation, Excess of Loss	$	5,000,000	$	510,000,000	98.5% of $505,000,000
Property, Per Risk Excess of Loss	$	2,000,000	$	30,000,000	95% of $28,000,000
Property, Occurrence Excess of loss	$	20,000,000	$	400,000,000	99% of $380,000,000
Surety, Excess of Loss	$	500,000	$	20,000,000	70% of $19,500,000
Casualty/Umbrella, Excess of Loss and Quota Share	$	2,500,000	$	50,000,000	95% of $50,000,000
Equipment Breakdown, Quota Share	$	—	$	100,000,000	100% of $100,000,000

	2014 International Reinsurance Program
Type of Reinsurance	Retention		Event Protection		Coverage
Property, Per Risk Excess of Loss	$	800,000	$	4,400,000	100% of $3,600,000
Property, Occurrence Excess of Loss	$	8,000,000	$	160,000,000	97% of $152,000,000
Surety, Excess of Loss and Quota Share	$	4,500,000	$	45,000,000	100% of $41,500,000
Casualty, Excess of Loss	$	3,000,000	$	15,000,000	100% of $12,000,000
Latent Defect, Excess of Loss	$	3,200,000	$	40,000,000	100% of $36,800,000
Accident and Health, Excess of Loss	$	800,000	$	32,000,000	100% of $31,200,000
Car Care, Excess of Loss	$	1,000,000	$	105,000,000	97.5% of $104,000,000
Medical Malpractice, Quota Share	$	7,800,000	$	13,000,000	40% of $13,000,000

94

	2014 AmTrust at Lloyds Reinsurance Programs
Type of Reinsurance	Retention		Event Protection		Coverage
Property, Per Risk Excess of Loss	$	1,600,000	$	8,000,000	100% of $6,400,000
Property, Occurrence Excess of Loss	$	20,000,000	$	120,000,000	98% of $90,000,000
Casualty, Excess of Loss	$	4,000,000	$	20,000,000	100% of $16,000,000
Personal Accident, Excess of Loss	$	2,000,000	$	50,000,000	100% of $48,000,000
Pecuniary Risks	$	5,000,000	$	35,000,000	100% of $30,000,000

If we incur catastrophe losses and loss settlement expenses that exceed the coverage limits of our reinsurance program, many of our property catastrophe programs have built in a fixed number of reinstatement of limits. For example, if we incur a property catastrophe loss, we are required to pay the reinsurers a reinstatement premium equal to the percentage of the limit exhausted by the loss, multiplied by the amount of the original reinsurance premium.

Maiden Quota Share

In 2007, we entered into a master agreement with Maiden, as amended, by which our Bermuda subsidiary, AII, and Maiden Reinsurance Ltd. ("Maiden Reinsurance"), formerly known as Maiden Insurance Company, Ltd., entered into a quota share reinsurance agreement (the “Maiden Quota Share”), as amended. Under this agreement, AII retrocedes to Maiden Reinsurance an amount equal to 40% of the premium written by our 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 our U.K. insurance subsidiary, AEL, net of commissions). AII also retrocedes 40% of losses. Certain business that we commenced writing after the effective date, including our European medical liability business included in the table above, business assumed from Tower pursuant to the Cut Through Reinsurance Agreement, and risks, other than workers’ compensation risks and certain business written by our Irish subsidiary, AmTrust International Underwriters Limited (“AIU”), for which the AmTrust Ceding Insurers’ net retention exceeds $5 million is not ceded to Maiden Reinsurance (ceded business defined as “Covered Business”).

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, we will be responsible for ultimate net loss otherwise recoverable from Maiden Reinsurance to the extent that the loss ratio to Maiden Reinsurance, which will be determined on an inception to date basis from July 1, 2007 through the date of calculation, is between 81.5% and 95% (the “Specialty Program Loss Corridor”). For purposes of determining whether the loss ratio falls within the Specialty Program Loss Corridor, workers’ compensation business written in our Specialty Program segment from July 1, 2007 through December 31, 2012 is excluded from the loss ratio calculation.

The Maiden Quota Share was renewed through July 1, 2016 and will automatically renew for successive three-year terms unless either AII or Maiden Reinsurance 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 Reinsurance, run-off, or a reduction of 50% or more of the stockholders’ equity of Maiden Reinsurance or the combined stockholders’ equity of AII and the AmTrust Ceding Insurers.

We recorded approximately $405.1 million, $276.6 million and $197.0 million of ceding commission during 2014, 2013 and 2012, respectively, as a result of the Maiden Quota Share.

95

Contractual Obligations and Commitments

The following table sets forth certain of our contractual obligations as of December 31, 2014:

	Payment Due by Period
	Total		Less than 1 Year		1 – 3 Years		3 – 5 Years		More than 5 Years
	(Amounts in Thousands)
Loss and loss adjustment expenses(1)	$	5,664,205	$	2,322,323	$	1,840,867	$	679,705	$	821,310
Loss-based insurance assessments(2)	42,831		13,706		13,278		5,140		10,707
Operating lease obligations	102,708		19,573		32,120		22,572		28,443
Purchase obligations(3)	41,705		13,588		23,117		5,000		—
Employment agreement obligations	26,670		13,616		11,111		1,521		422
Life insurance policy premiums related to life settlement contracts and premium finance loans(4)	779,933		40,961		106,499		79,894		552,579
Debt and interest(5)	1,469,143		208,105		240,527		68,935		951,576
Total	$	8,127,195	$	2,631,872	$	2,267,519	$	862,767	$	2,365,037

(1) The loss and loss adjustment expense payments due by period in the table above are based upon the loss and loss adjustment expense estimates as of December 31, 2014 and actuarial estimates of expected payout patterns and are not contractual liabilities as to a time certain. Our contractual liability is to provide benefits under the policy. As a result, our calculation of loss and loss adjustment expense payments due by period is subject to the same uncertainties associated with determining the level of loss and loss adjustment expenses generally and to the additional uncertainties arising from the difficulty of predicting when claims (including claims that have not yet been reported to us) will be paid. For a discussion of our loss and loss adjustment expense estimate process, see “Item 1. Business — Loss Reserves.” Actual payments of loss and loss adjustment expenses by period will vary, perhaps materially, from the table above to the extent that current estimates of loss and loss adjustment expenses vary from actual ultimate claims amounts and as a result of variations between expected and actual payout patterns. See “Item 1A. Risk Factors — Risks Related to Our Business — Our loss reserves are based on estimates and may be inadequate to cover our actual losses” for a discussion of the uncertainties associated with estimating loss and loss adjustment expenses.

(2) We are subject to various annual assessments imposed by certain of the states in which we write insurance policies. These assessments are generally based upon the amount of premiums written or losses paid during the applicable year. Assessments based on premiums are generally paid within one year after the calendar year in which the policies are written, while assessments based on losses are generally paid within one year after the loss is paid. When we establish a reserve for loss and loss adjustment expenses for a reported claim, we accrue our obligation to pay any applicable assessments. If settlement of the claim is to be paid out over more than one year, our obligation to pay any related loss-based assessments extends for the same period of time. Because our reserves for loss and loss adjustment expenses are based on estimates, our accruals for loss-based insurance assessments are also based on estimates. Actual payments of loss and loss adjustment expenses may differ, perhaps materially, from our reserves. Accordingly, our actual loss-based insurance assessments may vary, perhaps materially, from our accruals.

(3) We are required by certain purchase agreements to pay the seller in the future based on the passage of time, volume of premium writings or a profitability metric. Also, we may be required by the terms of certain purchase agreements to pay the seller an annual minimum override payment based on a contractually defined formula. The amount payable to the seller under these agreements could be materially higher if the premiums produced generate a higher payment than the calculated minimum payment. We are required by certain agreements to pay fees based on profitability of certain subsidiary companies.

(4) We currently own 274life settlement contracts with a carrying value of $264.5 million. In order for us to derive the economic benefit of the face value of the policies, we are required to make these premium payments. The contractual obligations are on a consolidated basis. As we have a 50% ownership interest in these life insurance policies and premium finance loans, NGHC has an obligation for 50% of the above contractual obligations.

(5) The interest related to the debt by period is as follows: $23.9 million — less than 1 year, $44.3 million  — 1 – 3 years, $42.2 million — 3 – 5 years and $148.3 million — more than 5 years. In addition, included within debt and interest is $168 million related to the Maiden collateral loan and $1.8 million of associated interest.

96

Inflation

We establish property and casualty insurance premiums before we know the amount of losses and loss adjustment expenses or the extent to which inflation may affect such amounts. We attempt to anticipate the potential impact of inflation in establishing our reserves, especially as it relates to medical and hospital rates where historical inflation rates have exceeded the general level of inflation. Inflation in excess of the levels we have assumed could cause loss and loss adjustment expenses to be higher than we anticipated, which would require us to increase reserves and reduce earnings. Fluctuations in rates of inflation also influence interest rates, which in turn impact the market value of our investment portfolio and yields on new investments. Operating expenses, including salaries and benefits, generally are impacted by inflation.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk.  Market risk is the risk of potential economic loss principally arising from adverse changes in the fair value of financial instruments. The major components of market risk affecting us are interest rate risk and equity price risk.

Interest Rate Risk.  We had fixed maturity securities (excluding $63.9 million of time and short-term deposits) with a fair value of $4.3 billion and a amortized cost of $4.1 billion as of December 31, 2014 that are subject to interest rate risk. Interest rate risk is the risk that we may incur losses due to adverse changes in interest rates. Fluctuations in interest rates have a direct impact on the market valuation of our fixed maturity securities. We manage our exposure to interest rate risk through a disciplined asset and liability matching and capital management process. In the management of this risk, the characteristics of duration, credit and variability of cash flows are critical elements. These risks are assessed regularly and balanced within the context of our liability and capital position.

The table below summarizes the interest rate risk associated with our fixed maturity securities by illustrating the sensitivity of the fair value and carrying value of our fixed maturity securities as of December 31, 2014 to selected hypothetical changes in interest rates, and the associated impact on our stockholders’ equity. We anticipate that we will continue to meet our obligations out of income. We classify our fixed securities and equity securities primarily as available-for-sale. Temporary changes in the fair value of our fixed maturity securities impact the carrying value of these securities and are reported in our stockholders’ equity as a component of other comprehensive income, net of deferred taxes.

The selected scenarios in the table below are not predictions of future events, but rather are intended to illustrate the effect such events may have on the fair value and carrying value of our fixed maturity securities and on our stockholders’ equity, each as of December 31, 2014.

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	$	3,850,272	$	(403,002	)	(11.9	)%
100 basis point increase	4,045,991		(207,283		)	(6.1	)
No change	4,253,274		—			—
100 basis point decrease	4,468,563		215,289			6.4
200 basis point decrease	4,699,991		446,717			13.2

Changes in interest rates would affect the fair market value of our fixed rate debt obligations but would not have an impact on our earnings or cash flow. We currently have $925.8 million of debt instruments of which $631.4 million are fixed rate debt instruments. A fluctuation of 100 basis points in interest on our variable rate debt instruments, which are tied to LIBOR, would affect our earnings and cash flows by $2.9 million before income tax, on an annual basis, but would not affect the fair market value of the variable rate debt. Additionally, our variable rate debt is effectively converted to a fixed rate through the use of an interest rate swap agreements.

Liquidity Risk.  Liquidity risk represents our potential inability to meet all payment obligations when they become due and the risk stemming from the lack of marketability of an investment security that cannot be bought or sold quickly enough to realize cash. We maintain sufficient cash and highly rated marketable securities, including U.S. Treasuries, to fund claim payments and operations. Additionally, we maintain two line of credit facilities and have the ability to enter into repurchase agreements as additional sources of liquidity. We purchase reinsurance coverage to mitigate the risk of an unexpected rise in claims severity or frequency from catastrophic events or a single large loss. The availability, amount and cost of reinsurance depend on market conditions and may vary significantly.

97

Credit Risk.  Credit risk is the potential loss arising principally from adverse changes in the financial condition of the issuers of our fixed maturity securities and the financial condition of our third party reinsurers. Additionally, we have counter-party credit risk with our repurchase agreement counter-parties and interest rate swap counter-parties.

We address the credit risk related to the issuers of our fixed maturity securities by investing primarily in fixed maturity securities that are rated “BBB-” or higher by Standard & Poor’s. We also independently monitor the financial condition of all issuers of our fixed maturity securities. To limit our risk exposure, we employ diversification policies that limit the credit exposure to any single issuer or business sector.

We are subject to credit risk with respect to our third party reinsurers. Although our third party reinsurers are obligated to reimburse us to the extent we cede risk to them, we are ultimately liable to our policyholders on all risks we have ceded. As a result, reinsurance contracts do not limit our ultimate obligations to pay claims covered under the insurance policies we issue and we might not collect amounts recoverable from our reinsurers. We address this credit risk by selecting reinsurers which have an A.M. Best rating of “A-” (Excellent) or better at the time we enter into the agreement and by performing, along with our reinsurance broker, periodic credit reviews of our reinsurers. If one of our reinsurers suffers a credit downgrade, we may consider various options to lessen the risk of asset impairment, including commutation, novation and letters of credit. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Reinsurance.”

Counter-party credit risk with our repurchase agreement counter-parties is mitigated by obtaining collateral. We obtain collateral in the amount of 110% of the value of the securities we have sold with agreement to repurchase. Additionally, repurchase agreements are only transacted with pre-approved counter-parties.

Foreign Currency Risk.  We write insurance in the United Kingdom and certain other European Union member countries through AIU, AEL and Motors Insurance Company, Ltd. (“MIC”). While the functional currencies of AIU, AEL and MIC are the Euro and British Pound, we write coverages that are settled in local currencies, including, primarily, the Euro and British Pound. We attempt to maintain sufficient local currency assets on deposit to minimize our exposure to realized currency losses. Assuming a 5% increase in the exchange rate of the local currency in which the claims will be paid and that we do not hold that local currency, we would recognize a $85.1 million before tax realized currency loss based on our outstanding foreign denominated reserves of $1,702,390 million at December 31, 2014.

Equity Price Risk.  Equity price risk is the risk that we may incur losses due to adverse changes in the market prices of the equity securities we hold in our investment portfolio, which include common stocks, non-redeemable preferred stocks and master limited partnerships. We classify our portfolio of equity securities either as available-for-sale or trading and carry these securities on our balance sheet at fair value. Accordingly, adverse changes in the market prices of our equity securities result in a decrease in the value of our total assets and a decrease in our stockholders’ equity. As of December 31, 2014, the equity securities in our investment portfolio had a fair value of $107.8 million, representing approximately 2.0% of our total invested assets on that date.

The table below illustrates the impact on our equity portfolio and financial position given a hypothetical movement in the broader equity markets. The selected scenarios in the table below are not predictions of future events, but rather are intended to illustrate the effect such events may have on the carrying value of our equity portfolio and on stockholders’ equity as of December 31, 2014.

Hypothetical Change in S&P 500 Index	Fair Value		Estimated Change in Fair Value			Hypothetical Percentage Increase (Decrease) in Shareholders’ Equity
	(Amounts in Thousands)
25% increase	$	134,741	$	26,948		0.8	%
No change	107,793		—			—
25% decrease	80,845		(26,948		)	(0.8	)

Off Balance Sheet Risk.  We do not have off balance sheet risk as of December 31, 2014.

Item 8. Financial Statements and Supplementary Data

The financial statements and financial statement schedules listed in the accompanying Index to Consolidated Financial Statements and Schedules at page F-1 are filed as part of this report.

98

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

Our management, with participation and under the supervision of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective in ensuring that information required to be disclosed by us in the reports we file or submit under the Exchange Act is timely recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Controls Over Financial Reporting

There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended December 31, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management Report on Internal Control Over Financial Reporting

We, as management of the Company, are responsible for establishing and maintaining adequate internal control over financial reporting. Pursuant to the rules and regulations of the SEC, internal control over financial reporting is a process designed by, or under the supervision of, our principal executive and principal financial officers, or persons performing similar functions, and effected by our Board of Directors, management and other personnel, 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 and includes those policies and procedures that:

• Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;

• Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and

• Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Management has evaluated the effectiveness of our internal control over financial reporting as of December 31, 2014, based on the control criteria established in a report entitled Internal Control — Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on such evaluation, we have concluded that our internal control over financial reporting is effective as of December 31, 2014. Management excluded from its design and assessment of internal control over financial reporting Insco Insurance Services, Inc. and its subsidiaries and Comp Options Insurance Company, Inc. during 2014, whose total assets and total revenues on a combined basis constitute approximately 2.4% and 1.6%, respectively, of the consolidated financial statement amounts as of and for the year ended December 31, 2014. Companies are allowed to exclude acquisitions from their assessment of internal control over financial reporting during the first year of an acquisition while integrating the acquired company under guidelines established by the SEC. Our internal control over financial reporting as of December 31, 2014 has been audited by BDO USA, LLP, our external auditors, who also audited our consolidated financial statements for the year ended December 31, 2014. As stated in their report, BDO expressed an unqualified opinion on the effectiveness of our internal control over financial reporting as of December 31, 2014.

99

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

AmTrust Financial Services, Inc.

New York, New York

We have audited AmTrust Financial Services, Inc.’s internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). AmTrust Financial Services, Inc.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Item 9A, Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, AmTrust Financial Services, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on the COSO criteria.

The scope of management's assessment of the effectiveness of internal control over financial reporting excluded the internal control over financial reporting of Insco Insurance Services, Inc. and its subsidiaries (“Insco Dico”) and Comp Options Insurance Company, Inc. (“Comp Options”), whose total assets and total revenues on a combined basis constitute approximately 2.4% and 1.6%, respectively, of the consolidated financial statement amounts as of and for the year ended December 31, 2014. Our audit of internal control over financial reporting of AmTrust Financial Services, Inc. also excluded an evaluation of the internal control and financial reporting of Insco Dico and Comp Options.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of AmTrust Financial Services, Inc. as of December 31, 2014 and 2013, and the related consolidated statements of income, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2014 and our report dated March 2, 2015 expressed an unqualified opinion thereon.

/s/ BDO USA, LLP

New York, New York

March 2, 2015

100

Item 9B. Other Information

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information required by Item 10 of Form 10-K is incorporated by reference to the information contained in our Proxy Statement for our Annual Meeting of Stockholders to be held May 20, 2015 (the “Proxy Statement”) under the captions “Proposal 1: Election of Directors,” “Executive Officers,” “Corporate Governance — Code of Business Conduct and Ethics,” “Corporate Governance — Board Committees” and “Security Ownership of Management — Section 16(a) Beneficial Ownership Reporting Compliance.” The Proxy Statement, or an amendment to this Annual Report on Form 10-K containing the information, will be filed with the SEC on or before April 30, 2015.

Item 11. Executive Compensation

The information required by Item 11 of Form 10-K is incorporated by reference to the information contained in our Proxy Statement under the captions “Executive Compensation,” “Compensation of Directors,” “Compensation Discussion and Analysis,” “Corporate Governance — Compensation Committee Interlocks and Insider Participation” and “Compensation Committee Report.” The Proxy Statement, or an amendment to this Annual Report on Form 10-K containing the information, will be filed with the SEC on or before April 30, 2015.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

A portion of the information required by Item 12 of Form 10-K is incorporated by reference to the information contained in our Proxy Statement under the captions “Security Ownership of Certain Beneficial Owners” and “Security Ownership of Management.” The Proxy Statement, or an amendment to this Annual Report on Form 10-K containing the information, will be filed with the SEC on or before April 30, 2015.

Equity Compensation Plan Information

The table below shows information regarding awards outstanding and shares of common stock available for issuance as of December 31, 2014 under the AmTrust Financial Services, Inc. 2010 Omnibus Incentive Plan:

Plan Category	Number of Securities to Be Issued Upon Exercise of Outstanding Options, Warrants and Rights (1)	Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (2)		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans
Equity Compensation Plans Approved by Security Holders	3,514,716	$	11.60	4,569,111
Equity Compensation Plans Not Approved by Security Holders	—	—		—
Total	3,514,716	$	11.60	4,569,111

⁽¹⁾ Includes restricted stock unit awards that, upon vesting, provide the holder with the right to receive common shares on a one-to-one basis. Performance share units are included at their target value. For further discussion of these awards, see Note 16. “Share Based Compensation.”

⁽²⁾ Only applies to outstanding options, as restricted stock units and performance share units do not have exercise prices.

101

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by Item 13 of Form 10-K is incorporated by reference to the information contained in our Proxy Statement under the captions “Certain Relationships and Related Transactions” and “Corporate Governance — Independence of Directors.” The Proxy Statement, or an amendment to this Annual Report on Form 10-K containing the information, will be filed with the SEC on or before April 30, 2015.

Item 14. Principal Accounting Fees and Services

The information required by Item 14 of Form 10-K is incorporated by reference to the information contained in our Proxy Statement under the captions “Audit and Non-Audit Fees” and “Pre-approval Policies and Procedures of the Audit Committee.” The Proxy Statement, or an amendment to this Annual Report on Form 10-K containing the information, will be filed with the SEC on or before April 30, 2015.

PART IV

Item 15. Exhibits, Financial Statement Schedules

(a) Documents filed as part of this report: The financial statements and financial schedules listed in the accompanying Index to Consolidated Financial Statements and Schedules are filed as part of this report. The exhibits listed in the accompanying Index to Exhibits are filed as part of this report.

(b) Exhibits: See Item 15(a).

(c) Schedules: See Item 15(a).

All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and, therefore, have been omitted.

102

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	AMTRUST FINANCIAL SERVICES, INC.
March 2, 2015	By:	/s/ Ronald E. Pipoly, Jr.
		Name: Ronald E. Pipoly, Jr. Title: Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature	Title	Date
/s/ Barry D. Zyskind	Chief Executive Officer, President and Director (Principal Executive Officer)	March 2, 2015
Barry D. Zyskind
/s/ Ronald E. Pipoly, Jr.	Chief Financial Officer (Principal Financial and Accounting Officer)	March 2, 2015
Ronald E. Pipoly, Jr.
/s/ Michael Karfunkel	Chairman of the Board	March 2, 2015
Michael Karfunkel
/s/ George Karfunkel	Director	March 2, 2015
George Karfunkel
/s/ Donald T. DeCarlo	Director	March 2, 2015
Donald T. DeCarlo
/s/ Susan Fisch	Director	March 2, 2015
Susan Fisch
/s/ Abraham Gulkowitz	Director	March 2, 2015
Abraham Gulkowitz
/s/ Jay J. Miller	Director	March 2, 2015
Jay J. Miller

103

AMTRUST FINANCIAL SERVICES, INC.

INDEX TO FINANCIAL STATEMENTS AND SCHEDULES

	Page
Audited Annual Financial Statements
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of December 31, 2014 and 2013	F-3
Consolidated Statements of Income for the years ended December 31, 2014, 2013 and 2012	F-4
Consolidated Statements of Comprehensive Income for the years ended December 31, 2014, 2013 and 2012	F-5
Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2014, 2013 and 2012	F-6
Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2013 and 2012	F-8
Notes to the Consolidated Financial Statements	F-10
Supplementary Information
Summary of Investments — Other than Investments in Related Parties (Schedule I)	S-0
Condensed Financial Information of Registrant (Schedule II)	S-2
Supplementary Insurance Information (Schedule III)	S-5
Reinsurance (Schedule IV)	S-6
Consolidated Supplementary Property and Casualty Insurance Information (Schedule V)	S-7

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

AmTrust Financial Services, Inc.

New York, New York

We have audited the accompanying consolidated balance sheets of AmTrust Financial Services, Inc. as of December 31, 2014 and 2013 and the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2014. In connection with our audits of the financial statements, we have also audited the financial statement schedules listed in the accompanying index. These financial statements and schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and schedules. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of AmTrust Financial Services, Inc. at December 31, 2014 and 2013, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2014, in conformity with accounting principles generally accepted in the United States of America.

Also, in our opinion, the financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole present fairly, in all material respects, the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), AmTrust Financial Services, Inc.’s internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated March 3, 2014 expressed an unqualified opinion thereon.

/s/ BDO USA, LLP

New York, New York

March 2, 2015

F-2

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In Thousands, Except Par Value per Share)
	December 31,
ASSETS	2014			2013
Investments:
Fixed maturities, available-for-sale, at market value (amortized cost $4,137,146; $3,107,043)	$	4,253,274		$	3,100,936
Equity securities, available-for-sale, at market value (cost $84,075; $16,010)	81,044			15,148
Equity securities, trading, at market value (cost $25,407; $0)	26,749			—
Short-term investments	63,916			114,202
Equity investment in unconsolidated subsidiaries – related parties	119,712			89,756
Other investments	31,186			25,749
Securities pledged (amortized cost of $0; $316,576)	—			311,518
Total investments	4,575,881			3,657,309
Cash and cash equivalents	902,750			830,022
Restricted cash and cash equivalents	186,225			100,439
Accrued interest and dividends	42,173			27,800
Premiums receivable, net	1,851,682			1,593,975
Reinsurance recoverable (related party $1,517,499; $1,144,168)	2,440,627			1,929,848
Prepaid reinsurance premium (related party $918,505; $739,719)	1,302,848			1,011,304
Other assets (related party $136,516 $0; recorded at fair value $264,517; $233,024)	1,094,943			890,333
Deferred policy acquisition costs	628,383			468,404
Property and equipment, net	154,175			104,299
Goodwill	352,685			373,591
Intangible assets	314,996			291,802
	$	13,847,368		$	11,279,126
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Loss and loss expense reserves	$	5,664,205		$	4,368,234
Unearned premiums	3,447,203			2,680,982
Ceded reinsurance premiums payable (related party $410,075; $393,941)	683,421			635,588
Reinsurance payable on paid losses	3,947			18,818
Funds held under reinsurance treaties	10,653			27,574
Note payable on collateral loan – related party	167,975			167,975
Securities sold but not yet purchased, at market	13,052			—
Securities sold under agreements to repurchase, at contract value	—			293,222
Accrued expenses and other current liabilities (recorded at fair value $18,567; $11,945)	795,877			672,575
Deferred income taxes	106,363			274,519
Debt	757,871			560,174
Total liabilities	11,650,567			9,699,661
Commitments and contingencies
Redeemable non-controlling interest	600			600
Stockholders’ equity:
Common stock, $.01 par value; 150,000 shares authorized, 98,211 and 98,122 issued in 2014 and 2013, respectively; 77,739 and 74,765 outstanding in 2014 and 2013, respectively	980			980
Preferred stock, $.01 par value; 10,000 shares authorized, 4,785 and 4,600 issued and outstanding in 2014 and 2013, respectively	300,000			115,000
Additional paid-in capital	1,022,769			1,033,084
Treasury stock at cost; 20,472 and 23,357 shares in 2014 and 2013, respectively	(297,586		)	(284,891		)
Accumulated other comprehensive income (loss)	56,123			(8,164		)
Retained earnings	954,734			584,996
Total AmTrust Financial Services, Inc. equity	2,037,020			1,441,005
Non-controlling interest	159,181			137,860
Total stockholders’ equity	2,196,201			1,578,865
	$	13,847,368		$	11,279,126

See accompanying notes to consolidated financial statements.

F-3

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In Thousands, Except Par Value per Share)

	Years Ended December 31,
	2014			2013			2012
Revenues:
Premium income:
Net written premium	$	3,956,618		$	2,565,673		$	1,648,037
Change in unearned premium	(430,054		)	(299,683		)	(229,185		)
Net earned premium	3,526,564			2,265,990			1,418,852
Service and fee income (related parties – $58,428, $51,545, and $29,041)	409,743			331,559			172,174
Net investment income	131,601			84,819			68,167
Net realized gain on investments	16,423			15,527			8,981
Total revenues	4,084,331			2,697,895			1,668,174
Expenses:
Loss and loss adjustment expense	2,342,619			1,517,361			922,675
Acquisition costs and other underwriting expenses (net of ceding commission - related party - $405,071, $276,556, and $196,982)	856,923			533,162			356,005
Other	436,350			291,617			177,709
Total expenses	3,635,892			2,342,140			1,456,389
Income before other income (expense), income taxes and equity in earnings of unconsolidated subsidiaries	448,439			355,755			211,785
Other income (expenses):
Interest expense (net of interest income - related party - $2,601, $0, and $0)	(45,857		)	(34,691		)	(28,508		)
Loss on extinguishment of debt	(9,831		)	—			—
Gain on investment in life settlement contracts net of profit commission	12,306			3,800			13,822
Foreign currency gain (loss)	60,245			(6,533		)	(242		)
Acquisition gain on purchase	—			48,715			—
Gain of sale of subsidiary	6,631			—			—
Total other income (expenses)	23,494			11,291			(14,928		)
Income before income taxes and equity in earnings of unconsolidated subsidiaries	471,933			367,046			196,857
Provision for income taxes	53,686			98,019			21,292
Income before equity in earnings of unconsolidated subsidiaries	418,247			269,027			175,565
Equity in earnings of unconsolidated subsidiary – related party	28,351			11,566			9,295
Net income	446,598			280,593			184,860
Net loss (income) attributable to non-controlling interests and redeemable non-controlling interests of subsidiaries	416			1,633			(6,873		)
Net income attributable to AmTrust Financial Services, Inc.	$	447,014		$	282,226		$	177,987
Dividends on preference stock	(12,738		)	(3,989		)	—
Net income attributable to AmTrust common stockholders	$	434,276		$	278,237		$	177,987
Earnings per common share:
Basic earnings per share	$	5.78		$	3.75		$	2.42
Diluted earnings per share	$	5.45		$	3.56		$	2.34
Dividends declared per common share	$	0.85		$	0.56		$	0.39
Weighted average common shares outstanding - basic	74,933			74,163			73,269
Weighted average common shares outstanding - diluted	79,517			77,984			75,620
Net realized gain on investments:
Total other-than-temporary impairment losses	$	(8,039	)	$	(2,869	)	$	(2,965	)
Portion of loss recognized in other comprehensive income	—			—			—
Net impairment losses recognized in earnings	(8,039		)	(2,869		)	(2,965		)
Other net realized gain on investments	24,462			18,396			11,946
Net realized investment gain	$	16,423		$	15,527		$	8,981

See accompanying notes to consolidated financial statements.

F-4

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Thousands)

	Year Ended December 31,
	2014			2013			2012
Net income	$	446,598		$	280,593		$	184,860
Other comprehensive income, net of tax:
Foreign currency translation adjustments	(17,358		)	12,943			6,730
Change in fair value of interest rate swap	664			1,028			(733		)
Minimum pension liability	(1,055		)	(1,738		)	—
Unrealized gain (loss) on securities:
Unrealized holding gain (loss) arising during period	86,954			(90,286		)	63,917
Reclassification adjustment for gain (loss) included in net income	(4,918		)	5,658			4,316
Other comprehensive income (loss), net of tax	$	64,287		$	(72,395	)	$	74,230
Comprehensive income	510,885			208,198			259,090
Less: Comprehensive income (loss) attributable to non-controlling and redeemable non-controlling interest	(416		)	(1,633		)	6,873
Comprehensive income attributable to AmTrust Financial Services, Inc.	$	511,301		$	209,831		$	252,217

See accompanying notes to consolidated financial statements.

F-5

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (In Thousands) Years Ended December 31, 2014, 2013, 2012
	Common Stock		Preferred Stock		Additional Paid-in Capital			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Total
Balance, December 31, 2011	$	849	$	—	$	582,321		$	(300,365	)	$	(9,999	)	$	617,757		$	890,563
Net income	—		—		—			—			—			184,860			184,860
Foreign currency translation, net of tax	—		—		—			—			6,730			—			6,730
Change in fair value of derivatives, net of tax											(733		)				(733		)
Unrealized holding loss on investments, net of tax	—		—		—			—			63,917			—			63,917
Reclassification adjustment for securities sold during the year, net of tax	—		—		—			—			4,316			—			4,316
Non-controlling interest in subsidiaries	—		—		—			—			—			(6,873		)	(6,873		)
Acquisition of non-controlling interest in subsidiary	—		—		6,900			—			—			—			6,900
Equity component of 5.5% convertible senior notes, net of income taxes and issues costs					3,306												3,306
Issuance of restricted stock	—		—		(2,378		)	2,378			—			—			—
Stock option compensation	—		—		7,172			—			—			—			7,172
Exercise of stock options, other	2		—		4,675			4,196			—			—			8,873
Share dividend	61				159,109									(159,170		)	—
Common stock dividend	—		—		—			—			—			(24,910		)	(24,910		)
Balance, December 31, 2012	912		—		761,105			(293,791		)	64,231			611,664			1,144,121
Net income	—		—		—			—			—			280,593			280,593
Foreign currency translation, net of tax	—		—		—			—			12,943			—			12,943
Change in fair value of derivatives, net of tax	—		—		—			—			1,028			—			1,028
Minimum pension liability, net of tax	—		—		—			—			(1,738		)	—			(1,738		)
Unrealized holding gain on investments, net of tax	—		—		—			—			(90,286		)	—			(90,286		)
Reclassification adjustment for securities sold during the year, net of tax	—		—		—			—			5,658			—			5,658
Non-controlling interest in subsidiaries	—		—		—			—			—			1,633			1,633
Common share issuance	—		—		251			221			—			—			472
Issuance of restricted stock	—		—		(1,902		)	1,902			—			—			—
Stock option compensation	—		—		11,186			—			—			—			11,186
Exercise of stock options, other	2		—		1,283			6,777			—			—			8,062
Preferred share issuance	—		115,000		(3,870		)	—			—			—			111,130
Preferred stock dividend	—		—		—			—			—			(3,989		)	(3,989		)
Share dividend	66				265,031									(265,097		)	—
Common stock dividend	—		—		—			—			—			(39,808		)	(39,808		)
Balance, December 31, 2013	980		115,000		1,033,084			(284,891		)	(8,164		)	584,996			1,441,005

See accompanying notes to consolidated financial statements.

F-6

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY(continued) (In Thousands) Years Ended December 31, 2014, 2013, 2012
	Common Stock		Preferred Stock		Additional Paid-in Capital			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Total
Net income	$	—	$	—	$	—		$	—		$	—		$	446,598		$	446,598
Foreign currency translation, net of tax	—		—		—			—			(17,358		)	—			(17,358		)
Change in fair value of derivative, net of tax	—		—		—			—			664			—			664
Minimum pension liability, net of tax	—		—		—			—			(1,055		)	—			(1,055		)
Unrealized holding loss on investments, net of tax	—		—		—			—			86,954			—			86,954
Reclassification adjustment for securities sold during the year, net of tax	—		—		—			—			(4,918		)	—			(4,918		)
Non-controlling interest in subsidiaries	—		—		—			—			—			910			910
Common share repurchase	—		—		—			(59,154		)	—			—			(59,155		)
Preferred share issuance	—		185,000		(6,359		)	—			—			—			178,641
Extinguishment of 5.5% convertible senior notes	—		—		(19,011		)	—			—			—			(19,011		)
Issuance of shares in convertible senior note exchange	—		—		(33,409		)	33,409			—			—			—
Equity component of 2.75% convertible senior notes, net of income taxes and issue costs	—		—		33,624			—			—			—			33,624
Issuance of restricted stock	—		—		(6,444		)	6,444			—			—			—
Stock option compensation	—		—		19,114			—			—			—			19,114
Exercise of stock options, other	—		—		2,170			6,606			—			—			8,776
Distribution of redeemable non-controlling interest	—		—		—			—			—			(494		)	(494		)
Preferred stock dividend	—		—		—			—			—			(12,738		)	(12,738		)
Common stock dividend	—		—		—			—			—			(64,538		)	(64,538		)
Balance, December 31, 2014	$	980	$	300,000	$	1,022,769		$	(297,586	)	$	56,123		$	954,734		$	2,037,020
Non-controlling interest in equity of consolidated subsidiaries:
Balance, December 31, 2011																	$	69,098
Capital contributions to subsidiaries																	34,273
Acquisition of non-controlling interest in subsidiary																	(6,900		)
Income attributable to non-controlling interests																	6,873
Balance, December 31, 2012																	$	103,344
Capital contributions to subsidiaries																	36,149
Loss attributable to non-controlling interests																	(1,633		)
Balance, December 31, 2013																	$	137,860
Capital contribution to subsidiaries																	25,359
Foreign currency translation																	(3,128		)
Loss attributable to non-controlling interests																	(910		)
Balance, December 31, 2014																	$	159,181

See accompanying notes to consolidated financial statements.

F-7

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands)
	Years Ended December 31,
	2014			2013			2012
Cash flows from operating activities:
Net income	$	446,598		$	280,593		$	184,860
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	63,093			53,118			28,602
Net amortization of bond premium or discount	15,395			18,925			3,905
Equity earnings on investment in unconsolidated subsidiaries	(28,351		)	(11,566		)	(9,295		)
Gain on investment in life settlement contracts, net	(12,306		)	(3,800		)	(13,822		)
Realized gain on marketable securities	(24,463		)	(18,396		)	(11,946		)
Non-cash write-down of marketable securities	8,039			2,869			2,965
Non-cash write-down of goodwill	62,898			10,226			16,389
Discount on notes payable	3,095			3,000			2,936
Stock based compensation	19,114			11,186			7,172
Loss on extinguishment of debt	9,831			—			—
Bad debt expense	24,294			24,334			11,348
Foreign currency (gain) loss	(60,245		)	6,533			242
Gain on sale of subsidiary	(6,631		)	—			—
Acquisition gain	—			(48,715		)	—
Dividend received from equity investment	—			12,203			—
Changes in assets – (increase) decrease:
Premiums and notes receivable	(251,544		)	(189,503		)	(329,618		)
Reinsurance recoverable	(503,926		)	(547,578		)	(219,826		)
Deferred policy acquisition costs, net	(159,979		)	(97,561		)	(68,135		)
Prepaid reinsurance premiums	(291,544		)	(133,787		)	(167,747		)
Prepaid expenses and other assets	(123,621		)	(310,177		)	(83,692		)
Changes in liabilities – increase (decrease):
Reinsurance premium payable	48,656			87,520			190,814
Loss and loss expense reserves	1,219,993			1,177,625			547,225
Unearned premiums	706,976			586,219			380,738
Funds held under reinsurance treaties	(10,397		)	(6,372		)	(15,303		)
Accrued expenses and other current liabilities	75,585			(13,071		)	67,350
Deferred tax liability	(75,024		)	21,623			6,293
Net cash provided by operating activities	1,155,536			915,448			531,455
Cash flows from investing activities:
Purchases of fixed maturities, available-for-sale	(2,425,101		)	(2,473,116		)	(1,466,424		)
Purchases of equity securities, available-for-sale	(293,554		)	(41,374		)	(30,468		)
Purchases of equity securities, trading	(84,493		)	—			—
Purchases of other investments	(20,207		)	(17,228		)	(1,884		)
Sales of fixed maturities, available-for-sale	1,749,897			1,612,580			905,697
Sales of equity securities, available-for-sale	238,369			68,585			47,491
Sales of equity securities, trading	78,974			—			—
Sales of other investments	17,854			6,102			5,717

See accompanying notes to consolidated financial statements.

F-8

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS – (Continued) (In Thousands)
	Years Ended December 31,
	2014			2013			2012
Net sales (purchases) of short term investments	50,286			9,550			118,283
Acquisition of and capitalized premiums for life settlement contracts	(25,419		)	(51,070		)	(51,031		)
Receipt of life settlement contract proceeds	10,035			20,054			10,074
Loan to ACP Re	(125,000		)	—			—
Acquisition of reinsurance entities, net of cash obtained	—			17,811			15,473
Acquisition of subsidiaries, net of cash obtained	(80,736		)	(20,182		)	(63,855		)
Sale of subsidiary	20,059			—			—
Increase in restricted cash and cash equivalents	(85,786		)	(21,677		)	(55,658		)
Purchase of property and equipment	(77,172		)	(39,586		)	(27,388		)
Net cash used in investing activities	(1,051,994		)	(929,551		)	(593,973		)
Cash flows from financing activities:
Revolving credit facility borrowings	220,000			—			—
Revolving credit facility payments	(100,000		)	—			—
Repurchase agreements, net	(293,222		)	58,311			43,193
Secured loan agreement borrowings	30,500			—			—
Secured loan agreement payments	(3,009		)	(1,299		)	(1,021		)
Promissory note borrowings	—			—			13,000
Promissory note payments	(10,695		)	—			(12,500		)
Senior notes proceeds	—			250,000			—
Convertible senior notes proceeds	68,400			—			25,000
Financing fees	(5,188		)	(2,740		)	(2,180		)
Common share (repurchase) issuance	(59,155		)	472			—
Preferred share issuance, net	178,641			111,130			—
Non-controlling interest capital contributions to consolidated subsidiaries	18,223			36,149			22,607
Stock option exercise and other	8,776			8,062			8,873
Dividends distributed on common stock	(55,599		)	(29,236		)	(30,201		)
Dividends distributed on preference stock	(12,738		)	(3,989		)	—
Net cash (used in) provided by financing activities	(15,066		)	426,860			66,771
Effect of exchange rate changes on cash	(15,748		)	2,895			3,270
Net increase in cash and cash equivalents	72,728			415,652			7,523
Cash and cash equivalents, beginning year	830,022			414,370			406,847
Cash and cash equivalents, end of year	$	902,750		$	830,022		$	414,370
Supplemental Cash Flow Information
Interest payments on debt	$	36,679		$	20,768		$	20,435
Income tax payments	85,619			65,652			8,414

See accompanying notes to consolidated financial statements.

F-9

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

1. Nature of Operations

AmTrust Financial Services, Inc. (the “Company”) is an insurance holding company formed under the laws of Delaware. Through its wholly-owned subsidiaries, the Company provides specialty property and casualty insurance focusing on workers’ compensation and commercial package coverage for small business, specialty risk and extended warranty coverage, and property and casualty coverage for middle market business. The Company also provides reinsurance, primarily on personal and commercial automotive business.

The Company transacts business primarily through fifteen insurance company subsidiaries domiciled in the United States and five insurance subsidiaries domiciled outside the United States. The Company's fifteen domestic insurance subsidiaries are:

Company	Abbreviation	Domiciled in
AmTrust Insurance Company of Kansas, Inc.	AICK	Kansas
Associated Industries Insurance Company, Inc.	AIIC	Florida
AmTrust Lloyd's Insurance Company of Texas	ALIC	Texas
Comp Options Insurance Company	COIC	Florida
Developers Surety and Indemnity Company	DSIC	Iowa
First Atlantic Title Insurance Corp.	FATIC	New York
First Nonprofit Insurance Company	FNIC	Delaware
Indemnity Company of California	ICC	California
Milwaukee Casualty Insurance Company	MCIC	Wisconsin
Rochdale Insurance Company	RIC	New York
Sequoia Insurance Company	SIC	California
Sequoia Indemnity Company	SID	Nevada
Security National Insurance Company	SNIC	Delaware
Technology Insurance Company, Inc.	TIC	New Hampshire
Wesco Insurance Company	WIC	Delaware

The Company's five primary foreign insurance subsidiaries are:

Company	Abbreviation	Domiciled in
AmTrust International Insurance Ltd.	AII	Bermuda
AmTrust International Underwriters Limited	AIU	Ireland
AmTrust Europe, Ltd.	AEL	England
Motors Insurance Company Ltd.	MIC	England
AmTrust at Lloyd's (Syndicate 1206)	ATL	England

2. Significant Accounting Policies

Basis of Reporting — The consolidated financial statements of the Company have been prepared in conformity with accounting principles generally accepted in the United States of America. The consolidated financial statements include the accounts of the Company and its domestic and foreign subsidiaries. The Company uses the equity method of accounting for its investment in National General Holding Corp. (“NGHC”) in which it owns a 13.2% ownership interest. All significant intercompany transactions and accounts have been eliminated in the consolidated financial statements.

Premiums — Insurance premiums, except for certain specialty risk and extended warranty programs, are recognized as earned on the straight-line basis over the contract period. Insurance premiums on specialty risk and extended warranty programs are earned

F-10

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

based on an estimated program coverage period. These estimates are based on the expected distribution of coverage periods by contract at inception, and because a single contract may contain multiple coverage period options, these estimates are revised based on the actual coverage period selected by the insured. Unearned premiums represent the portion of premiums written which is applicable to the unexpired term of the contract or policy in force. Premium adjustments on contracts and audit premiums are based on estimates made over the contract period. Premiums earned but not yet billed to insureds are estimated and accrued, net of related costs. These estimates are subject to the effects of trends in payroll audit adjustments. Although considerable variability is inherent in such estimates, management believes that the accrual for earned but unbilled premiums is reasonable. The estimates are continually reviewed and adjusted as necessary as experience develops or new information becomes known; such adjustments are included in current operations. The Company historically has used a percentage of premium for establishing its allowance for doubtful accounts. The Company reviews its bad debt write-offs at least annually and adjusts its premium percentage as required. Allowance for doubtful accounts were approximately $45,024 and $32,132 at December 31, 2014 and 2013, respectively.

Loss and Loss Adjustment Expenses — Loss and loss adjustment expenses (“LAE”) represent the estimated ultimate net costs of all reported and unreported losses incurred through December 31, 2014. The reserves for unpaid losses and LAE are estimated using individual case-basis valuations and statistical analysis and are not discounted. Although considerable variability is inherent in the estimates of reserves for losses and LAE, management believes that the reserves for losses and LAE are adequate. The estimates are continually reviewed and adjusted as necessary as experience develops or new information becomes known. Such adjustments are included in current operations.

Investments — The Company accounts for its investments in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 320 Investments — Debt and Equity Securities, which requires that fixed-maturity and equity securities that have readily determined fair values be segregated into categories based upon the Company’s intention for those securities. In accordance with ASC 320, the Company has classified its fixed-maturities and certain equity securities as available-for-sale. The Company may sell its available-for-sale securities in response to changes in interest rates, risk/reward characteristics, liquidity needs or other factors. Available for sale fixed-maturity securities and equity securities are reported at their estimated fair values based on quoted market prices or a recognized pricing service, with unrealized gains and losses, net of tax effects, reported as a separate component of comprehensive income in stockholders’ equity. Additionally, the Company classified certain equity securities as trading securities. Unrealized gains and losses on trading securities are reported within realized gains and losses. Realized gains and losses are determined on the specific identification method.

Quarterly, the Company’s Investment Committee (“Committee”) evaluates each security that has an unrealized loss as of the end of the subject reporting period for other-than-temporary-impairment (“OTTI”). The Company generally considers an investment to be impaired when it has been in a significant unrealized loss position (in excess of 35% of cost if the issuer has a market capitalization of under $1 billion and in excess of 25% of cost if the issuer has a market capitalization of $1 billion or more) for over 24 months. In addition, the Committee uses a set of quantitative and qualitative criteria to review the Company's investment portfolio to evaluate the necessity of recording impairment losses for other-than-temporary declines in the fair value of our investments. The criteria the Committee primarily considers include:

• 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 restructuring, regulatory changes, acquisitions and dispositions, pending litigation, distribution agreements and general industry trends.

F-11

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

Impairment of investment securities results in a charge to operations when a market decline below cost is deemed to be other-than-temporary. The Company writes down investments immediately that it considers to be impaired based on the above criteria collectively.

Based on guidance in FASB ASC 320-10-65, in the event of the decline in fair value of a debt security, a holder of that security that does not intend to sell the debt security and for whom it is not more than likely than not that such holder will be required to sell the debt security before recovery of its amortized cost basis, is required to separate the decline in fair value into (a) the amount representing the credit loss and (b) the amount related to other factors. The amount of total decline in fair value related to the credit loss shall be recognized in earnings as an OTTI with the amount related to other factors recognized in accumulated other comprehensive loss net loss, net of tax. OTTI credit losses result in a permanent reduction of the cost basis of the underlying investment. The determination of OTTI is a subjective process, and different judgments and assumptions could affect the timing of the loss realization.

In 2014, the Company also classified certain of its equity securities as trading securities. Equity securities classified as trading securities are generally held for resale in anticipation of short-term market movement. Trading securities are stated at estimated fair market value. Gains and losses, both realized and unrealized, are included in the net realized gain or loss on investment on the Consolidated Statements of Income.

The Company has the following types of investments:

(a) Short-term investments — Short term investments are carried at cost, which approximates fair value, and include investments with maturities between 91 days and less than 1 year at date of acquisition. As of December 31, 2014 and 2013, short term investments consisted primarily of money market investments.

(b) Fixed maturities and equity securities, available-for-sale — Fixed maturities and equity securities (common stocks, mutual funds and non-redeemable preferred stock) are classified as available-for-sale and carried at fair value. Unrealized gains or losses on available-for-sale securities are reported as a component of accumulated other comprehensive income.

(c) Equity securities, trading —  Equity securities classified as trading are carried at estimated fair market value. Gains and losses, both realized and unrealized, are reported in the net realized gain or loss on investment.

(d) Mortgage and asset backed securities — For mortgage and asset backed securities, the Company recognizes income using the retrospective adjustment method based on prepayments and the estimated economic life of the securities. The effective yield reflects actual payments to date plus anticipated future payments.

(e) Limited partnerships — The Company uses the equity method of accounting for investments in limited partnerships in which its ownership interest of the limited partnership enables the Company to influence the operating or financial decisions of the investee company, but the Company’s interest in the limited partnership does not require consolidation. The Company’s proportionate share of equity in net income of these unconsolidated affiliates is reported in net investment income.

(f) Derivatives and hedging activities — The Company from time to time invests in a limited amount of derivatives and other financial instruments as part of its investment portfolio. Derivatives are financial arrangements among two or more parties with returns linked to an underlying equity, debt, commodity, asset, liability, foreign exchange rate or other index. Unless subject to a scope exclusion, the Company carries all derivatives on the consolidated balance sheet at fair value. For derivatives that do not qualify for hedge accounting, the changes in fair value of the derivative are presented as a component of operating income. The Company primarily utilizes interest rate swaps, which are valued in terms of the contract between the Company and the issuer of the swaps, are based on the difference between the stated floating rate of the underlying indebtedness, and a predetermined fixed rate for such indebtedness with the result that the indebtedness carries a net fixed interest rate.

(g) Securities sold under agreements to repurchase, at contract value — The Company from time to time invests in securities sold under agreements to repurchase, which are accounted for as collateralized borrowing transactions and are recorded at their contracted repurchase amounts, plus accrued interest. The Company minimizes the credit risk that counterparties to transactions might be unable to fulfill their contractual obligations by monitoring exposure and collateral value and generally requiring additional collateral to be deposited with the Company when necessary.

Net investment income consists primarily of interest and dividends less expenses. Interest on fixed maturities, adjusted for any amortization of premium or discount, is recorded as income when earned. Investment expenses are accrued as incurred.

F-12

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

Realized investment gains or losses are computed using the specific costs of securities sold, and, if applicable, include write-downs on investments having other-than-temporary declines in value.

Fair Value of Financial Instruments — The Company’s estimates of fair value for financial assets and financial liabilities are based on the framework established in ASC 820 Fair Value Measurements and Disclosures. The framework is based on the inputs used in valuation and gives the highest priority to quoted prices in active markets and requires that observable inputs be used in the valuations when available. The disclosure of fair value estimates in the ASC 820 hierarchy is based on whether the significant inputs into the valuation are observable. In determining the level of the hierarchy in which the estimate is disclosed, the highest priority is given to unadjusted quoted prices in active markets and the lowest priority to unobservable inputs that reflect the Company’s significant market assumptions. Additionally, valuation of fixed maturity investments is more subjective when markets are less liquid due to lack of market based inputs, which may increase the potential that the estimated fair value of an investment is not reflective of the price at which an actual transaction could occur. Fair values of other financial instruments approximate their carrying values.

For investments that have quoted market prices in active markets, the Company uses the quoted market prices as fair value and includes these prices in the amounts disclosed in the Level 1 hierarchy. The Company receives the quoted market prices from nationally recognized third-party pricing services (“pricing service”). When quoted market prices are unavailable, the Company utilizes a pricing service to determine an estimate of fair value. This pricing method is used, primarily, for fixed maturities. The fair value estimates provided by the pricing service are included in the Level 2 hierarchy. If the Company determines that the fair value estimate provided by the pricing service does not represent fair value or if quoted market prices and an estimate from pricing services are unavailable, the Company produces an estimate of fair value based on dealer quotations of the bid price for recent activity in positions with the same or similar characteristics to that being valued or through consensus pricing of a pricing service. Depending on the level of observable inputs, the Company will then determine if the estimate is Level 2 or Level 3 hierarchy.

Fixed Maturities. The Company utilizes a pricing service to estimate fair value measurements for all of its fixed maturities. The pricing service utilizes market quotations for fixed maturity securities that have quoted market prices in active markets. Since fixed maturities other than U.S. treasury securities generally do not trade on a daily basis, the pricing service prepares estimates of fair value measurements using relevant market data, benchmark curves, sector groupings and matrix pricing. The pricing service utilized by the Company has indicated it will produce an estimate of fair value only if there is verifiable information to produce a valuation. As the fair value estimates of most fixed maturity investments are based on observable market information rather than market quotes, the estimates of fair value other than U.S. Treasury securities are included in Level 2 of the hierarchy. U.S. Treasury securities are included in the amount disclosed in Level 1 as the estimates are based on unadjusted prices. The Company’s Level 2 investments include obligations of U.S. government agencies, municipal bonds, corporate debt securities and other mortgage backed securities.

Equity Securities. The Company utilizes a pricing service to estimate the fair value of the majority of its available-for-sale and trading equity securities. The pricing service utilizes market quotations for equity securities that have quoted market prices in active markets and their respective quoted prices are provided as fair value. The Company classifies the values of these equity securities as Level 1. The pricing service also provides fair value estimates for certain equity securities whose fair value is based on observable market information rather than market quotes. The Company classifies the value of these equity securities as Level 2. The Company also holds certain equity securities that are issued by privately-held entities or direct equity investments that do not have an active market. The Company estimates the fair value of these securities primarily based on inputs such as third party broker quotes, issuers' book value, market multiples, and other inputs. These equity securities are classified as Level 3 due to significant unobservable inputs used in the valuation.

Other Investments. Other investments consisted primarily of investments in limited partnerships, an interest in syndicated term loan, and annuities. Other investments accounted for approximately 0.6% of the Company's investment portfolio as of December 31, 2014. The Company estimates the fair value of other investments based on significant unobservable inputs in the valuation process. As a result, the Company classified the fair value estimates as Level 3 in the financial hierarchy. The Company has determined that its investments in Level 3 securities are not material to its financial position or results of operations.

Derivatives. The Company estimates fair value using information provided by a pricing service for interest rate swaps and classifies derivatives as Level 2 hierarchy.

Investment in Life Settlements — When the Company becomes the owner of a life insurance policy either by direct purchase or following a default on a premium finance loan, the life insurance premium for such policy is accounted for as an investment in

F-13

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

life settlements. Investments in life settlements are accounted for in accordance with ASC 325-30, Investments in Insurance Contracts, which states that an investor shall elect to account for its investments in life settlement contracts using either the investment method or the fair value method. The election is made on an instrument-by-instrument basis and is irrevocable. The Company has elected to account for these investments using the fair value method. Fair value of the investment in policies is determined using unobservable Level 3 inputs and is calculated by performing a net present value calculation of the face amount of the life policies less premiums for the total portfolio. The unobservable Level 3 inputs use new or updated information that affects the Company's assumptions about remaining life expectancy, credit worthiness of the policy issuer, funds needed to maintain the asset until maturity, and discount rates.

Life Settlement Profit Commission — Investments in life settlements are accounted for in accordance with ASC 325-30, Investments in Insurance Contracts, and the Company has elected to account for its investment in life settlements using the fair value method. The Company retains a third party service provider to perform certain administration functions to effectively manage the life settlement contracts held by Tiger Capital, LLC and AMT Capital Holdings II S.A. and a portion of their fee is contingent on the overall profitability of the life settlement contracts. The Company accrues the related profit commission on life settlements at fair value, in relation to life settlements purchased prior to December 31, 2010. This profit commission is calculated based on the discounted anticipated cash flows and the provisions of the underlying contract. In addition, the Company accrues a best estimate in relation to profit commission due on certain life settlement contracts acquired subsequent to December 31, 2010 as no contractual relationship currently exists.

Warranty Fee Revenue — The Company promotes and markets extended service plans (“ESP”) to consumers through retailers and certain other marketing organizations usually with terms of coverage ranging from one to three years, commencing at the expiration of the manufacturers’ warranty, if applicable. The Company generally insures the obligations under ESPs through contractual liability insurance issued by one of its insurance company subsidiaries. Under the terms of service agreements with various retailers, the Company provides for marketing and administrative services related to ESP. These agreements are generally for one-year terms and can be canceled by either party with thirty days advance notice. The Company recognizes revenue related to promotion, marketing and administration services at the time of the sale of ESP. However, the Company defers a portion of service revenue based upon an estimate of administrative services to be provided in future periods.

Deferred Policy Acquisition Costs — The Company defers commission expenses, premium taxes and assessments as well as underwriting and safety costs that vary with and are primarily related to the successful acquisition of insurance policies. These acquisition costs are capitalized and charged to expense ratably as premiums are earned. The Company may realize deferred policy acquisition costs only if the ratio of loss and loss adjustment expense reserves (calculated on a discounted basis) to the premiums to be earned is less than 100%, as it historically has been. If, hypothetically, that ratio were to be above 100%, the Company could not continue to record deferred policy acquisition costs as an asset and may be required to establish a liability for a premium deficiency reserve. The Company considers anticipated investment income in determining whether a premium deficiency relating to short duration contracts exists. The change in net deferred acquisition costs was $159,979, $97,561 and $68,135 for the years ended December 31, 2014, 2013 and 2012, respectively. The amortization for deferred acquisition costs was approximately $538,710, $367,288, and $242,887 in 2014, 2013 and 2012, respectively.

Reinsurance — Reinsurance premiums, losses and LAE ceded to other companies are accounted for on a basis consistent with those used in accounting for the original policies issued and pursuant to the terms of the reinsurance contracts. The Company records premiums earned and losses and LAE incurred and ceded to other companies as reductions of premium revenue and losses and LAE. The Company accounts for commissions allowed by reinsurers on business ceded as ceding commission, which is a reduction of acquisition of costs and other underwriting expenses. The Company earns commissions on reinsurance premiums ceded in a manner consistent with the recognition of the earned premium on the underlying insurance policies, on a pro rata basis over the terms of the policies reinsured. Reinsurance recoverables relate to the portion of reserves and paid losses and LAE that are ceded to other companies. The Company remains contingently liable for all loss payments in the event of failure to collect from the reinsurer.

Ceding Commissions on Reinsurance Transactions — Ceding commissions on reinsurance transactions are commissions the Company receives from ceding gross written premiums to third party reinsurers. In connection with the Maiden Quota Share, which is the Company's primary source of ceding commissions, the amount the Company receives is a blended rate based on a contractual formula contained in the individual reinsurance agreements, and the rate may not correlate specifically to the cost structure of the individual segments. The ceding commissions the Company receives cover a portion of its capitalized direct acquisition costs and a portion of other underwriting expenses. Ceding commissions received from reinsurance transactions that represent recovery of capitalized direct acquisition costs are recorded as a reduction of capitalized unamortized deferred acquisition

F-14

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

costs and the net amount is charged to expense in proportion to net premium revenue recognized. Ceding commissions received from reinsurance transactions that represent the recovery of other underwriting expenses are recognized in the income statement over the insurance contract period in proportion to the insurance protection provided and classified as a reduction of acquisition costs and other underwriting expenses. Ceding commissions received, but not yet earned, that represent the recovery of other underwriting expenses are classified as a component of accrued expenses and other current liabilities. The Company allocates earned ceding commissions to its segments based on each segment’s proportionate share of total acquisition costs and other underwriting expenses recognized during the period.

Assessments — Insurance related assessments are accrued in the period in which they have been incurred. A typical obligating event would be the issuance of an insurance policy or the occurrence of a claim. The Company is subject to a variety of assessments, such as assessments by state guaranty funds and workers’ compensation second injury funds. State guaranty funds assessments are used by state insurance regulators to cover losses of policyholders of insolvent insurance companies and for the operating expenses of such agencies. The Company uses estimated assessment rates in determining the appropriate assessment expense and accrual. The Company uses estimates derived from state regulators and/or National Association of Insurance Commissioners (“NAIC”) Tax and Assessments Guidelines. Assessment expense for the years ended December 31, 2014, 2013 and 2012 was approximately $23,205, $33,772 and $39,546, respectively.

Business Combinations — The Company accounts for business combinations under the acquisition method of accounting, which requires the Company to record assets acquired, liabilities assumed and any non-controlling interest in the acquiree at their respective fair values as of the acquisition date in the Company's consolidated financial statements. The Company accounts for the insurance and reinsurance contracts under the acquisition method as new contracts, which requires the Company to record assets and liabilities at fair value. The Company adjusts the fair value loss and LAE reserves by recording the acquired loss reserves based on the Company’s existing accounting policies and then discounting them based on expected reserve payout patterns using a current risk-free rate of interest. This risk free interest rate is then adjusted based on different cash flow scenarios that use different payout and ultimate reserve assumptions deemed to be reasonably possible based upon the inherent uncertainties present in determining the amount and timing of payment of such reserves. The difference between the acquired loss and LAE reserves and the Company’s best estimate of the fair value of such reserves at the acquisition date is recorded either an an intangible asset or another liability, as applicable, and amortized proportionately to the decrease in the acquired loss and LAE reserves over the payout period for the acquired loss and LAE reserves. The Company records contingent consideration at fair value based on the terms of the purchase agreement with subsequent changes in fair value recorded through earnings. The determination of fair value may require management to make significant estimates and assumptions. The purchase price is the fair value of the total consideration conveyed to the seller and the Company records the excess of the purchase price over the fair value of the acquired net assets, where applicable, as goodwill. The Company assigns fair values to intangible assets based on valuation techniques including the income and market approaches. The Company expenses costs associated with the acquisition of a business in the period incurred. The Company includes the results of operations of an acquired business in its consolidated financial statements from the date of the acquisition.

Goodwill and Intangible Assets — The Company accounts for goodwill and intangible assets in accordance with ASC 350 Intangibles — Goodwill and Other. Upon the completion of an acquisition, the Company completes purchase price accounting in accordance with ASC 805, Business Combinations, which requires an acquirer to assign values to the acquired assets and liabilities based on their fair value. In the event that a purchase price paid is in excess of the net assets acquired, any unidentified excess is deemed to be goodwill. Goodwill is not amortized. Additionally as a result of an acquisition, the Company may obtain identifiable intangible assets. Indefinite lived intangible assets are not amortized. Intangible assets with a finite life are amortized over the estimated useful life of the asset. Intangible assets with an indefinite useful life are not amortized. Goodwill and intangible assets with an indefinite useful life are tested for impairment on an annual basis or more frequently if changes in circumstances indicate that the carrying amount may not be recoverable. If the goodwill or intangible asset is impaired, it is written down to its realizable value with a corresponding expense reflected in the consolidated statement of operations. The Company tests for impairment of goodwill at the reporting unit level. The Company generally combines reporting units, which are a component of an operating segment when they have similar economic characteristics, nature of services, types of customer, distribution methods and regulatory environment. The Company had seven reporting units as of December 31, 2014.

F-15

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

Property and Equipment — Property and equipment are recorded at cost. Maintenance and repairs are charged to operations as incurred. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets, as follows:

Building	40 years
Equipment	5 to 7 years
Computer equipment and software	3 to 20 years (primarily 3 years)
Leasehold improvements	Lesser of lease term or 15 years

The Company accounts for its internal use software under ASC 350 Intangibles — Goodwill and Other. Accordingly, the Company capitalizes costs of computer software developed or obtained for internal use that is specifically identifiable, has determinable lives and relates to future use.

Equalization reserves —The Company owns several Luxembourg-domiciled reinsurance entities. In connection with these entities, the Company acquires cash and equalization reserves of the reinsurance companies. An equalization reserve is a catastrophe reserve established in excess of required reserves as established by the laws of Luxembourg. The equalization reserves were originally established by the seller of the reinsurance entities, and under Luxembourg law allowed the reinsurance company to reduce its income tax paid.

Income Taxes — The Company files a consolidated United States ("US") income tax return for its eligible domestic subsidiaries. The Company's non-domestic subsidiaries file income tax returns in their respective local jurisdictions. As part of the US consolidated income tax return filing, the Company is party to federal income tax allocation agreements amongst the includible entities. Under the tax allocation agreements, the Company pays to or receives from its subsidiaries the amount, if any, by which the group’s federal income tax liability was affected by virtue of inclusion of the subsidiary in the consolidated federal return.

Deferred income taxes reflect the impact of “temporary differences” between the amount of assets and liabilities for financial reporting purposes and such amounts as measured by tax laws and regulations. The deferred tax asset primarily consists of book versus tax differences for premiums earned, loss and loss adjustment expense reserve discounting, policy acquisition costs, earned but unbilled premiums, and unrealized holding gains and losses on marketable equity securities. Changes in deferred income tax assets and liabilities that are associated with components of other comprehensive income, primarily unrealized investment gains and losses, are recorded directly to other comprehensive income. Otherwise, changes in deferred income tax assets and liabilities are included as a component of income tax expense.

In assessing the recoverability of deferred tax assets, management considers whether it is more likely than not that the Company will generate future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, tax planning strategies and projected future taxable income in making this assessment. If necessary, the Company establishes a valuation allowance to reduce the deferred tax assets to the amounts that are more likely than not to be realized.

The Company recognizes tax benefits only for tax positions that are more likely than not to be sustained upon examination by taxing authorities. The Company’s policy is to prospectively classify accrued interest and penalties related to any unrecognized tax benefits in its income tax provision. The Company files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. Primarily tax years 2009 through 2013 are still subject to examination. The Company does not anticipate any significant changes to its total unrecognized tax benefits within the next 12 months.

Pensions — The Company accounts for its pension plan by recognizing in its balance sheets the overfunded or underfunded status of defined benefit plans measured as the difference between the fair value of plan assets and the projected benefit obligation. The Company recognizes the change in the funded status of the plan in the year in which the change occurs through Accumulated Other Comprehensive Income.

Foreign Currency — The Company assigns functional currencies to its foreign operations, which are generally the currencies of the local operating environment. Foreign currency amounts are remeasured to the functional currency and the resulting foreign exchange gains and losses are reflected in earnings. Functional currency amounts from the Company’s foreign operations are then translated into U.S. dollars. The change in unrealized foreign currency translation gain or loss during the year, net of tax, is a component of accumulated other changes in equity from nonowner sources. The foreign currency remeasurement and translation

F-16

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

are calculated using current exchange rates for the items reported on the balance sheets and average exchange rates for items recorded in earnings.

Stock Compensation Expense — The Company follows ASC 720 Compensation — Stock Compensation and recognizes compensation expense for its share-based payments based on the fair value of the awards. Share-based payments include restricted stock, restricted stock units, performance share units and stock option grants under the Company’s 2005 Equity Incentive Plan and 2010 Omnibus Incentive Plan. ASC 720 requires share-based compensation expense recognized to be based on estimated grant date fair value.

Earnings Per Share — The Company accounts for earnings per share under the two-class method, as described in ASC 260, Earnings Per Share. Under the two-class method, earnings for the period are allocated between common stockholders and other stockholders based on their respective rights to receive dividends. Restricted stock awards granted to employees under the Company’s 2005 Equity Incentive Plan and 2010 Omnibus Incentive Plan are considered participating securities as they receive dividends on this stock. Additionally, the Company follows the treasury stock method related to its contingently convertible debt, as the Company has the ability to settle the conversion premium in either cash or stock. The Company had contingently convertible shares that were dilutive for the Company's earnings per share calculations in 2014 and 2013 and anti-dilutive in 2012.

Treasury Stock — The Company accounts for the treasury stock at the repurchase price as a reduction to stockholders’ equity.

Concentration and Credit Risk — Financial instruments that potentially subject the Company to concentration of credit risk are primarily cash and cash equivalents, investments and premium receivable. Investments are diversified through the types of investments, industry sectors and geographic regions. The Company limits the amount of credit exposure with any one financial institution and believes that no significant concentration of credit risk exists with respect to cash and investments. At December 31, 2014 and 2013, the outstanding premium receivable balance is generally diversified due to the number of entities composing the Company’s customer base. To reduce credit risk, the Company performs ongoing evaluations of its customers’ financial condition. The Company also has receivables from its reinsurers. Reinsurance contracts do not relieve the Company from its obligations to policyholders. Failure of reinsurers to honor their obligations could result in losses to the Company. The Company periodically evaluates the financial condition of its reinsurers to minimize its exposure to significant losses from reinsurer insolvencies. It is the policy of management to review all outstanding receivables at period end as well as the bad debt write-offs experienced in the past and establish an allowance for doubtful accounts, if deemed necessary.

Non-controlling Interest — The ownership interest in consolidated subsidiaries of non-controlling interests is reflected as non-controlling interest. The Company’s consolidation principles would also consolidate any entity in which the Company would be deemed a primary beneficiary. Non-controlling interest expense represents such non-controlling interests’ in the earnings of that entity. All significant transactions and account balances between the Company and its subsidiaries were eliminated during consolidation.

Use of Estimates — The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions, which include the reserves for losses and loss adjustment expenses, are subject to considerable estimation error due to the inherent uncertainty in projecting ultimate claim amounts that will be reported and settled over a period of many years. In addition, estimates and assumptions associated with the recognition and amortization of deferred policy acquisition costs, the determination of fair value of invested assets and related impairments, and the determination of goodwill and intangible impairments require considerable judgment by management. On an on-going basis, management reevaluates its assumptions and the methods of calculating its estimates. Actual results may differ from the estimates and assumptions used in preparing the consolidated financial statements.

Reclassifications — Certain accounts in the prior years’ consolidated financial statements have been reclassified for comparative purposes to conform to the current year’s presentation.

Recent Accounting Literature

In November 2014, the FASB issued Accounting Standards Update ("ASU") 2014-16, Derivative and Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity, which requires an entity (an issuer or an investor) of hybrid financial instruments to determine the nature of the host

F-17

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

contract by considering the economic characteristics and risks of the entire hybrid financial instrument, including the embedded derivative feature that is being evaluated for separate accounting from the host contract. The updated guidance is effective for the period ending March 15, 2016. The adoption of this guidance is not expected to have a material effect on the Company's results of operations, financial position or liquidity.

In June 2014, the FASB issued ASU 2014-11, Transfers and Serving (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures, which amends accounting for repurchase-to-maturity transactions and associated repurchase financing to secured borrowing. The revised guidance also requires expanded disclosure for certain transactions comprising (1) a transfer of a financial asset accounted for as a sale and (2) an agreement with the same transferee entered into in contemplation of the initial transfer that results in the transferor retaining substantially all of the exposure to the economic return on the transferred financial asset throughout the term of the transaction, as well as expands disclosure for repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions that are accounted for as secured borrowings. The updated guidance is effective for the period ending March 31, 2015. The adoption of this guidance is not expected to have a material effect on the Company's results of operations, financial position or liquidity.

In June 2014, the FASB issued ASU 2014-12, Compensation-Stock Compensation (Topic 718):Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period, to clarify how entities should treat performance targets that can be met after therequisite service period of a share-based payment award. The ASU states that the share-based payment award should be treatedas a performance condition that affects vesting and, therefore, an entity would not record compensation expense (measured as ofthe grant date without taking into account the effect of the performance target) related to an award for which transfer to the employeeis contingent on the entity’s satisfaction of a performance target until it becomes probable that the performance target will be met.No new disclosures are required under this ASU.ASU 2014-12 is effective beginning after December 15, 2015. Early adoption is permitted. In addition, all entities will havethe option of applying the guidance either prospectively (i.e., only to awards granted or modified on or after the effective date ofthe issue) or retrospectively. Retrospective application would only apply to awards with performance targets outstanding at orafter the beginning of the first annual period presented (i.e., the earliest presented comparative period). The adoption of thisguidance is not expected to have an impact on the Company's results of operations, financial condition or liquidity.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), to clarify the principles for recognizing revenue. While insurance contracts are not within the scope of this updated guidance, the Company’s service and fee income will be subject to this updated guidance. The updated guidance requires an entity to recognize revenue as performance obligations are met, in order to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration the entity is entitled to receive for those goods or services. The following steps are applied in the updated guidance: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the entity satisfies a performance obligation. The updated guidance is effective for the quarter ending March 31, 2017. The Company is currently evaluating the impact this guidance will have on the Company's results of operations, financial position or liquidity.

In April 2014, the FASB issued ASU 2014-08, Presentation of Financial Statement (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosure of Disposals of Components of an Entity, which provides revised guidance to reduce diversity in practice for reporting discontinued operations. Under the previous guidance, any component of an entity that was a reportable segment, an operating segment, a reporting unit, a subsidiary, or an asset group was eligible for discontinued operations presentation. The revised guidance only allows disposals of components of an entity that represent a strategic shift (e.g., disposal of a major geographical area, a major line of business, a major equity method investment, or other major parts of an entity) and that have a major effect on a reporting entity’s operations and financial results to be reported as discontinued operations. The revised guidance also requires expanded disclosure in the financial statements for discontinued operations as well as for disposals of significant components of an entity that do not qualify for discontinued operations presentation. The updated guidance is effective for the period ending March 31, 2015. The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

F-18

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

In July 2013, the FASB issued ASU 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, which provides guidance on the presentation of an unrecognized tax benefit when a net operating loss (“NOL”) carry-forward, a similar tax loss, or a tax credit carry-forward exists. Under the ASU, an entity must present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, as a reduction to a deferred tax asset for a NOL carry-forward, similar tax loss, or a tax credit carry-forward. There are two exceptions to this form of presentation as follows:

• To the extent a NOL carry-forward, a similar tax loss, or a tax credit carry-forward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position; and

• The entity does not intend to use the deferred tax asset for this purpose.

If either of these conditions exists, an entity should present an unrecognized benefit in the financial statements as a liability and should net the unrecognizable tax benefit with a deferred tax asset. The amendments in this update were effective for fiscal years, and interim periods within those years, beginning after December 31, 2013. The adoption of this guidance did not have a material impact on the Company's results of operations, financial condition or liquidity.

In March 2013, the FASB issued ASU 2013-05, Foreign Currency Matters (Topic 830): Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity, with the objective of resolving the diversity about whether ASC 810-10, Consolidation - Overall, or ASC 830-30, Foreign Currency Matters - Translation of Financial Statements, applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or allof its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is anonprofit activity or a business (other than a sale of in-substance real estate or conveyance of oil and gas mineral rights) within aforeign entity.

Under this guidance, when a reporting entity that is also the parent entity ceases to have a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business (other than a sale of in substance real estate or conveyance of oil and gas mineral rights) within a foreign entity, the parent is required to apply the guidance in ASC 830-30 to release any related cumulative translation adjustment into net income. Accordingly, the cumulative translation adjustment should be released into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. Additionally, for an equity method investment that is a foreign entity, the partial sale guidance in ASC 830-30-40 continues to be applicable. As such, a pro rata portion of the cumulative translation adjustment should be released into net income upon a partial sale of such an equity method investment. However, this treatment does not apply to an equity method investment that is not a foreign entity. In those instances, the cumulative translation adjustment is released into net income only if the partial sale represents a complete or substantially complete liquidation of the foreign entity that contains the equity method investment. Furthermore, the amendments in this ASU clarify that the sale of an investment in a foreign entity includes both: (1) events that result in the loss of a controlling financial interest in a foreign entity (that is, irrespective of any retained investment); and (2) events that result in an acquirer obtaining control of an acquiree in which it held an equity interest immediately before the acquisition date (sometimes also referred to as a step acquisition). Accordingly, the cumulative translation adjustment should be released into net income upon the occurrence of those events. The amendments in this ASU are effective prospectively for fiscal years (and interim reporting periods within those years) beginning after December 15, 2013. The update was adopted effective January 1, 2014. The adoption of this guidance did not have an impact on the Company's results of operations, financial condition or liquidity.

F-19

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

3. Investments

(a) Available-for-Sale Securities

The amortized cost, estimated fair value and gross unrealized appreciation and depreciation of fixed and equity securities are presented in the tables below:

(Amounts in Thousands) As of December 31, 2014	Original or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Preferred stock	$	3,349	$	158	$	(1	)	$	3,506
Common stock	80,726		4,673		(7,861		)	77,538
U.S. treasury securities	42,416		1,558		(104		)	43,870
U.S. government agencies	12,968		575		(5		)	13,538
Municipal bonds	469,646		13,950		(1,555		)	482,041
Foreign government	106,054		6,760		(83		)	112,731
Corporate bonds:
Finance	1,167,011		60,322		(5,471		)	1,221,862
Industrial	1,187,818		38,317		(23,275		)	1,202,860
Utilities	137,169		3,200		(1,677		)	138,692
Commercial mortgage backed securities	36,964		1,890		(169		)	38,685
Residential mortgage backed securities:
Agency backed	954,320		23,340		(1,878		)	975,782
Non-agency backed	22,071		696		(264		)	22,503
Asset backed securities	709		2		(1		)	710
	$	4,221,221	$	155,441	$	(42,344	)	$	4,334,318

(Amounts in Thousands) As of December 31, 2013	Original or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Preferred stock	$	1,498	$	82	$	(74	)	$	1,506
Common stock	14,512		1,156		(2,026		)	13,642
U.S. treasury securities	158,915		1,196		(851		)	159,260
U.S. government agencies	10,466		107		(84		)	10,489
Municipal bonds	461,325		4,781		(19,923		)	446,183
Foreign government	160,459		971		(1,325		)	160,105
Corporate bonds:
Finance	1,057,542		41,027		(13,970		)	1,084,599
Industrial	768,161		7,695		(21,439		)	754,417
Utilities	70,924		1,310		(2,008		)	70,226
Commercial mortgage backed securities	28,970		—		(404		)	28,566
Residential mortgage backed securities:
Agency backed	694,001		5,657		(13,918		)	685,740
Non-agency backed	6,737		19		(7		)	6,749
Asset backed securities	6,119		4		(3		)	6,120
	$	3,439,629	$	64,005	$	(76,032	)	$	3,427,602
Less: securities pledged	316,576		506		(5,564		)	311,518
	$	3,123,053	$	63,499	$	(70,468	)	$	3,116,084

F-20

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

Investments in foreign government securities include securities issued by national entities as well as instruments that are unconditionally guaranteed by such entities. As of December 31, 2014, the Company's foreign government securities were issued or guaranteed primarily by governments in Canada and Europe.

Proceeds from the sale of investments in available-for-sale securities during the years ended December 31, 2014, 2013 and 2012 were approximately $1,962,558, $1,681,165 and $953,188, respectively.

A summary of the Company’s available-for-sale fixed securities as of December 31, 2014 and 2013, 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.

	December 31, 2014				December 31, 2013
(Amounts in Thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	106,041	$	105,839	$	128,128	$	128,214
Due after one through five years	682,632		704,344		592,703		603,942
Due after five through ten years	1,998,740		2,062,942		1,632,115		1,631,751
Due after ten years	335,669		342,468		334,846		321,372
Mortgage and asset backed securities	1,014,064		1,037,681		735,827		727,175
Total fixed maturities	$	4,137,146	$	4,253,274	$	3,423,619	$	3,412,454

OTTI charges of our fixed-maturities and equity securities for the years ended December 31, 2014, 2013 and 2012 are presented in the table below:

(Amounts in Thousands)	2014		2013		2012
Equity securities recognized in earnings	$	2,646	$	2,869	$	2,965
Fixed maturity securities recognized in earnings	5,393		—		—
	$	8,039	$	2,869	$	2,965

F-21

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

The tables below summarize the gross unrealized losses of our fixed maturity and equity securities by length of time the security has continuously been in an unrealized loss position as of December 31, 2014 and 2013:

	Less Than 12 Months						12 Months or More						Total
(Amounts in Thousands) December 31, 2014	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	$	38,970	$	(7,764	)	21	$	400	$	(98	)	2	$	39,370	$	(7,862	)
U.S. treasury securities	1,030		(54		)	7	3,219		(50		)	9	4,249		(104		)
U.S. government agencies	1,736		(3		)	3	222		(2		)	4	1,958		(5		)
Municipal bonds	24,695		(240		)	64	93,201		(1,315		)	98	117,896		(1,555		)
Foreign government	7,644		(83		)	4	—		—			—	7,644		(83		)
Corporate bonds:
Finance	192,520		(4,297		)	143	66,715		(1,174		)	27	259,235		(5,471		)
Industrial	236,845		(17,230		)	194	60,511		(6,045		)	43	297,356		(23,275		)
Utilities	12,188		(490		)	22	13,908		(1,187		)	3	26,096		(1,677		)
Commercial mortgage backed securities	15		—			2	4,729		(169		)	8	4,744		(169		)
Residential mortgage backed securities:
Agency backed	41,187		(101		)	10	66,172		(1,777		)	29	107,359		(1,878		)
Non-agency backed	5,092		(263		)	3	28		(1		)	2	5,120		(264		)
Asset-backed securities	148		—			1	110		(1		)	2	258		(1		)
Total temporarily impaired	$	562,070	$	(30,525	)	474	$	309,215	$	(11,819	)	227	$	871,285	$	(42,344	)

	Less Than 12 Months						12 Months or More						Total
(Amounts in Thousands) December 31, 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	$	4,875	$	(2,100	)	51	$	—	$	—		—	$	4,875	$	(2,100	)
U.S. treasury securities	52,757		(851		)	18	—		—			—	52,757		(851		)
U.S. government agencies	4,135		(84		)	11	—		—				4,135		(84		)
Municipal bonds	254,219		(17,986		)	302	24,169		(1,937		)	9	278,388		(19,923		)
Foreign government	68,102		(1,324		)	16	999		(1		)	1	69,101		(1,325		)
Corporate bonds:
Finance	500,564		(13,402		)	182	58,923		(568		)	9	559,487		(13,970		)
Industrial	500,366		(21,203		)	263	3,383		(236		)	2	503,749		(21,439		)
Utilities	45,663		(2,008		)	21	—		—			—	45,663		(2,008		)
Commercial mortgage backed securities	28,552		(404		)	18	—		—			—	28,552		(404		)
Residential mortgage backed securities:
Agency backed	492,740		(13,918		)	120	—		—			—	492,740		(13,918		)
Non-agency backed	205		(5		)	6	23		(2		)	1	228		(7		)
Asset-backed securities	1,463		(3		)	4	—		—			—	1,463		(3		)
Total temporarily impaired	$	1,953,641	$	(73,288	)	1,012	$	87,497	$	(2,744	)	22	$	2,041,138	$	(76,032	)

F-22

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

There are 701 and 1,034 securities at December 31, 2014 and 2013, 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.

The net unrealized gains (losses) on available-for-sale securities for for the years ended December 31, 2014, 2013 and 2012 were as follows:

(Amounts in Thousands) Year Ended December 31,	2014			2013			2012
Fixed maturity securities	$	116,128		$	(11,165	)	$	117,582
Equity securities	(3,031		)	(862		)	(478		)
Total net unrealized gain (loss)	113,097			(12,027		)	117,104
Deferred income tax benefit (expense)	(39,584		)	4,209			(40,986		)
Cumulative net unrealized gain (loss), net of deferred income tax as of December 31	73,513			(7,818		)	76,118
Increase (decrease) in net unrealized gains, net of deferred income tax	$	81,331		$	(83,936	)	$	67,708

(b) Trading Securities

During 2014, the Company reclassified approximately $16,830 of its equity securities from available-for-sale securities, carried at estimated fair market value, to trading securities. Equity securities classified as trading securities are generally held for resale in anticipation of short-term market movements.

The amortized cost, estimated market value and gross unrealized appreciation and depreciation of trading securities as of December 31, 2014 are presented in the table below:

(Amounts in Thousands) December 31, 2014	Original or amortized cost		Gross unrealized gains		Gross unrealized losses			Market value
Common stock	$	25,407	$	1,614	$	(272	)	$	26,749

Proceeds from the sale of investments in trading securities during the year ended December 31, 2014 was approximately $78,974. As of December 31, 2013, the Company did not have any securities classified as trading securities.

(c) Investment Income

Net investment income for the years ended December 31, 2014, 2013 and 2012 was derived from the following sources:

(Amounts in Thousands)	2014			2013			2012
Fixed maturities, available-for-sale	$	124,976		$	82,392		$	67,182
Equity securities, available-for-sale	1,346			2,119			127
Equity securities, trading	29			—			—
Cash and short term investments	5,442			2,200			1,778
	131,793			86,711			69,087
Less: Investment expenses and interest expense on securities sold under agreement to repurchase	(192		)	(1,892		)	(920		)
	$	131,601		84,819			$	68,167

F-23

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

(d) Realized Gains and Losses

The tables below summarize the gross realized gains and (losses) for the years ended December 31, 2014, 2013 and 2012.

(Amounts in Thousands) Year Ended December 31, 2014	Gross Gains		Gross Losses			Net Gains and (Losses)
Fixed maturities, available-for-sale	$	16,611	$	(4,946	)	$	11,665
Equity securities, available-for-sale	14,121		(3,928		)	10,193
Equity securities, trading	10,475		(7,871		)	2,604
Write-down of fixed maturities, available-for-sale	—		(5,393		)	(5,393		)
Write-down of equity securities, available-for-sale	—		(2,646		)	(2,646		)
	$	41,207	$	(24,784	)	$	16,423

(Amounts in Thousands) Year Ended December 31, 2013	Gross Gains		Gross Losses			Net Gains and (Losses)
Fixed maturities, available-for-sale	$	28,696	$	(18,066	)	$	10,630
Equity securities, available-for-sale	11,264		(3,498		)	7,766
Write-down of equity securities, available-for-sale	—		(2,869		)	(2,869		)
	$	39,960	$	(24,433	)	$	15,527

(Amounts in Thousands) Year Ended December 31, 2012	Gross Gains		Gross Losses			Net Gains and (Losses)
Fixed maturities, available-for-sale	$	10,310	$	(1,066	)	$	9,244
Equity securities, available-for-sale	7,718		(5,016		)	2,702
Write-down of equity securities, available-for-sale	—		(2,965		)	(2,965		)
	$	18,028	$	(9,047	)	$	8,981

(e) Derivatives

The Company from time to time invests in a limited amount 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 hedged positions as a component of other comprehensive income. As of December 31, 2014 and 2013, the Company had two interest rate swap agreements designated as a hedge and were recorded as a liability in the amount of $2,033 and $3,054, 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 December 31, 2014:

	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.

F-24

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

(f) 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 held are primarily in the form of cash or certain high grade securities. The fair values of our restricted assets as of December 31, 2014 and 2013 are as follows:

(Amounts in Thousands)	2014		2013
Restricted cash	$	186,225	$	100,439
Restricted investments	734,271		978,910
Total restricted cash and investments	$	920,496	$	1,079,349

(g) Other

Securities sold but not yet purchased represent obligations of the Company to deliver the specified security at the contracted price and, thereby, create a liability to purchase the security in the market at prevailing prices. The Company’s liability for securities to be delivered is measured at their fair value and as of December 31, 2014 was $13,052, which consisted primarily of equity securities. The Company did not have any securities sold but not yet purchased as of December 31, 2013. Substantially all securities owned under these arrangements are pledged to the clearing broker to sell or re-pledge the securities to others subject to certain limitations.

From time to time, the Company enters 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 December 31, 2014, the Company had no repurchase agreements outstanding. Interest expense associated with these repurchase agreements for the year ended December 31, 2014 was $283.

As of December 31, 2013, the Company had twelve repurchase agreements with an outstanding principal amount of $293,222, which approximates fair value, at interest rates between 0.12% and 0.47%. The Company had nine repurchase agreements with one counter-party totaling $242,304 and three repurchase agreements with a separate counter-party totaling $50,918. Interest expense associated with these twelve repurchase agreements for the year ended December 31, 2013 was $777, of which $0 was accrued as of December 31, 2013. The Company had approximately $311,518 of collateral pledged in support of these agreements. Interest expense related to repurchase agreements is recorded as a component of investment income.

F-25

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

4. Fair Value of Financial Instruments

Fair Value Hierarchy

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 December 31, 2014 and 2013:

(Amounts in Thousands) As of December 31, 2014	Total		Level 1		Level 2		Level 3
Assets:
U.S. treasury securities	$	43,870	$	43,870	$	—	$	—
U.S. government securities	13,538		—		13,538		—
Municipal bonds	482,041		—		482,041		—
Foreign government	112,731		—		112,731		—
Corporate bonds and other bonds:
Finance	1,221,862		—		1,221,862		—
Industrial	1,202,860		—		1,202,860		—
Utilities	138,692		—		138,692		—
Commercial mortgage backed securities	38,685		—		38,685		—
Residential mortgage backed securities:
Agency backed	975,782		—		975,782		—
Non-agency backed	22,503		—		22,503		—
Asset-backed securities	710		—		710		—
Equity securities, available-for-sale	81,044		24,484		21,674		34,886
Equity securities, trading	26,749		26,749		—		—
Short term investments	63,916		63,916		—		—
Other investments	31,186		—		—		31,186
Life settlement contracts	264,517		—		—		264,517
	$	4,720,686	$	159,019	$	4,231,078	$	330,589
Liabilities:
Equity securities sold but not yet purchased, market	$	13,052	$	13,052	$	—	$	—
Life settlement contract profit commission	16,534		—		—		16,534
Derivatives	2,033		—		2,033		—
	$	31,619	$	13,052	$	2,033	$	16,534

F-26

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

(Amounts in Thousands) As of December 31, 2013	Total		Level 1		Level 2		Level 3
Assets:
U.S. treasury securities	$	110,345	$	110,345	$	—	$	—
U.S. government securities	10,489		—		10,489		—
Municipal bonds	446,183		—		446,183		—
Foreign government	160,105				160,105
Corporate bonds and other bonds:
Finance	1,084,599		—		1,084,599		—
Industrial	754,417		—		754,417		—
Utilities	70,226		—		70,226		—
Commercial mortgage backed securities	28,566		—		28,566		—
Residential mortgage backed securities:
Agency backed	423,137		—		423,137		—
Non-agency backed	6,749		—		6,749		—
Asset-backed securities	6,120		—		6,120		—
Equity securities	15,148		15,148		—		—
Short term investments	114,202		114,202		—		—
Other investments	25,749		—		—		25,749
Securities held as collateral	311,518		48,915		262,603		—
Life settlement contracts	233,024		—		—		233,024
	$	3,800,577	$	288,610	$	3,253,194	$	258,773
Liabilities:
Securities sold under agreements to repurchase, at contract value	293,222		—		293,222		—
Life settlement contract profit commission	11,945		—		—		11,945
Derivatives	3,054		—		3,054		—
	$	308,221	$	—	$	296,276	$	11,945

F-27

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

The following table provides a summary of changes in fair value of the Company’s Level 3 financial assets and liabilities for the years ended December 31, 2014 and 2013:

(Amounts in Thousands)	Balance as of January 1, 2014			Net income (loss)			Other comprehensive income (loss)			Purchases and issuances		Sales and settlements			Net transfers into (out of) Level 3		Balance as of December 31, 2014
Other investments	$	25,749		$	3,084		$	—		$	20,207	$	(17,854	)	$	—	31,186
Equity securities, available-for-sale	—			—			(7,079		)	41,965		—			—		34,886
Life settlement contracts	233,024			61,110			—			25,418		(55,035		)	—		264,517
Life settlement contract profit commission	(11,945		)	(4,589		)	—			—		—			—		(16,534		)
Total	$	246,828		$	59,605		$	(7,079	)	$	87,590	$	(72,889	)	$	—	$	314,055

(Amounts in Thousands)	Balance as of January 1, 2013			Net income (loss)			Other comprehensive income (loss)		Purchases and issuances		Sales and settlements			Net transfers into (out of) Level 3		Balance as of December 31, 2013
Other investments	$	11,144		$	1,813		$	1,666	$	17,228	$	(6,102	)	$	—	$	25,749
Life settlement contracts	193,927			47,245			—		11,906		(20,054		)	—		233,024
Life settlement contract profit commission	(11,750		)	(195		)	—		—		—			—		(11,945		)
Total	$	193,321		$	48,863		$	1,666	$	29,134	$	(26,156	)	$	—	$	246,828

The Company had no transfers among the levels of fair value hierarchy during the years ended December 31, 2014 and 2013.

A reconciliation of net income for life settlement contracts in the above table to (loss) gain on investment in life settlement contracts net of profit commission included in the Consolidated Statements of Income for the years ended December 31, 2014 and 2013 is as follows:

(Amounts in Thousands)	2014			2013
Net income	$	61,110		$	47,245
Premium paid	(46,367		)	(38,933		)
Profit commission	(4,589		)	(195		)
Other expenses	2,152			(4,317		)
Gain on investment in life settlement contracts	$	12,306		$	3,800

The Company uses the following methods and assumptions in estimating its fair value disclosures for financial instruments:

• Equity and Fixed Income Investments:  Fair value disclosures for these investments are disclosed elsewhere in Note 2. “Significant Accounting Policies”. 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: Other investments consisted primarily of investments in limited partnerships, an interest in a syndicated term loan, and annuities. Other investments accounted for approximately 0.6% of the Company's investment portfolio as of December 31, 2014. The Company estimates the fair value of other investments based on significant unobservable inputs in the valuation process. As a result, the Company classified the fair value estimates as Level 3 in the financial hierarchy.

F-28

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

• Equity Investment in Unconsolidated Subsidiaries - Related Party: The Company has an approximate ownership percentage of 13.2% in NGHC, a publicly-held insurance holding company (Nasdaq: NGHC). The Company accounts for this investment under the equity method of accounting as it has the ability to exert significant influence on NGHC. The fair value and the carrying value of the investment was approximately $228,818 and $119,712, respectively, as of December 31, 2014.

• Subordinated Debentures and Debt:  The current fair value of the Company's5.5% 2021 convertible senior notes, 2.75% 2044 convertible senior notes, subordinated debentures and 6.125% Notes was $146,675, $210,831, $74,690 and $258,750 as of December 31, 2014, respectively. The 5.5% 2021 convertible senior notes, 2.75% 2044 convertible senior notes, and 6.125% Notes are publicly traded instruments and are classified as Level 1 in the fair value hierarchy. The fair value of the subordinated debentures was determined using the Black-Derman-Toy interest rate lattice model and is classified as Level 3 in the fair value hierarchy.

• 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.

The fair value of life settlement contracts as well as life settlement profit commission liability is based on information available to the Company at the end of the reporting period. The Company considers the following factors in its fair value estimates: cost at date of purchase, recent purchases and sales of similar investments (if available and applicable), financial standing of the issuer, changes in economic conditions affecting the issuer, maintenance cost, premiums, benefits, standard actuarially developed mortality tables and life expectancy reports prepared by nationally recognized and independent third party medical underwriters. The Company estimates the fair value of a life insurance policy by applying an investment discount rate based on the cost of funding the Company's life settlement contracts as compared to returns on investments in asset classes with comparable credit quality, which the Company has determined to be 7.5%, to the expected cash flow generated by the policies in the Company's life settlement portfolio (death benefits less premium payments), net of policy specific adjustments and reserves. In order to confirm the integrity of their calculation of fair value, the Company, quarterly, retains an independent third-party actuary to verify that the actuarial modeling used by the Company to determine fair value was performed correctly and that the valuation, as determined through the Company's actuarial modeling, is consistent with other methodologies. The Company considers this information in its assessment of the reasonableness of the life expectancy and discount rate inputs used in the valuation of these investments.

The Company adjusts the standard mortality for each insured for the insured's life expectancy based on reviews of the insured's medical records. The Company establishes policy specific reserves for the following uncertainties: improvements in mortality, the possibility that the high net worth individuals represented in its portfolio may have access to better health care, the volatility inherent in determining the life expectancy of insureds with significant reported health impairments, the possibility that the issuer of the policy or a third party will contest the payment of the death benefit payable to the Company, and the future expenses related to the administration of the portfolio. The application of the investment discount rate to the expected cash flow generated by the portfolio, net of the policy specific reserves, yields the fair value of the portfolio. The effective discount rate reflects the relationship between the fair value and the expected cash flow gross of these reserves.

F-29

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

The following summarizes data utilized in estimating the fair value of the portfolio of life insurance policies as of December 31, 2014 and 2013 and, as described in Note 6. “Investments in Life Settlements”, only includes data for policies to which the Company assigned value at those dates:

	2014			2013
Average age of insured	81.1			80.1
Average life expectancy, months (1)	121			131
Average face amount per policy	$	6,624,000		$	6,611,000
Effective discount rate (2)	14.0		%	14.2		%

⁽¹⁾  Standard life expectancy as adjusted for insured’s specific circumstances.

⁽²⁾  Effective Discount Rate (“EDR”) is the Company's estimated internal rate of return on its life settlement contract portfolio and is determined from the gross expected cash flows and valuation of the portfolio. The valuation of the portfolio is calculated net of all reserves using a 7.5% discount rate. The EDR is implicit of the reserves and the gross expected cash flows of the portfolio. The Company anticipates that the EDR's range is between 12.5% and 17.5% and reflects the uncertainty that exists surrounding the information available as of the reporting date. As the accuracy and reliability if information improves (declines), the EDR will decrease (increase). The change in the EDR from December 31, 2013 to December 31, 2014 resulted from routine updating of life expectancies and other factors relating to operational risk.

The Company's 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 are held constant, the carrying value of the investment in life insurance policies would increase or (decrease) by the unaudited amounts summarized below for the years ended December 31, 2014 and 2013:

	Change in life expectancy
	Plus 4 Months			Minus 4 Months
Investment in life policies:
December 31, 2014	$	(34,686	)	$	36,486
December 31, 2013	$	(29,537	)	$	31,313

	Change in discount rate (1)
	Plus 1%			Minus 1%
Investment in life policies:
December 31, 2014	$	(22,705	)	$	25,456
December 31, 2013	$	(20,055	)	$	22,605

⁽¹⁾ Discount rate is a present value calculation that considers legal risk, credit risk and liquidity risk and is a component of EDR.

F-30

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

5. Significant Acquisitions

The Company accounts for acquisitions pursuant to the acquisition method. In applying the acquisition method, the Company records the identifiable assets acquired and liabilities assumed at fair value and records the excess of the consideration paid over the value of the identified net assets acquired as goodwill. The Company assigns fair values to intangible assets based on valuation techniques including the income and market approaches.

The following significant acquisitions occurred during the years ended December 31, 2014 and 2013:

Comp Options Insurance Company, Inc.

On October 1, 2014, the Company acquired Comp Options Insurance Company, Inc. ("Comp Options"), a Florida-based workers' compensation insurer, from an affiliate of Blue Cross & Blue Shield of Florida, for approximately $34,291 in cash. Comp Options offers workers' compensation insurance to small businesses with low-hazard risk profiles in the state of Florida.

A summary of the preliminary assets acquired and liabilities assumed for Comp Options are as follows:

(Amounts in Thousands)
Assets
	Cash and investments	$	80,051
	Premium receivables	33,530
	Prepaid expenses and other assets	6,642
	Deferred tax asset	5,024
	Goodwill and intangible assets	17,353
Total assets		$	142,600
Liabilities
	Loss and loss expense reserves	$	55,752
	Unearned premiums	34,364
	Accrued expenses and other current liabilities	16,561
	Deferred tax liability	1,632
Total liabilities		$	108,309
Cash paid		$	34,291

The goodwill and intangible assets, as well as Comp Options' results of operations, are included as a component of the Small Commercial Business segment. The Company is in the process of completing its acquisition accounting and expects to have it completed in 2015.

In accordance with FASB ASC 944-805 Business Combinations, the Company adjusted to fair value Comp Option's loss and LAE reserves by taking the acquired loss reserves recorded and discounting them based on expected reserve payout pattern using a current risk free rate. This risk free interest rate was then adjusted based on different cash flow scenarios that use different payout and ultimate reserve assumptions deemed to be reasonably possible based upon the inherent uncertainties present in determining the amount and timing of payment of such reserves. The difference between the acquired loss and LAE reserves and the Company's best estimate of the fair value of such reserves at acquisition date is recorded as an intangible asset and is amortized proportionately to the decrease in the acquired loss and LAE reserves and was approximately $1,612.

As a result of this acquisition, the Company recorded approximately $18,653 of written premium and $951 of service and fee income related to Comp Options in 2014.

F-31

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

The Insco Dico Group

On January 3, 2014, the Company completed the acquisition of Insco Insurance Services, Inc. ("Insco Dico") and its subsidiaries for a purchase price of approximately $88,700. Insco Dico's subsidiaries include Developers Surety and Indemnity Company and Indemnity Company of California, which offer surety insurance to developers and contractors in all 50 states with California as the largest state. In addition, Insco Dico's subsidiary, Builders Insurance Services, markets general liability insurance policies to contractors in several states in the western region of the U.S.

A summary of the assets acquired and liabilities assumed for Insco Dico are as follows:

(Amounts in Thousands)
Assets
	Cash and investments	$	130,031
	Premium receivables	8,684
	Reinsurance recoverable	5,799
	Prepaid expenses and other assets	1,783
	Deferred tax asset	3,104
	Property and equipment	1,190
	Goodwill and intangible assets	17,765
Total assets		$	168,356
Liabilities
	Loss and loss expense reserves	$	25,210
	Unearned premiums	25,715
	Funds held for policyholders	5,864
	Accrued expenses and other current liabilities	10,210
	Deferred tax liability	2,657
	Notes payable	10,000
Total liabilities		$	79,656
Cash paid		$	88,700

The goodwill and intangible assets, as well as Insco Dico's results of operations, are included as a component of the Small Commercial Business segment. The identifiable intangible assets consist of agency relationships, which have a 20 year life, and licenses that have an indefinite life. The Company completed its acquisition accounting in 2014.

As a result of this transaction, the Company recorded approximately $55,511 of written premium and approximately $3,743 of service and fee income during the year ended December 31, 2014 related to Insco Dico.

Sagicor Europe Limited

On December 23, 2013, the Company, through one of its subsidiaries, completed the acquisition of Sagicor Europe Limited and its wholly owned subsidiaries, including Sagicor at Lloyd's Limited ("Sagicor"), from Sagicor Financial Corporation for approximately $93,113. Sagicor Europe Limited and Sagicor at Lloyd's Limited subsequently changed their names to AmTrust Lloyd's Holdings Limited and AmTrust at Lloyd's Limited, respectively. AmTrust at Lloyd's Limited is a managing agency and owner of Lloyd's property/casualty insurance syndicate 1206 with stamp capacity of $330,000 and Lloyd's life insurance syndicate 44 with stamp capacity of $16,500.

F-32

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

A summary of the assets acquired and liabilities assumed for AmTrust Lloyd's Holdings Limited are as follows:

(Amounts in Thousands)
Assets
	Cash and investments	$	429,476
	Prepaid insurance	122,673
	Premium receivable	89,801
	Deferred tax asset	29,916
	Prepaid expenses and other assets	64,981
	Property and equipment	5,010
	Goodwill and intangible assets	33,539
Total assets		$	775,396
Liabilities
	Loss and loss expense reserves	$	496,836
	Unearned premium	113,182
	Ceded reinsurance premiums payable	16,315
	Accrued expense and other current liabilities	55,950
Total liabilities		$	682,283
Cash paid		$	93,113

The goodwill and intangible assets, as well as AmTrust Lloyd's Holdings Limited's results of operations, are included as a component of the Specialty Risk and Extended Warranty segment. The Company completed its acquisition accounting in 2014.

As a result of this transaction, the Company recorded approximately $322,817 of written premium during the year ended December 31, 2014 related to Sagicor.

Mutual Insurers Holding Company

On May 13, 2013, the Company completed the acquisition of Mutual Insurers Holding Company (“MIHC”) and its subsidiaries. MIHC's primary operating subsidiary, First Nonprofit Insurance Company (“FNIC”), is a provider of property and casualty insurance products to nonprofit organizations in the U.S. Immediately prior to the acquisition, MIHC converted from a mutual form to a stock form of ownership in a transaction “sponsored” by the Company. As required by the plan of conversion and applicable Delaware law, the Company offered shares of its common stock, at a discount to the market price, to the members of MIHC who held policies as of December 31, 2012 and the directors, officers and employees of MIHC and its subsidiaries. The Company received subscriptions for approximately $472, resulting in the issuance by the Company of 18,052 shares of its common stock at a discounted price of 20% from the Company's market trading price, or approximately $118. Pursuant to the stock purchase agreement, after the expiration of the offering, the Company purchased all of the authorized shares of capital stock of MIHC at a purchase price equal to the greater of the gross proceeds received by the Company in the offering, and $8,000. The Company made a payment to MIHC of $48,500, which included the $472 in proceeds the Company received in the offering, for the stock of FNIC. Additionally, the Company as part of the transaction, was required to make a contribution to First Nonprofit Foundation, a tax exempt corporation principally funded by FNIC's predecessor and managed for the benefit of nonprofit organizations, in the amount of $7,882, which represented $8,000, as discussed above, less the discount of approximately $118 on the shares issued by the Company in the transaction. The remaining $40,618 of cash contributed to MIHC was retained by the Company. Additionally, the Company assumed $6,500 of debt in the transaction. In accordance with FASB ASC 805-10 Business Combinations, the Company recorded an acquisition price of approximately $14,500.

F-33

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

A summary of the assets acquired and liabilities assumed for MIHC are as follows:

(Amounts in Thousands)
Assets
	Cash and investments	$	134,780
	Premium receivable	23,085
	Prepaid expenses and other assets	43,714
	Deferred tax asset	5,358
	Property and equipment	2,684
	Intangible assets	6,132
Total assets		$	215,753
Liabilities
	Loss and loss expense reserves	$	89,267
	Unearned premiums	27,760
	Accrued expenses and other current liabilities	23,629
	Deferred tax liability	2,146
	Notes payable	6,500
Total liabilities		$	149,302
Cash paid		$	48,500
Acquisition gain		$	17,951

The intangible assets consisted of state licenses and have an indefinite life. The intangible assets, as well as FNIC's results of operations, are included as a component of the Small Commercial Business segment.

In accordance with FASB ASC 944-805 Business Combinations, the Company adjusted to fair value FNIC's loss and LAE reserves by taking the acquired loss reserves recorded and discounting them based on expected reserve payout pattern using a current risk free rate. This risk free interest rate was then adjusted based on different cash flow scenarios that use different payout and ultimate reserve assumptions deemed to be reasonably possible based upon the inherent uncertainties present in determining the amount and timing of payment of such reserves. The difference between the acquired loss and LAE reserves and the Company's best estimate of the fair value of such reserves at acquisition date is recorded as an intangible asset and is amortized proportionately to the decrease in the acquired loss and LAE reserves and was approximately $4,531. As a result of this transaction, the Company recorded an acquisition gain of approximately $17,951.

The Company recorded approximately $58,096 and $32,144 of written premium for the years ended December 31, 2014 and 2013, respectively, related to FNIC.

AMTCS Holdings, Inc.

On May 3, 2013, the Company, through its wholly-owned subsidiary AMT Warranty Corp., completed the acquisition of CPPNA Holdings, Inc. (“CPPNA”) from CPP Group LLC, a company based in the United Kingdom, for approximately $40,000. CPPNA subsequently changed its name to AMTCS Holdings, Inc. (“AMTCS”). AMTCS provides administrative services for consumer protection products in the United States, including identity theft protection and warranties related to credit card purchases, to customers of AMTCS's financial services partners. In accordance with FASB ASC 805-10 Business Combinations, the Company recorded a purchase price of approximately $40,000, which consisted primarily of goodwill and intangible assets of approximately $17,327 and $34,700, respectively, and a deferred tax liability of $12,145. The intangible asset consists of customer relationships and has a life of 12 years. The goodwill and intangibles, as well as AMTCS's results of operations, are included as a component of the Specialty Risk and Extended Warranty segment from the date of acquisition.

The Company recorded approximately $58,360 and $44,540 of service and fee income during the years ended December 31, 2014 and 2013, respectively, related to AMTCS.

F-34

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

Sequoia Insurance Company

On April 19, 2013, the Company completed the acquisition of all the issued and outstanding shares of common stock of Sequoia Insurance Company and its subsidiaries, Sequoia Indemnity Company and Personal Express Insurance Company (“Sequoia”), for approximately $60,000. Sequoia offers low hazard, property/casualty insurance products, including workers' compensation and commercial package insurance, to small businesses in several western states, with California representing Sequoia's largest market.

A summary of the assets acquired and liabilities assumed for Sequoia are as follows:

(Amounts in Thousands)
Assets
	Cash and investments	$	215,473
	Premium receivable	32,870
	Reinsurance recoverables	43,793
	Prepaid expenses and other assets	4,014
	Deferred tax asset	1,242
	Property and equipment	1,022
	Intangible assets	11,848
Total assets		$	310,262
Liabilities
	Loss and loss expense reserves	$	165,487
	Unearned premium	59,773
	Accrued expenses and other current liabilities	15,624
	Deferred tax liability	4,147
Total liabilities		$	245,031
Cash paid		$	60,000
Acquisition gain		$	5,231

The intangible assets consists primarily of licenses and trademarks and have an indefinite life. The intangible assets, as well as Sequoia's results of operations, are included as a component of the Small Commercial Business segment.

In accordance with FASB ASC 944-805 Business Combinations, the Company adjusted to fair value Sequoia's loss and LAE reserves by taking the acquired loss reserves recorded and discounting them based on expected reserve payout pattern using a current risk free rate. This risk free interest rate was then adjusted based on different cash flow scenarios that use different payout and ultimate reserve assumptions deemed to be reasonably possible based upon the inherent uncertainties present in determining the amount and timing of payment of such reserves. The difference between the acquired loss and LAE reserves and the Company's best estimate of the fair value of such reserves at acquisition date is recorded as an intangible asset and is amortized proportionately to the decrease in the acquired loss and LAE reserves and was approximately $7,448. As a result of this transaction, the Company recorded an acquisition gain of approximately $5,231.

The Company recorded approximately $68,262 and $79,666 of written premium for the years ended December 31, 2014 and 2013, respectively, related to Sequoia.

Car Care

On February 28, 2013, the Company, through its wholly-owned subsidiary AmTrust International Limited, acquired all of the issued and outstanding shares of capital stock of Car Care Plan (Holdings) Limited (“CCPH”) from Ally Insurance Holdings, Inc (“AIH”). CCPH is an administrator, insurer and provider of auto extended warranty, guaranteed asset protection, Wholesale

F-35

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

Floorplan Insurance and other complementary insurance products. CCPH underwrites its products and the products of third-party administrators through its subsidiary Motors Insurance Company Limited, a United Kingdom based insurer. CCPH has operations in the United Kingdom, Europe, China, North America and Latin America. The Company paid $72,412 for the purchase of CCPH.

Certain employees, former employees and retirees of CCPH participate in a defined benefit pension plan. The plan was frozen and curtailed in 2007. The impact of the plan on the Company's results of operations was immaterial. For further information on the pension plan, see "Note 18. Employee Benefit Plans".

A summary of the assets acquired and liabilities assumed for CCPH are as follows:

(Amounts in Thousands)
Assets
	Cash and investments	$	253,257
	Premium receivable	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	9,703
	Unearned premium	131,494
	Accrued expenses and other current liabilities	83,993
	Deferred tax liability	6,215
Total liabilities		$	231,405
Cash paid		$	72,412
Acquisition gain		$	25,532

The intangible assets consist primarily of customer relationships and have a life of fifteen years. The intangible assets, as well as CCPH's results of operations, are included as a component of the Specialty Risk and Extended Warranty segment from the date of acquisition. As a result of this transaction, the Company recognized a gain on the acquisition of approximately $25,532.

The Company recorded approximately $110,769 and $98,865 of written premium for the years ended December 31, 2014 and 2013, respectively. In addition, the Company recorded $42,435 and $31,568 of service and fee income for the years ended December 31, 2014 and 2013, respectively, related to CCPH.

AHL

During 2013, AmTrust Holdings Luxembourg S.A.R.L. (“AHL”) completed two acquisitions described below. AHL is a holding company that purchases Luxembourg-domiciled reinsurance entities. In connection with these transactions, the Company acquires cash and equalization reserves of the reinsurance companies. An equalization reserve is a catastrophe reserve in excess of required reserves established pursuant to Luxembourg law. Equalization reserves are required to be established for Luxembourg statutory and tax purposes, but are not recognized under U.S. GAAP. The equalization reserves originally established by the seller under Luxembourg law allowed the reinsurer to offset any taxable income. Equalization reserves are calculated on a line of business basis and are subject to a theoretical maximum amount, or cap, based on the expected premium volume described in the business plan of the reinsurance company as approved by the Luxembourg regulators and is subject to reassessment every five years. Each year, the Luxembourg reinsurer is required to adjust its equalization reserves by an amount equal to its statutory net income or net loss, determined based on premiums and investment income less incurred losses and other operating expenses. The yearly adjustment of the equalization reserve generally results in zero pretax income on a Luxembourg statutory and tax basis, as follows: in a year in which the reinsurer’s operations result in a statutory loss, the equalization reserves are taken down in an amount to

F-36

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

balance the income statement to zero pretax income, and in a year in which the operations result in a gain, the equalization reserves are increased in an amount to balance the income statement to zero pretax income. If the reinsurer were to produce underwriting income in excess of the equalization reserve cap, or if the cap were to be reduced below the amount of the carried equalization reserves, the reinsurer would incur Luxembourg tax on the amount of such excess income or the amount by which the reserves exceeded the reduced cap, as applicable.

If a Luxembourg reinsurer can assume sufficient premium to maintain its equalization reserves or assume losses, which then reduce the equalization reserves, the reinsurer can permanently defer the income tax. Subsequent to the acquisition, the Company cedes premium and associated losses to the reinsurance companies through intercompany reinsurance arrangements. Provided the Company is able to cede business that generates a net loss to the reinsurance companies through intercompany reinsurance arrangements sufficient to offset the reinsurers’ required reductions of the equalization reserves, Luxembourg would not, under laws currently in effect, impose any income, corporation or profits tax on the reinsurance companies. However, if the reinsurance companies were to cease reinsuring business without exhausting the equalization reserves, they would be taxed by Luxembourg at a rate of approximately 30%. As of December 31, 2014, the Company had approximately $314,050 of unutilized equalization reserves and an associated deferred tax liability of approximately $94,215. During 2014, 2013 and 2012, the Company was able to reduce overall expenses by a net amount of $30,379, $214 and $9,274, respectively, to reflect the net reduction of the deferred tax liability offset by goodwill impairment charges related to the utilization of the equalization reserves. Under its business plans currently in effect, the Company expects that the ceded losses and expenses net of reinsurance premiums paid under the intercompany reinsurance agreements will cause the equalization reserves to be fully utilized in three to five years subsequent to the acquisition of the Luxembourg reinsurer, at which point the deferred tax liability relating to the equalization reserves will be extinguished. The effects of these intercompany reinsurance agreements are appropriately eliminated in consolidation and did not impact the Company's gross and net loss reserves or loss ratio.

In December 2013, AHL acquired all the issued and outstanding stock of Atlas COPCO Reinsurance S.A., a Luxembourg domiciled reinsurance company, from ATLAS COPCO AB. The purchase price of Atlas COPCO Reinsurance S.A. was approximately $80,700. The Company recorded approximately $89,100 of cash, goodwill of $16,900 and a deferred tax liability of $25,300. Atlas COPCO Reinsurance S.A. subsequently changed its name to AmTrust Re Aries S.A.

In November 2013, AHL acquired all the issued and outstanding stock of Re'A FIN S.A., a Luxembourg domiciled reinsurance company, from SRIW Finance SA and SPARXIS SA. The purchase price of Re'A FIN S.A. was approximately $93,400. The Company recorded approximately $102,800 of cash, goodwill of $18,700 and a deferred tax liability of $28,100. Re'A FIN S.A. subsequently changed its name to AmTrust Re Taurus S.A.

6. Investment in Life Settlements

The Company currently has a 50% ownership interest in each of four entities for the purpose of acquiring life settlement contracts, with a subsidiary of NGHC owning the other 50%. A life settlement contract is a contract between the owner of a life insurance policy and a third-party who obtains the ownership and beneficiary rights of the underlying life insurance policy. The entities (collectively, the “LSC Entities”) are:

•Tiger Capital LLC (“Tiger”);

•AMT Capital Alpha, LLC (“AMT Alpha”);

•AMT Capital Holdings, S.A. (“AMTCH”); and

•AMT Capital Holdings II, S.A. (“AMTCH II”).

The LSC Entities may also acquire premium finance loans made in connection with the borrowers’ purchase of life insurance policies that are secured by the policies. The LSC Entities acquire the underlying policies through the borrowers’ voluntary surrender of the policy in satisfaction of the loan or foreclosure. A third party serves as the administrator of the Tiger and AMTCH II life settlement contract portfolios, for which it receives an administrative fee. The third party administrator is eligible to receive a percentage of profits after certain time and performance thresholds have been met. The Company provides certain actuarial and finance functions related to the LSC Entities. In conjunction with the Company’s 13.2% ownership percentage of NGHC, the Company ultimately receives 56.6% of the profits and losses of the LSC Entities. As such, in accordance with ASC 810-10, Consolidation, the Company has been deemed the primary beneficiary and, therefore, consolidate the LSC Entities.

The Company accounts for investments in life settlements in accordance with ASC 325-30, Investments in Insurance Contracts, which states that an investor shall elect to account for its investments in life settlement contracts by using either the investment

F-37

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

method or the fair value method. The election is made on an instrument-by-instrument basis and is irrevocable. The Company has elected to account for these policies using the fair value method. The Company determines fair value based upon its estimate of the discounted cash flow related to policies (net of the reserves for improvements in mortality, the possibility that the high net worth individuals represented in its portfolio may have access to better health care, the volatility inherent in determining the life expectancy of insureds with significant reported health impairments, the possibility that the issuer of the policy or a third party will contest the payment of the death benefit payable to the Company, and the future expenses related to the administration of the portfolio), which incorporates current life expectancy assumptions, premium payments, the credit exposure to the insurance company that issued the life settlement contracts and the rate of return that a buyer would require on the contracts as no comparable market pricing is available.

Total capital contributions of $36,115 and $70,780 were committed to the LSC Entities during the years ended December 31, 2014 and 2013, respectively, for which the Company's proportionate share was approximately $17,907 and $35,380 in those same periods. $1,271 of this $17,907 capital contribution was funded in January 2015. The LSC Entities used the contributed capital to pay premiums and purchase policies. The Company’s investments in life settlements and premium finance loans were approximately $264,517 and $233,024 as of December 31, 2014 and 2013, respectively, and are included in Prepaid expenses and other assets on the Consolidated Balance Sheet. The Company recorded a gain on investment on investment in life settlement contracts net of profit commission of approximately $12,306, $3,800 and $13,822 for the years ended December 31, 2014, 2013 and 2012, respectively, related to the life settlement contracts.

As of December 31, 2014, the LSC Entities owned no premium finance loans. As of December 31, 2013, the LSC Entities owned two premium finance loans, which were secured by the underlying life insurance policies and were carried at a value of $0 at December 31, 2013.

The following tables describe the Company’s investment in life settlements as of December 31, 2014 and 2013:

(Amounts in thousands, except Life Settlement Contracts) Expected Maturity Term in Years	Number of Life Settlement Contracts	Fair Value (1)		Face Value
As of December 31, 2014
0 – 1	—	$	—	$	—
1 – 2	—	—		—
2 – 3	8	43,593		70,500
3 – 4	5	10,081		22,500
4 – 5	7	14,335		49,000
Thereafter	254	196,508		1,596,209
Total	274	$	264,517	$	1,738,209
As of December 31, 2013
0 – 1	—	$	—	$	—
1 – 2	—	—		—
2 – 3	1	2,726		5,000
3 – 4	13	53,767		103,000
4 – 5	2	5,622		13,000
Thereafter	255	170,909		1,641,409
Total	271	$	233,024	$	1,762,409

⁽¹⁾ The Company determined the fair value as of December 31, 2014 based on 218 policies out of 274 policies, as the Company assigned no value to 56 of the policies as of December 31, 2014. The Company determined the fair value as of December 31, 2013 based on 191 policies out of 271 policies, as the Company assigned no value to 80 of the policies as of December 31, 2013. The Company estimates the fair value of a life insurance policy using a cash flow model with an appropriate discount rate. In some cases, the cash flow model calculates the value of an individual policy to be negative, and therefore the fair value of the policy is zero as no liability exists when a negative value is calculated. The Company is not contractually bound to pay the premium on its life settlement contracts and, therefore, would not pay a willing buyer to assume title of these contracts. Additionally, certain of the Company’s acquired polices were structured to have low premium payments at

F-38

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

inception of the policy term, which later escalate greatly towards the tail end of the policy term. At the current time, the Company expenses all premiums paid, even on policies with zero fair value. Once the premium payments escalate, the Company may allow the policies to lapse. In the event that death benefits are realized in the time frame between initial acquisition and premium escalation, it is a benefit to cash flow.

For these contracts where the Company determined the fair value to be negative and therefore assigned a fair value of zero, the table below details the amount of premiums paid and the death benefits received for the years ended December 31, 2014 and 2013:

	2014		2013
Number of policies with a negative value from discounted cash flow model	56		80
Premiums paid for the year ended	$	5,963	$	9,371
Death benefit received	$	4,950	$	3,012

Premiums to be paid by the LSC Entities for each of the five succeeding fiscal years to keep the life insurance policies in force as of December 31, 2014, are as follows:

(Amounts in Thousands)	Premiums Due on Life Settlement Contracts
2015	$	40,961
2016	54,208
2017	52,291
2018	40,117
2019	39,777
Thereafter	552,579
	$	779,933

7. Deferred Policy Acquisition Costs

The following table reflects the amounts of policy acquisition costs deferred and amortized for the years ended December 31, 2014, 2013 and 2012 as follows:

(Amounts in Thousands)	2014			2013			2012
Balance, beginning of period	$	468,404		$	349,126		$	280,991
Acquisition costs deferred	698,689			486,566			311,022
Amortization	(538,710		)	(367,288		)	(242,887		)
Balance, end of period	$	628,383		$	468,404		$	349,126

F-39

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

8. Intangible Assets and Goodwill

The composition of goodwill and intangible assets is summarized as follows:

(Amounts in Thousands) As of December 31, 2014	Gross Balance		Accumulated Amortization		Net Value		Useful Life
Goodwill	$	352,685	$	—	$	352,685	Indefinite Life
Renewal rights	62,367		16,732		45,635		7 – 17 years
Distribution networks	115,480		36,009		79,471		5 – 20 years
Software	3,547		2,101		1,446		3 - 20 years
Customer relationships	132,744		31,807		100,937		8 – 18 years
Trademarks	5,220		5,132		88		15 years
Trademarks	6,327		—		6,327		Indefinite Life
Licenses	12,608		6,151		6,457		5 - 50 years
Licenses	25,055		—		25,055		Indefinite Life
Use rights	41,468		—		41,468		Indefinite Life
Other	16,348		8,236		8,112		4 - 10 years
Total	$	773,849	$	106,168	$	667,681	13 years average

(Amounts in Thousands) As of December 31, 2013	Gross Balance		Accumulated Amortization		Net Value		Useful Life
Goodwill	$	373,591	$	—	$	373,591	Indefinite Life
Renewal rights	30,880		11,438		19,442		7 – 17 years
Covenant not to compete	7,756		7,692		64		3 – 9 years
Distribution networks	100,163		28,136		72,027		10 – 20 years
Software	2,266		2,076		190		20 years
Customer relationships	132,266		18,215		114,051		8 – 18 years
Trademarks	5,001		4,751		250		2 – 15 years
Trademarks	6,460		—		6,460		Indefinite Life
Licenses	12,608		3,702		8,906		5 - 50 years
Licenses	21,540		—		21,540		Indefinite Life
Use rights	38,507		—		38,507		Indefinite Life
Other	14,736		4,371		10,365		4 -10 years
Total	$	745,774	$	80,381	$	665,393	14 years average

The Company identifies reporting units for goodwill impairment testing in accordance with ASC 350-20-35 Intangibles - Goodwill and Other. The Company generally combines reporting units, which are a component of an operating segment, when they have similar economic characteristics, nature of services, types of customer, distribution methods and regulatory environment. For the years ended December 31, 2014 and 2013, the Company had seven reporting units that it tested for goodwill impairment, which is tested as of October 1st. The Company had one reporting unit, Specialty Risk and Extended Warranty - Luxembourg reporting unit (“RU”), which was at risk of failing step 1 in the goodwill impairment test required under ASC 350 Intangibles - Goodwill and Other. This RU had $121,761 and $96,866 of goodwill as of the test date in 2014 and 2013, respectively. For the RU, a step 1 analysis was performed to determine whether an impairment existed using an October 1st measurement date. Since Luxembourg reinsurance companies are regularly bought and sold between third parties and the transaction data information is available, the Guideline Transactions Method of the Market Approach was utilized to determine the fair value of the RU. The Guideline Transactions Method is based on valuation multiples derived from actual transactions for comparable companies and was used to develop an estimate of value for the subject company. In applying this method, valuation multiples are derived from historical data of selected transactions, then evaluated and adjusted, if necessary, based on the strengths and weaknesses of the subject company relative to the derived market data. In the case of the RU, the most appropriate multiple to utilize was determined to be a Price to Invested Assets (“P/IA”) multiple, since invested assets and the corresponding regulatory reserves are metrics utilized by market participants to negotiate the purchase price of the transaction. These P/IA multiples are then applied to the

F-40

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

appropriate invested assets of the subject company to arrive at an indication of fair value. Step 1 of the impairment test indicated that the RU’s carrying value exceeded its fair value. Accordingly, the Company performed a Step 2 impairment test and recorded a non-cash goodwill impairment charge of $61,512, $10,226 and $16,389 as of December 31, 2014, 2013, and 2012, respectively. Additionally, certain goodwill attributable to the Specialty Risk and Extended Warranty - Europe RU was impaired for $1,386 due to deterioration in a subsidiary's operating performance with which the goodwill was associated.

The changes in the carrying amount of goodwill by segment for the years ended December 31, 2014 and 2013 are as follows:

(Amounts in Thousands)	Small Commercial Business		Specialty Risk and Extended Warranty			Specialty Program		Total
Balance as of January 1, 2013	$	116,272	$	194,554		$	15,820	$	326,646
Goodwill additions	—		54,932			2,121		57,053
Goodwill impairment	—		(10,226		)	—		(10,226		)
Foreign currency translation	—		118			—		118
Balance as of January 1, 2014	$	116,272	$	239,378		$	17,941	$	373,591
Goodwill additions	24,304		18,617					42,921
Goodwill impairment	—		(62,898		)	—		(62,898		)
Foreign currency translation	—		(929		)	—		(929		)
Balance as of December 31, 2014	$	140,576	$	194,168		$	17,941	$	352,685

Goodwill added during 2014 resulted primarily from the acquisitions of Insco Dico and Comp Options in the Small Commercial Business segment as well as certain insignificant acquisitions in the Specialty Risk and Extended Warranty segment. Goodwill added during 2013 resulted primarily from the acquisitions of AmTrust Re Aries S.A., AmTrust Re Taurus S.A., and AMTCS in the Specialty Risk and Extended Warranty segment.

Finite lived intangible assets are generally amortized under the straight-line method, except for renewal rights, which the Company amortizes using a 125% accelerated method, and certain customer relationships, which are amortized based on cash flows associated with the respective customer relationships. Amortization expense for 2014, 2013 and 2012 was $33,543, $31,667 and $17,169, respectively. The estimated aggregate amortization expense for each of the next five years is:

(Amounts in Thousands)
2015	$	38,727
2016	35,972
2017	30,336
2018	25,249
2019	23,501

F-41

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

9. Property and Equipment, Net

(Amounts in Thousands) As of December 31,	2014			2013
Land	$	7,593		$	7,593
Building	25,478			23,284
Software	92,211			65,699
Computer equipment	41,924			27,575
Other equipment	53,529			19,881
Leasehold improvements	25,691			22,968
	246,426			167,000
Less: Accumulated depreciation and amortization	(92,251		)	(62,701		)
	$	154,175		$	104,299

Depreciation expense was $29,550, $21,451 and $13,221for the years ended December 31, 2014, 2013 and 2012.

10. Liability for Unpaid Loss and LAE

The following table provides a reconciliation of the beginning and ending balances for unpaid losses and LAE, reported in the accompanying consolidated balance sheets as of December 31, 2014, 2013 and 2012:

(Amounts in Thousands)	2014			2013			2012
Unpaid losses and LAE, gross of related reinsurance recoverables at beginning of year	$	4,368,234		$	2,426,400		$	1,879,175
Less: Reinsurance recoverables at beginning of year	1,739,689			1,180,212			972,392
Net balance, beginning of year	2,628,545			1,246,188			906,783
Incurred related to:
Current year	2,324,062			1,486,418			909,818
Prior year	18,557			30,943			12,857
Total incurred losses during the year	2,342,619			1,517,361			922,675
Paid losses and LAE related to:
Current year	(886,724		)	(617,539		)	(406,238		)
Prior year	(554,495		)	(335,621		)	(285,479		)
Total payments for losses and LAE	(1,441,219		)	(953,160		)	(691,717		)
Commuted loss reserves	—			—			91,529
Acquired outstanding loss and loss adjustment reserve	71,755			807,592			13,137
Effect of foreign exchange rates	(86,939		)	10,564			3,781
Net balance, December 31	3,514,761			2,628,545			1,246,188
Plus reinsurance recoverables at end of year	2,149,444			1,739,689			1,180,212
Unpaid losses and LAE, gross of related reinsurance recoverables at end of year	$	5,664,205		$	4,368,234		$	2,426,400

F-42

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

In 2014, 2013 and 2012, the Company’s liabilities for unpaid losses and LAE attributable to prior years increased by $18,557, $30,943 and $12,857, respectively, primarily as a result of unfavorable loss development due to higher actuarial estimates based on actual losses. The percentage of the Company's unpaid losses and LAE related to IBNR was 49.6%, 42.4% and 34.5% as of December 31, 2014, 2013 and 2012, respectively. In setting its reserves, the Company utilizes a combination of Company loss development factors and industry-wide loss development factors. In the event that the Company’s losses develop more favorably than the industry, as a whole, the Company’s liabilities for unpaid losses and LAE should decrease. Management believes that its use of both its historical experience and industry-wide loss development factors provide a reasonable basis for estimating future losses. As the Company has written more business and developed more credible data, the Company has assigned more weight to its historical experience than to industry-wide results. In either case, future events beyond the control of management, such as changes in law, judicial interpretations of law, and inflation may favorably or unfavorably impact the ultimate settlement of the Company’s loss and LAE.

The anticipated effect of inflation is implicitly considered when estimating liabilities for losses and LAE. While anticipated changes in claim costs due to inflation are considered in estimating the ultimate claim costs, the increase in average severity of claims is caused by a number of factors that vary with the individual type of policy written. Future average severities are projected based on historical trends adjusted for implemented changes in underwriting standards, policy provisions, and general economic trends. Those anticipated trends are monitored based on actual development and are modified if necessary.

11. Accrued Expenses and Other Liabilities

(Amounts in Thousands) As of December 31,	2014		2013
Premium taxes, assessments and surcharges payable	$	171,512	$	173,274
Accounts and commissions payable	157,232		100,780
Deferred warranty revenue	138,592		84,230
Redeemable contractual obligations	111,748		132,608
Income tax payable	100,410		9,181
Other accrued expenses and liabilities	116,383		172,502
	$	795,877	$	672,575

12. Debt

The Company’s outstanding debt consisted of the following at December 31, 2014 and 2013:

(Amounts in Thousands) As of December 31,	2014		2013
Revolving credit facility	$	120,000	$	—
5.5% Convertible senior notes due 2021 (the "2021 Notes")	56,745		164,218
2.75% Convertible senior notes due 2044 (the "2044 Notes")	157,679		—
6.125% Notes due 2023	250,000		250,000
Subordinated debentures	123,714		123,714
Secured loan agreements	35,233		7,742
Promissory notes	14,500		14,500
	$	757,871	$	560,174

F-43

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

Aggregate scheduled maturities of the Company’s outstanding debt at December 31, 2014 are:

(Amounts in Thousands)
2015	$	168,689	(1)
2016	7,186
2017	7,377
2018	9,400
2019	4,269
Thereafter	560,950		(2)

⁽¹⁾  Amount includes debt outstanding under revolving credit facility as of December 31, 2014 that was paid down in 2015, amount of 2021 Notes, net of $8,417 unamortized original issue discount, submitted for conversion in 2014 that were settled in 2015 as discussed in Note 27. "Subsequent Events", as well as principal payments under our secured loan agreements.

⁽²⁾  Amount reflected in balance sheet for the 2021 Notes and the 2044 Notes is net of unamortized original issue discount of $2,957 and $53,245, respectively.

Revolving Credit Agreement

On September 12, 2014, the Company entered into a five-year, $350,000 credit agreement (the “Credit Agreement”), among JPMorgan Chase Bank, N.A., as Administrative Agent, KeyBank National Association and SunTrust Bank, as Co-Syndication Agents, Lloyd's Bank PLC and Associated Bank, as Co-Documentation Agents and the various lending institutions party thereto. The credit facility is a revolving credit facility with a letter of credit sublimit of $175,000 and an expansion feature of not more than an additional $150,000. The Credit Agreement has a maturity date of September 12, 2019. In connection with entering into the Credit Agreement, the Company terminated its existing $200,000 credit agreement (the "Preceding Credit Agreement"), dated August 10, 2012, with JPMorgan Chase Bank, N.A., as Administrative Agent, KeyBank National Association and SunTrust Bank, as Co-Syndication Agents, Associated Bank, National Association and Lloyds Securities Inc., as Co-Documentation Agents, and the various lending institutions party thereto. Letters of credit issued and outstanding under the Preceding Credit Agreement were deemed issued and outstanding under the Credit Agreement. Deferred origination costs associated with the Credit Agreement were approximately $967 and are being amortized into interest expense over the term of the Credit Agreement.

The Credit Agreement contains certain restrictive covenants customary for facilities of this type (subject to negotiated exceptions and baskets), including restrictions on indebtedness, liens, acquisitions and investments, restricted payments and dispositions. There are also financial covenants that require the Company to maintain a minimum consolidated net worth, a maximum consolidated leverage ratio, a minimum consolidated fixed charge coverage ratio, a minimum consolidated risk-based capital and a minimum consolidated statutory surplus. The Company was in compliance with all of its covenants as of December 31, 2014.

As of December 31, 2014, the Company had $120,000 of borrowings and $97,346 letters of credit outstanding under this Credit Agreement, which reduced the availability for letters of credit to $77,654, and the total aggregate availability under the facility to $132,654.

Borrowings under the Credit Agreement bear interest at either the Alternate Base Rate or the LIBO rate. Borrowings bearing interest at a rate determined by reference to the Alternate Base Rate will bear interest at (x) the greatest of (a) the administrative agent’s prime rate, (b) the federal funds effective rate plus 0.5%, or (c) the adjusted LIBO rate for a one-month interest period on such day plus 1.0%, plus (y) a margin ranging from 0.125% to 0.625%, adjusted on the basis of the Company’s consolidated leverage ratio. Eurodollar borrowings will bear interest at the adjusted LIBO rate for the interest period in effect plus a margin ranging from 1.125% to 1.625%, adjusted on the basis of the Company’s consolidated leverage ratio. The interest rate on the outstanding borrowings under this credit facility as of December 31, 2014 range from 1.563% to 3.625%.

Fees payable by the Company under the Credit Agreement include a letter of credit participation fee (equal to the margin applicable to Eurodollar borrowings), a letter of credit fronting fee with respect to each letter of credit (0.125%) and a commitment fee on the available commitments of the lenders (a range of 0.15% to 0.25% based on the Company’s consolidated leverage ratio, which was 0.175%).

F-44

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

Interest expense, including amortization of the deferred origination costs and fees associated with the letters of credit under the Credit Agreement and the Preceding Credit Agreement, was approximately $1,662, $1,752, and $1,884 for the year ended December 31, 2014, 2013 and 2012, respectively.

Convertible Senior Notes

5.5% Convertible Senior Notes due 2021

In December 2011 and January 2012, the Company issued $200,000 in aggregate principal amount of its 2021 Notes. The 2021 Notes will mature on December 15, 2021 (the “Maturity Date”), unless earlier purchased by the Company or converted into shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”). Prior to September 15, 2021, the 2021 Notes will be convertible only in the following circumstances: (i) during any fiscal quarter, and only during any such fiscal quarter, if the last reported sale price of the Company’s Common Stock was greater than or equal to 130% of the applicable conversion price for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on the last trading day of the previous fiscal quarter (the “Sale Price Condition”); (ii) during the five consecutive business day period following any five consecutive trading day period in which, for each day of that period, the trading price for the 2021 Notes was less than 98% of the product of the last reported sale price of the Company’s Common Stock and the applicable conversion rate on such trading day; or (iii) upon the occurrence of specified corporate transactions. On or after September 15, 2021, the 2021 Notes will be convertible at any time prior to the close of business on the second scheduled trading day immediately preceding the Maturity Date. The conversion rate at December 31, 2014 is equal to 38.5985 shares of Common Stock per $1,000 principal amount of 2021 Notes, which corresponds to a conversion price of approximately $25.91 per share of Common Stock. The conversion rate is subject to adjustment upon the occurrence of certain events as set forth in the indenture governing the 2021 Notes. Upon conversion of the 2021 Notes, the Company will, at its election, pay or deliver, as the case may be, cash, shares of Common Stock, or a combination of cash and shares of Common Stock. As of October 1, 2014, the 2021 Notes were convertible under the Sale Price Condition.

Upon the occurrence of a fundamental change (as defined in the indenture governing the notes) involving the Company, holders of the 2021 Notes will have the right to require the Company to repurchase their 2021 Notes for cash, in whole or in part, at 100% of the principal amount of the 2021 Notes to be repurchased, plus any accrued and unpaid interest, if any, to, but excluding, the fundamental change purchase date.

During 2014, the Company entered into separate, privately negotiated exchange agreements under which the Company retired $131,881 in aggregate principal amount of its outstanding 2021 Notes in exchange for the issuance of 2044 Notes in an aggregate principal amount of $158,257 and the issuance of 2,731,727 shares of Common Stock. As of December 31, 2014, $68,119 in aggregate principal amount of the 2021 Notes remain outstanding with terms unchanged. Please see the description of the 2044 Notes below.

As of December 31, 2014, certain of the remaining 2021 Notes holders had submitted approximately $50,105 of the remaining $68,119 2021 Notes for conversion under the Sale Price Condition described above. Based on the terms of the 2021 Notes, the conversions will settle during the first three months of 2015.

The Company separately allocated the proceeds for the issuance of the 2021 Notes to a liability component and an equity component, which is the embedded conversion option. The equity component was reported as an adjustment to paid-in-capital, net of tax, and is reflected as an original issue discount (“OID”). The OID of $41,679 and deferred origination costs relating to the liability component of $4,750 are being amortized into interest expense over the term of the 2021 Notes. After considering the contractual interest payments and amortization of the original discount, the effective interest rate of the 2021 Notes was 8.57%. Transaction costs of $1,250 associated with the equity component were netted in paid-in-capital. Interest expense, including amortization of OID and deferred origination costs, recognized on the 2021 Notes was $13,933, $14,476, and $14,031 for the years ended December 31, 2014, 2013 and 2012, respectively.

F-45

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

2.75% Convertible Senior Notes due 2044

As described above, during 2014, the Company entered into separate, privately negotiated exchange agreements under which the Company retired $131,881 in aggregate principal amount of the outstanding 2021 Notes in exchange for issuance of a new series of 2.75% 2044 Notes in an aggregate principal amount of $158,257 and the issuance of 2,731,727 shares of Common Stock. The Company also entered into separate, privately negotiated purchase agreements (the “Purchase Agreements”) to issue an additional $76,000 in aggregate principal amount of the 2044 Notes for a price equal to 90% of their face value.

The principal amount of the 2044 Notes accretes at a rate of 6% per year compounding on a semi-annual basis, until December 15, 2024. The accreted portion of the principal is payable in cash upon maturity but does not bear cash interest and is not convertible into shares of Common Stock. The 2044 Notes will mature on December 15, 2044 (the “Maturity Date”), unless earlier repurchased or redeemed by the Company or converted. On or before December 15, 2018, the 2044 Notes will be subject to redemption for cash, in whole or in part, at the Company’s option, provided the trading price of Common Stock equals or exceeds $97.50 (or 130% of the then applicable conversion price) for the required measurement period, at a redemption price equal to 100% of the principal amount of the 2044 Notes to be redeemed, plus any accrued and unpaid interest. Thereafter, the 2044 Notes will be subject to redemption for cash, in whole or in part, at the Company’s option at a redemption price equal to 100% of the accreted amount of the 2044 Notes to be redeemed, plus any accrued and unpaid interest. In addition, holders of the 2044 Notes will have the right to require the Company to purchase their 2044 Notes for cash, in whole or in part, on December 15, 2024 or upon the occurrence of a fundamental change. In each such case, the repurchase price would be 100% of the principal amount of the 2044 Notes being repurchased, plus any accrued and unpaid interest.

The 2044 Notes will bear interest at a rate of 2.75% per annum, payable semi-annually in arrears on June 15th and December 15th of each year, beginning on June 15, 2015. Beginning with the six-month period starting December 15, 2021, holders of the 2044 Notes will receive contingent interest for certain periods if the trading price of the 2044 Notes is greater than or equal to 130% of the principal amount of the 2044 Notes. The amount of contingent interest payable per $1,000 principal amount of 2044 Notes in respect of any contingent interest period is equal to 0.25% of the average trading price of the 2044 Notes during the specified measurement period. Any contingent interest payable on the 2044 Notes will be in addition to the regular interest payable on the 2044 Notes. The 2044 Notes will rank pari passu with the Company’s existing and future senior unsecured debt, including the 2021 Notes that will remain outstanding. The 2044 Notes will be effectively subordinated to the existing and future secured indebtedness of the Company to the extent of the value of the collateral securing those obligations and structurally subordinated to the existing and future indebtedness of the Company’s subsidiaries.

Each $1,000 principal amount at maturity of 2044 Notes will have an issue price of $900 for purposes of the indenture for the 2044 Notes. An amount equal to the difference between the issue price and the principal amount at maturity will accrue in accordance with a schedule to be set forth in the indenture. The issue price plus such accrued amount per $1,000 principal amount at maturity of 2044 Notes is referred to herein as the “accreted principal amount.”

Pursuant to ASC 470-50 Debt - Modifications and Extinguishments, this exchange transaction is being accounted for as an extinguishment of debt because the terms of the two debt instruments are substantially different under the accounting rules. The Company retired $131,881of the outstanding 2021 Notes with a carrying value of $110,346 and wrote-off unamortized debt issuance costs of $2,195. The 2044 Notes issued as part of the exchange had a fair value of $117,982 which resulted in a loss on the early extinguishment of debt of $9,831.

The Company separately accounts for the liability and equity components of its 2044 Notes in a manner that reflects the Company's nonconvertible debt borrowing rate when interest is recognized in subsequent periods. The Company measured the debt component of the 2044 Notes using an effective interest rate of 7.46%. Upon issuance of the 2044 Notes in December 2014, in accordance with accounting standards related to convertible debt instruments that may be settled in cash upon conversion, the Company recorded an OID of $53,374, thereby reducing the initial carrying the value of the 2044 Notes from $210,831to $157,457 and recorded an equity component net of tax of $34,693. Interest expense, including amortization of OID and deferred origination costs, recognized on the 2044 Notes was $503 for the year ended December 31, 2014.

F-46

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

The following table shows the amounts recorded for the 2021 Notes and 2044 Notes as of December 31, 2014 and 2013:

	2014							2013
(Amounts in Thousands)	Outstanding Principal		Unamortized OID			Net Carrying Amount		Outstanding Principal		Unamortized OID			Net Carrying Amount
2021 Notes	$	68,119	$	(11,374	)	$	56,745	$	200,000	$	(35,782	)	$	164,218
2044 Notes	210,924		(53,245		)	157,679		—		—			—
	$	279,043	$	(64,619	)	$	214,424	$	200,000	$	(35,782	)	$	164,218

6.125% Notes due 2023

In August 2013, the Company issued $250,000 aggregate principal amount of its 6.125% notes due 2023 (the "2023 Notes") to certain initial purchasers in a private placement. The 2023 Notes bear interest at a rate equal to 6.125% per year, payable semiannually in arrears on February 15th and August 15th of each year. The 2023 Notes will mature August 15, 2023, unless earlier purchased by the Company. Fees associated with the Notes we approximately $2,740. The indenture governing the Notes contains covenants whereby the interest rates will increase by 0.50% per year if the Company's consolidated leverage ratio exceeds 30% and does not exceed 35% and will increase an additional 1.00% per year (for an aggregate increase of 1.50% per year) if the consolidated leverage ratio exceeds 35%. The consolidated leverage ratio, as calculated under this agreement, was less than 30% as of December 31, 2014. It is an event of default if the Company has a consolidated leverage ratio in excess of 35% for a period of 30 days, unless in connection with an acquisition, in which case the grace period is 18 months. The indenture governing the 2023 Notes also contains customary covenants, such as reporting of annual and quarterly financial results, and restrictions on certain mergers and consolidations, a limitation on liens, and a limitation on the disposition of stock of certain of the Company's subsidiaries. The 2023 Notes rank equally with existing and future unsecured and unsubordinated indebtedness, including the Company's convertible senior notes and amounts under the Credit Agreement. Interest expense, including amortization of deferred origination costs, recognized on the 2023 Notes was approximately $15,587 and $5,845 for the years ended December 31, 2014 and 2013, respectively.

Junior Subordinated Debt

The Company has established four special purpose trusts for the purpose of issuing trust preferred securities. The proceeds from such issuances, together with the proceeds of the related issuances of common securities of the trusts, were invested by the trusts in junior subordinated debentures issued by the Company. In accordance with FASB ASC 810-10-25, the Company does not consolidate such special purpose trusts, as the Company is not considered to be the primary beneficiary. The equity investment, totaling $3,714 as of December 31, 2014 on the Company’s consolidated balance sheet, represents the Company’s ownership of common securities issued by the trusts. The debentures require interest-only payments to be made on a quarterly basis, with principal due at maturity. The debentures contain covenants that restrict declaration of dividends on the Company’s common stock under certain circumstances, including default of payment. The Company incurred $2,605 of placement fees in connection with these issuances which is being amortized over thirty years. The Company recorded $8,100, $8,099 and $8,297 of interest expense for the years ended December 31, 2014, 2013 and 2012, respectively, related to these trust preferred securities.

F-47

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

The table below summarizes the Company’s trust preferred securities as of December 31, 2014:

(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	3.541	(2)
AmTrust Capital Financing Trust IV	40,000		1,238		41,238		3/15/2037	3.241	(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%.

The Company entered into two interest rate swap agreements related to these junior subordinated debentures, which effectively convert the interest rate on the trust preferred securities from a variable rate to a fixed rate. Each agreement is for a period of 5 years and commenced on September 15, 2011 for tranche III and March 15, 2012 for tranche IV.

Secured Loan Agreements

The Company, through a wholly-owned subsidiary, has a seven year secured loan agreement with Bank of America Leasing & Capital, LLC in the aggregate amount of $10,800 to finance the purchase of an aircraft. The loan bears interest at a fixed rate of 4.45%, requires monthly installment payments of approximately $117 through February 25, 2018, and a balloon payment of $2,970 at the maturity date. The Company recorded interest expense of approximately $330, $380 and $432 for the years ended December 31, 2014, 2013 and 2012, respectively, related to this agreement. The loan is secured by the aircraft.

The agreement contains certain covenants that are similar to the Credit Agreement. Additionally, subsequent to February 25, 2012, but prior to payment in full, if the outstanding balance of this loan exceeds 90% of the fair value of the aircraft, the Company is required to pay the lender the entire amount necessary to reduce the outstanding principal balance to be equal to or less than 90% of the fair value of the aircraft. During 2013, the Company paid an additional $270 to reduce the outstanding principal balance as required by these terms. The agreement allows the Company, under certain conditions, to repay the entire outstanding principal balance of this loan without penalty.

On August 29, 2014, the Company entered into a five-year secured loan agreement with Key Equipment Finance, which was subsequently assigned to RBS Citizens Bank, in the aggregate amount of $30,500 to finance the purchase of an aircraft. The loan bears interest at a fixed rate of 2.27% per annum and requires monthly installment payments of approximately $538 through August 31, 2019. The Company recorded interest expense of approximately $227 for the year ended December 31, 2014. The loan is secured by the aircraft.

Promissory Notes

In September 2012, as part of its participation in the New Market Tax Credit Program discussed in Note 21. "New Market Tax Credit", the Company entered into two promissory notes totaling $8,000. The loans are for a period of 15 years and have an average interest rate of 1.7% per annum. The Company recorded approximately $1,430 of deferred origination costs associated with the promissory notes. The Company recorded interest expense of approximately $312, $290, and $100 for the years ended December 31, 2014, 2013 and 2012, respectively, related to the promissory notes.

The Company assumed two promissory notes in 2013 totaling $6,500 as a result of its acquisition of MIHC as discussed in Note 5. "Significant Acquisitions". The principal of these notes is due in 2034 and 2035. The notes require the payment of interest on a quarterly basis and have an interest rate of 3.8% plus the three months LIBOR per annum, which was 4.1% as of December 31, 2014. The Company recorded $365 and $210 of interest expense related to these notes for the years ended December 31, 2014 and 2013, respectively.

F-48

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

ING Credit Agreement

On November 25, 2014, AmTrust Financial Services, Inc. (as Guarantor), and four of its wholly-owned subsidiaries, AmTrust International Insurance, Ltd. (as Account Party), AmTrust Corporate Capital Limited, AmTrust Corporate Member Limited and AmTrust Corporate Member Two Limited (as Corporate Members and collectively with the Guarantor and the Account Party, the “Company”) entered into an Amended and Restated Agreement ("Amended and Restated Credit Facility") relating to its £200,000 credit facility agreement ("Preceding Credit Facility") with ING Bank, N.V., London Branch, individually and as Agent and Security Trustee. The Amended and Restated Credit Facility increases the maximum amount of the letter of credit facility to £235,000 to be used to support the Company’s capacity at Lloyd’s as a member and/or reinsurer of Syndicates 2526, 1206 and 44 for the 2015 underwriting year of account, as well as prior open years of account. Letters of credit issued and outstanding under the Preceding Credit Facility were deemed issued and outstanding under the Amended and Restated Credit Facility.

The Amended and Restated Credit Facility contains customary covenants for facilities of this type, including restrictions on indebtedness and liens, limitations on mergers, transactions with affiliates and the sale of assets, and requirements to maintain certain consolidated net worth, statutory surplus, leverage and fixed charge coverage ratios. The Amended and Restated Credit Facility also provides for customary events of default, including, without limitation, failure to pay principal, interest or fees when due, failure to comply with certain covenants, any representation or warranty made by the Company being false or misleading in any material respect, default under certain other indebtedness, certain insolvency or receivership events affecting the Company and its subsidiaries, the occurrence of certain material judgments, or a change in control of the Account Party or the Corporate Member. Upon an event of default, the lender may immediately terminate its obligations to issue letters of credit, declare the Company’s obligations under the amended and restated credit facility to become immediately due and payable, and require the Company to deposit collateral with a value equal to 100%of the aggregate face amount of any outstanding letters of credit consisting of cash or other specified collateral including time deposits, certificates of deposit, money market deposits and U.S. government securities subject to varying advance rates.

The ability to have letters of credit issued under this amended and restated facility expires on December 31, 2015 and the maturity date for the facility is July 31, 2019. The facility is 40% secured by a pledge of a collateral account established in the United States pursuant to a pledge and security agreement and in the United Kingdom pursuant to a Deed of Charge dated as of November 26, 2013. In addition to upon an event of default as discussed above, the collateral account will be required to be 100% funded upon the occurrence of certain specified events, including the A.M. Best financial strength rating of the Account Party falling below A-, the forecast underwriting losses exceeding a certain level for any year supported by a letter of credit, or any non-extension notice is given with respect to any letter of credit.

Fees payable by the Company under the Amended and Restated Credit Facility include a letter of credit issuance fee, payable quarterly in arrears, on the secured portion of the letters of credit at the rate of 0.50% and on the unsecured potion of the letters of credit determined based on the Account Party’s then-current financial strength rating issued by A.M. Best. As of December 31, 2014, the applicable letter of credit fee rate on the unsecured portion was 1.15% based on the Account Party’s A.M. Best financial strength rating of “A”. The Company also pays a commitment fee of 0.35% per year on the aggregate unutilized and un-canceled amount of the facility, and a facility fee upon closing of 0.15% of the total aggregate commitment.

As of December 31, 2014, the Company had outstanding letters of credit of £227,989 (or $355,178) in place under the Amended and Restated Credit Facility. The aggregate unutilized amount under this facility was £7,011 (or $10,923) as of December 31, 2014. The Company recorded total interest expense of $2,795 for the year ended December 31, 2014 under the Amended and Restated Credit Facility. Interest expense recorded in 2013 under the Preceding Credit Facility was not material.

Other Letters of Credit

The Company, through one of its subsidiaries, has a secured letter of credit facility with Comerica Bank.The Company utilizes this letter of credit facility to comply with the deposit requirements of the State of California and the U.S. Department of Labor as security for the Company's obligations to workers' compensation and Federal Longshore and Harbor Workers' Compensation Act policyholders. The credit limit is for $75,000, of which $48,467 was utilized as of December 31, 2014. The Company is required to pay a letter of credit participation fee for each letter of credit in the amount of 0.40%.

The Company, through certain subsidiaries, has additional existing stand-by letters of credit with various lenders in the amount of $6,265 as of December 31, 2014.

F-49

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

13. Reinsurance

The Company structures its reinsurance programs by analyzing its tolerance for risk in each line of business and on an overall consolidated basis, based on a number of factors, including market conditions, pricing, competition and the inherent risks associated with each business type. Based on its analysis of these factors, the Company may determine not to purchase reinsurance for some lines of business. The Company generally purchases reinsurance to reduce its net liability on individual risks and to protect against catastrophe losses and volatility. The Company retains underwriting risk in certain lines of business in order to retain a greater proportion of expected underwriting profits. The Company has chosen not to purchase any reinsurance on businesses where volatility or catastrophe risks are considered remote and policy limits are within its risk tolerance.

The Company purchases reinsurance on a proportional basis to cover loss frequency, individual risk severity and catastrophe exposure. The Company also purchases reinsurance on an excess of loss basis to cover individual risk, severity and catastrophe exposure. Additionally, the Company may obtain facultative reinsurance protection on a single risk. The type and amount of reinsurance the Company purchases varies year to year based on its risk assessment, its desired retention levels based on profitability and other considerations, and the market availability of quality reinsurance at prices the Company considers acceptable. Our reinsurance programs renew throughout the year, and the price changes in recent years have not been material to the Company's net underwriting results. The Company's reinsurance generally does not cover war or nuclear, biological, chemical or radiological terrorism risks.

In its proportional reinsurance programs, the Company generally receives a commission on the premium ceded to reinsurers. This “ceding commission” compensates the Company's insurance companies for the direct costs associated with production of the business, the servicing of the business during the term of the policies ceded, and the costs associated with placement of reinsurance that benefits the proportional programs. In addition, certain of the Company's reinsurance treaties allow it to share in any net profits generated under such treaties with the reinsurers. Various reinsurance brokers may arrange for the placement of this reinsurance coverage on the Company's behalf and are compensated, directly or indirectly, by the reinsurers. The Company also places reinsurance with direct markets and enters reinsurance relationships with third-party captives formed by agents and other business partners as a mechanism for sharing risk and profit.

In order to reduce its exposure to reinsurance credit risk, the Company evaluates the financial condition of its reinsurers and places its reinsurance with a diverse group of companies and syndicates that it believes to be financially sound. The Company carefully monitors the credit quality of its reinsurers when the Company places new and renewal reinsurance, as well as on an ongoing, current basis. The Company uses objective criteria to select and retain its reinsurers, including requiring minimum surplus of $500,000 and a financial strength rating of “A-” or better from A.M. Best Company, Inc. or Standard & Poor's Corporation. The Company approves exceptions to these criteria when warranted.

The Company monitors its financial exposure to the reinsurance market and takes necessary actions in an attempt to mitigate its exposure to possible loss. The Company limits its liquidity exposure for uncollected recoverables by holding funds, letters of credit or other security, with the result that net balances due from reinsurers are significantly less than the gross balances shown in its consolidated balance sheets. The Company monitors the collectability of its reinsurance recoverables and records a reserve for uncollectible reinsurance when it determines an amount is potentially uncollectible. The Company's evaluation is based on its periodic reviews of its disputed and aged recoverables, as well as its assessment of recoverables due from reinsurers known to be in financial difficulty. In some cases, the Company makes estimates as to what portion of a recoverable may be uncollectible. The Company's estimates and judgment about the collectability of the recoverables and the financial condition of reinsurers can change, and these changes can affect the level of reserve required.

F-50

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

Reinsurance Programs and Retentions

The following tables provide a summary of the Company's primary reinsurance programs as of December 31, 2014 for the United States and internationally:

(Amounts in Thousands)	2014 Domestic Reinsurance Program
Type of Reinsurance	Retention		Event Protection		Coverage
Workers’ Compensation, Excess of Loss	$	5,000	$	510,000	98.5% of $505,000
Property, Per Risk Excess of Loss	$	2,000	$	30,000	95% of $28,000
Property, Occurrence Excess of loss	$	20,000	$	400,000	99% of $380,000
Surety, Excess of Loss	$	500	$	20,000	70% of $19,500
Casualty/Umbrella, Excess of Loss and Quota Share	$	2,500	$	50,000	95% of $50,000
Equipment Breakdown, Quota Share	$	—	$	100,000	100% of $100,000

(Amounts in Thousands)	2014 International Reinsurance Program
Type of Reinsurance	Retention		Event Protection		Coverage
Property, Per Risk Excess of Loss	$	800	$	4,400	100% of $3,600
Property, Occurrence Excess of Loss	$	8,000	$	160,000	97% of $152,000
Surety, Excess of Loss and Quota Share	$	4,500	$	45,000	100% of $41,500
Casualty, Excess of Loss	$	3,000	$	15,000	100% of $12,000
Latent Defect, Excess of Loss	$	3,200	$	40,000	100% of $36,800
Accident and Health, Excess of Loss	$	800	$	32,000	100% of $31,200
Car Care, Excess of Loss	$	1,000	$	105,000	97.5% of $104,000
Medical Malpractice, Quota Share	$	7,800	$	13,000	40% of $13,000

(Amounts in Thousands)	2014 AmTrust at Lloyds Reinsurance Programs
Type of Reinsurance	Retention		Event Protection		Coverage
Property, Per Risk Excess of Loss	$	1,600	$	8,000	100% of $6,400
Property, Occurrence Excess of Loss	$	20,000	$	120,000	98% of $90,000
Casualty, Excess of Loss	$	4,000	$	20,000	100% of $16,000
Personal Accident, Excess of Loss	$	2,000	$	50,000	100% of $48,000
Pecuniary Risks	$	5,000	$	35,000	100% of $30,000

If the Company incurs catastrophe losses and loss settlement expenses that exceed the coverage limits of its reinsurance program, many of its property catastrophe programs have built in a fixed number of reinstatement of limits. For example, if the Company incurs a property catastrophe loss, it is required to pay the reinsurers a reinstatement premium equal to the percentage of the limit exhausted by the loss, multiplied by the amount of the original reinsurance premium.

During the third quarter of 2007, the Company entered into a master agreement with Maiden, as amended, by which its Bermuda subsidiary, AII, and Maiden Reinsurance entered into a quota share reinsurance agreement, as amended (the “Maiden Quota Share”). For a description of this agreement, see Note 14. “Related Party Transactions.”

F-51

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

The effect of reinsurance with unrelated companies on premiums and losses for 2014, 2013 and 2012 are as follows:

	Year Ended December 31,
	2014						2013						2012
(Amounts in Thousands)	Written			Earned			Written			Earned			Written			Earned
Premiums:
Direct	$	5,422,484		$	4,816,607		$	3,869,893		$	3,308,136		$	2,494,846		$	2,067,635
Assumed	665,481			562,193			247,018			254,863			254,480			270,008
Ceded	(2,131,347		)	(1,852,236		)	(1,551,238		)	(1,297,009		)	(1,101,289		)	(918,791		)
	$	3,956,618		$	3,526,564		$	2,565,673		$	2,265,990		$	1,648,037		$	1,418,852

	As of December 31,
	2014					2013					2012
(Amounts in Thousands)	Assumed		Ceded			Assumed		Ceded			Assumed		Ceded
Loss and LAE reserves	$	623,193	$	(2,149,444	)	$	378,564	$	(1,739,689	)	$	503,174	$	(1,185,056	)
Unearned premiums	211,177		(1,302,848		)	103,878		(1,011,304		)	108,679		(754,844		)
Loss and LAE expense incurred	424,754		(1,217,593		)	91,109		(975,434		)	166,191		(638,595		)

The Company continuously updates the reserves on these lines of business based on information available from the ceding insurers. During 2014 and 2013, the Company had no commutations related to workers’ compensation that were included in ceded reinsurance treaties.

14. Related Party Transactions

Significant Transactions with Maiden Holdings, Ltd.

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 stockholders, and, respectively, the Chairman of the Board of Directors, a Director, and the Chief Executive Officer and director of the Company. As of December 31, 2014, our principal stockholders, 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%, 9.3% 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 Reinsurance Ltd. ("Maiden Reinsurance"), formerly known as Maiden Insurance Company, Ltd, 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 Reinsurance to enter into a quota share reinsurance agreement (the “Maiden Quota Share”), as amended, by which AII retrocedes to Maiden Reinsurance 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). AII also retrocedes 40% of losses. Certain business that the Company commenced writing after the effective date, including the Company's European medical liability business discussed below, business assumed from Tower Group International, Ltd. pursuant to the cut-through quota share reinsurance agreement, 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 is not ceded to Maiden Insurance (ceded business defined as “Covered Business”).

F-52

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

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, the Company will be responsible for ultimate net loss otherwise recoverable from Maiden Reinsurance to the extent that the loss ratio to Maiden Reinsurance, 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 “Specialty Program Loss Corridor”). For the purpose of determining whether the loss ratio falls within the Specialty Program Loss Corridor, workers' compensation business written in the Company's Specialty Program segment from July 1, 2007 through December 31, 2012 is excluded from the loss ratio calculation.

The Maiden Quota Share was renewed through July 1, 2016 and will automatically renew for successive three-year terms unless either AII or Maiden Reinsurance 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 Reinsurance, run-off, or a reduction of 50% or more of the stockholders’ equity of Maiden Reinsurance or the combined stockholders’ 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 Reinsurance by which the Company cedes to Maiden Reinsurance 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, 2016. The agreement can be terminated by either party on four months’ prior written notice. Maiden Reinsurance 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%.

The following is the effect on the Company’s results of operations for the years ended December 31, 2014, 2013 and 2012 related to the Maiden Quota Share agreement:

(Amounts in Thousands)	2014			2013			2012
Results of operations:
Premium written – ceded	$	(1,592,457	)	$	(1,150,394	)	$	(846,491	)
Change in unearned premium – ceded	211,897			162,846			116,168
Earned premium – ceded	$	(1,380,560	)	$	(987,548	)	$	(730,323	)
Ceding commission on premium written	$	493,342		$	330,186		$	223,111
Ceding commission – deferred	(88,271		)	(53,630		)	(26,129		)
Ceding commission – earned	$	405,071		$	276,556		$	196,982
Incurred loss and loss adjustment expense – ceded	$	885,362		$	715,832		$	526,210

Note Payable to Maiden — Collateral for Proportionate Share of Reinsurance Obligations

In conjunction with the Maiden Quota Share, as described above, the Company entered into a loan agreement with Maiden Reinsurance during the fourth quarter of 2007, whereby Maiden Reinsurance loaned to the Company the amount equal to AII's 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 December 31, 2014 and 2013. The Company recorded $1,797, $1,852 and $1,951 of interest expense during the years ended December 31, 2014, 2013 and 2012, respectively. Effective December 1, 2008, AII and Maiden Reinsurance entered into a Reinsurer Trust Assets Collateral agreement whereby Maiden Reinsurance 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 December 31, 2014 was approximately $1,936,128. Maiden retains ownership of the collateral in the trust account.

F-53

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

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 $19,896, $17,498 and $8,759 of brokerage commission during the years ended December 31, 2014, 2013 and 2012, respectively. The brokerage commission was recorded as a component of service and fee income.

Asset Management Agreement

Effective July 1, 2007, a subsidiary of the Company entered into an asset management agreement with Maiden Reinsurance, pursuant to which the Company provides investment management services to Maiden Reinsurance and certain of its affiliates. As of December 31, 2014, the Company managed approximately $3,653,758 of assets related to this agreement. The asset 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 exceed $1,000,000. As a result of this agreement, the Company recorded approximately $5,213, $4,388 and $3,697 of asset management fees for the years ended December 31, 2014, 2013 and 2012, respectively. The asset management fees were recorded as a component of service and fee income.

Significant Transactions with National General Holding Corp.

The Company has a 13.2% ownership interest in NGHC. NGHC is a publicly-held insurance holding company (Nasdaq: NGHC) that operates fifteen insurance companies in the United States and writes consumer property and casualty insurance business through independent agents for automobiles. Its coverages include standard/preferred auto, RVs, non-standard auto and commercial auto. NGHC's two largest stockholders are The Michael Karfunkel 2005 Grantor Retained Annuity Trust (the “Trust”) and Michael Karfunkel individually. 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, president and chief executive officer of NGHC. In accordance with ASC 323-10-15, Investments-Equity Method and Joint Ventures, the Company accounts for its investment in NGHC under the equity method as it has the ability to exert significant influence on NGHC's operations.

In February 2014, NGHC issued approximately 13,600,000 shares in a follow on Rule 144A offering, which resulted in the Company reducing its ownership percentage in NGHC from 15.4% to 13.2%. As a result of the stock issuance, the Company recognized a gain on sale of its equity investment of $14,712, which is included in equity in earnings of unconsolidated subsidiary. In total, the Company recorded $28,351, $11,566 and $9,295 of income during the years ended December 31, 2014, 2013 and 2012, respectively related to its equity investment in NGHC.

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 that is currently 1.25% of gross premiums written 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 $25,632, $24,196 and $14,444 of fee income for the years ended December 31, 2014, 2013 and 2012, respectively, related to this agreement. Additionally, the Company provided certain consulting services to NGHC related to Luxembourg-domiciled reinsurance entities in 2014, for which the Company received $1,057 for the year ended December 31, 2014. The fees for these services were recorded as a component of service and fee income.

Asset Management Agreement

A subsidiary of the Company manages the assets of NGHC and certain of its subsidiaries, including the assets of reciprocal insurers managed by subsidiaries of NGHC, 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 $1,433,705 of assets as of December 31, 2014 related to this

F-54

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

agreement. As a result of this agreement, the Company earned approximately $2,006, $1,725 and $1,503 of asset management fees for the years ended December 31, 2014, 2013 and 2012, respectively. The asset management fees were recorded as a component of service and fee income.

As a result of the above service agreements with NGHC, the Company recorded fees totaling approximately $28,695, $25,921 and $15,947 for the years ended December 31, 2014, 2013 and 2012, respectively. As of December 31, 2014, the outstanding balance payable by NGHC related to these service fees and reimbursable costs was approximately $16,409.

800 Superior, LLC

In 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 13.2% ownership percentage of NGHC, the Company ultimately receives 57.7% of the profits and losses of 800 Superior, LLC. As such, in accordance with ASC 810-10, Consolidation, the Company has been deemed the primary beneficiary and, therefore, consolidates this entity.

In 2012, NGHC entered into an office lease with 800 Superior, LLC for approximately 134,000 square feet. The lease period is for 15 years and NGHC paid 800 Superior, LLC $2,056, $2,329, and $1,391 for the years ended December 31, 2014, 2013 and 2012, respectively. As discussed in Note 21. "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.

Sale of Personal Express Insurance Company

In April 2014, the Company completed the sale of Personal Express Insurance Company (“PEIC”), a California-domiciled property and casualty insurance carrier that offers retail personal lines insurance products in California, and its captive insurance agency Personal Express Insurance Services, Inc. (“PEIS” and, together with PEIC, the “Personal Express Companies”) to Integon National Insurance Company ("Integon"), a subsidiary of NGHC, for approximately $21,743. As a result of the sale, the Company recorded a gain on sale of approximately $6,631. The Personal Express Companies were wholly-owned subsidiaries of Sequoia Insurance Company, which is one of the Company’s wholly-owned subsidiaries.

Personal Lines Quota Share

The Company was a party to a quota share reinsurance agreement (“Personal Lines Quota Share”) with Integon. On August 1, 2013, the Company and its wholly-owned subsidiary, Technology Insurance Company, Inc. (“TIC”), received a termination notice related to TIC's participation in the Personal Lines Quota Share effective August 1, 2013. The termination was on a run-off basis, meaning the Company is involved with the continuing cash flows associated with this business with respect to policies in force as of July 31, 2013. As such, the Personal Lines Reinsurance segment, which contains the results of operations from the Personal Lines Quota Share, is not presented as a discontinued operation in accordance with ASC 205-20, Discontinued Operations. The overall results of the Personal Lines Reinsurance segment were immaterial for the years ended December 31, 2014 and 2013.

Significant Transactions with ACP Re, Ltd.

ACP Re, Ltd. (“ACP Re”) is a privately-held Bermuda reinsurance holding company formed by Michael Karfunkel, the Chairman of the Board of the Company. ACP Re operates 10 insurance companies in the United States and Bermuda as a result of its merger with Tower Group International, Ltd. ("Tower") during the third quarter of 2014. The following section describes the agreements in place between the Company and its subsidiaries and ACP Re and its subsidiaries.

Asset Management Agreement

A subsidiary of the Company provides asset management services to ACP Re, Ltd. and certain of its subsidiaries at (i) an annual rate of 0.20% of the average value of the invested assets under management, 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

F-55

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

0.15% of the average value of invested assets under management, excluding investments in the Company's stock, for the preceding calendar quarter if the average value of such assets for the quarter was greater than $1,000,000. The Company managed approximately $53,670 of assets as of December 31, 2014. The Company recorded approximately $214, $238, and $638 for these services for the years ended December 31, 2014, 2013 and 2012, respectively.

Agreements as a result of ACP Re / Tower Merger

In January 2014, ACP Re, through a subsidiary, agreed to acquire 100% of the outstanding stock of Tower and merge with Tower on September 15, 2014 (the “Merger”). As a result of the Merger, the Company and ACP Re entered into the agreements and transactions described below, as well as an asset management agreement described above.

Commercial Lines Master Agreement

On July 23, 2014, the Company and ACP Re entered into the Amended and Restated Commercial Lines Master Agreement (the “Master Agreement”), which provides for the implementation of the various transactions associated with the acquisition of Tower by ACP Re pursuant to the Merger, including entering into the agreements described below, all of which became effective on September 15, 2014. In addition, the Master Agreement requires the Company to pay ACP Re contingent consideration in the form of a three year earn-out (the “Contingent Payments”), payable semi-annually on the last day of January and July, of 3% of gross written premium of the Tower commercial lines business written or assumed by the Company following the Merger. The Contingent Payments to be made by the Company are subject to a maximum of $30,000, in the aggregate, over the three-year period. NGHC will pay contingent consideration to ACP Re on the same terms. As a result of entering into this agreement, the Company initially assigned a value of $26,200 to the renewal rights, $700 to goodwill, and $26,900 to the contingent consideration, which is recorded as a component of accrued expense and other liability. In addition, as a result of the renewal rights transaction, the Company generated approximately $133,424 of gross written premium for the year ended December 31, 2014.

Commercial Lines Reinsurance Agreements

TIC entered into the Commercial Lines Quota Share Reinsurance Agreement (the “CL Reinsurance Agreement”) with Tower’s ten statutory insurance companies (the “Tower Companies”) pursuant to which TIC will reinsure 100% of all losses under the Tower Companies’ new and renewal commercial lines business written after September 15, 2014. The ceding commission payable by TIC under the CL Reinsurance Agreement is equal to the sum of (i) reimbursement of the Tower Companies’ acquisition costs in respect of the business covered, including commission payable to AmTrust North America, Inc., a subsidiary of the Company (“ANA”), pursuant to the CL MGA Agreement described below, and premium taxes and (ii) 2%of gross written premium (net of cancellations and return premiums) collected pursuant to the CL MGA Agreement described below. The CL Reinsurance Agreement will remain in effect until termination of the CL MGA Agreement. The Company assumed $17,404 of premium under the CL Reinsurance Agreement during the year ended December 31, 2014.

In connection with the execution of the CL Reinsurance Agreement, the Commercial Lines Cut-Through Quota Share Reinsurance Agreement, dated January 3, 2014, between TIC and the Tower Companies whereby TIC, through a 100% quota share, reinsured at least 60% of the Tower Companies’ then in-force commercial lines policies and most new and renewal commercial lines business from January 3, 2014 forward, was terminated on a run-off basis, with the reinsurance of all policies reinsured under that agreement remaining in effect. During the year ended December 31, 2014, TIC assumed $475,038 of premium under the cut-through reinsurance agreement. During the year ended December 31, 2014, the Company earned approximately $386,609 of premium and incurred approximately $224,961 of loss and loss adjustment expense, respectively, related to the cut-through reinsurance agreement. During the year ended December 31, 2014, the Company incurred approximately $91,502 of commission expense and approximately $15,926 of unallocated claims expense as part of the agreement. Additionally, the Company recorded approximately $8,915 of prepaid claim expense as of December 31, 2014, which is reported as a component of other assets.

Commercial Lines MGA Agreement

ANA produces and manages all new and renewal commercial lines business written by the Tower Companies pursuant to the Commercial Lines Managing General Agency Agreement (the “CL MGA Agreement”). As described above, all post-September 15, 2014 commercial lines business written by the Tower Companies will be reinsured by TIC pursuant to the CL Reinsurance Agreement. The Tower Companies pay ANA a 10% commission on all business written pursuant to the CL MGA Agreement and reimburse ANA for commissions payable to agents producing such business. All payments by the Tower Companies to ANA pursuant to the CL MGA Agreement will be netted out of the ceding commission payable by TIC to the Tower Companies pursuant

F-56

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

to the CL Reinsurance Agreement. The CL MGA Agreement has a term of ten years. The Company recorded $1,751 of commission under the CL MGA Agreement during the year ended December 31, 2014. The commission income was recorded as a component of service and fee income.

Commercial Lines Administrative Services Agreement

ANA, the Tower Companies and CastlePoint Reinsurance Company, Ltd. (“CP Re”, a subsidiary of ACP Re) entered into the Commercial Lines LPTA Administrative Services Agreement (the “CL Administrative Agreement”) pursuant to which ANA administers the runoff of CP Re’s and the Tower Companies’ commercial lines business written prior to September 15, 2014 at cost. CP Re and the Tower Companies reimburse ANA for its actual costs, including costs incurred in connection with claims operations, out-of-pocket expenses, costs incurred in connection with any required modifications to ANA’s claims systems and an allocated portion of the claims service expenses paid by TIC to the Tower Companies pursuant to the CL Reinsurance Agreement. The CL Administrative Agreement will remain in effect until the first to occur of (i) the completed performance of all obligations and duties arising under the agreement, or (ii) mutual written consent. The Company did not receive any reimbursement as a result of the CL Administrative Agreement during the year ended December 31, 2014.

Stop-Loss and Retrocession Agreements

AII and National General Re, Ltd., a subsidiary of NGHC (“NG Re Ltd.”), as reinsurers, entered into a $250,000 Aggregate Stop Loss Reinsurance Agreement (the “Stop-Loss Agreement”) with CP Re. AII and NG Re Ltd. also entered into an Aggregate Stop Loss Retrocession Contract (the “Retrocession Agreement”) with ACP Re pursuant to which ACP Re will reinsure the full amount of any payments that AII and NG Re Ltd. are obligated to make to CP Re under the Stop-Loss Agreement. Pursuant to the Stop-Loss Agreement, each of the Company and NGHC will provide, severally, $125,000 of stop loss coverage with respect to the run-off of the Tower business written on or before September 15, 2014. The reinsurers’ obligation to indemnify CP Re under the Stop-Loss Agreement will be triggered only at such time as CP Re’s ultimate net loss related to the run-off of the pre-September 15, 2014 Tower business exceeds a retention equal to the Tower Companies’ loss and loss adjustment reserves and unearned premium reserves as of September 15, 2014. CP Re will pay AII and NG Re Ltd. total premium of $56,000 on the five-year anniversary of the Stop-Loss Agreement. The premium payable by AII and NG Re Ltd. to ACP Re pursuant to the Retrocession Agreement will be $56,000 in the aggregate, less a ceding commission of 5.5% to be retained by AII and NG Re Ltd.

Credit Agreement

The Company, AII, and NG Re Ltd. entered into a credit agreement (the “ACP Re Credit Agreement”) among the Company, as Administrative Agent, ACP Re and Tower, now a wholly-owned subsidiary of ACP Re, as the borrowers (collectively, the “Borrowers”), ACP Re Holdings, LLC, as Guarantor, and AII and NG Re Ltd., as Lenders, pursuant to which the Lenders made a $250,000 loan ($125,000 made by each Lender) to the Borrowers. ACP Re used the proceeds of such loan to (i) finance the Merger, (ii) repay certain indebtedness of Tower and its related companies in connection with the Merger, and (iii) pay certain transaction costs and expenses incurred by the Borrowers in connection with the Merger.

The loan issued pursuant to the ACP Re Credit Agreement has a maturity date of September 15, 2021. Outstanding borrowings under the ACP Re Credit Agreement will bear interest at a fixed annual rate of 7%, payable semi-annually on the last day of January and July. Fees payable to the Company for its service as Administrative Agent include an annual fee equal to $30, plus reimbursement of costs, expenses and certain other charges. The obligations of the Borrowers are secured by (i) a first-priority pledge of 100% of the stock of ACP Re and ACP Re’s U.S. subsidiaries and 65% of the stock of certain of ACP Re’s foreign subsidiaries, and (ii) a first-priority lien on all of the assets of the Borrowers and Guarantor and certain of the assets of ACP Re’s subsidiaries (other than the Tower Companies).

The Borrowers have the right to prepay the amounts borrowed, in whole or in part. The Borrowers are required to prepay the amounts borrowed within thirty (30) days from the receipt of net cash proceeds received by ACP Re from (i) certain asset sales, (ii) the disposition of certain equity interests, (iii) the issuance or incurrence of certain debt, (iv) any dividend or distribution from Tower subsidiaries to ACP Re, (v) premiums and other payments received pursuant to the Retrocession Agreement, and (vi) any tax refunds, pension plan reversions, insurance proceeds, indemnity payments, purchase price adjustments (excluding working capital adjustments) under acquisition agreements, litigation proceeds and other similar receipts received by the Borrowers after the effective date of the ACP Re Credit Agreement, unless any of the foregoing proceeds (other than payments received pursuant to the Retrocession Agreement) are required for the ordinary course business operations of the Borrowers. The Borrowers are also required to deposit any excess cash flow (including payments under the Master Agreement) into a reserve account that also secures

F-57

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

Borrowers’ obligations under the ACP Re Credit Agreement. Any funds in the reserve account after January 1, 2018 that exceed the amount of interest payable by the Borrowers for the remainder of the term of the ACP Re Credit Agreement must be applied by the Borrowers as a prepayment of principal under the ACP Re Credit Agreement.

The ACP Re Credit Agreement contains certain customary restrictive covenants (subject to negotiated exceptions and baskets), including restrictions on indebtedness, liens, acquisitions and investments, dispositions, creation of subsidiaries and restricted payments. There are also financial covenants that require ACP Re to maintain minimum current assets, a maximum leverage ratio, and a minimum fixed charge coverage ratio. If ACP Re fails to comply with the leverage ratio or fixed charge coverage ratio covenants as of any measurement date, the Borrowers may cure such breach by making a capital contribution to ACP Re sufficient to bring the Borrowers into compliance.

The ACP Re Credit Agreement also provides for customary events of default, with grace periods where appropriate, including failure to pay principal when due, failure to pay interest or fees within three business days after becoming due, failure to comply with covenants, breaches of representations and warranties, default under certain other indebtedness, certain insolvency, receivership or insurance regulatory events affecting the Borrowers, the occurrence of certain material judgments, certain amounts of reportable ERISA or foreign pension plan noncompliance events, a change in control of the Guarantor, any security interest created under the ACP Re Credit Agreement ceases to be in full force and effect, or if ACP Re defaults on its obligations under the Retrocession Agreement. Upon the occurrence and during the continuation of an event of default, the Company, as Administrative Agent, upon the request of any Lender, will declare the Borrowers’ obligations under the ACP Re Credit Agreement immediately due and payable and/or exercise any and all remedies and other rights under the ACP Re Credit Agreement.

As of December 31, 2014, the Company recorded $127,601 of loan and related interest receivable as a component of other assets on the condensed consolidated balance sheet. The Company recorded total interest income of approximately $2,601 for the year ended December 31, 2014 under the ACP Re Credit Agreement.

Other Related Party Transactions

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 $1,880, $730 and $733 for the years ended December 31, 2014, 2013 and 2012, respectively.

The Company leases 15,765 square feet of office space in Chicago, Illinois from 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 Company paid approximately $444 and $480 for this lease for the years ended December 31, 2014 and 2013, respectively.

Use of Company Aircraft

The Company and its wholly-owned subsidiary, AmTrust Underwriters, Inc. (“AUI”), are each a party to aircraft time share agreements with each of Maiden and NGHC. The agreements provide for payment to the Company or AUI for usage of their respective company-owned aircraft and cover 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, and airport taxes, among others. Neither the Company nor AUI charges Maiden or NGHC for the fixed costs that would be incurred in any event to operate the aircrafts (for example, aircraft purchase costs, insurance and flight crew salaries). During the years ended December 31, 2014, 2013 and 2012, Maiden paid AUI $26, $38, and $59, respectively, and NGHC paid AUI $133, $140, and $165, respectively, for the use of AUI’s aircraft under these agreements. During the year ended December 31, 2014, Maiden paid the Company $26 for the use of the Company's aircraft.

F-58

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

In addition, for personal travel, Mr. Zyskind, the Company’s President and Chief Executive Officer and Mr. Michael Karfunkel, the Chairman of the Board, each entered into an aircraft reimbursement agreement with the Company and, since entering into such agreements, has fully reimbursed the Company for the incremental cost billed by the Company for their personal use of the company-owned aircraft. Mr. Zyskind reimbursed the Company $235, $74, and $192 respectively, for his personal use of the aircraft during the years ended December 31, 2014, 2013 and 2012. Mr. Karfunkel reimbursed the Company $55 during the year ended December 31, 2013 for his personal use of the aircraft. Mr. Karfunkel did not use the aircraft for personal use in 2014 or 2012.

15. Acquisition Costs and Other Underwriting Expenses

The following table summarizes the components of acquisition costs and other underwriting expenses for the years ended December 31, 2014, 2013 and 2012:

(Amounts in Thousands)	2014		2013		2012
Policy acquisition expenses	$	460,010	$	244,461	$	178,633
Salaries and benefits	367,549		247,173		155,441
Other insurance general and administrative expense	29,364		41,528		21,931
	$	856,923	$	533,162	$	356,005

16. Share Based Compensation

The Company's 2010 Omnibus Incentive Plan (the “Plan”), which permits the Company to grant to officers, employees and non-employee directors incentive compensation directly linked to the price of the Company’s stock, authorizes up to an aggregate of 7,315,068 shares of Company stock for awards of options to purchase shares of the Company’s common stock, restricted stock, restricted stock units (“RSU”), performance share units ("PSU") or appreciation rights. Shares used may be either newly issued shares or treasury shares or both. The aggregate number of shares of common stock for which awards may be issued may not exceed 7,315,068 shares, subject to the authority of the Company’s Board of Directors to adjust this amount in the event of a consolidation, reorganization, stock dividend, stock split, recapitalization or similar transaction affecting the Company’s common stock. As of December 31, 2014, approximately 4,600,000 shares of Company common stock remained available for grants under the Plan.

The Company recognizes compensation expense under FASB ASC 718-10-25 for its share-based payments based on the fair value of the awards. The Company grants stock options at prices equal to the closing stock price of the Company’s stock on the dates the options are granted. The options have a term of ten years from the date of grant and vest primarily in equal annual installments over the four years period following the date of grant for employee options. The Company uses the simplified method in determining the expected life. Employees have three months after the employment relationship ends to exercise all vested options. The fair value of each option grant is separately estimated for each vesting date. The fair value of each option is amortized into compensation expense on a straight-line basis between the grant date for the award and each vesting date. The Company has estimated the fair value of all stock option awards as of the date of the grant by applying the Black-Scholes-Merton multiple-option pricing valuation model. The application of this valuation model involves assumptions that are judgmental and highly sensitive in the determination of compensation expense. The Company grants restricted shares, RSUs and PSUs with a grant date value equal to the closing stock price of the Company's stock on the dates the shares or units are granted and the restricted shares and RSUs vest over a period of two to four years, while PSUs vest based on terms of the awards.

The Company paid a ten percent stock dividend in 2013 and 2012. At the dividend date, all options outstanding were adjusted by ten percent and their respective exercise prices were reduced by ten percent, which ultimately resulted in each outstanding share having the same fair value immediately prior to and subsequent to the dividend date. Therefore, the Company did not record any additional compensation expense as a result of either stock dividend. The Company also adjusted outstanding RSUs, unvested restricted stock and PSUs, resulting in no additional compensation expense.

F-59

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

The following schedule shows all options granted, exercised, and expired under the Plan for the years ended December 31, 2014, 2013 and 2012:

	2014				2013				2012
	Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
Outstanding at beginning of year	2,997,460		$	10.49	3,675,776		$	9.41	4,546,678		$	9.06
Granted	37,500		37.87		78,001		29.78		45,981		23.63
Exercised	(1,092,120	)	9.50		(747,272	)	7.21		(821,745	)	7.98
Forfeited	(8,470	)	7.03		(9,045	)	8.90		(95,138	)	11.87
Outstanding at end of year	1,934,370		$	11.60	2,997,460		$	10.49	3,675,776		$	9.41

The fair value was estimated at the date of grant with the following weighted average assumptions for the years ended December 31, 2014, 2013 and 2012:

	2014		2013		2012
Volatility	41.89	%	33.09	%	32.68	%
Risk-free interest rate	2.73	%	0.88	%	0.73	%
Weighted average expected lives in years	6.25		6.25		6.25
Dividend rate	1.90	%	1.68	%	1.37	%
Forfeiture rate	0.50	%	0.50	%	0.50	%

The weighted average grant date fair value of options granted was $14.69, $8.10 and $8.44 during 2014, 2013 and 2012, respectively. As of December 31, 2014 and 2013, all option grants outstanding had an approximate weighted average remaining life of 3.4 and 4.4 years, respectively. As of December 31, 2014 and 2013, there were approximately 1,800,000 options and 2,800,000 options, respectively, with a weighted average exercise price of $10.49 and $9.69, respectively, which were exercisable.

A summary of the Company’s restricted stock and RSU activity for the years ended December 31, 2014, 2013 and 2012 is shown below:

	2014				2013				2012
	Shares or Units		Weighted Average Grant Date Fair Value		Shares or Units		Weighted Average Grant Date Fair Value		Shares or Units		Weighted Average Grant Date Fair Value
Non-vested at beginning of year	917,015		$	24.43	888,197		$	20.86	352,453		$	15.14
Granted	902,358		39.21		291,430		31.17		638,177		23.04
Vested	(497,534	)	27.38		(262,031	)	19.81		(101,681	)	14.70
Forfeited	(16,328	)	33.19		(581	)	29.31		(752	)	20.86
Non-vested at end of year	1,305,511		$	33.41	917,015		$	24.43	888,197		$	20.86

The Company has 274,835 PSUs outstanding as of December 31, 2014. PSUs are conditional grants of a specified maximum number of common shares. In general, grants are earned, subject to the attainment of pre-specified performance goals at the end of a pre-determined period. The fair value of PSUs granted in 2014 and 2013 was $7,640 and $4,687, respectively.

Compensation expense for all share-based payments under ASC 718-10-30 was approximately $19,114, $11,186 and $7,172 for the years ended December 31, 2014, 2013 and 2012, respectively. The Company had approximately $36,882, $23,857 and $20,665 of unrecognized compensation cost related to all share based compensation as of December 31, 2014, 2013 and 2012, respectively.

F-60

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

The intrinsic value of stock options exercised during 2014, 2013 and 2012 was $35,597, $19,352 and $12,061, respectively. The intrinsic value of stock options that were outstanding as December 31, 2014, 2013 and 2012 was $86,374, $66,559 and $70,860, respectively.

Cash received from options exercised was $10,589, $5,387 and $8,873 during 2014, 2013 and 2012 respectively. The excess tax benefit from award exercises was approximately $10,281 and $5,109 for the years ended December 31, 2014 and 2013.

17. Income Taxes

The provision for income taxes consists of the following for the years ended December 31, 2014, 2013 and 2012:

(Amounts in Thousands) Income Tax Provision (Benefit)	2014			2013		2012
Current expense (benefit)
Federal	$	219,413		$	49,565	$	6,402
Foreign	26,142			29,935		21,052
Total current tax expense	245,555			79,500		27,454
Deferred expense (benefit)
Federal	$	(8,376	)	$	13,741	$	9,919
Foreign	(183,493		)	4,778		(16,081		)
Total deferred tax expense	(191,869		)	18,519		(6,162		)
Total income tax expense	$	53,686		$	98,019	$	21,292

The following table is a reconciliation of the Company’s statutory income tax expense to its effective tax rate for the years ended December 31, 2014, 2013 and 2012:

(Amounts in Thousands)	2014			2013			2012
Income before equity in earnings (loss) of unconsolidated subsidiaries	$	471,933		$	367,046		$	196,857
Tax at federal statutory rate of 35%	$	165,177		$	128,466		$	68,900
Tax effects resulting from:
Net income of non-includible foreign subsidiaries	(99,904		)	(45,075		)	(43,806		)
Other, net	(11,587		)	14,628			(3,802		)
	$	53,686		$	98,019		$	21,292
Effective tax rate	11.4		%	26.7		%	10.8		%

F-61

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities as of December 31, 2014 and 2013 are shown below:

(Amounts in Thousands)	2014			2013
Deferred tax assets:
Unearned premiums	$	117,922		$	83,410
Ceding commission	107,739			82,554
Loss and LAE reserves	49,583			43,452
Other	62,346			60,673
Deferred compensation	7,774			7,183
Bad debt	13,027			8,790
Net operating loss carryforward	101,230			2,133
Unrealized loss on investments	—			4,396
	$	459,621		$	292,591
Deferred tax liabilities:
Deferred acquisition costs	$	(295,121	)	$	(239,293	)
Equalization reserves	(94,215		)	(186,576		)
Intangible assets	(51,619		)	(64,090		)
Unrealized gain on investments	(30,219		)	—
Other	(16,790		)	(19,578		)
Depreciation	(31,350		)	(31,396		)
Equity results which cannot be liquidated tax free	(41,497		)	(21,200		)
Accrual market discount	(3,123		)	(3,020		)
Cash surrender value on insurance	(2,050		)	(1,957		)
	(565,984		)	(567,110		)
Deferred tax liability, net	$	(106,363	)	$	(274,519	)

The Company’s management believes that it will realize the benefits of its deferred tax assets, which are 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 December 31, 2014 and 2013, the financial reporting basis in excess of the tax basis for which no deferred taxes have been recognized was approximately $257,587 and $112,263, respectively.

The Company has U.S. Net Operating Losses (“NOLs”) of $26,079 that expire beginning in 2019 through 2033. In addition, these NOLs are subject to certain limitations under Section 382 of the Internal Revenue Code due to changes in ownership of $1,723 per year. The Company also has foreign NOLs of $307,288 that currently have no expiration.

F-62

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

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. Listed below are the tax years that remain subject to examination by major tax jurisdictions:

	Open Tax Years
Major tax jurisdictions:
United States	2010-2013
United Kingdom	2011-2013
Ireland	2009-2013

As permitted by FASB ASC 740-10 Income Taxes, the Company recognizes interest and penalties, if any, related to unrecognized tax benefits in its income tax provision. The Company does not have any unrecognized tax benefits and, therefore, has not recorded any unrecognized tax benefits, or any related interest and penalties, as of December 31, 2014 and 2013. No interest or penalties have been recorded by the Company for the years ended December 31, 2014, 2013 and 2012. The Company does not anticipate any significant changes to its total unrecognized tax benefits in the next 12 months.

18. Employee Benefit Plans

Defined Benefit Plan

In association with the acquisition of CCPH in 2013, the Company assumed a frozen defined benefit pension plan on February 28, 2013. The plan is funded and covers approximately 300 participants in the United Kingdom.

Changes in benefit obligations and plan assets as of December 31, 2014 and 2013 is as follows:

(Amounts in Thousands)	2014			2013
Change in Benefit Obligation
Benefit obligation at January 1, 2014 and February 28, 2013	$	46,873		$	39,877
Interest cost	2,074			1,608
Actuarial loss	4,621			2,074
Benefits paid net of retiree contributions	(820		)	(553		)
Exchange rate changes	(3,202		)	3,867
Benefit Obligation at End of Year	49,546			$	46,873
Change in Plan Assets
Fair Value of Plan Assets at January 1, 2014 and February 28, 2013	43,592			$	34,832
Actual return on assets	5,974			1,820
Employer contributions	1,004			3,958
Benefits and expenses paid net of retiree contributions	(820		)	(553		)
Exchange rate changes	(3,016		)	3,535
Fair Value of Plan Assets at End of Year	$	46,734		$	43,592
Funded Status at December 31, 2014 and 2013	$	(2,812	)	$	(3,281	)

F-63

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

Net periodic benefit cost for the year ended December 31, 2014 and 2013 is as follows:

(Amounts in Thousands)	2014			2013
Net Periodic Benefit Costs
Interest costs on benefit obligation	$	2,074		$	1,608
Assumed return on plan assets	(2,600		)	(1,900		)
Total	$	(526	)	$	(292	)

The Company made $1,004 and $3,958 in contributions to its plans during 2014 and 2013, respectively. The Company anticipates that it will be required to make a contribution to its pension plans of approximately $950 in 2015 and have pension income of approximately $614 in 2015.

Estimated future benefit payments to retirees from the Company's Non-U.S. pension trust are as follows:

(Amounts in Thousands)
2015	$	749
2016	858
2017	910
2018	815
2019	1,055
2020 - 2024	7,531

Information regarding the pension plan with projected benefit obligations and accumulated benefit obligations in excess of the fair value of plan assets as of December 31, 2014 and 2013 is as follows:

(Amounts in Thousands)	2014		2013
Non-U.S. Pension Plan
Projected benefit obligation and accumulated benefit obligation	$	49,546	$	46,873
Fair value of plan assets	46,734		43,592
Excess of projected benefit obligation and accumulated benefit obligation over plan assets	$	2,812	$	3,281

Weighted average assumptions used to measure the benefit obligation for the Company's defined benefit plan as of December 31, 2014 and 2013 is as follows:

	2014		2013
Weighted Average Assumptions
Discount rate used for liability determination	3.75	%	4.50	%
Measurement date	September 30		September 30

Weighted average assumptions used to measure the net periodic benefit cost for the Company's defined benefit plan for the year ended December 31, 2014 and 2013 is as follows:

	2014		2013
Weighted Average Assumptions
Discount rate used for expense determination	4.50	%	4.75	%
Long term rate of return on assets	6.00	%	6.00	%
Assumed rate of increase for pension payments	3.25	%	3.25	%

F-64

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

Actual and target allocation of the plan assets for 2014 and 2013 by asset category are as follows:

	2014				2013
	Target Allocation		Actual Allocation		Target Allocation		Actual Allocation
Asset Category
Equity securities	47.5	%	48.0	%	47.5	%	51.0	%
Fixed income securities	40.0	%	42.0	%	40.0	%	39.0	%
Real estate partnerships	12.5	%	10.0	%	12.5	%	10.0	%
Total	100.0	%	100.0	%	100.0	%	100.0	%

The following table sets forth, by level within the fair value hierarchy, the Company's defined benefit plan assets as of December 31, 2014 and 2013:

(Amounts in Thousands) As of December 31, 2014	Total		Level 1		Level 2		Level 3
Money market funds	$	185	$	185	$	—	$	—
Registered investment companies:
Equity mutual funds	22,376		22,376		—		—
Fixed income mutual funds	19,423		19,423		—		—
Total registered investment companies	41,799		41,799		—		—
Real estate partnerships	4,750				4,750		—
	$	46,734	$	41,984	$	4,750	$	—

(Amounts in Thousands) As of December 31, 2013	Total		Level 1		Level 2		Level 3
Money market funds	$	196	$	196	$	—	$	—
Registered investment companies:
Equity mutual funds	22,159		22,159		—		—
Fixed income mutual funds	16,871		16,871		—		—
Total registered investment companies	39,030		39,030		—		—
Real estate partnerships	4,366		—		4,366		—
	$	43,592	$	39,226	$	4,366	$	—

Defined Contribution Plans

The Company sponsors multiple defined contribution pension plans, which are available to a majority of its employees. Contributions to these plans were based on a percentage of employee contributions or earnings. The cost of the Company's domestic plan was approximately $4,241, $2,561 and $1,919 for the years ended December 31, 2014, 2013 and 2012, respectively. The cost of the Company's European plans was approximately $6,167, $2,575, and $1,054 for the years ended December 31, 2014, 2013 and 2012, respectively.

F-65

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

19. Earnings per Share

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

The Company paid a ten percent stock dividend on September 4, 2013 and September 20, 2012 As such, the weighted average number of shares used for basic and diluted earnings per share have been adjusted retroactively in the prior periods.

The following, is a summary of the elements used in calculating basic and diluted earnings per share for the years ended December 31, 2014, 2013 and 2012:

(Amounts in Thousands, except for earnings per share)	2014		2013		2012
Basics earnings per share:
Net income attributable to AmTrust common stockholders	$	434,276	$	278,237	$	177,987
Less: Net income allocated to participating securities and redeemable non-controlling interest	1,217		431		706
Net income allocated to AmTrust common stockholders	$	433,059	$	277,806	$	177,281
Weighted average common shares outstanding – basic	75,144		74,278		73,534
Less: Weighted average participating shares outstanding	211		115		265
Weighted average common shares outstanding – basic	74,933		74,163		73,269
Net income per AmTrust common shares – basic	$	5.78	$	3.75	$	2.42
Diluted earnings per share:
Net income attributable to AmTrust common stockholders	$	434,276	$	278,237	$	177,987
Less: Net income allocated to participating securities and redeemable non-controlling interest	1,217		431		706
Net income allocated to AmTrust common stockholders	$	433,059	$	277,806	$	177,281
Weighted average common shares outstanding – basic	74,933		74,163		73,269
Plus: Dilutive effect of stock options, convertible debt, other	4,584		3,821		2,351
Weighted average common shares outstanding – dilutive	79,517		77,984		75,620
Net income per AmTrust common shares – diluted	$	5.45	$	3.56	$	2.34

As of December 31, 2014, there were less than 8,000 anti-dilutive securities excluded from diluted earnings per share.

F-66

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

20. Stockholders' Equity

Preferred Stock Issuances

On June 10, 2013, the Company issued 4,600,000 shares of 6.75% Non-Cumulative Series A Preferred Stock (the “Preferred Stock”). Dividends on the Preferred Stock when, as and if declared by the Company’s Board of Directors or a duly authorized committee of the Board will accrue and be payable on the liquidation preference amount ($25), on a non-cumulative basis, quarterly in arrears on the 15th day of March, June, September and December of each year (each, a “dividend payment date”), at an annual rate of 6.75%. During the year ended December 31, 2013, the Company paid dividends on the Preferred Stock in the amount of $3,989.

Dividends on the Preferred Stock are not cumulative. Accordingly, in the event dividends are not declared on the Preferred Stock for payment on any dividend payment date, then those dividends will not accumulate and will not be payable. If the Company has not declared a dividend before the dividend payment date for any dividend period, the Company will have no obligation to pay dividends for that dividend period, whether or not dividends on the Preferred Stock are declared for any future dividend payment. During any dividend period, so long as any shares of Preferred Stock remain outstanding, unless the full dividends for the latest completed dividend period on all outstanding shares of Preferred Stock have been declared and paid, no dividend shall be paid or declared on the shares of common stock.

The shares of Preferred Stock have no stated maturity date and are redeemable in whole or in part at the Company’s option any time after June 10, 2018 at a redemption price of $25 per share plus any declared and unpaid dividends, without accumulation of any undeclared dividends. The holders of the Preferred Stock have no voting rights other than the right to elect up to two directors if dividends on the Preferred Stock are not declared and paid for six or more dividend periods. Holders of Preferred Stock have no right to convert the Preferred Stock into, or exchange Preferred Stock for, any other securities or property of the Company.

Upon any dissolution, liquidation or “winding up” of the Company, holders of Preferred Stock will be entitled to receive out of the Company’s assets, whether from capital, surplus or earnings, and before any distribution of any assets is made on the Company’s common stock, the liquidation preference of $25 per share, plus unpaid dividends, if any, to the date fixed for distribution. Holders of Preferred Stock will be entitled to no further participation in any distribution made in conjunction with any dissolution, liquidation or “winding up.”

On July 1, 2014, the Company completed a public offering of 4,000,000 of its depositary shares, each representing a 1/40th interest in a share of its 7.25% Non-Cumulative Preferred Stock, Series B, $0.01 par value per share (the "Series B Preferred Stock"), with a liquidation preference of $1,000 per share (equivalent to $25 per depositary share). Each depositary share entitles the holder to a proportional fractional interest in all rights and preferences of the Series B Preferred Stock represented thereby (including any dividend, liquidation, redemption and voting rights). Dividends on the Series B Preferred Stock represented by the depositary shares will be payable on the liquidation preference amount, on a non-cumulative basis, when, as and if declared by the Company’s Board of Directors, at a rate of 7.25% per annum, quarterly in arrears, on March 15, June 15, September 15, and December 15 of each year, beginning on September 15, 2014, from and including the date of original issuance. The Series B Preferred Stock represented by the depositary shares is not redeemable prior to July 1, 2019. After that date, the Company may redeem at its option, in whole or in part, the Series B Preferred Stock represented by the depositary shares at a redemption price of $1,000 per share (equivalent to $25 per depositary share) plus any declared and unpaid dividends for prior dividend periods and accrued but unpaid dividends (whether or not declared) for the then current dividend period. On July 10, 2014, the underwriters exercised, in part, their over-allotment option with respect to 200,000 additional depositary shares, each representing a 1/40th interest in a share of Series B Preferred Stock, on the same terms and conditions as the original issuance. A total of 4,200,000 depositary shares (equivalent to 105,000 shares of Series B Preferred Stock) were issued. Net proceeds from this offering, including the over-allotment, were $101,702. In addition, the Company incurred $3,614 in underwriting discount and commissions and expenses, which were recognized as a reduction to additional paid-in capital.

On September 16, 2014, the Company completed a public offering of 3,200,000 of its depositary shares, each representing a 1/40th interest in a share of its 7.625% Non-Cumulative Preferred Stock, Series C, $0.01 par value per share (the "Series C Preferred Stock"), with a liquidation preference of $1,000 per share (equivalent to $25 per depositary share). Each depositary share entitles the holder to a proportional fractional interest in all rights and preferences of the Series C Preferred Stock represented thereby (including any dividend, liquidation, redemption and voting rights). Dividends on the Series C Preferred Stock represented by the depositary shares will be payable on the liquidation preference amount, on a non-cumulative basis, when, as and if declared by the Company’s Board of Directors, at a rate of 7.625% per annum, quarterly in arrears, on March 15, June 15, September 15, and

F-67

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

December 15 of each year, beginning on December 15, 2014, from and including the date of original issuance. The Series C Preferred Stock represented by the depositary shares is not redeemable prior to September 16, 2019. After that date, the Company may redeem at its option, in whole or in part, the Series C Preferred Stock represented by the depositary shares at a redemption price of $1,000 per share (equivalent to $25 per depositary share) plus any declared and unpaid dividends for prior dividend periods and accrued but unpaid dividends (whether or not declared) for the then current dividend period. Net proceeds from this offering were $77,480. In addition, the Company incurred $2,745 in underwriting discount and commissions and expenses, which were recognized as a reduction to additional paid-in capital.

Accumulated Other Comprehensive Income (Loss)

The following tables summarize accumulated other comprehensive income (loss) for the years ended December 31, 2014, 2013 and 2012:

(Amounts in Thousands)	Foreign Currency Items			Unrealized Gains (Losses) on Investments			Interest Rate Swap Hedge			Net Benefit Plan Assets and Obligations Recognized in Stockholders' Equity			Accumulated Other Comprehensive Income (Loss)
Balance, December 31, 2011	$	(17,091	)	$	9,372		$	(2,280	)	$	—		$	(9,999	)
Other comprehensive income (loss) before reclassifications	10,354			98,334			(1,128		)	—			107,560
Amounts reclassed from accumulated other comprehensive income (loss)	—			6,640			—			—			6,640
Income tax benefit (expense)	(3,624		)	(36,741		)	395			—			(39,970		)
Net current-period other comprehensive income (loss)	6,730			68,233			(733		)	—			74,230
Balance, December 31, 2012	(10,361		)	77,605			(3,013		)	—			64,231
Other comprehensive income (loss) before reclassification	19,912			(138,902		)	1,581			(2,257		)	(119,666		)
Amounts reclassed from accumulated other comprehensive income (loss)	—			8,707			—			—			8,707
Income tax benefit (expense)	(6,969		)	45,567			(553		)	519			38,564
Net current-period other comprehensive income (loss)	12,943			(84,628		)	1,028			(1,738		)	(72,395		)
Balance, December 31, 2013	2,582			(7,023		)	(1,985		)	(1,738		)	(8,164		)
Other comprehensive income (loss) before reclassification	(26,706		)	133,775			1,022			(1,623		)	106,468
Amounts reclassed from accumulated other comprehensive income	—			(7,566		)	—			—			(7,566		)
Income tax benefit (expense)	9,348			(44,173		)	(358		)	568			(34,615		)
Net current-period other comprehensive income (loss)	(17,358		)	82,036			664			(1,055		)	64,287
Balance, December 31, 2014	$	(14,776	)	$	75,013		$	(1,321	)	$	(2,793	)	$	56,123

During the years ended December 31, 2014, 2013 and 2012, amounts reclassed from accumulated other comprehensive income (loss) into net income were included in net realized gain on investment.

F-68

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

21. New Market Tax Credit

In 2012, the Company's subsidiary, 800 Superior, LLC (an entity owned equally by the Company and NGHC), received $19,400 in net proceeds from a financing transaction the Company and NGHC entered into with Key Community Development Corporation (“KCDC”) related to a capital improvement project for an office building in Cleveland, Ohio owned by 800 Superior, LLC. The Company, NGHC and KCDC collectively made capital contributions (net of allocation fees) and loans to 800 Superior NMTC Investment Fund II and 800 Superior NMTC Investment Fund I LLC (collectively, the “Investment Funds”) under a qualified New Markets Tax Credit (“NMTC”) program. The NMTC program was provided for in the Community Renewal Tax Relief Act of 2000 (the “Act”) and is intended to induce capital investment in qualified lower income communities. The Act permits taxpayers to claim credits against their federal income taxes for up to 39% of qualified investments in the equity of community development entities (“CDEs”). CDEs are privately managed investment institutions that are certified to make qualified low-income community investments (“QLICIs”).

In addition to the capital contributions and loans from the Company, NGHC and KCDC, as part of the transaction, the Investment Funds received, directly and indirectly, proceeds of approximately $8,000 through two loans originating from state and local governments of Ohio. These loans are each for a period of 15 years and have an average interest rate of 1.7% per annum.

The Investment Funds then contributed the loan proceeds and capital contributions of $19,400 to two CDEs, which, in turn, loaned the funds on similar terms to 800 Superior, LLC. The proceeds of the loans from the CDEs (including loans representing the capital contribution made by KCDC, net of allocation fees) will be used to fund the capital improvement project. As collateral for these loans, the Company has granted a security interest in the assets acquired with the loan proceeds.

The Company and NGHC are each entitled to receive an equal portion of 49% of the benefits derived from the NMTCs generated by 800 Superior Investment Fund II LLC, while KCDC is entitled to the remaining 51%. The NMTC is subject to 100% recapture for a period of seven years as provided in the Internal Revenue Code. During this seven years compliance period, the entities involved are required to be in compliance with various regulations and contractual provisions that apply to the NMTC arrangement. Non-compliance with applicable requirements could result in the projected tax benefits not being realized and, therefore, could require the Company to indemnify KCDC for any loss or recapture of NMTCs related to the financing until such time as the obligation to deliver tax benefits is relieved. The Company does not anticipate any credit recaptures will be required in connection with this arrangement. In addition, this transaction includes a put/call provision whereby the Company may be obligated or entitled to repurchase KCDC's interest in the Investment Funds in September 2019 at the end of the recapture period. The Company believes that KCDC will exercise its put option and, therefore, attributed an insignificant value to the put/call.

The Company has determined that the Investment Funds are variable interest entities (“VIEs”). The ongoing activities of the Investment Funds - collecting and remitting interest and fees and NMTC compliance - were all considered in the initial design and are not expected to significantly affect economic performance throughout the life of the Investment Funds. When determining whether to consolidate the Investment Funds, Company management considered the contractual arrangements that obligate it to deliver tax benefits and provide various other guarantees to the structure, KCDC's lack of a material interest in the underlying economics of the project, and the fact that the Company is obligated to absorb losses of the Investment Funds. Also, the Company has a 13.2% ownership in NGHC. The Company concluded that it was the primary beneficiary and consolidated the Investment Funds, as VIEs, in accordance with the accounting standard for consolidation. KCDC's contribution, net of syndication fees, is included as an accrued liability in the accompanying consolidated balance sheets. Direct costs incurred in structuring the financing arrangement are deferred and will be recognized as expense over the term of the loans. Incremental costs to maintain the structure during the compliance period are recognized as incurred.

22. Commitments and Contingencies

Litigation

The Company’s insurance subsidiaries are named as defendants in various legal actions arising principally from claims made under insurance policies and contracts. Those actions are considered by the Company in estimating the loss and LAE reserves. The Company’s management believes the resolution of those actions will not have a material adverse effect on the Company’s financial position or results of operations.

F-69

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

Lease Commitments

The Company is obligated under approximately 95 leases for office space expiring at various dates through 2023. Future minimum lease payments as of December 31, 2014 under non-cancellable operating leases for each of the next five years are approximately as follows:

(Amounts in Thousands)
2015	$	19,573
2016	17,478
2017	14,642
2018	11,787
2019	10,785
2020 and Thereafter	28,443
	$	102,708

Rent expense for the years ended December 31, 2014, 2013 and 2012 was $16,314, $15,658 and $11,518, respectively.

Employment Agreements

The Company has employment agreements with approximately 44 of its key executives and employees. The agreements terminate on varying dates through 2020, contain annual minimum levels of compensation, and contain bonuses based on the Company’s achieving certain financial targets. The annual future minimums in the aggregate are as follows through 2020:

(Amounts in Thousands)
2015	$	13,616
2016	7,293
2017	3,818
2018	919
2019	602
2020 and Thereafter	422
	$	26,670

23. Statutory Financial Data, Risk Based Capital and Dividend Restrictions

The Company’s insurance subsidiaries file financial statements in accordance with statutory accounting practices (“SAP”) prescribed or permitted by domestic or foreign insurance regulatory authorities. The differences between statutory financial statements and financial statements prepared in accordance with GAAP vary between domestic and foreign jurisdictions. The principal differences relate to (1) acquisition costs incurred in connection with acquiring new business which are charged to expense under SAP but under GAAP are deferred and amortized as the related premiums are earned; (2) limitation on net deferred tax assets created by the tax effects of temporary differences; (3) unpaid losses and loss expense, and unearned premium reserves are presented gross of reinsurance with a corresponding asset recorded; and (4) fixed maturity portfolios that are carried at fair value and changes in fair value are reflected directly in unassigned surplus, net of related deferred taxes.

Property and casualty insurance companies in the United States are subject to certain Risk-Based Capital (“RBC”) requirements as specified by the National Association of Insurance Commissioners ("NAIC"). Under such requirements, the amount of Statutory Capital and Surplus maintained by a property and casualty insurance company is to be determined on various risk factors. As of December 31, 2014 and 2013, the Statutory Capital and Surplus of the Company’s fifteen insurance subsidiaries domiciled in the United States exceeded the RBC requirements.

F-70

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

Statutory capital and surplus and required statutory capital and surplus for the Company's insurance subsidiaries as reported to regulatory authorities as of December 31, 2014 and 2013 were approximately as follows:

	2014				2013
(Amounts in Thousands)	Statutory Capital and Surplus		Required Statutory Capital and Surplus (1)		Statutory Capital and Surplus		Required Statutory Capital and Surplus (1)
TIC (domestic)	$	479,437	$	178,941	$	236,528	$	108,377
RIC (domestic)	82,350		31,082		58,845		22,587
WIC (domestic)	215,530		125,810		166,813		79,857
AIIC (domestic)	74,014		17,416		74,076		17,373
SNIC (domestic)	123,573		50,607		79,780		32,603
MCIC (domestic)	17,713		5,287		14,912		3,620
ALIC (domestic)	2,162		217		2,155		245
AICK (domestic)	19,304		6,752		15,275		5,307
SIC (domestic)	79,475		15,231		74,502		17,354
SID (domestic)	9,799		665		9,820		705
FNIC (domestic)	36,104		7,736		35,428		7,787
DSIC (domestic) (2)	82,243		11,361
ICC (domestic) (2)	20,699		528
FATIC (domestic) (2)	10,538		500
COIC (domestic) (2)	29,011		8,424
AEL (United Kingdom)	290,916		62,925		246,292		61,738
AIU (Ireland)	195,208		37,865		169,465		43,124
AII (Bermuda)	679,967		244,509		445,077		221,330
AILSA (Luxembourg)	6,874		6,526		7,204		6,165
MIC (United Kingdom)	130,169		20,122		95,649		22,957

⁽¹⁾ For the Company's U.S. insurance companies and AIU, except FATIC, the amount is equal to the Regulatory Action Level ("RAL") as defined by NAIC or the minimum amount required to avoid regulatory oversight. For AEL, MIC, AII and AILSA, the amount is equal to the minimum capital required by their respective country's regulatory authority. For FATIC, the amount is equal to the minimum capital required by the regulatory authority in its state of domicile.

⁽²⁾ As these entities were acquired in 2014, the 2013 information is not presented.

F-71

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

Statutory net income for the insurance subsidiaries for the years ended December 31, 2014, 2013 and 2012 as reported to regulatory authorities were approximately as follows:

(Amounts in Thousands)	2014			2013			2012
TIC (domestic)	$	21,418		$	16,614		$	45,621
RIC (domestic)	9,440			8,158			1,129
WIC (domestic)	14,150			21,447			9,263
AIIC (domestic)	8,297			12,810			5,570
SNIC (domestic)	30,666			14,350			10,624
MCIC (domestic)	3,226			1,671			1,519
ALIC (domestic)	2			18			15
AICK (domestic)	4,081			3,413			1,198
SIC (domestic) (1)	9,535			4,464
SID (domestic) (1)	35			634
FNIC (domestic) (1)	(1,186		)	(4,596		)
DSIC (domestic) (1)	4,124
ICC (domestic) (1)	1,565
FATIC (domestic) (1)	(664		)
COIC (domestic) (1)	(946		)
AEL (United Kingdom)	56,766			50,452			54,967
AIU (Ireland)	50,697			34,223			20,767
AII (Bermuda)	78,142			5,282			107,980
AILSA (Luxembourg) (1)	207			(27		)
MIC (United Kingdom) (1)	28,856			7,515

⁽¹⁾ Information is presented only for years the subsidiaries were owned by the Company. The amounts reported in year of acquisition are for the entire year and do not represent the statutory net income for the period of ownership.

The Company’s insurance subsidiaries are subject to statutory and regulatory restrictions applicable to insurance companies, and imposed by the states of domicile, which limit the amount of cash dividends or distributions that they may pay to approximately $844,037 and $473,253 as of December 31, 2014 and 2013, respectively. During 2014, 2013 and 2012, the Company received a dividend of approximately $7,400, $6,900 and $7,200, respectively, from one of its subsidiaries. In addition to the restrictions on the insurance subsidiaries, there are also restrictions in the Parent company's debt instruments, which require dividends to be limited to an amount that, after giving immediate effect to such dividend payments on a pro forma basis, would allow the Company to remain in compliance with its debt covenants. There were no other material restrictions on net assets in place as of December 31, 2014. Accordingly, the total amount of unrestricted net assets for consolidated subsidiaries as of December 31, 2014 and 2013 was $844,037 and $473,253, respectively.

24. Geographic Information

Four of the Company’s insurance subsidiaries (AII, AIU, MIC and AEL) operate outside the United States. Their assets and liabilities are located principally in the countries where the insurance risks are written or assumed. For 2014, 21% of the Company’s gross written premiums related to foreign risks, of which 43% were written from the United Kingdom. For 2013 and 2012, 27% and 29%, respectively, of the Company's gross written premiums related to foreign risks, of which 42% and 38%, respectively, were written from Italy and the United Kingdom, respectively. As of December 31, 2014 and 2013, approximately 45% and 51%, respectively, of the Company's consolidated assets were located outside the United States. For the years ended 2014, 2013 and 2012, approximately 66%, 83% and 72%, respectively, of the consolidated revenues earned by the Company were located in or derived from foreign countries.

F-72

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

The domestic and foreign components of Income before income tax and equity in earnings (loss) of unconsolidated subsidiaries for the years ended December 31, 2014, 2013 and 2012 are as follows:

(Amounts in Thousands)	2014		2013		2012
Domestic	$	267,486	$	243,566	$	79,638
Foreign	204,447		123,480		117,219
	$	471,933	$	367,046	$	196,857

The following table summarizes the Company’s operations by major geographic segment:

(Amounts in Thousands)	Domestic		Bermuda		Other Foreign
December 31, 2014:
Revenue	$	1,394,497	$	1,417,781	$	1,272,053
Property and equipment	143,027		—		11,148
December 31, 2013:
Revenue	$	468,980	$	1,600,809	$	628,106
Property and equipment	95,689		—		8,610
December 31, 2012:
Revenue	$	467,617	$	984,582	$	215,975
Property and equipment	72,899		—		3,034

25. Segments

The Company currently operates three business segments, Small Commercial Business; Specialty Risk and Extended Warranty; and Specialty Program. The Company also has a segment, Personal Lines Reinsurance, which is in run-off. The “Corporate & Other” segment represents the activities of the holding company as well as a portion of service and fee revenue. In determining total assets (excluding cash and invested assets) by segment, the Company identifies those assets that are attributable to a particular segment such as deferred acquisition cost, reinsurance recoverable, goodwill, intangible assets and prepaid reinsurance while the remaining assets are allocated based on gross written premium by segment. In determining cash and invested assets by segment, the Company matches certain identifiable liabilities such as unearned premium and loss and loss adjustment expense reserves by segment. The remaining cash and invested assets are then allocated based on gross written premium by segment. Investment income and realized gains (losses) are determined by calculating an overall annual return on cash and invested assets and applying that overall return to the cash and invested assets by segment. Ceding commission revenue is allocated to each segment based on that segment’s proportionate share of the Company’s overall acquisition costs. Interest expense is allocated based on gross written premium by segment. Income taxes are allocated on a pro-rata basis based on the Company’s effective tax rate. Additionally, management reviews the performance of underwriting income in assessing the performance of and making decisions regarding the allocation of resources to the segments. Underwriting income excludes, primarily, service and fee revenue, investment income and other revenues, other expenses, interest expense and income taxes. Management believes that providing this information in this manner is essential to providing Company’s stockholders with an understanding of the Company’s business and operating performance.

During the years ended December 31, 2014, 2013 and 2012, the Company’s Specialty Risk and Extended Warranty segment derived over ten percent of its total revenue from one broker. During the years ended 2014 and 2013, the Company’s Specialty Program segment derived over ten percent of its total revenue from one broker and in 2012 the segment derived over ten percent of its total revenue from two brokers.

F-73

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

The following tables summarize business segments as follows for 2014, 2013 and 2012:

(Amounts in Thousands)	Small Commercial Business			Specialty Risk and Extended Warranty			Specialty Program			Personal Lines Reinsurance - Run off			Corporate and Other			Total
Year Ended December 31, 2014:
Gross written premium	$	2,999,714		$	1,983,052		$	1,105,199		$	—		$	—		$	6,087,965
Net written premium	$	1,882,383		$	1,333,747		$	740,488		$	—		$	—		$	3,956,618
Change in unearned premium	(275,578		)	(101,509		)	(61,876		)	8,909			—			(430,054		)
Net earned premium	1,606,805			1,232,238			678,612			8,909			—			3,526,564
Loss and loss adjustment expense	(1,055,521		)	(817,780		)	(456,422		)	(12,896		)	—			(2,342,619		)
Acquisition costs and other underwriting expenses	(416,965		)	(253,794		)	(183,541		)	(2,623		)	—			(856,923		)
	(1,472,486		)	(1,071,574		)	(639,963		)	(15,519		)	—			(3,199,542		)
Underwriting income	134,319			160,664			38,649			(6,610		)	—			327,022
Service and fee income	95,430			253,220			428			—			60,665			409,743
Investment income and realized gain	62,810			56,852			27,994			368			—			148,024
Other expenses	(215,002		)	(142,134		)	(79,214		)	—			—			(436,350		)
Interest expense including loss on extinguishment of debt	(27,439		)	(18,139		)	(10,110		)	—			—			(55,688		)
Foreign currency gain	—			60,245			—			—			—			60,245
Gain on investment in life settlement contracts net of profit commission	6,064			4,008			2,234			—			—			12,306
Gain on sale of subsidiary	6,631			—			—			—			—			6,631
Provision for income taxes	(6,741		)	(40,211		)	2,148			670			(9,552		)	(53,686		)
Equity in earnings of unconsolidated subsidiaries –  related party	—			—			—			—			28,351			28,351
Net income	$	56,072		$	334,505		$	(17,871	)	$	(5,572	)	$	79,464		$	446,598

F-74

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

(Amounts in Thousands)	Small Commercial Business			Specialty Risk and Extended Warranty			Specialty Program			Personal Lines Reinsurance - Run off			Corporate and Other			Total
Year Ended December 31, 2013:
Gross written premium	$	1,659,980		$	1,511,649		$	879,455		$	65,827		$	—		$	4,116,911
Net written premium	$	935,313		$	944,081		$	620,452		$	65,827		$	—		$	2,565,673
Change in unearned premium	(101,501		)	(132,244		)	(100,081		)	34,143			—			(299,683		)
Net earned premium	833,812			811,837			520,371			99,970			—			2,265,990
Loss and loss adjustment expense	(548,598		)	(545,516		)	(355,067		)	(68,180		)	—			(1,517,361		)
Acquisition costs and other underwriting expenses	(212,824		)	(151,188		)	(138,650		)	(30,500		)	—			(533,162		)
	(761,422		)	(696,704		)	(493,717		)	(98,680		)	—			(2,050,523		)
Underwriting income	72,390			115,133			26,654			1,290			—			215,467
Service and fee income	87,519			191,941			114			—			51,985			331,559
Investment income and realized gain	34,665			46,304			18,464			913			—			100,346
Other expenses	(117,583		)	(107,076		)	(62,295		)	(4,663		)	—			(291,617		)
Interest expense	(13,987		)	(12,738		)	(7,411		)	(555		)	—			(34,691		)
Foreign currency loss	—			(6,533		)	—			—			—			(6,533		)
Gain on investment in life settlement contracts net of profit commission	1,532			1,395			812			61			—			3,800
Acquisition gain on purchase	23,183			25,532			—			—			—			48,715
Provision for income taxes	(24,389		)	(64,281		)	5,989			748			(16,086		)	(98,019		)
Equity in earnings of unconsolidated subsidiaries –  related party	—			—			—			—			11,566			11,566
Net income	$	63,330		$	189,677		$	(17,673	)	$	(2,206	)	$	47,465		$	280,593

F-75

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

(Amounts in Thousands)	Small Commercial Business			Specialty Risk and Extended Warranty			Specialty Program			Personal Lines Reinsurance - Run off			Corporate and Other			Total
Year Ended December 31, 2012:
Total gross written premium	$	933,740		$	1,118,710		$	578,735		$	118,141		$	—		$	2,749,326
Net written premium	$	474,381		$	624,555		$	430,960		$	118,141		$	—		$	1,648,037
Change in unearned premium	(57,816		)	(82,982		)	(82,392		)	(5,995		)	—			(229,185		)
Net earned premium	416,565			541,573			348,568			112,146						1,418,852
Loss and loss adjustment expense	(270,843		)	(341,196		)	(238,302		)	(72,334		)	—			(922,675		)
Acquisition costs and other underwriting expenses	(110,895		)	(112,491		)	(98,415		)	(34,204		)	—			(356,005		)
	(381,738		)	(453,687		)	(336,717		)	(106,538		)				(1,278,680		)
Underwriting income	34,827			87,886			11,851			5,608			—			140,172
Service and fee income	53,886			86,672			1,342			—			30,274			172,174
Investment income and realized gain	27,217			30,952			16,362			2,617			—			77,148
Other expenses	(54,788		)	(82,031		)	(33,958		)	(6,932		)	—			(177,709		)
Interest expense	(9,682		)	(11,600		)	(6,001		)	(1,225		)	—			(28,508		)
Foreign currency loss	—			(242		)	—			—			—			(242		)
Gain on investment in life settlement contracts net of profit commission	4,694			5,624			2,910			594			—			13,822
Acquisition gain on purchase	—			—			—			—			—			—
Provision for income taxes	(5,800		)	(12,109		)	774			(68		)	(4,089		)	(21,292		)
Equity in earnings of unconsolidated subsidiaries – related party	$	—		$	—		$	—		$	—		$	9,295		$	9,295
Net income	$	50,354		$	105,152		$	(6,720	)	$	594		$	35,480		$	184,860

F-76

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

The following tables summarize net earned premium by major line of business, by segment, for 2014, 2013 and 2012:

(Amounts in Thousands)	Small Commercial Business		Specialty Risk and Extended Warranty		Specialty Program		Personal Lines Reinsurance - Run off		Total
Year Ended December 31, 2014:
Workers' compensation	$	1,061,130	$	—	$	260,756	$	—	$	1,321,886
Warranty	—		433,710		234		—		433,944
Other liability	98,846		198,505		127,364		—		424,715
Commercial auto and liability, physical damage	162,377		25,255		116,528		1,563		305,723
Medical malpractice	—		176,608		—		—		176,608
Other	284,452		398,160		173,730		7,346		863,688
Total net earned premium	$	1,606,805	$	1,232,238	$	678,612	$	8,909	$	3,526,564
Year Ended December 31, 2013:
Workers' compensation	$	665,087	$	—	$	166,071	$	—	$	831,158
Warranty	—		397,978		1,952		—		399,930
Other liability	37,308		108,018		125,827		7		271,160
Commercial auto and liability, physical damage	51,623		13,631		108,962		8,612		182,828
Medical malpractice	—		191,217		—		—		191,217
Other	79,794		100,993		117,559		91,351		389,697
Total net earned premium	$	833,812	$	811,837	$	520,371	$	99,970	$	2,265,990
Year Ended December 31, 2012:
Workers' compensation	$	340,221	$	—	$	96,326	$	—	$	436,547
Warranty	—		226,559		10,303		—		236,862
Other liability	25,996		93,914		71,526		7		191,443
Commercial auto and liability, physical damage	26,893		8,516		89,599		7,108		132,116
Medical malpractice	—		170,078		—		—		170,078
Other	23,455		42,506		80,814		105,031		251,806
Total net earned premium	$	416,565	$	541,573	$	348,568	$	112,146	$	1,418,852

The following tables summarize total asses and long lived assets, by segment, as of December 31, 2014 and 2013:

(Amounts in Thousands)	Small Commercial Business		Specialty Risk and Extended Warranty		Specialty Program		Personal Lines Reinsurance		Corporate and other		Total
As of December 31, 2014:
Fixed assets	$	75,966	$	50,220	$	27,989	$	—	$	—	$	154,175
Goodwill and intangible assets	285,583		348,216		33,882		—		—		667,681
Total assets	6,142,645		5,441,378		2,248,901		14,444		—		13,847,368
As of December 31, 2013:
Fixed assets	$	42,054	$	38,297	$	22,280	$	1,668	$	—	$	104,299
Goodwill and intangible assets	233,566		399,954		31,873		—		—		665,393
Total assets	4,261,764		5,036,121		1,894,538		86,703		—		11,279,126

F-77

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, Except Per Share Data)

26. Quarterly Financial Data (Unaudited)

The Company paid a ten percent stock dividend on September 4, 2013. As such, the weighted average number of shares used for basic and diluted earnings per share have been adjusted retroactively for all periods presented and the prior quarters' basic and diluted earnings per share has been adjusted.

During the three months ended June 30, 2014, the Company retrospectively adjusted its gains related to its acquisitions of Sequoia and FNIC from $13,309 to $5,231 and from $18,511 to $17,951, respectively, for the three months ended June 30, 2013.

The following is a summary of the unaudited quarterly results of operations:

	2014
(Amounts in Thousands)	March 31,		June 30,		September 30,			December 31,
Earned premium	$	829,051	$	874,937	$	914,413		$	908,163
Investment income	28,527		32,594		34,552			35,928
Total revenue	953,975		1,010,979		1,071,634			1,047,743
Loss and loss adjustment expense	558,570		587,233		609,352			587,464
Acquisition costs and other underwriting expense	186,609		208,060		225,512			236,742
Other expense	87,591		87,588		103,493			157,678
Provision for income taxes	27,444		17,966		(7,664		)	15,940
Net income	101,728		104,189		157,156			83,525
Income attributable to Common Stockholders	99,851		106,274		156,590			71,561
Basic EPS	$1.34		$1.41		$2.09			$0.94
Diluted EPS	$1.27		$1.33		$1.97			$0.88

	2013
(Amounts in Thousands)	March 31,		June 30,		September 30,		December 31,
Earned premium	$	407,994	$	536,539	$	613,895	$	707,562
Investment income	18,095		22,634		23,290		20,800
Total revenue	503,886		649,342		728,278		816,389
Loss and loss adjustment expense	272,256		364,110		410,579		470,416
Acquisition costs and other underwriting expense	100,285		129,946		137,186		165,745
Other expense	52,152		80,985		90,195		68,285
Provision for income taxes	16,109		27,402		23,880		30,628
Net income	83,001		71,397		59,689		66,506
Income attributable to Common Stockholders	83,878		71,397		58,238		64,724
Basic EPS	$1.13		$0.96		$0.78		$0.87
Diluted EPS	$1.08		$0.93		$0.74		$0.82

Due to changes in number of shares outstanding from quarter to quarter, the total earnings per share of the four quarters may not necessarily equal the earnings per share for the year.

F-78

27. Subsequent Events

Conversion of 2021 Notes

During the fourth quarter of 2014, certain holders of 2021 Notes submitted for conversion approximately $50,105 of notes under the Sale Price Condition discussed in Note 12. "Debt". Based on the terms of the 2021 Notes, $31,011 of these notes were settled prior to the filing of the Company's Annual Report on Form 10-K for the year ended December 31, 2014, which resulted in the Company paying $31,011 of cash and issuing 616,202 shares of the Company's common stock. The remainder of the 2021 Notes submitted for conversion during the fourth quarter of 2014 will settle during the three months ended March 31, 2015. In addition, approximately $3,500 of 2021 Notes were submitted for conversion subsequent to December 31, 2014. These notes will be settled during the three months ended March 31, 2015.

Issuance of Common Stock

During January and February 2015, the Company completed the sale of an aggregate of 3,450,000 shares of Common Stock in an underwritten public offering. Proceeds received from this offering were $172,500. Fees and expenses related to the offering were approximately $250.

Acquisition of TMI Solutions, LLC

On January 6, 2015, the Company acquired all of the issued and outstanding stock of TMI Solutions, LLC ("TMIS") for approximately $29,000 in cash as well as an earn-out provision that is contingent on TMIS meeting certain performance conditions. TMIS offers monthly billed warranty solutions for a variety of consumer electronics as well as consumer protection services. TMIS's warranties are primarily distributed in conjunction with large telecommunication monthly customer billing services. TMIS's established customers include Fortune 500 companies. TMIS’s results of operation will be included as a component of the Specialty Risk and Extended Warranty segment.

Acquisition of Oryx Insurance Brokerage, Inc.

On January 6, 2015, the Company acquired all of the issued and outstanding stock of Oryx Insurance Brokerage, Inc. ("Oryx") from Oryx's principals for approximately $29,700 in cash as well as an earn-out provision that is contingent on Oryx meeting certain performance conditions. Oryx, established in 1996, is a privately held managing general agent and wholesaler providing insurance products to the construction industry in upstate New York. For 2014, Oryx placed $80,000 in premiums through over 135 agencies with the majority of business underwritten by the Company. Oryx’s results of operation will be included as a component of the Specialty Program segment.

F-79

Schedule I

SUMMARY OF INVESTMENTS

OTHER THAN INVESTMENTS IN RELATED PARTIES

At December 31, 2014 Type of Investment	Cost(1)		Value		Amount at which Shown in the Balance Sheet
	(In Thousands)
Fixed Maturities:
Bonds:
United States government and government agencies & authorities	$	1,009,704	$	1,033,190	$	1,033,190
States, municipalities and political subdivisions	469,646		482,041		482,041
Foreign governments	106,054		112,731		112,731
Public utilities	137,169		138,692		138,692
All other corporate bonds	2,414,573		2,486,620		2,486,620
Redeemable preferred stock	—		—		—
Total fixed maturities	4,137,146		4,253,274		4,253,274
Equity securities:
Common stocks:
Public utilities, Banks, trust and insurance companies	13,323		13,712		13,712
Industrial, miscellaneous and all other Nonredeemable preferred stocks	96,159		94,081		94,081
Total equity securities	109,482		107,793		107,793
Short-term investments, at cost (approximates market value)	63,916		63,916		63,916
Other invested assets (approximates market value)	31,186		31,186		31,186
Total investments	$	4,341,730	$	4,456,169	$	4,456,169

(1) Original cost of equity securities and, as to fixed maturities, original cost reduced by repayments and adjusted for amortization of premiums or accrual of discounts.

S-1

Schedule II

AMTRUST FINANCIAL SERVICES

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

BALANCE SHEET — PARENT COMPANY ONLY

	December 31,
	2014			2013
	(In Thousands)
Assets:
Cash	$	7,690		$	1,495
Invested assets	1,353			67
Carrying value of subsidiaries, at equity	2,826,090			1,949,997
Other assets	549,780			358,881
Total Assets	3,384,913			2,310,440
Liabilities:
Due to affiliates – net	322,243			207,540
6.125% Notes due 2023	250,000			250,000
5.5% due 2021 Convertible senior notes	56,745			164,218
2.75% due 2044 Convertible senior notes	157,679			—
Junior subordinated debt	123,714			123,714
Revolving credit facility borrowing	120,000			—
Secured loan	28,572			—
Other liabilities	288,940			123,963
Total Liabilities	1,347,893			869,435
Stockholders’ Equity
Common stock	980			980
Preferred stock	300,000			115,000
Paid-in and contributed capital	1,022,769			1,033,084
Treasury shares	(297,586		)	(284,891		)
Accumulated other comprehensive income	56,123			(8,164		)
Retained earnings	954,734			584,996
Total Stockholders’ Equity	2,037,020			1,441,005
Total Liabilities and Stockholders’ Equity	$	3,384,913		$	2,310,440

The condensed financial statements should be read in conjunction with consolidated financial statements and notes thereto.

S-2

STATEMENT OF INCOME — PARENT COMPANY ONLY

	Year Ended December 31,
	2014			2013		2012
	(In Thousands)
Income:
Investment income	$	183		$	207	$	227
Equity in undistributed net income of consolidated subsidiaries and partially-owned companies	539,915			319,738		218,123
Acquisition gain on purchase	—			23,183		—
Miscellaneous income	641			6		12
Total Income	540,739			343,134		218,362
Expenses:
Interest expense	32,016			22,178		16,159
Loss on extinguishment of debt	9,831			—		—
Federal tax (benefit) expense	(4,800		)	10,087		(1,099		)
Other expenses from operations	57,094			30,276		18,442
Total Expenses	94,141			62,541		33,502
Net Income	$	446,598		$	280,593	$	184,860

The condensed financial statements should be read in conjunction with consolidated financial statements and notes thereto.

S-3

Schedule II

AMTRUST FINANCIAL SERVICES

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

STATEMENT OF CASH FLOWS — PARENT COMPANY ONLY

	December 31,
	2014			2013			2012
	(In Thousands)
Cash flows from operating activities:
Net income	$	446,598		$	280,593		$	184,860
Depreciation and amortization	6,678			3,593			830
Stock option compensation	19,114			11,186			7,172
Discount on note	3,095			3,000			(2,150		)
Dividend from equity investment	—			12,203			—
Loss on extinguishment of debt	9,831			—			—
Adjustments to reconcile net income to net cash changes in assets (increase) decrease:
Carrying value of equity interest in subsidiaries	(414,021		)	(449,176		)	(227,632		)
Equity (earnings) losses and gain on investments in unconsolidated subsidiaries	(28,351		)	(11,566		)	(9,295		)
Other assets	(128,866		)	(135,799		)	(80,993		)
Changes in liabilities increase (decrease):
Due to (due from) affiliates	114,703			(14,636		)	179,522
Other liabilities	146,715			64,774			3,397
Net cash provided by (used in) operating activities	175,496			(235,828		)	55,711
Cash flows from investing activities:
Capital expenditures	(31,097		)	(2,455		)	(107		)
Investment purchased	(1,286		)	—			—
Investment in subsidiary	(285,783		)	(22,605		)	(1,455		)
Acquisition of subsidiary companies, net of cash acquired	(123,887		)	(78,193		)	(42,694		)
Net cash used in investing activities	(442,053		)	(103,253		)	(44,256		)
Cash flows from financing activities:
Issuance of debt	318,900			250,000			25,000
Payment of debt	(101,928		)	—			(7,500		)
Financing fees	(4,143		)	(2,740		)	(750		)
Common share (repurchase) issuance, net	(50,379		)	8,534			8,873
Net proceeds from issuance of preferred stock	178,641			111,130			—
Dividends paid on common stock	(55,601		)	(29,236		)	(30,201		)
Dividends paid on preferred stock	(12,738		)	(3,989		)	—
Net cash (used in) provided by financing activities	272,752			333,699			(4,578		)
Net increase (decrease) in cash and cash equivalents	6,195			(5,382		)	6,877
Cash and cash equivalents, beginning of the year	1,495			6,877			—
Cash and cash equivalents, end of period	$	7,690		$	1,495		$	6,877

The condensed financial statements should be read in conjunction with consolidated financial statements and notes thereto.

S-4

Schedule III

AMTRUST FINANCIAL SERVICES, INC.

AND SUBSIDIARIES SUPPLEMENTARY INSURANCE INFORMATION

At December 31, 2014, 2013 and 2012 and for the years then ended:

Segment	Deferred Policy Acquisition Costs		Reserves for Losses and Loss Expenses, Future Policy Benefits		Reserves for Unearned Premiums		Premium Revenue		Net Investment Income		Losses and Loss Expenses Incurred, Benefits		Amortization of Deferred Policy Acquisition Costs		Other Operating Expenses		Net Premiums Written
	(In Thousands)
2014
Small Commercial Business	$	179,771	$	2,854,379	$	1,193,628	$	1,606,805	$	55,842	1,055,521		$	276,876	$	140,089	$	1,882,383
Specialty Risk and Extended Warranty	389,763		1,669,293		1,832,560		1,232,238		50,544		817,780		152,141		101,653		1,333,747
Specialty Program	58,502		1,126,436		421,015		678,612		24,888		456,422		107,074		76,467		740,488
Personal Lines Reinsurance	347		14,097		—		8,909		327		12,896		2,619		4		—
Total	$	628,383	$	5,664,205	$	3,447,203	$	3,526,564	$	131,601	$	2,342,619	$	538,710	$	318,213	$	3,956,618
2013
Small Commercial Business	$	98,275	$	1,982,977	$	704,234	$	833,812	$	29,301	548,598		$	143,036	$	69,788	$	935,313
Specialty Risk and Extended Warranty	310,230		1,537,887		1,599,167		811,837		39,139		545,516		114,662		36,526		944,081
Specialty Program	56,949		817,272		368,673		520,371		15,607		355,067		86,317		52,333		620,452
Personal Lines Reinsurance	2,950		30,098		8,908		99,970		772		68,180		23,273		7,227		65,827
Total	$	468,404	$	4,368,234	$	2,680,982	$	2,265,990	$	84,819	$	1,517,361	$	367,288	$	165,874	$	2,565,673
2012
Small Commercial Business	$	58,690	$	1,266,261	$	413,707	$	416,565	$	24,049	$	270,843	$	60,709	$	49,866	$	474,381
Specialty Risk and Extended Warranty	234,490		605,366		1,063,999		541,573		27,349		341,196		94,945		17,546		624,555
Specialty Program	42,468		524,928		252,835		348,568		14,457		238,302		63,775		34,640		430,960
Personal Lines Reinsurance	13,478		29,845		43,052		112,146		2,312		72,334		23,458		10,746		118,141
Total	$	349,126	$	2,426,400	$	1,773,593	$	1,418,852	$	68,167	$	922,675	$	242,887	$	112,798	$	1,648,037

See accompanying notes to financial statements.

S-5

Schedule IV

AMTRUST FINANCIAL SERVICES, INC.

AND SUBSIDIARIES REINSURANCE

For the year ended December 31, 2014, 2013 and 2012:

	Gross Amount		Ceded to Other Companies		Amount from Other Companies		Net Amount		Percent of Amount Assumed to Net
	(Amounts in Thousands)
2014
Premiums:
General Insurance	$	5,422,484	$	2,131,347	$	665,481	$	3,956,618	16.8	%
2013
Premiums:
General Insurance	$	3,869,893	$	1,551,238	$	247,018	$	2,565,673	9.6	%
2012
Premiums:
General Insurance	$	2,494,846	$	1,101,289	$	254,480	$	1,648,037	15.4	%

See accompanying notes to financial statements.

S-6

Schedule V

AMTRUST FINANCIAL SERVICES, INC.

CONSOLIDATED SUPPLEMENTARY PROPERTY

AND CASUALTY INSURANCE INFORMATION

(In Thousands)

	Losses and Loss Adjustment Expenses Incurred Related to				Paid Losses and Loss Adjustment Expenses
Year Ended December 31,	Current Year		Prior Years
2014	$	2,324,062	$	18,557	$	1,441,219
2013	$	1,486,418	$	30,943	$	953,160
2012	$	909,818	$	12,857	$	691,717

See accompanying notes to financial statements.

S-7

INDEX TO EXHIBITS

The following documents are filed as exhibits to this report:

Exhibit No.	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 on 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 on June 10, 2013)
3.3	Certificate of Designations of 7.25% Non-Cumulative Preferred Stock, Series B (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K (No. 001-33143) filed on July 1, 2014)
3.4	Certificate of Designations of 7.625% Non-Cumulative Preferred Stock, Series C (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K (No. 001-33143) filed on September 16, 2014)
3.5	Amended and Restated By-Laws of the Company (incorporated by reference to Exhibit 3.3 to the Company’s Quarterly Report on Form 10-Q (No. 001-33143) filed on August 9, 2013)
4.1	Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-1 (No. 333-134960) filed on June 12, 2006)
4.2	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 on June 10, 2013)
4.3	Form of Stock Certificate evidencing 7.25% Non-Cumulative Preferred Stock, Series B (incorporated by reference to Exhibit 4.3 to the Company's Current Report on Form 8-K (No. 001-33143) filed on July 1, 2014)
4.4	Form of Stock Certificate evidencing 7.625% Non-Cumulative Preferred Stock, Series C (incorporated by reference to Exhibit 4.3 to the Company's Current Report on form 8-K (No. 001-33143) filed on September 16, 2014)
4.5	Form of 5.50% Convertible Senior Notes due 2021 (incorporated by reference to Exhibit 4.3 to the Company’s Form 8-K (No. 001-33143) filed on December 21, 2011)
4.6	Form of 6.125% Notes due 2023 (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K (No. 001-33143) filed on August 15, 2013)
4.7	Form of 2.75% Convertible Senior Notes due 2044 (included as Exhibit A to Exhibit 4.12) (incorporated by reference to Exhibit 4.3 to the Company's Current Report on Form 8-K (No. 001-33143) filed on December 11, 2014)
4.8	Indenture, dated as of December 21, 2011, by and between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K (No. 001-33143) filed on December 21, 2011)
4.9	First Supplemental Indenture, dated as of December 21, 2011, by and between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.2 to the Company’s Form 8-K (No. 001-33143) filed on December 21, 2011)
4.10	Second Supplemental Indenture, dated as of August 15, 2013, by and between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (No. 001-33143) filed on August 15, 2013)
4.11	Third Supplemental Indenture, dated as of December 10, 2014, by and between the Company, as Issuer, and The Bank of New York Mellon Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K (No. 001-33143) filed on December 11, 2014)
4.12	Fourth Supplemental Indenture, dated as of December 15, 2014, by and between the Company, as Issuer, and The Bank of New York Mellon Trust Company, N.A., as Trustee (filed herewith)
4.13	Deposit Agreement, dated July 1, 2014, among the Company and American Stock Transfer and Trust Company, LLC and the holders from time to time of the depositary receipts described therein (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K (No. 001-33143) filed on July 1, 2014)
4.14	Deposit Agreement, dated September 16, 2014, among the Company and American Stock Transfer and Trust Company, LLC and the holders from time to time of the depositary receipts described therein (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K (No. 001-33143) filed on September 16, 2014)
4.15	Form of depositary receipt (included as Exhibit A to Exhibit 4.13) (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K (No. 001-33143) filed on July 1, 2014)
4.16	Form of depositary receipt (included as Exhibit A to Exhibit 4.14) (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K (No. 001-33143) filed on September 16, 2014)
4.17	The Company will file with the SEC upon request, pursuant to the requirements of Item 601(b)(4) of Regulation S-K, documents (other than Exhibits 4.8, 4.9, 4.10, 4.11 and 4.12) defining rights of holders of the Company’s long-term indebtedness

Exhibit No.	Description
10.1*	2005 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Registration Statement on Form S-1 (No. 333-134960) filed on June 12, 2006)
10.2*	AmTrust Financial Services, Inc. 2010 Omnibus Incentive Plan, as amended (incorporated by reference to Appendix A to the Company’s definitive proxy statement on Schedule 14A filed on April 5, 2012)
10.3*	Employment Agreement, dated as of January 1, 2005, by and between the Company and Barry D. Zyskind (incorporated by reference to Exhibit 10.7 to the Company’s Registration Statement on Form S-1 (No. 333-134960) filed on June 12, 2006)
10.4*	Amendment to Employment Agreement, dated October 6, 2010, by and between the Company and Barry D. Zyskind (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (No. 001-33143) filed on October 7, 2010)
10.5*	Second Amendment to Employment Agreement, dated March 22, 2013, by and between the Company and Barry D. Zyskind (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (No. 001-33143) filed on March 25, 2013)
10.6*	Employment Agreement, dated November 22, 2010, by and between the Company and Max G. Caviet (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (No. 001-33143) filed on November 23, 2010)
10.7*	Employment Agreement, dated as of March 1, 2010, by and between the Company and Christopher M. Longo (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K (No. 001-33143) filed on March 5, 2010)
10.8*	Amendment No. 1 to Employment Agreement, dated November 3, 2010, by and between the Company and Christopher M. Longo (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q (No. 001-33143) filed on November 9, 2010)
10.9*	Amendment No. 2 to Employment Agreement, dated March 1, 2012, by and between the Company and Christopher M. Longo (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K (No. 001-33143) filed on March 5, 2012)
10.10*	Amendment No. 3 to Employment Agreement, dated March 22, 2013, by and between the Company and Christopher M. Longo (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K (No. 001-33143) filed on March 25, 2013)
10.11*	Employment Agreement, dated as of March 1, 2010, by and between the Company and Ronald E. Pipoly, Jr. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (No. 001-33143) filed on March 5, 2010)
10.12*	Amendment No. 1 to Employment Agreement, dated March 1, 2012, by and between the Company and Ronald E. Pipoly, Jr. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (No. 001-33143) filed on March 5, 2012)
10.13*	Employment Agreement, dated as of March 1, 2010, by and between the Company and Michael J. Saxon. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (No. 001-33143) filed on March 5, 2010)
10.14*	Amendment No. 1 to Employment Agreement, dated November 3, 2010, by and between the Company and Michael J. Saxon (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (No. 001-33143) filed on November 9, 2010)
10.15*	Amendment No. 2 to Employment Agreement, dated March 1, 2012, by and between the Company and Michael J. Saxon (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (No. 001-33143) filed on March 5, 2012)
10.16*	Amendment No. 3 to Employment Agreement, dated March 22, 2013, by and between the Company and Michael J. Saxon (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (No. 001-33143) filed on March 25, 2013)
10.17*	Form of Indemnification Agreement between the Company and its officers and directors (incorporated by reference to Exhibit 10.12 to the Company’s Registration Statement on Form S-1 (No. 333-134960) filed on June 12, 2006)
10.18	Master Agreement dated July 3, 2007 between AmTrust Financial Services, Inc. and Maiden Holdings, Ltd. (incorporated by reference to Exhibit 2.2 to the Company’s Quarterly Report on Form 10-Q (No. 001-33143) filed on August 14, 2007)
10.19	First Amendment to Master Agreement dated September 17, 2007 between AmTrust Financial Services, Inc. and Maiden Holdings, Ltd. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (No. 001-33143) filed on September 19, 2007)
10.20	Amended and Restated Quota Share Reinsurance Agreement between AmTrust International Insurance, Ltd. and Maiden Reinsurance Ltd. (formerly known as Maiden Insurance Company Ltd.) (incorporated by reference to Exhibit 10.27 to the Company’s Annual Report on Form 10-K (No. 001-33143) filed on March 16, 2009)

Exhibit No.	Description
10.21	Endorsement No. 1 to the Amended and Restated Quota Share Reinsurance Agreement, dated July 26, 2011, between AmTrust International Insurance, Ltd. and Maiden Reinsurance Ltd. (formerly known as Maiden Insurance Company Ltd.) (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (No. 001-33143) filed on August 4, 2011)
10.22	Endorsement No. 2 to the Amended and Restated Quota Share Reinsurance Agreement, dated March 7, 2013, between AmTrust International Insurance, Ltd. and Maiden Reinsurance Ltd. (formerly known as Maiden Insurance Company Ltd.) (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (No. 001-33143) filed March 11, 2013)
10.23	Quota Share Reinsurance Agreement, dated April 1, 2011, among AmTrust Europe Ltd., AmTrust International Underwriters Limited, and Maiden Reinsurance Ltd. (formerly known as Maiden Insurance Company Ltd.), as amended by Endorsement No. 1 to the Quota Share Reinsurance Agreement, dated July 26, 2011, among AmTrust Europe Ltd., AmTrust International Underwriters Limited, and Maiden Insurance Company Ltd. (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q (No. 001-33143) filed on August 4, 2011)
10.24	Endorsement No. 2 to the Quota Share Reinsurance Agreement among AmTrust Europe Ltd., AmTrust International Underwriters Limited, and Maiden Reinsurance Ltd. (formerly known as Maiden Insurance Company Ltd.) (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q (No. 001-33143) filed on August 9, 2012)
10.25*	Amended and Restated AmTrust Financial Services, Inc. 2007 Executive Performance Plan (incorporated by reference to Appendix A to the Company’s definitive proxy statement on Schedule 14A filed on April 1, 2010)
10.26*	Form of Incentive Stock Option Agreement, amended and restated effective November 1, 2011 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (No. 001-33143) filed on November 9, 2011)
10.27*	Form of Non-qualified Stock Option Agreement for Non-Employee Directors, amended and restated effective November 1, 2011 (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (No. 001-33143) filed on November 9, 2011)
10.28*	Form of Restricted Stock Agreement, amended and restated effective November 1, 2011 (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q (No. 001-33143) filed on November 9, 2011)
10.29*	Form of Restricted Stock Unit Agreement, amended and restated effective November 1, 2011 (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q (No. 001-33143) filed on November 9, 2011)
10.30*	Performance Share Award Agreement for Barry D. Zyskind, dated March 26, 2012 (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K (No. 001-33143) filed on May 29, 2012)
10.31	Credit Agreement, dated September 12, 2014, among the Company, JPMorgan Chase Bank, N.A., as Administrative Agent, KeyBank National Association and SunTrust Bank, as Co-Syndication Agents, Lloyd's Bank PLC and Associated Bank, as Co-Documentation Agents 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 on September 12, 2014)
10.32	Amendment No. 1, dated November 26, 2014, to the Credit Agreement, dated September 12, 2014, among the Company, JPMorgan Chase Bank, N.A., as Administrative Agent, and the various lending institutions party thereto (filed herewith)
10.33	Credit Agreement, dated September 15, 2014, among the Company, as Administrative Agent, ACP Re Ltd. and Tower Group International, Ltd., as Borrowers, ACP Re Holdings, LLC, as Guarantor, and AmTrust International Insurance, Ltd. and National General Re Ltd., as Lenders (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (No. 001-33143) filed on September 17, 2014)
10.34	Personal and Commercial Automobile Quota Share Reinsurance Agreement between Integon National Insurance Company and Technology Insurance Company, Inc., Maiden Reinsurance Ltd. (formerly known as Maiden Insurance Company Ltd.), and ACP Re, Ltd., effective March 1, 2010 (incorporated by reference to Exhibit 10.33 to the Company’s Annual Report on Form 10-K (No. 001-33143) filed on March 15, 2011)
10.35	Addendum No. 1 to Personal and Commercial Automobile Quota Share Reinsurance Agreement between Integon National Insurance Company and Technology Insurance Company, Inc., Maiden Reinsurance Ltd. (formerly known as Maiden Insurance Company Ltd.), and ACP Re, Ltd., effective October 1, 2012 (incorporated by reference to Exhibit 10.35 to the Company’s Annual Report on Form 10-K (No. 001-33143) filed on March 1, 2013)
10.36	Master Services Agreement between AmTrust North America, Inc. and GMAC Insurance Management Corporation, dated February 22, 2012 (incorporated by reference to Exhibit 10.40 to the Company’s Annual Report on Form 10-K (No. 001-33143) filed March 15, 2012)

Exhibit No.	Description
10.37	Commercial Lines Cut-Through Reinsurance Agreement, dated as of January 3, 2014, by and among Tower Insurance Company of New York, Castle Point National Insurance Company, Tower National Insurance Company, Hermitage Insurance Company, Castle Point Florida Insurance Company, Kodiak Insurance Company, North East Insurance Company, York Insurance Company of Maine, Massachusetts Homeland Insurance Company, Preserver Insurance Company, Castle Point Insurance Company, and Technology Insurance Company, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (No. 001-33143) filed on January 7, 2014)
10.38	Amendment One to Commercial Lines Cut-Through Quota Share Reinsurance Agreement, dated as of March 20, 2014, by and among Tower Insurance Company of New York, Castle Point National Insurance Company, Tower National Insurance Company, Hermitage Insurance Company, Castle Point Florida Insurance Company, Kodiak Insurance Company, North East Insurance Company, York Insurance Company of Maine, Massachusetts Homeland Insurance Company, Preserver Insurance Company, Castle Point Insurance Company, and Technology Insurance Company, Inc. (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q (No. 001-33143) filed on May 12, 2014)
10.39	Amended and Restated Commercial Lines Master Agreement, dated as of July 23, 2014, by and between the Company and ACP Re, Ltd. (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q (No. 001-33143) filed on August 11, 2014)
10.40	Amending and Restating Agreement related to £235,000,000 Facility Agreement, dated November 25, 2014, among AmTrust Corporate Capital Limited, AmTrust Corporate Member Limited and AmTrust Corporate Member Two Limited, AmTrust International Insurance Ltd., AmTrust Financial Services, Inc., and ING Bank N.V., London Branch, as the Original Bank, Agent, Issuing Bank and Security Trustee (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (No. 001-33143) filed on December 1, 2014)
21.1	List of subsidiaries of the Company (filed herewith)
23.1	Consent of BDO USA, LLP, Independent Registered Public Accounting Firm, relating to the Financial Statements of the Company (filed herewith)
31.1	Certification of Chief Executive Officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
31.2	Certification of Chief Financial Officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
32.1	Certification of Chief Executive Officer pursuant to 18 U.SC. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
32.2	Certification of Chief Financial Officer pursuant to 18 U.SC. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
101.1	The following materials from the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets as of December 31, 2014 and 2013; (ii) the Consolidated Statements of Income for the years ended December 31, 2014, 2013 and 2012; (iii) the Consolidated Statements of Comprehensive Income for the years ended December 31, 2014, 2013 and 2012; (iv) the Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2014, 2013 and 2012; (v) the Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2013 and 2012; and (vi) the Notes to the Consolidated Financial Statements (submitted electronically herewith).

* Indicates management contract or compensatory plan, contract or arrangement in which one or more directors or executive officers of the Company may be participants.

EX-4

EXHIBIT 4.12

AmTrust Financial Services, Inc.

as Issuer

The Bank of New York Mellon Trust Company, N.A.

as Trustee

____________________________ 

Fourth Supplemental Indenture

Dated as of December 15, 2014

to the Indenture dated as of

December 21, 2011

2.75% Convertible Senior Notes due 2044

TABLE OF CONTENTS

	PAGE
Article 1. DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION	1
Section 1.01    Scope of Supplemental Indenture	1
Section 1.02    Definitions	2
Section 1.03    References to Interest	14
Section 1.04    References to Principal Amount	14
Article 2. THE SECURITIES	14
Section 2.01    Title and Terms; Payments	14
Section 2.02    Forms	15
Section 2.03    Transfer and Exchange; Restrictions on Transfer	17
Section 2.04    Payments on the Securities	21
Section 2.05    Contingent Interest	22
Article 3. REDEMPTIONS AND PURCHASES	23
Section 3.01    Amendments to the Base Indenture	23
Section 3.02    Purchase at Option of Holders upon a Fundamental Change	23
Section 3.03    Effect of Fundamental Change Purchase Notice	25
Section 3.04    Withdrawal of Fundamental Change Purchase Notice	26
Section 3.05    Deposit of Fundamental Change Purchase Price	26
Section 3.06    Securities Purchased in Whole or in Part	27
Section 3.07    Covenant to Comply with Applicable Laws upon Purchase of Securities	27
Section 3.08    Repayment to the Company	27
Section 3.09    Purchase Right of Holders on Specified Date	27
Section 3.10    Optional Redemption	29
Section 3.11    Notice of Redemption	30
Article 4. CONVERSION	31
Section 4.01    Right To Convert	31
Section 4.02    Conversion Procedures	33
Section 4.03    Settlement upon Conversion	35
Section 4.04    Adjustment of Conversion Rate	38
Section 4.05    Discretionary and Voluntary Adjustments	48
Section 4.06    Adjustment to Conversion Rate upon Conversion in Connection with a Make-Whole Fundamental Change or Certain Redemptions	49
Section 4.07    Effect of Recapitalization, Reclassification, Consolidation, Merger or Sale	50
Section 4.08    Stock Issued upon Conversion	53
Section 4.09    Responsibility of Trustee	53
Section 4.10    Notice to Holders	54
Article 5. PARTICULAR COVENANTS OF THE COMPANY	55
Section 5.01    Payment of Principal and Interest	55
Section 5.02    Maintenance of Office or Agency	55
Section 5.03    Appointments to Fill Vacancies in Trustee’s Office	56

Section 5.04    Provisions as to Paying Agent	56
Section 5.05    Reports; 144A Information; Registration; Additional Interest	58
Section 5.06    Statements as to Defaults	62
Section 5.07    Supplementary Interest and Additional Interest Notice	62
Article 6. REMEDIES	62
Section 6.01    Amendments to the Base Indenture	62
Section 6.02    Events of Default	63
Section 6.03    Acceleration; Rescission and Annulment	64
Section 6.04    Supplementary Interest	65
Section 6.05    Waiver of Past Defaults	66
Section 6.06    Control by Majority	66
Section 6.07    Limitation on Suits	66
Section 6.08    Rights of Holders to Receive Payment and to Convert	67
Section 6.09    Collection of Indebtedness; Suit for Enforcement by Trustee	67
Section 6.10    Trustee May Enforce Claims Without Possession of Securities	67
Section 6.11    Trustee May File Proofs of Claim	68
Section 6.12    Restoration of Rights and Remedies	68
Section 6.13    Rights and Remedies Cumulative	68
Section 6.14    Delay or Omission Not a Waiver	68
Section 6.15    Priorities	69
Section 6.16    Undertaking for Costs	69
Section 6.17    Waiver of Stay, Extension and Usury Laws	69
Section 6.18    Notices from the Trustee	70
Article 7. SATISFACTION AND DISCHARGE	70
Section 7.01    Inapplicability of Provisions of Base Indenture; Satisfaction and Discharge of the Indenture	70
Section 7.02    Deposited Monies to Be Held in Trust by Trustee	71
Section 7.03    Paying Agent to Repay Monies Held	71
Section 7.04    Return of Unclaimed Monies	71
Section 7.05    Reinstatement	71
Article 8. SUPPLEMENTAL INDENTURES	72
Section 8.01    Supplemental Indentures Without Consent of Holders	72
Section 8.02    Supplemental Indentures With Consent of Holders	72
Section 8.03    Notice of Amendment or Supplement	74
Article 9. SUCCESSOR COMPANY	74
Section 9.01    Consolidation, Merger and Sale of Assets	74
Section 9.02    Company May Consolidate, Etc. on Certain Terms	74
Section 9.03    Successor Corporation to Be Substituted	74
Section 9.04    Opinion of Counsel to Be Given to Trustee	75
Article 10. TAX ADDITIONAL AMOUNTS	76
Section 10.01  Payment of Tax Additional Amounts	76
Section 10.02  Exceptions to Payment of Tax Additional Amounts	76
Section 10.03  Entitlement to Refund or Credit	77
Section 10.04  References to be Consistent	77
Article 11. TAX TREATMENT	77
Section 11.01  Tax Treatment	77

Section 11.02    Comparable Yield and Projected Payment Schedule	78
Article 12. MISCELLANEOUS	79
Section 12.01    Effect on Successors and Assigns	79
Section 12.02    Governing Law; Waiver of Jury Trial	79
Section 12.03    No Security Interest Created	79
Section 12.04    Trust Indenture Act	79
Section 12.05    Benefits of Supplemental Indenture	79
Section 12.06    Calculations	79
Section 12.07    Execution in Counterparts	80
Section 12.08    Notices	80
Section 12.09    Ratification of Base Indenture	80
Section 12.10    The Trustee	80
Section 12.11    No Recourse Against Others	80
Section 12.12    FATCA	80

FOURTH SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”), dated as of December 15, 2014, between AmTrust Financial Services, Inc., a Delaware corporation (the “Company”), and The Bank of New York Mellon Trust Company, N.A. (the “Trustee”), as trustee under the Indenture, dated as of December 21, 2011, between the Company and the Trustee (as amended or supplemented from time to time in accordance with the terms thereof, the “Base Indenture”).

RECITALS OF THE COMPANY

WHEREAS, the Company executed and delivered the Base Indenture to the Trustee to provide, among other things, for the issuance, from time to time, of the Company’s unsecured senior debt Securities, in an unlimited aggregate principal amount, in one or more series to be established by the Company under, and authenticated and delivered as provided in, the Base Indenture;

WHEREAS, Section 12.01(p) of the Base Indenture provides for the Company and the Trustee to enter into supplemental indentures to the Base Indenture to establish the form and terms of Securities of any series as contemplated by Section 3.01 of the Base Indenture;

WHEREAS, the Board of Directors has duly adopted resolutions authorizing the Company to execute and deliver this Supplemental Indenture;

WHEREAS, pursuant to the terms of the Base Indenture, the Company has authorized the creation and issuance under this Supplemental Indenture of its 2.75% Convertible Senior Notes due 2044 (the “Securities”), the form and substance of such Securities and the terms, provisions and conditions thereof to be set forth as provided in the Base Indenture and this Supplemental Indenture; and

WHEREAS, the Company has requested that the Trustee execute and deliver this Supplemental Indenture, and that all requirements necessary to make (i) this Supplemental Indenture a valid instrument in accordance with its terms, and (ii) the Securities, when executed by the Company and authenticated and delivered by the Trustee, the valid obligations of the Company have been performed, and the execution and delivery of this Supplemental Indenture have been duly authorized in all respects.

NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH, for and in consideration of the premises and the purchases (whether for cash or other consideration) of the Securities by the Holders thereof, it is mutually agreed, for the benefit of the Company and the equal and proportionate benefit of all Holders, as follows:

ARTICLE 1.

DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

Section 1.01 Scope of Supplemental Indenture. The changes, modifications and supplements to the Base Indenture effected by this Supplemental Indenture shall be applicable only with respect to, and shall govern only the terms of (and only the rights of the Holders and the obligations of the Company with respect to), the Securities, which may be issued from time to time, and shall not apply to any other securities that may be issued under the Base Indenture (or govern the rights of the Holders or the obligations of the Company with respect to any such other securities) unless a supplemental indenture with respect to such other securities specifically incorporates such changes, modifications and supplements. The provisions of this Supplemental Indenture shall, with respect to the Securities, supersede any corresponding provisions in the Base Indenture. Subject to the preceding sentence, and except as otherwise provided herein, the provisions of the Base Indenture shall apply to the Securities and govern the rights of the Holders of the Securities and the obligations of the Company and the Trustee with respect thereto.

Section 1.02 Definitions. For all purposes of the Indenture, except as otherwise expressly provided or unless the context otherwise requires:

(i) the terms defined in this Article 1 shall have the meanings assigned to them in this Article 1 and include the plural as well as the singular; and

(ii) all words, terms and phrases defined in the Base Indenture (but not otherwise defined herein) shall have the same meanings as in the Base Indenture.

“Accreted Amount” means, as of any date of determination, the amount per $1,000 principal amount of Securities as determined as of such date and calculated in accordance with Exhibit D hereto. For the avoidance of doubt, the Accreted Amount on the Maturity Date will be $1,000 per $1,000 principal amount of Securities.

“Additional Interest” the meaning specified in Section 5.05(e) hereof.

“Additional Shares” has the meaning specified in Section 4.06(a) hereof.

“Adjustment Event” means any event that requires an adjustment to the Conversion Rate pursuant to Sections 4.04(a), (b), (c), (d), (e) and (h) hereof, Section 4.05(b) hereof, Section 4.06(a) hereof and Section 4.07(a) hereof.

“Agent Members” has the meaning specified in Section 2.02(c) hereof.

“Applicable Law” has the meaning specified in Section 12.12 hereof.

“Applicable Procedures” of a Depositary means, with respect to any matter at any time, the policies and procedures of such Depositary, if any, that are applicable to such matter at such time.

“Averaging Period” has the meaning specified in Section 4.04(e) hereof.

“Base Indenture” has the meaning specified in the first paragraph of this Supplemental Indenture, as such instruments may be supplemented from time to time by one or more indentures supplemental thereto, including this Supplemental Indenture, entered into pursuant to the applicable provisions of the Base Indenture, including, for all purposes of the Base Indenture, this Supplemental Indenture and any such other supplemental indenture, the provisions of the Trust Indenture Act that are deemed to be a part of and govern the Base Indenture, this Supplemental Indenture and any other such supplemental indenture, respectively.

“Bid Solicitation Agent” means the Company or an independent nationally recognized investment banking firm as may be appointed, from time to time, by the Company to solicit bids for the Trading Price of the Securities in accordance with Section 4.01(b)(2) hereof.

“Board of Directors” means the board of directors of the Company or a committee of such board of directors duly authorized to act for it hereunder.

“Business Day” means, notwithstanding anything to the contrary in Section 1.01 of the Base Indenture, any day other than a Saturday, a Sunday or a day on which the Federal Reserve Bank of New York is authorized or required by law or executive order to close or to be closed.

“Capital Stock” means, notwithstanding anything to the contrary in Section 1.01 of the Base Indenture, for any Person, any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) the equity of such Person, but excluding any debt securities convertible into such equity.

“Cash Settlement” has the meaning set forth in Section 4.03(a) hereof.

“Cash Settlement Averaging Period” means, with respect to any Security: (x) subject to clause (y), the 25 consecutive VWAP Trading Day period beginning on, and including, the third VWAP Trading Day immediately following the related Conversion Date; (y) if the relevant Conversion Date occurs after the date of an issuance of a redemption notice and on or prior to the third Scheduled Trading Day immediately preceding the related Redemption Date, the 25 consecutive Trading Day period beginning on, and including, the 27th Scheduled Trading Day preceding the Redemption Date; and (z) subject to clause (y), for any Security having a Conversion Date occurring during the period beginning on, and including, the 30th Scheduled Trading Day preceding the Maturity Date and ending at the Close of Business on the second Scheduled Trading Day immediately prior to the Maturity Date, the 25 consecutive VWAP Trading Days beginning on, and including, the 27th Scheduled Trading Day immediately preceding the Maturity Date or, if such day is not a VWAP Trading Day, the immediately following VWAP Trading Day.

“Clause A Distribution” has the meaning specified in Section 4.04(c) hereof.

“Clause B Distribution” has the meaning specified in Section 4.04(c) hereof.

“Clause C Distribution” has the meaning specified in Section 4.04(c) hereof.

“Close of Business” means 5:00 p.m., New York City time.

“Code” has the meaning specified in Section 10.02.

“Combination Settlement” has the meaning specified in Section 4.03(a) hereof.

“Common Equity” of any person means the Capital Stock of such person that is generally entitled (a) to vote in the election of directors of such person or (b) if such person is not a corporation, to vote or otherwise participate in the selection of the governing body, partners, managers or others that will control the management or policies of such person.

“Common Stock” means, subject to Section 4.07, the shares of common stock, par value $0.01 per share, of the Company authorized at the date of this instrument as originally executed or shares of any class or classes of common stock resulting from any reclassification or reclassifications thereof; provided, however, that if at any time there shall be more than one such resulting class, the shares so issuable on conversion of Securities shall include shares of all such classes, and the shares of each such class then so issuable shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications.

“common stock” includes any stock of any class of capital stock which has no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the issuer thereof and which is not subject to redemption by the issuer thereof.

“Common Stock Registrar” has the meaning specified in Section 2.03(e)(3) hereof.

“Company” has the meaning specified in the first paragraph of this Supplemental Indenture, notwithstanding anything to the contrary in Section 1.01 of the Base Indenture, and subject to the provisions of Section 9.02, shall include its successors and assigns.

“Contingent Interest” has the meaning specified in Section 2.05 hereof.

“Contingent Payment Regulations” has the meaning specified in Section 11.01.

“Controlled Charitable Foundation” means, with respect to any individual, a charitable foundation that is controlled by such individual.

“Controlled Entity” means, with respect to any Family Trust, the corporations, limited liability companies, trusts, partnerships or other similar entities that are assets of such Family Trust and are controlled by such Family Trust.

“Conversion Agent” means the office or agency designated by the Company where Securities may be presented for conversion.

“Conversion Date” has the meaning specified in Section 4.02(b) hereof.

“Conversion Notice” has the meaning specified in Section 4.02(b) hereof.

“Conversion Obligation” has the meaning specified in Section 4.01(a) hereof.

“Conversion Price” means, in respect of each Security, as of any date, $1,000 divided by the Conversion Rate in effect on such date.

“Conversion Rate” means initially 13.3333 shares of Common Stock per $1,000 principal amount of Securities, subject to adjustment as set forth herein.

“Custodian” means the Trustee, as custodian with respect to the Securities (so long as the Securities constitute Global Securities), or any successor entity.

“Daily Conversion Value” means, for any of the 25 consecutive VWAP Trading Days during any Cash Settlement Averaging Period, one-twenty-fifth (1/25th) of the product of (i) the Conversion Rate in effect on such VWAP Trading Day and (ii) the Daily VWAP on such VWAP Trading Day.

“Daily Settlement Amount” means, for any of the 25 consecutive VWAP Trading Days during a Cash Settlement Averaging Period, an amount consisting of:

(a) cash equal to the lesser of (i) the Daily Specified Dollar Amount and (ii) the Daily Conversion Value for such Trading Day; and

(b) if the Daily Conversion Value exceeds the Daily Specified Dollar Amount, a number of shares of Common Stock equal to (i) the difference between the Daily Conversion Value and the Daily Specified Dollar Amount, divided by (ii) the Daily VWAP for such Trading Day.

“Daily Specified Dollar Amount” means the quotient of the Specified Dollar Amount divided by 25.

“Daily VWAP” means, for any VWAP Trading Day, the per-share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg page “AFSI.Q AQR” (or its equivalent successor if such page is not available) in respect of the period from the scheduled open of trading until the scheduled close of trading of the primary trading session on such VWAP Trading Day (or if such volume-weighted average price is unavailable, the market value of one share of the Common Stock on such VWAP Trading Day determined, using a volume-weighted average method, by a nationally recognized independent investment banking firm retained for this purpose by the Company). The “Daily VWAP” will be determined without regard to after-hours trading or any other trading outside of the regular trading session’s trading hours.

“Deferral Notice” has the meaning specified in Section 5.05(f) hereof.

“Deferral Period” has the meaning specified in Section 5.05(f) hereof.

“Default” means, notwithstanding anything to the contrary in Section 1.01 of the Base Indenture, any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default.

“Distributed Property” has the meaning specified in Section 4.04(c) hereof.

“Dividend Threshold” has the meaning specified in Section 4.04(d) hereof.

“EDGAR” has the meaning specified in Section 4.10(a)(2) hereof.

“Effective Date” means (i) with respect to a Make-Whole Fundamental Change, the date on which the Make-Whole Fundamental Change occurs or becomes effective or (ii) with respect to any conversion in connection with a redemption under Section 3.10(a) prior to December 15, 2018, the date on which the related notice of redemption is provided to Holders by the Company.

“Event of Default” has the meaning, notwithstanding anything to the contrary in Section 1.01 of the Base Indenture, specified in Section 6.02 hereof.

“Ex-Dividend Date” means, except to the extent otherwise provided under Section 4.04(c) hereof, the first date on which shares of the Common Stock trade on the applicable exchange or in the applicable market, regular way, without the right to receive the issuance, dividend or distribution in question.

“Family Member” means, with respect to any individual, any other individual having a relationship by blood (to the second degree of consanguinity), marriage, or adoption to such individual.

“Family Trust” means, with respect to any individual, any trust or other estate planning vehicle established for the benefit of such individual or Family Members of such individual and in respect of which such individual or a Family Member of such individual serves as trustee or in a similar capacity and has sole control.

“Form of Assignment and Transfer” means the “Form of Assignment and Transfer” attached as Attachment 3 to the Form of Security attached hereto as Exhibit A.

“Form of Fundamental Change Purchase Notice” means the “Form of Fundamental Change Purchase Notice” attached as Attachment 2 to the Form of Security attached hereto as Exhibit A.

“Form of Notice of Conversion” means the “Form of Notice of Conversion” attached as Attachment 1 to the Form of Security attached hereto as Exhibit A.

“Form of Purchase Notice” means the “Form of Purchase Notice” attached as Attachment 4 to the Form of Security attached hereto as Exhibit A.

“Fundamental Change” shall be deemed to have occurred at the time after the Securities are originally issued if any of the following occurs:

(1) any “person” or “group” (within the meaning of Section 13(d) of the Exchange Act) other than the Company or its Subsidiaries files a Schedule TO or any schedule, form or report under the Exchange Act disclosing that such person or group has become the direct or indirect ultimate “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of the Company’s common equity representing (i) more than 70% of the voting power of the Company’s Common Equity, in the case of any person or group that includes the Permitted Holders or (ii) more than 50% of the voting power of the Company’s Common Equity, in the case of any other person or group;

(2) the consummation of (x) any consolidation, merger, amalgamation, scheme of arrangement or other binding share exchange or reclassification or similar transaction between the Company and another person (other than any of the Company’s Subsidiaries), in each case, pursuant to which the Common Stock shall be converted into cash, securities or other property, other than a transaction (i) that results in the holders of all classes of the Company’s Common Equity immediately prior to such transaction owning, directly or indirectly, as a result of such transaction, more than 50% of the surviving corporation or transferee or the parent thereof immediately after such event, or (ii) effected solely to change the Company’s jurisdiction of incorporation or to form a holding company for the Company and that results in a share exchange or reclassification or similar exchange of the outstanding Common Stock solely into common shares of the surviving entity or (y) any sale or other disposition in one transaction or a series of transactions of all or substantially all of the assets of the Company and its Subsidiaries, on a consolidated basis, to another person (other than any of the Company’s Subsidiaries); provided, however, that the exceptions set forth in clauses (i) and (ii) above shall not apply to any transaction that is a Non-U.S. Merger Event;

(3) the Company’s stockholders approve any plan or proposal for the liquidation or dissolution of the Company (other than a transaction described in clause (2) above); or

(4) the Common Stock ceases to be listed or quoted on The NASDAQ Global Select Market or The New York Stock Exchange (or any of their respective successors);

provided, however, that in the case of a transaction or event described in clause (1) or (2) above, other than a Non-U.S. Merger Event, if at least 90% of the consideration received or to be received by holders of the Common Stock (excluding cash payments for fractional shares) in the transaction or transactions that would otherwise constitute a “Fundamental Change” consists of shares of common stock or common equity interests (or American Depositary Receipts in respect of common equity interests) that are traded on The NASDAQ Global Select Market or The New York Stock Exchange (or any of their respective successors) or that will be so traded when issued or exchanged in connection with the transaction that would otherwise constitute a “Fundamental Change” under clause (1) or (2) above (“Publicly Traded Securities”), and as a result of such transaction or transactions, the Securities become convertible into or based on such Publicly Traded Securities, excluding cash payments for fractional shares (subject to settlement in accordance with the provisions of Sections 4.03, 4.04 and 4.06 hereof), such event shall not be a “Fundamental Change” and, for the avoidance of doubt, an event that is not considered a “Fundamental Change” pursuant to this proviso shall not be a “Fundamental Change” solely because such event could also be described by clause (1) or (2) above.

“Fundamental Change Company Notice” has the meaning specified in Section 3.02(b) hereof.

“Fundamental Change Expiration Time” has the meaning specified in Section 3.02(a) hereof.

“Fundamental Change Purchase Date” has the meaning specified in Section 3.02(a) hereof.

“Fundamental Change Purchase Notice” has the meaning specified in Section 3.02(a) hereof.

“Fundamental Change Purchase Price” has the meaning specified in Section 3.02(a) hereof.

“Holder” means the Person in whose name a Security is registered in the Register.

“Indenture” means, notwithstanding anything to the contrary in Section 1.01 of the Base Indenture, the Base Indenture, as originally executed and as supplemented from time to time by one or more indentures supplemental thereto, including this Supplemental Indenture, entered into pursuant to the applicable provisions of the Indenture, including, for all purposes of the Base Indenture, this Supplemental Indenture and any such other supplemental indenture, the provisions of the Trust Indenture Act that are deemed to be a part of and govern the Base Indenture, this Supplemental Indenture and any other such supplemental indenture, respectively.

“Interest Payment Date” means, with respect to the payment of interest on the Securities and notwithstanding anything to the contrary in Section 1.01 of the Base Indenture, each June 15 and December 15 of each year, beginning on June 15, 2015.

“Issue Date” means, with respect to the Securities, December 15, 2014.

“Last Reported Sale Price” of the Common Stock for any Trading Day means the closing sale price per share (or, if no closing sale price is reported, the average of the last bid and last ask prices or, if more than one in either case, the average of the average last bid and the average last ask prices) on that Trading Day as reported in composite transactions for the principal U.S. national or regional securities exchange on which the Common Stock is traded. If the Common Stock is not listed for trading on a U.S. national or regional securities exchange on the relevant trading day, the “Last Reported Sale Price” will be the last quoted bid price for the Common Stock in the over-the-counter market on the relevant date as reported by Pink OTC Markets Inc. or a similar organization. If the Common Stock is not so quoted, the “Last Reported Sale Price” will be the average of the mid-point of the last bid and last ask prices for the Common Stock on the relevant trading day from each of at least three nationally recognized independent investment banking firms selected by the Company for this purpose. Any such determination will be conclusive absent manifest error.

“Make-Whole Fundamental Change” means any event that (i) is a Fundamental Change or (ii) would be a Fundamental Change, but for the exclusion in section (i) of clause (2) of the definition thereof.

“Market Disruption Event” means, if the Common Stock is listed for trading on The NASDAQ Global Select Market or listed on another U.S. national or regional securities exchange, the occurrence or existence during the one-half-hour period ending on the scheduled close of trading on any Trading Day of any material suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the stock exchange or otherwise) in the Common Stock or in any options, contracts or futures contracts relating to the Common Stock.

“Market Price” means, with respect to the Securities on any date of determination, the average of the secondary market bid quotations obtained by the Bid Solicitation Agent for $5.0 million principal amount of the Securities at approximately 3:30 p.m., New York City time, on such determination date from three independent nationally recognized securities dealers the Company selects; provided that, if three such bids cannot reasonably be obtained by the Bid Solicitation Agent but two such bids are obtained, then the average of the two bids shall be used, and if only one such bid can reasonably be obtained by the Bid Solicitation Agent, that one bid shall be used. If the Bid Solicitation Agent cannot reasonably obtain at least one bid for $5.0 million principal amount of the Securities from a nationally recognized securities dealer, then the Trading Price per $1,000 principal amount of Securities will be deemed to equal the product of the Last Reported Sale Price of the Common Stock and the applicable Conversion Rate.

“Maturity Date” means, with respect to any Security and the payment of the principal amount thereof, December 15, 2044.

“Measurement Period” has the meaning specified in Section 4.01(b) hereof.

“Merger Common Stock” has the meaning specified in Section 4.07(a) hereof.

“Merger Event” has the meaning specified in Section 4.07(a) hereof.

“Merger Valuation Percentage” has the meaning specified in Section 4.07.

“Merger Valuation Period” has the meaning specified in Section 4.07.

“Non-U.S. Jurisdiction” means any jurisdiction under which an entity may be organized that is not the United States of America, any state thereof, or the District of Columbia.

“Non-U.S. Merger Event” means any transaction where the surviving entity is not a corporation organized under the laws of the United States of America, any state thereof, or the District of Columbia.

“Notice of Default” has the meaning, notwithstanding anything to the contrary in Section 1.01 of the Base Indenture, specified in Section 6.02(f) hereof.

“Offer Expiration Date” has the meaning specified in Section 4.04(e) hereof.

“Open of Business” means 9:00 a.m., New York City time.

“Outstanding” means, with respect to the Securities, notwithstanding anything to the contrary in Section 1.01 of the Base Indenture, any Securities authenticated by the Trustee except (i) Securities cancelled by it, (ii) Securities delivered to it for cancellation and (iii)(A) Securities replaced pursuant to Section 3.07 of the Base Indenture, on and after the time such Security is replaced (unless the Trustee and the Company receive proof satisfactory to them that such Security is held by a bona fide purchaser), (B) Securities converted pursuant to Article 4 hereof, on and after their Conversion Date, (C) any and all Securities, as of the Maturity Date, if the Paying Agent holds, in accordance with this Indenture, money sufficient to pay all of the Securities then payable, and (D) any and all Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor, except that in determining whether the Trustee shall be protected in relying upon any request, demand, authorization, direction, notice, consent or waiver or other action that is to be made by a requisite principal amount of Outstanding Securities, only such Securities which a Responsible Officer of the Trustee knows to be so owned shall be disregarded.

“Paying Agent” has the meaning set forth in the Base Indenture and shall be the person authorized by the Company to pay the principal amount of, interest on, or Fundamental Change Purchase Price of, any Securities on behalf of the Company.

“Permitted Holders” means, collectively, (a) George Karfunkel and his Permitted Related Persons, (b) Michael Karfunkel and his Permitted Related Persons, and (c) Barry D. Zyskind and his Permitted Related Persons.

“Permitted Related Persons” means, with respect to any individual, (a) the Family Members of such individual, (b) the Family Trusts of such individual and the Controlled Entities (as defined below) of such Family Trusts and (c) the Controlled Charitable Foundations of such individual.

“Physical Securities” means any non-Global Security issued pursuant to Section 2.03 hereof that is in definitive, fully registered form, without interest coupons.

“Physical Settlement” has the meaning specified in Section 4.03(a) hereof.

“Publicly Traded Securities” has the meaning specified in this Section 1.02.

“Purchase Agreements” means the Private Placement Purchase Agreements relating to the Securities, each dated December 11, 2014, by and among the Company and the applicable purchasers named therein.

“Purchase Company Notice” has the meaning specified in Section 3.09(b) hereof.

“Purchase Expiration Time” has the meaning specified in Section 3.09(a) hereof.

“Purchase Date” has the meaning specified in Section 3.09(a) hereof.

“Purchase Notice” has the meaning specified in Section 3.09(a) hereof.

“Purchase Price” has the meaning specified in Section 3.09(a) hereof.

“Reference Property” has the meaning specified in Section 4.07(a) hereof.

“Registrable Securities” means the Securities purchased pursuant to one or more Purchase Agreements and any Common Stock issued upon conversion thereof; provided, however, that such Securities and Common Stock shall cease to be

Registrable Securities when (i) such Securities or shares of Common Stock have been sold or otherwise transferred by the Holder thereof pursuant to the Registration Statement; (ii) such Securities or shares of Common Stock are sold pursuant to Rule 144 under circumstances in which any legend borne by such Securities or shares of Common Stock relating to restrictions on transferability thereof, under the Securities Act or otherwise, is removed, (iii) the legend on such Securities or shares of Common Stock is removed pursuant to Section 5.05(g); or (iv) such Securities or shares of Common Stock shall cease to be outstanding (including, in the case of the Securities, upon conversion into Common Stock).

“Registration Default” the meaning specified in Section 5.05(e) hereof.

“Regular Record Date” means, with respect to any Interest Payment Date, the June 1 (whether or not a Business Day) or the December 1 (whether or not a Business Day), as the case may be, immediately preceding such Interest Payment Date.

“Reporting Event of Default” has the meaning specified in Section 6.04(a) hereof.

“Resale Restriction Termination Date” has the meaning specified in Section 2.03(e)(2) hereof.

“Restricted Common Stock Legend” means the restricted legend set forth in Exhibit C.

“Restricted Security Legend” means the restricted legend set forth in Exhibit B.

“Restricted Securities” has the meaning specified in Section 2.03(e) hereof.

“Rule 144” means Rule 144 under the Securities Act, or any similar successor rule or regulation, as amended from time to time.

“Scheduled Trading Day” means a day that is scheduled to be a Trading Day on the principal U.S. national or regional securities exchange or market on which the Common Stock is listed or admitted for trading. If the Common Stock is not so listed or admitted for trading, “Scheduled Trading Day” means a Business Day.

“Security” or “Securities” has the meaning specified in the fourth paragraph of the Recitals of this Supplemental Indenture, notwithstanding anything to the contrary in Section 1.01 of the Base Indenture.

“Selling Securityholder Questionnaire” means a written notice delivered to the Company containing the information called for by the Form of Selling Securityholder Notice and Questionnaire attached as Annex C to each Purchase Agreement.

“Settlement Amount” has the meaning specified in Section 4.03(a)(2) hereof.

“Settlement Election” has the meaning specified in Section 4.03(a)(1) hereof.

“Settlement Election Notice” has the meaning specified in Section 4.03(a)(1) hereof.

“Settlement Method” means, with respect to any conversion of Securities, Physical Settlement, Cash Settlement or Combination Settlement, as elected by the Company.

“Significant Subsidiary” means, notwithstanding anything to the contrary in Section 1.01 of the Base Indenture, with respect to any person, a Subsidiary of such person that would constitute a “significant subsidiary” as such term is defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as in effect on the original date of issuance of the Securities.

“Specified Dollar Amount” means an amount of cash per $1,000 principal amount of converted Securities equal to $1,000; provided that in the event of the delivery of any Settlement Election Notice specifying a different Specified Dollar Amount pursuant to Section 4.03(a)(1) hereof, during the period during which such Settlement Election Notice is effective, the Specified Dollar Amount shall be as specified in such Settlement Election Notice.

“Specified Dollar Amount Election” has the meaning specified in Section 4.03(a)(1) hereof.

“Specified Dollar Amount Election Notice” has the meaning specified in Section 4.03(a)(1) hereof.

“Spin-Off” has the meaning specified in Section 4.04(c) hereof.

“Stock Price” means (i) if the holders of the Common Stock receive only cash in a Make-Whole Fundamental Change described in clause (2) of the definition of Make-Whole Fundamental Change, the cash amount paid per share, (ii) with respect to any other Make-Whole Fundamental Change, the average of the Last Reported Sale Prices of the Common Stock over the ten consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the Effective Date of the Make-Whole Fundamental Change and (iii) with respect to any conversion in connection with a redemption under Section 3.10(a) on or prior to December 15, 2018, the average of the Last Reported Sale Prices of the Common Stock over the ten consecutive Trading Days ending two Trading Days prior to the date on which the related notice of redemption is provided to Holders by the Company.

“Successor Company” has the meaning specified in Section 9.02(a) hereof, notwithstanding anything to the contrary in Section 1.01 of the Base Indenture.

“Supplemental Indenture” has the meaning specified in the first paragraph hereof, as such instrument may be supplemented from time to time by one or more indentures supplemental thereto, entered into pursuant to the applicable provisions of the Base Indenture and this Supplemental Indenture, including, for all purposes of this Supplemental Indenture and any such other supplemental indenture, the provisions of the Trust Indenture Act that are deemed to be a part of and govern the Base Indenture, this Supplemental Indenture and any other such supplemental indenture, respectively.

“Supplementary Interest” has the meaning specified in Section 6.04(a) hereof.

“Tax Additional Amounts” has the meaning specified in Section 10.01 hereof.

“Taxing Jurisdiction” has the meaning specified in Section 10.01 hereof.

“Trading Day” means a Scheduled Trading Day on which (i) trading in the Common Stock generally occurs on The NASDAQ Global Select Market or, if the Common Stock is not then listed on The NASDAQ Global Select Market, on the principal other U.S. national or regional securities exchange on which the Common Stock is then listed or, if the Common Stock is not then listed on a U.S. national or regional securities exchange, on the principal other market on which the Common Stock is then traded, and (ii) there is no Market Disruption Event. If the Common Stock is not so listed or traded, “Trading Day” means a “Business Day.”

“Trading Price” of the Securities on any date of determination means the average of the secondary market bid quotations obtained by the Bid Solicitation Agent for $5.0 million principal amount of the Securities at approximately 3:30 p.m., New York City time, on such Trading Day from three independent nationally recognized securities dealers selected by the Company; provided that, if three such bids cannot reasonably be obtained by the Bid Solicitation Agent but two such bids are obtained, then the average of the two bids shall be used, and if only one such bid can reasonably be obtained by the Bid Solicitation Agent, that one bid shall be used. If the Bid Solicitation Agent cannot reasonably obtain at least one bid for $5.0 million principal amount of the Securities from a nationally recognized securities dealer, then the Trading Price per $1,000 principal amount of Securities will be deemed to be less than 98% of the product of (i) the Conversion Rate in effect on such Trading Day and (ii) the Last Reported Sale Price of the Common Stock on such Trading Day. Any such determination will be conclusive absent manifest error. If (i) the Company does not so instruct the Bid Solicitation Agent to obtain bids when required, or the Bid Solicitation Agent fails to solicit bids when required, (ii) the Company is acting as Bid Solicitation Agent and fails to obtain bids when so required or (iii) the Trading Price is otherwise not determined as required, the Trading Price per $1,000 principal amount of the Securities will be deemed to be less than 98% of the product of (i) the Conversion Rate and (ii) the Trading Price for each Trading Day on which the Company or the Bid Solicitation Agent fails to do so, as the case may be.

“Trigger Event” has the meaning specified in Section 4.04(c) hereof.

“Trustee” means the Person named as the “Trustee” in the first paragraph of this Supplemental Indenture until a successor Trustee shall have become such pursuant to the applicable provisions of the Base Indenture and this Supplemental Indenture, and thereafter “Trustee” shall mean or include each Person who is then a Trustee hereunder.

“Unit of Reference Property” has the meaning specified in Section 4.07(a) hereof.

“U.S.” means the United States of America.

“Valuation Period” has the meaning specified in Section 4.04(c) hereof.

“VWAP Market Disruption Event” means (i) a failure by the principal U.S. national or regional securities exchange or market on which the Common Stock is listed or admitted to trading to open for trading during its regular trading session or (ii) the occurrence or existence, prior to 1:00 p.m., New York City time, on any Scheduled Trading Day for the Common Stock for more than a one half-hour period in the aggregate during regular trading hours, of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant securities exchange or otherwise) in the Common Stock or in any options, contracts or future contracts relating to the Common Stock.

“VWAP Trading Day” means a Scheduled Trading Day on which (i) there is no VWAP Market Disruption Event and (ii) trading in the Common Stock generally occurs on The NASDAQ Global Select Market or, if the Common Stock is not then listed on The NASDAQ Global Select Market, on the principal other U.S. national or regional securities exchange on which the Common Stock is then listed or, if the Common Stock is not then listed on a U.S. national or regional securities exchange, on the principal other market on which the Common Stock is then traded. If the Common Stock is not so listed or traded, “VWAP Trading Day” means a “Business Day.”

“Withholding Tax” has the meaning specified in Section 10.01 hereof.

Section 1.03 References to Interest. Any reference to interest on, or in respect of, any Security in the Indenture shall be deemed to include Supplementary Interest if, in such context, Supplementary Interest is, was or would be payable pursuant to Section 6.04, Additional Interest if, in such context, Additional Interest is, was or would be payable pursuant to Section 5.05, and Contingent Interest if, in such context, Contingent Interest is, was or would be payable pursuant to Section 2.05. Any express mention of the payment of Supplementary Interest, Additional Interest or Contingent Interest in any provision hereof shall not be construed as excluding Supplementary Interest, Additional Interest or Contingent Interest, as applicable, in those provisions hereof where such express mention is not made.

Section 1.04 References to Principal Amount. Unless otherwise indicated in this Supplemental Indenture, any reference to the principal amount of the Securities is to $1,000 principal amount at maturity of the Securities (and not the Accreted Amount of the Securities on any particular date) and references to the Conversion Price per $1,000 principal amount of Securities are to $1,000 principal amount of the Securities at maturity divided by the applicable Conversion Rate.

ARTICLE 2.

THE SECURITIES

Section 2.01 Title and Terms; Payments.

(a) Establishment; Designation. Pursuant to Section 3.01 of the Base Indenture, there is hereby established and authorized a new series of Securities under the Indenture, which series of Securities shall be designated the “2.75% Convertible Senior Notes due 2044.”

(b) Initial Issuance. Subject to Section 2.01(c) hereof, the aggregate principal amount of Securities that may initially be authenticated and delivered under the Indenture is limited to $234,257,000. In addition, the Company may execute, and the Trustee may authenticate and deliver, in each case, in accordance with Section 3.03 of the Base Indenture, an unlimited aggregate principal amount of additional Securities upon the transfer, exchange, purchase or conversion of Securities pursuant to Sections 3.04, 3.05 and 3.06 of the Base Indenture and Sections 3.06 and 4.02 hereof.

(c) Further Issues. The Company may, without the consent of the Holders, issue additional Securities under the Indenture with substantially the same terms as the Securities initially issued under the Indenture (other than with respect to (i) the date of issuance, (ii) the issue price, (iii) the amount of interest payable on the first Interest Payment Date applicable thereto, (iv) transfer restrictions, if applicable and (v) whether or not Additional Interest is payable thereon, if applicable (to the extent such additional Securities are issued with a different “CUSIP”, “ISIN” or “Common Code” number than such Securities)) in an unlimited aggregate principal amount; provided, that no such additional Securities may be issued with the same “CUSIP”, “ISIN” or “Common Code” number as other Securities unless it is so permitted in accordance with applicable law and such additional Securities are fungible with such other Securities for U.S. federal income tax purposes. Any such additional Securities will, for all purposes of the Indenture, including waivers, amendments and offers to purchase, be treated as part of the same series as the Securities initially issued under the Indenture.

(d) Purchases. The Company and its Subsidiaries may from time to time purchase Securities in open market purchases in negotiated transactions or otherwise without giving prior notice to or obtaining any consent of the Holders. Any

Securities purchased by the Company or any of its Subsidiaries pursuant to the foregoing sentence or otherwise will be retired and will no longer be Outstanding under the Indenture.

(e) Denominations. Pursuant to Sections 3.01 and 3.02 of the Base Indenture, the Securities will be issued only in minimum denominations of $1,000 and integral multiples of $1,000 in excess thereof.

Section 2.02 Forms.

(a) In General. Pursuant to Section 2.01 of the Base Indenture, the Securities will be substantially in the forms set forth in Exhibit A hereto, and may include such insertions, omissions, substitutions and other variations as are required or permitted by the Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Securities, as evidenced by their execution of the Securities.

Notwithstanding Section 3.05 of the Base Indenture, each Security will bear a Trustee’s certificate of authentication substantially in the form included in Exhibit A hereto. Each Security will also bear a form of notice of conversion, form of fundamental change purchase notice, form of assignment and transfer and form of purchase notice substantially in the form set forth in Attachments 1, 2, 3 and 4, respectively, to Exhibit A hereto.

Any Security that is a Global Security will bear a legend substantially in the form of the legend set forth in Section 3.03(g) of the Base Indenture and shall also bear the “Schedule of Increases and Decreases of Global Security” set forth in Annex A to Exhibit A hereto.

The terms and provisions contained in the Securities will constitute, and are hereby expressly made, a part of this Indenture and, to the extent applicable, the Company and the Trustee, by their execution and delivery of this Supplemental Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent that any provision of any Security conflicts with the express provisions of the Indenture, the provisions of this Indenture will govern and control.

(b) Initial and Subsequent Form of Securities. The Company hereby initially appoints The Depository Trust Company as the Depositary for the Securities, which initially shall be issued in the form of one or more Global Securities without interest coupons (i) registered in the name of Cede & Co., as nominee of the Depositary, and (ii) delivered to the Trustee as custodian for the Depositary.

So long as the Securities are eligible for book-entry settlement with the Depositary, unless otherwise required by law, and except to the extent provided in Section 2.03(b)(A) through (C) hereof, all Securities will be represented by one or more Global Securities.

(c) Global Securities. Each Global Security will represent the aggregate principal amount of the then Outstanding Securities endorsed thereon and provide that it represents such aggregate principal amount of the then Outstanding Securities, which aggregate principal amount may, from time to time, be reduced or increased to reflect transfers, exchanges, conversions or purchases by the Company.

Only the Trustee, or the custodian holding such Global Security for the Depositary, at the direction of the Trustee, may endorse a Global Security to reflect the amount of any increase or decrease in the aggregate principal amount of the then Outstanding Securities represented thereby, and whenever the Holder of a Global Security delivers instructions to the Trustee to increase or decrease the aggregate principal amount of the then Outstanding Securities represented by a Global Security in accordance with the Indenture and the Applicable Procedures, the Trustee, or the custodian holding such Global Security for the Depositary, at the direction of the Trustee, will endorse such Global Security to reflect such increase or decrease in the aggregate principal amount of the then Outstanding Securities represented thereby. None of the Trustee, the Company or any agent of the Trustee or the Company will have any responsibility or bear any liability for any aspect of the records relating to or payments made on account of the ownership of any beneficial interest in a Global Security or with respect to maintaining, supervising or reviewing any records relating to such beneficial interest.

Members of, or participants in, the Depositary (“Agent Members”) shall have no rights under the Indenture with respect to any Global Security held on their behalf by the Depositary, or the Trustee as its custodian, or under the Global Security, and Cede & Co., or such other person designated by the Depositary as its nominee, may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of the Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as

between the Depositary and its Agent Members, the operation of customary practices governing the exercise of the rights of any Holder.

Section 2.03 Transfer and Exchange; Restrictions on Transfer.

(a) In General. Notwithstanding anything to the contrary in Article III of the Base Indenture, the Company is not required to transfer or exchange any Securities or portions thereof that have been surrendered for purchase or called for redemption in accordance with Article 3 hereof or surrendered for conversion in accordance with Article 4 hereof, and a written form of transfer substantially in the form of the Form of Assignment and Transfer set forth in Attachment 3 to Exhibit A hereto will be deemed to be written instrument of transfer satisfactory to the Company and the Registrar. No transfer of any Security prior to the Resale Restriction Termination Date will be registered by the Registrar unless the appropriate box on the Form of Assignment and Transfer set forth in Attachment 3 to Exhibit A has been checked.

At such time as all interests in a Global Security have been redeemed, purchased, converted, cancelled or exchanged for Securities in certificated form, such Global Security shall, upon receipt thereof, be canceled by the Trustee in accordance with standing procedures and instructions existing between the Depositary and the custodian for the Global Security. At any time prior to such cancellation, if any interest in a Global Security is redeemed, purchased, converted, cancelled or exchanged for Securities in certificated form, the principal amount of such Global Security shall, in accordance with the standing procedures and instructions existing between the Depositary and the custodian for the Global Security, be appropriately reduced, and an endorsement shall be made on such Global Security, by the Trustee or the custodian for the Global Security, at the direction of the Trustee, to reflect such reduction.

(b) Global Securities. Notwithstanding anything to the contrary in Section 3.06 of the Base Indenture, every transfer and exchange of a beneficial interest in a Global Security will be effected through the Depositary in accordance with the Applicable Procedures and the provisions of the Indenture, and each Global Security may be transferred only as a whole and only (A) by the Depositary to a nominee of the Depositary, (B) by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or (C) by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary.

(c) Holders Deemed Owners. Prior to due presentment of a Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal of and any interest (subject to Section 3.08 of the Base Indenture) on such Security at the Maturity Date, in connection with a Fundamental Change, upon any other purchase or redemption, upon any conversion and for all other purposes whatsoever, including delivery of shares of Common Stock on conversion, for distribution of notices to such Holders or solicitations of their consent, whether or not such Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary.

Notwithstanding anything to the contrary in Section 3.06 of the Base Indenture:

(1) Each Global Security will be exchanged for Physical Securities if the Depositary delivers notice to the Company that the Depositary is unwilling, unable or no longer permitted under applicable law to continue to act as Depositary, and, in each case, the Company promptly delivers a copy of such notice to the Trustee and the Company fails to appoint a successor Depositary within 90 days after receiving notice from the Depositary.

(2) If an Event of Default has occurred and is continuing, any owner of a beneficial interest in a Global Security may exchange such beneficial interest for Physical Securities by delivering a written request to the Registrar.

(3) If the Company notifies the Trustee that it wishes to terminate and exchange all or part of a Global Security for Physical Securities and the beneficial owners of the majority of the principal amount of such Global Security (or portion thereof) to be exchanged consent to such exchange, the Company may exchange all beneficial interests in such Global Security (or portion thereof) for Physical Securities by delivering a written request to the Registrar.

In the case of an exchange for Physical Securities under clause (1) above:

(A) each Global Security will be deemed surrendered to the Trustee for cancellation;

(B) the Trustee will cause each Global Security to be cancelled in accordance with the Applicable Procedures; and

(C) the Company, in accordance with Section 3.03 of the Base Indenture, will promptly execute, and, upon receipt of a Company Order, the Trustee, in accordance with Section 3.03 of the Base Indenture, will promptly authenticate and deliver, for each beneficial interest in each Global Security so exchanged, an aggregate principal amount of Physical Securities equal to the aggregate principal amount of such beneficial interest, registered in such names and in such authorized denominations as the Depositary specifies, and bearing any legends that such Physical Securities are required to bear under this Indenture.

In the case of an exchange for Physical Securities under clause (2) above:

(A) the Registrar will deliver notice of such request to the Company and the Trustee, which notice will identify the owner of the beneficial interest to be exchanged, the aggregate principal amount of such beneficial interest and the CUSIP of the relevant Global Security, in each case if and as such information is provided to the Registrar by the Depositary;

(B) the Company, in accordance with Section 3.03 of the Base Indenture, will promptly execute, and, upon receipt of a Company Order, the Trustee, in accordance with Section 3.03 of the Base Indenture, will promptly authenticate and deliver to such owner, for the beneficial interest so exchanged by such owner, Physical Securities registered in such owner’s name having an aggregate principal amount equal to the aggregate principal amount of such beneficial interest and bearing any legends that such Physical Securities are required to bear under this Indenture; and

(C) the Registrar, in accordance with the Applicable Procedures, will cause the principal amount of such Global Security to be decreased by the aggregate principal amount of the beneficial interest so exchanged. If all of the beneficial interests in a Global Security are so exchanged, such Global Security will be deemed surrendered to the Trustee for cancellation, and the Trustee will cause such Global Security to be cancelled in accordance with the Applicable Procedures.

In the case of an exchange for Physical Securities under clause (3) above:

(A) the Company will deliver notice of such request to the Registrar and the Trustee, which notice will identify each owner of a beneficial interest to be exchanged, the aggregate principal amount of each such beneficial interest and the CUSIP of the relevant Global Security;

(B) the Company, in accordance with Section 3.03 of the Base Indenture, will promptly execute, and, upon receipt of a Company Order, the Trustee, in accordance with Section 3.03 of the Base Indenture, will promptly authenticate and deliver to each such beneficial owner, Physical Securities registered in such beneficial owner’s name having an aggregate principal amount equal to the aggregate principal amount of its exchanged beneficial interest and bearing any legends that such Physical Securities are required to bear under this Indenture and any applicable law; and

(C) the Registrar, in accordance with the Applicable Procedures, will cause the principal amount of each relevant Global Security to be decreased by the aggregate principal amount of the beneficial interests so exchanged. If all of the beneficial interests in a Global Security are so exchanged, such Global Security will be deemed surrendered to the Trustee for cancellation, and the Trustee will cause such Global Security to be cancelled in accordance with the Applicable Procedures.

In each of the cases described in clauses (1), (2) and (3) above, the Company may rely on the Depositary to provide all names of beneficial owners and their respective principal amounts beneficially owned and may issue Physical Securities registered in the names and amounts so provided by the Depositary.

(d) Physical Securities. Except to the extent otherwise provided in Section 2.03(a) hereof, Physical Securities may be transferred or exchanged in accordance with Section 3.06 of the Base Indenture.

(e) Restrictions on Transfer.

(1) Every Security (and all securities issued in exchange therefor or in substitution thereof) that bears, or is required under this Section 2.03 to bear, the Restricted Security Legend (together with any Common Stock issued upon conversion of the Securities that bears, or is required under this Section 2.03 to bear, the Restricted Common Stock Legend, collectively, the “Restricted Securities”) shall be subject to the restrictions on transfer set forth in this Section 2.03 (including those set forth in the Restricted Security Legend and the Restricted Common Stock Legend, as applicable), unless such restrictions on transfer shall be eliminated or otherwise waived by written consent of the Company following receipt of legal advice satisfactory to the Company in its sole discretion, supporting the permissibility of the waiver of such transfer

restrictions, and the Holder of each such Security or shareholder of such Common Stock, as applicable, by such Holder’s or shareholder’s acceptance thereof, agrees to be bound by all such restrictions on transfer. As used in this Section 2.03, the term “transfer” means any sale, pledge, loan, transfer or other disposition whatsoever of any Restricted Security or any interest therein.

(2) Until the date that is one year after the last date of the original issuance of the Securities or such later date, if any, as may be required by applicable laws (such applicable date, the “Resale Restriction Termination Date”): (i) each certificate evidencing a Security shall bear the Restricted Security Legend and (ii) each certificate evidencing shares of Common Stock issued upon conversion of the Securities shall bear the Restricted Common Stock Legend, in each case. unless such Restricted Security has been sold pursuant to a registration statement that has been declared effective under the Securities Act (and which continues to be effective at the time of such transfer) or sold pursuant to Rule 144 or any similar provision then in force under the Securities Act, or unless otherwise agreed by the Company in writing as set forth above, with written notice thereof to the Trustee.

(3) Any Securities (or security issued in exchange or substitution therefore, including any Common Stock into which a Security has been converted in accordance with this Indenture) as to which the conditions for the removal of the Restricted Security Legend, or Restricted Common Stock Legend, as applicable, set forth thereon have been satisfied may, upon surrender of such Securities or Common Stock to the Registrar or registrar for the Common Stock (the “Common Stock Registrar”), as applicable, be exchanged for a new Security or Securities, of like tenor and aggregate principal amount, or certificate for shares of Common Stock, as applicable, which shall not bear the Restricted Security Legend or Restricted Common Stock Legend, as applicable. The Company shall cause the removal of the legends required by Section 2.03(e)(2) from any Restricted Security promptly following the Resale Restriction Termination Date by: (i) instructing the Trustee or the Common Stock Registrar, as applicable, in writing to remove such legends from such Restricted Security; (ii) providing to the Trustee and the Depositary or Common Stock Registrar, as applicable, written notice to change the CUSIP number for the Restricted Securities to the applicable unrestricted CUSIP number; and (iii) complying with any Applicable Procedures or similar procedures of the Common Stock Registrar for delegending or otherwise exchanging such Restricted Security for a Security or share of Common Stock, as applicable, not bearing the applicable Restricted Security Legend or Restricted Common Stock Legend (including DTC’s mandatory exchange process, if applicable); whereupon any legends otherwise required by Section 2.03(e)(2) shall be deemed removed from such Restricted Securities without any further action on the part of the Holders or shareholders.

(4) Subject to Section 2.01(d), any Security or Common Stock issued upon conversion of the Securities that, prior to expiration of the holding period applicable to sales thereof under Rule 144 under the Securities Act (or any successor provision), is purchased or owned by the Company or any affiliate (as defined under Rule 144) thereof may not be resold by the Company or such affiliate unless registered under the Securities Act in a transaction that results in such Securities or Common Stock, as the case may be, no longer being “restricted securities” (as defined under Rule 144).

(5) Notwithstanding any provision of Section 2.03 to the contrary, in the event Rule 144 as promulgated under the Securities Act (or any successor rule) is amended to change the one-year period under Rule 144 (or the corresponding period under any successor rule), from and after receipt by the Trustee of the Officers’ Certificate and Opinion of Counsel provided for in this Section 2.03(e)(5), (i) each reference in Section 2.03(e) to “one year” and in the restrictive Restricted Security Legend or Restricted Stock Legend, as applicable, shall be deemed for all purposes hereof to be references to such changed period, provided that such changes shall not become effective if they are otherwise prohibited by, or would otherwise cause a violation of, the then-applicable federal securities laws. The provisions of this Section 2.03(e)(5) will not be effective until such time as an Opinion of Counsel and Officers’ Certificate, in each case, specifying the occurrence of the amendment or change to Rule 144 (or any successor rule) and the satisfaction of the conditions to modification of the related holding period for the Securities in accordance with the provisions of this Section 2.03(e)(5), have been received by the Trustee hereunder. This Section 2.03(e)(5) shall apply to successive amendments to Rule 144 (or any successor rule) changing the holding period thereunder.

(6) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Supplemental Indenture or under applicable law with respect to any transfer of any interest in any Security other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Supplemental Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

Section 2.04 Payments on the Securities.

(a) In General. Each Security will accrue interest at a rate equal to 2.75% per annum from the most recent date to which interest has been paid or duly provided for, or, if no interest has been paid or duly provided for, the Issue Date. Interest on a Security will cease to accrue upon the earliest of the Maturity Date, subject to the provisions of Article 3 hereof, any Fundamental Change Purchase Date, Purchase Date or Redemption Date for such Security, and subject to the provisions of Article 4 hereof, any Conversion Date for such Security. Interest on any Security will be payable semi-annually in arrears on each Interest Payment Date, beginning June 15, 2015, to the Holder of such Security as of the Close of Business on the Regular Record Date immediately preceding the applicable Interest Payment Date. As provided in Section 3.10 of the Base Indenture, interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. The Company shall be obligated to pay Holders Supplementary Interest under the circumstances set forth in Section 6.04 hereof. The Company shall be obligated to pay Holders Additional Interest under the circumstances set forth in Section 5.05 hereof. In addition, the Company shall be obligated to pay Holders Contingent Interest under the circumstances set forth in Section 2.05 hereof.

The Securities will mature on the Maturity Date, and on the Maturity Date, each Holder of a then Outstanding Security will be entitled on such date to receive $1,000 in cash for each $1,000 in principal amount of then Outstanding Securities held, together with accrued and unpaid interest to, but not including, the Maturity Date on such then Outstanding Securities.

Notwithstanding anything to the contrary, if the Maturity Date, any Interest Payment Date, Fundamental Change Purchase Date, Purchase Date, Redemption Date or Conversion Date falls, or if any payment, delivery, notice or other action by the Company is otherwise due, on a day that is not a Business Day, then any action to be taken on such date need not be taken on such date, but may be taken on the immediately following Business Day with the same force and effect as if taken on such date, and no additional interest will accrue and no default shall occur on account of such delay.

(b) Method of Payment. The Company will pay the principal of, the Fundamental Change Purchase Price, Purchase Price or Redemption Price for, and any cash portion of the Settlement Amount with respect to, any Physical Security to the Holder of such Security in cash at the designated office of the Paying Agent in the Borough of Manhattan in The City of New York, New York, prior to 10:00 a.m. on the relevant payment or settlement date, as the case may be. The Company will pay any interest on any Physical Security to the Holder of such Security (i) if such Holder holds $2,000,000 or less aggregate principal amount of Securities, by check mailed to such Holder’s registered address, and (ii) if such Holder holds more than $2,000,000 aggregate principal amount of Securities, (A) by check mailed to such Holder’s registered address or, (B) if such Holder delivers to the Registrar a written request that the Company make such payments by wire transfer to an account of such Holder within the United States, for each interest payment corresponding to each Regular Record Date occurring during the period beginning on the date on which such Holder delivered such request and ending on the date, if any, on which such Holder delivers to the Registrar a written instruction to the contrary, by wire transfer of immediately available funds to the account specified by such Holder.

The Company will pay the principal of, interest on, the Fundamental Change Purchase Price, Purchase Price or Redemption Price for, and any cash portion of the Settlement Amount with respect to, any Global Security to the Depositary by wire transfer of immediately available funds on the relevant payment date in accordance with Applicable Procedures.

(c) Defaulted Payments. The Company shall pay any interest on the Securities that is payable, but is not punctually paid or duly provided for, on the applicable Interest Payment Date, in accordance with Section  3.08 of the Base Indenture.

Section 2.05 Contingent Interest. Beginning with the six-month interest period commencing December 15, 2021, the Company will pay contingent interest during any six-month interest period to the Holders of the Securities if the Market Price of the Securities for each of the 20 Trading Days ending on the second Trading Day immediately preceding the first day of the applicable six-month interest period equals or exceeds 130% of the principal amount of the Securities (such interest is referred to as “Contingent Interest”).

During any six-month period when Contingent Interest shall be payable, the Contingent Interest payable per $1,000 principal amount of the Securities will equal 0.25% of the average of the Market Prices for $1,000 principal amount of Securities during the 20 consecutive Trading Day period ending on the second Trading Day immediately preceding the first day of the applicable six-month interest period.

For purposes of this Section 2.05, a “six-month interest period” shall be the period commencing on and including an Interest Payment Date and ending on but excluding the next Interest Payment Date.

The Company will notify Holders prior to the beginning of any six-month interest period that they will be entitled to receive Contingent Interest during such six-month interest period.

ARTICLE 3.

REDEMPTIONS AND PURCHASES

Section 3.01 Amendments to the Base Indenture.

(a) No Sinking Fund. Article V of the Base Indenture shall not apply with respect to the Securities.

Section 3.02 Purchase at Option of Holders upon a Fundamental Change. (a) If a Fundamental Change occurs, then each Holder shall have the right, at such Holder’s option, to require the Company to purchase for cash all of such Holder’s Securities, or any portion thereof such that the remaining principal amount of each Security that is not purchased in full equals $1,000 or an integral multiple of $1,000 in excess thereof, on a date (the “Fundamental Change Purchase Date”) specified by the Company that is not less than 20 calendar days or more than 35 calendar days following the date on which the Company delivers the Fundamental Change Company Notice, at a purchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest thereon, if any, to, but excluding, the Fundamental Change Purchase Date (the “Fundamental Change Purchase Price”); provided, however, that if the Company purchases a Security on a Fundamental Change Purchase Date that is after a Regular Record Date and on or prior to the Interest Payment Date corresponding to such Regular Record Date, the Company shall instead pay such accrued and unpaid interest on such Security on the Interest Payment Date to the Holder of record of such Security as of such Regular Record Date.

Purchases of Securities under this Section 3.02 shall be made, at the option of the Holder thereof, upon:

(1) if the Securities to be purchased are Physical Securities, delivery to the Paying Agent by the Holder of a duly completed notice (the “Fundamental Change Purchase Notice”) in the form set forth in Attachment 2 to the Form of Security attached hereto as Exhibit A and of the Securities, duly endorsed for transfer, on or before the Close of Business on the second Business Day immediately preceding the Fundamental Change Purchase Date, subject to extensions to comply with applicable law (the “Fundamental Change Expiration Time”); and

(2) if the Securities to be purchased are Global Securities, delivery of the Securities, by book-entry transfer, in compliance with the Applicable Procedures of the Depositary and the satisfaction of any other requirements of the Depositary in connection with tendering beneficial interests in a Global Security for purchase, by the Fundamental Change Expiration Time.

The Fundamental Change Purchase Notice in respect of any Securities to be purchased shall state:

(1) the certificate numbers of such Securities;

(2) the portion of the principal amount of such Securities, which must be such that the principal amount that is not to be purchased of each Security that is not to be purchased in full equals $1,000 or an integral multiple of $1,000 in excess thereof; and

(3) that such Securities are to be purchased by the Company pursuant to the applicable provisions of the Securities and this Indenture.

Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent the Fundamental Change Purchase Notice contemplated by this Section 3.02 shall have the right to withdraw, in whole or in part, such Fundamental Change Purchase Notice at any time prior to the Close of Business on the Business Day immediately preceding the Fundamental Change Purchase Date by delivery of a written notice of withdrawal to the Paying Agent in accordance with Section 3.04.

The Paying Agent shall promptly notify the Company of the receipt by it of any Fundamental Change Purchase Notice or written notice of withdrawal thereof.

(b) On or before the 20th calendar day after the occurrence of a Fundamental Change, the Company shall provide to all Holders of the Securities, the Trustee and the Paying Agent (in the case of any Paying Agent other than the Trustee) a notice (the “Fundamental Change Company Notice”) of the occurrence of such Fundamental Change and of the purchase right at the option of the Holders arising as a result thereof. Such notice shall be sent by first class mail or, in the case of any Global Securities, in accordance with the procedures of the Depositary for providing notices. Simultaneously with providing such Fundamental Change Company Notice, the Company shall publish a notice containing such information in a newspaper of

general circulation in The City of New York or publish such information on the Company’s website or through such other public medium as the Company may use at such time.

Each Fundamental Change Company Notice shall specify:

(1) the events causing the Fundamental Change;

(2) the date of the Fundamental Change;

(3) the last date on which a Holder of Securities may exercise the purchase right pursuant to this Article 3;

(4) the Fundamental Change Purchase Price;

(5) the Fundamental Change Purchase Date;

(6) the name and address of the Paying Agent and the Conversion Agent, if applicable;

(7) the applicable Conversion Rate and any adjustments to the applicable Conversion Rate;

(8) that the Securities with respect to which a Fundamental Change Purchase Notice has been delivered by a Holder may be converted only if the Holder withdraws the Fundamental Change Purchase Notice in accordance with this Supplemental Indenture;

(9) that the Holder must exercise the purchase right prior to the Fundamental Change Expiration Time;

(10) that the Holder shall have the right to withdraw any Securities surrendered for purchase prior to the Close of Business on the Business Day immediately preceding the Fundamental Change Purchase Date ; and

(11) the procedures that Holders must follow to require the Company to purchase their Securities.

No failure of the Company to give the foregoing notices and no defect therein shall limit the purchase rights of the Holders of Securities or affect the validity of the proceedings for the purchase of the Securities pursuant to this Section 3.02.

(c) Notwithstanding the foregoing, there shall be no purchase of any Securities pursuant to this Section 3.02 if the principal amount of the Securities has been accelerated, and such acceleration has not been rescinded, on or prior to the Fundamental Change Purchase Date (except in the case of an acceleration resulting from a Default by the Company in the payment of the Fundamental Change Purchase Price with respect to such Securities). The Paying Agent will promptly return to the respective Holders thereof any Physical Securities held by it during the acceleration of the Securities (except in the case of an acceleration resulting from a Default by the Company in the payment of the Fundamental Change Purchase Price with respect to such Securities) and shall deem to be cancelled any instructions for book-entry transfer of the Securities in compliance with the procedures of the Depositary, in which case, upon such return or cancellation, as the case may be, the Fundamental Change Purchase Notice with respect thereto shall be deemed to have been withdrawn.

Section 3.03 Effect of Fundamental Change Purchase Notice or Purchase Notice. Upon receipt by the Paying Agent of a Fundamental Change Purchase Notice specified in Section 3.02 or a Purchase Notice specified in Section 3.09, the Holder of the Security in respect of which such Fundamental Change Purchase Notice or Purchase Notice was given shall (unless such Fundamental Change Purchase Notice or Purchase Notice is withdrawn in accordance with Section 3.04) thereafter be entitled to receive solely the Fundamental Change Purchase Price or Purchase Price, as applicable, in cash with respect to such Security (and any previously accrued and unpaid interest on such Security). Such Fundamental Change Purchase Price or Purchase Price, as applicable, shall be paid to such Holder, subject to receipt of funds by the Paying Agent, on the later of (x) the applicable Fundamental Change Purchase Date or Purchase Date (provided the conditions in Section 3.02 or Section 3.09, as applicable, have been satisfied, and subject to extensions to comply with applicable law) and (y) the time of delivery or book-entry transfer of such Security to the Paying Agent by the Holder thereof in the manner required by Section 3.02 or Section 3.09, as applicable.

Section 3.04 Withdrawal of Fundamental Change Purchase Notice or Purchase Notice. A Fundamental Change Purchase Notice or a Purchase Notice may be withdrawn (in whole or in part) by means of a written notice of withdrawal delivered to the Paying Agent in accordance with the Fundamental Change Company Notice or Purchase at any time prior to the Close of

Business on the Business Day immediately preceding the Fundamental Change Purchase Date or Purchase Date, as applicable, specifying:

(1) the principal amount of the Securities with respect to which such notice of withdrawal is being submitted;

(2) if Physical Securities have been issued, the certificate numbers of the withdrawn Securities; and

(3) the principal amount, if any, of each Security that remains subject to the Fundamental Change Purchase Notice or Purchase Notice, which must be such that the principal amount not to be purchased equals $1,000 or an integral multiple of $1,000 in excess thereof;

provided, however, that if the Securities are Global Securities, the notice must comply with the Applicable Procedures of the Depositary.

The Paying Agent will promptly return to the respective Holders thereof any Physical Securities with respect to which a Fundamental Change Purchase Notice or Purchase Notice has been withdrawn in compliance with the provisions of this Section 3.04.

Section 3.05 Deposit of Fundamental Change Purchase Price or Purchase Price. Prior to 10:00 a.m., New York City time, on the Fundamental Change Purchase Date or Purchase Date, as applicable, the Company shall deposit with the Paying Agent (or, if the Company or a Subsidiary or an Affiliate of either of them is acting as the Paying Agent, shall segregate and hold in trust as provided herein) an amount of money (in immediately available funds if deposited on such Business Day) sufficient to pay the Fundamental Change Purchase Price or Purchase Price, as applicable, of all the Securities or portions thereof that are to be purchased as of the Fundamental Change Purchase Date or Purchase Date, as applicable. If the Paying Agent holds cash sufficient to pay the Fundamental Change Purchase Price or Purchase Price, as applicable, of the Securities for which a Fundamental Change Purchase Notice or Purchase Notice has been tendered and not withdrawn in accordance with this Indenture on the Fundamental Change Purchase Date or Purchase Date, as applicable, then as of such Fundamental Change Purchase Date or Purchase Date, (a) such Securities will cease to be Outstanding and interest will cease to accrue thereon (whether or not book-entry transfer of such Securities is made or such Securities have been delivered to the Paying Agent) and (b) all other rights of the Holders in respect thereof will terminate (other than the right to receive the Fundamental Change Purchase Price or Purchase Price, as applicable, upon delivery or book-entry transfer of such Securities).

Section 3.06 Securities Purchased in Whole or in Part. Any Security that is to be purchased, whether in whole or in part, shall be surrendered at the office of the Paying Agent (with, if the Company or the Trustee so requires in the case of Physical Securities, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or such Holder’s attorney duly authorized in writing) and the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Security, without service charge, a new Security or Securities, of any authorized denomination as requested by such Holder in aggregate principal amount equal to, and in exchange for, the portion of the principal amount of the Security so surrendered that is not purchased.

Section 3.07 Covenant to Comply with Applicable Laws upon Purchase of Securities. In connection with any offer to purchase Securities under Section 3.02 or Section 3.09, the Company shall, in each case if required by law, (i) comply with Rule 13e-4, Rule 14e-1 and any other tender offer rules under the Exchange Act that may then be applicable, (ii) file a Schedule TO or any other required schedule under the Exchange Act and (iii) otherwise comply with all federal and state securities laws applicable to the Company in connection with such purchase offer, in each case, so as to permit the rights and obligations under Section 3.02 and Section 3.09 to be exercised in the time and in the manner specified in Section 3.02 and Section 3.09.

Section 3.08 Repayment to the Company. To the extent that the aggregate amount of cash deposited by the Company pursuant to Section 3.05 exceeds the aggregate Fundamental Change Purchase Price or Purchase Price, as applicable, of the Securities or portions thereof that the Company is obligated to purchase as of the Fundamental Change Purchase Date or Purchase Date, as applicable, then, following such Fundamental Change Purchase Date or Purchase Date, the Paying Agent shall promptly return any such excess to the Company.

Section 3.09 Purchase Right of Holders on Specified Date.

(a) On December 15, 2024, each Holder shall have the right, at such Holder’s option, to require the Company to purchase all of such Holder’s Securities or any portion thereof that is a multiple of $1,000 principal amount, for cash on such date (the “Purchase Date”) at a purchase price equal to 100% of the principal amount thereof, together with accrued and

unpaid interest thereon to, but excluding, the Purchase Date (the “Purchase Price”); provided, however, that if the Purchase Date is after a Regular Record Date and on or prior to the Interest Payment Date corresponding to such Regular Record Date, the Company shall instead pay such accrued and unpaid interest on such Security on the Interest Payment Date to the Holder of record of such Security as of such Regular Record Date.

Purchases of Securities under this Section 3.09 shall be made, at the option of the Holder thereof, upon:

(1) if the Securities to be purchased are Physical Securities, delivery to the Paying Agent by the Holder of a duly completed notice (the “Purchase Notice”) in the form set forth in Attachment 4 to the Form of Security attached hereto as Exhibit A and of the Securities, duly endorsed for transfer, on or before the Close of Business on the second Business Day immediately preceding the Purchase Date (the “Purchase Expiration Time”); and

(2) if the Securities to be purchased are Global Securities, delivery of the Securities, by book-entry transfer, in compliance with the Applicable Procedures of the Depositary and the satisfaction of any other requirements of the Depositary in connection with tendering beneficial interests in a Global Security for purchase, by the Purchase Expiration Time.

The Purchase Notice in respect of any Securities to be purchased shall state:

(1) the certificate numbers of such Securities;

(2) the portion of the principal amount of such Securities, which must be such that the principal amount that is not to be purchased of each Security that is not to be purchased in full equals $1,000 or an integral multiple of $1,000 in excess thereof; and

(3) that such Securities are to be purchased by the Company pursuant to the applicable provisions of the Securities and this Indenture.

Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent the Purchase Notice contemplated by this Section 3.09 shall have the right to withdraw, in whole or in part, such Purchase Notice at any time prior to the Close of Business on the Business Day immediately preceding the Purchase Date by delivery of a written notice of withdrawal to the Paying Agent in accordance with Section 3.04.

The Paying Agent shall promptly notify the Company of the receipt by it of any Purchase Notice or written notice of withdrawal thereof.

(b) On or before the 20th calendar day before the Purchase Date, the Company shall provide to all Holders of the Securities, the Trustee and the Paying Agent (in the case of any Paying Agent other than the Trustee) a notice (the “Purchase Company Notice”) of the purchase right at the option of the Holders. Such notice shall be sent by first class mail or, in the case of any Global Securities, in accordance with the procedures of the Depositary for providing notices of the purchase right at the option of the Holders. Such mailing shall be by first-class mail. Simultaneously with providing such Purchase Company Notice, the Company shall publish a notice containing such information in a newspaper of general circulation in The City of New York or publish such information on the Company’s website or through such other public medium as the Company may use at such time. The Purchase Company Notice shall specify:

(1) that the Holder must exercise the purchase right prior to the Close of Business on the Purchase Date;

(2) the Purchase Price;

(3) the Purchase Date;

(4) the last date on which a Holder of Securities may exercise the purchase right pursuant to this Article 3;

(5) the name and address of the Paying Agent;

(6) that the Securities with respect to which a Purchase Notice has been delivered by a Holder may be converted only if the Holder withdraws the applicable Purchase Notice in accordance with the terms of the Indenture;

(7) that the Holder must exercise the purchase right prior to the Purchase Expiration Time;

(8) that the Holder shall have the right to withdraw any Securities surrendered for purchase prior to the Close of Business on the Business Day immediately preceding the Purchase Date; and

(9) the procedures that Holders must follow to require the Company to purchase their Securities.

(c) No failure of the Company to give the foregoing notice and no defect therein shall limit the Holders’ repurchase rights or affect the validity of the proceedings for the purchase of the Securities pursuant to this Section 3.09.

(d) Notwithstanding the foregoing, there shall be no purchase of any Securities pursuant to this Section 3.09 if the principal amount of the Securities has been accelerated, and such acceleration has not been rescinded, on or prior to the Purchase Date (except in the case of an acceleration resulting from a Default by the Company in the payment of the Purchase Price with respect to such Securities). The Paying Agent will promptly return to the respective Holders thereof any Physical Securities held by it during the acceleration of the Securities (except in the case of an acceleration resulting from a Default by the Company in the payment of the Purchase Price with respect to such Securities) and shall deem to be cancelled any instructions for book-entry transfer of the Securities in compliance with the procedures of the Depositary, in which case, upon such return or cancellation, as the case may be, the Purchase Notice with respect thereto shall be deemed to have been withdrawn.

Section 3.10 Optional Redemption.

(a) The Company shall have the right, at the Company’s option, at any time on or before December 15, 2018, to redeem all or, from time to time, any part of the Securities at a Redemption Price payable in cash equal to the principal amount of the Securities to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, such Redemption Date if the Daily VWAP is greater than or equal to 130% of the then current Conversion Price for each of at least 20 Trading Days in the 30 consecutive Trading Days ending on, and including, the Trading Day prior to the mailing of the notice of redemption pursuant to Section 4.03 of the Base Indenture and Section 3.11 hereof. The Company shall increase the Conversion Rate to the extent set forth in Section 4.06 with respect to any Securities that are converted pursuant to the terms of this Indenture in connection with a redemption under this Section 3.10(a).

(b) The Company shall have the right, at the Company’s option, at any time after December 15, 2018, to redeem all or, from time to time, any part of the Securities at a Redemption Price payable in cash equal to the Accreted Amount of the Securities to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, such Redemption Date.

(c) Notwithstanding the foregoing clauses (a) and (b), and anything to the contrary in the Indenture or the Securities, (i) if the Redemption Date with respect to a Security is after a Regular Record Date for the payment of an installment of interest and on or before the corresponding Interest Payment Date, then accrued and unpaid interest on such Security to, but excluding, such Redemption Date shall be paid, on such Redemption Date, to the Holder of such Security at the close of business on such Regular Record Date, and the Holder surrendering such Security for redemption shall not be entitled to any such interest unless such Holder was also the Holder of record of such Security at the close of business on such Regular Record Date and (ii) in no event shall the Company redeem any Securities at a time when the Company has failed to pay interest on the Securities and such failure to pay is continuing.

(d) If any Securities selected for partial redemption are thereafter surrendered for conversion in part before the third Scheduled Trading Day prior to the Redemption Date, the converted portion of such Securities shall be deemed (so far as may be), solely for purposes of determining the aggregate principal amount of Securities to be redeemed by the Company, to be the portion selected for redemption. Securities which have been converted during a selection of Securities to be redeemed may be treated by the Trustee as Outstanding for the purpose of such selection. Nothing in this Section 3.10 shall affect the right of any Holder to convert any Securities pursuant to Article 4 before the third Scheduled Trading Day prior to the Redemption Date. The Company will calculate the Redemption Price.

Section 3.11 Notice of Redemption. Each notice of redemption provided pursuant to Section 4.03 of the Base Indenture shall state, in addition to the information required by such Section 4.03 to be included in such notice, (i) that Holders have the right to convert the Securities called for redemption; (ii) the Conversion Rate then in effect and, if applicable, the adjustment to such Conversion Rate in accordance with the provisions of Section 4.06; (iii) the date on which such right to convert the Securities called for redemption will begin; (iv) the date on which such right to convert the Securities called for redemption will expire; and (v) any change in the Settlement Election that the Company shall have previously selected pursuant to Section 4.03(a)(1) with respect to Securities called for redemption that are converted. Such notice of redemption shall be provided not more than 50, and not less than 30, Scheduled Trading Days prior to the related Redemption Date.

ARTICLE 4.

CONVERSION

Section 4.01 Right To Convert. (a) Subject to and upon compliance with the provisions of the Indenture, each Holder shall have the right, at such Holder’s option, to convert its Securities, or any portion of its Securities such that the principal amount that remains Outstanding of each Security that is not converted in full equals $1,000 or an integral multiple of $1,000 in excess thereof, into the Settlement Amount determined in accordance with Section 4.03(a) hereof (the “Conversion Obligation”), (x) prior to the Close of Business on the Business Day immediately preceding September 15, 2044, only upon satisfaction of one or more of the conditions described in Section 4.01(b) hereof, and (y) on or after September 15, 2044, at any time prior to the Close of Business on the second Scheduled Trading Day immediately preceding the Maturity Date.

(b) (1) A Holder may surrender Securities for conversion during any fiscal quarter commencing after December 31, 2014 (and only during such fiscal quarter) if the Daily VWAP of the Common Stock for at least 20 Trading Days (whether or not consecutive) during the period of 30 consecutive Trading Days ending on the last Trading Day of the immediately preceding fiscal quarter is greater than or equal to 130% of the Conversion Price in effect on each Trading Day.

(2) A Holder may surrender Securities for conversion during the five Business Day period after any five consecutive Trading Day period (the “Measurement Period”) in which the Trading Price per $1,000 principal amount of Securities, as determined following a request by a Holder in accordance with the procedures set forth in this Section 4.01(b)(2), for each Trading Day of such Measurement Period was less than 98% of the product of (i) the Conversion Rate in effect on such Trading Day and (ii) the Last Reported Sale Price of the Common Stock on such Trading Day. The Trading Price shall be determined by the Company pursuant to this Section 4.01(b)(2) and the definition of “Trading Price” set forth in Section 1.02 hereof. The Company shall provide written notice to the Bid Solicitation Agent (if other than the Company) of the three independent nationally recognized securities dealers selected by the Company in accordance with the definition of Trading Price, along with the appropriate contact information for each. The Bid Solicitation Agent (if other than the Company) shall have no obligation to solicit secondary market bid quotations for the Securities for purposes of this Section 4.01(b)(2) unless the Company has requested it to do so; and the Company shall have no obligation to make such request (or, if the Company is acting as Bid Solicitation Agent, to determine the Trading Price of the Securities) unless a Holder of a Security provides it with reasonable evidence that the Trading Price per $1,000 principal amount of Securities would be less than 98% of the product of (i) the Conversion Rate in effect on the next Trading Day and (ii) the Last Reported Sale Price of the Common Stock on such Trading Day. At such time, the Company shall, or shall instruct the Bid Solicitation Agent to (if other than the Company) determine the Trading Price per $1,000 principal amount of the Securities beginning on the next Trading Day and on each successive Trading Day until the Trading Price per $1,000 principal amount of Securities for a Trading Day is greater than or equal to 98% of the product of (i) the Conversion Rate in effect on such Trading Day and (ii) the Last Reported Sale Price of the Common Stock on such Trading Day. Whenever the condition to conversion set forth in this Section 4.01(b)(2) has been met, but was not met on the immediately preceding Trading Day, the Company will so notify the Holders, the Trustee and the Conversion Agent (if other than the Trustee). If, at any time after the condition to conversion set forth in this Section 4.01(b)(2) has been met, the condition to conversion set forth in this Section 4.01(b)(2) ceases to be met, the Company will so notify the Holders, the Trustee and the Conversion Agent (if other than the Trustee) on the first Trading Day on which such condition ceases to be met.

(3) If the Company elects to (x) issue to all or substantially all holders of the Common Stock rights, options or warrants entitling them for a period of not more than 45 calendar days after the date of such issuance to subscribe for or purchase shares of the Common Stock, at a price per share less than the average of the Last Reported Sale Prices of the Common Stock for the 10 consecutive Trading Day period ending on the Trading Day immediately preceding the date of announcement of such issuance; or (y) distribute to all or substantially all holders of the Common Stock the Company’s assets, debt securities or rights to purchase the Company’s securities, which distribution has a per-share value, as reasonably determined by the Board of Directors, exceeding 10% of the Last Reported Sale Price of the Common Stock on the Trading Day immediately preceding the date of announcement for such distribution, then, the Company must deliver notice of such issuance or distribution, and of the Ex-Dividend Date for such issuance or distribution, to the Holders at least 30 Scheduled Trading Days prior to the Ex-Dividend Date for such issuance or distribution. Holders may surrender their Securities for conversion at any time during the period beginning on the 30th Scheduled Trading Day immediately prior to the Ex-Dividend Date for such issuance or distribution and ending on the earlier of (a) the Close of Business on the Business Day immediately preceding the Ex-Dividend Date for such issuance or distribution or (b) its announcement that such issuance or distribution will not take place, even if the Securities are not otherwise convertible at such time; provided, however, that Holders may not convert their Securities pursuant to this Section 4.01(b)(3) if the Company provides that Holders shall participate, at the same time and upon the same terms as holders of the Common Stock, and as a result of holding the Securities, in the relevant issuance or distribution without having to convert their Securities as if they held a number of shares of the Common Stock

equal to the Conversion Rate in effect on the Ex-Dividend Date for such issuance or distribution multiplied by the principal amount (expressed in thousands) of Securities held by such Holder on the Ex-Dividend Date for such issuance or distribution.

(4) If (i) a Make-Whole Fundamental Change occurs or (ii) the Company is a party to (a) a consolidation, merger or binding share exchange, pursuant to which the Company’s common stock would be converted into cash, securities or other assets or (b) a sale, conveyance, transfer or lease of all or substantially all of the assets of the Company and its Subsidiaries, on a consolidated basis, to another person (other than any of the Company’s Subsidiaries), the Securities may be surrendered for conversion at any time from or after the date that is 20 Scheduled Trading Days prior to the anticipated effective date of such transaction (or, if later, the Business Day after the Company gives notice of such transaction) until the Close of Business (i) if such transaction or event is a Fundamental Change, on the Business Day immediately preceding the Fundamental Change Purchase Date, and, (ii) otherwise, on the 35th Business Day immediately following the effective date for such transaction or event. The Company will notify the Holders of any such transaction:

(A) as promptly as practicable following the date the Company publicly announces such transaction but in no event less than 20 Scheduled Trading Days prior to the anticipated effective date of such transaction; or

(B) if the Company does not have knowledge of such transaction at least 20 Scheduled Trading Days prior to the anticipated effective date of such transaction, within one Business Day of the date upon which the Company receives notice, or otherwise becomes aware, of such transaction, but in no event later than the actual effective date of such transaction.

(5) If the Company calls any or all of the Securities for redemption, a Holder may surrender any or all of its Securities for conversion which have been called for redemption at any time prior to the close of business on the third Scheduled Trading Day prior to the related Redemption Date, even if the Notes are not otherwise convertible at such time, after which time a Holder’s right to convert will expire unless the Company defaults in the payment of the Redemption Price.

Section 4.02 Conversion Procedures.

(a) Each Security shall be convertible at the office of the Conversion Agent and, if applicable, in accordance with the Applicable Procedures of the Depositary.

(b) To exercise the conversion privilege with respect to a beneficial interest in a Global Security, the Holder must complete the appropriate instruction form for conversion pursuant to the Depositary’s book-entry conversion program, furnish appropriate endorsements and transfer documents if required by the Company or the Conversion Agent, and pay the funds, if any, required by Section 4.02(f) and any taxes or duties if required pursuant to Section 4.02(g), and the Conversion Agent must be informed of the conversion in accordance with the customary practice of the Depositary.

To exercise the conversion privilege with respect to any Physical Securities, the Holder of such Physical Securities shall:

(1) complete and manually sign a conversion notice in the form set forth in the Form of Notice of Conversion (the “Conversion Notice”) or a facsimile of the Conversion Notice;

(2) deliver the Conversion Notice, which is irrevocable, and the Security to the Conversion Agent;

(3) if required, furnish appropriate endorsements and transfer documents;

(4) if required, make any payment required under Section 4.02(f); and

(5) if required, pay all transfer or similar taxes as set forth in Section 4.02(g).

If, upon conversion of a Security, any shares of Common Stock are to be issued to a person other than the Holder of such Security, the related Conversion Notice shall include such other person’s name and address.

If a Security is subject to a Fundamental Change Purchase Notice or a Purchase Notice, such Security may not be converted unless such Fundamental Change Purchase Notice or Purchase Notice is withdrawn in accordance with Section 3.04 hereof prior to the Close of Business on the Business Day immediately prior to the Fundamental Change Repurchase Date or Purchase Date, as the case may be.

For any Security, the first Business Day on which the Holder of such Security satisfies all of the applicable requirements set forth above with respect to such Security and on which conversion of such Security is not otherwise prohibited under this Indenture shall be the “Conversion Date” with respect to such Security.

Each conversion shall be deemed to have been effected as to any such Securities (or portion thereof) surrendered for conversion at the Close of Business on the applicable Conversion Date; provided, however, that the person in whose name the certificate for any shares of Common Stock delivered upon conversion is registered shall be treated as a stockholder of record as of the Close of Business on the Conversion Date (in the case of Physical Settlement) or the last VWAP Trading Day of the applicable Cash Settlement Averaging Period (in the case of Combination Settlement). At the Close of Business on the Conversion Date for a Security, the converting Holder shall no longer be the Holder of such Security.

(c) Endorsement. Any Securities surrendered for conversion shall, unless shares of Common Stock issuable on conversion are to be issued in the same name as the registration of such Securities, be duly endorsed by, or be accompanied by instruments of transfer in form satisfactory to the Company duly executed by, the Holder or its duly authorized attorney.

(d) Physical Securities. If any Securities in a denomination greater than $1,000 shall be surrendered for partial conversion, the Company shall execute and the Trustee shall authenticate and deliver to the Holder of the Securities so surrendered, without charge, new Securities in authorized denominations in an aggregate principal amount equal to the unconverted portion of the surrendered Securities.

(e) Global Securities. Upon the conversion of a beneficial interest in Global Securities, the Conversion Agent shall make a notation in its records as to the reduction in the principal amount represented thereby. The Company shall notify the Trustee in writing of any conversions of Securities effected through any Conversion Agent other than the Trustee.

(f) Interest Due upon Conversion. If a Holder converts a Security after the Close of Business on a Regular Record Date but prior to the Open of Business on the Interest Payment Date corresponding to such Regular Record Date, such Holder must accompany such Security with an amount of cash equal to the amount of interest that will payable on such Security on the corresponding Interest Payment Date; provided, however, that a Holder need not make such payment (1) if the Conversion Date follows the Regular Record Date immediately preceding the Maturity Date; (2) if the Company has specified a Fundamental Change Purchase Date that is after a Regular Record Date and on or prior to the Business Day immediately following the corresponding Interest Payment Date and the Holder converts its Security after the Close of Business on such Regular Record Date and on or prior to the Open of Business on such Interest Payment Date; (3) if the Company has specified a Redemption Date that is after a Regular Record Date and on or prior to the corresponding Interest Payment Date; or (4) to the extent of any overdue interest, if any overdue interest exists at the time of conversion with respect to such Security.

(g) Taxes Due upon Conversion. If a Holder converts a Security, the Company will pay any documentary, stamp or similar issue or transfer tax due on the issue of any shares of the Common Stock upon the conversion, unless the tax is due because the Holder requests that any shares be issued in a name other than the Holder’s name, in which case the Holder will pay that tax.

Section 4.03 Settlement upon Conversion.

(a) Settlement. Subject to this Section 4.03 and Sections 4.06 and 4.07 hereof, upon conversion of any Security, the Company may elect to deliver to Holders in full satisfaction of its Conversion Obligation in respect of each $1,000 principal amount of Securities being converted: cash (“Cash Settlement”), shares of Common Stock (“Physical Settlement”) or a combination of cash and shares of Common Stock, together with cash, if applicable, in lieu of any fractional share of Common Stock in accordance with Section 4.03(d) (“Combination Settlement”).

(1) Settlement Election. The Company shall from time to time make an election with respect to the Settlement Method (a “Settlement Election”) and the Specified Dollar Amount, if applicable (a “Specified Dollar Amount Election”), it chooses to satisfy its Conversion Obligation under Section 4.01 hereof. Each Settlement Election and Specified Dollar Amount Election shall be effective until the Company provides a notice of a different Settlement Election (each such notice, a “Settlement Election Notice”) or a different Specified Dollar Amount Election, if applicable (each such notice, a “Specified Dollar Amount Election Notice”), and such different Settlement Election or Specified Dollar Amount Election, if applicable, becomes effective. The Company may not make a different Settlement Election or Specified Dollar Amount Election after (x) the 30th Scheduled Trading Date preceding the Maturity Date or (y) with respect to Securities converted in connection with a redemption, after the Company shall have provided a notice of redemption of the Securities. As of the date of this Supplemental Indenture, the Company has made a Settlement Election of Combination Settlement with a Specified Dollar Amount Election equal to $1,000. If the Company makes a different Settlement Election and/or Specified Dollar Amount

Election, the Company shall provide to all Holders, the Trustee and the Conversion Agent a Settlement Election Notice and/or Specified Dollar Amount Election Notice (which may be part of the Settlement Election Notice) with respect to each Settlement Election and/or Specified Dollar Amount Election specifying the newly chosen Settlement Method and/or Specified Dollar Amount and the effective date of such Settlement Election and/or Specified Dollar Amount Election (which effective date cannot be earlier than the second Trading Day preceding the delivery of the applicable notice). If the Company makes a Settlement Election specifying Combination Settlement in respect of its Conversion Obligation but does not make a Specified Dollar Amount Election, the Specified Dollar Amount shall be deemed to be equal to $1,000. Simultaneously with providing a Settlement Election Notice or Specified Dollar Amount Election, the Company shall issue a press release containing the relevant information and make such information available on its website.

In addition, the Company may at any time irrevocably elect Combination Settlement with a Specified Dollar Amount of $1,000; provided, however, that after the 30th Scheduled Trading Day preceding the Maturity Date, in no event may the Company make such irrevocable election if such election would result in a different Settlement Method. The Company may make such irrevocable election in its sole discretion without any consent of the Holders. If the Company chooses to make this irrevocable election, the Company shall provide notice to all Holders, the Trustee and the Conversion Agent. Simultaneously with providing such notice, the Company shall issue a press release containing the relevant information and make this information available on its website. Following such irrevocable election, the Company will not have the right to make a different Settlement Election.

(2) Settlement Amount. The cash, shares of Common Stock or combination of cash and shares of Common Stock in respect of any conversion of Securities (the “Settlement Amount”) shall be computed as follows:

(A) if the Company elects Physical Settlement, the Company shall deliver to the converting Holder a number of shares of Common Stock equal to the product of (i) the aggregate principal amount of Securities to be converted, divided by $1,000 and (ii) the applicable Conversion Rate;

(B) if the Company elects Cash Settlement, the Company shall deliver to the converting Holder, in respect of each $1,000 principal amount of Securities being converted, cash in an amount equal to the sum of the Daily Conversion Values for each of the 25 consecutive VWAP Trading Days during the related Cash Settlement Averaging Period; and

(C) if the Company elects Combination Settlement, the Company shall deliver to the converting Holder, in respect of each $1,000 principal amount of Securities being converted, an amount of cash and shares of Common Stock equal to the sum of the Daily Settlement Amounts for each of the 25 consecutive VWAP Trading Days during the applicable Cash Settlement Averaging Period.

(3) Delivery Obligation. The Company shall pay or deliver, as the case may be, the consideration due in respect of its Conversion Obligation (i) on the third Business Day immediately following the applicable Conversion Date, if the Company elects to satisfy its Conversion Obligation in respect of such conversion by Physical Settlement; provided that for all such conversions occurring on or after the 30th Scheduled Trading Day immediately preceding the Maturity Date or any Redemption Date, the Company shall deliver the shares of Common Stock on the Maturity Date or such Redemption Date; and (ii) except to the extent otherwise provided pursuant to Section 4.06 hereof, on the third Business Day immediately following the last VWAP Trading Day of the applicable Cash Settlement Averaging Period, if the Company elects to satisfy its Conversion Obligation in respect of such conversion by Cash Settlement or Combination Settlement.

(b) Fractional Shares. Notwithstanding the foregoing, the Company will not issue fractional shares of Common Stock as part of the Settlement Amount due with respect to any converted Security. Instead, if any Settlement Amount includes a fraction of a share of the Common Stock, the Company will, in lieu of delivering such fraction of a share of Common Stock, pay an amount of cash (i) in the case Physical Settlement applies to the Conversion Obligation, based on the Daily VWAP of the Common Stock on the relevant Conversion Date, or if such Conversion Date is not a Trading Day, the immediately preceding Trading Day or (ii) in the case Cash Settlement or Combination Settlement applies to the Conversion Obligation, based on the Daily VWAP on the last Trading Day of the relevant Cash Settlement Averaging Period (subject to subsection (c) below).

(c) Conversion of Multiple Securities by a Single Holder. If a Holder surrenders more than one Security for conversion on a single Conversion Date, the Company will calculate the amount of cash and the number of shares of Common Stock due with respect to such Securities as if such Holder had surrendered for conversion one Security having an aggregate principal amount equal to the sum of the principal amounts of each of the Securities surrendered for conversion by such Holder on such Conversion Date.

(d) Settlement of Accrued Interest and Deemed Payment of Principal. If a Holder converts a Security, the Company will not adjust the Conversion Rate to account for any accrued and unpaid interest (including original discount) on such Security and the Company’s delivery of cash, shares of Common Stock or a combination of cash and shares of Common Stock into which a Security is convertible will be deemed to satisfy and discharge in full the Company’s obligation to pay the principal of, and accrued and unpaid interest (including original discount), if any, on, such Security to, but excluding, the Conversion Date; provided, however, that, subject to Section 4.02(f), if a Holder converts a Security after a Regular Record Date and prior to the Open of Business on the corresponding Interest Payment Date, the Company will still be obligated to pay the interest due on such Interest Payment Date to the Holder of such Security on such Regular Record Date.

As a result, except as otherwise provided in the proviso to the immediately preceding sentence, any accrued and unpaid interest (including original discount) with respect to a converted Security will be deemed to be paid in full rather than cancelled, extinguished or forfeited. In addition, if the Settlement Amount for any Security includes both cash and shares of the Common Stock, accrued and unpaid interest (including original discount) will be deemed to be paid first out of the amount of cash delivered upon such conversion. In no event will a Holder be entitled to receive any dividend or other distribution with respect to any Common Stock issued on conversion of such Holder’s Securities if the applicable Conversion Date is after the Regular Record Date for such dividend or distribution. Prior to the settlement of any conversion in accordance with Section 4.03, a Holder shall not be the owner of any Common Stock issuable upon conversion of such Holder’s Securities.

Notwithstanding the foregoing, if Securities are converted in connection with a redemption on or prior to December 15, 2018 pursuant to Section 3.10(a), a Holder will receive, in addition to the cash and shares of Common Stock, if any, due upon conversion, a cash payment representing accrued and unpaid interest to the Conversion Date; provided that no such payment shall be required to be made if such conversion occurs after a Regular Record Date and on or prior to the next succeeding Interest Payment Date and such accrued and unpaid interest is paid in accordance with Section 4.02(f).

(e) Notices. Whenever a Conversion Date occurs with respect to a Security, the Conversion Agent will, as promptly as possible, and in no event later than the Business Day immediately following such Conversion Date, deliver to the Company and the Trustee, if it is not then the Conversion Agent, notice that a Conversion Date has occurred, which notice will state such Conversion Date, the principal amount of Securities converted on such Conversion Date and the names of the Holders that converted Securities on such Conversion Date.

On the first Business Day immediately following the last VWAP Trading Day of the Cash Settlement Averaging Period applicable to any converted Security to which Cash Settlement or Combination Settlement is applicable, the Company will deliver written notice to the Conversion Agent and the Trustee stating the amount of cash and the number of shares of Common Stock, if any, that the Company is obligated to pay to satisfy its conversion obligation with respect to each Security converted on such Conversion Date.

Section 4.04 Adjustment of Conversion Rate. The Conversion Rate will be adjusted as described in this Section 4.04, except that the Company shall not make any adjustment to the Conversion Rate if Holders participate (other than in the case of a share split or share combination), at the same time and upon the same terms as holders of the Common Stock and as a result of holding the Securities, in any of the transactions described below without having to convert their Securities, as if they held a number of shares of Common Stock equal to the applicable Conversion Rate, in respect of each $1,000 principal amount of Securities.

(a) If the Company exclusively issues shares of Common Stock as a dividend or distribution on all or substantially all shares of the Common Stock, or if the Company effects a share split or share combination, the Conversion Rate will be adjusted based on the following formula:

CR1 = CR0  x	OS1
	OS0

where,

CR0	=	the Conversion Rate in effect immediately prior to the Open of Business on the Ex-Dividend Date of such dividend or distribution, or immediately prior to the Open of Business on the effective date of such share split or combination, as applicable;
CR1	=	the Conversion Rate in effect immediately after the Open of Business on such Ex-Dividend Date or such effective date;
OS0	=	the number of shares of Common Stock outstanding immediately prior to the Open of Business on such Ex-Dividend Date or such effective date; and

OS₁ = the number of shares of Common Stock outstanding immediately after giving effect to such dividend, distribution, share split or share combination.

Any adjustment made under this Section 4.04(a) shall become effective immediately after the Open of Business on the Ex-Dividend Date for such dividend or distribution, or immediately after the Open of Business on the effective date for such share split or share combination. If any dividend or distribution of the type described in this Section 4.04(a) is declared but not so paid or made, the Conversion Rate shall be immediately readjusted, effective as of the date the Board of Directors determines not to pay such dividend or distribution to the Conversion Date that would then be in effect if such dividend or distribution had not been declared.

(b) If the Company issues to all or substantially all holders of the Common Stock any rights, options or warrants entitling them, for a period of not more than 45 calendar days after the date of such issuance, to subscribe for or purchase shares of the Common Stock, at a price per share less than the average of the Last Reported Sale Prices of the Common Stock for the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of such issuance, the Conversion Rate will be increased based on the following formula:

CR1 = CR0  x	OS0 + X
	OS0 + Y

where,

CR0	=	the Conversion Rate in effect immediately prior to the Open of Business on the Ex-Dividend Date for such issuance;
CR1	=	the Conversion Rate in effect immediately after the Open of Business on such Ex-Dividend Date;
OS0	=	the number of shares of Common Stock outstanding immediately prior to the Open of Business on such Ex-Dividend Date;
X	=	the total number of shares of Common Stock issuable pursuant to such rights, options or warrants; and
Y	=	the number of shares of Common Stock equal to the aggregate price payable to exercise such rights, options or warrants divided by the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of the issuance of such rights, options or warrants.

Any increase made under this Section 4.04(b) will be made successively whenever any such rights, options or warrants are issued and shall become effective immediately after the Open of Business on the Ex-Dividend Date for such issuance. To the extent that such rights, options or warrants are not exercised prior to their expiration or shares of Common Stock are not delivered upon the expiration of such rights, options or warrants, the Conversion Rate shall be readjusted to the Conversion Rate that would then be in effect had the increase with respect to the issuance of such rights, options or warrants been made on the basis of delivery of only the number of shares of Common Stock actually delivered. If such rights, options or warrants are not so issued, or if such rights, options or warrants are not exercised prior to their expiration, the Conversion Rate shall be decreased to be the Conversion Rate that would then be in effect if such Ex-Dividend Date for such issuance had not occurred.

For purposes of this Section 4.04(b) and Section 4.01(b)(3) hereof, in determining whether any rights, options or warrants entitle the holders of the Common Stock to subscribe for or purchase shares of the Common Stock at a price per share less than such average of the Last Reported Sale Prices of the Common Stock for the 10 consecutive Trading Day period ending on the Trading Day immediately preceding the date of announcement for such issuance, and in determining the aggregate offering price of such shares of the Common Stock, there shall be taken into account any consideration received by the Company for such rights, options or warrants and any amount payable on exercise or conversion thereof, the value of such consideration, if other than cash, to be determined by the Board of Directors.

(c) If the Company distributes shares of its Capital Stock, evidences of its indebtedness, other assets or property of the Company or rights, options or warrants to acquire its Capital Stock or other securities, to all or substantially all holders of the Common Stock, excluding:

(1) dividends or distributions, rights options or warrants as to which an adjustment was effected pursuant to Section 4.04(a) hereof or Section 4.04(b) hereof;

(2) dividends or distributions paid exclusively in cash as to which an adjustment was effected pursuant to Section 4.04(d) hereof; and

(3) Spin-Offs as to which the provisions set forth below in this Section 4.04(c) shall apply;

(any of such shares of Capital Stock, evidences of indebtedness, other assets or property or rights, options or warrants to acquire Capital Stock or other securities of the Company, the “Distributed Property”), then the Conversion Rate shall be increased based on the following formula:

CR1 = CR0  x	SP0
	SP0 - FMV

where,

CR0	=	the Conversion Rate in effect immediately prior to the Open of Business on the Ex-Dividend Date for such distribution;
CR1	=	the Conversion Rate in effect immediately after the Open of Business on such Ex-Dividend Date;
SP0	=	the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the Ex-Dividend Date for such distribution; and
FMV	=	the fair market value (as determined by the Board of Directors) of the shares of Capital Stock, evidences the Company’s indebtedness, other assets, or property of the Company or rights, options or warrants to acquire the Company’s Capital Stock or other securities distributed with respect to each outstanding share of the Common Stock on the Ex-Dividend Date for such distribution.

If “FMV” (as defined above) is equal to or greater than the “SP0” (as defined above), in lieu of the foregoing increase, each Holder of Securities shall receive, in respect of each $1,000 principal amount of Securities it holds, at the same time and upon the same terms as holders of the Common Stock, the amount and kind of Capital Stock, evidences of the Company’s indebtedness, other assets or property of the Company or rights, options or warrants to acquire the Capital Stock or other securities that such Holder would have received as if such Holder owned a number of shares of Common Stock equal to the Conversion Rate in effect on the Ex-Dividend Date for the distribution.

Any increase made under the portion of this Section 4.04(c) will become effective immediately after the Open of Business on the Ex-Dividend Date for such distribution. If such distribution is not so paid or made, the Conversion Rate shall be decreased to be the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.

With respect to an adjustment pursuant to this Section 4.04(c) where there has been a payment of a dividend or other distribution on the Common Stock of shares of Capital Stock of any class or series, or similar equity interest, of or relating to a Subsidiary of the Company or other business unit of the Company, and such Capital Stock or similar equity interest is listed or quoted (or will be listed or quoted upon the consummation of the distribution) on a United States national securities exchange or a reasonably comparable non-U.S. equivalent (a “Spin-Off”), the Conversion Rate will be increased based on the following formula:

CR1 = CR0	x	FMV0 + MP0
		MP0

where,

CR0	=	the Conversion Rate in effect immediately prior to the Open of Business on the Ex-Dividend Date for such Spin-Off;
CR1	=	the Conversion Rate in effect immediately after the Open of Business on the Ex-Dividend Date for such Spin-Off;

FMV0	=	the average of the Last Reported Sale Prices of the Capital Stock or similar equity interest distributed to holders of Common Stock applicable to one share of Common Stock over the first 10 consecutive Trading Day period after, and including, the effective date of the Spin-Off (the “Valuation Period”); and
MP0	=	the average of the Last Reported Sale Prices of Common Stock over the Valuation Period.

If (i) the first VWAP Trading Day of the relevant Cash Settlement Averaging Period (in the case of a conversion to which Cash Settlement or Combination Settlement is applicable) or (ii) the Conversion Date (in the case of a conversion to which Physical Settlement is applicable) occurs after the first Trading Day of the Valuation Period for a Spin-Off, but on or before the last Trading Day of the Valuation Period for such Spin-Off, the Valuation Period for determining the Conversion Rate applicable to such conversion shall be deemed to end on the Trading Day immediately preceding the first VWAP Trading Day of the relevant Cash Settlement Averaging Period (in the case of a conversion to which Cash Settlement or Combination Settlement is applicable) or the Conversion Date (in the case of a conversion to which Physical Settlement is applicable). If (i) the first VWAP Trading Day of the relevant Cash Settlement Averaging Period (in the case of a conversion to which Cash Settlement or Combination Settlement is applicable) or (ii) the Conversion Date (in the case of a conversion to which Physical Settlement is applicable) is on the first Trading Day of the Valuation Period for a Spin-Off, then the Valuation Period shall be one Trading Day, with the reference in the above definition of “FMV0” to ten (10) Trading Days being deemed replaced with a reference to one (1) Trading Day; provided further, that if one or more VWAP Trading Days of any Cash Settlement Averaging Period (in the case of a conversion to which Cash Settlement or Combination Settlement is applicable) or the Conversion Date (in the case of a conversion to which Physical Settlement is applicable) occurs on or after the Ex-Dividend Date for a Spin-Off, but on or prior to the first Trading Day of the Valuation Period, then such Cash Settlement Averaging Period will be suspended on the first such Trading Day and will resume on the second Trading Day of the Valuation Period for such Spin-Off, or such Conversion Date will be deemed to occur on the second Trading Day of the Valuation Period for such Spin-Off, as applicable, with references in the above definition of “FMV0” to ten (10) Trading Days being deemed replaced with a reference to one (1) Trading Day.

For purposes of the second adjustment set forth in this Section 4.04(c), (i) the Last Reported Sale Price of any Capital Stock or similar equity interest shall be calculated in a manner analogous to that used to calculate the Last Reported Sale Price of the Common Stock in the definition of “Last Reported Sale Price” set forth in Section 1.02 hereof, (ii) whether a day is a Trading Day (and whether a day is a Scheduled Trading Day and whether a Market Disruption Event has occurred) for such Capital Stock or similar equity interest shall be determined in a manner analogous to that used to determine whether a day is a Trading Day (or whether a day is a Scheduled Trading Day and whether a Market Disruption Event has occurred) for the Common Stock, and (iii) whether a day is a Trading Day to be included in a Valuation Period will be determined based on whether a day is a Trading Day for both the Common Stock and such Capital Stock or similar equity interest.

Subject to Section 4.04(g), for the purposes of this Section 4.04(c), rights, options or warrants distributed by the Company to all holders of the Common Stock entitling them to subscribe for or purchase shares of the Company’s Capital Stock (either initially or under certain circumstances), which rights, options or warrants, until the occurrence of a specified event or events (a “Trigger Event”): (1) are deemed to be transferred with such shares of Common Stock; (2) are not exercisable; and (3) are also issued in respect of future issuances of Common Stock, shall be deemed not to have been distributed for purposes of this Section 4.04(c) (and no adjustment to the Conversion Rate under this Section 4.04(c) will be required) until the occurrence of the earliest Trigger Event, whereupon such rights, options or warrants shall be deemed to have been distributed and an appropriate adjustment (if any is required) to the Conversion Rate shall be made under this Section 4.04(c). If any such right, option or warrant, distributed prior to the Issue Date are subject to events, upon the occurrence of which such rights, options or warrants become exercisable to purchase different securities, evidences of indebtedness or other assets, then the date of the occurrence of any and each such event shall be deemed to be the date of distribution and Ex-Dividend Date of such deemed distribution (in which case the original rights, options or warrants shall be deemed to terminate and expire on such date without exercise by any of the holders). In addition, in the event of any distribution or deemed distribution of rights, options or warrants, or any Trigger Event or other event (of the type described in the preceding sentence) with respect thereto that was counted for purposes of calculating a distribution amount for which an adjustment to the Conversion Rate under this Section 4.04(c) was made, (1) in the case of any such rights, options or warrants which shall all have been redeemed or purchased without exercise by any Holders thereof, upon such final redemption or purchase (x) the Conversion Rate shall be readjusted as if such rights, options or warrants had not been issued and (y) the Conversion Rate shall then again be readjusted to give effect to such distribution, deemed distribution or Trigger Event, as the case may be, as though it were a cash distribution, equal to the per share redemption or purchase price received by holders of Common Stock with respect to such rights, options or warrants (assuming each such holder had retained such rights, options or warrants), made to all holders of

Common Stock as of the date of such redemption or purchase, and (2) in the case of such rights, options or warrants which shall have expired or been terminated without exercise by any holders thereof, the Conversion Rate shall be readjusted as if such rights and warrants had not been issued.

For purposes of Section 4.04(a) hereof, Section 4.04(b) hereof and this Section 4.04(c), if any dividend or distribution to which this Section 4.04(c) applies includes one or both of:

(A) a dividend or distribution of shares of Common Stock to which Section 4.04(a) hereof also applies (the “Clause A Distribution”); or

(B) a dividend or distribution of rights, options or warrants to which Section 4.04(b) hereof also applies (the “Clause B Distribution”),

then (i) such dividend or distribution, other than the Clause A Distribution and the Clause B Distribution, shall be deemed to be a dividend or distribution to which this Section 4.04(c) applies (the “Clause C Distribution”) and any Conversion Rate adjustment required to be made under this Section 4.04(c) with respect to such Clause C Distribution shall be made, (ii) the Clause B Distribution, if any, shall be deemed to immediately follow the Clause C Distribution and any Conversion Rate adjustment required by Section 4.04(b) hereof with respect thereto shall then be made, except that, if determined by the Company, (A) the “Ex-Dividend Date” of the Clause B Distribution and the Clause A Distribution, if any, shall be deemed to be the Ex-Dividend Date of the Clause C Distribution and (B) any shares of Common Stock included in the Clause A Distribution or the Clause B Distribution shall not be deemed to be “outstanding immediately prior to the Open of Business on such Ex-Dividend Date” within the meaning of Section 4.04(b) hereof, and (iii) the Clause A Distribution, if any, shall be deemed to immediately follow the Clause C Distribution or the Clause B Distribution, as the case may be, except that, if determined by the Company, (A) the “Ex-Dividend Date” of the Clause A Distribution and the Clause B Distribution, if any, shall be deemed to be the Ex-Dividend Date of the Clause C Distribution, and (B) any shares of Common Stock included in the Clause A Distribution shall not be deemed to be “outstanding immediately prior to the Open of Business on such Ex-Dividend Date or such effective date” within the meaning of Section 4.04(a) hereof.

(d) If any cash dividend or distribution is made to all or substantially all holders of the Common Stock (other than a regular quarterly cash dividend that does not exceed $0.25 (the “Dividend Threshold”)), the Conversion Rate shall be adjusted based on the following formula:

CR1 = CR0	x	SP0
		SP0 - C

where,

CR0	=	the Conversion Rate in effect immediately prior to the Open of Business on the Ex-Dividend Date for such dividend or distribution;
CR1	=	the Conversion Rate in effect immediately after the Open of Business on the Ex-Dividend Date for such dividend or distribution;
SP0	=	the Last Reported Sale Price of the Common Stock on the Trading Day immediately preceding the Ex-Dividend Date for such dividend or distribution; and

C = the amount in cash per share that the Company distributes to holders of the Common Stock in excess of the Dividend Threshold; provided that if the dividend is not a regular quarterly cash dividend, the Dividend Threshold will be deemed to be zero. If "C" (as defined above) is equal to or greater than "SP0" (as defined above), in lieu of the foregoing increase, each Holder shall receive, for each $1,000 principal amount of Securities it holds, at the same time and upon the same terms as holders of shares of the Common Stock, the amount of cash that such Holder would have received if such Holder had owned a number of shares of Common Stock equal to the Conversion Rate on the Ex-Dividend Date for such cash dividend or distribution. Such increase shall become effective immediately after the Open of Business on the Ex-Dividend Date for such dividend or distribution. If such dividend or distribution is not so paid, the Conversion Rate shall be decreased effective as of the date the Board of Directors of the Company, or a committee thereof, determines not to pay such dividends or distributions, to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.

The Dividend Threshold shall be adjusted in a manner inversely proportional to adjustments to the Conversion Rate; provided that no adjustment will be made to the Dividend Threshold for any adjustments to the Conversion Rate under this Section 4.04(d).

(e) If the Company or any of its Subsidiaries make a payment in respect of a tender offer or exchange offer for the Common Stock, to the extent that the cash and value of any other consideration included in the payment per share of the Common Stock exceeds the Last Reported Sale Price of the Common Stock on the Trading Day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer (the “Offer Expiration Date”), the Conversion Rate shall be increased based on the following formula:

CR1 = CR0	x	AC + (SP1 xOS1)
		OS0 x SP1

where,

CR0	=	the Conversion Rate in effect immediately prior to the Close of Business on the Offer Expiration Date;
CR1	=	the Conversion Rate in effect immediately after the Close of Business on the Offer Expiration Date;
AC	=	the aggregate value of all cash and any other consideration (as determined by the Board of Directors) paid or payable for shares of Common Stock purchased in such tender offer or exchange offer;
OS0	=	the number of shares of Common Stock outstanding immediately prior to the expiration time of the tender or exchange offer on the Offer Expiration Date (prior to giving effect to the purchase of all shares accepted for purchase or exchange in such tender offer or exchange offer);
OS1	=	the number of shares of Common Stock outstanding immediately after the expiration time of the tender or exchange offer on the Offer Expiration Date (after giving effect to the purchase of all shares accepted for purchase or exchange in such tender or exchange offer); and
SP1	=	the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the Offer Expiration Date (the “Averaging Period”).

If (i) the first VWAP Trading Day of the relevant Cash Settlement Averaging Period (in the case of a conversion to which Cash Settlement or Combination Settlement is applicable) or (ii) the Conversion Date (in the case of a conversion to which Physical Settlement is applicable) occurs after the first Trading Day of the Averaging Period for a tender offer or exchange offer, but on or before the last Trading Day of the Averaging Period for such tender offer or exchange offer, the Averaging Period for determining the Conversion Rate applicable to such conversion shall be deemed to end on the Trading Day immediately preceding the first VWAP Trading Day of the relevant Cash Settlement Averaging Period (in the case of a conversion to which Cash Settlement or Combination Settlement is applicable), or the Conversion Date (in the case of a conversion to which Physical Settlement is applicable). If (i) the first VWAP Trading Day of the relevant Cash Settlement Averaging Period (in the case of a conversion to which Cash Settlement or Combination Settlement is applicable) or (ii) the Conversion Date (in the case of a conversion to which Physical Settlement is applicable) is on the first Trading Day of the Averaging Period for a tender offer or exchange offer, then the Averaging Period shall be one Trading Day, and the reference in the above definition of “SP1” to “ten (10)” shall be deemed replaced with a reference to “one (1).”

If a Holder converts a Security, when Physical Settlement is applicable to such Security and any Conversion Rate adjustment described herein has become effective on or prior to the applicable Conversion Date, but the Holder will be entitled to participate in the event giving rise to such adjustment on account of the shares of Common Stock it receives upon conversion of such Security, then, notwithstanding anything to the contrary herein, the Company shall calculate its conversion obligation to such Holder as if such Conversion Rate adjustment had not been required hereunder and treat such Holder as entitled to participate in such event on account of the shares of Common Stock it receives upon conversion of such Security.

(f) Special Settlement Provisions. Notwithstanding anything to the contrary herein, if a Holder converts a Security, when Combination Settlement is applicable to such Security and the Daily Settlement Amount for any VWAP Trading Day during the Cash Settlement Averaging Period applicable to such Security:

(1) is calculated based on a Conversion Rate adjusted on account of any event described in Sections 4.04(a) through (e) hereof; and

(2) includes any shares of Common Stock that, but for this provision, would entitle their holder to participate in such event;

then, although the Company will otherwise treat such Holder as the holder of record of such shares of Common Stock on the last VWAP Trading Day of such Cash Settlement Averaging Period, the Company will not permit such Holder to participate in such event on account of such shares of Common Stock.

(g) Poison Pill. Whenever a Holder converts a Security, to the extent that Combination Settlement applies to such Security and the Company has a rights plan in effect on any VWAP Trading Day in the Cash Settlement Averaging Period applicable to such Security, or to the extent that Physical Settlement applies to such Security and the Company has a rights plan in effect on the Conversion Date, the Holder converting such Security will receive, in addition to any shares of Common Stock otherwise received in connection with such conversion on such Conversion Date or VWAP Trading Day, as the case may be, the rights under the rights plan, unless prior to such Conversion Date or VWAP Trading Day, as the case may be, the rights have separated from the Common Stock, in which case, and only in such case, the Conversion Rate will be adjusted at the time of separation as if the Company distributed to all holders of the Common Stock, shares of Capital Stock, evidences of indebtedness, assets, property, rights, options or warrants as described in Section 4.04(c) hereof, subject to readjustment in the event of the expiration, termination or redemption of such rights.

(h) Deferral of Adjustments. Notwithstanding anything to the contrary herein, except on and after the first VWAP Trading Day of any Cash Settlement Averaging Period with respect to a Security and on or prior to the last VWAP Trading Day of such Cash Settlement Averaging Period, the Company will not be required to adjust the Conversion Rate unless such adjustment would require an increase or decrease of at least one percent; provided, however, that any such minor adjustments that are not required to be made will be carried forward and taken into account in any subsequent adjustment, and provided, further, that any such adjustment of less than one percent that has not been made shall be made upon the occurrence of (i) the Effective Date for any Make-Whole Fundamental Change, (ii) a Redemption Date and (iii) in the case of any Security to which Physical Settlement applies, upon the Conversion Date, and in the case of a Security to which Cash Settlement or Combination Settlement applies, on the first VWAP Trading Day of the applicable Cash Settlement Averaging Period. In addition, the Company shall not account for such deferrals when determining whether any of the conditions to conversion have been satisfied.

(i) Limitation on Adjustments. Except as stated in this Section 4.04, the Company will not adjust the Conversion Rate for the issuance of shares of Common Stock or any securities convertible into or exchangeable for shares of Common

Stock or the right to purchase shares of the Common Stock or such convertible or exchangeable securities. If, however, the application of the formulas in Sections 4.04(a) through (e) hereof would result in a decrease in the Conversion Rate, then, except to the extent of any readjustment to the Conversion Rate, no adjustment to the Conversion Rate will be made (other than as a result of a reverse share split, share combination or readjustment to the Conversion Rate).

In addition, notwithstanding anything to the contrary herein, the Conversion Rate will not be adjusted:

(1) on account of stock repurchases that are not tender offers referred to in Section 4.04(e) hereof, including structured or derivative transactions, or transactions pursuant to a stock repurchase program approved by the Board of Directors or otherwise;

(2) upon the issuance of any shares of Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on the Company’s securities and the investment of additional optional amounts in shares of Common Stock under any plan;

(3) upon the issuance of any shares of Common Stock or options or rights to purchase those shares pursuant to any present or future employee, director or consultant benefit plan, program or agreement of or assumed by the Company or any of its Subsidiaries;

(4) upon the issuance of any shares of Common Stock pursuant to any option, warrant, right or exercisable, exchangeable or convertible security not described in the preceding bullet and outstanding as of the date the Securities were first issued;

(5) for a change in the par value of the Common Stock;

(6) for accrued and unpaid interest on the Securities, if any; or

(7) for an event otherwise requiring an adjustment under this Indenture if such event is not consummated.

In addition, before taking any action which would cause an adjustment to the Conversion Rate such that the Conversion Price per share of Common Stock would be less than the par value of the Common Stock issuable upon conversion of the Securities, the Company shall take all corporate actions that may, in the opinion of its counsel, be necessary so it may validly and legally issue shares of Common Stock at such adjusted Conversion Rate.

(j) For purposes of this Section 4.04, the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company so long as the Company does not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Company, but shall include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of Common Stock.

Section 4.05 Discretionary and Voluntary Adjustments.

(a) Discretionary Adjustments. Whenever any provision of this Indenture requires the Company to calculate the Last Reported Sale Prices, the Daily VWAPs or any function thereof, including the number of shares of Common Stock that would be deliverable, over a span of multiple days (including during a Cash Settlement Averaging Period), the Company will make appropriate adjustments to each to account for any adjustment to the Conversion Rate that becomes effective, or any event requiring an adjustment to the Conversion Rate where the Effective Date, Ex-Dividend Date or Offer Expiration Date of the event occurs, at any time during the period when such Last Reported Sale Prices, the Daily VWAPs or function thereof, including the number of shares of Common Stock that would be deliverable, is to be calculated.

(b) Voluntary Adjustments. To the extent permitted by applicable law, the Company is permitted to increase the Conversion Rate of the Securities by any amount for a period of at least 20 business days if the Board of Directors determines that such increase would be in the Company’s best interest. The Company may also (but is not required to) increase the Conversion Rate to avoid or diminish income tax to holders of Common Stock or rights to purchase shares of Common Stock in connection with a dividend or distribution of shares (or rights to acquire shares) or similar event.

Section 4.06 Adjustment to Conversion Rate upon Conversion in Connection with a Make-Whole Fundamental Change or Certain Redemptions.

(a) Increase in the Conversion Rate. If a Make-Whole Fundamental Change occurs on or prior to December 15, 2018 or the Company redeems Securities on or prior to December 15, 2018 pursuant to Section 3.10(a) and a Holder elects to convert its Securities in connection with such Make-Whole Fundamental Change or such redemption, the Company shall, under the circumstances set forth in this Section 4.06, increase the Conversion Rate for the Securities so surrendered for conversion by a number of additional shares of Common Stock (the “Additional Shares”), as set forth in this Section 4.06. A conversion of Securities shall be deemed for these purposes to be “in connection with” a Make-Whole Fundamental Change if the relevant Conversion Notice is received by the Conversion Agent during the period from, and including, the Effective Date of the Make-Whole Fundamental Change up to, and including, the Close of Business on the Business Day immediately prior to the related Fundamental Change Purchase Date or, if such Make-Whole Fundamental Change is not a Fundamental Change, the 35th Business Day immediately following the Effective Date for such Make-Whole Fundamental Change. A conversion of Securities shall be deemed for these purposes to be “in connection with” a redemption under Section 3.10(a) if the relevant Conversion Notice is received by the Conversion Agent during the period from, and including, the date of the notice of redemption and prior to the Close of Business on the third Scheduled Trading Day prior to the related Redemption Date. Notwithstanding anything to the contrary in this Indenture or the Securities, in the event that a conversion may be deemed to be both “in connection with” a Make-Whole Fundamental Change and “in connection with” a redemption pursuant to Section 3.10(a), such conversion will be deemed to be “in connection” with a Make-Whole Fundamental Change and not “in connection with” a redemption pursuant to Section 3.10(a).

(b) Cash Mergers. Upon surrender of Securities for conversion in connection with a Make-Whole Fundamental Change, the Company shall, at its option, satisfy its conversion obligation by Physical Settlement, Cash Settlement or Combination Settlement. Notwithstanding anything to the contrary herein, if the consideration paid to holders of the Common Stock in any Make-Whole Fundamental Change described in Clause (2) of the definition of Fundamental Change is comprised entirely of cash, then, for any conversion of Securities following the Effective Date of such Make-Whole Fundamental Change, the payment and delivery obligations upon the conversion of a Security shall be calculated based solely on the Stock Price for such Make-Whole Fundamental Change and shall, for each $1,000 principal amount of Securities converted, be deemed to be an amount of cash equal to the product of (i) the Conversion Rate in effect on the applicable Conversion Date (as increased by any number of Additional Shares required by this Section 4.06) multiplied by (ii) such Stock Price. In such event, the Company will pay such amount of cash to a converting Holder on the third Business Day following the applicable Conversion Date. Otherwise, the Company will settle any conversion of the Securities following the Effective Date for a Make-Whole Fundamental Change in accordance with Section 4.02 hereof (but subject to Section 4.07 hereof).

(c) Determining the Number of Additional Shares. The number of Additional Shares, if any, by which the Conversion Rate will be increased for a Holder that converts its Securities in connection with a Make-Whole Fundamental Change occurring on or prior to December 15, 2018 or a redemption on or prior to December 15, 2018 pursuant to Section 3.10(a) shall be determined by reference to the table attached as Schedule A hereto, based on the Effective Date and the Stock Price.

(d) Interpolation and Limits. The exact Stock Prices and Effective Dates may not be set forth in the table in Schedule A, in which case:

(1) If the Stock Price is between two Stock Prices in the table or the Effective Date is between two Effective Dates in the table, the number of Additional Shares shall be determined by a straight-line interpolation between the number of Additional Shares set forth for the higher and lower Stock Prices and the earlier and later Effective Dates, as applicable, based on a 365-day year.

(2) If the Stock Price is greater than $175.00 per share (subject to adjustment in the same manner as the Stock Prices set forth in the column headings of the table in Schedule A pursuant to Section 4.06(d)(4) hereof), the Conversion Rate shall not be increased.

(3) If the Stock Price is less than $57.77 per share (subject to adjustments in the same manner as the Stock Prices set forth in the column headings of the table in Schedule A pursuant to Section 4.06(d)(4) hereof), the Conversion Rate shall not be increased.

Notwithstanding the foregoing, in no event will the Conversion Rate be increased on account of a Make-Whole Fundamental Change to exceed 17.3100 shares of Common Stock per $1,000 principal amount of Securities, subject to adjustments in the same manner as the Conversion Rate is required to be adjusted as set forth in Section 4.04 hereof.

(4) The Stock Prices set forth in the column headings of the table in Schedule A hereto shall be adjusted as of any date on which the Conversion Rate of the Securities is otherwise required to be adjusted. The adjusted Stock Prices shall equal the Stock Prices applicable immediately prior to such adjustment, multiplied by a fraction, the numerator of which is the

Conversion Rate immediately prior to such adjustment giving rise to the Stock Price adjustment and the denominator of which is the Conversion Rate as so adjusted. The number of Additional Shares set forth in such table shall be adjusted in the same manner and at the same time as the Conversion Rate is required to be adjusted as set forth in Section 4.04. After December 15, 2018, the provisions of this Section 4.06(d) shall no longer remain applicable to the Securities.

(5) The Conversion Rate applicable to the Securities shall not be subject to increase on account of this Section 4.06 if the Effective Date of a Make-Whole Fundamental Change occurs after December 15, 2018 or with respect to any conversion of Securities in connection with a redemption if the related Redemption Date falls on or after December 15, 2018.

(e) Notices. The Company shall notify the Holders of the Effective Date of any Make-Whole Fundamental Change and issue a press release announcing such Effective Date no later than five Business Days after such Effective Date.

Section 4.07 Effect of Recapitalization, Reclassification, Consolidation, Merger or Sale.

(a) Merger Events. In the case of:

(1) any recapitalization, reclassification or change of the Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a split, subdivision or combination for which an adjustment was made pursuant to Section 4.04(a) hereof);

(2) any consolidation, merger or combination involving the Company;

(3) any sale, lease or other transfer to a third party of the consolidated assets of the Company and its Subsidiaries substantially as an entirety; or

(4) any statutory share exchange;

and, in each case, as a result of which the Common Stock would be converted into, or exchanged for, stock, other securities, other property or assets (including cash or any combination thereof) (any such event, a “Merger Event,” any such stock, other securities, other property or assets, “Reference Property,” and the amount and kind of Reference Property that a holder of one share of Common Stock is entitled to receive in the applicable Merger Event (or if as a result of the applicable Merger Event, each share of Common Stock is converted into the right to receive more than a single type of consideration (determined based in part upon any form of stockholder election), the per-share of Common Stock weighted average of the types and amounts of Reference Property received by the holders of Common Stock that affirmatively make such an election) a “Unit of Reference Property”) then, at the effective time of such Merger Event, the right to convert each $1,000 principal amount of Securities based on a number of shares of the Common Stock equal to the applicable Conversion Rate will, without the consent of the Holders, be changed into a right to convert each $1,000 principal amount of Securities into or based on a number of Units of Reference Property equal to the applicable Conversion Rate and, prior to or at the effective time of such Merger Event, the Company or the successor or purchasing person, as the case may be, shall execute with the Trustee a supplemental indenture (which shall comply with the Trust Indenture Act as in force at the date of execution of such supplemental indenture) providing for such change in the right to convert each $1,000 principal amount of Securities; provided, however, that (x) the Company will continue to have the right to determine the form of consideration to be paid and delivered, as the case may be, pursuant to Section 4.03(a)(2) hereof and (y)(i) any amount payable in cash upon conversion of the Securities in accordance with Sections 4.03 and 4.06 hereof shall continue to be payable in cash, (ii) the number of shares of Common Stock that the Company would have been required to deliver upon conversion of the Securities in accordance with Sections 4.03 and 4.06 hereof shall instead be deliverable in Units of Reference Property and (iii) the Daily VWAP and the Last Reported Sale Price will, to the extent reasonably possible, be calculated based on the value of a Unit of Reference Property and the definitions of VWAP Trading Day and VWAP Market Disruption Event shall be determined by reference to the components of a Unit of Reference Property.

The Company shall not become a party to any Merger Event unless its terms are consistent with this Section 4.07. Such supplemental indenture described in the immediately preceding paragraph shall provide for adjustments which shall be as nearly equivalent to the adjustments provided for in this Article 4 in the judgment of the Board of Directors or the board of directors of the successor person. If, in the case of any such Merger Event, the Reference Property receivable thereupon by a holder of Common Stock includes shares of stock, securities or other property or assets (including cash or any combination thereof) of a person other than the successor or purchasing person, as the case may be, in such Merger Event, then such supplemental indenture shall also be executed by such other person.

In connection with any Merger Event, the Dividend Threshold will subject to adjustment as described in clause (i), clause (ii) or clause (iii) below, as the case may be.

(i) In the case of a Merger Event in which the Reference Property (determined, as appropriate, pursuant to the second paragraph of subsection (a) above and excluding any dissenters’ appraisal rights) is composed entirely of shares of common stock (the “Merger Common Stock”), the Dividend Threshold at and after the effective time of such Merger Event will be equal to (x) the Dividend Threshold immediately prior to the effective time of such Merger Event, divided by (y) the number of shares of Merger Common Stock that a holder of one share of Common Stock would receive in such Merger Event (such quotient rounded down to nearest cent).

(ii) In the case of a Merger Event in which the Reference Property (determined, as appropriate, pursuant to the second paragraph of subsection (a) above and excluding any dissenters’ appraisal rights) is composed in part of shares of Merger Common Stock, the Dividend Threshold at and after the effective time of such Merger Event will be equal to (x) the Dividend Threshold immediately prior to the effective time of such Merger Event, multiplied by (y) the Merger Valuation Percentage for such Merger Event (such product rounded down to nearest cent).

(iii) For the avoidance of doubt, in the case of a Merger Event in which the Reference Property (determined, as appropriate, pursuant to the first paragraph of this Section 4.07(a) above (including, without limitation, in circumstances where the Common Stock is converted into the right to receive more than a single type of consideration determined based in part upon any form of stock holder election) and excluding any dissenters’ appraisal rights)) is composed entirely of consideration other than shares of common stock, the Dividend Threshold at and after the effective time of such Merger Event will be equal to zero.

For purposes of the provisions of this paragraph, the following terms shall have the following meanings:

(i) The “Merger Valuation Percentage” for any Merger Event shall be equal to (x) the arithmetic average of the Last Reported Sale Prices of one share of such Merger Common Stock over the relevant Merger Valuation Period (determined as if references to “Common Stock” in the definition of “Last Reported Sale Price” were references to the “Merger Common Stock” for such Merger Event), divided by (y) the arithmetic average of the Last Reported Sale Prices of one share of Common Stock over the relevant Merger Valuation Period.

(ii) The “Merger Valuation Period” for any Merger Event means the five consecutive Trading Day period immediately preceding, but excluding, the effective date for such Merger Event.

(b) Notice of Supplemental Indentures. The Company shall cause notice of the execution of such supplemental indenture to be mailed to each Holder, at the address of such Holder as it appears on the register of the Securities maintained by the Registrar, within 20 days after execution thereof. Failure to deliver such notice shall not affect the legality or validity of such supplemental indenture. The above provisions of this Section 4.07 shall similarly apply to successive Merger Events.

(c) Prior Notice. In addition, at least 20 Scheduled Trading Days before any Merger Event, the Company shall give notice to Holders of such Merger Event, or, if the Company has not publicly announced such Merger Event at such time, as promptly as practicable after publicly announcing such Merger Event. In any such notice, the Company shall also specify the composition of the Unit of Reference Property for such Merger Event, or, if the Company has not determined the composition of such Unit of Reference Property at such time, the Company will provide an additional notice to Holders that states the composition of such Unit of Reference Property as promptly as practicable after determining its composition.

Section 4.08 Stock Issued upon Conversion.

(a) Reservation of Shares. To the extent necessary to satisfy its obligations under this Indenture, prior to issuing any shares of Common Stock, the Company will reserve out of its authorized but unissued shares of Common Stock a sufficient number of shares of Common Stock to permit the conversion of the Securities.

(b) Certain Other Covenants. The Company covenants that all shares of Common Stock that may be issued upon conversion of Securities shall be newly issued shares or treasury shares, shall be duly authorized, validly issued, fully paid and non-assessable and shall be free from preemptive rights and free from any tax, lien or charge (other than those created by the Holder or due to a change in registered owner).

The Company shall list or cause to have quoted any shares of Common Stock to be issued upon conversion of Securities on each national securities exchange or over-the-counter or other domestic market on which the Common Stock is then listed or quoted.

Section 4.09 Responsibility of Trustee. The Trustee and any Conversion Agent, Registrar, Bid Solicitation Agent or Paying Agent (in each case, if other than the Company) shall not at any time be under any duty or responsibility to any Holder of Securities to determine or calculate amounts to be paid or for monitoring the price of the Common Stock or be charged with any knowledge of or have any duties to monitor any Measurement Period. These calculations include, but are not limited to, determinations of the Last Reported Sale Price of the Common Stock, accrued interest payable on the Securities, the Daily VWAP, the Daily Conversion Value, the Daily Settlement Amount and the Conversion Rate of the Securities. Further, the Trustee and any Conversion Agent, Registrar, Bid Solicitation Agent or Paying Agent (in each case, if other than the Company) shall not at any time be under any duty or responsibility to any Holder of Securities to determine whether any facts exist which may require any adjustment of the Conversion Rate, or to confirm the accuracy of any such adjustment when made or the appropriateness of the method employed, or herein or in any supplemental indenture provided to be employed, in making the same. The Trustee and any other Conversion Agent shall not be accountable with respect to the validity or value (or the kind or amount) of any shares of Common Stock or of any other securities or property that may at any time be issued or delivered upon the conversion of any Securities; and the Trustee and the Conversion Agent make no representations with respect thereto. Neither the Trustee nor any Conversion Agent shall be responsible for any failure of the Company to issue, transfer or deliver any shares of Common Stock or stock certificates or other securities or property or cash upon the surrender of any Securities for the purpose of conversion or to comply with any of the duties, responsibilities or covenants of the Company contained in this Article 4. The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be compensated, reimbursed, and indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, including its capacity as Conversion Agent.

Section 4.10 Notice to Holders.

(a) Notice to Holders Prior to Certain Actions. The Company shall deliver notices of the events specified below at the times specified below and containing the information specified below, unless, in each case, (i) pursuant to this Indenture, the Company is already required to deliver notice of such event containing at least the information specified below at an earlier time or, (ii) the Company, at the time it is required to deliver a notice, does not have knowledge of all of the information required to be included in such notice, in which case, the Company shall (A) deliver notice at such time containing only the information that it has knowledge of at such time (if it has knowledge of any such information at such time), and (B) promptly upon obtaining knowledge of any such information not already included in a notice delivered by the Company, deliver notice to each Holder containing such information. In each case, the failure by the Company to give such notice, or any defect therein, shall not affect the legality or validity of such event.

(1) Issuances, Distributions, and Dividends and Distributions. If the Company (A) announces any issuance of any rights, options or warrants that would require an adjustment in the Conversion Rate pursuant to Section 4.04(b) hereof; (B) authorizes any distribution that would require an adjustment in the Conversion Rate pursuant to Section 4.04(c) hereof (including any separation of rights from the Common Stock described in Section 4.04(g) hereof); or (C) announces any dividend or distribution that would require an adjustment in the Conversion Rate pursuant to Section 4.04(d) hereof, then the Company shall deliver to the Holders, as promptly as possible, but in any event at least 15 calendar days prior to the applicable Ex-Dividend Date, notice describing such issuance, distribution, dividend or distribution, as the case may be, and stating the expected Ex-Dividend Date and record date for such issuance, distribution, dividend or distribution, as the case may be. In addition, the Company shall deliver to the Holders notice if the consideration included in such issuance, distribution, dividend or distribution, or the Ex-Dividend Date or record date of such issuance, distribution, dividend or distribution, as the case may be, changes.

(2) Voluntary Increases. If the Company increases the Conversion Rate pursuant to Section 4.05(b), the Company shall deliver notice to the Holders at least 10 days prior to the date on which such increase will become effective, which notice shall state the date on which such increased will become effective and the amount by which the Conversion Rate will be increased.

(3) Dissolutions, Liquidations and Winding-Ups. If there is a voluntary or involuntary dissolution, liquidation or winding-up of the Company, the Company shall deliver notice to the Holders at promptly as possible, but in any event at least 15 calendar days prior to the earlier of (i) the date on which such dissolution, liquidation or winding-up, as the case may be, is expected to become effective or occur, and (ii) the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their Common Stock for securities or other property deliverable upon such dissolution, liquidation or winding-up, as the case may be, which notice shall state the expected effective date and record date

for such event, as applicable, and the amount and kind of property that a holder of one share of the Common Stock is expected to be entitled, or may elect, to receive in such event. The Company shall deliver an additional notice to Holders, as promptly as practicable, whenever the expected effective date or record date, as applicable, or the amount and kind of property that a holder of one share of the Common Stock is expect to be entitled to receive in such event, changes.

(b) Notices After Certain Actions and Events. Whenever an adjustment to the Conversion Rate becomes effective pursuant to Sections 4.04, 4.05 or 4.06 hereof, the Company will (i) file with the Trustee an Officer’s Certificate stating that such adjustment has become effective, the Conversion Rate, and the manner in which the adjustment was computed and (ii) deliver notice to the Holders stating that such adjustment has become effective and the Conversion Rate or conversion privilege as adjusted. Failure to give any such notice, or any defect therein, shall not affect the validity of any such adjustment.

ARTICLE 5.

PARTICULAR COVENANTS OF THE COMPANY

Section 5.01 Payment of Principal and Interest. This Section 5.01 shall replace Section 6.01 of the Base Indenture in its entirety.

The Company covenants and agrees that it will cause to be paid the principal (or required portion thereof) of (including the Fundamental Change Purchase Price, Purchase Price or Redemption Price), and accrued and unpaid interest, if any, on each of the Securities at the places, at the respective times and in the manner provided herein and in the Securities.

Section 5.02 Maintenance of Office or Agency. This Section 5.02 replaces Section 6.02 of the Base Indenture in its entirety.

The Company will maintain in the Borough of Manhattan, The City of New York, an office of the Paying Agent, an office of the Registrar and an office or agency where Securities may be surrendered for conversion (“Conversion Agent”) and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office or the office or agency of the Trustee in the Borough of Manhattan, The City of New York.

The Company may also from time to time designate co-registrars and one or more other offices or agencies where the Securities may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, The City of New York, for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The terms “Paying Agent” and “Conversion Agent” include any such additional or other offices or agencies, as applicable.

The Company hereby initially designates the Trustee as the Paying Agent, Registrar, Custodian, Conversion Agent, Transfer Agent and the Corporate Trust Office, which shall be in the continental United States, shall be considered as one such office or agency of the Company for each of the aforesaid purposes. The Company hereby initially designates itself as the Bid Solicitation Agent.

With respect to any Global Security, the Corporate Trust Office of the Trustee or any Paying Agent shall be the Place of Payment where such Global Security may be presented or surrendered for payment or conversion or for registration of transfer or exchange, or where successor Securities may be delivered in exchange therefor; provided, however, that any such payment, conversion, presentation, surrender or delivery effected pursuant to the Applicable Procedures of the Depositary for such Global Security shall be deemed to have been effected at the Place of Payment for such Global Security in accordance with the provisions of this Indenture.

Section 5.03 Appointments to Fill Vacancies in Trustee’s Office. The Company, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 10.06 of the Base Indenture, a Trustee, so that there shall at all times be a Trustee hereunder.

Section 5.04 Provisions as to Paying Agent.

(a) If the Company shall appoint a Paying Agent other than the Trustee, the Company will cause such Paying Agent to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section 5.04:

(1) that it will hold all sums held by it as such agent for the payment of the principal of, accrued and unpaid interest, if any, on, and the Fundamental Change Purchase Price, Purchase Price or Redemption Price for, the Securities in trust for the benefit of the holders of the Securities;

(2) that it will give the Trustee prompt notice of any failure by the Company to make any payment of the principal of, accrued and unpaid interest, if any, on, or the Fundamental Change Purchase Price, Purchase Price or Redemption Price for, the Securities when the same shall be due and payable; and

(3) that at any time during the continuance of an Event of Default, upon request of the Trustee, it will forthwith pay to the Trustee all sums so held in trust.

The Company shall, on or before each due date of the principal of, accrued and unpaid interest, if any, on, and Fundamental Change Purchase Price, Purchase Price or Redemption Price for, the Securities, deposit with the Paying Agent a sum sufficient to pay such principal, accrued and unpaid interest, or Fundamental Change Purchase Price, Purchase Price or Redemption Price, as the case may be, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of any failure to take such action, provided that, if such deposit is made on the due date, such deposit must be received by the Paying Agent by 10:00 a.m., New York City time, on such date.

(b) If the Company shall act as its own Paying Agent, it will, on or before each due date of the principal of, accrued and unpaid interest, if any, on, or Fundamental Change Purchase Price, Purchase Price or Redemption Price for, the Securities, set aside, segregate and hold in trust for the benefit of the Holders of the Securities a sum sufficient to pay such principal, accrued and unpaid interest, if any, on or Fundamental Change Purchase Price, Purchase Price or Redemption Price, as the case may be, so becoming due and will promptly notify the Trustee in writing of any failure to take such action and of any failure by the Company to make any payment of the principal of, accrued and unpaid interest on, or Fundamental Change Purchase Price, Purchase Price or Redemption Price for, the Securities when the same shall become due and payable.

(c) Anything in this Section 5.04 to the contrary notwithstanding, the Company may, at any time, for the purpose of obtaining a satisfaction and discharge of this Indenture, or for any other reason, pay or cause to be paid to the Trustee all sums held in trust by the Company or any Paying Agent hereunder as required by this Section 5.04, such sums to be held by the Trustee upon the trusts herein contained and upon such payment by the Company or any Paying Agent to the Trustee, the Company or such Paying Agent shall be released from all further liability with respect to such sums.

(d) Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, accrued and unpaid interest, if any, on, or Fundamental Change Purchase Price, Purchase Price or Redemption Price for, any Security and remaining unclaimed for two years after such principal, accrued and unpaid interest, if any, on, or Fundamental Change Purchase Price, Purchase Price or Redemption Price for, such Security has become due and payable shall be paid to the Company on request of the Company contained in an Officer’s Certificate, or (if then held by the Company) shall be discharged from such trust; and the holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that before the Trustee or such Paying Agent are required to make any such repayment, the Company shall cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in The Borough of Manhattan, The City of New York, New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than thirty days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company.

Section 5.05 Reports; 144A Information; Registration; Additional Interest.

(a) The Company covenants and agrees that it shall, during any period in which it is not subject to Section 13 or 15(d) under the Exchange Act, make available to any Holder or beneficial holder of Securities or any holder of Common Stock issued upon conversion thereof which continue to be Restricted Securities and any prospective purchaser of Securities or such Common Stock designated by such Holder or beneficial holder, the information, if any, required pursuant to Rule 144A(d)(4) under the Securities Act upon the request of any such Holder or beneficial holder of the Securities or such Common Stock, until such time as such securities are no longer “restricted securities” within the meaning of Rule 144, assuming such Securities have not been owned or beneficially owned by an “affiliate” (as defined in Rule 144) of the Company.

(b) This Section 5.05(b) replaces Section 9.02 of the Base Indenture in its entirety.

The Company will file with the Trustee, within 15 days after it is required to file the same with the SEC, pursuant to Section 314 of the Trust Indenture Act, copies of the quarterly and annual reports and of the information, documents and other reports, if any, that it is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act, and to otherwise comply with Section 314(a) of the Trust Indenture Act. Any such report, information or document that the Company files with the SEC through the EDGAR system (or any successor thereto) will be deemed to be delivered to the Trustee for the purposes of this Section 5.05 at the time of such filing through the EDGAR system (or such successor thereto).

Delivery of any such reports, information and documents to the Trustee shall be for informational purposes only, and the Trustee’s receipt of such reports, information and documents shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officer’s Certificates).

(c) Registration Under the Securities Act.

(1) The Company has filed a registration statement on Form S-3 (the “Shelf Registration Statement”) providing for the registration of, and the sale on a continuous or delayed basis pursuant to Rule 415 under the Securities Act by the Holders of Registrable Securities that provided a properly completed Selling Securityholder Questionnaire to the Company as of the date of the applicable Purchase Agreement, which Shelf Registration Statement has become effective. The Company agrees to use its reasonable best efforts to keep such Shelf Registration Statement continuously effective until the earlier of (i) the removal of the restrictive legend borne by the Securities in accordance with Section 5.05(g) or (ii) such time as there are no longer any Registrable Securities outstanding (the “Effective Period”).

(2) The Company agrees to furnish to the Holders of the Registrable Securities copies of any supplement or amendment prior to its being used or promptly following its filing with the Commission; provided, however, that the Company shall have no obligation to deliver to Holders of Registrable Securities copies of any amendment consisting exclusively of an Exchange Act report or other Exchange Act filing otherwise publicly available on the Company’s website.

(3) From and after the date the Shelf Registration Statement becomes effective and following the issuance of the Notes that are Registrable Securities, the Company shall, as promptly as is practicable after the date a Selling Securityholder Questionnaire is delivered, and in any event within ten Business Days after such date,

(A) if required by applicable law, file with the Commission a post-effective amendment to the Shelf Registration Statement or prepare and, if required by applicable law, file a supplement to the related prospectus or a supplement or amendment to any document incorporated therein by reference or file any other required document so that the Holder delivering such Selling Securityholder Questionnaire is named as a selling security holder in the Shelf Registration Statement and the related prospectus in such a manner as to permit such Holder to deliver such prospectus to purchasers of the Registrable Securities in accordance with applicable law;

(B) provide such Holder copies of any documents filed pursuant to Section 5.05(c)(3)(A); and

(C) notify such Holder as promptly as practicable after the filing and effectiveness under the Securities Act of any post-effective amendment filed pursuant to Section 5.05(c)(3)(A);

provided that the Company shall not be required to make more than two such filings in any calendar quarter (or one such filing in any calendar quarter in the form of a post-effective amendment to the Shelf Registration Statement); provided, further, that if such Selling Securityholder Questionnaire is delivered during a Deferral Period, the Company shall so inform the Holder delivering such Selling Securityholder Questionnaire and shall take the actions set forth in clauses (A), (B) and (C) above upon expiration of the Deferral Period. Notwithstanding anything contained herein to the contrary, the Company shall be under no obligation to name any Holder that has not delivered a properly completed Selling Securityholder Questionnaire as a selling securityholder in any Shelf Registration Statement or related prospectus.

(d) The Company agrees to bear and to pay or cause to be paid promptly upon request being made therefor all expenses incident to the Company’s performance of or compliance with this Section 5.05. Notwithstanding the foregoing, the Holders of the Registrable Securities being registered shall pay any underwriting discounts and commissions and placement agent fees and commissions attributable to the sale of such Registrable Securities and the fees and disbursements of any counsel or other advisors or experts retained by such Holders (severally or jointly).

(e) If any of the following events (any such event a “Registration Default”) shall occur, then additional interest (the “Additional Interest”) shall become payable by the Company to Holders in respect of Securities that are Registrable Securities as follows:

(1) if the Shelf Registration Statement ceases to be effective at any time during the Effective Period (other than pursuant to Section 5.05(f) hereof), then commencing on the day such Shelf Registration Statement ceases to be effective, Additional Interest shall accrue on the principal amount of the outstanding Securities that are Registrable Securities as of such date at a rate of 0.5% per annum; and

(2) if the aggregate duration of Deferral Periods in any period exceeds the number of days permitted in respect of such period pursuant to Section 5.05(f) hereof, then commencing on the day the aggregate duration of Deferral Periods in any period exceeds the number of days permitted in respect of such period (and again on the first day of any subsequent Deferral Period during such period), Additional Interest shall accrue on the principal amount of the outstanding Securities that are Registrable Securities at a rate of 0.5% per annum;

provided, however, that the Additional Interest rate on the Securities that are Registrable Securities shall not exceed in the aggregate 0.5% per annum and shall not be payable under more than one clause above for any given period of time; provided further, however, that (i) upon the effectiveness of the Shelf Registration Statement which had ceased to remain effective (in the case of clause (e)(1) above), (ii) upon the termination of the Deferral Period that caused the limit on the aggregate duration of Deferral Periods in a period set forth in Section 5.05(f) to be exceeded (in the case of clause (e)(2) above), (ii) upon the removal of the legend on the Registrable Securities pursuant to Section 5.05(g) or (6) after the end of the Effective Period, Additional Interest on the Securities that are Registrable Securities as a result of such clause, as the case may be, shall cease to accrue.

The Company shall notify the Trustee immediately upon the occurrence of each and every Registration Default. The obligation to pay Additional Interest shall be the sole remedy of any Holder of Registrable Securities for any Registration Default.

(f) Upon (A) the issuance by the Commission of a stop order suspending the effectiveness of the Shelf Registration Statement or the initiation of proceedings with respect to the Shelf Registration Statement under Section 8(d) or 8(e) of the Securities Act, (B) the occurrence of any event or the existence of any event or existence of fact as a result of which the Shelf Registration Statement shall contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, or any related prospectus shall contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or (C) the occurrence or existence of any corporate development or business reason that, in the sole discretion of the Company, makes it appropriate to suspend the availability of the Shelf Registration Statement and the related prospectus, including, without limitation, the acquisition or divestiture of assets, pending corporate developments, public filings with the Commission and similar events, the Company will:

(1) in the case of clause (B) above, subject to the immediately following paragraph, as promptly as practicable prepare and file a post-effective amendment to such Shelf Registration Statement, prospectus or a supplement to the related prospectus or any document incorporated therein by reference or file any other required document that would be incorporated by reference into such Shelf Registration Statement and prospectus so that such Shelf Registration Statement and prospectus does not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading (in the case of the prospectus in the light of the circumstances under which they were made); and

(2) give notice to the Holders of Restricted Securities that have delivered a properly completed Selling Securityholder Questionnaire that the availability of the Shelf Registration Statement is suspended (a “Deferral Notice”).

The Company will use its commercially reasonable efforts to ensure that the use of the related prospectus may be resumed (x) in the case of clause (A) above, as promptly as reasonably practicable, (y) in the case of clause (B) above, as soon as, in the sole judgment of the Company, public disclosure of such event or fact would not be prejudicial to or contrary to the interests of the Company or, if necessary to avoid unreasonable burden or expense, as soon as practicable thereafter and (z) in the case of clause (C) above, as soon as, in the sole discretion of the Company, such suspension is no longer appropriate; provided that the period during which the availability of the Shelf Registration Statement and any related prospectus is suspended (the “Deferral Period”), without the Company incurring any obligation to pay Additional Interest pursuant to Section 5.05(e), shall not exceed 90 days in the aggregate in any 12-month period.

(g) Unless (i) the Restricted Security Legend on the Securities that are Registrable Securities has been removed, and (ii) the Registrable Securities are freely tradable pursuant to Rule 144 under the Securities Act without volume restrictions by holders other than affiliates (as defined in Rule 144) of the Company (without restrictions pursuant to U.S. securities law or the terms of this Indenture or the Securities), as of December 20, 2015, the Company shall pay Additional Interest on the Securities that are Registrable Securities at an annual rate equal to 0.5% of the aggregate principal amount of the Securities that are Registrable Securities until such time as the Restricted Security Legend shall be removed and the Securities that had been Registrable Securities shall be freely tradable in accordance with clause (ii) above (provided that Additional Interest shall not accrue on account of the failure of the removal of the Restricted Security Legend if the Shelf Registration Statement specified in Section 5.05(c)(1) shall remain effective and cover resales of the Securities).

(h) So long as a condition described in either Section 5.05(e) or Section 5.05(g) continues, the Company shall pay such Additional Interest on each Interest Payment Date to the Holders of record of Registrable Securities as of the related Regular Record Date. When such condition ceases to continue, accrued and unpaid Additional Interest through the date of cessation shall be paid in arrears on the subsequent Interest Payment Date to the Holders of record as of the related Regular Record Date.

(i) For the avoidance of doubt, no Security that is not a Registrable Security at the time of any accrual of Additional Interest pursuant to Section 5.05(e) or Section 5.05(g) shall be entitled to accrual or payment of Additional Interest on such Security. If a Holder converts Securities into Common Stock pursuant to Article 4 hereof, the Holder will not be entitled to receive Additional Interest on such Common Stock pursuant to Section 5.05(e) or Section 5.05(g).

(j) In no event shall the failure by the Company to comply with any of the provisions of Section 5.05(c)-(i) of this Supplemental Indenture (including, without limitation, in connection with a Registration Default or the failure to remove the Restricted Security Legend and for the Registrable Securities to be freely tradable as described in Section 5.05(g)) constitute a failure by the Company to comply with its covenants or agreements in this Supplemental Indenture and the Securities for purposes of Section 6.02 hereof or otherwise. In addition, in no event shall Additional Interest accrue in accordance with the provisions of Section 5.05 at a rate in excess of 0.5% per annum.

Section 5.06 Statements as to Defaults. In addition, the Company shall deliver to the Trustee, as soon as possible, and in any event within thirty days after the Company becomes aware of the occurrence of any Default or Event of Default, an Officer’s Certificate setting forth the details of such Default or Event of Default, its status and the action that the Company proposes to take with respect thereto. Such Officer’s Certificate shall also comply with any additional requirements set forth in Section 6.05 of the Base Indenture.

Section 5.07 Supplementary Interest and Additional Interest Notice. If Additional Interest or Supplementary Interest is payable by the Company pursuant to Section 5.05 or Section 6.04 hereof, respectively, the Company shall deliver to the Trustee an Officer’s Certificate to that effect stating (a) the amount of such Additional Interest or Supplementary Interest that is payable and (b) the date on which such interest is payable. Unless and until a Responsible Officer of the Trustee receives at the Corporate Trust Office such a certificate, the Trustee may assume without inquiry that no such Additional Interest or Supplementary Interest, as applicable, is payable. If the Company has paid Additional Interest or Supplementary Interest, as applicable, directly to the Persons entitled to them, the Company shall deliver to the Trustee an Officer’s Certificate setting forth the particulars of such payment.

ARTICLE 6.

REMEDIES

Section 6.01 Amendments to the Base Indenture. The Event of Default provisions set forth in this Article 6 shall, with respect to the Securities, supersede the entirety of Article VII of the Base Indenture, and all references in the Base Indenture to Article VII thereof and the provisions relating to Events of Default therein, as the case may be, shall, with respect to the Securities, be deemed to be references to this Article 6 and the Events of Default provisions set forth in this Article 6, respectively. Accordingly, and without limitation:

(a) the references to Sections 7.01(f) and (g) in Section 10.01(a) of the Base Indenture are, with respect to the Securities, hereby deemed replaced by references to Sections 6.02(h) and (i) hereof;

(b) the references to Section 7.01 in Section 10.02(a) of the Base Indenture are, with respect to the Securities, hereby deemed replaced by references to Section 6.02 hereof; and

(c) the references to Section 7.06 in Sections 10.02(b)(iii) of the Base Indenture are, with respect to the Securities, hereby deemed replaced by a reference to Section 6.06 hereof.

Section 6.02 Events of Default. Each of the following events (and only the following events) shall be an “Event of Default” wherever used with respect to the Securities:

(a) default in any payment of interest on any Security when due and payable, and the default continues for a period of thirty (30) days;

(b) default in the payment of the principal amount (or required portion thereof) of any Security (including the Fundamental Change Purchase Price, the Purchase Price, or the Redemption Price) when due and payable on the Maturity Date, upon required purchase or redemption, upon declaration of acceleration or otherwise;

(c) failure by the Company to comply with its obligations under Article 4 hereof to convert the Securities into cash, shares of Common Stock, or the combination of cash and shares of Common Stock, as applicable, determined in accordance with Article 4 hereof upon exercise of a Holder’s conversion right and that failure continues for five (5) calendar days;

(d) failure by the Company to comply with its obligations under Article 9 hereof;

(e) failure by the Company to issue a notice in accordance with the provisions of Section 4.01(b)(3) or 4.01(b)(4) hereof or Section 3.02(b) hereof for a period of five (5) calendar days after such notice becomes due;

(f) failure by the Company for sixty (60) days after written notice from the Trustee or the Holders of at least 25% in principal amount of the Securities then Outstanding (a copy of which notice, if given by Holders, must also to be given to the Trustee) has been received by the Company to comply with any of its other agreements contained in the Securities or this Indenture (other than a covenant or warranty a default in whose performance or whose breach is elsewhere in this Section 6.02 specifically provided for or that is not applicable to the Securities), which notice shall state that it is a “Notice of Default” hereunder;

(g) failure by the Company to pay beyond any applicable grace period, or the acceleration of, indebtedness of the Company or any of the Company’s Subsidiaries in an aggregate amount greater than $10,000,000 (or its foreign currency equivalent at the time);

(h) the Company or any Significant Subsidiary of the Company shall commence a voluntary case or other proceeding seeking the liquidation, reorganization or other relief with respect to the Company or such Significant Subsidiary or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of the Company or such Significant Subsidiary of the Company or any substantial part of the Company’s, or such Significant Subsidiary of the Company’s, property, or shall consent to any such relief or to the appointment of, or taking possession by, any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due;

(i) an involuntary case or other proceeding shall be commenced against the Company or any Significant Subsidiary of the Company seeking liquidation, reorganization or other relief with respect to the Company or such Significant Subsidiary of the Company or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of the Company or such Significant Subsidiary of the Company or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of thirty consecutive days; or

(j) the failure by the Company or any of its subsidiaries to pay final judgments entered by a court or courts of competent jurisdiction in excess of $15,000,000, which judgments are not paid, discharged or stayed, for a period of thirty (30) calendar days.

Section 6.03 Acceleration; Rescission and Annulment.

(a) If one or more Events of Default shall have occurred and be continuing (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body), then, and in each and every such case (other than an Event of Default specified in Section 6.02(h) or Section 6.02(i) with respect to the Company (and not

solely with respect to a Significant Subsidiary of the Company)), unless the principal of all of the Securities shall have already become due and payable, either the Trustee or the holders of at least 25% in aggregate principal amount of the Securities then Outstanding, by notice in writing to the Company (and to the Trustee if given by the Holders), may declare 100% of the principal of, and accrued and unpaid interest, if any, on all the Securities to be due and payable immediately, and upon any such declaration the same shall become and shall automatically be immediately due and payable, anything in this Indenture or in the Securities contained to the contrary notwithstanding. If an Event of Default specified in Section 6.02(h) or Section 6.02(i) with respect to the Company (and not solely with respect to a Significant Subsidiary of the Company) occurs and is continuing, the principal of, and accrued and unpaid interest, if any, on all Securities shall be immediately due and payable.

(b) The provisions of Section 6.03(a), however, are subject to the conditions that if, at any time after the principal of, and accrued and unpaid interest, if any, on, the Securities shall have been so declared due and payable, and before any judgment or decree for the payment of the monies due shall have been obtained or entered as hereinafter provided:

(1) the Company shall pay or shall deposit with the Trustee (A) a sum sufficient to pay installments of accrued and unpaid interest, if any, upon all Securities and the principal of all Securities that shall have become due otherwise than by acceleration (with interest on overdue installments of accrued and unpaid interest, if any (to the extent that payment of such interest is enforceable under applicable law), and on such principal, at the rate borne by the Securities at such time) and amounts due to the Trustee pursuant to Section 10.01(a) of the Base Indenture, and (B) an amount of cash, shares of Common Stock or a combination of cash and shares of Common Stock, as the case may be, sufficient to settle every outstanding Conversion Obligation;

(2) rescission would not conflict with any judgment or decree of a court of competent jurisdiction; and

(3) any and all Events of Defaults under this Indenture, other than the nonpayment of the principal of, and accrued and unpaid interest, if any, on, the Securities (including on overdue installments) that shall have become due solely by such acceleration, shall have been cured or waived pursuant to Section 6.05 hereof,

then, the Holders of a majority in aggregate principal amount of the Securities then Outstanding, by written notice to the Company and to the Trustee, may waive all Defaults or Events of Default with respect to the Securities (other than a Default or an Event of Default resulting from a failure to pay the Fundamental Change Purchase Price, Purchase Price or Redemption Price of a Security, the failure to pay or deliver the cash, shares of Common Stock or a combination of cash and shares of Common Stock, as the case may be, due upon conversion of a Security, or the breach of any provision of this Indenture that cannot be modified or amended without the consent of each affected Holder) and rescind and annul such declaration of acceleration resulting from such Defaults or Event of Defaults (other than a Default or an Event of Default resulting from a failure to pay the Fundamental Change Purchase Price, Purchase Price or Redemption Price of a Security, the failure to pay or deliver the cash, shares of Common Stock or a combination of cash and shares of Common Stock, as the case may be, due upon conversion of a Security, or the breach of any provision of this Indenture that cannot be modified or amended without the consent of each affected Holder) and their consequences and such Default (other than a Default relating to the failure to pay the Fundamental Change Purchase Price, Purchase Price or Redemption Price of a Security, the failure to pay or deliver the cash, shares of Common Stock or a combination of cash and shares of Common Stock, as the case may be, due upon conversion of a Security, or the breach of any provision of this Indenture that cannot be modified or amended without the consent of each affected Holder) shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; provided, that no such waiver or rescission and annulment shall extend to or shall affect any subsequent Default or Event of Default, or shall impair any right consequent thereon.

Section 6.04 Supplementary Interest.

(a) Notwithstanding any provisions of the Indenture to the contrary, the sole remedy for an Event of Default arising under Section 6.02(f) relating to the Company’s failure to comply with Section 5.05(b) hereof (a “Reporting Event of Default”) will consist exclusively of the right to receive additional interest on the Securities at a rate per year equal to 0.25% of the Outstanding principal amount of the Securities (“Supplementary Interest”), payable semi-annually in arrears at the same time and in the same manner as regular interest on the Securities pursuant to Section 2.04 for each day during the 365-day period during which such Reporting Event of Default is continuing beginning on, and including, the date on which such Reporting Event of Default first occurs (and has neither been waived nor cured). In no event shall Supplementary Interest accrue at a rate per year in excess of 0.25%, regardless of the number of Reporting Events of Default that could give rise to the requirement to pay Supplementary Interest. With regard to any Reporting Event of Default, no Supplementary Interest shall accrue, and no right to declare the principal or other amounts due and payable in respect of the Securities shall exist, after such Reporting Event of Default has been cured.

(b) On the 365th day after the date on which the Reporting Event of Default first occurred (if such Reporting Event of Default has not been cured or waived prior to such 365th day), the Securities will be subject to acceleration as provided in Section 6.03 hereof.

(c) Notwithstanding the foregoing, if Additional Interest is accruing and payable pursuant to Section 5.05 when the accrual of Supplementary Interest is the sole remedy for a Reporting Event of Default, then no Supplementary Interest shall be payable in respect of any such Reporting Event of Default so long as Additional Interest is also accruing and payable pursuant to Section 5.05.

Section 6.05 Waiver of Past Defaults. If an Event of Default or a Default, other than (a) an uncured Event of Default described in Sections 6.02(a), (b) and (c) hereof or (b) a Default in respect of a provision that under Section 8.02 hereof cannot be amended without the consent of each affected Holder, occurs, the Holders of a majority in aggregate principal amount of the then Outstanding Securities may waive such Event of Default or Default and all of its consequences hereunder. Whenever any Event of Default is so waived, it will cease to exist, and whenever any Default is so waived, it will be deemed cured, and any Event of Default arising therefrom will be deemed not to have occurred. However, no such waiver will extend to any subsequent or other Default or Event of Default or impair any consequent right.

Section 6.06 Control by Majority. At any time, the Holders of a majority of the aggregate principal amount of the then Outstanding Securities may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or for exercising any trust or power conferred on the Trustee. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or, subject to the Trustee’s duties under Article 6 of the Base Indenture and the Trust Indenture Act, that the Trustee determines to be unduly prejudicial to the rights of a Holder or to the Trustee, or that would potentially involve the Trustee in personal liability unless the Trustee is offered indemnity or security reasonably satisfactory to it against any loss, liability or expense to the Trustee that may result from the Trustee’s instituting such proceeding as the Trustee. Prior to taking any action hereunder, the Trustee will be entitled to indemnification reasonably satisfactory to it against all losses and expenses caused by taking or not taking such action.

Section 6.07 Limitation on Suits. Subject to Section 6.08 hereof, no Holder may pursue a remedy with respect to this Indenture or the Securities unless:

(a) such Holder has previously delivered to the Trustee written notice that an Event of Default has occurred and is continuing;

(b) the Holders of at least 25% of the aggregate principal amount of the then Outstanding Securities deliver to the Trustee a written request that the Trustee pursue a remedy with respect to such Event of Default;

(c) such Holder or Holders have offered and, if requested, provided to the Trustee indemnity reasonably satisfactory to the Trustee against any loss, liability or other expense of compliance with such written request;

(d) the Trustee has not complied with such written request within 60 days after receipt of such written request and offer of indemnity; and

(e) during such 60-day period, the Holders of a majority of the aggregate principal amount of the then Outstanding Securities did not deliver to the Trustee a direction inconsistent with such written request.

A Holder may not use this Indenture to prejudice the rights of any other Holder or to obtain a preference or priority over any other Holder, it being understood that the Trustee does not have any affirmative duty to ascertain whether any usage of this Indenture by a Holder is unduly prejudicial to such other Holders.

Section 6.08 Rights of Holders to Receive Payment and to Convert. Notwithstanding anything to the contrary elsewhere in this Indenture, the right of any Holder to receive payment of the principal of, interest on, Fundamental Change Purchase Price for, its Securities, on or after the respective due date, and to convert its Securities and receive payment or delivery, as the case may be, of the consideration due with respect to such Securities in accordance with Article 4 hereof, or to bring suit for the enforcement of any such payment or conversion rights, will not be impaired or affected without the consent of such Holder and will not be subject to the requirements of Section  6.07 hereof.

Section 6.09 Collection of Indebtedness; Suit for Enforcement by Trustee. If an Event of Default specified in Sections 6.02(a), 6.02(b) or 6.02(c) hereof occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Company for the whole amount of principal (or required portion thereof) of, interest on, Fundamental Change Purchase Price, Purchase Price or Redemption Price for, and any amounts due upon the conversion of,

the Securities, as the case may be, and such further amount as is sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, as well as any other amounts that may be due under Section 10.01 of the Base Indenture.

Section 6.10 Trustee May Enforce Claims Without Possession of Securities. All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders in respect of which such judgment has been recovered.

Section 6.11 Trustee May File Proofs of Claim. The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable to have the claims of the Trustee and the Holders allowed in any judicial proceedings relative to the Company, its creditors or its property and, unless prohibited by law or applicable regulations, will be entitled to collect, receive and distribute any money or other property payable or deliverable on any such claims, and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and, in the event that the Trustee consents to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 10.01 of the Base Indenture. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 10.01 of the Base Indenture out of the estate in any such proceeding, will be denied for any reason, payment of the same will be secured by a lien on, and is paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding, whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained will be deemed to authorize the Trustee to authorize or consent to, or to accept or to adopt on behalf of any Holder, any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

Section 6.12 Restoration of Rights and Remedies. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted.

Section 6.13 Rights and Remedies Cumulative. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in Section 3.07 of the Base Indenture, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

Section 6.14 Delay or Omission Not a Waiver. No delay or omission of the Trustee or of any Holder to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article 6 or by law to the Trustee or to the Holders may be exercised from time to time and as often as may be deemed expedient by the Trustee (subject to the limitations contained in this Indenture) or by the Holders, as the case may be.

Section 6.15 Priorities. If the Trustee collects any money pursuant to this Article 6, it will pay out the money in the following order:

FIRST: to the Trustee, its agents and attorneys for amounts due under Section 10.01(a) of the Base Indenture, including payment of all compensation, expenses and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection;

SECOND: to the Holders, for any amounts due and unpaid on the principal of, accrued and unpaid interest on, Fundamental Change Purchase Price for, and any cash due upon conversion of, any Security, without preference or priority of any kind, according to such amounts due and payable on all of the Securities; and

THIRD: the balance, if any, to the Company or to such other party as a court of competent jurisdiction directs.

The Trustee may fix a record date and payment date for any payment to the Holders pursuant to this Section 6.15. If the Trustee so fixes a record date and a payment date, at least 15 days prior to such record date, the Company will deliver to each Holder and the Trustee a written notice, which notice will state such record date, such payment date and the amount of such payment.

Section 6.16 Undertaking for Costs. All parties to this Indenture agree, and each Holder, by such Holder’s acceptance of a Security, shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; provided, however, that the provisions of this Section 6.16 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in aggregate principal amount of the Securities then Outstanding, or to any suit instituted by any Holder for the enforcement of the payment of the principal of, accrued and unpaid interest, if any, on, or Fundamental Change Purchase Price for, any Security on or after the due date expressed or provided for in this Indenture or to any suit for the enforcement of the right to convert any Security in accordance with the provisions of Article 4 hereof.

Section 6.17 Waiver of Stay, Extension and Usury Laws. The Company covenants that, to the extent that it may lawfully do so, it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Company, to the extent that it may lawfully do so, hereby expressly waives all benefit or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will instead suffer and permit the execution of every such power as though no such law has been enacted.

Section 6.18 Notices from the Trustee. Notwithstanding anything to the contrary in the Base Indenture, including Section 10.03 thereof, whenever a Default occurs and is continuing and is known to the Trustee, the Trustee must deliver notice of such Default to the Holders within 90 days after the date on which such Default first occurred. Except in the case of a Default in the payment of the principal (or required portion thereof) of, interest on, or Fundamental Change Purchase Price, Purchase Price or Redemption Price for, any Security or of a Default in the payment or delivery, as the case may be, of the consideration due upon conversion of a Security, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determine that the withholding of such notice is in the interests of the Holders.

ARTICLE 7.

SATISFACTION AND DISCHARGE

Section 7.01 Inapplicability of Provisions of Base Indenture; Satisfaction and Discharge of the Indenture. The satisfaction and discharge provisions set forth in this Article 7 shall, with respect to the Securities, supersede the entirety of Article XI of the Base Indenture, and all references in the Base Indenture to Article XI thereof and the provisions relating to satisfaction and discharge therein, as the case may be, shall, with respect to the Securities, be deemed to be references to this Article 7 and the satisfaction and discharge provisions set forth in this Article 7, respectively.

When (a) the Company shall deliver to the Registrar for cancellation all Securities theretofore authenticated (other than any Securities that have been destroyed, lost or stolen and in lieu of or in substitution for which other Securities shall have been authenticated and delivered) and not theretofore canceled, or (b) all the Securities not theretofore canceled or delivered to the Trustee for cancellation shall have become due and payable (whether on the Maturity Date, on any Fundamental Change Purchase Date, on any Purchase Date, on any Redemption Date, upon conversion or otherwise) and the Company shall deposit with the Trustee, in trust, or deliver to the Holders, as applicable, an amount of cash, number of shares of Common Stock or the combination of cash and shares of Common Stock, as the case may be (solely to settle amounts due with respect to outstanding conversions), sufficient to pay all amounts due on all of such Securities (other than any Securities that shall have been mutilated, destroyed, lost or stolen and in lieu of or in substitution for which other Securities shall have been authenticated and delivered) not theretofore canceled or delivered to the Trustee for cancellation, including principal and interest due, accompanied, except in the event the Securities are due and payable solely in cash at the Maturity Date or upon an earlier Fundamental Change Purchase Date, Purchase Date or Redemption Date, by a verification report as to the sufficiency of the deposited amount from an independent certified accountant or other financial professional reasonably satisfactory to the

Trustee, and if the Company shall also pay or cause to be paid all other sums payable hereunder by the Company, then this Indenture shall cease to be of further effect (except as to (i) rights hereunder of Holders to receive all amounts owing upon the Securities and the other rights, duties and obligations of Holders, as beneficiaries hereof with respect to the amounts, if any, so deposited with the Trustee and (ii) the rights, obligations and immunities of the Trustee hereunder), and the Trustee, on written demand of the Company accompanied by an Officer’s Certificate and an Opinion of Counsel and at the cost and expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture; the Company, however, hereby agrees to reimburse the Trustee for any costs or expenses thereafter reasonably and properly incurred by the Trustee, including the fees and expenses of its counsel, and to compensate the Trustee for any services thereafter reasonably and properly rendered by the Trustee in connection with this Indenture or the Securities.

Section 7.02 Deposited Monies to Be Held in Trust by Trustee. Subject to Section 7.04 hereof, all monies and shares of Common Stock, as the case may be, deposited with the Trustee pursuant to Section 7.01 hereof shall be held in trust for the sole benefit of the Holders of the Securities, and such monies and shares of Common Stock shall be applied by the Trustee to the payment, either directly or through any Paying Agent (including the Company if acting as its own Paying Agent), to the Holders of the particular Securities for the payment, settlement or redemption of which such monies or shares of Common Stock, or both, as the case may be, have been deposited with the Trustee, of all sums or amounts due and to become due thereon for principal and interest, if any.

Section 7.03 Paying Agent to Repay Monies Held. Upon the satisfaction and discharge of this Indenture, all monies and shares of Common Stock, as the case may be, then held by any Paying Agent (if other than the Trustee) shall, upon written request of the Company, be repaid to it or paid to the Trustee, and thereupon such Paying Agent shall be released from all further liability with respect to such monies and shares of Common Stock, or both, as the case may be.

Section 7.04 Return of Unclaimed Monies. Subject to the requirements of applicable law, any monies and shares of Common Stock deposited with or paid to the Trustee for payment of the principal of or interest, if any, on the Securities and not applied but remaining unclaimed by the Holders of the Securities for two years after the date upon which the principal of or interest, if any, on such Securities, as the case may be, shall have become due and payable, shall be repaid to the Company by the Trustee on demand, and all liability of the Trustee shall thereupon cease with respect to such monies and shares of Common Stock; and the Holder shall thereafter look only to the Company for any payment or delivery that such Holder may be entitled to collect unless an applicable abandoned property law designates another person.

Section 7.05 Reinstatement. If the Trustee or the Paying Agent is unable to apply any money or shares of Common Stock, or both, as the case may be, in accordance with Section 7.02 by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company’s obligations under the Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to Section 7.01 until such time as the Trustee or the Paying Agent is permitted to apply all such money and shares of Common Stock in accordance with Section 7.02; provided, however, that if the Company makes any payment of interest on, principal of or payment or delivery in respect of any Security following the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money or shares of Common Stock, if any, held by the Trustee or Paying Agent.

ARTICLE 8.

SUPPLEMENTAL INDENTURES

Section 8.01 Supplemental Indentures Without Consent of Holders. Section 12.01 of the Base Indenture shall not apply with respect to the Securities, and this Section 8.01 shall replace Section 12.01 of the Base Indenture in its entirety.

Without the consent of any Holder, the Company (when authorized by a Board Resolution) and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes:

(a) cure any ambiguity, omission, defect or inconsistency in this Indenture or the Securities, including to eliminate any conflict with the Trust Indenture Act;

(b) to evidence the succession by a Successor Company and to provide for the assumption by a Successor Company of the Company’s obligations under the Indenture;

(c) to add guarantees with respect to the Securities;

(d) to secure the Securities;

(e) to add to the Company’s covenants such further covenants, restrictions or conditions for the benefit of the Holders (or any other holders) or surrender any right or power conferred upon the Company by the Indenture;

(f) to make any other change that does not adversely affect the rights of any Holder (other than a Holder that consents to such change);

(g) to provide for a successor Trustee;

(h) to comply with the Applicable Procedures of the Depositary; or

(i) to comply with any requirement of the SEC in connection with the qualification of the Indenture under the Trust Indenture Act.

Section 8.02 Supplemental Indentures With Consent of Holders. Section 12.02 of the Base Indenture shall not apply with respect to the Securities, and this Section 8.02 shall replace Section 12.02 of the Base Indenture in its entirety.

With the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities affected by such supplemental indenture, including without limitation, consents obtained in connection with a purchase of, or tender or exchange offer for, Securities and by act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security affected thereby:

(a) reduce the percentage in aggregate principal amount of Securities Outstanding necessary to waive any past Default or Event of Default;

(b) reduce the rate of interest on any Security or change the time for payment of interest on any Security;

(c) reduce the principal of any Security or change the Maturity Date;

(d) change the place or currency of payment on any Security;

(e) make any change that impairs or adversely affects the conversion rights of any Securities;

(f) reduce the Fundamental Change Purchase Price, Purchase Price or Redemption Price of any Security or amend or modify in any manner adverse to the rights of the Holders of the Securities the Company’s obligation to pay the Fundamental Change Purchase Price, the Purchase Price or the Redemption Price, whether through an amendment or waiver of provisions in the covenants, definitions related thereto or otherwise;

(g) impair the right of any Holder of Securities to receive payment of principal (or required portion thereof) of, and interest, if any, on, its Securities, or the right to receive payment or delivery, as the case may be, of the consideration due upon conversion of its Securities on or after the due dates therefor or to institute suit for the enforcement of any such payment or delivery, as the case may be, with respect to such Holder’s Securities; or

(h) make any change to the provisions of this Article 8 or in the waiver provisions of the Indenture that requires each Holder’s consent to modify, amend or waive.

It shall not be necessary for any Act or consent of Holders under this Section 8.02 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act or consent shall approve the substance thereof. The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Persons entitled to consent to any indenture supplemental hereto. If a record date is fixed, the Holders on such record date, or their duly designated proxies, and only such Persons, shall be entitled to consent to such supplemental indenture, whether or not such Holders remain Holders after such record date; provided that, unless such consent shall have become effective by virtue of the requisite percentage having been obtained prior to the date which is 90 days after such record date, any such consent previously given shall automatically and without further action by any Holder be cancelled and of no further effect.

Section 8.03 Notice of Amendment or Supplement. After an amendment or supplement under this Article 8 becomes effective, the Company shall mail to the Holders a notice briefly describing such amendment or supplement. However, the failure to give such notice to all the Holders, or any defect in the notice, shall not impair or affect the validity of the amendment or supplement.

ARTICLE 9.

SUCCESSOR COMPANY

Section 9.01 Consolidation, Merger and Sale of Assets. The successor company provisions set forth in this Article 9 shall, with respect to the Securities, supersede the entirety of Section 6.04 of the Base Indenture, and all references in the Base Indenture to Section 6.04 thereof and the successor company provisions therein, as the case may be, shall, with respect to the Securities, be deemed to be references to this Article 9 and the successor company provisions set forth in this Article 9, respectively.

Section 9.02 Company May Consolidate, Etc. on Certain Terms. Subject to the provisions of Section 9.04, the Company shall not amalgamate or consolidate with, merge with or into or convey, transfer or lease its properties and assets substantially as an entirety to another Person, unless:

(a) the resulting, surviving or transferee Person (the “Successor Company”), if not the Company, shall expressly assume, by supplemental indenture, executed and delivered to the Trustee, in form satisfactory to the Trustee, all of the obligations of the Company under the Securities and this Indenture as applicable to the Securities; and

(b) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing under this Indenture; and

Upon any such amalgamation, consolidation, merger, conveyance, transfer or lease, the Successor Company (if not the Company) shall succeed to, and may exercise every right and power of, the Company under this Indenture.

At the election of the Company, a conveyance, transfer or lease of properties and assets substantially as an entirety to one or more Subsidiaries of the Company may be deemed not to be a conveyance, transfer or lease to a Person other than the Company, and in the event of such election, such conveyance, transfer or lease shall not be subject to this Section 9.02 and the Securities shall remain convertible into or based on Common Stock, subject to the provisions of Section 4.07. Notice of any such election shall be sent to the Trustee and Conversion Agent promptly following the consummation of any such conveyance, transfer or lease of properties and assets to one or more Subsidiaries, specifying that such transaction does not constitute a conveyance, transfer or lease to a Person other than the Company in accordance with this Section 9.02.

Section 9.03 Successor Corporation to Be Substituted. In case of any such amalgamation, consolidation, merger, conveyance, transfer or lease and upon the assumption by the Successor Company, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the due and punctual payment of the principal (or required portion thereof) of and premium (including any Fundamental Change Purchase Price), if any, accrued and unpaid interest, accrued and unpaid Supplementary Interest, if any, and accrued and unpaid Additional Interest, if any, on all of the Securities, the due and punctual delivery or payment, as the case may be, of any consideration due upon conversion of the Securities and the due and punctual performance of all of the covenants and conditions of this Indenture to be performed by the Company under this Indenture, such Successor Company shall succeed to and be substituted for, and may exercise every right and power of, the Company under this Indenture, with the same effect as if it had been named herein as the party of the first part; provided, however, that in the case of a conveyance, transfer or lease to one or more of the Subsidiaries of the Company of all or substantially all of the properties and assets of the Company, the Securities will remain convertible into cash or a combination of cash and shares of Common Stock, if any, as the case may be, in accordance with Section 4.03 hereof, but subject to adjustment (if any) in accordance with Section 4.07 hereof. Such Successor Company thereupon may cause to be signed, and may issue either in its own name or in the name of the Company any or all of the Securities issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the order of such Successor Company instead of the Company and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver, or cause to be authenticated and delivered, any Securities that previously shall have been signed and delivered by the officers of the Company to the Trustee for authentication, and any Securities that such Successor Company thereafter shall cause to be signed and delivered to the Trustee for that purpose. All the Securities so issued shall in all respects have the same legal rank and benefit under this Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Securities had been issued at the date of the execution hereof. In the event of any such amalgamation, consolidation, merger, conveyance or transfer (but not in the case of a lease), the Person

named as the “Company” in the first paragraph of this Indenture or any successor that shall thereafter have become such in the manner prescribed in this Article 9 may be dissolved, wound up and liquidated at any time thereafter and, except in the case of a lease, such Person shall be released from its liabilities as obligor and maker of the Securities and from its obligations under this Indenture.

In case of any such amalgamation, consolidation, merger, conveyance, transfer or lease, such changes in phraseology and form (but not in substance) may be made in the Securities thereafter to be issued as may be appropriate.

Section 9.04 Opinion of Counsel to Be Given to Trustee. In the case of any such amalgamation, merger, consolidation, conveyance, transfer or lease the Trustee shall receive an Officer’s Certificate and an Opinion of Counsel stating that any such amalgamation, consolidation, merger, conveyance, transfer or lease and any such assumption and, if a supplemental indenture is required in connection with such transaction such supplemental indenture, complies with the provisions of this Article 9.

ARTICLE 10.

TAX ADDITIONAL AMOUNTS

Section 10.01 Payment of Tax Additional Amounts. The Company shall pay any amounts due with respect to the Securities without deduction or withholding for any and all present and future withholding taxes, levies, imposts and charges (each, a “Withholding Tax”) imposed by or for the account of any Non-U.S. Jurisdiction in which the Company is resident for tax purposes or any political subdivision or taxing authority of such jurisdiction (the “Taxing Jurisdiction”) as a result of any consolidation, merger, amalgamation, or other transaction permitted by Section 9.01 hereof and conducted in accordance with Article 9 hereof, unless such withholding or deduction is required by law. If such deduction or withholding is at any time required, the Company will (subject to compliance by such Holder with any relevant administrative requirements) pay each Holder additional amounts (“Tax Additional Amounts”) as will result in such Holder’s receipt of such amounts as it would have received had no such withholding or deduction been required. If the Taxing Jurisdiction requires the Company to deduct or withhold any Withholding Tax, the Company will (subject to compliance by a Holder with any relevant administrative requirements) pay such Tax Additional Amounts in respect of any principal amount, Fundamental Change Purchase Price, Purchase Price, Redemption Price, or interest payable at the Maturity Date, on any Interest Payment Date, upon conversion, on a Fundamental Change Purchase Date, on a Purchase Date, on a Redemption Date or otherwise, as applicable, as may be necessary so that the net amounts paid to the Holder or the Trustee after such deduction or withholding will equal the principal amount, Fundamental Change Purchase Price, Purchase Price, Redemption Price or interest on the Securities.

Section 10.02 Exceptions to Payment of Tax Additional Amounts. Notwithstanding the foregoing, the Company shall not be obligated to pay Tax Additional Amounts pursuant to Section 10.01 hereof in the following instances:

(a) any Withholding Tax which would not be payable or due but for the fact that (1) the Holder of a Security (or a fiduciary, settlor, beneficiary of, member or shareholder of, such Holder, if such Holder is an estate, trust, partnership or corporation) is a domiciliary, national or resident of, or engaging in business or maintaining a permanent establishment or being physically present in, the Taxing Jurisdiction or otherwise having some present or former connection with the Taxing Jurisdiction other than the holding or ownership of the Securities or the collection of principal amount, Fundamental Change Purchase Price, and Interest (if any), in accordance with the terms of the Securities and the Indenture or the enforcement of the Securities or (2) where presentation is required, the Security was presented more than 30 days after the date such payment became due or was provided for, whichever is later;

(b) any Withholding Tax attributable to any estate, inheritance, gift, sales, transfer, excise, personal property or similar tax, levy, impost or charge;

(c) any Withholding Tax attributable to any tax, levy, impost or charge which is payable otherwise than by withholding from payment of principal amount, Fundamental Change Purchase Price, and interest (if any);

(d) any Withholding Tax which would not have been imposed but for the failure to comply with certification, information, documentation or other reporting requirements concerning the nationality, residence, identity or connections with the relevant tax authority of the Holder or beneficial owner of the Securities, if this compliance is required by statute or by regulation as a precondition to relief or exemption from such Withholding Tax;

(e) to the extent a Holder is entitled to a refund or credit in such Taxing Jurisdiction of amounts required to be withheld by such Taxing Jurisdiction;

(f) any tax, assessment or other governmental charge imposed or collected pursuant to Sections 1471 through 1474 of the Internal Revenue Code of 1986, as amended (the “Code”), any intergovernmental agreements entered into in connection with the implementation of such sections of the Code, or any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such sections of the Code; or

(g) any combination of the instances described in (a) through (f).

Section 10.03 Entitlement to Refund or Credit. With respect to Section 10.2(e), in the absence of evidence reasonably satisfactory to the Company, the Company may conclusively presume that a Holder of a Security is entitled to a refund or credit of all amounts required to be withheld if the relevant local laws provide a Holder with the ability to file or otherwise claim such refund or credit. The Company shall not be required to pay any Tax Additional Amounts to any Holder of a Security who is a fiduciary or partnership or other than the sole beneficial owner of the Security to the extent that a beneficiary or settlor with respect to such fiduciary, or a member of such partnership or a beneficial owner thereof, would not have been entitled to the payment of such Tax Additional Amounts had such beneficiary, settlor, member or beneficial owner been the Holder of the Security.

Section 10.04 References to be Consistent. Whenever with respect to the Securities there is mentioned in the Indenture or in any Global Security or Physical Security, in any context, payment of principal (and premium, if any), the Fundamental Change Purchase Price, the Purchase Price, the Redemption Price interest or any other amount payable under or with respect to any Security at the Maturity Date, any Interest Payment Date, in connection with any conversion, on a Fundamental Change Purchase Date, on a Purchase Date, on a Redemption Date or otherwise, such mention shall be deemed to include mention of the payment of Tax Additional Amounts described in this Article 10 to the extent that, in such context, Tax Additional Amounts were or would be payable by the Company in respect thereof.

ARTICLE 11.

TAX TREATMENT

Section 11.01 Tax Treatment. The Company agrees, and by purchasing a beneficial ownership interest in the Securities each Holder, and any individual or entity that acquires a direct or indirect beneficial interest in the Securities, will be deemed to have agreed:

(a) for U.S. federal income tax purposes, to treat the Securities as indebtedness of the Company that is subject to U.S. Treasury Regulations Section 1.1275-4 (the “Contingent Payment Regulations”);

(b) for purposes of the Contingent Payment Regulations, to treat the fair market value of any shares of Common Stock and cash beneficially received by a beneficial holder upon any conversion or repurchase of the Securities as a contingent payment;

(c) to be bound by the Company’s determination that the Securities are contingent payment debt instruments subject to the “noncontingent bond method” within the meaning of the Contingent Payment Regulations;

(d) to accrue original issue discount at the comparable yield as determined by the Company; and

(e) to be bound by the Company’s projected payment schedule with respect to the Securities.

Section 11.02 Comparable Yield and Projected Payment Schedule. Solely for purposes of applying the Contingent Payment Regulations to the Securities:

(a) for U.S. federal income tax purposes, the Company shall accrue interest with respect to outstanding Securities as original issue discount according to the “noncontingent bond method,” as set forth in U.S. Treasury Regulation Section 1.1275-4(b), using a comparable yield of 6.75% compounded semi-annually, and the projected payment schedule as determined by the Company; and

(b) the Company acknowledges and agrees, and each Holder and any beneficial owner of a Security, by its purchase of a Security, shall be deemed to acknowledge and agree, that (A) the comparable yield and the projected payment schedule are not determined for any purpose other than for the purpose of applying U.S. Treasury Regulation Section 1.1275-4(b)(4) to the Securities; and (B) the comparable yield and the projected payment schedule do not constitute a projection or representation regarding the future stock price or the actual amounts payable on the Securities.

Holders that wish to obtain the amount of original issue discount, issue price, issue date, comparable yield and projected payment schedule may do so by submitting a written request to the Company (to the attention of the Chief Financial Officer) at the following address: AmTrust Financial Services, Inc., 800 Superior Ave., 21st Floor, Cleveland, Ohio 44114.

ARTICLE 12.

MISCELLANEOUS

Section 12.01 Effect on Successors and Assigns. Notwithstanding Section 14.10 of the Base Indenture, all agreements of the Company, the Trustee, the Registrar, the Paying Agent and the Conversion Agent in this Indenture and the Securities will bind their respective successors.

Section 12.02 Governing Law; Waiver of Jury Trial. This Supplemental Indenture and the Securities shall be deemed to be contracts made under the law of the State of New York and for all purposes shall be governed by and construed in accordance with the law of said State. Each party hereto and each Holder of Securities by acceptance thereof, hereby waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any litigation directly or indirectly arising out of, under or in connection with this Indenture.

Section 12.03 No Security Interest Created. Nothing in this Indenture or in the Securities, expressed or implied, shall be construed to constitute a security interest under the Uniform Commercial Code or similar legislation, as now or hereafter enacted and in effect, in any jurisdiction.

Section 12.04 Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required under such Act to be a part of and govern this Indenture, the latter provision shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or to be excluded, as the case may be.

Section 12.05 Benefits of Supplemental Indenture. Nothing in this Supplemental Indenture or in the Securities, expressed or implied, will give to any Person, other than the parties hereto, any Paying Agent, any Conversion Agent, any authenticating agent, any Registrar or their successors hereunder or the Holders of the Securities, any benefit or any legal or equitable right, remedy or claim under this Supplemental Indenture.

Section 12.06 Calculations. Except as otherwise provided in this Indenture, the Company shall be responsible for making all calculations called for under the Securities. None of the Trustee, Conversion Agent, Note Registrar, Bid Solicitation Agent or Paying Agent (in each case if different from the Company) shall have any responsibility for making such calculations, for determining amounts to be paid or for monitoring the market price of the Common Stock or be charged with any knowledge of or have any duties to monitor any measurement period. These calculations include, but are not limited to, determinations of the Last Reported Sale Prices of the Common Stock, accrued interest payable on the Securities, the Daily VWAP, the Daily Conversion Value, the Daily Settlement Amount and the Conversion Rate. The Company shall make all these calculations in good faith and, absent manifest error, the Company’s calculations shall be final and binding on Holders of Securities. The Company shall provide a schedule of its calculations to each of the Trustee and the Conversion Agent, and each of the Trustee and Conversion Agent is entitled to rely conclusively upon the accuracy of the Company’s calculations without independent verification. The Trustee will forward the Company’s calculations to any Holder upon the request of that Holder at the sole cost and expense of the Company.

Whenever the Company is required to calculate the Conversion Rate, the Company will do so to the 1/10,000th of a share of Common Stock, rounding any additional decimal places up or down in a commercially reasonable manner.

Section 12.07 Execution in Counterparts. This Supplemental Indenture may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument.

Section 12.08 Notices. The Company or the Trustee, by notice given to the other in the manner provided in Section 14.03 of the Base Indenture, may designate additional or different addresses for subsequent notices or communications.

Notwithstanding anything to the contrary in Sections 14.03 and 14.04 of the Base Indenture, whenever the Company is required to deliver notice to the Holders, the Company will, by the date it is required to deliver such notice to the Holders, deliver a copy of such notice to the Trustee, the Paying Agent, the Registrar and the Conversion Agent. Each notice to the Trustee, the Paying Agent, the Registrar and the Conversion Agent shall be sufficiently given if in writing and mailed, first-class postage prepaid to the address most recently sent by the Trustee, the Paying Agent, the Registrar or the Conversion Agent, as the case may be, to the Company.

Section 12.09 Ratification of Base Indenture. The Base Indenture, as supplemented by this Supplemental Indenture, is in all respects ratified and confirmed, and this Supplemental Indenture shall be deemed part of the Base Indenture in the manner and to the extent herein provided. For the avoidance of doubt, each of the Company and each Holder of Securities, by its acceptance of such Securities, acknowledges and agrees that all of the rights, privileges, protections, immunities and benefits afforded to the Trustee under the Base Indenture are deemed to be incorporated herein, and shall be enforceable by the Trustee hereunder, in each of its capacities hereunder as if set forth herein in full.

Section 12.10 The Trustee. The recitals in this Supplemental Indenture are made by the Company only and not by the Trustee, and all of the provisions contained in the Base Indenture in respect of the rights, privileges, immunities, powers and duties of the Trustee shall be applicable in respect of the Securities and of this Supplemental Indenture as fully and with like effect as set forth in full herein.

Section 12.11 No Recourse Against Others. No director, officer, employee, incorporator or stockholder of the Company shall have any liability for any obligations of the Company under the Securities, the Indenture or any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder, by accepting a Security, waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Securities.

Section 12.12 FATCA.

(a) In order to comply with applicable tax laws, rules and regulations (inclusive of directives, guidelines and interpretations promulgated by competent authorities) in effect from time to time (“Applicable Law”), the Company agrees (i) to provide to the Trustee and the Paying Agent sufficient information about the applicable parties and/or transactions (including any modification to the terms of such transactions) so the Trustee and the Paying Agent can determine whether it has tax-related obligations under Applicable Law, (ii) that the Trustee and the Paying Agent shall be entitled to make any withholding or deduction from payments under the Indenture to the extent necessary to comply with Applicable Law for which neither the Trustee nor the Paying Agent shall have any liability, and (c) to hold harmless the Trustee and the Paying Agent for any losses it may suffer due to the actions it takes to comply with such Applicable Law. The terms of this section shall survive the termination of the Indenture.

(b) Each of the Trustee and the Paying Agent shall be entitled to deduct FATCA Withholding Tax, and shall have no obligation to gross-up any payment hereunder or to pay any additional amount as a result of such FATCA Withholding Tax.

[Remainder of the page intentionally left blank]

IN WITNESS WHEREOF, the parties hereto have caused this Fourth Supplemental Indenture to be duly executed as of the day and year first above written.

AMTRUST FINANCIAL SERVICES, INC.
By:	/s/ Ronald E. Pipoly, Jr.
	Name: Ronald E. Pipoly, Jr.
	Title: Executive Vice President and Chief Financial Officer

Attest:

/s/ Catherine L. Miller

Name: Catherine L. Miller

Title: Vice President, Assistant Secretary

AmTrust Financial Services, Inc. — Fourth Supplemental Indenture Signature Page

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee
By:	/s/ Lawrence M. Kusch
	Name: Lawrence M. Kusch
	Title: Vice President

AmTrust Financial Services, Inc. — Fourth Supplemental Indenture Signature Page

SCHEDULE A

The following table sets forth the number of Additional Shares by which the Conversion Rate shall be increased pursuant to Section 4.06 based on the Stock Price and Effective Date set forth below.

	Stock Price
Effective Date	57.77	60.00	64.00	67.50	75.00	82.50	90.00	97.50	110.00	130.00	150.00	175.00
December 15, 2014	2.2457	2.8054	2.7150	2.7315	2.3369	1.9087	1.4287	1.1112	0.8354	0.5444	0.3700	0.2560
December 15, 2015	2.4107	2.6822	2.3701	2.1925	1.7531	1.4319	1.0718	0.8336	0.6267	0.4084	0.2776	0.1921
December 15, 2016	2.5775	2.5587	2.0242	1.6520	1.1677	0.9537	0.7139	0.5552	0.4174	0.2720	0.1849	0.1279
December 15, 2017	2.7460	2.4355	1.6794	1.1130	0.5838	0.4769	0.3569	0.2776	0.2087	0.1360	0.0924	0.0640
December 15, 2018	2.9163	2.3123	1.3345	0.5739	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000	0.0000

EXHIBIT A

[FORM OF FACE OF SECURITY]

[For Global Securities, include the following legend:

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.]

THIS SECURITY IS A CONTINGENT PAYMENT DEBT INSTRUMENT AND WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR U.S. FEDERAL INCOME TAX PURPOSES. AMTRUST FINANCIAL SERVICES, INC. WILL PROMPTLY PROVIDE TO THE HOLDER OF THIS SECURITY, UPON WRITTEN REQUEST, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT, ISSUE PRICE, ISSUE DATE, COMPARABLE YIELD AND PROJECTED PAYMENT SCHEDULE WITH RESPECT TO THIS SECURITY. ANY SUCH WRITTEN REQUEST SHOULD BE SENT TO THE FOLLOWING ADDRESS: AMTRUST FINANCIAL SERVICES, INC., 800 SUPERIOR AVE., 21ST FLOOR, CLEVELAND, OHIO 44114 ATTENTION: CHIEF FINANCIAL OFFICER.

No.:        [            ]

CUSIP:

ISIN:

Principal Amount $[]

[as revised by the Schedule of Increases

and Decreases in the Global Security attached hereto]1

AmTrust Financial Services, Inc.

2.75% Convertible Senior Notes due 2044

__________________________________

¹ Include for Global Securities only.

AmTrust Financial Services, Inc., a Delaware corporation, promises to pay to [            ][include “Cede & Co.” for Global Security] or registered assigns, the principal amount of $[            ] on December 15, 2044 (the “Maturity Date”) and to pay interest hereon as set forth in the Indenture in the manner, at the rates and to the Persons set forth therein.

Interest Payment Dates:        June 15 and December 15.

Regular Record Dates:        June 1 and December 1.

Additional provisions of this Security are set forth on the other side of this Security.

IN WITNESS WHEREOF, AMTRUST FINANCIAL SERVICES, INC. has caused this instrument to be signed manually or by facsimile by two of its duly authorized officers.

Dated:

AMTRUST FINANCIAL SERVICES, INC.
By:
	Name:
	Title:

Attest:

____________________________

[Trustee’s Certificate of Authentication Follows]

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

The Bank of New York Mellon Trust Company, N.A., as Trustee, certifies that this is one of the Securities referred to in the within-mentioned Indenture.

Dated:

THE BANK OF NEW YORK

MELLON TRUST COMPANY, N.A.,

as Trustee

By:
	Name:
	Title:

[FORM OF REVERSE OF NOTE]

AMTRUST FINANCIAL SERVICES, INC.

2.75% Convertible Senior Notes due 2044

This Security is one of a duly authorized issue of securities of the Company (herein called the “Securities”), issued under an Indenture dated as of December 21, 2011 (herein called the “Base Indenture”), and as further supplemented by the Fourth Supplemental Indenture, dated as of December 15, 2014 (herein called the “Supplemental Indenture” and the Base Indenture, as supplemented by the Supplemental Indenture, the “Indenture”) by and between the Company and The Bank of New York Mellon Trust Company, N.A., herein called the “Trustee”, and reference is hereby made to the Indenture for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is not subject to redemption at the option of the Company prior to the Maturity Date.

As provided in and subject to the provisions of the Indenture, upon the occurrence of a Fundamental Change, the Holder of this Security will have the right, at such Holder’s option, to require the Company to purchase this Security, or any portion of this Security such that the principal amount of this Security that is not purchased equals $1,000 or an integral multiple of $1,000 in excess thereof, on the Fundamental Change Purchase Date at a price equal to the Fundamental Change Purchase Price for such Fundamental Change Purchase Date.

As provided in and subject to the provisions of the Indenture, the Holder of this Security will have the right, at such Holder’s option, to require the Company to purchase this Security, or any portion of this Security such that the principal amount of this Security that is not purchased equals $1,000 or an integral multiple of $1,000 in excess thereof, on the Purchase Date at a price equal to the Purchase Price.

This Security will be redeemable, at the option of the Company, in whole at any time or in part from time to time, (a) on or before December 15, 2018, at a Redemption Price payable in cash equal to the principal amount of the Securities to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, such Redemption Date if the Daily VWAP is greater than or equal to 130% of the then current Conversion Price for each of at least 20 Trading Days in the 30 consecutive Trading Days ending on, and including, the Trading Day prior to the mailing of the notice of redemption and (b) at any time after December 15, 2018 at a Redemption Price payable in cash equal to the Accreted Amount to be redeemed, plus accrued and unpaid interest to but excluding the Redemption Date (unless the Redemption Date is between a Regular Record Date and the Interest Payment Date to which it relates, in which case the Company will pay accrued and unpaid interest to the Holder of record on such Regular Record Date).

As provided in and subject to the provisions of the Indenture, the Holder hereof has the right, at its option (i) during certain periods and upon the occurrence of certain conditions specified in the Indenture, prior to the Close of Business on the Business Day immediately preceding September 15, 2044, and (ii) on or after September 15, 2044, at any time prior to the Close of Business on the second Scheduled Trading Day immediately preceding the Stated Maturity, to convert this Security or a portion of this Security such that the principal amount of this Security that is not converted equals $1,000 or an integral multiple of $1,000 in excess thereof into an amount of cash, a number of shares of Common Stock or a combination of cash and shares of Common Stock, as the case may be, determined in accordance with Article 4 of the Supplemental Indenture.

As provided in and subject to the provisions of the Indenture, the Company will make all payments in respect of the Fundamental Change Purchase Price, Purchase Price and Redemption Price for, and the principal amount of, this Security to the Holder that surrenders this Security to the Paying Agent to collect such payments in respect of this Security. The Company will pay cash amounts in money of the United States that at the time of payment is legal tender for payment of public and private debts. Any references in this Security to principal (and premium, if any), the Fundamental Change Purchase Price, Purchase Price, Redemption Price interest or any other amount payable under or with respect to the Security at the Maturity Date, any Interest Payment Date, in connection with any conversion, on a Fundamental Change Purchase Date, on a Purchase Date, on a Redemption Date or otherwise, shall be deemed to include payment of Tax Additional Amounts, as applicable.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities to be effected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in principal amount of the Securities at the time Outstanding. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities at the time Outstanding, on behalf of the Holders of all Securities, to waive compliance by the Company with certain provisions of the Indenture and certain past Defaults under the Indenture and their consequences. Any such consent or

waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect to the Indenture, or for the appointment of a receiver or trustee, or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Security, the Holders of not less than 25% in principal amount of the Securities at the time Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonable indemnity, and the Trustee shall not have received from the Holders of a majority in principal amount of Securities at the time Outstanding a direction inconsistent with such request, and shall have failed to institute any such proceeding, for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof or any premium or interest hereon on or after the respective due dates expressed herein.

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay or deliver, as the case may be, the principal (or required portion thereof) of (including the Fundamental Change Purchase Price, Purchase Price and Redemption Price), interest on and all amounts of consideration due upon conversion of, this Security at the time, place and rate, and in the coin and currency, herein prescribed.

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of and interest on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Registrar duly executed by, the Holder hereof or its attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.

The Securities are issuable only in registered form without coupons in denominations of $1,000 and integral multiples of $1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, the Securities are exchangeable for a like aggregate principal amount of Securities and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.

Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or Trustee may treat the Person in whose name the Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

All defined terms used in this Security that are defined in the Indenture shall have the meanings assigned to them in the Indenture. If any provision of this Security limits, qualifies or conflicts with a provision of the Indenture, such provision of the Indenture shall control.

ABBREVIATIONS

The following abbreviations, when used in the inscription of the face of this Security, shall be construed as though they were written out in full

TEN COM - as tenants in common	UNIF GIFT MIN ACT	Custodian
	(Cust)
TEN ENT - as tenants by the entireties
	(Minor)
JT TEN - as joint tenants with right of Survivorship and not as tenants in common	Uniform Gifts to Minors Act		(State)

Additional abbreviations may also be used though not in the above list.

ANNEX A

[Include for Global Security]

SCHEDULE OF INCREASES AND DECREASES OF GLOBAL SECURITY

Initial principal amount of Global Security:

Date Amount of Increase in principal amount of Global Security Amount of Decrease in principal amount of Global Security Principal amount of Global Security after Increase or Decrease Notation by Registrar or Security Custodian

ATTACHMENT 1

[FORM OF NOTICE OF CONVERSION]

To: AmTrust Financial Services, Inc.

The undersigned owner of this Security hereby irrevocably exercises the option to convert this Security, or a portion hereof (which is such that the principal amount of the portion of this Security that will not be converted equals $1,000 or an integral multiple of $1,000 in excess thereof) below designated, into an amount of cash, number of shares of Common Stock or a combination of cash and shares of Common Stock, as the case may be, in accordance with the terms of the Indenture referred to in this Security, and directs that any cash payable and any shares of Common Stock issuable and deliverable upon conversion, together with any Securities representing any unconverted principal amount hereof, be paid and/or issued and/or delivered, as the case may be, to the registered Holder hereof unless a different name is indicated below.

Subject to certain exceptions set forth in the Indenture, if this notice is being delivered on a date after the Close of Business on a Regular Record Date and prior to the Open of Business on the Interest Payment Date corresponding to such Regular Record Date, this notice must be accompanied by payment of an amount equal to the interest payable on such Interest Payment Date on the principal amount of this Security to be converted. If any shares of Common Stock are to be issued in the name of a Person other than the undersigned, the undersigned will pay all transfer taxes payable with respect to such issuance and transfer as set forth in the Indenture.

Principal amount to be converted (in an integral multiple of $1,000, if less than all):

Signature(s)

Signature(s) must be guaranteed by an institution which is a member of one of the following Guarantee Programs:

(i) The Securities Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange Medallion Program (MNSP); (iii) The Stock Exchange Medallion Program (SEMP) or (iv) another guarantee program acceptable to the Trustee.

Signature Guarantee

Fill in for registration of any shares of Common Stock and Securities if to be issued otherwise than to the registered Holder.

(Name)

(Address)

Please print Name and Address

(including zip code number)

Social Security or other Taxpayer

Identifying

Number            

ATTACHMENT 2

[FORM OF FUNDAMENTAL CHANGE PURCHASE NOTICE]

To: AmTrust Financial Services, Inc.

The undersigned registered owner of this Security hereby acknowledges receipt of a notice from AmTrust Financial Services, Inc. (the “Company”) as to the occurrence of a Fundamental Change with respect to the Company and specifying the Fundamental Change Purchase Date and requests and instructs the Company to pay to the registered holder hereof in accordance with the applicable provisions of the Indenture referred to in this Security (i) the entire principal amount of this Security, or the portion thereof (that is such that the portion not to be purchased has a principal amount equal to $1,000 or an integral multiple of $1,000 in excess thereof) below designated, and (ii) if such Fundamental Change Purchase Date does not occur during the period after a Regular Record Date and on or prior to the Interest Payment Date corresponding to such Regular Record Date, accrued and unpaid interest, if any, thereon to, but excluding, such Fundamental Change Purchase Date.

In the case of certificated Securities, the certificate numbers of the Securities to be purchased are as set forth below:

Dated:   ___________________

Signature(s)

Social Security or Other Taxpayer Identification Number

principal amount to be repaid (if less than all):

$        ,000

NOTICE: The signature on the Fundamental Change Purchase Notice must correspond with the name as written upon the face of the Security in every particular without alteration or enlargement or any change whatever.

ATTACHMENT 3

[FORM OF ASSIGNMENT AND TRANSFER]

For value received hereby sell(s), assign(s) and transfer(s) unto . (Please insert social security or Taxpayer Identification Number of assignee) the within Security, and hereby irrevocably constitutes and appoints to transfer the said Security on the books of the Company, with full power of substitution in the premises.

In connection with any transfer of the within Security occurring prior to the Resale Restriction Termination Date, as defined in the Indenture governing such Security, the undersigned confirms that such Security is being transferred:

¨ To AmTrust Financial Services, Inc. or a subsidiary thereof; or

¨ Pursuant to a registration statement that has been declared effective under the Securities Act of 1933, as amended; or

¨ Pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended; or

¨ Pursuant to and in compliance with Rule 144 under the Securities Act of 1933, as amended, or any other available exemption from the registration requirements of the Securities Act of 1933, as amended,

and unless the Securities has been transferred to AmTrust Financial Services, Inc. or a subsidiary thereof, the undersigned confirms that such Securities are not being transferred to an “affiliate” of the Company as defined in Rule 144 under the Securities Act of 1933, as amended.

___________________________________

Signature(s)

Signature(s) must be guaranteed by an

institution which is a member of one of the

following recognized signature Guarantee

Programs:

(i) The Securities Transfer Agent Medallion

Program (STAMP); (ii) The New York Stock

Exchange Medallion Program (MNSP); (iii) The

Stock Exchange Medallion Program (SEMP) or

(iv) another guarantee

Unless one of the boxes is checked, the Trustee shall refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered holder thereof.

ATTACHMENT 4

[FORM OF PURCHASE NOTICE]

To: AmTrust Financial Services, Inc.

The undersigned registered owner of this Security hereby acknowledges receipt of a notice from AmTrust Financial Services, Inc. (the “Company”) as to the purchase right associated with the Purchase Date and requests and instructs the Company to pay to the registered holder hereof in accordance with the applicable provisions of the Indenture referred to in this Security (i) the entire principal amount of this Security, or the portion thereof (that is such that the portion not to be purchased has a principal amount equal to $1,000 or an integral multiple of $1,000 in excess thereof) below designated, and (ii) if the Purchase Date does not occur during the period after a Regular Record Date and on or prior to the Interest Payment Date corresponding to such Regular Record Date, accrued and unpaid interest, if any, thereon to, but excluding, the Purchase Date.

In the case of certificated Securities, the certificate numbers of the Securities to be purchased are as set forth below:

Dated:

Signature(s)

Social Security or Other Taxpayer Identification Number

principal amount to be repaid (if less than all):

$        ,000

NOTICE: The signature on the Purchase Notice must correspond with the name as written upon the face of the Security in every particular without alteration or enlargement or any change whatever.

EXHIBIT B

[FORM OF RESTRICTED SECURITY LEGEND]

THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT); (2) AGREES THAT IT WILL NOT WITHIN THE LATER OF (X) ONE YEAR (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144 UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THEREUNDER) AFTER THE LAST DATE OF ORIGINAL ISSUANCE OF SECURITIES (INCLUDING THROUGH THE EXERCISE OF THE OPTION TO PURCHASE ADDITIONAL SECURITIES) AND (Y) 90 DAYS AFTER IT CEASES TO BE AN AFFILIATE (WITHIN THE MEANING OF RULE 144 UNDER THE SECURITIES ACT) OF AMTRUST FINANCIAL SERVICES, INC. (THE “COMPANY”), OFFER, RESELL, PLEDGE OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH SECURITY, EXCEPT (A) TO THE COMPANY OR ANY AFFILIATE THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) UNDER ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, INCLUDING RULE 144 (IF AVAILABLE), OR (D) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND THAT CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER); (3) PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER PURSUANT TO CLAUSES 2(A), 2(B) AND 2(D) ABOVE), IT WILL FURNISH TO THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE TRUSTEE MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT; AND (4) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(D) ABOVE) PRIOR TO EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144 UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION) A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. THIS LEGEND WILL BE REMOVED UPON THE EARLIER OF THE TRANSFER OF THIS SECURITY PURSUANT TO CLAUSE 2(D) ABOVE OR UPON ANY TRANSFER OF THIS SECURITY UNDER RULE 144 SUCH THAT THE SECURITY IS NO LONGER CONSIDERED A “RESTRICTED SECURITY” WITHIN THE MEANING OF RULE 144 (OR ANY SUCCESSOR PROVISION). THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS SECURITY IN VIOLATION OF THE FOREGOING RESTRICTION.

EXHIBIT C

[FORM OF RESTRICTED COMMON STOCK LEGEND]

THE COMMON STOCK EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. THE HOLDER HEREOF AGREES THAT (1) IT WILL NOT WITHIN THE LATER OF (X) ONE YEAR (OR, SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144 UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THEREUNDER) AFTER THE LAST DATE OF ORIGINAL ISSUANCE OF THE SECURITIES (INCLUDING THROUGH THE EXERCISE OF THE OPTION TO PURCHASE ADDITIONAL SECURITIES) UPON THE CONVERSION OF WHICH THIS SECURITY WAS ISSUED AND (Y) 90 DAYS AFTER IT CEASES TO BE AN AFFILIATE (WITHIN THE MEANING OF RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY, OFFER, RESELL, PLEDGE OR OTHERWISE TRANSFER THE COMMON STOCK EVIDENCED HEREBY, EXCEPT (A) TO THE COMPANY OR TO ANY AFFILIATE THEREOF, (B) UNDER ANY AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, INCLUDING RULE 144 (IF AVAILABLE), OR (C) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND THAT CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER); (2) PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER PURSUANT TO CLAUSES 1(A) OR 1(C) ABOVE), IT WILL FURNISH TO THE TRANSFER AGENT FOR THE COMPANY’S COMMON STOCK, SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT; AND (3) IT WILL DELIVER TO EACH PERSON TO WHOM THE COMMON STOCK EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 1(C) ABOVE) PRIOR TO EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE COMMON STOCK EVIDENCED HEREBY UNDER RULE 144 UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION) A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. THIS LEGEND WILL BE REMOVED UPON THE EARLIER OF THE TRANSFER OF THE COMMON STOCK EVIDENCED HEREBY PURSUANT TO CLAUSE 1(C) ABOVE OR UPON ANY TRANSFER OF THE SHARES OF COMMON STOCK EVIDENCED HEREBY UNDER RULE 144 SUCH THAT THE COMMON STOCK EVIDENCED HEREBY ARE NO LONGER CONSIDERED “RESTRICTED SECURITIES” WITHIN THE MEANING OF RULE 144 (OR ANY SUCCESSOR PROVISION).

EXHIBIT D

The following table sets forth the Accreted Amount per $1,000 principal amount of Securities, expressed as a percentage of the principal amount of the Securities, as of the specified dates during the period from the Closing Date through the Maturity Date. The Accreted Amount at any given time shall be determined by the Company. The Trustee, Registrar and Paying Agent shall have no duty to ascertain or verify the Accreted Amount.

		Accreted Price
Period	Date	As % of Par		Dollars
0.0	12/15/14	90.00	%	$	900
0.5	06/15/15	90.48	%	$	905
1.0	12/15/15	90.95	%	$	910
1.5	06/15/16	91.43	%	$	914
2.0	12/15/16	91.92	%	$	919
2.5	06/15/17	92.40	%	$	924
3.0	12/15/17	92.89	%	$	929
3.5	06/15/18	93.38	%	$	934
4.0	12/15/18	93.87	%	$	939
4.5	06/15/19	94.37	%	$	944
5.0	12/15/19	94.87	%	$	949
5.5	06/15/20	95.37	%	$	954
6.0	12/15/20	95.87	%	$	959
6.5	06/15/21	96.38	%	$	964
7.0	12/15/21	96.89	%	$	969
7.5	06/15/22	97.40	%	$	974
8.0	12/15/22	97.91	%	$	979
8.5	06/15/23	98.43	%	$	984
9.0	12/15/23	98.95	%	$	990
9.5	06/15/24	99.47	%	$	995
10.0	12/15/24	100.00	%	$	1,000
10.5	06/15/25	100.00	%	$	1,000
11.0	12/15/25	100.00	%	$	1,000
11.5	06/15/26	100.00	%	$	1,000
12.0	12/15/26	100.00	%	$	1,000
12.5	06/15/27	100.00	%	$	1,000
13.0	12/15/27	100.00	%	$	1,000
13.5	06/15/28	100.00	%	$	1,000
14.0	12/15/28	100.00	%	$	1,000
14.5	06/15/29	100.00	%	$	1,000
15.0	12/15/29	100.00	%	$	1,000
15.5	06/15/30	100.00	%	$	1,000
16.0	12/15/30	100.00	%	$	1,000
16.5	06/15/31	100.00	%	$	1,000
17.0	12/15/31	100.00	%	$	1,000
17.5	06/15/32	100.00	%	$	1,000
18.0	12/15/32	100.00	%	$	1,000
18.5	06/15/33	100.00	%	$	1,000
19.0	12/15/33	100.00	%	$	1,000
19.5	06/15/34	100.00	%	$	1,000
20.0	12/15/34	100.00	%	$	1,000

20.5	06/15/35	100.00	%	$	1,000
21.0	12/15/35	100.00	%	$	1,000
21.5	06/15/36	100.00	%	$	1,000
22.0	12/15/36	100.00	%	$	1,000
22.5	06/15/37	100.00	%	$	1,000
23.0	12/15/37	100.00	%	$	1,000
23.5	06/15/38	100.00	%	$	1,000
24.0	12/15/38	100.00	%	$	1,000
24.5	06/15/39	100.00	%	$	1,000
25.0	12/15/39	100.00	%	$	1,000
25.5	06/15/40	100.00	%	$	1,000
26.0	12/15/40	100.00	%	$	1,000
26.5	06/15/41	100.00	%	$	1,000
27.0	12/15/41	100.00	%	$	1,000
27.5	06/15/42	100.00	%	$	1,000
28.0	12/15/42	100.00	%	$	1,000
28.5	06/15/43	100.00	%	$	1,000
29.0	12/15/43	100.00	%	$	1,000
29.5	06/15/44	100.00	%	$	1,000
30.0	12/15/44	100.00	%	$	1,000

If any date where the Accreted Amount must be determined for purposes of the Indenture is between two consecutive dates set forth above, the Accreted Amount will be determined by a straight-line interpolation between the Accreted Amount set forth for such two dates, based on a 365-day year.

EX-10

Exhibit 10.32

AMENDMENT NO. 1

Dated as of November 26, 2014

to

CREDIT AGREEMENT

Dated as of September 12, 2014

THIS AMENDMENT NO. 1 (“Amendment”) is made as of November 26, 2014 and shall, upon satisfaction of the conditions precedent set forth in Section 2 below be effective as of the date hereof (the “Amendment No. 1 Effective Date”) by and among AmTrust Financial Services, Inc., a Delaware corporation (the “Borrower”), the financial institutions listed on the signature pages hereof and JPMorgan Chase Bank, N.A., as Administrative Agent (the “Administrative Agent”), under that certain Credit Agreement dated as of September 12, 2014, by and among the Borrower, the Lenders and the Administrative Agent (as amended, restated, supplemented or otherwise modified from time to time prior to the date hereof, the “Credit Agreement”). Capitalized terms used herein and not otherwise defined herein shall have the respective meanings given to them in the Credit Agreement.

WHEREAS, the Borrower has requested that the requisite Lenders and the Administrative Agent agree to make certain modifications to the Credit Agreement;

WHEREAS, the Borrower, the Lenders party hereto and the Administrative Agent have so agreed on the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the premises set forth above, the terms and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower, the Lenders party hereto and the Administrative Agent hereby agree to enter into this Amendment.

1.Amendments to Credit Agreement. Effective as of the Amendment No. 1 Effective Date but subject to the satisfaction of the conditions precedent set forth in Section 2 below, the Credit Agreement is hereby amended as follows:

(a)The definition of “Permitted Call Spread Swap Agreements” appearing in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“Permitted Call Spread Swap Agreements” means one or more Swap Agreements pursuant to which the Borrower (a) acquires a call option requiring the counterparty thereto to deliver to the Borrower shares of common stock of the Borrower, the cash value of such shares or a combination thereof from time to time upon exercise of such option, and/or (b) issues to the counterparty thereto warrants to acquire common stock of the Borrower, in each case entered into by the Borrower concurrently with the issuance of Permitted Convertible Notes; provided that (i) the terms, conditions and covenants of each such Swap Agreement shall be such as are typical and customary for Swap Agreements of such type (as determined by the

Board of Directors of the Borrower in good faith) and (ii) in the case of clause (b) above, each such Swap Agreement, at the time of execution, would be classified as an equity instrument in accordance with EITF 00-19, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock, or any successor thereto (including pursuant to the Accounting Standards Codification), and the settlement of such Swap Agreement does not require the Borrower to make any payment in cash or cash equivalents that would disqualify such Swap Agreement from so being classified as an equity instrument.

(b)The definition of “Permitted Convertible Notes” appearing in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“Permitted Convertible Notes” means any unsecured notes issued by the Borrower that are convertible into common stock of the Borrower, cash or any combination thereof; provided that the Indebtedness thereunder satisfies the following requirements: (i) both immediately prior to and after giving effect (including pro forma effect) thereto, no Default or Event of Default shall exist or result therefrom, (ii) such Indebtedness matures after, and does not require any scheduled amortization or other scheduled payments of principal prior to, the date that is 367 days after the Maturity Date (it being understood that the settlement of any early conversion or required repurchase following a Fundamental Change (as defined in such notes) (i.e. prior to the stated maturity date of the Indebtedness) of any Permitted Convertible Notes in accordance with the terms thereof shall not be considered a maturity, scheduled amortization or other scheduled payment of principal prior to the date that is 367 days after the Maturity Date), (iii) such Indebtedness is not guaranteed by any Subsidiary of the Borrower and (iv) the aggregate principal amount of Indebtedness permitted to be issued or incurred under this definition shall not exceed $200,000,000 at any time outstanding.

2.Conditions of Effectiveness. The effectiveness of this Amendment is subject to the conditions precedent that the Administrative Agent shall have received counterparts of this Amendment duly executed by the Borrower, the Required Lenders and the Administrative Agent.

3.Representations and Warranties of the Borrower. The Borrower hereby represents and warrants as follows:

(a)This Amendment and the Credit Agreement as amended hereby constitute legal, valid and binding obligations of the Borrower and are enforceable against the Borrower in accordance with their terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

(b)As of the date hereof and giving effect to the terms of this Amendment, (i) no Default or Event of Default shall have occurred and be continuing and (ii) the representations and warranties of the Borrower set forth in the Credit Agreement, as amended hereby, are true and correct as of the date hereof.

4.Reference to and Effect on the Credit Agreement.

2

(a)Upon the effectiveness hereof, each reference to the Credit Agreement in the Credit Agreement or any other Loan Document shall mean and be a reference to the Credit Agreement as amended hereby.

(b)Each Loan Document and all other documents, instruments and agreements executed and/or delivered in connection therewith shall remain in full force and effect and are hereby ratified and confirmed.

(c)Except with respect to the subject matter hereof and as set forth herein, the execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Administrative Agent or the Lenders, nor constitute a waiver of any provision of the Credit Agreement, the Loan Documents or any other documents, instruments and agreements executed and/or delivered in connection therewith.

(d)This Amendment shall be a Loan Document.

5.Governing Law. This Amendment shall be construed in accordance with and governed by the law of the State of New York.

6.Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.

7.Counterparts. This Amendment may be executed by one or more of the parties hereto on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

[Signature Pages Follow]

3

IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year first above written.

AMTRUST FINANCIAL SERVICES, INC.,

as the Borrower

By: /s/ Harry Schlachter                
Name: Harry Schlachter

Title: SVP of Finance

Signature Page to Amendment No. 1 to

Credit Agreement dated as of September 12, 2014

AmTrust Financial Services, Inc.

JPMORGAN CHASE BANK, N.A.,

individually as a Lender, as Issuing Bank and as Administrative Agent

By: /s/ Hector J. Varona                

Name: Hector J. Varona

Title: Vice President

KEYBANK NATIONAL ASSOCIATION,

as a Lender

By: /s/ James Cribbet                
Name: James Cribbet

Title: Senior Vice President

SUNTRUST BANK,

as a Lender

By: /s/ Paula Mueller                
Name: Paula Mueller

Title: Director

LLOYDS BANK PLC,

as a Lender

By: /s/ Stephen Giacolone            

Name: Stephen Giacolone

Title: Assistant Vice President – G011

By: /s/ Daven Popat                

Name: Daven Popat

Title: Senior Vice President – P003

Signature Page to Amendment No. 1 to

Credit Agreement dated as of September 12, 2014

AmTrust Financial Services, Inc.

EX-21

EXHIBIT 21.1

SUBSIDIARIES LIST

Entity Name	Jurisdiction of Incorporation or Formation
1103-1107 Dekalb Ave LLC	Delaware
1103-1107 Dekalb Avenue Corporation	Delaware
1262 East 14th Purchaser, LLC	New York
800 Superior, LLC	Delaware
800 Superior NMTC Investment Fund II LLC	Ohio
AA Gadget Repair Limited	Ireland
AFS Realty Holdings, LLC	Delaware
AFS Realty Member, LLC	Delaware
Agent Alliance Reinsurance Company, Ltd.	Bermuda
AII Insurance Management Limited	Bermuda
AII Investment Holdings Ltd.	Bermuda
AII Reinsurance Broker, Ltd.	Bermuda
AIU Management Services Limited	Ireland
AmCom Insurance Services, Inc.	California
AMT Capital Alpha, LLC	Delaware
AMT Capital Holdings, S. A. AMT Capital Holdings II S.A AMT Capital Holdings III S.A.	Luxembourg Luxembourg Luxembourg
AMT Consumer Services, Inc.	Delaware
AMT Home Protection Company AMT HSC Maryland, Inc. AMT Road Services Corp.	California Maryland Delaware
AMT Warranty Corp.	Delaware
AMT Warranty Corp. of Canada, ULC AMTCS Holdings, Inc.	Alberta, Canada Delaware
AmTrust at Lloyd’s Limited	England
AmTrust Captive Solutions Limited AmTrust Cayman Reinsurance Company, Ltd.	Luxembourg The Cayman Islands
AmTrust Claims Management SrL.	Italy
AmTrust Claims Services, Inc.	California
AmTrust Corporate Capital Limited AmTrust Corporate Member Limited AmTrust Corporate Member Two Limited AmTrust E&S Insurance Services, Inc.	England England England Delaware
AmTrust Equity Solutions, Ltd. AmTrust Europe Legal, Ltd.	Bermuda England
AmTrust Europe Ltd.	England
AmTrust Holdings Luxembourg-Europe S.à.r.l.	Luxembourg
AmTrust Holding Sweden Europe AB	Sweden
AmTrust Holdings Luxembourg S.à.r.l.	Luxembourg

Entity Name	Jurisdiction of Incorporation or Formation
AmTrust Insurance Company of Kansas, Inc.	Kansas
AmTrust Insurance Luxembourg S.A. AmTrust Insurance Spain, S.L.U.	Luxembourg Spain
AmTrust International Bermuda Ltd. AmTrust International Insurance, Ltd.	Bermuda Bermuda
AmTrust International Limited	England
AmTrust International Underwriters Limited	Ireland
AmTrust Japan KK	Japan
AmTrust Lloyd’s Corporation AmTrust Lloyds Holdings Limited	Texas The Cayman Islands
AmTrust Lloyd’s Insurance Company of Texas	Texas
AmTrust Management & Consultancy (China) Co., Ltd.	China
AmTrust Management Services, Ltd.	England
AmTrust Nordic, AB	Sweden
AmTrust North America, Inc.	Delaware
AmTrust North America of Florida, Inc.	Florida
AmTrust North America of Texas, Inc. AmTrust Re 2007 (Luxembourg)	Delaware Luxembourg
AmTrust Re Alpha	Luxembourg
AmTrust Re Aries S.A. AmTrust Re Epsilon	Luxembourg Luxembourg
AmTrust Re Taurus S.A.	Luxembourg
AmTrust Re Theta	Luxembourg
AmTrust Syndicate Holdings Limited AmTrust Syndicate Services Limited AmTrust Underwriters, Inc. AmTrust Underwriting Limited	England England Delaware England
AmTrust Ventures I, LLC	Delaware
AMTS Holding Corp.	Delaware
Associated Industries Insurance Company, Inc.	Florida
Boca NW65, LLC	Delaware
Builders & Tradesmen’s Insurance Services, Inc.	California
Builders Insurance Services, LLC Car Care Pension Trustees Limited Car Care Plan do Brasil Limitada Car Care Plan GmbH Car Care Plan (Holdings) Limited Car Care Plan Limited	Delaware England Brazil Germany England England
Caravan Security Storage Limited	England
CNH Industrial Canada Insurance Agency, Ltd. CNH Industrial Insurance Agency, Inc.	Alberta, Canada Delaware

Entity Name	Jurisdiction of Incorporation or Formation
Commercial Care Plan Limited Comp Options Insurance Company, Inc. CPP Direct LLC CPP Florida LLC CPP Travel LLC CPP Warranties LLC	England Florida Delaware Florida Delaware Delaware
Crop Pro Insurance, LLC	Wyoming
Developers Surety and Indemnity Company	Iowa
Direct Reinsurance, Ltd.	Turks and Caicos Islands
Dore & Associates Holdings Limited Dore Underwriting Services Limited East Ninth & Superior, LLC	England England Delaware
First Atlantic Title Insurance Corp.	New York
First Nonprofit Companies, Inc. First Nonprofit Insurance Agency, Inc. First Nonprofit Insurance Company Gadget Repair Solutions Limited	Illinois Illinois Delaware England
GMAC International Insurance Services Limited HSC Claims Administration, Inc. I.G.I. Administration Services Limited	England Maryland England
I.G.I. Intermediaries, Ltd.	England
I.G.I. Underwriting Agency, Inc.	New York
Indemnity Company of California	California
Insco Insurance Services, Inc.	California
LAE Insurance Services, Inc.	California
Milwaukee Casualty Insurance Co. Mobile Repair Solutions Malaysia SDN BHD Motors Insurance Company Limited National Home Surety Inc. Northcoast Warranty Services, Inc.	Wisconsin Malaysia England Delaware Delaware
Oakwood Village Ltd.	England
OwnerGUARD Agency	California
OwnerGUARD Corporation	California
OwnerGUARD University	California
PBOA, Inc.	Florida
Pedigree Livestock Insurance Limited PT Tecprotec REAF Holdings LLC RHL Corporate Name No. 1 Limited	England Indonesia Delaware England
Right2Claim Limited	England
Risk Services-Arizona, Inc.	Arizona
Risk Services (Bermuda), Ltd.	Bermuda
Risk Services-(Hawaii), Ltd.	Hawaii
Risk Services Intermediaries (Bermuda), Ltd.	Bermuda
Risk Services, LLC	Virginia

Entity Name	Jurisdiction of Incorporation or Formation
Risk Services-Nevada, Inc.	Nevada
Risk Services-Vermont, Inc.	Vermont
Rochdale Insurance Company	New York
Rock Run South, LLC	Delaware
Rocklin Sierra College, LLC	Delaware
RS Acquisition Holdco, LLC	Delaware
Security National Insurance Company Sequoia Indemnity Company Sequoia Insurance Company Shanghai First Response	Delaware Nevada California China
Signal Acquisition LLC	Delaware
Signal Service Solutions, LLC Strongwood Risk Management Solutions, LLC	Delaware California
Technology Insurance Company, Inc.	New Hampshire
Tecprotec Asia Private Limited	India
Tecprotec AVA Sdn Bhd	Malaysia
Tecprotec Holdings Pte Ltd.	Singapore
Tecprotec LLC	Russia
Tecprotec Sdn Bhd	Malaysia
The CPP Insurance Agency LLC	Delaware
The Finest Service Organization Investment Management, LLC	Delaware
The Finest Service Organization LLC	Delaware
Tiger Capital, LLC ToCo Warranty Corp.	Delaware Delaware
TPT Agency Sdn Bhd	Malaysia
Vemeco, Inc.	Connecticut
Vista Surety Insurance Solutions, LLC	California
W Direct Corp.	Delaware
Warrantech Automotive, Inc.	Connecticut
Warrantech Automotive of Canada, Inc.	Ontario, Canada
Warrantech Automotive of Florida, Inc.	Florida
Warrantech Caribbean, LTD.	Grand Cayman Islands
Warrantech Consumer Product Services, Inc.	Connecticut
Warrantech Corporation	Nevada
Warrantech Direct I, L.P.	Texas
Warrantech Direct, Inc.	Texas
Warrantech Home Assurance Company	Florida
Warrantech Home Service Company	Connecticut
Warrantech International de Chile	Chile
Warrantech International, Inc.	Delaware
Warrantech Management Company	Delaware
Warrantech Management Holding Company	Delaware

Entity Name	Jurisdiction of Incorporation or Formation
Warrantech Management Limited Partnership	Texas
Warrantech Peru SRL	Peru
WCPS of Florida, Inc.	Florida
Wesco Insurance Company	Delaware
Westport Reinsurance Limited	Turks and Caicos Islands
Westside Parkway GA, LLC	Delaware
WHSC Direct, Inc.	Texas

EX-23

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

AmTrust Financial Services, Inc.

New York, New York 

We hereby consent to the incorporation by reference in the Registration Statements on Form S-1 (Registration No. 333-134960), Form S-8 (Registration No. 333-147867), Form S-8 (Registration No. 333-166943), Form S-3 (Registration No. 333-169520), and Form S-3ASR (Registration Nos. 333-200847 and 333-192097) of AmTrust Financial Services, Inc. of our reports dated March 2, 2015, relating to the consolidated financial statements and financial statement schedules, and the effectiveness of AmTrust Financial Services, Inc.’s internal control over financial reporting, which appears in this Form 10-K.

/s/ BDO USA, LLP

New York, New York

March 2, 2015

EX-31

EXHIBIT 31.1

CERTIFICATION

I, Barry Zyskind, certify that:

1. I have reviewed this Annual Report on Form 10-K 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:	March 2, 2015	By:	/s/ Barry Zyskind
			Barry Zyskind
			President and Chief Executive Officer
			(Principal Executive Officer)

EX-31

EXHIBIT 31.2

CERTIFICATION

I, Ronald Pipoly, certify that:

1. I have reviewed this Annual Report on Form 10-K 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:	March 2, 2015	By:	/s/ Ronald Pipoly
			Ronald Pipoly
			Chief Financial Officer
			(Principal Financial and Accounting Officer)

EX-32

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Barry Zyskind, President and Chief Executive Officer (Principal Executive Officer) of AmTrust Financial Services, Inc. (the “Company”), hereby certify, that, to my knowledge:

1. The Annual Report on Form 10-K for the year ended December 31, 2014 (the “Report”) of the Company 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:	March 2, 2015	By:	/s/ Barry Zyskind
			Barry Zyskind
			President and Chief Executive Officer
			(Principal Executive Officer)

EX-32

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Ronald Pipoly, Chief Financial Officer (Principal Financial and Accounting Officer) of AmTrust Financial Services, Inc. (the “Company”), hereby certify, that, to my knowledge:

1. The Annual Report on Form 10-K for the year ended December 31, 2014 (the “Report”) of the Company 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:	March 2, 2015	By:	/s/ Ronald Pipoly
			Ronald Pipoly
			Chief Financial Officer
			(Principal Financial and Accounting Officer)

XML

Schedule IV - Reinsurance

12 Months Ended

Dec. 31, 2014

Supplemental Schedule of Reinsurance Premiums for Insurance Companies [Abstract]

Schedule IV - Reinsurance

AMTRUST FINANCIAL SERVICES, INC.

AND SUBSIDIARIES REINSURANCE

For the year ended December 31, 2014, 2013 and 2012:

	Gross Amount		Ceded to Other Companies		Amount from Other Companies		Net Amount		Percent of Amount Assumed to Net
	(Amounts in Thousands)
2014
Premiums:
General Insurance	$	5,422,484	$	2,131,347	$	665,481	$	3,956,618	16.8	%
2013
Premiums:
General Insurance	$	3,869,893	$	1,551,238	$	247,018	$	2,565,673	9.6	%
2012
Premiums:
General Insurance	$	2,494,846	$	1,101,289	$	254,480	$	1,648,037	15.4	%

XML

Segments (Results of Operations of Business Segments) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014 Segments	Dec. 31, 2013	Dec. 31, 2012
Segment Reporting Information [Line Items]
Number of Operating Segments									3
Gross written premium									$ 6,087,965	$ 4,116,911	$ 2,749,326
Net premium written									3,956,618	2,565,673	1,648,037
Change in unearned premium									(430,054)	(299,683)	(229,185)
Net earned premium	908,163	914,413	874,937	829,051	707,562	613,895	536,539	407,994	3,526,564	2,265,990	1,418,852
Loss and loss adjustment expense	(587,464)	(609,352)	(587,233)	(558,570)	(470,416)	(410,579)	(364,110)	(272,256)	(2,342,619)	(1,517,361)	(922,675)
Acquisition costs and other underwriting expenses	(236,742)	(225,512)	(208,060)	(186,609)	(165,745)	(137,186)	(129,946)	(100,285)	(856,923)	(533,162)	(356,005)
Operating Expenses									(3,199,542)	(2,050,523)	(1,278,680)
Underwriting income									327,022	215,467	140,172
Service, fee and other revenues									409,743	331,559	172,174
Investment income and realized gain (loss)									148,024	100,346	77,148
Other expenses	(157,678)	(103,493)	(87,588)	(87,591)	(68,285)	(90,195)	(80,985)	(52,152)	(436,350)	(291,617)	(177,709)
Interest expense including loss on extinguishment of debt									(55,688)	(34,691)	(28,508)
Foreign currency gain (loss)									60,245	(6,533)	(242)
Gain on life settlement contracts									12,306	3,800	13,822
Acquisition gain									0	48,715	0
Gain (Loss) on Disposition of Stock in Subsidiary									6,631	0	0
Provision for income taxes	(15,940)	7,664	(17,966)	(27,444)	(30,628)	(23,880)	(27,402)	(16,109)	(53,686)	(98,019)	(21,292)
Equity in earnings of unconsolidated subsidiary – related party									28,351	11,566	9,295
Net income	83,525	157,156	104,189	101,728	66,506	59,689	71,397	83,001	446,598	280,593	184,860
Operating Segments [Member]
Segment Reporting Information [Line Items]
Net earned premium									3,526,564	2,265,990	1,418,852
Operating Segments [Member] | Small Commercial Business
Segment Reporting Information [Line Items]
Gross written premium									2,999,714	1,659,980	933,740
Net premium written									1,882,383	935,313	474,381
Change in unearned premium									(275,578)	(101,501)	(57,816)
Net earned premium									1,606,805	833,812	416,565
Loss and loss adjustment expense									(1,055,521)	(548,598)	(270,843)
Acquisition costs and other underwriting expenses									(416,965)	(212,824)	(110,895)
Operating Expenses									(1,472,486)	(761,422)	(381,738)
Underwriting income									134,319	72,390	34,827
Service, fee and other revenues									95,430	87,519	53,886
Investment income and realized gain (loss)									62,810	34,665	27,217
Other expenses									(215,002)	(117,583)	(54,788)
Interest expense including loss on extinguishment of debt									(27,439)	(13,987)	(9,682)
Foreign currency gain (loss)									0	0	0
Gain on life settlement contracts									6,064	1,532	4,694
Acquisition gain										23,183	0
Gain (Loss) on Disposition of Stock in Subsidiary									6,631
Provision for income taxes									(6,741)	(24,389)	(5,800)
Equity in earnings of unconsolidated subsidiary – related party									0	0	0
Net income									56,072	63,330	50,354
Operating Segments [Member] | Specialty Risk and Extended Warranty
Segment Reporting Information [Line Items]
Gross written premium									1,983,052	1,511,649	1,118,710
Net premium written									1,333,747	944,081	624,555
Change in unearned premium									(101,509)	(132,244)	(82,982)
Net earned premium									1,232,238	811,837	541,573
Loss and loss adjustment expense									(817,780)	(545,516)	(341,196)
Acquisition costs and other underwriting expenses									(253,794)	(151,188)	(112,491)
Operating Expenses									(1,071,574)	(696,704)	(453,687)
Underwriting income									160,664	115,133	87,886
Service, fee and other revenues									253,220	191,941	86,672
Investment income and realized gain (loss)									56,852	46,304	30,952
Other expenses									(142,134)	(107,076)	(82,031)
Interest expense including loss on extinguishment of debt									(18,139)	(12,738)	(11,600)
Foreign currency gain (loss)									60,245	(6,533)	(242)
Gain on life settlement contracts									4,008	1,395	5,624
Acquisition gain										25,532	0
Gain (Loss) on Disposition of Stock in Subsidiary									0
Provision for income taxes									(40,211)	(64,281)	(12,109)
Equity in earnings of unconsolidated subsidiary – related party									0	0	0
Net income									334,505	189,677	105,152
Operating Segments [Member] | Specialty Program
Segment Reporting Information [Line Items]
Gross written premium									1,105,199	879,455	578,735
Net premium written									740,488	620,452	430,960
Change in unearned premium									(61,876)	(100,081)	(82,392)
Net earned premium									678,612	520,371	348,568
Loss and loss adjustment expense									(456,422)	(355,067)	(238,302)
Acquisition costs and other underwriting expenses									(183,541)	(138,650)	(98,415)
Operating Expenses									(639,963)	(493,717)	(336,717)
Underwriting income									38,649	26,654	11,851
Service, fee and other revenues									428	114	1,342
Investment income and realized gain (loss)									27,994	18,464	16,362
Other expenses									(79,214)	(62,295)	(33,958)
Interest expense including loss on extinguishment of debt									(10,110)	(7,411)	(6,001)
Foreign currency gain (loss)									0	0	0
Gain on life settlement contracts									2,234	812	2,910
Acquisition gain										0	0
Gain (Loss) on Disposition of Stock in Subsidiary									0
Provision for income taxes									2,148	5,989	774
Equity in earnings of unconsolidated subsidiary – related party									0	0	0
Net income									(17,871)	(17,673)	(6,720)
Operating Segments [Member] | Personal Lines Reinsurance
Segment Reporting Information [Line Items]
Gross written premium									0	65,827	118,141
Net premium written									0	65,827	118,141
Change in unearned premium									8,909	34,143	(5,995)
Net earned premium									8,909	99,970	112,146
Loss and loss adjustment expense									(12,896)	(68,180)	(72,334)
Acquisition costs and other underwriting expenses									(2,623)	(30,500)	(34,204)
Operating Expenses									(15,519)	(98,680)	(106,538)
Underwriting income									(6,610)	1,290	5,608
Service, fee and other revenues									0	0	0
Investment income and realized gain (loss)									368	913	2,617
Other expenses									0	(4,663)	(6,932)
Interest expense including loss on extinguishment of debt									0	(555)	(1,225)
Foreign currency gain (loss)									0	0	0
Gain on life settlement contracts									0	61	594
Acquisition gain										0	0
Gain (Loss) on Disposition of Stock in Subsidiary									0
Provision for income taxes									670	748	(68)
Equity in earnings of unconsolidated subsidiary – related party									0	0	0
Net income									(5,572)	(2,206)	594
Operating Segments [Member] | Corporate and Other
Segment Reporting Information [Line Items]
Gross written premium									0	0	0
Net premium written									0	0	0
Change in unearned premium									0	0	0
Net earned premium									0	0
Loss and loss adjustment expense									0	0	0
Acquisition costs and other underwriting expenses									0	0	0
Operating Expenses									0	0
Underwriting income									0	0	0
Service, fee and other revenues									60,665	51,985	30,274
Investment income and realized gain (loss)									0	0	0
Other expenses									0	0	0
Interest expense including loss on extinguishment of debt									0	0	0
Foreign currency gain (loss)									0	0	0
Gain on life settlement contracts									0	0	0
Acquisition gain										0	0
Gain (Loss) on Disposition of Stock in Subsidiary									0
Provision for income taxes									(9,552)	(16,086)	(4,089)
Equity in earnings of unconsolidated subsidiary – related party									28,351	11,566	9,295
Net income									79,464	47,465	35,480
Workers' compensation | Operating Segments [Member]
Segment Reporting Information [Line Items]
Net earned premium									1,321,886	831,158	436,547
Workers' compensation | Operating Segments [Member] | Small Commercial Business
Segment Reporting Information [Line Items]
Net earned premium									1,061,130	665,087	340,221
Workers' compensation | Operating Segments [Member] | Specialty Risk and Extended Warranty
Segment Reporting Information [Line Items]
Net earned premium									0	0	0
Workers' compensation | Operating Segments [Member] | Specialty Program
Segment Reporting Information [Line Items]
Net earned premium									260,756	166,071	96,326
Workers' compensation | Operating Segments [Member] | Personal Lines Reinsurance
Segment Reporting Information [Line Items]
Net earned premium									0	0	0
Warranty | Operating Segments [Member]
Segment Reporting Information [Line Items]
Net earned premium									433,944	399,930	236,862
Warranty | Operating Segments [Member] | Small Commercial Business
Segment Reporting Information [Line Items]
Net earned premium									0	0	0
Warranty | Operating Segments [Member] | Specialty Risk and Extended Warranty
Segment Reporting Information [Line Items]
Net earned premium									433,710	397,978	226,559
Warranty | Operating Segments [Member] | Specialty Program
Segment Reporting Information [Line Items]
Net earned premium									234	1,952	10,303
Warranty | Operating Segments [Member] | Personal Lines Reinsurance
Segment Reporting Information [Line Items]
Net earned premium									0	0	0
Other liability | Operating Segments [Member]
Segment Reporting Information [Line Items]
Net earned premium									424,715	271,160	191,443
Other liability | Operating Segments [Member] | Small Commercial Business
Segment Reporting Information [Line Items]
Net earned premium									98,846	37,308	25,996
Other liability | Operating Segments [Member] | Specialty Risk and Extended Warranty
Segment Reporting Information [Line Items]
Net earned premium									198,505	108,018	93,914
Other liability | Operating Segments [Member] | Specialty Program
Segment Reporting Information [Line Items]
Net earned premium									127,364	125,827	71,526
Other liability | Operating Segments [Member] | Personal Lines Reinsurance
Segment Reporting Information [Line Items]
Net earned premium									0	7	7
Commercial auto and liability, physical damage | Operating Segments [Member]
Segment Reporting Information [Line Items]
Net earned premium									305,723	182,828	132,116
Commercial auto and liability, physical damage | Operating Segments [Member] | Small Commercial Business
Segment Reporting Information [Line Items]
Net earned premium									162,377	51,623	26,893
Commercial auto and liability, physical damage | Operating Segments [Member] | Specialty Risk and Extended Warranty
Segment Reporting Information [Line Items]
Net earned premium									25,255	13,631	8,516
Commercial auto and liability, physical damage | Operating Segments [Member] | Specialty Program
Segment Reporting Information [Line Items]
Net earned premium									116,528	108,962	89,599
Commercial auto and liability, physical damage | Operating Segments [Member] | Personal Lines Reinsurance
Segment Reporting Information [Line Items]
Net earned premium									1,563	8,612	7,108
Medical malpractice | Operating Segments [Member]
Segment Reporting Information [Line Items]
Net earned premium									176,608	191,217	170,078
Medical malpractice | Operating Segments [Member] | Small Commercial Business
Segment Reporting Information [Line Items]
Net earned premium									0	0	0
Medical malpractice | Operating Segments [Member] | Specialty Risk and Extended Warranty
Segment Reporting Information [Line Items]
Net earned premium									176,608	191,217	170,078
Medical malpractice | Operating Segments [Member] | Specialty Program
Segment Reporting Information [Line Items]
Net earned premium									0	0	0
Medical malpractice | Operating Segments [Member] | Personal Lines Reinsurance
Segment Reporting Information [Line Items]
Net earned premium									0	0	0
Other | Operating Segments [Member]
Segment Reporting Information [Line Items]
Net earned premium									863,688	389,697	251,806
Other | Operating Segments [Member] | Small Commercial Business
Segment Reporting Information [Line Items]
Net earned premium									284,452	79,794	23,455
Other | Operating Segments [Member] | Specialty Risk and Extended Warranty
Segment Reporting Information [Line Items]
Net earned premium									398,160	100,993	42,506
Other | Operating Segments [Member] | Specialty Program
Segment Reporting Information [Line Items]
Net earned premium									173,730	117,559	80,814
Other | Operating Segments [Member] | Personal Lines Reinsurance
Segment Reporting Information [Line Items]
Net earned premium									$ 7,346	$ 91,351	$ 105,031

XML

Related Party Transactions - Additional information (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended			1 Months Ended			0 Months Ended		3 Months Ended		1 Months Ended
	Dec. 31, 2014 sqft	Dec. 31, 2013	Dec. 31, 2012	Apr. 30, 2011	Feb. 28, 2014	Aug. 31, 2011	Jun. 06, 2013	Mar. 05, 2013	Dec. 31, 2007	Sep. 30, 2007	Apr. 30, 2014	Sep. 30, 2014 Entity	Jan. 31, 2014
Related Party Transaction [Line Items]
Interest income	$ 2,601	$ 0	$ 0
Reinsurance recoverable	2,440,627	1,929,848
Assumed premiums written	665,481	247,018	254,480
Premium written - ceded	2,131,347	1,551,238	1,101,289
Assumed premiums earned	562,193	254,863	270,008
Note payable	167,975	167,975
Service, fee and other revenues	409,743	331,559	172,174
Purchase of senior notes	20,207	17,228	1,884
Equity in earnings of unconsolidated subsidiary – related party	28,351	11,566	9,295
Gross written premium	6,087,965	4,116,911	2,749,326
Office area under lease	39,992
Lease payments	16,314	15,658	11,518
Gain of sale of subsidiary	6,631	0	0
800 Superior LLC
Related Party Transaction [Line Items]
Percentage of ownership interest						50.00%
Technology Insurance Company Inc
Related Party Transaction [Line Items]
Ceding commission percentage of ceded written premiums	5.00%
Maiden Reinsurance Company
Related Party Transaction [Line Items]
Percentage of capital stock	7.60%
Ceding commission percentage of ceded written premiums				5.00%
Percentage of premiums				40.00%
Term of reinsurance agreement				1 year
Reinsurance ceded profit ratio				50.00%
Assets managed under asset management agreement	3,653,758
Investment management fee	5,213	4,388	3,697
Maiden Reinsurance Company | Minimum
Related Party Transaction [Line Items]
Asset management services fee percentage	0.15%
Average value of assets under management	1,000,000
Maiden Reinsurance Company | Maximum
Related Party Transaction [Line Items]
Reinsurance ceded loss ratio				65.00%
Asset management services fee percentage	0.20%
Average value of assets under management	1,000,000
Maiden Reinsurance Company | Board of Directors Chairman
Related Party Transaction [Line Items]
Percentage of capital stock	6.20%
Maiden Reinsurance Company | Director
Related Party Transaction [Line Items]
Percentage of capital stock	9.30%
Maiden Reinsurance Company | Chief Executive Officer
Related Party Transaction [Line Items]
Percentage of capital stock	5.10%
NGHC
Related Party Transaction [Line Items]
Asset management fees payable	16,409
Assets managed under asset management agreement	1,433,705
Investment management fee	2,006	1,725	1,503
Shares issued during the period					13,600,000
Percentage of ownership interests	13.20%				13.20%							13.20%	15.40%
Number of Reportable Entities												15
License fee percentage	1.25%
Technology services fee income	25,632	24,196	14,444
Percentage of ownership interest	13.20%					13.20%
Cost of acquiring office building						7,500
Contribution Towards Payment for Guaranties, Percentage	50.00%
Investment Advisory, Management and Administrative Fees	28,695	25,921	15,947
Aircraft use payments	133	140	165
NGHC | Common stock
Related Party Transaction [Line Items]
Stock split, conversion ratio							286
NGHC | Minimum
Related Party Transaction [Line Items]
Asset management services fee percentage	0.15%
Average value of assets under management	1,000,000
NGHC | Maximum
Related Party Transaction [Line Items]
Asset management services fee percentage	0.20%
Average value of assets under management	1,000,000
NGHC | 800 Superior LLC
Related Party Transaction [Line Items]
Percentage of ownership interest						50.00%
Collaborative arrangement profit share percentage						57.70%
Office lease period	15 years
Proceeds from collection of lease receivables	2,056	2,329	1,391
Office area under lease			134,000
Maiden
Related Party Transaction [Line Items]
Percentage of reinsurance brokerage commissions	1.25%
Service, fee and other revenues	19,896	17,498	8,759
Aircraft use payments	26	38	59
Maiden | Board of Directors Chairman
Related Party Transaction [Line Items]
Aircraft use payments		55
Maiden | CEO
Related Party Transaction [Line Items]
Aircraft use payments	235	74	192
AII
Related Party Transaction [Line Items]
Premiums, percentage assumed to net										40.00%
Percentage of reinsurance related losses assumed										40.00%
Ceding commission percentage of ceded written premiums	31.00%
Extended service agreement term								3 years
Termination notice period								30 days
Increase (Decrease) in Stockholders Equity, Percentage								50.00%
Related party transaction, rate									0.90%
AII | Retail Business [Member]
Related Party Transaction [Line Items]
Ceding commission percentage of ceded written premiums				34.38%
AII | Minimum
Related Party Transaction [Line Items]
Reinsurance recoverable										5,000
AII | Maiden | Minimum
Related Party Transaction [Line Items]
Reinsurance ceded loss ratio	81.50%
AII | Maiden | Maximum
Related Party Transaction [Line Items]
Reinsurance ceded loss ratio	95.00%
59 Maiden Lane Associates, LLC
Related Party Transaction [Line Items]
Lease payments	1,880	730	733
33 West Monroe Associates, LLC
Related Party Transaction [Line Items]
Office area under lease												15,765
Lease payments	444	480
Private Placement [Member] | NGHC
Related Party Transaction [Line Items]
Realized gain (loss) on disposal					14,712
Operating Segments [Member] | Personal Lines Reinsurance
Related Party Transaction [Line Items]
Service, fee and other revenues	0	0	0
Equity in earnings of unconsolidated subsidiary – related party	0	0	0
Gross written premium	0	65,827	118,141
Personal Express Insurance Company [Member]
Related Party Transaction [Line Items]
Proceeds from Divestiture of Businesses											21,743
Gain of sale of subsidiary											6,631
Maiden Reinsurance Company
Related Party Transaction [Line Items]
Note payable	167,975
Maiden Reinsurance Company | AII
Related Party Transaction [Line Items]
Interest expense on collateral loan	1,797	1,852	1,951
Collateral debt issued by maiden insurance	$ 1,936,128

XML

Acquisition Costs and Other Underwriting Expenses (Tables)

12 Months Ended

Dec. 31, 2014

Insurance [Abstract]

Components of acquisition costs and other underwriting expenses

The following table summarizes the components of acquisition costs and other underwriting expenses for the years ended December 31, 2014, 2013 and 2012:

(Amounts in Thousands)	2014		2013		2012
Policy acquisition expenses	$	460,010	$	244,461	$	178,633
Salaries and benefits	367,549		247,173		155,441
Other insurance general and administrative expense	29,364		41,528		21,931
	$	856,923	$	533,162	$	356,005

XML

Schedule IV - Reinsurance (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
Gross Amount									$ 4,816,607	$ 3,308,136	$ 2,067,635
Ceded to Other Companies									1,852,236	1,297,009	918,791
Amount from Other Companies									562,193	254,863	270,008
Net earned premium	908,163	914,413	874,937	829,051	707,562	613,895	536,539	407,994	3,526,564	2,265,990	1,418,852
General Insurance
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items]
Gross Amount									5,422,484	3,869,893	2,494,846
Ceded to Other Companies									2,131,347	1,551,238	1,101,289
Amount from Other Companies									665,481	247,018	254,480
Net earned premium									$ 3,956,618	$ 2,565,673	$ 1,648,037
Premiums, percentage assumed to net									16.80%	9.60%	15.40%

XML

Property and Equipment, Net (Tables)

12 Months Ended

Dec. 31, 2014

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

(Amounts in Thousands) As of December 31,	2014			2013
Land	$	7,593		$	7,593
Building	25,478			23,284
Software	92,211			65,699
Computer equipment	41,924			27,575
Other equipment	53,529			19,881
Leasehold improvements	25,691			22,968
	246,426			167,000
Less: Accumulated depreciation and amortization	(92,251		)	(62,701		)
	$	154,175		$	104,299

XML

Income Taxes Income Taxes (Reconciliation of Effective Tax Rate) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Income Tax Disclosure [Abstract]
Income before equity in earnings (loss) of unconsolidated subsidiaries									$ 471,933	$ 367,046	$ 196,857
Tax at federal statutory rate of 35%									165,177	128,466	68,900
Net income of non-includible foreign subsidiaries									(99,904)	(45,075)	(43,806)
Other, net									(11,587)	14,628	(3,802)
Provision for income taxes	$ 15,940	$ (7,664)	$ 17,966	$ 27,444	$ 30,628	$ 23,880	$ 27,402	$ 16,109	$ 53,686	$ 98,019	$ 21,292
Effective tax rate									11.40%	26.70%	10.80%
Federal statutory rate									35.00%	35.00%

XML

Investments (Summary of Gross Unrealized Losses of Fixed-maturities and Equity Securities) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014 Contract	Dec. 31, 2013 Contract
Schedule of Available-for-sale Securities [Line Items]
Fair Market Value, Less than 12 Months	$ 562,070	$ 1,953,641
Unrealized Losses, Less than 12 Months	(30,525)	(73,288)
No. of Positions Held, Less than 12 Months	474	1,012
Fair Market Value, 12 Months or More	309,215	87,497
Unrealized Losses, 12 Months or More	(11,819)	(2,744)
No. of Positions Held, 12 Months or More	227	22
Total Fair Market Value	871,285	2,041,138
Total Unrealized Losses	(42,344)	(76,032)
Common and Preferred stock
Schedule of Available-for-sale Securities [Line Items]
Fair Market Value, Less than 12 Months	38,970	4,875
Unrealized Losses, Less than 12 Months	(7,764)	(2,100)
No. of Positions Held, Less than 12 Months	21	51
Fair Market Value, 12 Months or More	400	0
Unrealized Losses, 12 Months or More	(98)	0
No. of Positions Held, 12 Months or More	2	0
Total Fair Market Value	39,370	4,875
Total Unrealized Losses	(7,862)	(2,100)
U.S. treasury securities
Schedule of Available-for-sale Securities [Line Items]
Fair Market Value, Less than 12 Months	1,030	52,757
Unrealized Losses, Less than 12 Months	(54)	(851)
No. of Positions Held, Less than 12 Months	7	18
Fair Market Value, 12 Months or More	3,219	0
Unrealized Losses, 12 Months or More	(50)	0
No. of Positions Held, 12 Months or More	9	0
Total Fair Market Value	4,249	52,757
Total Unrealized Losses	(104)	(851)
U.S. government agencies
Schedule of Available-for-sale Securities [Line Items]
Fair Market Value, Less than 12 Months	1,736	4,135
Unrealized Losses, Less than 12 Months	(3)	(84)
No. of Positions Held, Less than 12 Months	3	11
Fair Market Value, 12 Months or More	222	0
Unrealized Losses, 12 Months or More	(2)	0
No. of Positions Held, 12 Months or More	4
Total Fair Market Value	1,958	4,135
Total Unrealized Losses	(5)	(84)
Municipal bonds
Schedule of Available-for-sale Securities [Line Items]
Fair Market Value, Less than 12 Months	24,695	254,219
Unrealized Losses, Less than 12 Months	(240)	(17,986)
No. of Positions Held, Less than 12 Months	64	302
Fair Market Value, 12 Months or More	93,201	24,169
Unrealized Losses, 12 Months or More	(1,315)	(1,937)
No. of Positions Held, 12 Months or More	98	9
Total Fair Market Value	117,896	278,388
Total Unrealized Losses	(1,555)	(19,923)
Foreign government
Schedule of Available-for-sale Securities [Line Items]
Fair Market Value, Less than 12 Months	7,644	68,102
Unrealized Losses, Less than 12 Months	(83)	(1,324)
No. of Positions Held, Less than 12 Months	4	16
Fair Market Value, 12 Months or More	0	999
Unrealized Losses, 12 Months or More	0	(1)
No. of Positions Held, 12 Months or More	0	1
Total Fair Market Value	7,644	69,101
Total Unrealized Losses	(83)	(1,325)
Finance | Corporate bonds
Schedule of Available-for-sale Securities [Line Items]
Fair Market Value, Less than 12 Months	192,520	500,564
Unrealized Losses, Less than 12 Months	(4,297)	(13,402)
No. of Positions Held, Less than 12 Months	143	182
Fair Market Value, 12 Months or More	66,715	58,923
Unrealized Losses, 12 Months or More	(1,174)	(568)
No. of Positions Held, 12 Months or More	27	9
Total Fair Market Value	259,235	559,487
Total Unrealized Losses	(5,471)	(13,970)
Industrial | Corporate bonds
Schedule of Available-for-sale Securities [Line Items]
Fair Market Value, Less than 12 Months	236,845	500,366
Unrealized Losses, Less than 12 Months	(17,230)	(21,203)
No. of Positions Held, Less than 12 Months	194	263
Fair Market Value, 12 Months or More	60,511	3,383
Unrealized Losses, 12 Months or More	(6,045)	(236)
No. of Positions Held, 12 Months or More	43	2
Total Fair Market Value	297,356	503,749
Total Unrealized Losses	(23,275)	(21,439)
Utilities | Corporate bonds
Schedule of Available-for-sale Securities [Line Items]
Fair Market Value, Less than 12 Months	12,188	45,663
Unrealized Losses, Less than 12 Months	(490)	(2,008)
No. of Positions Held, Less than 12 Months	22	21
Fair Market Value, 12 Months or More	13,908	0
Unrealized Losses, 12 Months or More	(1,187)	0
No. of Positions Held, 12 Months or More	3	0
Total Fair Market Value	26,096	45,663
Total Unrealized Losses	(1,677)	(2,008)
Commercial mortgage backed securities
Schedule of Available-for-sale Securities [Line Items]
Fair Market Value, Less than 12 Months	15	28,552
Unrealized Losses, Less than 12 Months	0	(404)
No. of Positions Held, Less than 12 Months	2	18
Fair Market Value, 12 Months or More	4,729	0
Unrealized Losses, 12 Months or More	(169)	0
No. of Positions Held, 12 Months or More	8	0
Total Fair Market Value	4,744	28,552
Total Unrealized Losses	(169)	(404)
Agency backed
Schedule of Available-for-sale Securities [Line Items]
Fair Market Value, Less than 12 Months	41,187	492,740
Unrealized Losses, Less than 12 Months	(101)	(13,918)
No. of Positions Held, Less than 12 Months	10	120
Fair Market Value, 12 Months or More	66,172	0
Unrealized Losses, 12 Months or More	(1,777)	0
No. of Positions Held, 12 Months or More	29	0
Total Fair Market Value	107,359	492,740
Total Unrealized Losses	(1,878)	(13,918)
Non-agency backed
Schedule of Available-for-sale Securities [Line Items]
Fair Market Value, Less than 12 Months	5,092	205
Unrealized Losses, Less than 12 Months	(263)	(5)
No. of Positions Held, Less than 12 Months	3	6
Fair Market Value, 12 Months or More	28	23
Unrealized Losses, 12 Months or More	(1)	(2)
No. of Positions Held, 12 Months or More	2	1
Total Fair Market Value	5,120	228
Total Unrealized Losses	(264)	(7)
Asset-backed securities
Schedule of Available-for-sale Securities [Line Items]
Fair Market Value, Less than 12 Months	148	1,463
Unrealized Losses, Less than 12 Months	0	(3)
No. of Positions Held, Less than 12 Months	1	4
Fair Market Value, 12 Months or More	110	0
Unrealized Losses, 12 Months or More	(1)	0
No. of Positions Held, 12 Months or More	2	0
Total Fair Market Value	258	1,463
Total Unrealized Losses	$ (1)	$ (3)

XML

Income Taxes (Additional Information) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Operating Loss Carryforwards [Line Items]
Income tax benefit (expense)	$ (15,940)	$ 7,664	$ (17,966)	$ (27,444)	$ (30,628)	$ (23,880)	$ (27,402)	$ (16,109)	$ (53,686)	$ (98,019)	$ (21,292)
Amount of unrecognized deferred tax liability, undistributed earnings	257,587				112,263				257,587	112,263
Loss and LAE reserves	49,583				43,452				49,583	43,452
Deferred tax liability for equalization reserve	94,215				186,576				94,215	186,576
Domestic Tax Authority [Member]
Operating Loss Carryforwards [Line Items]
Operating Loss Carryforwards	26,079								26,079
Foreign Tax Authority [Member]
Operating Loss Carryforwards [Line Items]
Operating Loss Carryforwards					$ 307,288					$ 307,288

XML

Share Based Compensation (Tables)

12 Months Ended

Dec. 31, 2014

Share-based Compensation [Abstract]

Schedule of Option Granted, Exercised and Expired

The following schedule shows all options granted, exercised, and expired under the Plan for the years ended December 31, 2014, 2013 and 2012:

	2014				2013				2012
	Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
Outstanding at beginning of year	2,997,460		$	10.49	3,675,776		$	9.41	4,546,678		$	9.06
Granted	37,500		37.87		78,001		29.78		45,981		23.63
Exercised	(1,092,120	)	9.50		(747,272	)	7.21		(821,745	)	7.98
Forfeited	(8,470	)	7.03		(9,045	)	8.90		(95,138	)	11.87
Outstanding at end of year	1,934,370		$	11.60	2,997,460		$	10.49	3,675,776		$	9.41

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

The fair value was estimated at the date of grant with the following weighted average assumptions for the years ended December 31, 2014, 2013 and 2012:

	2014		2013		2012
Volatility	41.89	%	33.09	%	32.68	%
Risk-free interest rate	2.73	%	0.88	%	0.73	%
Weighted average expected lives in years	6.25		6.25		6.25
Dividend rate	1.90	%	1.68	%	1.37	%
Forfeiture rate	0.50	%	0.50	%	0.50	%

Summary of Restricted Stock and RSU Activity

A summary of the Company’s restricted stock and RSU activity for the years ended December 31, 2014, 2013 and 2012 is shown below:

	2014				2013				2012
	Shares or Units		Weighted Average Grant Date Fair Value		Shares or Units		Weighted Average Grant Date Fair Value		Shares or Units		Weighted Average Grant Date Fair Value
Non-vested at beginning of year	917,015		$	24.43	888,197		$	20.86	352,453		$	15.14
Granted	902,358		39.21		291,430		31.17		638,177		23.04
Vested	(497,534	)	27.38		(262,031	)	19.81		(101,681	)	14.70
Forfeited	(16,328	)	33.19		(581	)	29.31		(752	)	20.86
Non-vested at end of year	1,305,511		$	33.41	917,015		$	24.43	888,197		$	20.86

XML

Fair Value of Financial Instruments (Financial Assets and Financial Liabilities on Recurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	$ 4,720,686	$ 3,800,577
Fair Value of liabilities	31,619	308,221
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	159,019	288,610
Fair Value of liabilities	13,052	0
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	4,231,078	3,253,194
Fair Value of liabilities	2,033	296,276
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	330,589	258,773
Fair Value of liabilities	16,534	11,945
U.S. treasury securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	43,870	110,345
U.S. treasury securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	43,870	110,345
U.S. treasury securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	0	0
U.S. treasury securities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	0	0
U.S. government agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	13,538	10,489
U.S. government agencies | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	0	0
U.S. government agencies | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	13,538	10,489
U.S. government agencies | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	0	0
Municipal bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	482,041	446,183
Municipal bonds | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	0	0
Municipal bonds | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	482,041	446,183
Municipal bonds | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	0	0
Foreign government
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	112,731	160,105
Foreign government | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	0
Foreign government | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	112,731	160,105
Foreign government | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	0
Commercial mortgage backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	38,685	28,566
Commercial mortgage backed securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	0	0
Commercial mortgage backed securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	38,685	28,566
Commercial mortgage backed securities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	0	0
Agency backed
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	975,782	423,137
Agency backed | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	0	0
Agency backed | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	975,782	423,137
Agency backed | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	0	0
Non-agency backed
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	22,503	6,749
Non-agency backed | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	0	0
Non-agency backed | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	22,503	6,749
Non-agency backed | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	0	0
Asset-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	710	6,120
Asset-backed securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	0
Asset-backed securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	710	6,120
Asset-backed securities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	0
Equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets		15,148
Equity securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets		15,148
Equity securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets		0
Equity securities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets		0
Short term investments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	63,916	114,202
Short term investments | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	63,916	114,202
Short term investments | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	0	0
Short term investments | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	0	0
Other investments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	31,186	25,749
Other investments | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	0	0
Other investments | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	0	0
Other investments | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	31,186	25,749
Securities Pledged as Collateral
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets		311,518
Securities Pledged as Collateral | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets		48,915
Securities Pledged as Collateral | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets		262,603
Securities Pledged as Collateral | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets		0
Life settlement contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	264,517	233,024
Life settlement contracts | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	0	0
Life settlement contracts | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	0	0
Life settlement contracts | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	264,517	233,024
Corporate bonds | Finance
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	1,221,862	1,084,599
Corporate bonds | Finance | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	0	0
Corporate bonds | Finance | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	1,221,862	1,084,599
Corporate bonds | Finance | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	0	0
Corporate bonds | Industrial
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	1,202,860	754,417
Corporate bonds | Industrial | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	0	0
Corporate bonds | Industrial | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	1,202,860	754,417
Corporate bonds | Industrial | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	0	0
Corporate bonds | Utilities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	138,692	70,226
Corporate bonds | Utilities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	0	0
Corporate bonds | Utilities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	138,692	70,226
Corporate bonds | Utilities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	0	0
Equity securities sold but not yet purchased, market
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value of liabilities	13,052
Equity securities sold but not yet purchased, market | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value of liabilities	13,052
Equity securities sold but not yet purchased, market | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value of liabilities	0
Equity securities sold but not yet purchased, market | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value of liabilities	0
Securities sold under agreements to repurchase, at contract value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value of liabilities		293,222
Securities sold under agreements to repurchase, at contract value | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value of liabilities		0
Securities sold under agreements to repurchase, at contract value | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value of liabilities		293,222
Securities sold under agreements to repurchase, at contract value | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value of liabilities		0
Life settlement contract profit commission
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value of liabilities	16,534	11,945
Life settlement contract profit commission | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value of liabilities	0	0
Life settlement contract profit commission | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value of liabilities	0	0
Life settlement contract profit commission | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value of liabilities	16,534	11,945
Derivatives
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value of liabilities	2,033	3,054
Derivatives | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value of liabilities	0	0
Derivatives | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value of liabilities	2,033	3,054
Derivatives | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value of liabilities	0	0
Available-for-sale Securities | Equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	81,044
Available-for-sale Securities | Equity securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	24,484
Available-for-sale Securities | Equity securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	21,674
Available-for-sale Securities | Equity securities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	34,886
Trading Securities | Equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	26,749
Trading Securities | Equity securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	26,749
Trading Securities | Equity securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	0
Trading Securities | Equity securities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets	$ 0

XML

Debt (Trust Preferred Securities) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Debt Instrument [Line Items]
Aggregate Liquidation Amount of Trust Preferred Securities	$ 120,000
Aggregate Liquidation Amount of Common Securities	3,714
Aggregate Principal Amount of Notes	123,714	123,714
AmTrust Capital Financing Trust I
Debt Instrument [Line Items]
Aggregate Liquidation Amount of Trust Preferred Securities	25,000
Aggregate Liquidation Amount of Common Securities	774
Aggregate Principal Amount of Notes	25,774
Stated Maturity of Notes	Mar. 17, 2035
Per annum interest rate of notes (percentage)	827.50%
AmTrust Capital Financing Trust II
Debt Instrument [Line Items]
Aggregate Liquidation Amount of Trust Preferred Securities	25,000
Aggregate Liquidation Amount of Common Securities	774
Aggregate Principal Amount of Notes	25,774
Stated Maturity of Notes	Jun. 15, 2035
Per annum interest rate of notes (percentage)	771.00%
AmTrust Capital Financing Trust III
Debt Instrument [Line Items]
Aggregate Liquidation Amount of Trust Preferred Securities	30,000
Aggregate Liquidation Amount of Common Securities	928
Aggregate Principal Amount of Notes	30,928
Stated Maturity of Notes	Sep. 15, 2036
Per annum interest rate of notes (percentage)	354.06%
AmTrust Capital Financing Trust IV
Debt Instrument [Line Items]
Aggregate Liquidation Amount of Trust Preferred Securities	40,000
Aggregate Liquidation Amount of Common Securities	1,238
Aggregate Principal Amount of Notes	$ 41,238
Stated Maturity of Notes	Mar. 15, 2037
Per annum interest rate of notes (percentage)	324.06%

XML

Deferred Policy Acquisition Costs (Tables)

12 Months Ended

Dec. 31, 2014

Insurance [Abstract]

Deferred Policy Acquisition Costs

The following table reflects the amounts of policy acquisition costs deferred and amortized for the years ended December 31, 2014, 2013 and 2012 as follows:

(Amounts in Thousands)	2014			2013			2012
Balance, beginning of period	$	468,404		$	349,126		$	280,991
Acquisition costs deferred	698,689			486,566			311,022
Amortization	(538,710		)	(367,288		)	(242,887		)
Balance, end of period	$	628,383		$	468,404		$	349,126

XML

Segments

12 Months Ended

Dec. 31, 2014

Segment Reporting [Abstract]

Segments

Segments

The Company currently operates three business segments, Small Commercial Business; Specialty Risk and Extended Warranty; and Specialty Program. The Company also has a segment, Personal Lines Reinsurance, which is in run-off. The “Corporate & Other” segment represents the activities of the holding company as well as a portion of service and fee revenue. In determining total assets (excluding cash and invested assets) by segment, the Company identifies those assets that are attributable to a particular segment such as deferred acquisition cost, reinsurance recoverable, goodwill, intangible assets and prepaid reinsurance while the remaining assets are allocated based on gross written premium by segment. In determining cash and invested assets by segment, the Company matches certain identifiable liabilities such as unearned premium and loss and loss adjustment expense reserves by segment. The remaining cash and invested assets are then allocated based on gross written premium by segment. Investment income and realized gains (losses) are determined by calculating an overall annual return on cash and invested assets and applying that overall return to the cash and invested assets by segment. Ceding commission revenue is allocated to each segment based on that segment’s proportionate share of the Company’s overall acquisition costs. Interest expense is allocated based on gross written premium by segment. Income taxes are allocated on a pro-rata basis based on the Company’s effective tax rate. Additionally, management reviews the performance of underwriting income in assessing the performance of and making decisions regarding the allocation of resources to the segments. Underwriting income excludes, primarily, service and fee revenue, investment income and other revenues, other expenses, interest expense and income taxes. Management believes that providing this information in this manner is essential to providing Company’s stockholders with an understanding of the Company’s business and operating performance.

During the years ended December 31, 2014, 2013 and 2012, the Company’s Specialty Risk and Extended Warranty segment derived over ten percent of its total revenue from one broker. During the years ended 2014 and 2013, the Company’s Specialty Program segment derived over ten percent of its total revenue from one broker and in 2012 the segment derived over ten percent of its total revenue from two brokers.

The following tables summarize business segments as follows for 2014, 2013 and 2012:

(Amounts in Thousands)	Small Commercial Business			Specialty Risk and Extended Warranty			Specialty Program			Personal Lines Reinsurance - Run off			Corporate and Other			Total
Year Ended December 31, 2014:
Gross written premium	$	2,999,714		$	1,983,052		$	1,105,199		$	—		$	—		$	6,087,965
Net written premium	$	1,882,383		$	1,333,747		$	740,488		$	—		$	—		$	3,956,618
Change in unearned premium	(275,578		)	(101,509		)	(61,876		)	8,909			—			(430,054		)
Net earned premium	1,606,805			1,232,238			678,612			8,909			—			3,526,564
Loss and loss adjustment expense	(1,055,521		)	(817,780		)	(456,422		)	(12,896		)	—			(2,342,619		)
Acquisition costs and other underwriting expenses	(416,965		)	(253,794		)	(183,541		)	(2,623		)	—			(856,923		)
	(1,472,486		)	(1,071,574		)	(639,963		)	(15,519		)	—			(3,199,542		)
Underwriting income	134,319			160,664			38,649			(6,610		)	—			327,022
Service and fee income	95,430			253,220			428			—			60,665			409,743
Investment income and realized gain	62,810			56,852			27,994			368			—			148,024
Other expenses	(215,002		)	(142,134		)	(79,214		)	—			—			(436,350		)
Interest expense including loss on extinguishment of debt	(27,439		)	(18,139		)	(10,110		)	—			—			(55,688		)
Foreign currency gain	—			60,245			—			—			—			60,245
Gain on investment in life settlement contracts net of profit commission	6,064			4,008			2,234			—			—			12,306
Gain on sale of subsidiary	6,631			—			—			—			—			6,631
Provision for income taxes	(6,741		)	(40,211		)	2,148			670			(9,552		)	(53,686		)
Equity in earnings of unconsolidated subsidiaries –  related party	—			—			—			—			28,351			28,351
Net income	$	56,072		$	334,505		$	(17,871	)	$	(5,572	)	$	79,464		$	446,598

(Amounts in Thousands)	Small Commercial Business			Specialty Risk and Extended Warranty			Specialty Program			Personal Lines Reinsurance - Run off			Corporate and Other			Total
Year Ended December 31, 2013:
Gross written premium	$	1,659,980		$	1,511,649		$	879,455		$	65,827		$	—		$	4,116,911
Net written premium	$	935,313		$	944,081		$	620,452		$	65,827		$	—		$	2,565,673
Change in unearned premium	(101,501		)	(132,244		)	(100,081		)	34,143			—			(299,683		)
Net earned premium	833,812			811,837			520,371			99,970			—			2,265,990
Loss and loss adjustment expense	(548,598		)	(545,516		)	(355,067		)	(68,180		)	—			(1,517,361		)
Acquisition costs and other underwriting expenses	(212,824		)	(151,188		)	(138,650		)	(30,500		)	—			(533,162		)
	(761,422		)	(696,704		)	(493,717		)	(98,680		)	—			(2,050,523		)
Underwriting income	72,390			115,133			26,654			1,290			—			215,467
Service and fee income	87,519			191,941			114			—			51,985			331,559
Investment income and realized gain	34,665			46,304			18,464			913			—			100,346
Other expenses	(117,583		)	(107,076		)	(62,295		)	(4,663		)	—			(291,617		)
Interest expense	(13,987		)	(12,738		)	(7,411		)	(555		)	—			(34,691		)
Foreign currency loss	—			(6,533		)	—			—			—			(6,533		)
Gain on investment in life settlement contracts net of profit commission	1,532			1,395			812			61			—			3,800
Acquisition gain on purchase	23,183			25,532			—			—			—			48,715
Provision for income taxes	(24,389		)	(64,281		)	5,989			748			(16,086		)	(98,019		)
Equity in earnings of unconsolidated subsidiaries –  related party	—			—			—			—			11,566			11,566
Net income	$	63,330		$	189,677		$	(17,673	)	$	(2,206	)	$	47,465		$	280,593

(Amounts in Thousands)	Small Commercial Business			Specialty Risk and Extended Warranty			Specialty Program			Personal Lines Reinsurance - Run off			Corporate and Other			Total
Year Ended December 31, 2012:
Total gross written premium	$	933,740		$	1,118,710		$	578,735		$	118,141		$	—		$	2,749,326
Net written premium	$	474,381		$	624,555		$	430,960		$	118,141		$	—		$	1,648,037
Change in unearned premium	(57,816		)	(82,982		)	(82,392		)	(5,995		)	—			(229,185		)
Net earned premium	416,565			541,573			348,568			112,146						1,418,852
Loss and loss adjustment expense	(270,843		)	(341,196		)	(238,302		)	(72,334		)	—			(922,675		)
Acquisition costs and other underwriting expenses	(110,895		)	(112,491		)	(98,415		)	(34,204		)	—			(356,005		)
	(381,738		)	(453,687		)	(336,717		)	(106,538		)				(1,278,680		)
Underwriting income	34,827			87,886			11,851			5,608			—			140,172
Service and fee income	53,886			86,672			1,342			—			30,274			172,174
Investment income and realized gain	27,217			30,952			16,362			2,617			—			77,148
Other expenses	(54,788		)	(82,031		)	(33,958		)	(6,932		)	—			(177,709		)
Interest expense	(9,682		)	(11,600		)	(6,001		)	(1,225		)	—			(28,508		)
Foreign currency loss	—			(242		)	—			—			—			(242		)
Gain on investment in life settlement contracts net of profit commission	4,694			5,624			2,910			594			—			13,822
Acquisition gain on purchase	—			—			—			—			—			—
Provision for income taxes	(5,800		)	(12,109		)	774			(68		)	(4,089		)	(21,292		)
Equity in earnings of unconsolidated subsidiaries – related party	$	—		$	—		$	—		$	—		$	9,295		$	9,295
Net income	$	50,354		$	105,152		$	(6,720	)	$	594		$	35,480		$	184,860

The following tables summarize net earned premium by major line of business, by segment, for 2014, 2013 and 2012:

(Amounts in Thousands)	Small Commercial Business		Specialty Risk and Extended Warranty		Specialty Program		Personal Lines Reinsurance - Run off		Total
Year Ended December 31, 2014:
Workers' compensation	$	1,061,130	$	—	$	260,756	$	—	$	1,321,886
Warranty	—		433,710		234		—		433,944
Other liability	98,846		198,505		127,364		—		424,715
Commercial auto and liability, physical damage	162,377		25,255		116,528		1,563		305,723
Medical malpractice	—		176,608		—		—		176,608
Other	284,452		398,160		173,730		7,346		863,688
Total net earned premium	$	1,606,805	$	1,232,238	$	678,612	$	8,909	$	3,526,564
Year Ended December 31, 2013:
Workers' compensation	$	665,087	$	—	$	166,071	$	—	$	831,158
Warranty	—		397,978		1,952		—		399,930
Other liability	37,308		108,018		125,827		7		271,160
Commercial auto and liability, physical damage	51,623		13,631		108,962		8,612		182,828
Medical malpractice	—		191,217		—		—		191,217
Other	79,794		100,993		117,559		91,351		389,697
Total net earned premium	$	833,812	$	811,837	$	520,371	$	99,970	$	2,265,990
Year Ended December 31, 2012:
Workers' compensation	$	340,221	$	—	$	96,326	$	—	$	436,547
Warranty	—		226,559		10,303		—		236,862
Other liability	25,996		93,914		71,526		7		191,443
Commercial auto and liability, physical damage	26,893		8,516		89,599		7,108		132,116
Medical malpractice	—		170,078		—		—		170,078
Other	23,455		42,506		80,814		105,031		251,806
Total net earned premium	$	416,565	$	541,573	$	348,568	$	112,146	$	1,418,852

The following tables summarize total asses and long lived assets, by segment, as of December 31, 2014 and 2013:

(Amounts in Thousands)	Small Commercial Business		Specialty Risk and Extended Warranty		Specialty Program		Personal Lines Reinsurance		Corporate and other		Total
As of December 31, 2014:
Fixed assets	$	75,966	$	50,220	$	27,989	$	—	$	—	$	154,175
Goodwill and intangible assets	285,583		348,216		33,882		—		—		667,681
Total assets	6,142,645		5,441,378		2,248,901		14,444		—		13,847,368
As of December 31, 2013:
Fixed assets	$	42,054	$	38,297	$	22,280	$	1,668	$	—	$	104,299
Goodwill and intangible assets	233,566		399,954		31,873		—		—		665,393
Total assets	4,261,764		5,036,121		1,894,538		86,703		—		11,279,126

XML

Fair Value of Financial Instruments (Changes in Fair Value of Level 3 Financial Assets And Liabilities) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Beginning Balance	$ 246,828	$ 193,321
Net income (loss)	59,605	48,863
Other comprehensive income (loss)	7,079	(1,666)
Purchases and issuances	87,590	29,134
Sales and settlements	(72,889)	(26,156)
Net transfers into (out of) Level 3	0	0
Ending Balance	314,055	246,828
Other investments
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Beginning Balance	25,749	11,144
Net income (loss)	3,084	1,813
Other comprehensive income (loss)	0	(1,666)
Purchases and issuances	20,207	17,228
Sales and settlements	(17,854)	(6,102)
Net transfers into (out of) Level 3	0	0
Ending Balance	31,186	25,749
Equity securities
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Beginning Balance	0
Net income (loss)	0
Other comprehensive income (loss)	7,079
Purchases and issuances	41,965
Sales and settlements	0
Net transfers into (out of) Level 3	0
Ending Balance	34,886
Life settlement contracts
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Beginning Balance	233,024	193,927
Net income (loss)	61,110	47,245
Other comprehensive income (loss)	0	0
Purchases and issuances	25,418	11,906
Sales and settlements	(55,035)	(20,054)
Net transfers into (out of) Level 3	0	0
Ending Balance	264,517	233,024
Life settlement contract profit commission
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Beginning Balance	(11,945)	(11,750)
Net income (loss)	(4,589)	(195)
Other comprehensive income (loss)	0	0
Purchases and issuances	0	0
Sales and settlements	0	0
Net transfers into (out of) Level 3	0	0
Ending Balance	$ (16,534)	$ (11,945)

XML

Share Based Compensation (Fair Value Assumptions) (Details)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Share-based Compensation [Abstract]
Volatility	41.89%	33.09%	32.68%
Risk-free interest rate	2.73%	0.88%	0.73%
Weighted average expected lives in years	6 years 3 months	6 years 3 months	6 years 3 months
Dividend rate	1.90%	1.68%	1.37%
Forfeiture rate	0.50%	0.50%	0.50%

XML

Employee Benefit Plans (Net Periodic Benefit Costs) (Details) (USD $) In Thousands, unless otherwise specified	10 Months Ended	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2014
Compensation and Retirement Disclosure [Abstract]
Interest costs on benefit obligation	$ 1,608	$ 2,074
Assumed return on plan assets	(1,900)	(2,600)
Total	$ (292)	$ (526)

XML

Stockholders' Equity (Preferred Stock Issuance) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	0 Months Ended		12 Months Ended			0 Months Ended
	Jul. 10, 2014	Jun. 10, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Sep. 16, 2014	Jul. 02, 2014	Jul. 10, 2014
Class of Stock [Line Items]
Preferred stock, shares issued			4,785,000	4,600,000
Dividend rate, percentage		6.75%
Preferred stock, par value			$ 0.01	$ 0.01		$ 0.01
Liquidation per share		$ 25
Dividend received by the company			$ 7,400	$ 6,900	$ 7,200
Underwriting discount and commissions	3,614		2,745
Noncumulative Preferred Stock
Class of Stock [Line Items]
Preferred stock, shares issued		4,600,000
Dividend rate, percentage						7.625%	7.25%
Preferred stock, par value							$ 0.01
Liquidation per share						$ 1,000	$ 1,000
Redemption price per share		$ 25
Shares issued during the period, shares	105,000
American Depository Shares
Class of Stock [Line Items]
Liquidation per share						$ 25	$ 25
Shares issued during the period, shares	200,000					3,200,000	4,000,000	4,200,000
Net proceeds from this offering, including over allotment	101,702		77,480
Series A Preferred Stock
Class of Stock [Line Items]
Dividend received by the company				$ 3,989

XML

Investments (Net Investment Income) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Gross Investment Income, Operating									$ 131,793	$ 86,711	$ 69,087
Less: Investment expenses and interest expense on securities sold under agreement to repurchase									(192)	(1,892)	(920)
Net investment income	35,928	34,552	32,594	28,527	20,800	23,290	22,634	18,095	131,601	84,819	68,167
Fixed maturities
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Gross Investment Income, Operating									124,976	82,392	67,182
Equity securities
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Gross Investment Income, Operating									1,346	2,119	127
Trading Securities
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Gross Investment Income, Operating									29	0
Cash and cash equivalents
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Gross Investment Income, Operating									$ 5,442	$ 2,200	$ 1,778

XML

Investment in Life Settlements (Investments in Life Settlements) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014 policy Contract	Dec. 31, 2013 policy Contract
Number of Life Settlement Contracts
Expected Maturity Term in Years, 0-1	0	0
Expected Maturity Term in Years, 1-2	0	0
Expected Maturity Term in Years, 2-3	8	1
Expected Maturity Term in Years, 3-4	5	13
Expected Maturity Term in Years, 4-5	7	2
Thereafter	254	255
Total	274	271
Fair Value
Expected Maturity Term in Years, 0-1	$ 0	$ 0
Expected Maturity Term in Years, 1-2	0	0
Expected Maturity Term in Years, 2-3	43,593	2,726
Expected Maturity Term in Years, 3-4	10,081	53,767
Expected Maturity Term in Years, 4-5	14,335	5,622
Thereafter	196,508	170,909
Total	264,517	233,024
Face Value
Expected Maturity Term in Years, 0-1	0	0
Expected Maturity Term in Years, 1-2	0	0
Expected Maturity Term in Years, 2-3	70,500	5,000
Expected Maturity Term in Years, 3-4	22,500	103,000
Expected Maturity Term in Years, 4-5	49,000	13,000
Thereafter	1,596,209	1,641,409
Total	1,738,209	1,762,409
Life settlement contracts, number of contracts with fair value	218	191
Number of policies with a negative value from discounted cash flow model	56	80
Premiums paid for the year ended	5,963	9,371
Death benefit received	$ 4,950	$ 3,012

XML

Employee Benefit Plans Employee Benefit Plans (Tables)

12 Months Ended

Dec. 31, 2014

Compensation and Retirement Disclosure [Abstract]

Changes in Projected Benefit Obligations, Fair Value of Plan Assets, and Funded Status of Plan

Changes in benefit obligations and plan assets as of December 31, 2014 and 2013 is as follows:

(Amounts in Thousands)	2014			2013
Change in Benefit Obligation
Benefit obligation at January 1, 2014 and February 28, 2013	$	46,873		$	39,877
Interest cost	2,074			1,608
Actuarial loss	4,621			2,074
Benefits paid net of retiree contributions	(820		)	(553		)
Exchange rate changes	(3,202		)	3,867
Benefit Obligation at End of Year	49,546			$	46,873
Change in Plan Assets
Fair Value of Plan Assets at January 1, 2014 and February 28, 2013	43,592			$	34,832
Actual return on assets	5,974			1,820
Employer contributions	1,004			3,958
Benefits and expenses paid net of retiree contributions	(820		)	(553		)
Exchange rate changes	(3,016		)	3,535
Fair Value of Plan Assets at End of Year	$	46,734		$	43,592
Funded Status at December 31, 2014 and 2013	$	(2,812	)	$	(3,281	)

Schedule of Net Benefit Costs

Net periodic benefit cost for the year ended December 31, 2014 and 2013 is as follows:

(Amounts in Thousands)	2014			2013
Net Periodic Benefit Costs
Interest costs on benefit obligation	$	2,074		$	1,608
Assumed return on plan assets	(2,600		)	(1,900		)
Total	$	(526	)	$	(292	)

Schedule of Expected Benefit Payments

Estimated future benefit payments to retirees from the Company's Non-U.S. pension trust are as follows:

(Amounts in Thousands)
2015	$	749
2016	858
2017	910
2018	815
2019	1,055
2020 - 2024	7,531

Schedule of Accumulated Benefit Obligations in Excess of Fair Value of Plan Assets

Information regarding the pension plan with projected benefit obligations and accumulated benefit obligations in excess of the fair value of plan assets as of December 31, 2014 and 2013 is as follows:

(Amounts in Thousands)	2014		2013
Non-U.S. Pension Plan
Projected benefit obligation and accumulated benefit obligation	$	49,546	$	46,873
Fair value of plan assets	46,734		43,592
Excess of projected benefit obligation and accumulated benefit obligation over plan assets	$	2,812	$	3,281

Schedule of Assumptions Used

Weighted average assumptions used to measure the benefit obligation for the Company's defined benefit plan as of December 31, 2014 and 2013 is as follows:

	2014		2013
Weighted Average Assumptions
Discount rate used for liability determination	3.75	%	4.50	%
Measurement date	September 30		September 30

Weighted average assumptions used to measure the net periodic benefit cost for the Company's defined benefit plan for the year ended December 31, 2014 and 2013 is as follows:

	2014		2013
Weighted Average Assumptions
Discount rate used for expense determination	4.50	%	4.75	%
Long term rate of return on assets	6.00	%	6.00	%
Assumed rate of increase for pension payments	3.25	%	3.25	%

Schedule of Allocation of Plan Assets

Actual and target allocation of the plan assets for 2014 and 2013 by asset category are as follows:

	2014				2013
	Target Allocation		Actual Allocation		Target Allocation		Actual Allocation
Asset Category
Equity securities	47.5	%	48.0	%	47.5	%	51.0	%
Fixed income securities	40.0	%	42.0	%	40.0	%	39.0	%
Real estate partnerships	12.5	%	10.0	%	12.5	%	10.0	%
Total	100.0	%	100.0	%	100.0	%	100.0	%

Schedule of Changes in Fair Value of Plan Assets

The following table sets forth, by level within the fair value hierarchy, the Company's defined benefit plan assets as of December 31, 2014 and 2013:

(Amounts in Thousands) As of December 31, 2014	Total		Level 1		Level 2		Level 3
Money market funds	$	185	$	185	$	—	$	—
Registered investment companies:
Equity mutual funds	22,376		22,376		—		—
Fixed income mutual funds	19,423		19,423		—		—
Total registered investment companies	41,799		41,799		—		—
Real estate partnerships	4,750				4,750		—
	$	46,734	$	41,984	$	4,750	$	—

(Amounts in Thousands) As of December 31, 2013	Total		Level 1		Level 2		Level 3
Money market funds	$	196	$	196	$	—	$	—
Registered investment companies:
Equity mutual funds	22,159		22,159		—		—
Fixed income mutual funds	16,871		16,871		—		—
Total registered investment companies	39,030		39,030		—		—
Real estate partnerships	4,366		—		4,366		—
	$	43,592	$	39,226	$	4,366	$	—

XML

Debt (Secured Loan Agreement) (Details) (USD $)	12 Months Ended				0 Months Ended	3 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Aug. 29, 2014	Dec. 31, 2014
Debt Instrument [Line Items]
Term loan, maturity period	5 years
Percentage of outstanding balance of loan in excess of fair value of aircraft				90.00%
Secured Debt
Debt Instrument [Line Items]
Term loan, maturity period				7 years
Debt instrument, face amount				$ 10,800,000
Debt instrument, stated interest rate (percentage)				4.45%
Monthly installment payment				117,000
Balloon payment at maturity date				2,970,000
Interest expense	330,000	380,000	432,000
Repayments of debt		270,000
KEY Equipment Finance [Member] | Secured Debt
Debt Instrument [Line Items]
Term loan, maturity period					5 years
Debt instrument, face amount					30,500,000
Debt instrument, stated interest rate (percentage)					2.27%
Monthly installment payment					538,000
Interest expense						$ 227,000

XML

Stockholders' Equity (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning Balance	$ (8,164)	$ 64,231	$ (9,999)
Other comprehensive income (loss) before reclassifications	106,468	(119,666)	107,560
Amounts reclassed from accumulated other comprehensive income (loss)	(7,566)	8,707	6,640
Income tax benefit (expense)	(34,615)	38,564	(39,970)
Other comprehensive income (loss), net of tax	64,287	(72,395)	74,230
Ending Balance	56,123	(8,164)	64,231
Foreign Currency Items
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning Balance	2,582	(10,361)	(17,091)
Other comprehensive income (loss) before reclassifications	(26,706)	19,912	10,354
Amounts reclassed from accumulated other comprehensive income (loss)	0	0	0
Income tax benefit (expense)	9,348	(6,969)	(3,624)
Other comprehensive income (loss), net of tax	(17,358)	12,943	6,730
Ending Balance	(14,776)	2,582	(10,361)
Unrealized Gains (Losses) on Investments
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning Balance	(7,023)	77,605	9,372
Other comprehensive income (loss) before reclassifications	133,775	(138,902)	98,334
Amounts reclassed from accumulated other comprehensive income (loss)	(7,566)	8,707	6,640
Income tax benefit (expense)	(44,173)	45,567	(36,741)
Other comprehensive income (loss), net of tax	82,036	(84,628)	68,233
Ending Balance	75,013	(7,023)	77,605
Interest Rate Swap Hedge
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning Balance	(1,985)	(3,013)	(2,280)
Other comprehensive income (loss) before reclassifications	1,022	1,581	(1,128)
Amounts reclassed from accumulated other comprehensive income (loss)	0	0	0
Income tax benefit (expense)	(358)	(553)	395
Other comprehensive income (loss), net of tax	664	1,028	(733)
Ending Balance	(1,321)	(1,985)	(3,013)
Net Benefit Plan Assets and Obligations Recognized in Stockholders' Equity
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning Balance	(1,738)	0	0
Other comprehensive income (loss) before reclassifications	(1,623)	(2,257)	0
Amounts reclassed from accumulated other comprehensive income (loss)	0	0	0
Income tax benefit (expense)	568	519	0
Other comprehensive income (loss), net of tax	(1,055)	(1,738)	0
Ending Balance	$ (2,793)	$ (1,738)	$ 0

XML

Investments (Fair Values of Restricted Assets) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Investments, Debt and Equity Securities [Abstract]
Restricted cash and cash equivalents	$ 186,225	$ 100,439
Restricted investments	734,271	978,910
Total restricted cash and investments	$ 920,496	$ 1,079,349

XML

Schedule II -Condensed Financial Information of Registrant Balance Sheet (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Condensed Financial Statements, Captions [Line Items]
Cash	$ 902,750	$ 830,022	$ 414,370	$ 406,847
Invested assets	4,575,881	3,657,309
Total assets	13,847,368	11,279,126
6.125% Notes due 2023	14,500	14,500
5.5% due 2021 Convertible senior notes	214,424	164,218
2.75% due 2044 Convertible senior notes	250,000	250,000
Junior subordinated debt	123,714	123,714
Revolving credit facility	120,000	0
Secured Debt	35,233	7,742
Other liabilities	795,877	672,575
Total liabilities	11,650,567	9,699,661
Common stock	980	980
Preferred stock, $.01 par value; 10,000 shares authorized, 4,785 and 4,600 issued and outstanding in 2014 and 2013, respectively	300,000	115,000
Paid-in and contributed capital	1,022,769	1,033,084
Treasury shares	(297,586)	(284,891)
Accumulated other comprehensive income	56,123	(8,164)
Retained earnings	954,734	584,996
Total AmTrust Financial Services, Inc. equity	2,037,020	1,441,005	1,144,121	890,563
Liabilities and Equity, Total	13,847,368	11,279,126
Parent
Condensed Financial Statements, Captions [Line Items]
Cash	7,690	1,495	6,877	0
Invested assets	1,353	67
Carrying value of subsidiaries, at equity	2,826,090	1,949,997
Other assets	549,780	358,881
Total assets	3,384,913	2,310,440
Due to affiliates – net	322,243	207,540
6.125% Notes due 2023	250,000	250,000
5.5% due 2021 Convertible senior notes	56,745	164,218
2.75% due 2044 Convertible senior notes	157,679	0
Junior subordinated debt	123,714	123,714
Revolving credit facility	120,000	0
Secured Debt	28,572	0
Other liabilities	288,940	123,963
Total liabilities	1,347,893	869,435
Common stock	980	980
Paid-in and contributed capital	1,022,769	1,033,084
Treasury shares	(297,586)	(284,891)
Accumulated other comprehensive income	56,123	(8,164)
Retained earnings	954,734	584,996
Total AmTrust Financial Services, Inc. equity	2,037,020	1,441,005
Liabilities and Equity, Total	$ 3,384,913	$ 2,310,440

XML

Acquisitions (Mutual Insurance) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended			0 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	May 13, 2013
Business Acquisition [Line Items]
Proceeds from issuance of common stock	$ (59,155)	$ 472	$ 0
Acquisition gain	0	48,715	0
Net written premium	3,956,618	2,565,673	1,648,037
Revenues	4,084,331	2,697,895	1,668,174
MIHC
Business Acquisition [Line Items]
Proceeds from issuance of common stock		472		472
Shares issued during the period, shares				18,000
Discount on market price of common stock				20.00%
Discount on market price of common stock, value		118		118
Stock purchased				8,000
Cash paid				48,500
Cash contribution retained				40,618
Consideration transferred, liabilities incurred				6,500
Purchase price				14,500
Accrued loss reserves	4,531
Acquisition gain	17,951
Net written premium	58,096	32,144
First Nonprofit Foundation | MIHC
Business Acquisition [Line Items]
Contribution to nonprofit organization				$ 7,882

XML

Quarterly Financial Data (Unaudited) (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended			1 Months Ended	3 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Apr. 19, 2013	Dec. 31, 2014	Jun. 30, 2013
Acquisition gain	$ 0	$ 48,715	$ 0
Sequoia Insurance Company
Acquisition gain				5,231	5,231
Sequoia Insurance Company | Retrospective Loss on Pretax on Acquisition | Restatement Adjustment
Acquisition gain						13,309
Sequoia Insurance Company | Retrospective Loss After Tax on Acquisition | Restatement Adjustment
Acquisition gain						18,511
FNIC | Retrospective Loss on Pretax on Acquisition | Restatement Adjustment
Acquisition gain						5,231
FNIC | Retrospective Loss After Tax on Acquisition | Restatement Adjustment
Acquisition gain						$ 17,951

XML

Schedule II -Condensed Financial Information of Registrant Income Statement (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Acquisition gain on purchase									$ 0	$ 48,715	$ 0
Total revenues									4,084,331	2,697,895	1,668,174
Interest expense									45,857	34,691	28,508
Loss on extinguishment of debt									9,831	0	0
Federal tax (benefit) expense	15,940	(7,664)	17,966	27,444	30,628	23,880	27,402	16,109	53,686	98,019	21,292
Other expenses from operations	157,678	103,493	87,588	87,591	68,285	90,195	80,985	52,152	436,350	291,617	177,709
Net income	83,525	157,156	104,189	101,728	66,506	59,689	71,397	83,001	446,598	280,593	184,860
Parent
Investment income									183	207	227
Equity in undistributed net income of consolidated subsidiaries and partially-owned companies									539,915	319,738	218,123
Acquisition gain on purchase									0	23,183	0
Miscellaneous income (expense)									641	6	12
Total revenues									540,739	343,134	218,362
Interest expense									32,016	22,178	16,159
Loss on extinguishment of debt									9,831	0	0
Federal tax (benefit) expense									(4,800)	10,087	(1,099)
Other expenses from operations									57,094	30,276	18,442
Total Expenses									94,141	62,541	33,502
Net income									$ 446,598	$ 280,593	$ 184,860

XML

Fair Value of Financial Instruments (Portfolio of Life Insurance Policies) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Assets, Fair Value Disclosure [Abstract]
Average age of insured	81 years 1 month 6 days	80 years 1 month 6 days
Average life expectancy, months	121 months	131 months
Average face amount per policy	$ 6,624	$ 6,611
Fair value discount rate	7.50%
Internal rate of return	14.00%	14.20%

XML

Acquisitions (AHL) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended			1 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Nov. 30, 2013
Business Acquisition [Line Items]
Equalization reserves	$ 94,215	$ 186,576		$ 186,576
Goodwill	352,685	373,591	326,646	373,591
AmTrust Holdings Luxembourg
Business Acquisition [Line Items]
Unutilized equalization reserve	314,050
Equalization reserves	94,215
Increase (decrease) in overall expenses	30,379	214	9,274
AmTrust Holdings Luxembourg | Atlas COPCO Reinsurance S.A
Business Acquisition [Line Items]
Purchase price				80,700
Cash upon acquisition		89,100		89,100
Goodwill		16,900		16,900
Deferred tax liability		25,300		25,300
AmTrust Holdings Luxembourg | Re'A FIN S.A
Business Acquisition [Line Items]
Purchase price					93,400
Cash upon acquisition					102,800
Goodwill					18,700
Deferred tax liability					$ 28,100

XML

Investments (Additional Information) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014 Derivative Investment agreements	Dec. 31, 2013 agreements Investment	Dec. 31, 2012
Investment [Line Items]
Transfers to trading, fair market value	$ 16,830
Proceeds from sale of investment in trading securities	78,974
Proceeds from the sale of investments in available-for-sale securities	1,962,558	1,681,165	953,188
Number of securities account for gross unrealized loss	701	1,034
Number of interest rate swaps	2
Interest rate swaps liability	2,033	3,054
Fair value of securities sold but not yet purchased	13,052	0
Number of repurchase agreements		12
Securities sold under agreements to repurchase, principal amount	0	293,222
Securities sold under agreements to repurchase, interest expense	283	777
Collateral pledged in support of the repurchase agreements		311,518
Minimum
Investment [Line Items]
Securities sold under agreements to repurchase, interest rates		0.12%
Maximum
Investment [Line Items]
Securities sold under agreements to repurchase, interest rates		0.47%
Securities sold under agreements to repurchase, at contract value
Investment [Line Items]
Securities sold under agreements to repurchase, accrued interest		0
Equity securities
Investment [Line Items]
Fair value of securities sold but not yet purchased	13,052
Counterparty One
Investment [Line Items]
Number of repurchase agreements		9
Securities sold under agreements to repurchase, principal amount		242,304
Counterparty Two
Investment [Line Items]
Number of repurchase agreements		3
Securities sold under agreements to repurchase, principal amount		$ 50,918

XML

Investments (Unrealized Gain and Losses) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Total net unrealized gain (loss)	$ 113,097	$ (12,027)	$ 117,104
Deferred income tax benefit (expense)	(39,584)	4,209	(40,986)
Cumulative net unrealized gain (loss), net of deferred income tax as of December 31	73,513	(7,818)	76,118
Increase (decrease) in net unrealized gains, net of deferred income tax	81,331	(83,936)	67,708
Fixed maturities
Schedule of Available-for-sale Securities [Line Items]
Total net unrealized gain (loss)	116,128	(11,165)	117,582
Equity securities
Schedule of Available-for-sale Securities [Line Items]
Total net unrealized gain (loss)	$ (3,031)	$ (862)	$ (478)

XML

Income Taxes

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The provision for income taxes consists of the following for the years ended December 31, 2014, 2013 and 2012:

(Amounts in Thousands) Income Tax Provision (Benefit)	2014			2013		2012
Current expense (benefit)
Federal	$	219,413		$	49,565	$	6,402
Foreign	26,142			29,935		21,052
Total current tax expense	245,555			79,500		27,454
Deferred expense (benefit)
Federal	$	(8,376	)	$	13,741	$	9,919
Foreign	(183,493		)	4,778		(16,081		)
Total deferred tax expense	(191,869		)	18,519		(6,162		)
Total income tax expense	$	53,686		$	98,019	$	21,292

The following table is a reconciliation of the Company’s statutory income tax expense to its effective tax rate for the years ended December 31, 2014, 2013 and 2012:

(Amounts in Thousands)	2014			2013			2012
Income before equity in earnings (loss) of unconsolidated subsidiaries	$	471,933		$	367,046		$	196,857
Tax at federal statutory rate of 35%	$	165,177		$	128,466		$	68,900
Tax effects resulting from:
Net income of non-includible foreign subsidiaries	(99,904		)	(45,075		)	(43,806		)
Other, net	(11,587		)	14,628			(3,802		)
	$	53,686		$	98,019		$	21,292
Effective tax rate	11.4		%	26.7		%	10.8		%

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities as of December 31, 2014 and 2013 are shown below:

(Amounts in Thousands)	2014			2013
Deferred tax assets:
Unearned premiums	$	117,922		$	83,410
Ceding commission	107,739			82,554
Loss and LAE reserves	49,583			43,452
Other	62,346			60,673
Deferred compensation	7,774			7,183
Bad debt	13,027			8,790
Net operating loss carryforward	101,230			2,133
Unrealized loss on investments	—			4,396
	$	459,621		$	292,591
Deferred tax liabilities:
Deferred acquisition costs	$	(295,121	)	$	(239,293	)
Equalization reserves	(94,215		)	(186,576		)
Intangible assets	(51,619		)	(64,090		)
Unrealized gain on investments	(30,219		)	—
Other	(16,790		)	(19,578		)
Depreciation	(31,350		)	(31,396		)
Equity results which cannot be liquidated tax free	(41,497		)	(21,200		)
Accrual market discount	(3,123		)	(3,020		)
Cash surrender value on insurance	(2,050		)	(1,957		)
	(565,984		)	(567,110		)
Deferred tax liability, net	$	(106,363	)	$	(274,519	)

The Company’s management believes that it will realize the benefits of its deferred tax assets, which are 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 December 31, 2014 and 2013, the financial reporting basis in excess of the tax basis for which no deferred taxes have been recognized was approximately $257,587 and $112,263, respectively.

The Company has U.S. Net Operating Losses (“NOLs”) of $26,079 that expire beginning in 2019 through 2033. In addition, these NOLs are subject to certain limitations under Section 382 of the Internal Revenue Code due to changes in ownership of $1,723 per year. The Company also has foreign NOLs of $307,288 that currently have no expiration.

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. Listed below are the tax years that remain subject to examination by major tax jurisdictions:

	Open Tax Years
Major tax jurisdictions:
United States	2010-2013
United Kingdom	2011-2013
Ireland	2009-2013

As permitted by FASB ASC 740-10 Income Taxes, the Company recognizes interest and penalties, if any, related to unrecognized tax benefits in its income tax provision. The Company does not have any unrecognized tax benefits and, therefore, has not recorded any unrecognized tax benefits, or any related interest and penalties, as of December 31, 2014 and 2013. No interest or penalties have been recorded by the Company for the years ended December 31, 2014, 2013 and 2012. The Company does not anticipate any significant changes to its total unrecognized tax benefits in the next 12 months.

XML

Geographic Information (Operations by Geographic Segment) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ 4,084,331	$ 2,697,895	$ 1,668,174
Property and equipment	154,175	104,299
Domestic
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	1,394,497	468,980	467,617
Property and equipment	143,027	95,689	72,899
Bermuda
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	1,417,781	1,600,809	984,582
Property and equipment	0	0	0
Other Foreign
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	1,272,053	628,106	215,975
Property and equipment	$ 11,148	$ 8,610	$ 3,034

XML

Accrued Expenses and Other Liabilities (Tables)

12 Months Ended

Dec. 31, 2014

Accounts Payable and Accrued Liabilities [Abstract]

Schedule of Accounts Payable and Accrued Liabilities

(Amounts in Thousands) As of December 31,	2014		2013
Premium taxes, assessments and surcharges payable	$	171,512	$	173,274
Accounts and commissions payable	157,232		100,780
Deferred warranty revenue	138,592		84,230
Redeemable contractual obligations	111,748		132,608
Income tax payable	100,410		9,181
Other accrued expenses and liabilities	116,383		172,502
	$	795,877	$	672,575

XML

Investments (Tables)

12 Months Ended

Dec. 31, 2014

Investments, Debt and Equity Securities [Abstract]

Amortized Cost, Estimated Market Value and Gross Unrealized Appreciation and Depreciation of Available-for-sale Securities

The amortized cost, estimated fair value and gross unrealized appreciation and depreciation of fixed and equity securities are presented in the tables below:

(Amounts in Thousands) As of December 31, 2014	Original or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Preferred stock	$	3,349	$	158	$	(1	)	$	3,506
Common stock	80,726		4,673		(7,861		)	77,538
U.S. treasury securities	42,416		1,558		(104		)	43,870
U.S. government agencies	12,968		575		(5		)	13,538
Municipal bonds	469,646		13,950		(1,555		)	482,041
Foreign government	106,054		6,760		(83		)	112,731
Corporate bonds:
Finance	1,167,011		60,322		(5,471		)	1,221,862
Industrial	1,187,818		38,317		(23,275		)	1,202,860
Utilities	137,169		3,200		(1,677		)	138,692
Commercial mortgage backed securities	36,964		1,890		(169		)	38,685
Residential mortgage backed securities:
Agency backed	954,320		23,340		(1,878		)	975,782
Non-agency backed	22,071		696		(264		)	22,503
Asset backed securities	709		2		(1		)	710
	$	4,221,221	$	155,441	$	(42,344	)	$	4,334,318

(Amounts in Thousands) As of December 31, 2013	Original or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Preferred stock	$	1,498	$	82	$	(74	)	$	1,506
Common stock	14,512		1,156		(2,026		)	13,642
U.S. treasury securities	158,915		1,196		(851		)	159,260
U.S. government agencies	10,466		107		(84		)	10,489
Municipal bonds	461,325		4,781		(19,923		)	446,183
Foreign government	160,459		971		(1,325		)	160,105
Corporate bonds:
Finance	1,057,542		41,027		(13,970		)	1,084,599
Industrial	768,161		7,695		(21,439		)	754,417
Utilities	70,924		1,310		(2,008		)	70,226
Commercial mortgage backed securities	28,970		—		(404		)	28,566
Residential mortgage backed securities:
Agency backed	694,001		5,657		(13,918		)	685,740
Non-agency backed	6,737		19		(7		)	6,749
Asset backed securities	6,119		4		(3		)	6,120
	$	3,439,629	$	64,005	$	(76,032	)	$	3,427,602
Less: securities pledged	316,576		506		(5,564		)	311,518
	$	3,123,053	$	63,499	$	(70,468	)	$	3,116,084

Summary of Available for Sale Fixed Securities by Contractual Maturity

A summary of the Company’s available-for-sale fixed securities as of December 31, 2014 and 2013, 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.

	December 31, 2014				December 31, 2013
(Amounts in Thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	106,041	$	105,839	$	128,128	$	128,214
Due after one through five years	682,632		704,344		592,703		603,942
Due after five through ten years	1,998,740		2,062,942		1,632,115		1,631,751
Due after ten years	335,669		342,468		334,846		321,372
Mortgage and asset backed securities	1,014,064		1,037,681		735,827		727,175
Total fixed maturities	$	4,137,146	$	4,253,274	$	3,423,619	$	3,412,454

Net Investment Income

Net investment income for the years ended December 31, 2014, 2013 and 2012 was derived from the following sources:

(Amounts in Thousands)	2014			2013			2012
Fixed maturities, available-for-sale	$	124,976		$	82,392		$	67,182
Equity securities, available-for-sale	1,346			2,119			127
Equity securities, trading	29			—			—
Cash and short term investments	5,442			2,200			1,778
	131,793			86,711			69,087
Less: Investment expenses and interest expense on securities sold under agreement to repurchase	(192		)	(1,892		)	(920		)
	$	131,601		84,819			$	68,167

Other than Temporary Impairment, Credit Losses Recognized in Earnings

OTTI charges of our fixed-maturities and equity securities for the years ended December 31, 2014, 2013 and 2012 are presented in the table below:

(Amounts in Thousands)	2014		2013		2012
Equity securities recognized in earnings	$	2,646	$	2,869	$	2,965
Fixed maturity securities recognized in earnings	5,393		—		—
	$	8,039	$	2,869	$	2,965

Summary of Gross Unrealized Losses of Fixed-maturities and Equity Securities

The tables below summarize the gross unrealized losses of our fixed maturity and equity securities by length of time the security has continuously been in an unrealized loss position as of December 31, 2014 and 2013:

	Less Than 12 Months						12 Months or More						Total
(Amounts in Thousands) December 31, 2014	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	$	38,970	$	(7,764	)	21	$	400	$	(98	)	2	$	39,370	$	(7,862	)
U.S. treasury securities	1,030		(54		)	7	3,219		(50		)	9	4,249		(104		)
U.S. government agencies	1,736		(3		)	3	222		(2		)	4	1,958		(5		)
Municipal bonds	24,695		(240		)	64	93,201		(1,315		)	98	117,896		(1,555		)
Foreign government	7,644		(83		)	4	—		—			—	7,644		(83		)
Corporate bonds:
Finance	192,520		(4,297		)	143	66,715		(1,174		)	27	259,235		(5,471		)
Industrial	236,845		(17,230		)	194	60,511		(6,045		)	43	297,356		(23,275		)
Utilities	12,188		(490		)	22	13,908		(1,187		)	3	26,096		(1,677		)
Commercial mortgage backed securities	15		—			2	4,729		(169		)	8	4,744		(169		)
Residential mortgage backed securities:
Agency backed	41,187		(101		)	10	66,172		(1,777		)	29	107,359		(1,878		)
Non-agency backed	5,092		(263		)	3	28		(1		)	2	5,120		(264		)
Asset-backed securities	148		—			1	110		(1		)	2	258		(1		)
Total temporarily impaired	$	562,070	$	(30,525	)	474	$	309,215	$	(11,819	)	227	$	871,285	$	(42,344	)

	Less Than 12 Months						12 Months or More						Total
(Amounts in Thousands) December 31, 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	$	4,875	$	(2,100	)	51	$	—	$	—		—	$	4,875	$	(2,100	)
U.S. treasury securities	52,757		(851		)	18	—		—			—	52,757		(851		)
U.S. government agencies	4,135		(84		)	11	—		—				4,135		(84		)
Municipal bonds	254,219		(17,986		)	302	24,169		(1,937		)	9	278,388		(19,923		)
Foreign government	68,102		(1,324		)	16	999		(1		)	1	69,101		(1,325		)
Corporate bonds:
Finance	500,564		(13,402		)	182	58,923		(568		)	9	559,487		(13,970		)
Industrial	500,366		(21,203		)	263	3,383		(236		)	2	503,749		(21,439		)
Utilities	45,663		(2,008		)	21	—		—			—	45,663		(2,008		)
Commercial mortgage backed securities	28,552		(404		)	18	—		—			—	28,552		(404		)
Residential mortgage backed securities:
Agency backed	492,740		(13,918		)	120	—		—			—	492,740		(13,918		)
Non-agency backed	205		(5		)	6	23		(2		)	1	228		(7		)
Asset-backed securities	1,463		(3		)	4	—		—			—	1,463		(3		)
Total temporarily impaired	$	1,953,641	$	(73,288	)	1,012	$	87,497	$	(2,744	)	22	$	2,041,138	$	(76,032	)

Realized Gain (Loss) on Investments

The tables below summarize the gross realized gains and (losses) for the years ended December 31, 2014, 2013 and 2012.

(Amounts in Thousands) Year Ended December 31, 2014	Gross Gains		Gross Losses			Net Gains and (Losses)
Fixed maturities, available-for-sale	$	16,611	$	(4,946	)	$	11,665
Equity securities, available-for-sale	14,121		(3,928		)	10,193
Equity securities, trading	10,475		(7,871		)	2,604
Write-down of fixed maturities, available-for-sale	—		(5,393		)	(5,393		)
Write-down of equity securities, available-for-sale	—		(2,646		)	(2,646		)
	$	41,207	$	(24,784	)	$	16,423

(Amounts in Thousands) Year Ended December 31, 2013	Gross Gains		Gross Losses			Net Gains and (Losses)
Fixed maturities, available-for-sale	$	28,696	$	(18,066	)	$	10,630
Equity securities, available-for-sale	11,264		(3,498		)	7,766
Write-down of equity securities, available-for-sale	—		(2,869		)	(2,869		)
	$	39,960	$	(24,433	)	$	15,527

(Amounts in Thousands) Year Ended December 31, 2012	Gross Gains		Gross Losses			Net Gains and (Losses)
Fixed maturities, available-for-sale	$	10,310	$	(1,066	)	$	9,244
Equity securities, available-for-sale	7,718		(5,016		)	2,702
Write-down of equity securities, available-for-sale	—		(2,965		)	(2,965		)
	$	18,028	$	(9,047	)	$	8,981

Unrealized Gain (Loss) on Investments

The net unrealized gains (losses) on available-for-sale securities for for the years ended December 31, 2014, 2013 and 2012 were as follows:

(Amounts in Thousands) Year Ended December 31,	2014			2013			2012
Fixed maturity securities	$	116,128		$	(11,165	)	$	117,582
Equity securities	(3,031		)	(862		)	(478		)
Total net unrealized gain (loss)	113,097			(12,027		)	117,104
Deferred income tax benefit (expense)	(39,584		)	4,209			(40,986		)
Cumulative net unrealized gain (loss), net of deferred income tax as of December 31	73,513			(7,818		)	76,118
Increase (decrease) in net unrealized gains, net of deferred income tax	$	81,331		$	(83,936	)	$	67,708

Trading Securities

The amortized cost, estimated market value and gross unrealized appreciation and depreciation of trading securities as of December 31, 2014 are presented in the table below:

(Amounts in Thousands) December 31, 2014	Original or amortized cost		Gross unrealized gains		Gross unrealized losses			Market value
Common stock	$	25,407	$	1,614	$	(272	)	$	26,749

Notional Amounts of Interest Rate Swaps by Remaining Maturity

The following table presents the notional amounts by remaining maturity of the Company’s Interest Rate Swaps as of December 31, 2014:

	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.

Fair Values of Restricted Assets

The fair values of our restricted assets as of December 31, 2014 and 2013 are as follows:

(Amounts in Thousands)	2014		2013
Restricted cash	$	186,225	$	100,439
Restricted investments	734,271		978,910
Total restricted cash and investments	$	920,496	$	1,079,349

XML

Investments (Notional Amounts of Interest Rate Swaps by Remaining Maturity) (Details) (Interest Rate Swap, USD $) In Thousands, unless otherwise specified	Dec. 31, 2014
Interest Rate Swap
Schedule of Available-for-sale Securities [Line Items]
One Year	$ 0
Two Through Five Years	70,000
Six Through Ten Years	0
After Ten years	0
Total	$ 70,000

XML

Property and Equipment, Net (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 246,426	$ 167,000
Less: Accumulated depreciation and amortization	(92,251)	(62,701)
Property and equipment, net	154,175	104,299
Depreciation expense	29,550	21,451	13,221
Land
Property, Plant and Equipment [Line Items]
Property and equipment, gross	7,593	7,593
Building
Property, Plant and Equipment [Line Items]
Property and equipment, gross	25,478	23,284
Software
Property, Plant and Equipment [Line Items]
Property and equipment, gross	92,211	65,699
Computer Equipment
Property, Plant and Equipment [Line Items]
Property and equipment, gross	41,924	27,575
Other equipment
Property, Plant and Equipment [Line Items]
Property and equipment, gross	53,529	19,881
Leasehold Improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 25,691	$ 22,968

XML

Schedule II -Condensed Financial Information of Registrant

12 Months Ended

Dec. 31, 2014

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Schedule II - Condensed Financial Information of Registrant

AMTRUST FINANCIAL SERVICES

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

BALANCE SHEET — PARENT COMPANY ONLY

	December 31,
	2014			2013
	(In Thousands)
Assets:
Cash	$	7,690		$	1,495
Invested assets	1,353			67
Carrying value of subsidiaries, at equity	2,826,090			1,949,997
Other assets	549,780			358,881
Total Assets	3,384,913			2,310,440
Liabilities:
Due to affiliates – net	322,243			207,540
6.125% Notes due 2023	250,000			250,000
5.5% due 2021 Convertible senior notes	56,745			164,218
2.75% due 2044 Convertible senior notes	157,679			—
Junior subordinated debt	123,714			123,714
Revolving credit facility borrowing	120,000			—
Secured loan	28,572			—
Other liabilities	288,940			123,963
Total Liabilities	1,347,893			869,435
Stockholders’ Equity
Common stock	980			980
Preferred stock	300,000			115,000
Paid-in and contributed capital	1,022,769			1,033,084
Treasury shares	(297,586		)	(284,891		)
Accumulated other comprehensive income	56,123			(8,164		)
Retained earnings	954,734			584,996
Total Stockholders’ Equity	2,037,020			1,441,005
Total Liabilities and Stockholders’ Equity	$	3,384,913		$	2,310,440

STATEMENT OF INCOME — PARENT COMPANY ONLY

	Year Ended December 31,
	2014			2013		2012
	(In Thousands)
Income:
Investment income	$	183		$	207	$	227
Equity in undistributed net income of consolidated subsidiaries and partially-owned companies	539,915			319,738		218,123
Acquisition gain on purchase	—			23,183		—
Miscellaneous income	641			6		12
Total Income	540,739			343,134		218,362
Expenses:
Interest expense	32,016			22,178		16,159
Loss on extinguishment of debt	9,831			—		—
Federal tax (benefit) expense	(4,800		)	10,087		(1,099		)
Other expenses from operations	57,094			30,276		18,442
Total Expenses	94,141			62,541		33,502
Net Income	$	446,598		$	280,593	$	184,860

Schedule II

AMTRUST FINANCIAL SERVICES

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

STATEMENT OF CASH FLOWS — PARENT COMPANY ONLY

	December 31,
	2014			2013			2012
	(In Thousands)
Cash flows from operating activities:
Net income	$	446,598		$	280,593		$	184,860
Depreciation and amortization	6,678			3,593			830
Stock option compensation	19,114			11,186			7,172
Discount on note	3,095			3,000			(2,150		)
Dividend from equity investment	—			12,203			—
Loss on extinguishment of debt	9,831			—			—
Adjustments to reconcile net income to net cash changes in assets (increase) decrease:
Carrying value of equity interest in subsidiaries	(414,021		)	(449,176		)	(227,632		)
Equity (earnings) losses and gain on investments in unconsolidated subsidiaries	(28,351		)	(11,566		)	(9,295		)
Other assets	(128,866		)	(135,799		)	(80,993		)
Changes in liabilities increase (decrease):
Due to (due from) affiliates	114,703			(14,636		)	179,522
Other liabilities	146,715			64,774			3,397
Net cash provided by (used in) operating activities	175,496			(235,828		)	55,711
Cash flows from investing activities:
Capital expenditures	(31,097		)	(2,455		)	(107		)
Investment purchased	(1,286		)	—			—
Investment in subsidiary	(285,783		)	(22,605		)	(1,455		)
Acquisition of subsidiary companies, net of cash acquired	(123,887		)	(78,193		)	(42,694		)
Net cash used in investing activities	(442,053		)	(103,253		)	(44,256		)
Cash flows from financing activities:
Issuance of debt	318,900			250,000			25,000
Payment of debt	(101,928		)	—			(7,500		)
Financing fees	(4,143		)	(2,740		)	(750		)
Common share (repurchase) issuance, net	(50,379		)	8,534			8,873
Net proceeds from issuance of preferred stock	178,641			111,130			—
Dividends paid on common stock	(55,601		)	(29,236		)	(30,201		)
Dividends paid on preferred stock	(12,738		)	(3,989		)	—
Net cash (used in) provided by financing activities	272,752			333,699			(4,578		)
Net increase (decrease) in cash and cash equivalents	6,195			(5,382		)	6,877
Cash and cash equivalents, beginning of the year	1,495			6,877			—
Cash and cash equivalents, end of period	$	7,690		$	1,495		$	6,877

XML

Reinsurance (Tables)

12 Months Ended

Dec. 31, 2014

Reinsurance Disclosures [Abstract]

Schedule of Primary Reinsurance Programs

The following tables provide a summary of the Company's primary reinsurance programs as of December 31, 2014 for the United States and internationally:

(Amounts in Thousands)	2014 Domestic Reinsurance Program
Type of Reinsurance	Retention		Event Protection		Coverage
Workers’ Compensation, Excess of Loss	$	5,000	$	510,000	98.5% of $505,000
Property, Per Risk Excess of Loss	$	2,000	$	30,000	95% of $28,000
Property, Occurrence Excess of loss	$	20,000	$	400,000	99% of $380,000
Surety, Excess of Loss	$	500	$	20,000	70% of $19,500
Casualty/Umbrella, Excess of Loss and Quota Share	$	2,500	$	50,000	95% of $50,000
Equipment Breakdown, Quota Share	$	—	$	100,000	100% of $100,000

(Amounts in Thousands)	2014 International Reinsurance Program
Type of Reinsurance	Retention		Event Protection		Coverage
Property, Per Risk Excess of Loss	$	800	$	4,400	100% of $3,600
Property, Occurrence Excess of Loss	$	8,000	$	160,000	97% of $152,000
Surety, Excess of Loss and Quota Share	$	4,500	$	45,000	100% of $41,500
Casualty, Excess of Loss	$	3,000	$	15,000	100% of $12,000
Latent Defect, Excess of Loss	$	3,200	$	40,000	100% of $36,800
Accident and Health, Excess of Loss	$	800	$	32,000	100% of $31,200
Car Care, Excess of Loss	$	1,000	$	105,000	97.5% of $104,000
Medical Malpractice, Quota Share	$	7,800	$	13,000	40% of $13,000

(Amounts in Thousands)	2014 AmTrust at Lloyds Reinsurance Programs
Type of Reinsurance	Retention		Event Protection		Coverage
Property, Per Risk Excess of Loss	$	1,600	$	8,000	100% of $6,400
Property, Occurrence Excess of Loss	$	20,000	$	120,000	98% of $90,000
Casualty, Excess of Loss	$	4,000	$	20,000	100% of $16,000
Personal Accident, Excess of Loss	$	2,000	$	50,000	100% of $48,000
Pecuniary Risks	$	5,000	$	35,000	100% of $30,000

Schedule of Effect of Reinsurance with Unrelated Companies on Premiums and Losses

The effect of reinsurance with unrelated companies on premiums and losses for 2014, 2013 and 2012 are as follows:

	Year Ended December 31,
	2014						2013						2012
(Amounts in Thousands)	Written			Earned			Written			Earned			Written			Earned
Premiums:
Direct	$	5,422,484		$	4,816,607		$	3,869,893		$	3,308,136		$	2,494,846		$	2,067,635
Assumed	665,481			562,193			247,018			254,863			254,480			270,008
Ceded	(2,131,347		)	(1,852,236		)	(1,551,238		)	(1,297,009		)	(1,101,289		)	(918,791		)
	$	3,956,618		$	3,526,564		$	2,565,673		$	2,265,990		$	1,648,037		$	1,418,852

	As of December 31,
	2014					2013					2012
(Amounts in Thousands)	Assumed		Ceded			Assumed		Ceded			Assumed		Ceded
Loss and LAE reserves	$	623,193	$	(2,149,444	)	$	378,564	$	(1,739,689	)	$	503,174	$	(1,185,056	)
Unearned premiums	211,177		(1,302,848		)	103,878		(1,011,304		)	108,679		(754,844		)
Loss and LAE expense incurred	424,754		(1,217,593		)	91,109		(975,434		)	166,191		(638,595		)

XML

Investments (Amortized Cost, Estimated Market Value and Gross Unrealized Appreciation and Depreciation of Available-for-sale Securities) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Original or amortized cost	$ 4,221,221	$ 3,439,629
Gross unrealized gains	155,441	64,005
Gross unrealized losses	(42,344)	(76,032)
Fair value	4,334,318	3,427,602
Securities pledged, original or amortized cost	0	316,576
Gross unrealized gains, securities pledged		506
Gross unrealized loss, securities pledged		(5,564)
Securities pledged (amortized cost of $0; $316,576)	0	311,518
Available-for-sale Securities, Net of Securities Pledged, Amortized Cost		3,123,053
Available For Sale Securities Gross Unrealized Gain Accumulated In Investments, Net of Unrealized Gain for Securities Pledged		63,499
Available For Sale Securities Gross Unrealized Loss Accumulated In Investments, Net of Securities Pledged		70,468
Available-for-sale Securities, Net of Securities Pledged		3,116,084
Preferred stock
Schedule of Available-for-sale Securities [Line Items]
Original or amortized cost	3,349	1,498
Gross unrealized gains	158	82
Gross unrealized losses	(1)	(74)
Fair value	3,506	1,506
Common stock
Schedule of Available-for-sale Securities [Line Items]
Original or amortized cost	80,726	14,512
Gross unrealized gains	4,673	1,156
Gross unrealized losses	(7,861)	(2,026)
Fair value	77,538	13,642
U.S. treasury securities
Schedule of Available-for-sale Securities [Line Items]
Original or amortized cost	42,416	158,915
Gross unrealized gains	1,558	1,196
Gross unrealized losses	(104)	(851)
Fair value	43,870	159,260
U.S. government agencies
Schedule of Available-for-sale Securities [Line Items]
Original or amortized cost	12,968	10,466
Gross unrealized gains	575	107
Gross unrealized losses	(5)	(84)
Fair value	13,538	10,489
Municipal bonds
Schedule of Available-for-sale Securities [Line Items]
Original or amortized cost	469,646	461,325
Gross unrealized gains	13,950	4,781
Gross unrealized losses	(1,555)	(19,923)
Fair value	482,041	446,183
Foreign government
Schedule of Available-for-sale Securities [Line Items]
Original or amortized cost	106,054	160,459
Gross unrealized gains	6,760	971
Gross unrealized losses	(83)	(1,325)
Fair value	112,731	160,105
Commercial mortgage backed securities
Schedule of Available-for-sale Securities [Line Items]
Original or amortized cost	36,964	28,970
Gross unrealized gains	1,890	0
Gross unrealized losses	(169)	(404)
Fair value	38,685	28,566
Agency backed
Schedule of Available-for-sale Securities [Line Items]
Original or amortized cost	954,320	694,001
Gross unrealized gains	23,340	5,657
Gross unrealized losses	(1,878)	(13,918)
Fair value	975,782	685,740
Non-agency backed
Schedule of Available-for-sale Securities [Line Items]
Original or amortized cost	22,071	6,737
Gross unrealized gains	696	19
Gross unrealized losses	(264)	(7)
Fair value	22,503	6,749
Asset-backed securities
Schedule of Available-for-sale Securities [Line Items]
Original or amortized cost	709	6,119
Gross unrealized gains	2	4
Gross unrealized losses	(1)	(3)
Fair value	710	6,120
Corporate bonds | Finance
Schedule of Available-for-sale Securities [Line Items]
Original or amortized cost	1,167,011	1,057,542
Gross unrealized gains	60,322	41,027
Gross unrealized losses	(5,471)	(13,970)
Fair value	1,221,862	1,084,599
Corporate bonds | Industrial
Schedule of Available-for-sale Securities [Line Items]
Original or amortized cost	1,187,818	768,161
Gross unrealized gains	38,317	7,695
Gross unrealized losses	(23,275)	(21,439)
Fair value	1,202,860	754,417
Corporate bonds | Utilities
Schedule of Available-for-sale Securities [Line Items]
Original or amortized cost	137,169	70,924
Gross unrealized gains	3,200	1,310
Gross unrealized losses	(1,677)	(2,008)
Fair value	$ 138,692	$ 70,226

XML

Reinsurance Reinsurance (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Reinsurance Retention Policy [Line Items]
Minimum surplus required to retain reinsurer	$ 500,000								$ 500,000
Effect of reinsurance with unrelated companies
Direct Premiums Written									5,422,484	3,869,893	2,494,846
Direct Premiums Earned									4,816,607	3,308,136	2,067,635
Assumed Premiums Written									665,481	247,018	254,480
Assumed Premiums Earned									562,193	254,863	270,008
Ceded Premiums Written									(2,131,347)	(1,551,238)	(1,101,289)
Ceded Premiums Earned									(1,852,236)	(1,297,009)	(918,791)
Premiums Written, Net									3,956,618	2,565,673	1,648,037
Net earned premium	908,163	914,413	874,937	829,051	707,562	613,895	536,539	407,994	3,526,564	2,265,990	1,418,852
Losses and LAE reserves	5,664,205				4,368,234				5,664,205	4,368,234	2,426,400	1,879,175
Unearned premiums	3,447,203				2,680,982				3,447,203	2,680,982
Assumed
Effect of reinsurance with unrelated companies
Losses and LAE reserves	623,193				378,564				623,193	378,564	503,174
Unearned premiums	211,177				103,878				211,177	103,878	108,679
Loss and LAE expense incurred									424,754	91,109	166,191
Ceded
Effect of reinsurance with unrelated companies
Losses and LAE reserves	(2,149,444)				(1,739,689)				(2,149,444)	(1,739,689)	(1,185,056)
Unearned premiums	(1,302,848)				(1,011,304)				(1,302,848)	(1,011,304)	(754,844)
Loss and LAE expense incurred									(1,217,593)	(975,434)	(638,595)
2014 International Reinsurance Program
Reinsurance Retention Program [Abstract]
Coverage, percentage									40.00%
2014 International Reinsurance Program | Medical Malpractice, Quota Share
Reinsurance Retention Program [Abstract]
Coverage, amounts									13,000
2014 International Reinsurance Program | Medical Malpractice, Quota Share | Maximum
Reinsurance Retention Program [Abstract]
Stated and Limits									13,000
2014 International Reinsurance Program | Medical Malpractice, Quota Share | Minimum
Reinsurance Retention Program [Abstract]
Stated and Limits									7,800
2014 International Reinsurance Program | Accident and Health, Excess of Loss
Reinsurance Retention Program [Abstract]
Coverage, amounts									31,200
Coverage, percentage									100.00%
2014 International Reinsurance Program | Accident and Health, Excess of Loss | Maximum
Reinsurance Retention Program [Abstract]
Stated and Limits									32,000
2014 International Reinsurance Program | Accident and Health, Excess of Loss | Minimum
Reinsurance Retention Program [Abstract]
Stated and Limits									800
2014 International Reinsurance Program | Car Care, Excess of Loss
Reinsurance Retention Program [Abstract]
Coverage, amounts									104,000
Coverage, percentage									97.50%
2014 International Reinsurance Program | Car Care, Excess of Loss | Maximum
Reinsurance Retention Program [Abstract]
Stated and Limits									105,000
2014 International Reinsurance Program | Car Care, Excess of Loss | Minimum
Reinsurance Retention Program [Abstract]
Stated and Limits									1,000
2014 International Reinsurance Program | Latent Defect, Excess of Loss
Reinsurance Retention Program [Abstract]
Coverage, amounts									36,800
Coverage, percentage									100.00%
2014 International Reinsurance Program | Latent Defect, Excess of Loss | Maximum
Reinsurance Retention Program [Abstract]
Stated and Limits									40,000
2014 International Reinsurance Program | Latent Defect, Excess of Loss | Minimum
Reinsurance Retention Program [Abstract]
Stated and Limits									3,200
2014 International Reinsurance Program | Surety, Excess of Loss and Quota Share
Reinsurance Retention Program [Abstract]
Coverage, amounts									41,500
Coverage, percentage									100.00%
2014 International Reinsurance Program | Surety, Excess of Loss and Quota Share | Maximum
Reinsurance Retention Program [Abstract]
Stated and Limits									45,000
2014 International Reinsurance Program | Surety, Excess of Loss and Quota Share | Minimum
Reinsurance Retention Program [Abstract]
Stated and Limits									4,500
2014 International Reinsurance Program | Casualty, Excess of Loss
Reinsurance Retention Program [Abstract]
Coverage, amounts									12,000
Coverage, percentage									100.00%
2014 International Reinsurance Program | Casualty, Excess of Loss | Maximum
Reinsurance Retention Program [Abstract]
Stated and Limits									15,000
2014 International Reinsurance Program | Casualty, Excess of Loss | Minimum
Reinsurance Retention Program [Abstract]
Stated and Limits									3,000
2014 International Reinsurance Program | Property, Occurrence Excess of Loss
Reinsurance Retention Program [Abstract]
Coverage, amounts									152,000
Coverage, percentage									97.00%
2014 International Reinsurance Program | Property, Occurrence Excess of Loss | Maximum
Reinsurance Retention Program [Abstract]
Stated and Limits									160,000
2014 International Reinsurance Program | Property, Occurrence Excess of Loss | Minimum
Reinsurance Retention Program [Abstract]
Stated and Limits									8,000
2014 International Reinsurance Program | Property, Per Risk Excess of Loss
Reinsurance Retention Program [Abstract]
Coverage, amounts									3,600
Coverage, percentage									100.00%
2014 International Reinsurance Program | Property, Per Risk Excess of Loss | Maximum
Reinsurance Retention Program [Abstract]
Stated and Limits									4,400
2014 International Reinsurance Program | Property, Per Risk Excess of Loss | Minimum
Reinsurance Retention Program [Abstract]
Stated and Limits									800
2014 AmTrust at Lloyds Reinsurance Programs | Casualty, Excess of Loss
Reinsurance Retention Program [Abstract]
Coverage, amounts									16,000
Coverage, percentage									100.00%
2014 AmTrust at Lloyds Reinsurance Programs | Casualty, Excess of Loss | Maximum
Reinsurance Retention Program [Abstract]
Stated and Limits									20,000
2014 AmTrust at Lloyds Reinsurance Programs | Casualty, Excess of Loss | Minimum
Reinsurance Retention Program [Abstract]
Stated and Limits									4,000
2014 AmTrust at Lloyds Reinsurance Programs | Personal Accident, Excess of Loss
Reinsurance Retention Program [Abstract]
Coverage, amounts									48,000
Coverage, percentage									100.00%
2014 AmTrust at Lloyds Reinsurance Programs | Personal Accident, Excess of Loss | Maximum
Reinsurance Retention Program [Abstract]
Stated and Limits									50,000
2014 AmTrust at Lloyds Reinsurance Programs | Personal Accident, Excess of Loss | Minimum
Reinsurance Retention Program [Abstract]
Stated and Limits									2,000
2014 AmTrust at Lloyds Reinsurance Programs | Property, Occurrence Excess of Loss
Reinsurance Retention Program [Abstract]
Coverage, amounts									90,000
Coverage, percentage									98.00%
2014 AmTrust at Lloyds Reinsurance Programs | Property, Occurrence Excess of Loss | Maximum
Reinsurance Retention Program [Abstract]
Stated and Limits									120,000
2014 AmTrust at Lloyds Reinsurance Programs | Property, Occurrence Excess of Loss | Minimum
Reinsurance Retention Program [Abstract]
Stated and Limits									20,000
2014 AmTrust at Lloyds Reinsurance Programs | Property, Per Risk Excess of Loss
Reinsurance Retention Program [Abstract]
Coverage, amounts									6,400
Coverage, percentage									100.00%
2014 AmTrust at Lloyds Reinsurance Programs | Property, Per Risk Excess of Loss | Maximum
Reinsurance Retention Program [Abstract]
Stated and Limits									8,000
2014 AmTrust at Lloyds Reinsurance Programs | Property, Per Risk Excess of Loss | Minimum
Reinsurance Retention Program [Abstract]
Stated and Limits									1,600
2014 AmTrust at Lloyds Reinsurance Programs | Pecuniary Risks
Reinsurance Retention Program [Abstract]
Coverage, amounts									30,000
Coverage, percentage									100.00%
2014 AmTrust at Lloyds Reinsurance Programs | Pecuniary Risks | Maximum
Reinsurance Retention Program [Abstract]
Stated and Limits									35,000
2014 AmTrust at Lloyds Reinsurance Programs | Pecuniary Risks | Minimum
Reinsurance Retention Program [Abstract]
Stated and Limits									5,000
2014 Domestic Reinsurance Program | Surety, Excess of Loss and Quota Share
Reinsurance Retention Program [Abstract]
Coverage, amounts									19,500
Coverage, percentage									70.00%
2014 Domestic Reinsurance Program | Surety, Excess of Loss and Quota Share | Maximum
Reinsurance Retention Program [Abstract]
Stated and Limits									20,000
2014 Domestic Reinsurance Program | Surety, Excess of Loss and Quota Share | Minimum
Reinsurance Retention Program [Abstract]
Stated and Limits									500
2014 Domestic Reinsurance Program | Casualty, Excess of Loss
Reinsurance Retention Program [Abstract]
Coverage, amounts									50,000
Coverage, percentage									95.00%
2014 Domestic Reinsurance Program | Casualty, Excess of Loss | Maximum
Reinsurance Retention Program [Abstract]
Stated and Limits									50,000
2014 Domestic Reinsurance Program | Casualty, Excess of Loss | Minimum
Reinsurance Retention Program [Abstract]
Stated and Limits									2,500
2014 Domestic Reinsurance Program | Equipment Breakdown, Quota Share
Reinsurance Retention Program [Abstract]
Coverage, amounts									100,000
Coverage, percentage									100.00%
2014 Domestic Reinsurance Program | Equipment Breakdown, Quota Share | Maximum
Reinsurance Retention Program [Abstract]
Stated and Limits									100,000
2014 Domestic Reinsurance Program | Equipment Breakdown, Quota Share | Minimum
Reinsurance Retention Program [Abstract]
Stated and Limits									0
2014 Domestic Reinsurance Program | Property, Occurrence Excess of Loss
Reinsurance Retention Program [Abstract]
Coverage, amounts									330,000
Coverage, percentage									99.00%
2014 Domestic Reinsurance Program | Property, Occurrence Excess of Loss | Maximum
Reinsurance Retention Program [Abstract]
Stated and Limits									400,000
2014 Domestic Reinsurance Program | Property, Occurrence Excess of Loss | Minimum
Reinsurance Retention Program [Abstract]
Stated and Limits									20,000
2014 Domestic Reinsurance Program | Property, Per Risk Excess of Loss
Reinsurance Retention Program [Abstract]
Coverage, amounts									28,000
Coverage, percentage									95.00%
2014 Domestic Reinsurance Program | Property, Per Risk Excess of Loss | Maximum
Reinsurance Retention Program [Abstract]
Stated and Limits									30,000
2014 Domestic Reinsurance Program | Property, Per Risk Excess of Loss | Minimum
Reinsurance Retention Program [Abstract]
Stated and Limits									2,000
2014 Domestic Reinsurance Program | Workers’ Compensation, Excess of Loss
Reinsurance Retention Program [Abstract]
Coverage, amounts									505,000
Coverage, percentage									98.50%
2014 Domestic Reinsurance Program | Workers’ Compensation, Excess of Loss | Maximum
Reinsurance Retention Program [Abstract]
Stated and Limits									510,000
2014 Domestic Reinsurance Program | Workers’ Compensation, Excess of Loss | Minimum
Reinsurance Retention Program [Abstract]
Stated and Limits									$ 5,000

XML

Schedule III - Supplementary Insurance Information (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Supplementary Insurance Information, by Segment [Line Items]
Net written premium	$ 3,956,618	$ 2,565,673	$ 1,648,037
Operating Segments [Member]
Supplementary Insurance Information, by Segment [Line Items]
Deferred Policy Acquisition Costs	628,383	468,404	349,126
Reserves for Losses and Loss Expenses, Future Policy Benefits	5,664,205	4,368,234	2,426,400
Reserves for Unearned Premiums	3,447,203	2,680,982	1,773,593
Premium Revenue	3,526,564	2,265,990	1,418,852
Net Investment Income	131,601	84,819	68,167
Losses and Loss Expenses Incurred, Benefits	2,342,619	1,517,361	922,675
Amortization of Deferred Policy Acquisition Costs	538,710	367,288	242,887
Other Operating Expenses	318,213	165,874	112,798
Premiums Written	3,956,618	2,565,673	1,648,037
Operating Segments [Member] | Small Commercial Business
Supplementary Insurance Information, by Segment [Line Items]
Deferred Policy Acquisition Costs	179,771	98,275	58,690
Reserves for Losses and Loss Expenses, Future Policy Benefits	2,854,379	1,982,977	1,266,261
Reserves for Unearned Premiums	1,193,628	704,234	413,707
Premium Revenue	1,606,805	833,812	416,565
Net Investment Income	55,842	29,301	24,049
Losses and Loss Expenses Incurred, Benefits	1,055,521	548,598	270,843
Amortization of Deferred Policy Acquisition Costs	276,876	143,036	60,709
Other Operating Expenses	140,089	69,788	49,866
Net written premium	1,882,383	935,313	474,381
Premiums Written	1,882,383	935,313	474,381
Operating Segments [Member] | Specialty Risk and Extended Warranty
Supplementary Insurance Information, by Segment [Line Items]
Deferred Policy Acquisition Costs	389,763	310,230	234,490
Reserves for Losses and Loss Expenses, Future Policy Benefits	1,669,293	1,537,887	605,366
Reserves for Unearned Premiums	1,832,560	1,599,167	1,063,999
Premium Revenue	1,232,238	811,837	541,573
Net Investment Income	50,544	39,139	27,349
Losses and Loss Expenses Incurred, Benefits	817,780	545,516	341,196
Amortization of Deferred Policy Acquisition Costs	152,141	114,662	94,945
Other Operating Expenses	101,653	36,526	17,546
Net written premium	1,333,747	944,081	624,555
Premiums Written	1,333,747	944,081	624,555
Operating Segments [Member] | Specialty Program
Supplementary Insurance Information, by Segment [Line Items]
Deferred Policy Acquisition Costs	58,502	56,949	42,468
Reserves for Losses and Loss Expenses, Future Policy Benefits	1,126,436	817,272	524,928
Reserves for Unearned Premiums	421,015	368,673	252,835
Premium Revenue	678,612	520,371	348,568
Net Investment Income	24,888	15,607	14,457
Losses and Loss Expenses Incurred, Benefits	456,422	355,067	238,302
Amortization of Deferred Policy Acquisition Costs	107,074	86,317	63,775
Other Operating Expenses	76,467	52,333	34,640
Net written premium	740,488	620,452	430,960
Premiums Written	740,488	620,452	430,960
Operating Segments [Member] | Personal Lines Reinsurance
Supplementary Insurance Information, by Segment [Line Items]
Deferred Policy Acquisition Costs	347	2,950	13,478
Reserves for Losses and Loss Expenses, Future Policy Benefits	14,097	30,098	29,845
Reserves for Unearned Premiums	0	8,908	43,052
Premium Revenue	8,909	99,970	112,146
Net Investment Income	327	772	2,312
Losses and Loss Expenses Incurred, Benefits	12,896	68,180	72,334
Amortization of Deferred Policy Acquisition Costs	2,619	23,273	23,458
Other Operating Expenses	4	7,227	10,746
Net written premium	0	65,827	118,141
Premiums Written	$ 0	$ 65,827	$ 118,141

XML

Statutory Financial Data, Risk Based Capital and Dividend Restrictions (Tables)

12 Months Ended

Dec. 31, 2014

Insurance [Abstract]

Statutory Accounting Practices Disclosure

Statutory capital and surplus and required statutory capital and surplus for the Company's insurance subsidiaries as reported to regulatory authorities as of December 31, 2014 and 2013 were approximately as follows:

	2014				2013
(Amounts in Thousands)	Statutory Capital and Surplus		Required Statutory Capital and Surplus (1)		Statutory Capital and Surplus		Required Statutory Capital and Surplus (1)
TIC (domestic)	$	479,437	$	178,941	$	236,528	$	108,377
RIC (domestic)	82,350		31,082		58,845		22,587
WIC (domestic)	215,530		125,810		166,813		79,857
AIIC (domestic)	74,014		17,416		74,076		17,373
SNIC (domestic)	123,573		50,607		79,780		32,603
MCIC (domestic)	17,713		5,287		14,912		3,620
ALIC (domestic)	2,162		217		2,155		245
AICK (domestic)	19,304		6,752		15,275		5,307
SIC (domestic)	79,475		15,231		74,502		17,354
SID (domestic)	9,799		665		9,820		705
FNIC (domestic)	36,104		7,736		35,428		7,787
DSIC (domestic) (2)	82,243		11,361
ICC (domestic) (2)	20,699		528
FATIC (domestic) (2)	10,538		500
COIC (domestic) (2)	29,011		8,424
AEL (United Kingdom)	290,916		62,925		246,292		61,738
AIU (Ireland)	195,208		37,865		169,465		43,124
AII (Bermuda)	679,967		244,509		445,077		221,330
AILSA (Luxembourg)	6,874		6,526		7,204		6,165
MIC (United Kingdom)	130,169		20,122		95,649		22,957

⁽¹⁾ For the Company's U.S. insurance companies and AIU, except FATIC, the amount is equal to the Regulatory Action Level ("RAL") as defined by NAIC or the minimum amount required to avoid regulatory oversight. For AEL, MIC, AII and AILSA, the amount is equal to the minimum capital required by their respective country's regulatory authority. For FATIC, the amount is equal to the minimum capital required by the regulatory authority in its state of domicile.

⁽²⁾ As these entities were acquired in 2014, the 2013 information is not presented.

Statutory net income for the insurance subsidiaries for the years ended December 31, 2014, 2013 and 2012 as reported to regulatory authorities were approximately as follows:

(Amounts in Thousands)	2014			2013			2012
TIC (domestic)	$	21,418		$	16,614		$	45,621
RIC (domestic)	9,440			8,158			1,129
WIC (domestic)	14,150			21,447			9,263
AIIC (domestic)	8,297			12,810			5,570
SNIC (domestic)	30,666			14,350			10,624
MCIC (domestic)	3,226			1,671			1,519
ALIC (domestic)	2			18			15
AICK (domestic)	4,081			3,413			1,198
SIC (domestic) (1)	9,535			4,464
SID (domestic) (1)	35			634
FNIC (domestic) (1)	(1,186		)	(4,596		)
DSIC (domestic) (1)	4,124
ICC (domestic) (1)	1,565
FATIC (domestic) (1)	(664		)
COIC (domestic) (1)	(946		)
AEL (United Kingdom)	56,766			50,452			54,967
AIU (Ireland)	50,697			34,223			20,767
AII (Bermuda)	78,142			5,282			107,980
AILSA (Luxembourg) (1)	207			(27		)
MIC (United Kingdom) (1)	28,856			7,515

⁽¹⁾ Information is presented only for years the subsidiaries were owned by the Company. The amounts reported in year of acquisition are for the entire year and do not represent the statutory net income for the period of ownership.

XML

Intangible Assets and Goodwill (Tables)

12 Months Ended

Dec. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Acquired Finite-Lived Intangible Assets by Major Class

The composition of goodwill and intangible assets is summarized as follows:

(Amounts in Thousands) As of December 31, 2014	Gross Balance		Accumulated Amortization		Net Value		Useful Life
Goodwill	$	352,685	$	—	$	352,685	Indefinite Life
Renewal rights	62,367		16,732		45,635		7 – 17 years
Distribution networks	115,480		36,009		79,471		5 – 20 years
Software	3,547		2,101		1,446		3 - 20 years
Customer relationships	132,744		31,807		100,937		8 – 18 years
Trademarks	5,220		5,132		88		15 years
Trademarks	6,327		—		6,327		Indefinite Life
Licenses	12,608		6,151		6,457		5 - 50 years
Licenses	25,055		—		25,055		Indefinite Life
Use rights	41,468		—		41,468		Indefinite Life
Other	16,348		8,236		8,112		4 - 10 years
Total	$	773,849	$	106,168	$	667,681	13 years average

(Amounts in Thousands) As of December 31, 2013	Gross Balance		Accumulated Amortization		Net Value		Useful Life
Goodwill	$	373,591	$	—	$	373,591	Indefinite Life
Renewal rights	30,880		11,438		19,442		7 – 17 years
Covenant not to compete	7,756		7,692		64		3 – 9 years
Distribution networks	100,163		28,136		72,027		10 – 20 years
Software	2,266		2,076		190		20 years
Customer relationships	132,266		18,215		114,051		8 – 18 years
Trademarks	5,001		4,751		250		2 – 15 years
Trademarks	6,460		—		6,460		Indefinite Life
Licenses	12,608		3,702		8,906		5 - 50 years
Licenses	21,540		—		21,540		Indefinite Life
Use rights	38,507		—		38,507		Indefinite Life
Other	14,736		4,371		10,365		4 -10 years
Total	$	745,774	$	80,381	$	665,393	14 years average

Schedule of Goodwill

The changes in the carrying amount of goodwill by segment for the years ended December 31, 2014 and 2013 are as follows:

(Amounts in Thousands)	Small Commercial Business		Specialty Risk and Extended Warranty			Specialty Program		Total
Balance as of January 1, 2013	$	116,272	$	194,554		$	15,820	$	326,646
Goodwill additions	—		54,932			2,121		57,053
Goodwill impairment	—		(10,226		)	—		(10,226		)
Foreign currency translation	—		118			—		118
Balance as of January 1, 2014	$	116,272	$	239,378		$	17,941	$	373,591
Goodwill additions	24,304		18,617					42,921
Goodwill impairment	—		(62,898		)	—		(62,898		)
Foreign currency translation	—		(929		)	—		(929		)
Balance as of December 31, 2014	$	140,576	$	194,168		$	17,941	$	352,685

Schedule of Expected Amortization Expense

The estimated aggregate amortization expense for each of the next five years is:

(Amounts in Thousands)
2015	$	38,727
2016	35,972
2017	30,336
2018	25,249
2019	23,501

XML

Nature of Operations

12 Months Ended

Dec. 31, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Operations

Nature of Operations

AmTrust Financial Services, Inc. (the “Company”) is an insurance holding company formed under the laws of Delaware. Through its wholly-owned subsidiaries, the Company provides specialty property and casualty insurance focusing on workers’ compensation and commercial package coverage for small business, specialty risk and extended warranty coverage, and property and casualty coverage for middle market business. The Company also provides reinsurance, primarily on personal and commercial automotive business.

The Company transacts business primarily through fifteen insurance company subsidiaries domiciled in the United States and five insurance subsidiaries domiciled outside the United States. The Company's fifteen domestic insurance subsidiaries are:

Company	Abbreviation	Domiciled in
AmTrust Insurance Company of Kansas, Inc.	AICK	Kansas
Associated Industries Insurance Company, Inc.	AIIC	Florida
AmTrust Lloyd's Insurance Company of Texas	ALIC	Texas
Comp Options Insurance Company	COIC	Florida
Developers Surety and Indemnity Company	DSIC	Iowa
First Atlantic Title Insurance Corp.	FATIC	New York
First Nonprofit Insurance Company	FNIC	Delaware
Indemnity Company of California	ICC	California
Milwaukee Casualty Insurance Company	MCIC	Wisconsin
Rochdale Insurance Company	RIC	New York
Sequoia Insurance Company	SIC	California
Sequoia Indemnity Company	SID	Nevada
Security National Insurance Company	SNIC	Delaware
Technology Insurance Company, Inc.	TIC	New Hampshire
Wesco Insurance Company	WIC	Delaware

The Company's five primary foreign insurance subsidiaries are:

Company	Abbreviation	Domiciled in
AmTrust International Insurance Ltd.	AII	Bermuda
AmTrust International Underwriters Limited	AIU	Ireland
AmTrust Europe, Ltd.	AEL	England
Motors Insurance Company Ltd.	MIC	England
AmTrust at Lloyd's (Syndicate 1206)	ATL	England

XML

Geographic Information (Narrative) (Details) (Geographic Concentration Risk)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Written Premiums | United Kingdom
Concentration Risk [Line Items]
Concentration risk	43.00%		38.00%
Written Premiums | Foreign
Concentration Risk [Line Items]
Concentration risk	21.00%	27.00%	29.00%
Written Premiums | ITALY
Concentration Risk [Line Items]
Concentration risk		42.00%
Assets, Total | Foreign
Concentration Risk [Line Items]
Concentration risk	45.00%	51.00%
Revenue | Foreign
Concentration Risk [Line Items]
Concentration risk	66.00%	83.00%	72.00%

XML

Share Based Compensation (Textual) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2010
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average grant date fair value of options granted	$ 14.69	$ 8.10	$ 8.44
Weighted average remaining life for options grants outstanding	3 years 4 months 24 days	4 years 4 months 24 days
Shares exercisable	1,800,000	2,800,000
Weighted average exercise price for the exercisable shares	$ 10.49	$ 9.69
Stock based compensation	$ 19,114	$ 11,186	$ 7,172
Total unrecognized compensation cost related to non-vested share-based compensation arrangements	36,882	23,857	20,665
Intrinsic value of stock options exercised	35,597	19,352	12,061
Intrinsic value of stock options outstanding	86,374	66,559	70,860
Stock option exercise and other	10,589	5,387	8,873
Excess tax benefit from award	$ 10,281	$ 5,109
Performance Shares (PSU)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted during the period	7,640	4,687
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Total Grants	274,835
Omnibus Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized for stock award, maximum				7,315,068
Common stock remaining shares available for grants	4,600,000
Omnibus Incentive Plan | Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expiration period	10 years
Share based award, vesting period	4 years
Omnibus Incentive Plan | Restricted Stock Units (RSUs) | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based award, vesting period	2 years
Omnibus Incentive Plan | Restricted Stock Units (RSUs) | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based award, vesting period	4 years

XML

Geographic Information (Tables)

12 Months Ended

Dec. 31, 2014

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Schedule of Income before Equity Earnings, Domestic and Foreign

The domestic and foreign components of Income before income tax and equity in earnings (loss) of unconsolidated subsidiaries for the years ended December 31, 2014, 2013 and 2012 are as follows:

(Amounts in Thousands)	2014		2013		2012
Domestic	$	267,486	$	243,566	$	79,638
Foreign	204,447		123,480		117,219
	$	471,933	$	367,046	$	196,857

Schedule of Operations, by Geographical Segment

The following table summarizes the Company’s operations by major geographic segment:

(Amounts in Thousands)	Domestic		Bermuda		Other Foreign
December 31, 2014:
Revenue	$	1,394,497	$	1,417,781	$	1,272,053
Property and equipment	143,027		—		11,148
December 31, 2013:
Revenue	$	468,980	$	1,600,809	$	628,106
Property and equipment	95,689		—		8,610
December 31, 2012:
Revenue	$	467,617	$	984,582	$	215,975
Property and equipment	72,899		—		3,034

XML

Employee Benefit Plans (Expected Future Benefit Payment) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014
Compensation and Retirement Disclosure [Abstract]
2015	$ 749
2016	858
2017	910
2018	815
2019	1,055
2020 - 2024	$ 7,531

XML

Commitment and Contingencies (Lease Commitments) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014 Leases	Dec. 31, 2013	Dec. 31, 2012
Commitments and Contingencies Disclosure [Abstract]
Lease payments	$ 16,314	$ 15,658	$ 11,518
Lease Commitment
2015	19,573
2016	17,478
2017	14,642
2018	11,787
2019	10,785
2020 and Thereafter	28,443
Future Minimum Payments Due	$ 102,708
Number of Leases	95

XML

Fair Value of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2014

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 December 31, 2014 and 2013:

(Amounts in Thousands) As of December 31, 2014	Total		Level 1		Level 2		Level 3
Assets:
U.S. treasury securities	$	43,870	$	43,870	$	—	$	—
U.S. government securities	13,538		—		13,538		—
Municipal bonds	482,041		—		482,041		—
Foreign government	112,731		—		112,731		—
Corporate bonds and other bonds:
Finance	1,221,862		—		1,221,862		—
Industrial	1,202,860		—		1,202,860		—
Utilities	138,692		—		138,692		—
Commercial mortgage backed securities	38,685		—		38,685		—
Residential mortgage backed securities:
Agency backed	975,782		—		975,782		—
Non-agency backed	22,503		—		22,503		—
Asset-backed securities	710		—		710		—
Equity securities, available-for-sale	81,044		24,484		21,674		34,886
Equity securities, trading	26,749		26,749		—		—
Short term investments	63,916		63,916		—		—
Other investments	31,186		—		—		31,186
Life settlement contracts	264,517		—		—		264,517
	$	4,720,686	$	159,019	$	4,231,078	$	330,589
Liabilities:
Equity securities sold but not yet purchased, market	$	13,052	$	13,052	$	—	$	—
Life settlement contract profit commission	16,534		—		—		16,534
Derivatives	2,033		—		2,033		—
	$	31,619	$	13,052	$	2,033	$	16,534

(Amounts in Thousands) As of December 31, 2013	Total		Level 1		Level 2		Level 3
Assets:
U.S. treasury securities	$	110,345	$	110,345	$	—	$	—
U.S. government securities	10,489		—		10,489		—
Municipal bonds	446,183		—		446,183		—
Foreign government	160,105				160,105
Corporate bonds and other bonds:
Finance	1,084,599		—		1,084,599		—
Industrial	754,417		—		754,417		—
Utilities	70,226		—		70,226		—
Commercial mortgage backed securities	28,566		—		28,566		—
Residential mortgage backed securities:
Agency backed	423,137		—		423,137		—
Non-agency backed	6,749		—		6,749		—
Asset-backed securities	6,120		—		6,120		—
Equity securities	15,148		15,148		—		—
Short term investments	114,202		114,202		—		—
Other investments	25,749		—		—		25,749
Securities held as collateral	311,518		48,915		262,603		—
Life settlement contracts	233,024		—		—		233,024
	$	3,800,577	$	288,610	$	3,253,194	$	258,773
Liabilities:
Securities sold under agreements to repurchase, at contract value	293,222		—		293,222		—
Life settlement contract profit commission	11,945		—		—		11,945
Derivatives	3,054		—		3,054		—
	$	308,221	$	—	$	296,276	$	11,945

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 years ended December 31, 2014 and 2013:

(Amounts in Thousands)	Balance as of January 1, 2014			Net income (loss)			Other comprehensive income (loss)			Purchases and issuances		Sales and settlements			Net transfers into (out of) Level 3		Balance as of December 31, 2014
Other investments	$	25,749		$	3,084		$	—		$	20,207	$	(17,854	)	$	—	31,186
Equity securities, available-for-sale	—			—			(7,079		)	41,965		—			—		34,886
Life settlement contracts	233,024			61,110			—			25,418		(55,035		)	—		264,517
Life settlement contract profit commission	(11,945		)	(4,589		)	—			—		—			—		(16,534		)
Total	$	246,828		$	59,605		$	(7,079	)	$	87,590	$	(72,889	)	$	—	$	314,055

(Amounts in Thousands)	Balance as of January 1, 2013			Net income (loss)			Other comprehensive income (loss)		Purchases and issuances		Sales and settlements			Net transfers into (out of) Level 3		Balance as of December 31, 2013
Other investments	$	11,144		$	1,813		$	1,666	$	17,228	$	(6,102	)	$	—	$	25,749
Life settlement contracts	193,927			47,245			—		11,906		(20,054		)	—		233,024
Life settlement contract profit commission	(11,750		)	(195		)	—		—		—			—		(11,945		)
Total	$	193,321		$	48,863		$	1,666	$	29,134	$	(26,156	)	$	—	$	246,828

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 December 31, 2014 and 2013 and, as described in Note 6. “Investments in Life Settlements”, only includes data for policies to which the Company assigned value at those dates:

	2014			2013
Average age of insured	81.1			80.1
Average life expectancy, months (1)	121			131
Average face amount per policy	$	6,624,000		$	6,611,000
Effective discount rate (2)	14.0		%	14.2		%

⁽¹⁾  Standard life expectancy as adjusted for insured’s specific circumstances.

⁽²⁾  Effective Discount Rate (“EDR”) is the Company's estimated internal rate of return on its life settlement contract portfolio and is determined from the gross expected cash flows and valuation of the portfolio. The valuation of the portfolio is calculated net of all reserves using a 7.5% discount rate. The EDR is implicit of the reserves and the gross expected cash flows of the portfolio. The Company anticipates that the EDR's range is between 12.5% and 17.5% and reflects the uncertainty that exists surrounding the information available as of the reporting date. As the accuracy and reliability if information improves (declines), the EDR will decrease (increase). The change in the EDR from December 31, 2013 to December 31, 2014 resulted from routine updating of life expectancies and other factors relating to operational risk.

Increase or (Decrease) in Carrying Value of Investment in Life Insurance Policies

The Company's 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 are held constant, the carrying value of the investment in life insurance policies would increase or (decrease) by the unaudited amounts summarized below for the years ended December 31, 2014 and 2013:

	Change in life expectancy
	Plus 4 Months			Minus 4 Months
Investment in life policies:
December 31, 2014	$	(34,686	)	$	36,486
December 31, 2013	$	(29,537	)	$	31,313

	Change in discount rate (1)
	Plus 1%			Minus 1%
Investment in life policies:
December 31, 2014	$	(22,705	)	$	25,456
December 31, 2013	$	(20,055	)	$	22,605

⁽¹⁾ Discount rate is a present value calculation that considers legal risk, credit risk and liquidity risk and is a component of EDR.

Schedule of Life Settlement Contracts Gain (Loss)

A reconciliation of net income for life settlement contracts in the above table to (loss) gain on investment in life settlement contracts net of profit commission included in the Consolidated Statements of Income for the years ended December 31, 2014 and 2013 is as follows:

(Amounts in Thousands)	2014			2013
Net income	$	61,110		$	47,245
Premium paid	(46,367		)	(38,933		)
Profit commission	(4,589		)	(195		)
Other expenses	2,152			(4,317		)
Gain on investment in life settlement contracts	$	12,306		$	3,800

XML

New Market Tax Credit

12 Months Ended

Dec. 31, 2014

New Market Tax Credit [Abstract]

New Market Tax Credit

New Market Tax Credit

In 2012, the Company's subsidiary, 800 Superior, LLC (an entity owned equally by the Company and NGHC), received $19,400 in net proceeds from a financing transaction the Company and NGHC entered into with Key Community Development Corporation (“KCDC”) related to a capital improvement project for an office building in Cleveland, Ohio owned by 800 Superior, LLC. The Company, NGHC and KCDC collectively made capital contributions (net of allocation fees) and loans to 800 Superior NMTC Investment Fund II and 800 Superior NMTC Investment Fund I LLC (collectively, the “Investment Funds”) under a qualified New Markets Tax Credit (“NMTC”) program. The NMTC program was provided for in the Community Renewal Tax Relief Act of 2000 (the “Act”) and is intended to induce capital investment in qualified lower income communities. The Act permits taxpayers to claim credits against their federal income taxes for up to 39% of qualified investments in the equity of community development entities (“CDEs”). CDEs are privately managed investment institutions that are certified to make qualified low-income community investments (“QLICIs”).

In addition to the capital contributions and loans from the Company, NGHC and KCDC, as part of the transaction, the Investment Funds received, directly and indirectly, proceeds of approximately $8,000 through two loans originating from state and local governments of Ohio. These loans are each for a period of 15 years and have an average interest rate of 1.7% per annum.

The Investment Funds then contributed the loan proceeds and capital contributions of $19,400 to two CDEs, which, in turn, loaned the funds on similar terms to 800 Superior, LLC. The proceeds of the loans from the CDEs (including loans representing the capital contribution made by KCDC, net of allocation fees) will be used to fund the capital improvement project. As collateral for these loans, the Company has granted a security interest in the assets acquired with the loan proceeds.

The Company and NGHC are each entitled to receive an equal portion of 49% of the benefits derived from the NMTCs generated by 800 Superior Investment Fund II LLC, while KCDC is entitled to the remaining 51%. The NMTC is subject to 100% recapture for a period of seven years as provided in the Internal Revenue Code. During this seven years compliance period, the entities involved are required to be in compliance with various regulations and contractual provisions that apply to the NMTC arrangement. Non-compliance with applicable requirements could result in the projected tax benefits not being realized and, therefore, could require the Company to indemnify KCDC for any loss or recapture of NMTCs related to the financing until such time as the obligation to deliver tax benefits is relieved. The Company does not anticipate any credit recaptures will be required in connection with this arrangement. In addition, this transaction includes a put/call provision whereby the Company may be obligated or entitled to repurchase KCDC's interest in the Investment Funds in September 2019 at the end of the recapture period. The Company believes that KCDC will exercise its put option and, therefore, attributed an insignificant value to the put/call.

The Company has determined that the Investment Funds are variable interest entities (“VIEs”). The ongoing activities of the Investment Funds - collecting and remitting interest and fees and NMTC compliance - were all considered in the initial design and are not expected to significantly affect economic performance throughout the life of the Investment Funds. When determining whether to consolidate the Investment Funds, Company management considered the contractual arrangements that obligate it to deliver tax benefits and provide various other guarantees to the structure, KCDC's lack of a material interest in the underlying economics of the project, and the fact that the Company is obligated to absorb losses of the Investment Funds. Also, the Company has a 13.2% ownership in NGHC. The Company concluded that it was the primary beneficiary and consolidated the Investment Funds, as VIEs, in accordance with the accounting standard for consolidation. KCDC's contribution, net of syndication fees, is included as an accrued liability in the accompanying consolidated balance sheets. Direct costs incurred in structuring the financing arrangement are deferred and will be recognized as expense over the term of the loans. Incremental costs to maintain the structure during the compliance period are recognized as incurred.

XML

Stockholders' Equity

12 Months Ended

Dec. 31, 2014

Statement of Comprehensive Income [Abstract]

Stockholders' Equity

Stockholders' Equity

Preferred Stock Issuances

On June 10, 2013, the Company issued 4,600,000 shares of 6.75% Non-Cumulative Series A Preferred Stock (the “Preferred Stock”). Dividends on the Preferred Stock when, as and if declared by the Company’s Board of Directors or a duly authorized committee of the Board will accrue and be payable on the liquidation preference amount ($25), on a non-cumulative basis, quarterly in arrears on the 15th day of March, June, September and December of each year (each, a “dividend payment date”), at an annual rate of 6.75%. During the year ended December 31, 2013, the Company paid dividends on the Preferred Stock in the amount of $3,989.

Dividends on the Preferred Stock are not cumulative. Accordingly, in the event dividends are not declared on the Preferred Stock for payment on any dividend payment date, then those dividends will not accumulate and will not be payable. If the Company has not declared a dividend before the dividend payment date for any dividend period, the Company will have no obligation to pay dividends for that dividend period, whether or not dividends on the Preferred Stock are declared for any future dividend payment. During any dividend period, so long as any shares of Preferred Stock remain outstanding, unless the full dividends for the latest completed dividend period on all outstanding shares of Preferred Stock have been declared and paid, no dividend shall be paid or declared on the shares of common stock.

The shares of Preferred Stock have no stated maturity date and are redeemable in whole or in part at the Company’s option any time after June 10, 2018 at a redemption price of $25 per share plus any declared and unpaid dividends, without accumulation of any undeclared dividends. The holders of the Preferred Stock have no voting rights other than the right to elect up to two directors if dividends on the Preferred Stock are not declared and paid for six or more dividend periods. Holders of Preferred Stock have no right to convert the Preferred Stock into, or exchange Preferred Stock for, any other securities or property of the Company.

Upon any dissolution, liquidation or “winding up” of the Company, holders of Preferred Stock will be entitled to receive out of the Company’s assets, whether from capital, surplus or earnings, and before any distribution of any assets is made on the Company’s common stock, the liquidation preference of $25 per share, plus unpaid dividends, if any, to the date fixed for distribution. Holders of Preferred Stock will be entitled to no further participation in any distribution made in conjunction with any dissolution, liquidation or “winding up.”

On July 1, 2014, the Company completed a public offering of 4,000,000 of its depositary shares, each representing a 1/40th interest in a share of its 7.25% Non-Cumulative Preferred Stock, Series B, $0.01 par value per share (the "Series B Preferred Stock"), with a liquidation preference of $1,000 per share (equivalent to $25 per depositary share). Each depositary share entitles the holder to a proportional fractional interest in all rights and preferences of the Series B Preferred Stock represented thereby (including any dividend, liquidation, redemption and voting rights). Dividends on the Series B Preferred Stock represented by the depositary shares will be payable on the liquidation preference amount, on a non-cumulative basis, when, as and if declared by the Company’s Board of Directors, at a rate of 7.25% per annum, quarterly in arrears, on March 15, June 15, September 15, and December 15 of each year, beginning on September 15, 2014, from and including the date of original issuance. The Series B Preferred Stock represented by the depositary shares is not redeemable prior to July 1, 2019. After that date, the Company may redeem at its option, in whole or in part, the Series B Preferred Stock represented by the depositary shares at a redemption price of $1,000 per share (equivalent to $25 per depositary share) plus any declared and unpaid dividends for prior dividend periods and accrued but unpaid dividends (whether or not declared) for the then current dividend period. On July 10, 2014, the underwriters exercised, in part, their over-allotment option with respect to 200,000 additional depositary shares, each representing a 1/40th interest in a share of Series B Preferred Stock, on the same terms and conditions as the original issuance. A total of 4,200,000 depositary shares (equivalent to 105,000 shares of Series B Preferred Stock) were issued. Net proceeds from this offering, including the over-allotment, were $101,702. In addition, the Company incurred $3,614 in underwriting discount and commissions and expenses, which were recognized as a reduction to additional paid-in capital.

On September 16, 2014, the Company completed a public offering of 3,200,000 of its depositary shares, each representing a 1/40th interest in a share of its 7.625% Non-Cumulative Preferred Stock, Series C, $0.01 par value per share (the "Series C Preferred Stock"), with a liquidation preference of $1,000 per share (equivalent to $25 per depositary share). Each depositary share entitles the holder to a proportional fractional interest in all rights and preferences of the Series C Preferred Stock represented thereby (including any dividend, liquidation, redemption and voting rights). Dividends on the Series C Preferred Stock represented by the depositary shares will be payable on the liquidation preference amount, on a non-cumulative basis, when, as and if declared by the Company’s Board of Directors, at a rate of 7.625% per annum, quarterly in arrears, on March 15, June 15, September 15, and December 15 of each year, beginning on December 15, 2014, from and including the date of original issuance. The Series C Preferred Stock represented by the depositary shares is not redeemable prior to September 16, 2019. After that date, the Company may redeem at its option, in whole or in part, the Series C Preferred Stock represented by the depositary shares at a redemption price of $1,000 per share (equivalent to $25 per depositary share) plus any declared and unpaid dividends for prior dividend periods and accrued but unpaid dividends (whether or not declared) for the then current dividend period. Net proceeds from this offering were $77,480. In addition, the Company incurred $2,745 in underwriting discount and commissions and expenses, which were recognized as a reduction to additional paid-in capital.

Accumulated Other Comprehensive Income (Loss)

The following tables summarize accumulated other comprehensive income (loss) for the years ended December 31, 2014, 2013 and 2012:

(Amounts in Thousands)	Foreign Currency Items			Unrealized Gains (Losses) on Investments			Interest Rate Swap Hedge			Net Benefit Plan Assets and Obligations Recognized in Stockholders' Equity			Accumulated Other Comprehensive Income (Loss)
Balance, December 31, 2011	$	(17,091	)	$	9,372		$	(2,280	)	$	—		$	(9,999	)
Other comprehensive income (loss) before reclassifications	10,354			98,334			(1,128		)	—			107,560
Amounts reclassed from accumulated other comprehensive income (loss)	—			6,640			—			—			6,640
Income tax benefit (expense)	(3,624		)	(36,741		)	395			—			(39,970		)
Net current-period other comprehensive income (loss)	6,730			68,233			(733		)	—			74,230
Balance, December 31, 2012	(10,361		)	77,605			(3,013		)	—			64,231
Other comprehensive income (loss) before reclassification	19,912			(138,902		)	1,581			(2,257		)	(119,666		)
Amounts reclassed from accumulated other comprehensive income (loss)	—			8,707			—			—			8,707
Income tax benefit (expense)	(6,969		)	45,567			(553		)	519			38,564
Net current-period other comprehensive income (loss)	12,943			(84,628		)	1,028			(1,738		)	(72,395		)
Balance, December 31, 2013	2,582			(7,023		)	(1,985		)	(1,738		)	(8,164		)
Other comprehensive income (loss) before reclassification	(26,706		)	133,775			1,022			(1,623		)	106,468
Amounts reclassed from accumulated other comprehensive income	—			(7,566		)	—			—			(7,566		)
Income tax benefit (expense)	9,348			(44,173		)	(358		)	568			(34,615		)
Net current-period other comprehensive income (loss)	(17,358		)	82,036			664			(1,055		)	64,287
Balance, December 31, 2014	$	(14,776	)	$	75,013		$	(1,321	)	$	(2,793	)	$	56,123

During the years ended December 31, 2014, 2013 and 2012, amounts reclassed from accumulated other comprehensive income (loss) into net income were included in net realized gain on investment.

XML

Debt (Borrowings) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013	Aug. 31, 2013
Debt Instrument [Line Items]
Revolving credit facility	$ 120,000	$ 0
Convertible senior notes	214,424	164,218
6.125% Notes due 2023	250,000	250,000
Subordinated debentures	123,714	123,714
Secured loan agreements	35,233	7,742
Promissory notes	14,500	14,500
Debt, Long-term and Short-term, Combined Amount, Total	757,871	560,174
5.5% Convertible senior notes due 2021 (the 2021 Notes)
Debt Instrument [Line Items]
Convertible senior notes	56,745	164,218
2.75% Convertible senior notes due 2044 (the 2044 Notes)
Debt Instrument [Line Items]
Convertible senior notes	157,679	0
Senior Notes | 6.125% Notes due 2023
Debt Instrument [Line Items]
Per annum interest rate of notes (percentage)	6.125%		6.125%
Convertible Senior Notes | 5.5% Convertible senior notes due 2021 (the 2021 Notes)
Debt Instrument [Line Items]
Per annum interest rate of notes (percentage)	5.50%
Convertible Senior Notes | 2.75% Convertible senior notes due 2044 (the 2044 Notes)
Debt Instrument [Line Items]
Convertible senior notes	$ 157,457
Per annum interest rate of notes (percentage)	2.75%

XML

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense (Benefit)

The provision for income taxes consists of the following for the years ended December 31, 2014, 2013 and 2012:

(Amounts in Thousands) Income Tax Provision (Benefit)	2014			2013		2012
Current expense (benefit)
Federal	$	219,413		$	49,565	$	6,402
Foreign	26,142			29,935		21,052
Total current tax expense	245,555			79,500		27,454
Deferred expense (benefit)
Federal	$	(8,376	)	$	13,741	$	9,919
Foreign	(183,493		)	4,778		(16,081		)
Total deferred tax expense	(191,869		)	18,519		(6,162		)
Total income tax expense	$	53,686		$	98,019	$	21,292

Reconciliation of Statutory Income Tax Rate to Effective Tax Rate

The following table is a reconciliation of the Company’s statutory income tax expense to its effective tax rate for the years ended December 31, 2014, 2013 and 2012:

(Amounts in Thousands)	2014			2013			2012
Income before equity in earnings (loss) of unconsolidated subsidiaries	$	471,933		$	367,046		$	196,857
Tax at federal statutory rate of 35%	$	165,177		$	128,466		$	68,900
Tax effects resulting from:
Net income of non-includible foreign subsidiaries	(99,904		)	(45,075		)	(43,806		)
Other, net	(11,587		)	14,628			(3,802		)
	$	53,686		$	98,019		$	21,292
Effective tax rate	11.4		%	26.7		%	10.8		%

Schedule of Deferred Tax Assets and Liabilities

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities as of December 31, 2014 and 2013 are shown below:

(Amounts in Thousands)	2014			2013
Deferred tax assets:
Unearned premiums	$	117,922		$	83,410
Ceding commission	107,739			82,554
Loss and LAE reserves	49,583			43,452
Other	62,346			60,673
Deferred compensation	7,774			7,183
Bad debt	13,027			8,790
Net operating loss carryforward	101,230			2,133
Unrealized loss on investments	—			4,396
	$	459,621		$	292,591
Deferred tax liabilities:
Deferred acquisition costs	$	(295,121	)	$	(239,293	)
Equalization reserves	(94,215		)	(186,576		)
Intangible assets	(51,619		)	(64,090		)
Unrealized gain on investments	(30,219		)	—
Other	(16,790		)	(19,578		)
Depreciation	(31,350		)	(31,396		)
Equity results which cannot be liquidated tax free	(41,497		)	(21,200		)
Accrual market discount	(3,123		)	(3,020		)
Cash surrender value on insurance	(2,050		)	(1,957		)
	(565,984		)	(567,110		)
Deferred tax liability, net	$	(106,363	)	$	(274,519	)

Summary of Income Tax Examinations

Listed below are the tax years that remain subject to examination by major tax jurisdictions:

	Open Tax Years
Major tax jurisdictions:
United States	2010-2013
United Kingdom	2011-2013
Ireland	2009-2013

XML

Acquisitions Acquisitions (Tables)

12 Months Ended

Dec. 31, 2014

Business Combinations [Abstract]

Summary of assets acquired and liabilities assumed

A summary of the assets acquired and liabilities assumed for Sequoia are as follows:

(Amounts in Thousands)
Assets
	Cash and investments	$	215,473
	Premium receivable	32,870
	Reinsurance recoverables	43,793
	Prepaid expenses and other assets	4,014
	Deferred tax asset	1,242
	Property and equipment	1,022
	Intangible assets	11,848
Total assets		$	310,262
Liabilities
	Loss and loss expense reserves	$	165,487
	Unearned premium	59,773
	Accrued expenses and other current liabilities	15,624
	Deferred tax liability	4,147
Total liabilities		$	245,031
Cash paid		$	60,000
Acquisition gain		$	5,231

A summary of the assets acquired and liabilities assumed for CCPH are as follows:

(Amounts in Thousands)
Assets
	Cash and investments	$	253,257
	Premium receivable	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	9,703
	Unearned premium	131,494
	Accrued expenses and other current liabilities	83,993
	Deferred tax liability	6,215
Total liabilities		$	231,405
Cash paid		$	72,412
Acquisition gain		$	25,532

A summary of the assets acquired and liabilities assumed for MIHC are as follows:

(Amounts in Thousands)
Assets
	Cash and investments	$	134,780
	Premium receivable	23,085
	Prepaid expenses and other assets	43,714
	Deferred tax asset	5,358
	Property and equipment	2,684
	Intangible assets	6,132
Total assets		$	215,753
Liabilities
	Loss and loss expense reserves	$	89,267
	Unearned premiums	27,760
	Accrued expenses and other current liabilities	23,629
	Deferred tax liability	2,146
	Notes payable	6,500
Total liabilities		$	149,302
Cash paid		$	48,500
Acquisition gain		$	17,951

XML

Commitment and Contingencies

12 Months Ended

Dec. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Litigation

The Company’s insurance subsidiaries are named as defendants in various legal actions arising principally from claims made under insurance policies and contracts. Those actions are considered by the Company in estimating the loss and LAE reserves. The Company’s management believes the resolution of those actions will not have a material adverse effect on the Company’s financial position or results of operations.

Lease Commitments

The Company is obligated under approximately 95 leases for office space expiring at various dates through 2023. Future minimum lease payments as of December 31, 2014 under non-cancellable operating leases for each of the next five years are approximately as follows:

(Amounts in Thousands)
2015	$	19,573
2016	17,478
2017	14,642
2018	11,787
2019	10,785
2020 and Thereafter	28,443
	$	102,708

Rent expense for the years ended December 31, 2014, 2013 and 2012 was $16,314, $15,658 and $11,518, respectively.

Employment Agreements

The Company has employment agreements with approximately 44 of its key executives and employees. The agreements terminate on varying dates through 2020, contain annual minimum levels of compensation, and contain bonuses based on the Company’s achieving certain financial targets. The annual future minimums in the aggregate are as follows through 2020:

(Amounts in Thousands)
2015	$	13,616
2016	7,293
2017	3,818
2018	919
2019	602
2020 and Thereafter	422
	$	26,670

XML

Statutory Financial Data, Risk Based Capital and Dividend Restrictions

12 Months Ended

Dec. 31, 2014

Insurance [Abstract]

Statutory Financial Data, Risk Based Capital and Dividend Restrictions

Statutory Financial Data, Risk Based Capital and Dividend Restrictions

The Company’s insurance subsidiaries file financial statements in accordance with statutory accounting practices (“SAP”) prescribed or permitted by domestic or foreign insurance regulatory authorities. The differences between statutory financial statements and financial statements prepared in accordance with GAAP vary between domestic and foreign jurisdictions. The principal differences relate to (1) acquisition costs incurred in connection with acquiring new business which are charged to expense under SAP but under GAAP are deferred and amortized as the related premiums are earned; (2) limitation on net deferred tax assets created by the tax effects of temporary differences; (3) unpaid losses and loss expense, and unearned premium reserves are presented gross of reinsurance with a corresponding asset recorded; and (4) fixed maturity portfolios that are carried at fair value and changes in fair value are reflected directly in unassigned surplus, net of related deferred taxes.

Property and casualty insurance companies in the United States are subject to certain Risk-Based Capital (“RBC”) requirements as specified by the National Association of Insurance Commissioners ("NAIC"). Under such requirements, the amount of Statutory Capital and Surplus maintained by a property and casualty insurance company is to be determined on various risk factors. As of December 31, 2014 and 2013, the Statutory Capital and Surplus of the Company’s fifteen insurance subsidiaries domiciled in the United States exceeded the RBC requirements.

Statutory capital and surplus and required statutory capital and surplus for the Company's insurance subsidiaries as reported to regulatory authorities as of December 31, 2014 and 2013 were approximately as follows:

	2014				2013
(Amounts in Thousands)	Statutory Capital and Surplus		Required Statutory Capital and Surplus (1)		Statutory Capital and Surplus		Required Statutory Capital and Surplus (1)
TIC (domestic)	$	479,437	$	178,941	$	236,528	$	108,377
RIC (domestic)	82,350		31,082		58,845		22,587
WIC (domestic)	215,530		125,810		166,813		79,857
AIIC (domestic)	74,014		17,416		74,076		17,373
SNIC (domestic)	123,573		50,607		79,780		32,603
MCIC (domestic)	17,713		5,287		14,912		3,620
ALIC (domestic)	2,162		217		2,155		245
AICK (domestic)	19,304		6,752		15,275		5,307
SIC (domestic)	79,475		15,231		74,502		17,354
SID (domestic)	9,799		665		9,820		705
FNIC (domestic)	36,104		7,736		35,428		7,787
DSIC (domestic) (2)	82,243		11,361
ICC (domestic) (2)	20,699		528
FATIC (domestic) (2)	10,538		500
COIC (domestic) (2)	29,011		8,424
AEL (United Kingdom)	290,916		62,925		246,292		61,738
AIU (Ireland)	195,208		37,865		169,465		43,124
AII (Bermuda)	679,967		244,509		445,077		221,330
AILSA (Luxembourg)	6,874		6,526		7,204		6,165
MIC (United Kingdom)	130,169		20,122		95,649		22,957

⁽¹⁾ For the Company's U.S. insurance companies and AIU, except FATIC, the amount is equal to the Regulatory Action Level ("RAL") as defined by NAIC or the minimum amount required to avoid regulatory oversight. For AEL, MIC, AII and AILSA, the amount is equal to the minimum capital required by their respective country's regulatory authority. For FATIC, the amount is equal to the minimum capital required by the regulatory authority in its state of domicile.

⁽²⁾ As these entities were acquired in 2014, the 2013 information is not presented.

Statutory net income for the insurance subsidiaries for the years ended December 31, 2014, 2013 and 2012 as reported to regulatory authorities were approximately as follows:

(Amounts in Thousands)	2014			2013			2012
TIC (domestic)	$	21,418		$	16,614		$	45,621
RIC (domestic)	9,440			8,158			1,129
WIC (domestic)	14,150			21,447			9,263
AIIC (domestic)	8,297			12,810			5,570
SNIC (domestic)	30,666			14,350			10,624
MCIC (domestic)	3,226			1,671			1,519
ALIC (domestic)	2			18			15
AICK (domestic)	4,081			3,413			1,198
SIC (domestic) (1)	9,535			4,464
SID (domestic) (1)	35			634
FNIC (domestic) (1)	(1,186		)	(4,596		)
DSIC (domestic) (1)	4,124
ICC (domestic) (1)	1,565
FATIC (domestic) (1)	(664		)
COIC (domestic) (1)	(946		)
AEL (United Kingdom)	56,766			50,452			54,967
AIU (Ireland)	50,697			34,223			20,767
AII (Bermuda)	78,142			5,282			107,980
AILSA (Luxembourg) (1)	207			(27		)
MIC (United Kingdom) (1)	28,856			7,515

⁽¹⁾ Information is presented only for years the subsidiaries were owned by the Company. The amounts reported in year of acquisition are for the entire year and do not represent the statutory net income for the period of ownership.

The Company’s insurance subsidiaries are subject to statutory and regulatory restrictions applicable to insurance companies, and imposed by the states of domicile, which limit the amount of cash dividends or distributions that they may pay to approximately $844,037 and $473,253 as of December 31, 2014 and 2013, respectively. During 2014, 2013 and 2012, the Company received a dividend of approximately $7,400, $6,900 and $7,200, respectively, from one of its subsidiaries. In addition to the restrictions on the insurance subsidiaries, there are also restrictions in the Parent company's debt instruments, which require dividends to be limited to an amount that, after giving immediate effect to such dividend payments on a pro forma basis, would allow the Company to remain in compliance with its debt covenants. There were no other material restrictions on net assets in place as of December 31, 2014. Accordingly, the total amount of unrestricted net assets for consolidated subsidiaries as of December 31, 2014 and 2013 was $844,037 and $473,253, respectively.

XML

Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Cash flows from operating activities:
Net income	$ 446,598	$ 280,593	$ 184,860
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	63,093	53,118	28,602
Net amortization of bond premium or discount	15,395	18,925	3,905
Equity earnings on investment in unconsolidated subsidiaries	(28,351)	(11,566)	(9,295)
Gain on investment in life settlement contracts, net	(12,306)	(3,800)	(13,822)
Realized gain on marketable securities	(24,463)	(18,396)	(11,946)
Non-cash write-down of marketable securities	8,039	2,869	2,965
Non-cash write-down of goodwill	62,898	10,226	16,389
Discount on notes payable	3,095	3,000	2,936
Stock based compensation	19,114	11,186	7,172
Loss on extinguishment of debt	9,831	0	0
Bad debt expense	24,294	24,334	11,348
Foreign currency (gain) loss	(60,245)	6,533	242
Gain on sale of subsidiary	(6,631)	0	0
Acquisition gain	0	(48,715)	0
Dividend received from equity investment	0	12,203	0
Changes in assets - (increase) decrease:
Premiums and notes receivable	(251,544)	(189,503)	(329,618)
Reinsurance recoverable	(503,926)	(547,578)	(219,826)
Deferred policy acquisition costs, net	(159,979)	(97,561)	(68,135)
Prepaid reinsurance premiums	(291,544)	(133,787)	(167,747)
Prepaid expenses and other assets	(123,621)	(310,177)	(83,692)
Changes in liabilities - increase (decrease):
Reinsurance premium payable	48,656	87,520	190,814
Loss and loss expense reserves	1,219,993	1,177,625	547,225
Unearned premiums	706,976	586,219	380,738
Funds held under reinsurance treaties	(10,397)	(6,372)	(15,303)
Accrued expenses and other current liabilities	75,585	(13,071)	67,350
Deferred tax liability	(75,024)	21,623	6,293
Net cash provided by operating activities	1,155,536	915,448	531,455
Cash flows from investing activities:
Purchases of fixed maturities, available-for-sale	(2,425,101)	(2,473,116)	(1,466,424)
Purchases of equity securities, available-for-sale	(293,554)	(41,374)	(30,468)
Purchases of equity securities, trading	(84,493)
Purchases of other investments	(20,207)	(17,228)	(1,884)
Sales of fixed maturities, available-for-sale	1,749,897	1,612,580	905,697
Sales of equity securities, available-for-sale	238,369	68,585	47,491
Sales of equity securities, trading	78,974
Sales of other investments	17,854	6,102	5,717
Net sales (purchases) of short term investments	50,286	9,550	118,283
Acquisition of and capitalized premiums for life settlement contracts	(25,419)	(51,070)	(51,031)
Receipt of life settlement contract proceeds	10,035	20,054	10,074
Loan to ACP Re	(125,000)
Acquisition of reinsurance entities, net of cash obtained	0	17,811	15,473
Acquisition of subsidiaries, net of cash obtained	(80,736)	(20,182)	(63,855)
Sale of subsidiary	20,059
Increase in restricted cash and cash equivalents	(85,786)	(21,677)	(55,658)
Purchase of property and equipment	(77,172)	(39,586)	(27,388)
Net cash used in investing activities	(1,051,994)	(929,551)	(593,973)
Cash flows from financing activities:
Preferred share issuance, net	220,000	0	0
Revolving credit facility payments	(100,000)	0	0
Repurchase agreements, net	(293,222)	58,311	43,193
Secured loan agreement borrowings	30,500	0	0
Secured loan agreement payments	(3,009)	(1,299)	(1,021)
Promissory note borrowings	0	0	13,000
Promissory note payments	(10,695)	0	(12,500)
Senior notes proceeds	0	250,000	0
Convertible senior notes proceeds	68,400	0	25,000
Financing fees	(5,188)	(2,740)	(2,180)
Common share (repurchase) issuance	(59,155)	472	0
Preferred share issuance, net	178,641	111,130	0
Non-controlling interest capital contributions to consolidated subsidiaries	18,223	36,149	22,607
Stock option exercise and other	8,776	8,062	8,873
Dividends distributed on common stock	(55,599)	(29,236)	(30,201)
Dividends distributed on preference stock	(12,738)	(3,989)	0
Net cash (used in) provided by financing activities	(15,066)	426,860	66,771
Effect of exchange rate changes on cash	(15,748)	2,895	3,270
Net increase in cash and cash equivalents	72,728	415,652	7,523
Cash and cash equivalents, beginning year	830,022	414,370	406,847
Cash and cash equivalents, end of year	902,750	830,022	414,370
Supplemental Cash Flow Information
Interest payments on debt	85,619	65,652	8,414
Income tax payments	$ 36,679	$ 20,768	$ 20,435

XML

Geographic Information

12 Months Ended

Dec. 31, 2014

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Geographic Information

Geographic Information

Four of the Company’s insurance subsidiaries (AII, AIU, MIC and AEL) operate outside the United States. Their assets and liabilities are located principally in the countries where the insurance risks are written or assumed. For 2014, 21% of the Company’s gross written premiums related to foreign risks, of which 43% were written from the United Kingdom. For 2013 and 2012, 27% and 29%, respectively, of the Company's gross written premiums related to foreign risks, of which 42% and 38%, respectively, were written from Italy and the United Kingdom, respectively. As of December 31, 2014 and 2013, approximately 45% and 51%, respectively, of the Company's consolidated assets were located outside the United States. For the years ended 2014, 2013 and 2012, approximately 66%, 83% and 72%, respectively, of the consolidated revenues earned by the Company were located in or derived from foreign countries.

The domestic and foreign components of Income before income tax and equity in earnings (loss) of unconsolidated subsidiaries for the years ended December 31, 2014, 2013 and 2012 are as follows:

(Amounts in Thousands)	2014		2013		2012
Domestic	$	267,486	$	243,566	$	79,638
Foreign	204,447		123,480		117,219
	$	471,933	$	367,046	$	196,857

The following table summarizes the Company’s operations by major geographic segment:

(Amounts in Thousands)	Domestic		Bermuda		Other Foreign
December 31, 2014:
Revenue	$	1,394,497	$	1,417,781	$	1,272,053
Property and equipment	143,027		—		11,148
December 31, 2013:
Revenue	$	468,980	$	1,600,809	$	628,106
Property and equipment	95,689		—		8,610
December 31, 2012:
Revenue	$	467,617	$	984,582	$	215,975
Property and equipment	72,899		—		3,034

XML

Fair Value of Financial Instruments (Additional Information) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Sep. 30, 2014	Feb. 28, 2014	Jan. 31, 2014	Aug. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Percentage of investments in portfolio	0.60%
Internal rate of return	14.00%	14.20%
Subordinate Debenture
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	74,690
NGHC
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Percentage of ownership interests	13.20%		13.20%	13.20%	15.40%
Minimum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Internal rate of return	12.50%
Maximum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Internal rate of return	17.50%
6.125% Notes due 2023 | Senior Notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt instrument, stated interest rate (percentage)	6.125%					6.125%
Fair value	258,750
5.5% Convertible senior notes due 2021 (the 2021 Notes) | Convertible Senior Notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt instrument, stated interest rate (percentage)	5.50%
5.5% Convertible senior notes due 2021 (the 2021 Notes) | Senior Notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	146,675
2.75% Convertible senior notes due 2044 (the 2044 Notes) | Convertible Senior Notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt instrument, stated interest rate (percentage)	2.75%
2.75% Convertible senior notes due 2044 (the 2044 Notes) | Senior Notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	210,831
Reported Value Measurement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity method investments, fair value disclosure	119,712
Estimate of Fair Value Measurement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity method investments, fair value disclosure	228,818

XML

Related Party Transactions (Significant transaction with ACP) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended			0 Months Ended		1 Months Ended	0 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Jul. 23, 2014	Sep. 15, 2014	Sep. 30, 2014	Jan. 03, 2014	Jan. 31, 2014
Related Party Transaction [Line Items]
Goodwill	$ 352,685				$ 373,591				$ 352,685	$ 373,591	$ 326,646
Gross written premium									6,087,965	4,116,911	2,749,326
Assumed premiums written									665,481	247,018	254,480
Earned premium	908,163	914,413	874,937	829,051	707,562	613,895	536,539	407,994	3,526,564	2,265,990	1,418,852
Loss and loss adjustment expense	587,464	609,352	587,233	558,570	470,416	410,579	364,110	272,256	2,342,619	1,517,361	922,675
Ceded reinsurance premiums payable	683,421				635,588				683,421	635,588
Revolving credit facility	120,000				0				120,000	0
Interest income									2,601	0	0
AmTrust North America
Related Party Transaction [Line Items]
Insurance commission, percentage													10.00%
NGHC
Related Party Transaction [Line Items]
Assets managed under asset management agreement	1,433,705								1,433,705
Asset management fees									28,695	25,921	15,947
Investment management fee									2,006	1,725	1,503
Acp Re Ltd
Related Party Transaction [Line Items]
Assets managed under asset management agreement	53,670								53,670
Asset management fees									214	238	638
Loan and related interest receivable	127,601								127,601
Scenario 1 | Acp Re Ltd
Related Party Transaction [Line Items]
Asset management services fee percentage	0.20%								0.20%
Scenario 3 | Acp Re Ltd
Related Party Transaction [Line Items]
Asset management services fee percentage	0.15%								0.15%
Minimum | NGHC
Related Party Transaction [Line Items]
Asset management services fee percentage	0.15%								0.15%
Average value of assets under management									1,000,000
Minimum | Scenario 3 | Acp Re Ltd
Related Party Transaction [Line Items]
Average value of assets under management									1,000,000
Maximum | NGHC
Related Party Transaction [Line Items]
Asset management services fee percentage	0.20%								0.20%
Average value of assets under management									1,000,000
Maximum | Scenario 2 | Acp Re Ltd
Related Party Transaction [Line Items]
Average value of assets under management									1,000,000
Tower Companies
Related Party Transaction [Line Items]
Goodwill													700
Contingent consideration													26,900
Gross written premium									133,424
Tower Companies | Acp Re Ltd
Related Party Transaction [Line Items]
Voting interests acquired, percentage																100.00%
Percentage of Gross Written Premium | Parent Company | Tower Companies | Acp Re Ltd
Related Party Transaction [Line Items]
Contingent consideration arrangements, percentage												3.00%
Contingent payment, maximum												30,000
Number of payments												3 years
Renewal Rights | Tower Companies
Related Party Transaction [Line Items]
Assigned to intangible assets													26,200
AII | NGHC | Aggregate Stop Loss Retrocession Contract
Related Party Transaction [Line Items]
Percentage of ceding commission													5.50%
AII | Acp Re Ltd
Related Party Transaction [Line Items]
Revolving credit facility													125,000
AII | NG Re Ltd. | Acp Re Ltd
Related Party Transaction [Line Items]
Revolving credit facility													250,000
Debt instrument, stated interest rate (percentage)													7.00%
AII | CP Re | NGHC | Aggregate Stop Loss Reinsurance Agreement
Related Party Transaction [Line Items]
Funds held under reinsurance agreements, asset													250,000
Ceded reinsurance premiums payable													56,000
Reinsurance agreement, period													5 years
AII | CP Re | NGHC | Aggregate Stop Loss Retrocession Contract
Related Party Transaction [Line Items]
Ceded reinsurance premiums payable													56,000
AII | Acp Re Ltd | NGHC | Aggregate Stop Loss Retrocession Contract
Related Party Transaction [Line Items]
Funds held under reinsurance agreements, asset													125,000
Parent Company
Related Party Transaction [Line Items]
Revolving credit facility	120,000				0				120,000	0
Parent Company | Acp Re Ltd
Related Party Transaction [Line Items]
Fees and commissions													30
TIC | Tower Companies
Related Party Transaction [Line Items]
Reinsured risk, Percentage														100.00%
Gross premium written, percentage														2.00%
Minimum reinsured, percentage															60.00%
Assumed premiums written									475,038
Earned premium									386,609
Loss and loss adjustment expense	224,961
Insurance commissions									91,502
Other expenses									15,926
Ceded reinsurance premiums payable													17,404
Domestic | AII | NG Re Ltd. | Acp Re Ltd
Related Party Transaction [Line Items]
Stock pledged as collateral, percentage													100.00%
Foreign Subsidiaries | AII | NG Re Ltd. | Acp Re Ltd
Related Party Transaction [Line Items]
Stock pledged as collateral, percentage													65.00%
Other Assets | Tower International [Member]
Related Party Transaction [Line Items]
Prepaid Insurance	$ 8,915								$ 8,915

XML

Schedule V - Consolidated Supplementary Property and Casulty Insurance Information

12 Months Ended

Dec. 31, 2014

Supplemental Information for Property, Casualty Insurance Underwriters [Abstract]

Schedule V - Consolidated Supplementary Property and Casualty Insurance Information

AMTRUST FINANCIAL SERVICES, INC.

CONSOLIDATED SUPPLEMENTARY PROPERTY

AND CASUALTY INSURANCE INFORMATION

(In Thousands)

	Losses and Loss Adjustment Expenses Incurred Related to				Paid Losses and Loss Adjustment Expenses
Year Ended December 31,	Current Year		Prior Years
2014	$	2,324,062	$	18,557	$	1,441,219
2013	$	1,486,418	$	30,943	$	953,160
2012	$	909,818	$	12,857	$	691,717

XML

Related Party Transactions (Tables)

12 Months Ended

Dec. 31, 2014

Text Block [Abstract]

Results of Operations Related to Reinsurance Agreements

The following is the effect on the Company’s results of operations for the years ended December 31, 2014, 2013 and 2012 related to the Maiden Quota Share agreement:

(Amounts in Thousands)	2014			2013			2012
Results of operations:
Premium written – ceded	$	(1,592,457	)	$	(1,150,394	)	$	(846,491	)
Change in unearned premium – ceded	211,897			162,846			116,168
Earned premium – ceded	$	(1,380,560	)	$	(987,548	)	$	(730,323	)
Ceding commission on premium written	$	493,342		$	330,186		$	223,111
Ceding commission – deferred	(88,271		)	(53,630		)	(26,129		)
Ceding commission – earned	$	405,071		$	276,556		$	196,982
Incurred loss and loss adjustment expense – ceded	$	885,362		$	715,832		$	526,210

XML

Investments (Trading Securities) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Schedule of Trading Securities and Other Trading Assets [Line Items]
Original or amortized cost	$ 25,407	$ 0
Market value	26,749	0
Common stock
Schedule of Trading Securities and Other Trading Assets [Line Items]
Original or amortized cost	25,407
Gross unrealized gains	1,614
Gross unrealized losses	272
Market value	$ 26,749

XML

Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Investments:
Fixed maturities, available-for-sale, at market value (amortized cost $4,137,146; $3,107,043)	$ 4,253,274	$ 3,100,936
Equity securities, available-for-sale, at market value (cost $84,075; $16,010)	81,044	15,148
Equity securities, trading, at market value (cost $25,407; $0)	26,749	0
Short-term investments	63,916	114,202
Equity investment in unconsolidated subsidiaries – related parties	119,712	89,756
Other investments	31,186	25,749
Securities pledged (amortized cost of $0; $316,576)	0	311,518
Total investments	4,575,881	3,657,309
Cash and cash equivalents	902,750	830,022
Restricted cash and cash equivalents	186,225	100,439
Accrued interest and dividends	42,173	27,800
Premiums receivable, net	1,851,682	1,593,975
Reinsurance recoverable (related party $1,517,499; $1,144,168)	2,440,627	1,929,848
Prepaid reinsurance premium (related party $918,505; $739,719)	1,302,848	1,011,304
Other assets (related party $136,516 $0; recorded at fair value $264,517; $233,024)	1,094,943	890,333
Deferred policy acquisition costs	628,383	468,404
Property and equipment, net	154,175	104,299
Goodwill	352,685	373,591
Intangible assets	314,996	291,802
Total assets	13,847,368	11,279,126
Liabilities:
Loss and loss expense reserves	5,664,205	4,368,234
Unearned premiums	3,447,203	2,680,982
Ceded reinsurance premiums payable (related party $410,075; $393,941)	683,421	635,588
Reinsurance payable on paid losses	3,947	18,818
Funds held under reinsurance treaties	10,653	27,574
Note payable on collateral loan – related party	167,975	167,975
Securities sold but not yet purchased, at market	13,052	0
Securities sold under agreements to repurchase, at contract value	0	293,222
Accrued expenses and other current liabilities (recorded at fair value $18,567; $11,945)	795,877	672,575
Deferred income taxes	106,363	274,519
Debt	757,871	560,174
Total liabilities	11,650,567	9,699,661
Commitments and contingencies
Redeemable non-controlling interest	600	600
Stockholders' equity:
Common stock, $.01 par value; 150,000 shares authorized, 98,211 and 98,122 issued in 2014 and 2013, respectively; 77,739 and 74,765 outstanding in 2014 and 2013, respectively	980	980
Preferred stock, $.01 par value; 10,000 shares authorized, 4,785 and 4,600 issued and outstanding in 2014 and 2013, respectively	300,000	115,000
Additional paid-in capital	1,022,769	1,033,084
Treasury stock at cost; 20,472 and 23,357 shares in 2014 and 2013, respectively	(297,586)	(284,891)
Accumulated other comprehensive income (loss)	56,123	(8,164)
Retained earnings	954,734	584,996
Total AmTrust Financial Services, Inc. equity	2,037,020	1,441,005
Non-controlling interest	159,181	137,860
Total stockholders’ equity	2,196,201	1,578,865
Liabilities and Equity, Total	$ 13,847,368	$ 11,279,126

XML

Investment in Life Settlements (Tables)

12 Months Ended

Dec. 31, 2014

Investments, All Other Investments [Abstract]

Investment in Life Settlements

The following tables describe the Company’s investment in life settlements as of December 31, 2014 and 2013:

(Amounts in thousands, except Life Settlement Contracts) Expected Maturity Term in Years	Number of Life Settlement Contracts	Fair Value (1)		Face Value
As of December 31, 2014
0 – 1	—	$	—	$	—
1 – 2	—	—		—
2 – 3	8	43,593		70,500
3 – 4	5	10,081		22,500
4 – 5	7	14,335		49,000
Thereafter	254	196,508		1,596,209
Total	274	$	264,517	$	1,738,209
As of December 31, 2013
0 – 1	—	$	—	$	—
1 – 2	—	—		—
2 – 3	1	2,726		5,000
3 – 4	13	53,767		103,000
4 – 5	2	5,622		13,000
Thereafter	255	170,909		1,641,409
Total	271	$	233,024	$	1,762,409

⁽¹⁾ The Company determined the fair value as of December 31, 2014 based on 218 policies out of 274 policies, as the Company assigned no value to 56 of the policies as of December 31, 2014. The Company determined the fair value as of December 31, 2013 based on 191 policies out of 271 policies, as the Company assigned no value to 80 of the policies as of December 31, 2013. The Company estimates the fair value of a life insurance policy using a cash flow model with an appropriate discount rate. In some cases, the cash flow model calculates the value of an individual policy to be negative, and therefore the fair value of the policy is zero as no liability exists when a negative value is calculated. The Company is not contractually bound to pay the premium on its life settlement contracts and, therefore, would not pay a willing buyer to assume title of these contracts. Additionally, certain of the Company’s acquired polices were structured to have low premium payments at inception of the policy term, which later escalate greatly towards the tail end of the policy term. At the current time, the Company expenses all premiums paid, even on policies with zero fair value. Once the premium payments escalate, the Company may allow the policies to lapse. In the event that death benefits are realized in the time frame between initial acquisition and premium escalation, it is a benefit to cash flow.

For these contracts where the Company determined the fair value to be negative and therefore assigned a fair value of zero, the table below details the amount of premiums paid and the death benefits received for the years ended December 31, 2014 and 2013:

	2014		2013
Number of policies with a negative value from discounted cash flow model	56		80
Premiums paid for the year ended	$	5,963	$	9,371
Death benefit received	$	4,950	$	3,012

Premiums to be Paid for Each of Five Succeeding Fiscal Years to keep Life Insurance Policies in Force

Premiums to be paid by the LSC Entities for each of the five succeeding fiscal years to keep the life insurance policies in force as of December 31, 2014, are as follows:

(Amounts in Thousands)	Premiums Due on Life Settlement Contracts
2015	$	40,961
2016	54,208
2017	52,291
2018	40,117
2019	39,777
Thereafter	552,579
	$	779,933

XML

Intangible Assets and Goodwill (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Finite-Lived Intangible Assets [Line Items]
Goodwill	$ 352,685	$ 373,591	$ 326,646
Impairment of goodwill	62,898	10,226	16,389
Specialty Risk and Extended Warranty
Finite-Lived Intangible Assets [Line Items]
Goodwill	194,168	239,378	194,554
Impairment of goodwill	62,898	10,226	16,389
LUXEMBOURG | Specialty Risk and Extended Warranty
Finite-Lived Intangible Assets [Line Items]
Goodwill	121,761	96,866
Domestic | Specialty Risk and Extended Warranty
Finite-Lived Intangible Assets [Line Items]
Impairment of goodwill	61,512
Europe | Specialty Risk and Extended Warranty
Finite-Lived Intangible Assets [Line Items]
Impairment of goodwill	$ 1,386

XML

New Market Tax Credit (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Schedule of Tax Credit [Line Items]
Proceeds from financing transaction	$ (293,222)	$ 58,311	$ 43,193
Percentage of qualified investment income that can be claimed at tax credit against their federal income taxes			39.00%
Term of debt instrument	5 years
Parent, NGHC, KCDC and State and Local Government of Ohio [Member] | 800 Superior LLC
Schedule of Tax Credit [Line Items]
Proceeds from financing transaction			19,400
State and Local Government of Ohio | 800 Superior LLC
Schedule of Tax Credit [Line Items]
Proceeds from financing transaction			$ 8,000
Number of loans			2
Term of debt instrument			15 years
Community Development Entities (CDE) | 800 Superior LLC
Schedule of Tax Credit [Line Items]
Number of CDE			2
Period to recapture			7 years
Key Community Development Corporation (KCDC) | 800 Superior LLC
Schedule of Tax Credit [Line Items]
Total benefit a company is entilted to receive			51.00%
Promissory note | State and Local Government of Ohio
Schedule of Tax Credit [Line Items]
Average rate of interest			1.70%
NGHC
Schedule of Tax Credit [Line Items]
Percentage of ownership interest			13.20%
NGHC | 800 Superior LLC
Schedule of Tax Credit [Line Items]
Total benefit a company is entilted to receive			49.00%

XML

Results of Operations Related to Reinsurance Agreements (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Related Party Transaction [Line Items]
Premium written - ceded									$ (2,131,347)	$ (1,551,238)	$ (1,101,289)
Change in unearned premium - ceded									(430,054)	(299,683)	(229,185)
Earned premium - ceded									(1,852,236)	(1,297,009)	(918,791)
Loss and loss adjustment expense	587,464	609,352	587,233	558,570	470,416	410,579	364,110	272,256	2,342,619	1,517,361	922,675
Related Party Transactions
Related Party Transaction [Line Items]
Premium written - ceded									(1,592,457)	(1,150,394)	(846,491)
Change in unearned premium - ceded									211,897	162,846	116,168
Earned premium - ceded									(1,380,560)	(987,548)	(730,323)
Ceding commission on premium written									493,342	330,186	223,111
Ceding commission - deferred									(88,271)	(53,630)	(26,129)
Ceding commission earned									405,071	276,556	196,982
Loss and loss adjustment expense									$ 885,362	$ 715,832	$ 526,210

XML

Condensed Consolidated Statement of Comprehensive Income (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Statement of Comprehensive Income [Abstract]
Net income	$ 446,598	$ 280,593	$ 184,860
Other comprehensive income, net of tax:
Foreign currency translation adjustments	(17,358)	12,943	6,730
Change in fair value of interest rate swap	664	1,028	(733)
Minimum pension liability	(1,055)	(1,738)	0
Unrealized gains on securities:
Unrealized holding gain (loss) arising during period	86,954	(90,286)	63,917
Reclassification adjustment for gain (loss) included in net income	(4,918)	5,658	4,316
Other comprehensive income (loss), net of tax	64,287	(72,395)	74,230
Comprehensive income	510,885	208,198	259,090
Less: Comprehensive income (loss) attributable to non-controlling and redeemable non-controlling interest	(416)	(1,633)	6,873
Comprehensive income attributable to AmTrust Financial Services, Inc.	$ 511,301	$ 209,831	$ 252,217

XML

Intangible Assets and Goodwill (Amortization Expense) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014
Goodwill and Intangible Assets Disclosure [Abstract]
2015	$ 38,727
2016	35,972
2017	30,336
2018	25,249
2019	$ 23,501

XML

Statutory Financial Data, Risk Based Capital and Dividend Restrictions (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Statutory Accounting Practices [Line Items]
Required Statutory Capital and Surplus	$ 500,000
Limit for cash dividends or distribution	844,037	473,253
Dividend received by the company	7,400	6,900	7,200
Unrestricted net assets	844,037	473,253
Domestic | TIC
Statutory Accounting Practices [Line Items]
Statutory Capital and Surplus	479,437	236,528
Required Statutory Capital and Surplus	178,941	108,377
Net income from insurance subsidiaries	21,418	16,614	45,621
Domestic | RIC
Statutory Accounting Practices [Line Items]
Statutory Capital and Surplus	82,350	58,845
Required Statutory Capital and Surplus	31,082	22,587
Net income from insurance subsidiaries	9,440	8,158	1,129
Domestic | WIC [Member]
Statutory Accounting Practices [Line Items]
Statutory Capital and Surplus	215,530	166,813
Required Statutory Capital and Surplus	125,810	79,857
Net income from insurance subsidiaries	14,150	21,447	9,263
Domestic | AIIC [Member]
Statutory Accounting Practices [Line Items]
Statutory Capital and Surplus	74,014	74,076
Required Statutory Capital and Surplus	17,416	17,373
Net income from insurance subsidiaries	8,297	12,810	5,570
Domestic | SNIC [Member]
Statutory Accounting Practices [Line Items]
Statutory Capital and Surplus	123,573	79,780
Required Statutory Capital and Surplus	50,607	32,603
Net income from insurance subsidiaries	30,666	14,350	10,624
Domestic | MCIC [Member]
Statutory Accounting Practices [Line Items]
Statutory Capital and Surplus	17,713	14,912
Required Statutory Capital and Surplus	5,287	3,620
Net income from insurance subsidiaries	3,226	1,671	1,519
Domestic | ALIC [Member]
Statutory Accounting Practices [Line Items]
Statutory Capital and Surplus	2,162	2,155
Required Statutory Capital and Surplus	217	245
Net income from insurance subsidiaries	2	18	15
Domestic | AICK [Member]
Statutory Accounting Practices [Line Items]
Statutory Capital and Surplus	19,304	15,275
Required Statutory Capital and Surplus	6,752	5,307
Net income from insurance subsidiaries	4,081	3,413	1,198
Domestic | SIC [Member]
Statutory Accounting Practices [Line Items]
Statutory Capital and Surplus	79,475	74,502
Required Statutory Capital and Surplus	15,231	17,354
Net income from insurance subsidiaries	9,535	4,464
Domestic | SID [Member]
Statutory Accounting Practices [Line Items]
Statutory Capital and Surplus	9,799	9,820
Required Statutory Capital and Surplus	665	705
Net income from insurance subsidiaries	35	634
Domestic | FNIC
Statutory Accounting Practices [Line Items]
Statutory Capital and Surplus	36,104	35,428
Required Statutory Capital and Surplus	7,736	7,787
Net income from insurance subsidiaries	(1,186)	(4,596)
Domestic | DSIC [Member]
Statutory Accounting Practices [Line Items]
Statutory Capital and Surplus	82,243
Required Statutory Capital and Surplus	11,361
Net income from insurance subsidiaries	4,124
Domestic | ICC [Member]
Statutory Accounting Practices [Line Items]
Statutory Capital and Surplus	20,699
Required Statutory Capital and Surplus	528
Net income from insurance subsidiaries	1,565
Domestic | FATIC [Member]
Statutory Accounting Practices [Line Items]
Statutory Capital and Surplus	10,538
Required Statutory Capital and Surplus	500
Net income from insurance subsidiaries	(664)
Domestic | COIC [Member]
Statutory Accounting Practices [Line Items]
Statutory Capital and Surplus	29,011
Required Statutory Capital and Surplus	8,424
Net income from insurance subsidiaries	(946)
United Kingdom | AEL [Member]
Statutory Accounting Practices [Line Items]
Statutory Capital and Surplus	290,916	246,292
Required Statutory Capital and Surplus	62,925	61,738
Net income from insurance subsidiaries	56,766	50,452	54,967
United Kingdom | MIC [Member]
Statutory Accounting Practices [Line Items]
Statutory Capital and Surplus	130,169	95,649
Required Statutory Capital and Surplus	20,122	22,957
Net income from insurance subsidiaries	28,856	7,515
Ireland | AIU [Member]
Statutory Accounting Practices [Line Items]
Statutory Capital and Surplus	195,208	169,465
Required Statutory Capital and Surplus	37,865	43,124
Net income from insurance subsidiaries	50,697	34,223	20,767
Bermuda | AII [Member]
Statutory Accounting Practices [Line Items]
Statutory Capital and Surplus	679,967	445,077
Required Statutory Capital and Surplus	244,509	221,330
Net income from insurance subsidiaries	78,142	5,282	107,980
LUXEMBOURG | AILSA [Member]
Statutory Accounting Practices [Line Items]
Statutory Capital and Surplus	6,874	7,204
Required Statutory Capital and Surplus	6,526	6,165
Net income from insurance subsidiaries	$ 207	$ (27)

XML

Geographic Information (Components of Income Before Equity in Earnings) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Revenues from External Customers and Long-Lived Assets [Line Items]
Income before equity in earnings (loss) of unconsolidated subsidiaries	$ 471,933	$ 367,046	$ 196,857
Domestic
Revenues from External Customers and Long-Lived Assets [Line Items]
Income before equity in earnings (loss) of unconsolidated subsidiaries	267,486	243,566	79,638
Foreign
Revenues from External Customers and Long-Lived Assets [Line Items]
Income before equity in earnings (loss) of unconsolidated subsidiaries	$ 204,447	$ 123,480	$ 117,219

XML

Stockholders' Equity (Tables)

12 Months Ended

Dec. 31, 2014

Statement of Comprehensive Income [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss)

The following tables summarize accumulated other comprehensive income (loss) for the years ended December 31, 2014, 2013 and 2012:

(Amounts in Thousands)	Foreign Currency Items			Unrealized Gains (Losses) on Investments			Interest Rate Swap Hedge			Net Benefit Plan Assets and Obligations Recognized in Stockholders' Equity			Accumulated Other Comprehensive Income (Loss)
Balance, December 31, 2011	$	(17,091	)	$	9,372		$	(2,280	)	$	—		$	(9,999	)
Other comprehensive income (loss) before reclassifications	10,354			98,334			(1,128		)	—			107,560
Amounts reclassed from accumulated other comprehensive income (loss)	—			6,640			—			—			6,640
Income tax benefit (expense)	(3,624		)	(36,741		)	395			—			(39,970		)
Net current-period other comprehensive income (loss)	6,730			68,233			(733		)	—			74,230
Balance, December 31, 2012	(10,361		)	77,605			(3,013		)	—			64,231
Other comprehensive income (loss) before reclassification	19,912			(138,902		)	1,581			(2,257		)	(119,666		)
Amounts reclassed from accumulated other comprehensive income (loss)	—			8,707			—			—			8,707
Income tax benefit (expense)	(6,969		)	45,567			(553		)	519			38,564
Net current-period other comprehensive income (loss)	12,943			(84,628		)	1,028			(1,738		)	(72,395		)
Balance, December 31, 2013	2,582			(7,023		)	(1,985		)	(1,738		)	(8,164		)
Other comprehensive income (loss) before reclassification	(26,706		)	133,775			1,022			(1,623		)	106,468
Amounts reclassed from accumulated other comprehensive income	—			(7,566		)	—			—			(7,566		)
Income tax benefit (expense)	9,348			(44,173		)	(358		)	568			(34,615		)
Net current-period other comprehensive income (loss)	(17,358		)	82,036			664			(1,055		)	64,287
Balance, December 31, 2014	$	(14,776	)	$	75,013		$	(1,321	)	$	(2,793	)	$	56,123

XML

Accrued Expenses and Other Liabilities (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Accounts Payable and Accrued Liabilities [Abstract]
Premium taxes, assessments and surchage payable	$ 171,512	$ 173,274
Accounts and commissions payable	157,232	100,780
Deferred warranty revenue	138,592	84,230
Redeemable contractual obligations	111,748	132,608
Income tax payable	100,410	9,181
Other accrued expenses and liabilities	116,383	172,502
Other Liabilities	$ 795,877	$ 672,575

XML

Subsequent Events

12 Months Ended

Dec. 31, 2014

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

Conversion of 2021 Notes

During the fourth quarter of 2014, certain holders of 2021 Notes submitted for conversion approximately $50,105 of notes under the Sale Price Condition discussed in Note 12. "Debt". Based on the terms of the 2021 Notes, $31,011 of these notes were settled prior to the filing of the Company's Annual Report on Form 10-K for the year ended December 31, 2014, which resulted in the Company paying $31,011 of cash and issuing 616,202 shares of the Company's common stock. The remainder of the 2021 Notes submitted for conversion during the fourth quarter of 2014 will settle during the three months ended March 31, 2015. In addition, approximately $3,500 of 2021 Notes were submitted for conversion subsequent to December 31, 2014. These notes will be settled during the three months ended March 31, 2015.

Issuance of Common Stock

During January and February 2015, the Company completed the sale of an aggregate of 3,450,000 shares of Common Stock in an underwritten public offering. Proceeds received from this offering were $172,500. Fees and expenses related to the offering were approximately $250.

Acquisition of TMI Solutions, LLC

On January 6, 2015, the Company acquired all of the issued and outstanding stock of TMI Solutions, LLC ("TMIS") for approximately $29,000 in cash as well as an earn-out provision that is contingent on TMIS meeting certain performance conditions. TMIS offers monthly billed warranty solutions for a variety of consumer electronics as well as consumer protection services. TMIS's warranties are primarily distributed in conjunction with large telecommunication monthly customer billing services. TMIS's established customers include Fortune 500 companies. TMIS’s results of operation will be included as a component of the Specialty Risk and Extended Warranty segment.

Acquisition of Oryx Insurance Brokerage, Inc.

On January 6, 2015, the Company acquired all of the issued and outstanding stock of Oryx Insurance Brokerage, Inc. ("Oryx") from Oryx's principals for approximately $29,700 in cash as well as an earn-out provision that is contingent on Oryx meeting certain performance conditions. Oryx, established in 1996, is a privately held managing general agent and wholesaler providing insurance products to the construction industry in upstate New York. For 2014, Oryx placed $80,000 in premiums through over 135 agencies with the majority of business underwritten by the Company. Oryx’s results of operation will be included as a component of the Specialty Program segment.

XML

Schedule I - Summary of Investments Other Than Investments in Related Parties (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	$ 4,341,730
Value	4,456,169
Amount at which Shown in Balance Sheet	4,456,169
Amount reclassified from fixed maturities available-for-sale	0	311,518
U.S. government agencies
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	1,009,704
Value	1,033,190
Amount at which Shown in Balance Sheet	1,033,190
States, municipalities and political subdivisions
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	469,646
Value	482,041
Amount at which Shown in Balance Sheet	482,041
Foreign governments
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	106,054
Value	112,731
Amount at which Shown in Balance Sheet	112,731
Utilities
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	137,169
Value	138,692
Amount at which Shown in Balance Sheet	138,692
All other corporate bonds
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	2,414,573
Value	2,486,620
Amount at which Shown in Balance Sheet	2,486,620
Redeemable preferred stock
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	0
Value	0
Amount at which Shown in Balance Sheet	0
Fixed Maturities
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	4,137,146
Value	4,253,274
Amount at which Shown in Balance Sheet	4,253,274
Public utilities Banks, trust and insurance companies
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	13,323
Value	13,712
Amount at which Shown in Balance Sheet	13,712
Industrial, miscellaneous and all other Nonredeemable preferred stocks
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	96,159
Value	94,081
Amount at which Shown in Balance Sheet	94,081
Equity Securities
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	109,482
Value	107,793
Amount at which Shown in Balance Sheet	107,793
Short-term investments
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	63,916
Value	63,916
Amount at which Shown in Balance Sheet	63,916
Other invested assets
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items]
Cost	31,186
Value	31,186
Amount at which Shown in Balance Sheet	$ 31,186

XML

Employee Benefit Plans (Plan assets) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Feb. 28, 2013
Defined Benefit Plan Disclosure [Line Items]
Target Allocation	100.00%	100.00%
Actual Allocation	100.00%	100.00%
Plan assets	$ 46,734	$ 43,592	$ 34,832
Level 1
Defined Benefit Plan Disclosure [Line Items]
Plan assets	41,984	39,226
Level 2
Defined Benefit Plan Disclosure [Line Items]
Plan assets	4,750	4,366
Level 3
Defined Benefit Plan Disclosure [Line Items]
Plan assets	0	0
Money market funds
Defined Benefit Plan Disclosure [Line Items]
Plan assets	185	196
Money market funds | Level 1
Defined Benefit Plan Disclosure [Line Items]
Plan assets	185	196
Money market funds | Level 2
Defined Benefit Plan Disclosure [Line Items]
Plan assets	0	0
Money market funds | Level 3
Defined Benefit Plan Disclosure [Line Items]
Plan assets	0	0
Equity securities
Defined Benefit Plan Disclosure [Line Items]
Target Allocation	47.50%	47.50%
Actual Allocation	48.00%	51.00%
Fixed income securities
Defined Benefit Plan Disclosure [Line Items]
Target Allocation	40.00%	40.00%
Actual Allocation	42.00%	39.00%
Real estate partnerships
Defined Benefit Plan Disclosure [Line Items]
Target Allocation	12.50%	12.50%
Actual Allocation	10.00%	10.00%
Plan assets	4,750	4,366
Real estate partnerships | Level 1
Defined Benefit Plan Disclosure [Line Items]
Plan assets		0
Real estate partnerships | Level 2
Defined Benefit Plan Disclosure [Line Items]
Plan assets	4,750	4,366
Real estate partnerships | Level 3
Defined Benefit Plan Disclosure [Line Items]
Plan assets	0	0
Equity mutual funds
Defined Benefit Plan Disclosure [Line Items]
Plan assets	22,376	22,159
Equity mutual funds | Level 1
Defined Benefit Plan Disclosure [Line Items]
Plan assets	22,376	22,159
Equity mutual funds | Level 2
Defined Benefit Plan Disclosure [Line Items]
Plan assets	0	0
Equity mutual funds | Level 3
Defined Benefit Plan Disclosure [Line Items]
Plan assets	0	0
Fixed income mutual funds
Defined Benefit Plan Disclosure [Line Items]
Plan assets	19,423	16,871
Fixed income mutual funds | Level 1
Defined Benefit Plan Disclosure [Line Items]
Plan assets	19,423	16,871
Fixed income mutual funds | Level 2
Defined Benefit Plan Disclosure [Line Items]
Plan assets	0	0
Fixed income mutual funds | Level 3
Defined Benefit Plan Disclosure [Line Items]
Plan assets	0	0
Total registered investment companies
Defined Benefit Plan Disclosure [Line Items]
Plan assets	41,799	39,030
Total registered investment companies | Level 1
Defined Benefit Plan Disclosure [Line Items]
Plan assets	41,799	39,030
Total registered investment companies | Level 2
Defined Benefit Plan Disclosure [Line Items]
Plan assets	0	0
Total registered investment companies | Level 3
Defined Benefit Plan Disclosure [Line Items]
Plan assets	$ 0	$ 0

XML

Nature of Operations Nature of Operations (Details)	Dec. 31, 2014 subsidiary
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of subsidiaries	15
Number of foreign subsidiaries	5

XML

Related Party Transactions

12 Months Ended

Dec. 31, 2014

Text Block [Abstract]

Related Party Transactions

Related Party Transactions

Significant Transactions with Maiden Holdings, Ltd.

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 stockholders, and, respectively, the Chairman of the Board of Directors, a Director, and the Chief Executive Officer and director of the Company. As of December 31, 2014, our principal stockholders, 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%, 9.3% 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 Reinsurance Ltd. ("Maiden Reinsurance"), formerly known as Maiden Insurance Company, Ltd, 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 Reinsurance to enter into a quota share reinsurance agreement (the “Maiden Quota Share”), as amended, by which AII retrocedes to Maiden Reinsurance 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). AII also retrocedes 40% of losses. Certain business that the Company commenced writing after the effective date, including the Company's European medical liability business discussed below, business assumed from Tower Group International, Ltd. pursuant to the cut-through quota share reinsurance agreement, 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 is not ceded to Maiden Insurance (ceded business defined as “Covered Business”).

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, the Company will be responsible for ultimate net loss otherwise recoverable from Maiden Reinsurance to the extent that the loss ratio to Maiden Reinsurance, 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 “Specialty Program Loss Corridor”). For the purpose of determining whether the loss ratio falls within the Specialty Program Loss Corridor, workers' compensation business written in the Company's Specialty Program segment from July 1, 2007 through December 31, 2012 is excluded from the loss ratio calculation.

The Maiden Quota Share was renewed through July 1, 2016 and will automatically renew for successive three-year terms unless either AII or Maiden Reinsurance 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 Reinsurance, run-off, or a reduction of 50% or more of the stockholders’ equity of Maiden Reinsurance or the combined stockholders’ 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 Reinsurance by which the Company cedes to Maiden Reinsurance 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, 2016. The agreement can be terminated by either party on four months’ prior written notice. Maiden Reinsurance 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%.

The following is the effect on the Company’s results of operations for the years ended December 31, 2014, 2013 and 2012 related to the Maiden Quota Share agreement:

(Amounts in Thousands)	2014			2013			2012
Results of operations:
Premium written – ceded	$	(1,592,457	)	$	(1,150,394	)	$	(846,491	)
Change in unearned premium – ceded	211,897			162,846			116,168
Earned premium – ceded	$	(1,380,560	)	$	(987,548	)	$	(730,323	)
Ceding commission on premium written	$	493,342		$	330,186		$	223,111
Ceding commission – deferred	(88,271		)	(53,630		)	(26,129		)
Ceding commission – earned	$	405,071		$	276,556		$	196,982
Incurred loss and loss adjustment expense – ceded	$	885,362		$	715,832		$	526,210

Note Payable to Maiden — Collateral for Proportionate Share of Reinsurance Obligations

In conjunction with the Maiden Quota Share, as described above, the Company entered into a loan agreement with Maiden Reinsurance during the fourth quarter of 2007, whereby Maiden Reinsurance loaned to the Company the amount equal to AII's 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 December 31, 2014 and 2013. The Company recorded $1,797, $1,852 and $1,951 of interest expense during the years ended December 31, 2014, 2013 and 2012, respectively. Effective December 1, 2008, AII and Maiden Reinsurance entered into a Reinsurer Trust Assets Collateral agreement whereby Maiden Reinsurance 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 December 31, 2014 was approximately $1,936,128. 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 $19,896, $17,498 and $8,759 of brokerage commission during the years ended December 31, 2014, 2013 and 2012, respectively. The brokerage commission was recorded as a component of service and fee income.

Asset Management Agreement

Effective July 1, 2007, a subsidiary of the Company entered into an asset management agreement with Maiden Reinsurance, pursuant to which the Company provides investment management services to Maiden Reinsurance and certain of its affiliates. As of December 31, 2014, the Company managed approximately $3,653,758 of assets related to this agreement. The asset 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 exceed $1,000,000. As a result of this agreement, the Company recorded approximately $5,213, $4,388 and $3,697 of asset management fees for the years ended December 31, 2014, 2013 and 2012, respectively. The asset management fees were recorded as a component of service and fee income.

Significant Transactions with National General Holding Corp.

The Company has a 13.2% ownership interest in NGHC. NGHC is a publicly-held insurance holding company (Nasdaq: NGHC) that operates fifteen insurance companies in the United States and writes consumer property and casualty insurance business through independent agents for automobiles. Its coverages include standard/preferred auto, RVs, non-standard auto and commercial auto. NGHC's two largest stockholders are The Michael Karfunkel 2005 Grantor Retained Annuity Trust (the “Trust”) and Michael Karfunkel individually. 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, president and chief executive officer of NGHC. In accordance with ASC 323-10-15, Investments-Equity Method and Joint Ventures, the Company accounts for its investment in NGHC under the equity method as it has the ability to exert significant influence on NGHC's operations.

In February 2014, NGHC issued approximately 13,600,000 shares in a follow on Rule 144A offering, which resulted in the Company reducing its ownership percentage in NGHC from 15.4% to 13.2%. As a result of the stock issuance, the Company recognized a gain on sale of its equity investment of $14,712, which is included in equity in earnings of unconsolidated subsidiary. In total, the Company recorded $28,351, $11,566 and $9,295 of income during the years ended December 31, 2014, 2013 and 2012, respectively related to its equity investment in NGHC.

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 that is currently 1.25% of gross premiums written 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 $25,632, $24,196 and $14,444 of fee income for the years ended December 31, 2014, 2013 and 2012, respectively, related to this agreement. Additionally, the Company provided certain consulting services to NGHC related to Luxembourg-domiciled reinsurance entities in 2014, for which the Company received $1,057 for the year ended December 31, 2014. The fees for these services were recorded as a component of service and fee income.

Asset Management Agreement

A subsidiary of the Company manages the assets of NGHC and certain of its subsidiaries, including the assets of reciprocal insurers managed by subsidiaries of NGHC, 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 $1,433,705 of assets as of December 31, 2014 related to this agreement. As a result of this agreement, the Company earned approximately $2,006, $1,725 and $1,503 of asset management fees for the years ended December 31, 2014, 2013 and 2012, respectively. The asset management fees were recorded as a component of service and fee income.

As a result of the above service agreements with NGHC, the Company recorded fees totaling approximately $28,695, $25,921 and $15,947 for the years ended December 31, 2014, 2013 and 2012, respectively. As of December 31, 2014, the outstanding balance payable by NGHC related to these service fees and reimbursable costs was approximately $16,409.

800 Superior, LLC

In 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 13.2% ownership percentage of NGHC, the Company ultimately receives 57.7% of the profits and losses of 800 Superior, LLC. As such, in accordance with ASC 810-10, Consolidation, the Company has been deemed the primary beneficiary and, therefore, consolidates this entity.

In 2012, NGHC entered into an office lease with 800 Superior, LLC for approximately 134,000 square feet. The lease period is for 15 years and NGHC paid 800 Superior, LLC $2,056, $2,329, and $1,391 for the years ended December 31, 2014, 2013 and 2012, respectively. As discussed in Note 21. "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.

Sale of Personal Express Insurance Company

In April 2014, the Company completed the sale of Personal Express Insurance Company (“PEIC”), a California-domiciled property and casualty insurance carrier that offers retail personal lines insurance products in California, and its captive insurance agency Personal Express Insurance Services, Inc. (“PEIS” and, together with PEIC, the “Personal Express Companies”) to Integon National Insurance Company ("Integon"), a subsidiary of NGHC, for approximately $21,743. As a result of the sale, the Company recorded a gain on sale of approximately $6,631. The Personal Express Companies were wholly-owned subsidiaries of Sequoia Insurance Company, which is one of the Company’s wholly-owned subsidiaries.

Personal Lines Quota Share

The Company was a party to a quota share reinsurance agreement (“Personal Lines Quota Share”) with Integon. On August 1, 2013, the Company and its wholly-owned subsidiary, Technology Insurance Company, Inc. (“TIC”), received a termination notice related to TIC's participation in the Personal Lines Quota Share effective August 1, 2013. The termination was on a run-off basis, meaning the Company is involved with the continuing cash flows associated with this business with respect to policies in force as of July 31, 2013. As such, the Personal Lines Reinsurance segment, which contains the results of operations from the Personal Lines Quota Share, is not presented as a discontinued operation in accordance with ASC 205-20, Discontinued Operations. The overall results of the Personal Lines Reinsurance segment were immaterial for the years ended December 31, 2014 and 2013.

Significant Transactions with ACP Re, Ltd.

ACP Re, Ltd. (“ACP Re”) is a privately-held Bermuda reinsurance holding company formed by Michael Karfunkel, the Chairman of the Board of the Company. ACP Re operates 10 insurance companies in the United States and Bermuda as a result of its merger with Tower Group International, Ltd. ("Tower") during the third quarter of 2014. The following section describes the agreements in place between the Company and its subsidiaries and ACP Re and its subsidiaries.

Asset Management Agreement

A subsidiary of the Company provides asset management services to ACP Re, Ltd. and certain of its subsidiaries at (i) an annual rate of 0.20% of the average value of the invested assets under management, 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 invested assets under management, excluding investments in the Company's stock, for the preceding calendar quarter if the average value of such assets for the quarter was greater than $1,000,000. The Company managed approximately $53,670 of assets as of December 31, 2014. The Company recorded approximately $214, $238, and $638 for these services for the years ended December 31, 2014, 2013 and 2012, respectively.

Agreements as a result of ACP Re / Tower Merger

In January 2014, ACP Re, through a subsidiary, agreed to acquire 100% of the outstanding stock of Tower and merge with Tower on September 15, 2014 (the “Merger”). As a result of the Merger, the Company and ACP Re entered into the agreements and transactions described below, as well as an asset management agreement described above.

Commercial Lines Master Agreement

On July 23, 2014, the Company and ACP Re entered into the Amended and Restated Commercial Lines Master Agreement (the “Master Agreement”), which provides for the implementation of the various transactions associated with the acquisition of Tower by ACP Re pursuant to the Merger, including entering into the agreements described below, all of which became effective on September 15, 2014. In addition, the Master Agreement requires the Company to pay ACP Re contingent consideration in the form of a three year earn-out (the “Contingent Payments”), payable semi-annually on the last day of January and July, of 3% of gross written premium of the Tower commercial lines business written or assumed by the Company following the Merger. The Contingent Payments to be made by the Company are subject to a maximum of $30,000, in the aggregate, over the three-year period. NGHC will pay contingent consideration to ACP Re on the same terms. As a result of entering into this agreement, the Company initially assigned a value of $26,200 to the renewal rights, $700 to goodwill, and $26,900 to the contingent consideration, which is recorded as a component of accrued expense and other liability. In addition, as a result of the renewal rights transaction, the Company generated approximately $133,424 of gross written premium for the year ended December 31, 2014.

Commercial Lines Reinsurance Agreements

TIC entered into the Commercial Lines Quota Share Reinsurance Agreement (the “CL Reinsurance Agreement”) with Tower’s ten statutory insurance companies (the “Tower Companies”) pursuant to which TIC will reinsure 100% of all losses under the Tower Companies’ new and renewal commercial lines business written after September 15, 2014. The ceding commission payable by TIC under the CL Reinsurance Agreement is equal to the sum of (i) reimbursement of the Tower Companies’ acquisition costs in respect of the business covered, including commission payable to AmTrust North America, Inc., a subsidiary of the Company (“ANA”), pursuant to the CL MGA Agreement described below, and premium taxes and (ii) 2%of gross written premium (net of cancellations and return premiums) collected pursuant to the CL MGA Agreement described below. The CL Reinsurance Agreement will remain in effect until termination of the CL MGA Agreement. The Company assumed $17,404 of premium under the CL Reinsurance Agreement during the year ended December 31, 2014.

In connection with the execution of the CL Reinsurance Agreement, the Commercial Lines Cut-Through Quota Share Reinsurance Agreement, dated January 3, 2014, between TIC and the Tower Companies whereby TIC, through a 100% quota share, reinsured at least 60% of the Tower Companies’ then in-force commercial lines policies and most new and renewal commercial lines business from January 3, 2014 forward, was terminated on a run-off basis, with the reinsurance of all policies reinsured under that agreement remaining in effect. During the year ended December 31, 2014, TIC assumed $475,038 of premium under the cut-through reinsurance agreement. During the year ended December 31, 2014, the Company earned approximately $386,609 of premium and incurred approximately $224,961 of loss and loss adjustment expense, respectively, related to the cut-through reinsurance agreement. During the year ended December 31, 2014, the Company incurred approximately $91,502 of commission expense and approximately $15,926 of unallocated claims expense as part of the agreement. Additionally, the Company recorded approximately $8,915 of prepaid claim expense as of December 31, 2014, which is reported as a component of other assets.

Commercial Lines MGA Agreement

ANA produces and manages all new and renewal commercial lines business written by the Tower Companies pursuant to the Commercial Lines Managing General Agency Agreement (the “CL MGA Agreement”). As described above, all post-September 15, 2014 commercial lines business written by the Tower Companies will be reinsured by TIC pursuant to the CL Reinsurance Agreement. The Tower Companies pay ANA a 10% commission on all business written pursuant to the CL MGA Agreement and reimburse ANA for commissions payable to agents producing such business. All payments by the Tower Companies to ANA pursuant to the CL MGA Agreement will be netted out of the ceding commission payable by TIC to the Tower Companies pursuant to the CL Reinsurance Agreement. The CL MGA Agreement has a term of ten years. The Company recorded $1,751 of commission under the CL MGA Agreement during the year ended December 31, 2014. The commission income was recorded as a component of service and fee income.

Commercial Lines Administrative Services Agreement

ANA, the Tower Companies and CastlePoint Reinsurance Company, Ltd. (“CP Re”, a subsidiary of ACP Re) entered into the Commercial Lines LPTA Administrative Services Agreement (the “CL Administrative Agreement”) pursuant to which ANA administers the runoff of CP Re’s and the Tower Companies’ commercial lines business written prior to September 15, 2014 at cost. CP Re and the Tower Companies reimburse ANA for its actual costs, including costs incurred in connection with claims operations, out-of-pocket expenses, costs incurred in connection with any required modifications to ANA’s claims systems and an allocated portion of the claims service expenses paid by TIC to the Tower Companies pursuant to the CL Reinsurance Agreement. The CL Administrative Agreement will remain in effect until the first to occur of (i) the completed performance of all obligations and duties arising under the agreement, or (ii) mutual written consent. The Company did not receive any reimbursement as a result of the CL Administrative Agreement during the year ended December 31, 2014.

Stop-Loss and Retrocession Agreements

AII and National General Re, Ltd., a subsidiary of NGHC (“NG Re Ltd.”), as reinsurers, entered into a $250,000 Aggregate Stop Loss Reinsurance Agreement (the “Stop-Loss Agreement”) with CP Re. AII and NG Re Ltd. also entered into an Aggregate Stop Loss Retrocession Contract (the “Retrocession Agreement”) with ACP Re pursuant to which ACP Re will reinsure the full amount of any payments that AII and NG Re Ltd. are obligated to make to CP Re under the Stop-Loss Agreement. Pursuant to the Stop-Loss Agreement, each of the Company and NGHC will provide, severally, $125,000 of stop loss coverage with respect to the run-off of the Tower business written on or before September 15, 2014. The reinsurers’ obligation to indemnify CP Re under the Stop-Loss Agreement will be triggered only at such time as CP Re’s ultimate net loss related to the run-off of the pre-September 15, 2014 Tower business exceeds a retention equal to the Tower Companies’ loss and loss adjustment reserves and unearned premium reserves as of September 15, 2014. CP Re will pay AII and NG Re Ltd. total premium of $56,000 on the five-year anniversary of the Stop-Loss Agreement. The premium payable by AII and NG Re Ltd. to ACP Re pursuant to the Retrocession Agreement will be $56,000 in the aggregate, less a ceding commission of 5.5% to be retained by AII and NG Re Ltd.

Credit Agreement

The Company, AII, and NG Re Ltd. entered into a credit agreement (the “ACP Re Credit Agreement”) among the Company, as Administrative Agent, ACP Re and Tower, now a wholly-owned subsidiary of ACP Re, as the borrowers (collectively, the “Borrowers”), ACP Re Holdings, LLC, as Guarantor, and AII and NG Re Ltd., as Lenders, pursuant to which the Lenders made a $250,000 loan ($125,000 made by each Lender) to the Borrowers. ACP Re used the proceeds of such loan to (i) finance the Merger, (ii) repay certain indebtedness of Tower and its related companies in connection with the Merger, and (iii) pay certain transaction costs and expenses incurred by the Borrowers in connection with the Merger.

The loan issued pursuant to the ACP Re Credit Agreement has a maturity date of September 15, 2021. Outstanding borrowings under the ACP Re Credit Agreement will bear interest at a fixed annual rate of 7%, payable semi-annually on the last day of January and July. Fees payable to the Company for its service as Administrative Agent include an annual fee equal to $30, plus reimbursement of costs, expenses and certain other charges. The obligations of the Borrowers are secured by (i) a first-priority pledge of 100% of the stock of ACP Re and ACP Re’s U.S. subsidiaries and 65% of the stock of certain of ACP Re’s foreign subsidiaries, and (ii) a first-priority lien on all of the assets of the Borrowers and Guarantor and certain of the assets of ACP Re’s subsidiaries (other than the Tower Companies).

The Borrowers have the right to prepay the amounts borrowed, in whole or in part. The Borrowers are required to prepay the amounts borrowed within thirty (30) days from the receipt of net cash proceeds received by ACP Re from (i) certain asset sales, (ii) the disposition of certain equity interests, (iii) the issuance or incurrence of certain debt, (iv) any dividend or distribution from Tower subsidiaries to ACP Re, (v) premiums and other payments received pursuant to the Retrocession Agreement, and (vi) any tax refunds, pension plan reversions, insurance proceeds, indemnity payments, purchase price adjustments (excluding working capital adjustments) under acquisition agreements, litigation proceeds and other similar receipts received by the Borrowers after the effective date of the ACP Re Credit Agreement, unless any of the foregoing proceeds (other than payments received pursuant to the Retrocession Agreement) are required for the ordinary course business operations of the Borrowers. The Borrowers are also required to deposit any excess cash flow (including payments under the Master Agreement) into a reserve account that also secures Borrowers’ obligations under the ACP Re Credit Agreement. Any funds in the reserve account after January 1, 2018 that exceed the amount of interest payable by the Borrowers for the remainder of the term of the ACP Re Credit Agreement must be applied by the Borrowers as a prepayment of principal under the ACP Re Credit Agreement.

The ACP Re Credit Agreement contains certain customary restrictive covenants (subject to negotiated exceptions and baskets), including restrictions on indebtedness, liens, acquisitions and investments, dispositions, creation of subsidiaries and restricted payments. There are also financial covenants that require ACP Re to maintain minimum current assets, a maximum leverage ratio, and a minimum fixed charge coverage ratio. If ACP Re fails to comply with the leverage ratio or fixed charge coverage ratio covenants as of any measurement date, the Borrowers may cure such breach by making a capital contribution to ACP Re sufficient to bring the Borrowers into compliance.

The ACP Re Credit Agreement also provides for customary events of default, with grace periods where appropriate, including failure to pay principal when due, failure to pay interest or fees within three business days after becoming due, failure to comply with covenants, breaches of representations and warranties, default under certain other indebtedness, certain insolvency, receivership or insurance regulatory events affecting the Borrowers, the occurrence of certain material judgments, certain amounts of reportable ERISA or foreign pension plan noncompliance events, a change in control of the Guarantor, any security interest created under the ACP Re Credit Agreement ceases to be in full force and effect, or if ACP Re defaults on its obligations under the Retrocession Agreement. Upon the occurrence and during the continuation of an event of default, the Company, as Administrative Agent, upon the request of any Lender, will declare the Borrowers’ obligations under the ACP Re Credit Agreement immediately due and payable and/or exercise any and all remedies and other rights under the ACP Re Credit Agreement.

As of December 31, 2014, the Company recorded $127,601 of loan and related interest receivable as a component of other assets on the condensed consolidated balance sheet. The Company recorded total interest income of approximately $2,601 for the year ended December 31, 2014 under the ACP Re Credit Agreement.

Other Related Party Transactions

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 $1,880, $730 and $733 for the years ended December 31, 2014, 2013 and 2012, respectively.

The Company leases 15,765 square feet of office space in Chicago, Illinois from 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 Company paid approximately $444 and $480 for this lease for the years ended December 31, 2014 and 2013, respectively.

Use of Company Aircraft

The Company and its wholly-owned subsidiary, AmTrust Underwriters, Inc. (“AUI”), are each a party to aircraft time share agreements with each of Maiden and NGHC. The agreements provide for payment to the Company or AUI for usage of their respective company-owned aircraft and cover 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, and airport taxes, among others. Neither the Company nor AUI charges Maiden or NGHC for the fixed costs that would be incurred in any event to operate the aircrafts (for example, aircraft purchase costs, insurance and flight crew salaries). During the years ended December 31, 2014, 2013 and 2012, Maiden paid AUI $26, $38, and $59, respectively, and NGHC paid AUI $133, $140, and $165, respectively, for the use of AUI’s aircraft under these agreements. During the year ended December 31, 2014, Maiden paid the Company $26 for the use of the Company's aircraft.

In addition, for personal travel, Mr. Zyskind, the Company’s President and Chief Executive Officer and Mr. Michael Karfunkel, the Chairman of the Board, each entered into an aircraft reimbursement agreement with the Company and, since entering into such agreements, has fully reimbursed the Company for the incremental cost billed by the Company for their personal use of the company-owned aircraft. Mr. Zyskind reimbursed the Company $235, $74, and $192 respectively, for his personal use of the aircraft during the years ended December 31, 2014, 2013 and 2012. Mr. Karfunkel reimbursed the Company $55 during the year ended December 31, 2013 for his personal use of the aircraft. Mr. Karfunkel did not use the aircraft for personal use in 2014 or 2012.

XML

Schedule I - Summary of Investments Other Than Investments in Related Parties

12 Months Ended

Dec. 31, 2014

Summary of Investments, Other than Investments in Related Parties [Abstract]

Schedule I - Summary of Investments Other than Investments in Related Parties

SUMMARY OF INVESTMENTS

OTHER THAN INVESTMENTS IN RELATED PARTIES

At December 31, 2014 Type of Investment	Cost(1)		Value		Amount at which Shown in the Balance Sheet
	(In Thousands)
Fixed Maturities:
Bonds:
United States government and government agencies & authorities	$	1,009,704	$	1,033,190	$	1,033,190
States, municipalities and political subdivisions	469,646		482,041		482,041
Foreign governments	106,054		112,731		112,731
Public utilities	137,169		138,692		138,692
All other corporate bonds	2,414,573		2,486,620		2,486,620
Redeemable preferred stock	—		—		—
Total fixed maturities	4,137,146		4,253,274		4,253,274
Equity securities:
Common stocks:
Public utilities, Banks, trust and insurance companies	13,323		13,712		13,712
Industrial, miscellaneous and all other Nonredeemable preferred stocks	96,159		94,081		94,081
Total equity securities	109,482		107,793		107,793
Short-term investments, at cost (approximates market value)	63,916		63,916		63,916
Other invested assets (approximates market value)	31,186		31,186		31,186
Total investments	$	4,341,730	$	4,456,169	$	4,456,169

(1) Original cost of equity securities and, as to fixed maturities, original cost reduced by repayments and adjusted for amortization of premiums or accrual of discounts.

XML

Liability for Unpaid Loss and LAE (Reconciliation of the beginning and ending balances for unpaid losses and LAE) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward]
Unpaid losses and LAE, gross of related reinsurance recoverables at beginning of year	$ 4,368,234	$ 2,426,400	$ 1,879,175
Less: Reinsurance recoverables at beginning of year	2,149,444	1,739,689	1,180,212	972,392
Net balance, beginning of year		2,628,545	1,246,188	906,783
Incurred related to:
Current year	2,324,062	1,486,418	909,818
Prior year	18,557	30,943	12,857
Total incurred losses during the year	2,342,619	1,517,361	922,675
Paid losses and LAE related to:
Current year	(886,724)	(617,539)	(406,238)
Prior year	(554,495)	(335,621)	(285,479)
Total payments for losses and LAE	(1,441,219)	(953,160)	(691,717)
Commuted loss reserve	0	0	91,529
Acquired outstanding loss and loss adjustment reserve	71,755	807,592	13,137
Effect of foreign exchange rates	(86,939)	10,564	3,781
Net balance, end of the year	3,514,761	2,628,545	1,246,188
Plus: Reinsurance recoverables at end of year	2,149,444	1,739,689	1,180,212	972,392
Unpaid losses and LAE, gross of related reinsurance recoverables at end of year	$ 5,664,205	$ 4,368,234	$ 2,426,400
Unpaid losses and LAE related to IBNR, percentage	49.60%	42.40%	34.50%

XML

Income Taxes (Open Tax Years) (Details)	12 Months Ended
	Dec. 31, 2014
2010 | Ireland
Income Tax Examination [Line Items]
Open Tax Years	2010
2011 | USA
Income Tax Examination [Line Items]
Open Tax Years	2011
2011 | Ireland
Income Tax Examination [Line Items]
Open Tax Years	2011
2012 | USA
Income Tax Examination [Line Items]
Open Tax Years	2012
2012 | United Kingdom
Income Tax Examination [Line Items]
Open Tax Years	2012
2012 | Ireland
Income Tax Examination [Line Items]
Open Tax Years	2012
2013 | USA
Income Tax Examination [Line Items]
Open Tax Years	2013
2013 | United Kingdom
Income Tax Examination [Line Items]
Open Tax Years	2013
2013 | Ireland
Income Tax Examination [Line Items]
Open Tax Years	2013
2014 | USA
Income Tax Examination [Line Items]
Open Tax Years	2014
2014 | United Kingdom
Income Tax Examination [Line Items]
Open Tax Years	2014
2014 | Ireland
Income Tax Examination [Line Items]
Open Tax Years	2014

XML

Share Based Compensation

12 Months Ended

Dec. 31, 2014

Share-based Compensation [Abstract]

Share Based Compensation

Share Based Compensation

The Company's 2010 Omnibus Incentive Plan (the “Plan”), which permits the Company to grant to officers, employees and non-employee directors incentive compensation directly linked to the price of the Company’s stock, authorizes up to an aggregate of 7,315,068 shares of Company stock for awards of options to purchase shares of the Company’s common stock, restricted stock, restricted stock units (“RSU”), performance share units ("PSU") or appreciation rights. Shares used may be either newly issued shares or treasury shares or both. The aggregate number of shares of common stock for which awards may be issued may not exceed 7,315,068 shares, subject to the authority of the Company’s Board of Directors to adjust this amount in the event of a consolidation, reorganization, stock dividend, stock split, recapitalization or similar transaction affecting the Company’s common stock. As of December 31, 2014, approximately 4,600,000 shares of Company common stock remained available for grants under the Plan.

The Company recognizes compensation expense under FASB ASC 718-10-25 for its share-based payments based on the fair value of the awards. The Company grants stock options at prices equal to the closing stock price of the Company’s stock on the dates the options are granted. The options have a term of ten years from the date of grant and vest primarily in equal annual installments over the four years period following the date of grant for employee options. The Company uses the simplified method in determining the expected life. Employees have three months after the employment relationship ends to exercise all vested options. The fair value of each option grant is separately estimated for each vesting date. The fair value of each option is amortized into compensation expense on a straight-line basis between the grant date for the award and each vesting date. The Company has estimated the fair value of all stock option awards as of the date of the grant by applying the Black-Scholes-Merton multiple-option pricing valuation model. The application of this valuation model involves assumptions that are judgmental and highly sensitive in the determination of compensation expense. The Company grants restricted shares, RSUs and PSUs with a grant date value equal to the closing stock price of the Company's stock on the dates the shares or units are granted and the restricted shares and RSUs vest over a period of two to four years, while PSUs vest based on terms of the awards.

The Company paid a ten percent stock dividend in 2013 and 2012. At the dividend date, all options outstanding were adjusted by ten percent and their respective exercise prices were reduced by ten percent, which ultimately resulted in each outstanding share having the same fair value immediately prior to and subsequent to the dividend date. Therefore, the Company did not record any additional compensation expense as a result of either stock dividend. The Company also adjusted outstanding RSUs, unvested restricted stock and PSUs, resulting in no additional compensation expense.

The following schedule shows all options granted, exercised, and expired under the Plan for the years ended December 31, 2014, 2013 and 2012:

	2014				2013				2012
	Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
Outstanding at beginning of year	2,997,460		$	10.49	3,675,776		$	9.41	4,546,678		$	9.06
Granted	37,500		37.87		78,001		29.78		45,981		23.63
Exercised	(1,092,120	)	9.50		(747,272	)	7.21		(821,745	)	7.98
Forfeited	(8,470	)	7.03		(9,045	)	8.90		(95,138	)	11.87
Outstanding at end of year	1,934,370		$	11.60	2,997,460		$	10.49	3,675,776		$	9.41

The fair value was estimated at the date of grant with the following weighted average assumptions for the years ended December 31, 2014, 2013 and 2012:

	2014		2013		2012
Volatility	41.89	%	33.09	%	32.68	%
Risk-free interest rate	2.73	%	0.88	%	0.73	%
Weighted average expected lives in years	6.25		6.25		6.25
Dividend rate	1.90	%	1.68	%	1.37	%
Forfeiture rate	0.50	%	0.50	%	0.50	%

The weighted average grant date fair value of options granted was $14.69, $8.10 and $8.44 during 2014, 2013 and 2012, respectively. As of December 31, 2014 and 2013, all option grants outstanding had an approximate weighted average remaining life of 3.4 and 4.4 years, respectively. As of December 31, 2014 and 2013, there were approximately 1,800,000 options and 2,800,000 options, respectively, with a weighted average exercise price of $10.49 and $9.69, respectively, which were exercisable.

A summary of the Company’s restricted stock and RSU activity for the years ended December 31, 2014, 2013 and 2012 is shown below:

	2014				2013				2012
	Shares or Units		Weighted Average Grant Date Fair Value		Shares or Units		Weighted Average Grant Date Fair Value		Shares or Units		Weighted Average Grant Date Fair Value
Non-vested at beginning of year	917,015		$	24.43	888,197		$	20.86	352,453		$	15.14
Granted	902,358		39.21		291,430		31.17		638,177		23.04
Vested	(497,534	)	27.38		(262,031	)	19.81		(101,681	)	14.70
Forfeited	(16,328	)	33.19		(581	)	29.31		(752	)	20.86
Non-vested at end of year	1,305,511		$	33.41	917,015		$	24.43	888,197		$	20.86

The Company has 274,835 PSUs outstanding as of December 31, 2014. PSUs are conditional grants of a specified maximum number of common shares. In general, grants are earned, subject to the attainment of pre-specified performance goals at the end of a pre-determined period. The fair value of PSUs granted in 2014 and 2013 was $7,640 and $4,687, respectively.

Compensation expense for all share-based payments under ASC 718-10-30 was approximately $19,114, $11,186 and $7,172 for the years ended December 31, 2014, 2013 and 2012, respectively. The Company had approximately $36,882, $23,857 and $20,665 of unrecognized compensation cost related to all share based compensation as of December 31, 2014, 2013 and 2012, respectively.

The intrinsic value of stock options exercised during 2014, 2013 and 2012 was $35,597, $19,352 and $12,061, respectively. The intrinsic value of stock options that were outstanding as December 31, 2014, 2013 and 2012 was $86,374, $66,559 and $70,860, respectively.

Cash received from options exercised was $10,589, $5,387 and $8,873 during 2014, 2013 and 2012 respectively. The excess tax benefit from award exercises was approximately $10,281 and $5,109 for the years ended December 31, 2014 and 2013.

XML

Investments (Summary of Available for Sale Fixed Securities by Contractual Maturity) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Total fixed maturities	$ 4,137,146	$ 3,107,043
Total fixed maturities	4,253,274	3,100,936
Fixed maturities
Schedule of Available-for-sale Securities [Line Items]
Due in one year or less	106,041	128,128
Due after one through five years	682,632	592,703
Due after five through ten years	1,998,740	1,632,115
Due after ten years	335,669	334,846
Mortgage and asset backed securities	1,014,064	735,827
Total fixed maturities	4,137,146	3,423,619
Due in one year or less	105,839	128,214
Due after one through five years	704,344	603,942
Due after five through ten years	2,062,942	1,631,751
Due after ten years	342,468	321,372
Mortgage and asset backed securities	1,037,681	727,175
Total fixed maturities	$ 4,253,274	$ 3,412,454

XML

Debt (Junior Subordinate Debt) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014 Entity	Dec. 31, 2013	Dec. 31, 2012
Debt Instrument [Line Items]
Term of debt instrument	5 years
Number of special purpose trusts established	4
Trust equity investment	$ 3,714
Placement fees in connection with common securities issuance	2,605
Interest expense related to trust preferred securities	$ 8,100	$ 8,099	$ 8,297
Junior Subordinated Debt
Debt Instrument [Line Items]
Term of debt instrument	30 years

XML

Schedule V - Consolidated Supplementary Property and Casulty Insurance Information (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Supplemental Information for Property, Casualty Insurance Underwriters [Abstract]
Current Year	$ 2,324,062	$ 1,486,418	$ 909,818
Prior year	18,557	30,943	12,857
Paid Losses and Loss Adjustment Expenses	$ 1,441,219	$ 953,160	$ 691,717

XML

Consolidated Statements of Changes in Stockholders' Equity (USD $) In Thousands, unless otherwise specified	Total	Common stock	Preferred stock	Additional Paid-in Capital	Treasury Stock	Accumulated Other Comprehensive Income (Loss)	Retained Earnings	Noncontrolling Interest	Common stock	Common stock Additional Paid-in Capital	Common stock Treasury Stock	Common stock Retained Earnings	Preferred stock	Preferred stock	Preferred stock Additional Paid-in Capital	5.5% Convertible senior notes due 2021 (the 2021 Notes) Convertible Senior Notes	5.5% Convertible senior notes due 2021 (the 2021 Notes) Convertible Senior Notes Additional Paid-in Capital	2.75% Convertible senior notes due 2044 (the 2044 Notes) Convertible Senior Notes	2.75% Convertible senior notes due 2044 (the 2044 Notes) Convertible Senior Notes Additional Paid-in Capital
Beginning balance at Dec. 31, 2011	$ 890,563	$ 849		$ 582,321	$ (300,365)	$ (9,999)	$ 617,757	$ 69,098
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	184,860						184,860
Foreign currency translation, net of tax	6,730					6,730
Change in fair value of derivatives, net of tax	(733)					(733)
Minimum pension liability, net of tax	0
Unrealized holding loss on investments, net of tax	63,917					63,917
Reclassification adjustment for securities sold during the year, net of tax	4,316					4,316
Non-controlling interest in subsidiaries	(6,873)						(6,873)	6,873
Acquisition of non-controlling interest in subsidiary	6,900			6,900				(6,900)
Equity component of 5.5% convertible senior notes, net of income taxes and issues costs	3,306			3,306
Issuance of restricted stock	0			(2,378)	2,378
Stock option compensation	7,172			7,172
Exercise of stock options, other	8,873	2		4,675	4,196
Share dividend		61		159,109			(159,170)
Common stock dividend	(24,910)											(24,910)
Capital contributions to subsidiaries								34,273
Ending balance at Dec. 31, 2012	1,144,121	912		761,105	(293,791)	64,231	611,664	103,344
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	280,593						280,593
Foreign currency translation, net of tax	12,943					12,943
Change in fair value of derivatives, net of tax	1,028					1,028
Minimum pension liability, net of tax	(1,738)					(1,738)
Unrealized holding loss on investments, net of tax	(90,286)					(90,286)
Reclassification adjustment for securities sold during the year, net of tax	5,658					5,658
Non-controlling interest in subsidiaries	1,633						1,633	(1,633)
Equity component of 5.5% convertible senior notes, net of income taxes and issues costs	(3,989)						(3,989)
Stock issued during the period			115,000						472	251	221		111,130		(3,870)
Issuance of restricted stock	0			(1,902)	1,902
Stock option compensation	11,186			11,186
Exercise of stock options, other	8,062	2		1,283	6,777
Share dividend	0	66		265,031			(265,097)
Common stock dividend	(39,808)						(39,808)
Capital contributions to subsidiaries								36,149
Ending balance at Dec. 31, 2013	1,441,005	980	115,000	1,033,084	(284,891)	(8,164)	584,996	137,860
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	446,598						446,598
Foreign currency translation, net of tax	(17,358)					(17,358)
Change in fair value of derivatives, net of tax	664					664
Minimum pension liability, net of tax	(1,055)					1,055
Unrealized holding loss on investments, net of tax	86,954					86,954
Reclassification adjustment for securities sold during the year, net of tax	(4,918)					(4,918)
Non-controlling interest in subsidiaries	910						910	(910)
Common share repurchase	(59,155)				(59,154)
Equity component of 5.5% convertible senior notes, net of income taxes and issues costs																(19,011)	(19,011)	33,624	33,624
Stock issued during the period										(33,409)	33,409		178,641	185,000	(6,359)
Issuance of restricted stock	0			(6,444)	6,444
Stock option compensation	19,114			19,114
Exercise of stock options, other	8,776	0		2,170	6,606
Distribution of redeemable non-controlling interest	(494)						(494)
Preferred stock dividend	(12,738)						(12,738)
Common stock dividend	(64,538)						(64,538)
Capital contributions to subsidiaries								25,359
Foreign currency translation								(3,128)
Ending balance at Dec. 31, 2014	$ 2,037,020	$ 980	$ 300,000	$ 1,022,769	$ (297,586)	$ 56,123	$ 954,734	$ 159,181

XML

Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Fixed maturities, available-for-sale, amortized cost	$ 4,137,146	$ 3,107,043
Equity securities, available-for-sale, cost	84,075	16,010
Trading Securities, Cost	25,407	0
Securities pledged	0	316,576
Prepaid expenses and other assets, fair value	264,517	233,024
Accrued expenses and other current liabilities, fair value	18,567	11,945
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	150,000,000	150,000,000
Common stock, issued	98,211,000	98,122,000
Common stock, outstanding	77,739,000	74,765,000
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	4,785,000	4,600,000
Treasury stock at cost, shares	20,472,000	23,357,000
Reinsurance recoverable	2,440,627	1,929,848
Prepaid reinsurance premium	1,302,848	1,011,304
Ceded reinsurance premiums payable	683,421	635,588
Other assets (related party $136,516 $0; recorded at fair value $264,517; $233,024)	1,094,943	890,333
Related Party Transactions
Reinsurance recoverable	1,517,499	1,144,168
Prepaid reinsurance premium	918,505	739,719
Ceded reinsurance premiums payable	410,075	393,941
Other assets (related party $136,516 $0; recorded at fair value $264,517; $233,024)	$ 162,046	$ 0

XML

Property and Equipment, Net

12 Months Ended

Dec. 31, 2014

Property, Plant and Equipment [Abstract]

Propert and Equipment, Net

Property and Equipment, Net

(Amounts in Thousands) As of December 31,	2014			2013
Land	$	7,593		$	7,593
Building	25,478			23,284
Software	92,211			65,699
Computer equipment	41,924			27,575
Other equipment	53,529			19,881
Leasehold improvements	25,691			22,968
	246,426			167,000
Less: Accumulated depreciation and amortization	(92,251		)	(62,701		)
	$	154,175		$	104,299

Depreciation expense was $29,550, $21,451 and $13,221for the years ended December 31, 2014, 2013 and 2012.

XML

Debt (Amounts Recorded for Notes) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Debt Instrument [Line Items]
Outstanding principal	$ 279,043	$ 200,000
Unamortized OID	(64,619)	(35,782)
Liability component	214,424	164,218
5.5% Convertible senior notes due 2021 (the 2021 Notes)
Debt Instrument [Line Items]
Outstanding principal	68,119	200,000
Unamortized OID	(11,374)	(35,782)
Liability component	56,745	164,218
2.75% Convertible senior notes due 2044 (the 2044 Notes)
Debt Instrument [Line Items]
Outstanding principal	210,924	0
Unamortized OID	(53,245)	0
Liability component	$ 157,679	$ 0

XML

Intangible Assets and Goodwill (Goodwill Rollforward) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Goodwill [Roll Forward]
Beginning balance	$ 373,591	$ 326,646
Goodwill additions	42,921	57,053
Impairment of goodwill	(62,898)	(10,226)	(16,389)
Foreign currecy translation	(929)	118
Ending balance	352,685	373,591	326,646
Small Commercial Business
Goodwill [Roll Forward]
Beginning balance	116,272	116,272
Goodwill additions	24,304	0
Impairment of goodwill	0
Foreign currecy translation	0	0
Ending balance	140,576	116,272
Specialty Risk and Extended Warranty
Goodwill [Roll Forward]
Beginning balance	239,378	194,554
Goodwill additions	18,617	54,932
Impairment of goodwill	(62,898)	(10,226)	(16,389)
Foreign currecy translation	(929)	118
Ending balance	194,168	239,378	194,554
Specialty Program
Goodwill [Roll Forward]
Beginning balance	17,941	15,820
Goodwill additions		2,121
Impairment of goodwill	0
Foreign currecy translation	0	0
Ending balance	$ 17,941	$ 17,941

XML

Deferred Policy Acquisition Costs (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Movement Analysis of Deferred Policy Acquisition Costs [Roll Forward]
Beginning balance	$ 468,404	$ 349,126	$ 280,991
Acquisition costs deferred	698,689	486,566	311,022
Amortization	(538,710)	(367,288)	(242,887)
Ending balance	$ 628,383	$ 468,404	$ 349,126

XML

Income Taxes Income Taxes (Deferred Tax Assets and Liability) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Income Tax Disclosure [Abstract]
Unearned premiums	$ 117,922	$ 83,410
Ceding commission	107,739	82,554
Loss and LAE reserves	49,583	43,452
Other	62,346	60,673
Deferred compensation	7,774	7,183
Bad debt	13,027	8,790
Net operating loss carryforward	101,230	2,133
Unrealized loss on investments	0	4,396
Deferred tax assets, gross	459,621	292,591
Deferred acquisition costs	(295,121)	(239,293)
Equalization reserves	(94,215)	(186,576)
Intangible assets	(51,619)	(64,090)
Unrealized gain on investments	(30,219)	0
Other	(16,790)	(19,578)
Depreciation	(31,350)	(31,396)
Equity results which cannot be liquidated tax free	(41,497)	(21,200)
Accrual market discount	(3,123)	(3,020)
Cash surrender value on insurance	(2,050)	(1,957)
Deferred tax liabilities, gross	(565,984)	(567,110)
Deferred tax liability, net	$ (106,363)	$ (274,519)

XML

Earnings Per Share (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Basic earnings per share:
Net income attributable to AmTrust common shareholders									$ 434,276	$ 278,237	$ 177,987
Less: Net income allocated to participating securities and redeemable non-controlling interest									1,217	431	706
Net income allocated to AmTrust common shareholders									433,059	277,806	177,281
Weighted average common shares outstanding - basic (in shares)									75,144	74,278	73,534
Less: Weighted average participating shares outstanding (in shares)									211	115	265
Weighted average common shares outstanding – basic									74,933	74,163	73,269
Net income per AmTrust Financial Services, Inc. common share - basic (usd per share)	$ 0.94	$ 2.09	$ 1.41	$ 1.34	$ 0.87	$ 0.78	$ 0.96	$ 1.13	$ 5.78	$ 3.75	$ 2.42
Diluted earnings per share:
Net income allocated to AmTrust Financial Services, Inc. common shareholders									434,276	278,237	177,987
Less: Net income allocated to participating securities and redeemable non-controlling interest									1,217	431	706
Net income allocated to AmTrust common shareholders									$ 433,059	$ 277,806	$ 177,281
Weighted average common shares outstanding – basic									74,933	74,163	73,269
Plus: Dilutive effect of stock options, other (in shares)									4,584	3,821	2,351
Weighted average common shares outstanding - dilutive (in shares)									79,517	77,984	75,620
Net income per AmTrust Financial Services, Inc. common shares - diluted (usd per share)	$ 0.88	$ 1.97	$ 1.33	$ 1.27	$ 0.82	$ 0.74	$ 0.93	$ 1.08	$ 5.45	$ 3.56	$ 2.34
Anti-dilutive securities excluded from diluted earnings per share, less than									8,000

XML

Subsequent Events - Additional Information (Detail) (USD $)	3 Months Ended								12 Months Ended			2 Months Ended	0 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Feb. 27, 2015	Jan. 06, 2015
Subsequent Event [Line Items]
Proceeds from issuance of common stock									$ (59,155,000)	$ 472,000	$ 0
Net earned premium	908,163,000	914,413,000	874,937,000	829,051,000	707,562,000	613,895,000	536,539,000	407,994,000	3,526,564,000	2,265,990,000	1,418,852,000
Oryx Insurance Brokerage Inc.
Subsequent Event [Line Items]
Net earned premium									80,000,000
Number of agencies, over									135
Subsequent Event
Subsequent Event [Line Items]
Number of shares sold												3,450,000
Proceeds from issuance of common stock												172,500,000
Issuance cost												250,000
Subsequent Event | TMI Solutions
Subsequent Event [Line Items]
Cash paid													29,000,000
Subsequent Event | Oryx Insurance Brokerage Inc.
Subsequent Event [Line Items]
Cash paid													29,700,000
5.5% Convertible senior notes due 2021 (the 2021 Notes) | Subsequent Event
Subsequent Event [Line Items]
Notes submitted for conversion, amount												3,500,000
5.5% Convertible senior notes due 2021 (the 2021 Notes) | Convertible Senior Notes
Subsequent Event [Line Items]
Notes submitted for conversion, amount	50,105,000
Principal amount per note used in conversion rate									1,000
Conversion rate for conversion of convertible senior notes									38.5985
5.5% Convertible senior notes due 2021 (the 2021 Notes) | Convertible Senior Notes | Subsequent Event
Subsequent Event [Line Items]
Principal amount per note used in conversion rate												31,011,000
Repayments of convertible debt												$ 31,011,000
Conversion rate for conversion of convertible senior notes												616,202

XML

Share Based Compensation (Summary of Restricted Stock and RSU Activity) (Details) (Restricted Stock and Restricted Stock Unit, USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Restricted Stock and Restricted Stock Unit
Shares or Units
Non-vested at beginning of period	917,015	888,197	352,453
Granted	902,358	291,430	638,177
Vested	(497,534)	(262,031)	(101,681)
Forfeited	(16,328)	(581)	(752)
Non-vested at end of period	1,305,511.000	917,015	888,197
Weighted Average Grant Date Fair Value
Non-vested at beginning of period	$ 24.43	$ 20.86	$ 15.14
Granted	$ 39.21	$ 31.17	$ 23.04
Vested	$ 27.38	$ 19.81	$ 14.70
Forfeited	$ 33.19	$ 29.31	$ 20.86
Non-vested at end of period	$ 33.41	$ 24.43	$ 20.86

XML

Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2014	Feb. 17, 2015	Jun. 30, 2014
Document Documentand Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	FY
Entity Well-known Seasoned Issuer	Yes
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Trading Symbol	AFSI
Entity Registrant Name	AMTRUST FINANCIAL SERVICES, INC.
Entity Central Index Key	0001365555
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		81,917,831
Entity Public Float			$ 1,305,118,675

XML

Employee Benefit Plans (Details) (USD $) In Thousands, unless otherwise specified	10 Months Ended	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2014 participant	Dec. 31, 2013	Dec. 31, 2012
Defined Benefit Plan Disclosure [Line Items]
Number of participants		300
Employer contribution	$ 3,958	$ 1,004	$ 3,958
Estimated contributions to be made in the next fiscal year		950
Estimated pension income for next fiscal year		(614)
Domestic
Defined Benefit Plan Disclosure [Line Items]
Cost of plan for the company		4,241	2,561	1,919
Europe
Defined Benefit Plan Disclosure [Line Items]
Cost of plan for the company		$ 6,167	$ 2,575	$ 1,054

XML

Liability for Unpaid Loss and LAE

12 Months Ended

Dec. 31, 2014

Insurance [Abstract]

Liability for Unpaid Loss and LAE

Liability for Unpaid Loss and LAE

The following table provides a reconciliation of the beginning and ending balances for unpaid losses and LAE, reported in the accompanying consolidated balance sheets as of December 31, 2014, 2013 and 2012:

(Amounts in Thousands)	2014			2013			2012
Unpaid losses and LAE, gross of related reinsurance recoverables at beginning of year	$	4,368,234		$	2,426,400		$	1,879,175
Less: Reinsurance recoverables at beginning of year	1,739,689			1,180,212			972,392
Net balance, beginning of year	2,628,545			1,246,188			906,783
Incurred related to:
Current year	2,324,062			1,486,418			909,818
Prior year	18,557			30,943			12,857
Total incurred losses during the year	2,342,619			1,517,361			922,675
Paid losses and LAE related to:
Current year	(886,724		)	(617,539		)	(406,238		)
Prior year	(554,495		)	(335,621		)	(285,479		)
Total payments for losses and LAE	(1,441,219		)	(953,160		)	(691,717		)
Commuted loss reserves	—			—			91,529
Acquired outstanding loss and loss adjustment reserve	71,755			807,592			13,137
Effect of foreign exchange rates	(86,939		)	10,564			3,781
Net balance, December 31	3,514,761			2,628,545			1,246,188
Plus reinsurance recoverables at end of year	2,149,444			1,739,689			1,180,212
Unpaid losses and LAE, gross of related reinsurance recoverables at end of year	$	5,664,205		$	4,368,234		$	2,426,400

In 2014, 2013 and 2012, the Company’s liabilities for unpaid losses and LAE attributable to prior years increased by $18,557, $30,943 and $12,857, respectively, primarily as a result of unfavorable loss development due to higher actuarial estimates based on actual losses. The percentage of the Company's unpaid losses and LAE related to IBNR was 49.6%, 42.4% and 34.5% as of December 31, 2014, 2013 and 2012, respectively. In setting its reserves, the Company utilizes a combination of Company loss development factors and industry-wide loss development factors. In the event that the Company’s losses develop more favorably than the industry, as a whole, the Company’s liabilities for unpaid losses and LAE should decrease. Management believes that its use of both its historical experience and industry-wide loss development factors provide a reasonable basis for estimating future losses. As the Company has written more business and developed more credible data, the Company has assigned more weight to its historical experience than to industry-wide results. In either case, future events beyond the control of management, such as changes in law, judicial interpretations of law, and inflation may favorably or unfavorably impact the ultimate settlement of the Company’s loss and LAE.

The anticipated effect of inflation is implicitly considered when estimating liabilities for losses and LAE. While anticipated changes in claim costs due to inflation are considered in estimating the ultimate claim costs, the increase in average severity of claims is caused by a number of factors that vary with the individual type of policy written. Future average severities are projected based on historical trends adjusted for implemented changes in underwriting standards, policy provisions, and general economic trends. Those anticipated trends are monitored based on actual development and are modified if necessary.

XML

Fair Value of Financial Instruments (Reconciliation) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Net income (loss)	$ 59,605	$ 48,863
Gain on investment in life settlement contracts net of profit commission	12,306	3,800	13,822
Life settlement contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Net income (loss)	61,110	47,245
Premium paid	46,367	38,933
Other expenses	2,152	(4,317)
Gain on investment in life settlement contracts net of profit commission	12,306	3,800
Life settlement contract profit commission
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Net income (loss)	$ (4,589)	$ (195)

XML

Investment in Life Settlements (Premiums to be Paid) (Details) (Premiums Due On Life Settlement Contracts, USD $) In Thousands, unless otherwise specified	Dec. 31, 2014
Premiums Due On Life Settlement Contracts
Life Insurance Premiums and Related Investment Income [Line Items]
2015	$ 40,961
2016	54,208
2017	52,291
2018	40,117
2019	39,777
Thereafter	552,579
Total	$ 779,933

XML

Condensed Consolidated Statements of Income (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Premium income:
Net written premium	$ 3,956,618	$ 2,565,673	$ 1,648,037
Change in unearned premium	(430,054)	(299,683)	(229,185)
Net earned premium	3,526,564	2,265,990	1,418,852
Service and fee income (related parties – $58,428, $51,545, and $29,041)	409,743	331,559	172,174
Net investment income	131,601	84,819	68,167
Net realized gain on investments	16,423	15,527	8,981
Total revenues	4,084,331	2,697,895	1,668,174
Expenses:
Loss and loss adjustment expense	2,342,619	1,517,361	922,675
Acquisition costs and other underwriting expenses (net of ceding commission - related party - $405,071, $276,556, and $196,982)	856,923	533,162	356,005
Other	436,350	291,617	177,709
Total expenses	3,635,892	2,342,140	1,456,389
Income before other income (expense), income taxes and equity in earnings of unconsolidated subsidiaries	448,439	355,755	211,785
Other income (expenses):
Interest expense (net of interest income - related party - $2,601, $0, and $0)	(45,857)	(34,691)	(28,508)
Loss on extinguishment of debt	(9,831)	0	0
Gain on investment in life settlement contracts net of profit commission	12,306	3,800	13,822
Foreign currency gain (loss)	60,245	(6,533)	(242)
Acquisition gain	0	48,715	0
Gain of sale of subsidiary	6,631	0	0
Total other income (expenses)	23,494	11,291	(14,928)
Income before income taxes and equity in earnings of unconsolidated subsidiaries	471,933	367,046	196,857
Provision for income taxes	53,686	98,019	21,292
Income before equity in earnings of unconsolidated subsidiaries	418,247	269,027	175,565
Equity in earnings of unconsolidated subsidiary – related party	28,351	11,566	9,295
Net income	446,598	280,593	184,860
Net loss (income) attributable to non-controlling interests and redeemable non-controlling interests of subsidiaries	416	1,633	(6,873)
Net income attributable to AmTrust Financial Services, Inc.	447,014	282,226	177,987
Dividends on preference stock	(12,738)	(3,989)	0
Net income attributable to AmTrust common shareholders	434,276	278,237	177,987
Earnings per common share:
Basic earnings per share (in dollars per share)	$ 5.78	$ 3.75	$ 2.42
Diluted earnings per share (in dollars per share)	$ 5.45	$ 3.56	$ 2.34
Dividends declared per common share (in dollars per share)	$ 0.85	$ 0.56	$ 0.39
Weighted average common shares outstanding - Basic (in shares)	74,933	74,163	73,269
Weighted average common shares outstanding - Diluted (in shares)	79,517	77,984	75,620
Net realized gain on investments:
Total other-than-temporary impairment losses	(8,039)	(2,869)	(2,965)
Portion of loss recognized in other comprehensive income	0	0	0
Net impairment losses recognized in earnings	(8,039)	(2,869)	(2,965)
Other net realized gain on investments	24,462	18,396	11,946
Net realized investment gain	$ 16,423	$ 15,527	$ 8,981

XML

Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2014

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Fair Value Hierarchy

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 December 31, 2014 and 2013:

(Amounts in Thousands) As of December 31, 2014	Total		Level 1		Level 2		Level 3
Assets:
U.S. treasury securities	$	43,870	$	43,870	$	—	$	—
U.S. government securities	13,538		—		13,538		—
Municipal bonds	482,041		—		482,041		—
Foreign government	112,731		—		112,731		—
Corporate bonds and other bonds:
Finance	1,221,862		—		1,221,862		—
Industrial	1,202,860		—		1,202,860		—
Utilities	138,692		—		138,692		—
Commercial mortgage backed securities	38,685		—		38,685		—
Residential mortgage backed securities:
Agency backed	975,782		—		975,782		—
Non-agency backed	22,503		—		22,503		—
Asset-backed securities	710		—		710		—
Equity securities, available-for-sale	81,044		24,484		21,674		34,886
Equity securities, trading	26,749		26,749		—		—
Short term investments	63,916		63,916		—		—
Other investments	31,186		—		—		31,186
Life settlement contracts	264,517		—		—		264,517
	$	4,720,686	$	159,019	$	4,231,078	$	330,589
Liabilities:
Equity securities sold but not yet purchased, market	$	13,052	$	13,052	$	—	$	—
Life settlement contract profit commission	16,534		—		—		16,534
Derivatives	2,033		—		2,033		—
	$	31,619	$	13,052	$	2,033	$	16,534

(Amounts in Thousands) As of December 31, 2013	Total		Level 1		Level 2		Level 3
Assets:
U.S. treasury securities	$	110,345	$	110,345	$	—	$	—
U.S. government securities	10,489		—		10,489		—
Municipal bonds	446,183		—		446,183		—
Foreign government	160,105				160,105
Corporate bonds and other bonds:
Finance	1,084,599		—		1,084,599		—
Industrial	754,417		—		754,417		—
Utilities	70,226		—		70,226		—
Commercial mortgage backed securities	28,566		—		28,566		—
Residential mortgage backed securities:
Agency backed	423,137		—		423,137		—
Non-agency backed	6,749		—		6,749		—
Asset-backed securities	6,120		—		6,120		—
Equity securities	15,148		15,148		—		—
Short term investments	114,202		114,202		—		—
Other investments	25,749		—		—		25,749
Securities held as collateral	311,518		48,915		262,603		—
Life settlement contracts	233,024		—		—		233,024
	$	3,800,577	$	288,610	$	3,253,194	$	258,773
Liabilities:
Securities sold under agreements to repurchase, at contract value	293,222		—		293,222		—
Life settlement contract profit commission	11,945		—		—		11,945
Derivatives	3,054		—		3,054		—
	$	308,221	$	—	$	296,276	$	11,945

The following table provides a summary of changes in fair value of the Company’s Level 3 financial assets and liabilities for the years ended December 31, 2014 and 2013:

(Amounts in Thousands)	Balance as of January 1, 2014			Net income (loss)			Other comprehensive income (loss)			Purchases and issuances		Sales and settlements			Net transfers into (out of) Level 3		Balance as of December 31, 2014
Other investments	$	25,749		$	3,084		$	—		$	20,207	$	(17,854	)	$	—	31,186
Equity securities, available-for-sale	—			—			(7,079		)	41,965		—			—		34,886
Life settlement contracts	233,024			61,110			—			25,418		(55,035		)	—		264,517
Life settlement contract profit commission	(11,945		)	(4,589		)	—			—		—			—		(16,534		)
Total	$	246,828		$	59,605		$	(7,079	)	$	87,590	$	(72,889	)	$	—	$	314,055

(Amounts in Thousands)	Balance as of January 1, 2013			Net income (loss)			Other comprehensive income (loss)		Purchases and issuances		Sales and settlements			Net transfers into (out of) Level 3		Balance as of December 31, 2013
Other investments	$	11,144		$	1,813		$	1,666	$	17,228	$	(6,102	)	$	—	$	25,749
Life settlement contracts	193,927			47,245			—		11,906		(20,054		)	—		233,024
Life settlement contract profit commission	(11,750		)	(195		)	—		—		—			—		(11,945		)
Total	$	193,321		$	48,863		$	1,666	$	29,134	$	(26,156	)	$	—	$	246,828

The Company had no transfers among the levels of fair value hierarchy during the years ended December 31, 2014 and 2013.

A reconciliation of net income for life settlement contracts in the above table to (loss) gain on investment in life settlement contracts net of profit commission included in the Consolidated Statements of Income for the years ended December 31, 2014 and 2013 is as follows:

(Amounts in Thousands)	2014			2013
Net income	$	61,110		$	47,245
Premium paid	(46,367		)	(38,933		)
Profit commission	(4,589		)	(195		)
Other expenses	2,152			(4,317		)
Gain on investment in life settlement contracts	$	12,306		$	3,800

The Company uses the following methods and assumptions in estimating its fair value disclosures for financial instruments:

• Equity and Fixed Income Investments:  Fair value disclosures for these investments are disclosed elsewhere in Note 2. “Significant Accounting Policies”. 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: Other investments consisted primarily of investments in limited partnerships, an interest in a syndicated term loan, and annuities. Other investments accounted for approximately 0.6% of the Company's investment portfolio as of December 31, 2014. The Company estimates the fair value of other investments based on significant unobservable inputs in the valuation process. As a result, the Company classified the fair value estimates as Level 3 in the financial hierarchy.

• Equity Investment in Unconsolidated Subsidiaries - Related Party: The Company has an approximate ownership percentage of 13.2% in NGHC, a publicly-held insurance holding company (Nasdaq: NGHC). The Company accounts for this investment under the equity method of accounting as it has the ability to exert significant influence on NGHC. The fair value and the carrying value of the investment was approximately $228,818 and $119,712, respectively, as of December 31, 2014.

• Subordinated Debentures and Debt:  The current fair value of the Company's5.5% 2021 convertible senior notes, 2.75% 2044 convertible senior notes, subordinated debentures and 6.125% Notes was $146,675, $210,831, $74,690 and $258,750 as of December 31, 2014, respectively. The 5.5% 2021 convertible senior notes, 2.75% 2044 convertible senior notes, and 6.125% Notes are publicly traded instruments and are classified as Level 1 in the fair value hierarchy. The fair value of the subordinated debentures was determined using the Black-Derman-Toy interest rate lattice model and is classified as Level 3 in the fair value hierarchy.

• 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.

The fair value of life settlement contracts as well as life settlement profit commission liability is based on information available to the Company at the end of the reporting period. The Company considers the following factors in its fair value estimates: cost at date of purchase, recent purchases and sales of similar investments (if available and applicable), financial standing of the issuer, changes in economic conditions affecting the issuer, maintenance cost, premiums, benefits, standard actuarially developed mortality tables and life expectancy reports prepared by nationally recognized and independent third party medical underwriters. The Company estimates the fair value of a life insurance policy by applying an investment discount rate based on the cost of funding the Company's life settlement contracts as compared to returns on investments in asset classes with comparable credit quality, which the Company has determined to be 7.5%, to the expected cash flow generated by the policies in the Company's life settlement portfolio (death benefits less premium payments), net of policy specific adjustments and reserves. In order to confirm the integrity of their calculation of fair value, the Company, quarterly, retains an independent third-party actuary to verify that the actuarial modeling used by the Company to determine fair value was performed correctly and that the valuation, as determined through the Company's actuarial modeling, is consistent with other methodologies. The Company considers this information in its assessment of the reasonableness of the life expectancy and discount rate inputs used in the valuation of these investments.

The Company adjusts the standard mortality for each insured for the insured's life expectancy based on reviews of the insured's medical records. The Company establishes policy specific reserves for the following uncertainties: improvements in mortality, the possibility that the high net worth individuals represented in its portfolio may have access to better health care, the volatility inherent in determining the life expectancy of insureds with significant reported health impairments, the possibility that the issuer of the policy or a third party will contest the payment of the death benefit payable to the Company, and the future expenses related to the administration of the portfolio. The application of the investment discount rate to the expected cash flow generated by the portfolio, net of the policy specific reserves, yields the fair value of the portfolio. The effective discount rate reflects the relationship between the fair value and the expected cash flow gross of these reserves.

The following summarizes data utilized in estimating the fair value of the portfolio of life insurance policies as of December 31, 2014 and 2013 and, as described in Note 6. “Investments in Life Settlements”, only includes data for policies to which the Company assigned value at those dates:

	2014			2013
Average age of insured	81.1			80.1
Average life expectancy, months (1)	121			131
Average face amount per policy	$	6,624,000		$	6,611,000
Effective discount rate (2)	14.0		%	14.2		%

⁽¹⁾  Standard life expectancy as adjusted for insured’s specific circumstances.

⁽²⁾  Effective Discount Rate (“EDR”) is the Company's estimated internal rate of return on its life settlement contract portfolio and is determined from the gross expected cash flows and valuation of the portfolio. The valuation of the portfolio is calculated net of all reserves using a 7.5% discount rate. The EDR is implicit of the reserves and the gross expected cash flows of the portfolio. The Company anticipates that the EDR's range is between 12.5% and 17.5% and reflects the uncertainty that exists surrounding the information available as of the reporting date. As the accuracy and reliability if information improves (declines), the EDR will decrease (increase). The change in the EDR from December 31, 2013 to December 31, 2014 resulted from routine updating of life expectancies and other factors relating to operational risk.

The Company's 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 are held constant, the carrying value of the investment in life insurance policies would increase or (decrease) by the unaudited amounts summarized below for the years ended December 31, 2014 and 2013:

	Change in life expectancy
	Plus 4 Months			Minus 4 Months
Investment in life policies:
December 31, 2014	$	(34,686	)	$	36,486
December 31, 2013	$	(29,537	)	$	31,313

	Change in discount rate (1)
	Plus 1%			Minus 1%
Investment in life policies:
December 31, 2014	$	(22,705	)	$	25,456
December 31, 2013	$	(20,055	)	$	22,605

⁽¹⁾ Discount rate is a present value calculation that considers legal risk, credit risk and liquidity risk and is a component of EDR.

XML

Investments

12 Months Ended

Dec. 31, 2014

Investments, Debt and Equity Securities [Abstract]

Investments

Investments

(a) Available-for-Sale Securities

The amortized cost, estimated fair value and gross unrealized appreciation and depreciation of fixed and equity securities are presented in the tables below:

(Amounts in Thousands) As of December 31, 2014	Original or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Preferred stock	$	3,349	$	158	$	(1	)	$	3,506
Common stock	80,726		4,673		(7,861		)	77,538
U.S. treasury securities	42,416		1,558		(104		)	43,870
U.S. government agencies	12,968		575		(5		)	13,538
Municipal bonds	469,646		13,950		(1,555		)	482,041
Foreign government	106,054		6,760		(83		)	112,731
Corporate bonds:
Finance	1,167,011		60,322		(5,471		)	1,221,862
Industrial	1,187,818		38,317		(23,275		)	1,202,860
Utilities	137,169		3,200		(1,677		)	138,692
Commercial mortgage backed securities	36,964		1,890		(169		)	38,685
Residential mortgage backed securities:
Agency backed	954,320		23,340		(1,878		)	975,782
Non-agency backed	22,071		696		(264		)	22,503
Asset backed securities	709		2		(1		)	710
	$	4,221,221	$	155,441	$	(42,344	)	$	4,334,318

(Amounts in Thousands) As of December 31, 2013	Original or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Preferred stock	$	1,498	$	82	$	(74	)	$	1,506
Common stock	14,512		1,156		(2,026		)	13,642
U.S. treasury securities	158,915		1,196		(851		)	159,260
U.S. government agencies	10,466		107		(84		)	10,489
Municipal bonds	461,325		4,781		(19,923		)	446,183
Foreign government	160,459		971		(1,325		)	160,105
Corporate bonds:
Finance	1,057,542		41,027		(13,970		)	1,084,599
Industrial	768,161		7,695		(21,439		)	754,417
Utilities	70,924		1,310		(2,008		)	70,226
Commercial mortgage backed securities	28,970		—		(404		)	28,566
Residential mortgage backed securities:
Agency backed	694,001		5,657		(13,918		)	685,740
Non-agency backed	6,737		19		(7		)	6,749
Asset backed securities	6,119		4		(3		)	6,120
	$	3,439,629	$	64,005	$	(76,032	)	$	3,427,602
Less: securities pledged	316,576		506		(5,564		)	311,518
	$	3,123,053	$	63,499	$	(70,468	)	$	3,116,084

Investments in foreign government securities include securities issued by national entities as well as instruments that are unconditionally guaranteed by such entities. As of December 31, 2014, the Company's foreign government securities were issued or guaranteed primarily by governments in Canada and Europe.

Proceeds from the sale of investments in available-for-sale securities during the years ended December 31, 2014, 2013 and 2012 were approximately $1,962,558, $1,681,165 and $953,188, respectively.

A summary of the Company’s available-for-sale fixed securities as of December 31, 2014 and 2013, 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.

	December 31, 2014				December 31, 2013
(Amounts in Thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	106,041	$	105,839	$	128,128	$	128,214
Due after one through five years	682,632		704,344		592,703		603,942
Due after five through ten years	1,998,740		2,062,942		1,632,115		1,631,751
Due after ten years	335,669		342,468		334,846		321,372
Mortgage and asset backed securities	1,014,064		1,037,681		735,827		727,175
Total fixed maturities	$	4,137,146	$	4,253,274	$	3,423,619	$	3,412,454

OTTI charges of our fixed-maturities and equity securities for the years ended December 31, 2014, 2013 and 2012 are presented in the table below:

(Amounts in Thousands)	2014		2013		2012
Equity securities recognized in earnings	$	2,646	$	2,869	$	2,965
Fixed maturity securities recognized in earnings	5,393		—		—
	$	8,039	$	2,869	$	2,965

The tables below summarize the gross unrealized losses of our fixed maturity and equity securities by length of time the security has continuously been in an unrealized loss position as of December 31, 2014 and 2013:

	Less Than 12 Months						12 Months or More						Total
(Amounts in Thousands) December 31, 2014	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	$	38,970	$	(7,764	)	21	$	400	$	(98	)	2	$	39,370	$	(7,862	)
U.S. treasury securities	1,030		(54		)	7	3,219		(50		)	9	4,249		(104		)
U.S. government agencies	1,736		(3		)	3	222		(2		)	4	1,958		(5		)
Municipal bonds	24,695		(240		)	64	93,201		(1,315		)	98	117,896		(1,555		)
Foreign government	7,644		(83		)	4	—		—			—	7,644		(83		)
Corporate bonds:
Finance	192,520		(4,297		)	143	66,715		(1,174		)	27	259,235		(5,471		)
Industrial	236,845		(17,230		)	194	60,511		(6,045		)	43	297,356		(23,275		)
Utilities	12,188		(490		)	22	13,908		(1,187		)	3	26,096		(1,677		)
Commercial mortgage backed securities	15		—			2	4,729		(169		)	8	4,744		(169		)
Residential mortgage backed securities:
Agency backed	41,187		(101		)	10	66,172		(1,777		)	29	107,359		(1,878		)
Non-agency backed	5,092		(263		)	3	28		(1		)	2	5,120		(264		)
Asset-backed securities	148		—			1	110		(1		)	2	258		(1		)
Total temporarily impaired	$	562,070	$	(30,525	)	474	$	309,215	$	(11,819	)	227	$	871,285	$	(42,344	)

	Less Than 12 Months						12 Months or More						Total
(Amounts in Thousands) December 31, 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	$	4,875	$	(2,100	)	51	$	—	$	—		—	$	4,875	$	(2,100	)
U.S. treasury securities	52,757		(851		)	18	—		—			—	52,757		(851		)
U.S. government agencies	4,135		(84		)	11	—		—				4,135		(84		)
Municipal bonds	254,219		(17,986		)	302	24,169		(1,937		)	9	278,388		(19,923		)
Foreign government	68,102		(1,324		)	16	999		(1		)	1	69,101		(1,325		)
Corporate bonds:
Finance	500,564		(13,402		)	182	58,923		(568		)	9	559,487		(13,970		)
Industrial	500,366		(21,203		)	263	3,383		(236		)	2	503,749		(21,439		)
Utilities	45,663		(2,008		)	21	—		—			—	45,663		(2,008		)
Commercial mortgage backed securities	28,552		(404		)	18	—		—			—	28,552		(404		)
Residential mortgage backed securities:
Agency backed	492,740		(13,918		)	120	—		—			—	492,740		(13,918		)
Non-agency backed	205		(5		)	6	23		(2		)	1	228		(7		)
Asset-backed securities	1,463		(3		)	4	—		—			—	1,463		(3		)
Total temporarily impaired	$	1,953,641	$	(73,288	)	1,012	$	87,497	$	(2,744	)	22	$	2,041,138	$	(76,032	)

There are 701 and 1,034 securities at December 31, 2014 and 2013, 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.

The net unrealized gains (losses) on available-for-sale securities for for the years ended December 31, 2014, 2013 and 2012 were as follows:

(Amounts in Thousands) Year Ended December 31,	2014			2013			2012
Fixed maturity securities	$	116,128		$	(11,165	)	$	117,582
Equity securities	(3,031		)	(862		)	(478		)
Total net unrealized gain (loss)	113,097			(12,027		)	117,104
Deferred income tax benefit (expense)	(39,584		)	4,209			(40,986		)
Cumulative net unrealized gain (loss), net of deferred income tax as of December 31	73,513			(7,818		)	76,118
Increase (decrease) in net unrealized gains, net of deferred income tax	$	81,331		$	(83,936	)	$	67,708

(b) Trading Securities

During 2014, the Company reclassified approximately $16,830 of its equity securities from available-for-sale securities, carried at estimated fair market value, to trading securities. Equity securities classified as trading securities are generally held for resale in anticipation of short-term market movements.

The amortized cost, estimated market value and gross unrealized appreciation and depreciation of trading securities as of December 31, 2014 are presented in the table below:

(Amounts in Thousands) December 31, 2014	Original or amortized cost		Gross unrealized gains		Gross unrealized losses			Market value
Common stock	$	25,407	$	1,614	$	(272	)	$	26,749

Proceeds from the sale of investments in trading securities during the year ended December 31, 2014 was approximately $78,974. As of December 31, 2013, the Company did not have any securities classified as trading securities.

(c) Investment Income

Net investment income for the years ended December 31, 2014, 2013 and 2012 was derived from the following sources:

(Amounts in Thousands)	2014			2013			2012
Fixed maturities, available-for-sale	$	124,976		$	82,392		$	67,182
Equity securities, available-for-sale	1,346			2,119			127
Equity securities, trading	29			—			—
Cash and short term investments	5,442			2,200			1,778
	131,793			86,711			69,087
Less: Investment expenses and interest expense on securities sold under agreement to repurchase	(192		)	(1,892		)	(920		)
	$	131,601		84,819			$	68,167

(d) Realized Gains and Losses

The tables below summarize the gross realized gains and (losses) for the years ended December 31, 2014, 2013 and 2012.

(Amounts in Thousands) Year Ended December 31, 2014	Gross Gains		Gross Losses			Net Gains and (Losses)
Fixed maturities, available-for-sale	$	16,611	$	(4,946	)	$	11,665
Equity securities, available-for-sale	14,121		(3,928		)	10,193
Equity securities, trading	10,475		(7,871		)	2,604
Write-down of fixed maturities, available-for-sale	—		(5,393		)	(5,393		)
Write-down of equity securities, available-for-sale	—		(2,646		)	(2,646		)
	$	41,207	$	(24,784	)	$	16,423

(Amounts in Thousands) Year Ended December 31, 2013	Gross Gains		Gross Losses			Net Gains and (Losses)
Fixed maturities, available-for-sale	$	28,696	$	(18,066	)	$	10,630
Equity securities, available-for-sale	11,264		(3,498		)	7,766
Write-down of equity securities, available-for-sale	—		(2,869		)	(2,869		)
	$	39,960	$	(24,433	)	$	15,527

(Amounts in Thousands) Year Ended December 31, 2012	Gross Gains		Gross Losses			Net Gains and (Losses)
Fixed maturities, available-for-sale	$	10,310	$	(1,066	)	$	9,244
Equity securities, available-for-sale	7,718		(5,016		)	2,702
Write-down of equity securities, available-for-sale	—		(2,965		)	(2,965		)
	$	18,028	$	(9,047	)	$	8,981

(e) Derivatives

The Company from time to time invests in a limited amount 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 hedged positions as a component of other comprehensive income. As of December 31, 2014 and 2013, the Company had two interest rate swap agreements designated as a hedge and were recorded as a liability in the amount of $2,033 and $3,054, 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 December 31, 2014:

	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.

(f) 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 held are primarily in the form of cash or certain high grade securities. The fair values of our restricted assets as of December 31, 2014 and 2013 are as follows:

(Amounts in Thousands)	2014		2013
Restricted cash	$	186,225	$	100,439
Restricted investments	734,271		978,910
Total restricted cash and investments	$	920,496	$	1,079,349

(g) Other

Securities sold but not yet purchased represent obligations of the Company to deliver the specified security at the contracted price and, thereby, create a liability to purchase the security in the market at prevailing prices. The Company’s liability for securities to be delivered is measured at their fair value and as of December 31, 2014 was $13,052, which consisted primarily of equity securities. The Company did not have any securities sold but not yet purchased as of December 31, 2013. Substantially all securities owned under these arrangements are pledged to the clearing broker to sell or re-pledge the securities to others subject to certain limitations.

From time to time, the Company enters 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 December 31, 2014, the Company had no repurchase agreements outstanding. Interest expense associated with these repurchase agreements for the year ended December 31, 2014 was $283.

As of December 31, 2013, the Company had twelve repurchase agreements with an outstanding principal amount of $293,222, which approximates fair value, at interest rates between 0.12% and 0.47%. The Company had nine repurchase agreements with one counter-party totaling $242,304 and three repurchase agreements with a separate counter-party totaling $50,918. Interest expense associated with these twelve repurchase agreements for the year ended December 31, 2013 was $777, of which $0 was accrued as of December 31, 2013. The Company had approximately $311,518 of collateral pledged in support of these agreements. Interest expense related to repurchase agreements is recorded as a component of investment income.

XML

Quarterly Financial Data (Unaudited) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Quarterly Financial Data [Abstract]
Earned premium	$ 908,163	$ 914,413	$ 874,937	$ 829,051	$ 707,562	$ 613,895	$ 536,539	$ 407,994	$ 3,526,564	$ 2,265,990	$ 1,418,852
Investment income	35,928	34,552	32,594	28,527	20,800	23,290	22,634	18,095	131,601	84,819	68,167
Revenue, Net	1,047,743	1,071,634	1,010,979	953,975	816,389	728,278	649,342	503,886
Loss and loss adjustment expense	587,464	609,352	587,233	558,570	470,416	410,579	364,110	272,256	2,342,619	1,517,361	922,675
Acquisition costs and other underwriting expense	236,742	225,512	208,060	186,609	165,745	137,186	129,946	100,285	856,923	533,162	356,005
Other	157,678	103,493	87,588	87,591	68,285	90,195	80,985	52,152	436,350	291,617	177,709
Provision for income taxes	15,940	(7,664)	17,966	27,444	30,628	23,880	27,402	16,109	53,686	98,019	21,292
Net income	83,525	157,156	104,189	101,728	66,506	59,689	71,397	83,001	446,598	280,593	184,860
Net income attributable to Common Shareholders	$ 71,561	$ 156,590	$ 106,274	$ 99,851	$ 64,724	$ 58,238	$ 71,397	$ 83,878	$ 447,014	$ 282,226	$ 177,987
Basic earnings per share	$ 0.94	$ 2.09	$ 1.41	$ 1.34	$ 0.87	$ 0.78	$ 0.96	$ 1.13	$ 5.78	$ 3.75	$ 2.42
Diluted earnings per share	$ 0.88	$ 1.97	$ 1.33	$ 1.27	$ 0.82	$ 0.74	$ 0.93	$ 1.08	$ 5.45	$ 3.56	$ 2.34

XML

Acquisition Costs and Other Underwriting Expenses

12 Months Ended

Dec. 31, 2014

Insurance [Abstract]

Acquisition Costs and Other Underwriting Expenses

Acquisition Costs and Other Underwriting Expenses

The following table summarizes the components of acquisition costs and other underwriting expenses for the years ended December 31, 2014, 2013 and 2012:

(Amounts in Thousands)	2014		2013		2012
Policy acquisition expenses	$	460,010	$	244,461	$	178,633
Salaries and benefits	367,549		247,173		155,441
Other insurance general and administrative expense	29,364		41,528		21,931
	$	856,923	$	533,162	$	356,005

XML

Accrued Expenses and Other Liabilities

12 Months Ended

Dec. 31, 2014

Accounts Payable and Accrued Liabilities [Abstract]

Accrued Expenses and Other Liabilities

Accrued Expenses and Other Liabilities

(Amounts in Thousands) As of December 31,	2014		2013
Premium taxes, assessments and surcharges payable	$	171,512	$	173,274
Accounts and commissions payable	157,232		100,780
Deferred warranty revenue	138,592		84,230
Redeemable contractual obligations	111,748		132,608
Income tax payable	100,410		9,181
Other accrued expenses and liabilities	116,383		172,502
	$	795,877	$	672,575

XML

Acquisitions (Additional Information) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended			0 Months Ended			1 Months Ended			0 Months Ended
	Dec. 31, 2014 employee	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014 employee	Dec. 31, 2013	Dec. 31, 2012	Oct. 01, 2014	Jan. 03, 2014 State	May 03, 2013	Apr. 19, 2013	Feb. 28, 2013	Dec. 23, 2013	May 13, 2013
Business Acquisition [Line Items]
Amortization of Intangible Assets									$ 1,612
Earned premium	908,163	914,413	874,937	829,051	707,562	613,895	536,539	407,994	3,526,564	2,265,990	1,418,852
Acquisition gain									0	48,715	0
Goodwill	352,685				373,591				352,685	373,591	326,646
Revenues									4,084,331	2,697,895	1,668,174
Number of employees	44								44
Net written premium									3,956,618	2,565,673	1,648,037
Service, fee and other revenues									409,743	331,559	172,174
Investments in life settlements and cash value loans	264,517				233,024				264,517	233,024
Gain on investment in life settlement contracts net of profit commission									12,306	3,800	13,822
Minimum | Customer Relationships
Business Acquisition [Line Items]
Useful life									8 years	8 years
Minimum | Renewal Rights
Business Acquisition [Line Items]
Useful life									7 years	7 years
Useful life of intangible									5 years
Maximum | Customer Relationships
Business Acquisition [Line Items]
Useful life									18 years	10 years
Maximum | Renewal Rights
Business Acquisition [Line Items]
Useful life									17 years	17 years
Useful life of intangible									10 years
Comp Options Insurance Company, Inc.
Business Acquisition [Line Items]
Cash paid												34,291
Deferred tax liability												1,632
Net written premium									18,653
Service, fee and other revenues									951
Insco Dico Group
Business Acquisition [Line Items]
Cash paid													88,700
Number of states in which entity operates													50
Deferred tax liability													2,657
Net written premium									55,511
Service, fee and other revenues									3,743
Llyods Property and Casualty Insurance [Member]
Business Acquisition [Line Items]
Stamp capacity																	330,000
Llyods Life Insurance [Member]
Business Acquisition [Line Items]
Stamp capacity																	16,500
AMTCS Holdings, Inc
Business Acquisition [Line Items]
Cash paid														40,000
Goodwill														17,327
Useful life														12 years
Deferred tax liability														12,145
Assigned to intangible assets														34,700
Service, fee and other revenues									58,360	44,540
Sequoia Insurance Company
Business Acquisition [Line Items]
Cash paid															60,000
Accrued loss reserves	7,448								7,448
Acquisition gain	5,231														5,231
Deferred tax liability															4,147
Assigned to intangible assets															11,848
Net written premium									68,262	79,666
Car Care Plan (Holding) Limited
Business Acquisition [Line Items]
Cash paid																72,412
Acquisition gain																25,532
Deferred tax liability																6,215
Assigned to intangible assets																34,337
Net written premium									110,769	98,865
Service, fee and other revenues									42,435	31,568
Car Care Plan (Holding) Limited | Customer Relationships
Business Acquisition [Line Items]
Useful life of intangible									15 years
Sagicor Europe Limited
Business Acquisition [Line Items]
Cash paid																	93,113
Net written premium									322,817
MIHC
Business Acquisition [Line Items]
Cash paid																		48,500
Cash paid																		14,500
Accrued loss reserves	4,531								4,531
Acquisition gain									17,951
Deferred tax liability																		2,146
Assigned to intangible assets																		6,132
Net written premium									58,096	32,144
Small Commercial Business
Business Acquisition [Line Items]
Goodwill	140,576				116,272				140,576	116,272	116,272
Parent
Business Acquisition [Line Items]
Acquisition gain									0	23,183	0
Revenues									$ 540,739	$ 343,134	$ 218,362

XML

Deferred Policy Acquisition Costs

12 Months Ended

Dec. 31, 2014

Insurance [Abstract]

Deferred Policy Acquisition Costs

Deferred Policy Acquisition Costs

The following table reflects the amounts of policy acquisition costs deferred and amortized for the years ended December 31, 2014, 2013 and 2012 as follows:

(Amounts in Thousands)	2014			2013			2012
Balance, beginning of period	$	468,404		$	349,126		$	280,991
Acquisition costs deferred	698,689			486,566			311,022
Amortization	(538,710		)	(367,288		)	(242,887		)
Balance, end of period	$	628,383		$	468,404		$	349,126

XML

Schedule II -Condensed Financial Information of Registrant Cash Flow (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Net income	$ 83,525	$ 157,156	$ 104,189	$ 101,728	$ 66,506	$ 59,689	$ 71,397	$ 83,001	$ 446,598	$ 280,593	$ 184,860
Stock based compensation									19,114	11,186	7,172
Discount on note									3,095	3,000	2,936
Dividend received from equity investment									0	12,203	0
Loss on extinguishment of debt									9,831	0	0
Equity (earnings) losses and gain on investments in unconsolidated subsidiaries									(28,351)	(11,566)	(9,295)
Other assets									(123,621)	(310,177)	(83,692)
Net cash provided by operating activities									1,155,536	915,448	531,455
Acquisition of subsidiary companies, net of cash acquired									(80,736)	(20,182)	(63,855)
Net cash used in investing activities									(1,051,994)	(929,551)	(593,973)
Financing fees									(5,188)	(2,740)	(2,180)
Common share (repurchase) issuance, net									10,589	5,387	8,873
Net proceeds from issuance of preferred stock									178,641	111,130	0
Dividends paid									(55,599)	(29,236)	(30,201)
Dividends distributed on preference stock									(12,738)	(3,989)	0
Net cash (used in) provided by financing activities									(15,066)	426,860	66,771
Net increase in cash and cash equivalents									72,728	415,652	7,523
Cash and cash equivalents, beginning year				830,022				414,370	830,022	414,370	406,847
Cash and cash equivalents, end of year	902,750				830,022				902,750	830,022	414,370
Parent
Net income									446,598	280,593	184,860
Depreciation and amortization									6,678	3,593	830
Stock based compensation									19,114	11,186	7,172
Discount on note									3,095	3,000	(2,150)
Dividend received from equity investment									0	12,203	0
Loss on extinguishment of debt									9,831	0	0
Carrying value of equity interest in subsidiaries									(414,021)	(449,176)	(227,632)
Equity (earnings) losses and gain on investments in unconsolidated subsidiaries									(28,351)	(11,566)	(9,295)
Other assets									(128,866)	(135,799)	(80,993)
Due to (due from) affiliates									114,703	(14,636)	179,522
Other liabilities									146,715	64,774	3,397
Net cash provided by operating activities									175,496	(235,828)	55,711
Capital expenditures									(31,097)	(2,455)	(107)
Investment purchased									(1,286)	0	0
Investment in subsidiary									(285,783)	(22,605)	(1,455)
Acquisition of subsidiary companies, net of cash acquired									(123,887)	(78,193)	(42,694)
Net cash used in investing activities									(442,053)	(103,253)	(44,256)
Issuance of debt									318,900	250,000	25,000
Payment of debt									(101,928)	0	(7,500)
Financing fees									(4,143)	(2,740)	(750)
Common share (repurchase) issuance, net									(50,379)	8,534	8,873
Net proceeds from issuance of preferred stock									178,641	111,130	0
Dividends paid									(55,601)	(29,236)	(30,201)
Dividends distributed on preference stock									(12,738)	(3,989)	0
Net cash (used in) provided by financing activities									272,752	333,699	(4,578)
Net increase in cash and cash equivalents									6,195	(5,382)	6,877
Cash and cash equivalents, beginning year				1,495				6,877	1,495	6,877	0
Cash and cash equivalents, end of year	$ 7,690				$ 1,495				$ 7,690	$ 1,495	$ 6,877

XML

Commitment and Contingencies (Tables)

12 Months Ended

Dec. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Minimum Rental Payments for Operating Leases

Future minimum lease payments as of December 31, 2014 under non-cancellable operating leases for each of the next five years are approximately as follows:

(Amounts in Thousands)
2015	$	19,573
2016	17,478
2017	14,642
2018	11,787
2019	10,785
2020 and Thereafter	28,443
	$	102,708

Annual Future Minimum Payments as per Employee Agreements

Aggregate scheduled maturities of the Company’s outstanding debt at December 31, 2014 are:

(Amounts in Thousands)
2015	$	168,689	(1)
2016	7,186
2017	7,377
2018	9,400
2019	4,269
Thereafter	560,950		(2)

⁽¹⁾  Amount includes debt outstanding under revolving credit facility as of December 31, 2014 that was paid down in 2015, amount of 2021 Notes, net of $8,417 unamortized original issue discount, submitted for conversion in 2014 that were settled in 2015 as discussed in Note 27. "Subsequent Events", as well as principal payments under our secured loan agreements.

⁽²⁾  Amount reflected in balance sheet for the 2021 Notes and the 2044 Notes is net of unamortized original issue discount of $2,957 and $53,245, respectively.

The annual future minimums in the aggregate are as follows through 2020:

(Amounts in Thousands)
2015	$	13,616
2016	7,293
2017	3,818
2018	919
2019	602
2020 and Thereafter	422
	$	26,670

XML

Debt (Additional Information) (Details)	12 Months Ended							12 Months Ended						12 Months Ended				1 Months Ended	12 Months Ended				12 Months Ended	1 Months Ended	12 Months Ended		12 Months Ended			12 Months Ended
	Dec. 31, 2014 USD ($) Derivative	Dec. 31, 2013 USD ($)	Dec. 31, 2012 USD ($)	Dec. 31, 2014 5.5% Convertible senior notes due 2021 (the 2021 Notes) USD ($)	Dec. 31, 2013 5.5% Convertible senior notes due 2021 (the 2021 Notes) USD ($)	Dec. 31, 2014 2.75% Convertible senior notes due 2044 (the 2044 Notes) USD ($)	Dec. 31, 2013 2.75% Convertible senior notes due 2044 (the 2044 Notes) USD ($)	Dec. 31, 2014 Junior Subordinated Debt	Dec. 31, 2014 Convertible Senior Notes debt_instrument	Dec. 31, 2014 Convertible Senior Notes 5.5% Convertible senior notes due 2021 (the 2021 Notes) USD ($)	Dec. 31, 2013 Convertible Senior Notes 5.5% Convertible senior notes due 2021 (the 2021 Notes) USD ($)	Dec. 31, 2012 Convertible Senior Notes 5.5% Convertible senior notes due 2021 (the 2021 Notes) USD ($)	Dec. 31, 2014 Convertible Senior Notes 2.75% Convertible senior notes due 2044 (the 2044 Notes)	Dec. 31, 2014 MIHC USD ($)	Dec. 31, 2013 MIHC USD ($)	Dec. 31, 2014 MIHC Notes Payable, Other Payables	Dec. 31, 2014 LIBOR	Sep. 30, 2012 State and Local Government of Ohio USD ($) promissory_note	Dec. 31, 2014 State and Local Government of Ohio Notes Payable, Other Payables USD ($)	Dec. 31, 2013 State and Local Government of Ohio Notes Payable, Other Payables USD ($)	Dec. 31, 2012 State and Local Government of Ohio Notes Payable, Other Payables USD ($)	Sep. 30, 2012 State and Local Government of Ohio Notes Payable, Other Payables USD ($)	Dec. 31, 2012 State and Local Government of Ohio 800 Superior LLC	Sep. 30, 2012 State and Local Government of Ohio 800 Superior LLC Notes Payable, Other Payables	Dec. 31, 2014 Sagicor Europe Limited Comerica Letter of Credit Facility	Dec. 31, 2014 ING Bank, N.V.	Dec. 31, 2014 ING Bank, N.V. Comerica Letter of Credit Facility USD ($)	Dec. 31, 2014 ING Bank, N.V. Comerica Letter of Credit Facility GBP (£)	Nov. 26, 2013 ING Bank, N.V. Comerica Letter of Credit Facility GBP (£)	Dec. 31, 2014 Comerica Bank Comerica Letter of Credit Facility USD ($)
Debt Instrument [Line Items]
Unamortized discount, notes submitted for conversion										$ 8,417,000
Unamortized original issue discount	64,619,000	35,782,000		11,374,000	35,782,000	53,245,000	0			2,957,000
Number of debt instruments									2									2
Number of derivative instruments held	2
Promissory notes	14,500,000	14,500,000												6,500,000				8,000,000
Deferred costs																						1,430,000
Availability of letter of credit	6,265,000
Term of debt instrument	5 years							30 years															15 years	15 years
Interest rate																								1.70%
Interest expense	45,857,000	34,691,000	28,508,000																312,000	290,000	100,000
Debt instrument, stated interest rate (percentage)										5.50%			2.75%			3.80%
Debt instrument, interest rate (percentage)									7.46%	8.57%							4.10%
Interest expense										13,933,000	14,476,000	14,031,000		365,000	210,000
Line of credit, maximum borrowing capacity																												235,000,000	200,000,000	75,000,000
Percentage of face amount													0.9													1
Funding percentage of collateral account																										40.00%
Fee payable on secured portion of debt, percentage																											0.50%
Fee payable on unsecured portion of debt, percentage																											1.15%
Unused capacity, commitment fee percentage																											0.35%
Commitment fee percentage																									0.15%					0.40%
Letters of credit, outstanding amount																											355,178,000	227,989,000		48,467,000
Credit agreement, remaining borrowing capacity																											10,923,000	7,011,000
Interest and debt expense																											$ 2,795,000

XML

Acquisitions

12 Months Ended

Dec. 31, 2014

Business Combinations [Abstract]

Acquisitions

Acquisitions

The Company accounts for acquisitions pursuant to the acquisition method. In applying the acquisition method, the Company records the identifiable assets acquired and liabilities assumed at fair value and records the excess of the consideration paid over the value of the identified net assets acquired as goodwill. The Company assigns fair values to intangible assets based on valuation techniques including the income and market approaches.

The following significant acquisitions occurred during the years ended December 31, 2014 and 2013:

Comp Options Insurance Company, Inc.

On October 1, 2014, the Company acquired Comp Options Insurance Company, Inc. ("Comp Options"), a Florida-based workers' compensation insurer, from an affiliate of Blue Cross & Blue Shield of Florida, for approximately $34,291 in cash. Comp Options offers workers' compensation insurance to small businesses with low-hazard risk profiles in the state of Florida.

A summary of the preliminary assets acquired and liabilities assumed for Comp Options are as follows:

(Amounts in Thousands)
Assets
	Cash and investments	$	80,051
	Premium receivables	33,530
	Prepaid expenses and other assets	6,642
	Deferred tax asset	5,024
	Goodwill and intangible assets	17,353
Total assets		$	142,600
Liabilities
	Loss and loss expense reserves	$	55,752
	Unearned premiums	34,364
	Accrued expenses and other current liabilities	16,561
	Deferred tax liability	1,632
Total liabilities		$	108,309
Cash paid		$	34,291

The goodwill and intangible assets, as well as Comp Options' results of operations, are included as a component of the Small Commercial Business segment. The Company is in the process of completing its acquisition accounting and expects to have it completed in 2015.

In accordance with FASB ASC 944-805 Business Combinations, the Company adjusted to fair value Comp Option's loss and LAE reserves by taking the acquired loss reserves recorded and discounting them based on expected reserve payout pattern using a current risk free rate. This risk free interest rate was then adjusted based on different cash flow scenarios that use different payout and ultimate reserve assumptions deemed to be reasonably possible based upon the inherent uncertainties present in determining the amount and timing of payment of such reserves. The difference between the acquired loss and LAE reserves and the Company's best estimate of the fair value of such reserves at acquisition date is recorded as an intangible asset and is amortized proportionately to the decrease in the acquired loss and LAE reserves and was approximately $1,612.

As a result of this acquisition, the Company recorded approximately $18,653 of written premium and $951 of service and fee income related to Comp Options in 2014.

The Insco Dico Group

On January 3, 2014, the Company completed the acquisition of Insco Insurance Services, Inc. ("Insco Dico") and its subsidiaries for a purchase price of approximately $88,700. Insco Dico's subsidiaries include Developers Surety and Indemnity Company and Indemnity Company of California, which offer surety insurance to developers and contractors in all 50 states with California as the largest state. In addition, Insco Dico's subsidiary, Builders Insurance Services, markets general liability insurance policies to contractors in several states in the western region of the U.S.

A summary of the assets acquired and liabilities assumed for Insco Dico are as follows:

(Amounts in Thousands)
Assets
	Cash and investments	$	130,031
	Premium receivables	8,684
	Reinsurance recoverable	5,799
	Prepaid expenses and other assets	1,783
	Deferred tax asset	3,104
	Property and equipment	1,190
	Goodwill and intangible assets	17,765
Total assets		$	168,356
Liabilities
	Loss and loss expense reserves	$	25,210
	Unearned premiums	25,715
	Funds held for policyholders	5,864
	Accrued expenses and other current liabilities	10,210
	Deferred tax liability	2,657
	Notes payable	10,000
Total liabilities		$	79,656
Cash paid		$	88,700

The goodwill and intangible assets, as well as Insco Dico's results of operations, are included as a component of the Small Commercial Business segment. The identifiable intangible assets consist of agency relationships, which have a 20 year life, and licenses that have an indefinite life. The Company completed its acquisition accounting in 2014.

As a result of this transaction, the Company recorded approximately $55,511 of written premium and approximately $3,743 of service and fee income during the year ended December 31, 2014 related to Insco Dico.

Sagicor Europe Limited

On December 23, 2013, the Company, through one of its subsidiaries, completed the acquisition of Sagicor Europe Limited and its wholly owned subsidiaries, including Sagicor at Lloyd's Limited ("Sagicor"), from Sagicor Financial Corporation for approximately $93,113. Sagicor Europe Limited and Sagicor at Lloyd's Limited subsequently changed their names to AmTrust Lloyd's Holdings Limited and AmTrust at Lloyd's Limited, respectively. AmTrust at Lloyd's Limited is a managing agency and owner of Lloyd's property/casualty insurance syndicate 1206 with stamp capacity of $330,000 and Lloyd's life insurance syndicate 44 with stamp capacity of $16,500.

A summary of the assets acquired and liabilities assumed for AmTrust Lloyd's Holdings Limited are as follows:

(Amounts in Thousands)
Assets
	Cash and investments	$	429,476
	Prepaid insurance	122,673
	Premium receivable	89,801
	Deferred tax asset	29,916
	Prepaid expenses and other assets	64,981
	Property and equipment	5,010
	Goodwill and intangible assets	33,539
Total assets		$	775,396
Liabilities
	Loss and loss expense reserves	$	496,836
	Unearned premium	113,182
	Ceded reinsurance premiums payable	16,315
	Accrued expense and other current liabilities	55,950
Total liabilities		$	682,283
Cash paid		$	93,113

The goodwill and intangible assets, as well as AmTrust Lloyd's Holdings Limited's results of operations, are included as a component of the Specialty Risk and Extended Warranty segment. The Company completed its acquisition accounting in 2014.

As a result of this transaction, the Company recorded approximately $322,817 of written premium during the year ended December 31, 2014 related to Sagicor.

Mutual Insurers Holding Company

On May 13, 2013, the Company completed the acquisition of Mutual Insurers Holding Company (“MIHC”) and its subsidiaries. MIHC's primary operating subsidiary, First Nonprofit Insurance Company (“FNIC”), is a provider of property and casualty insurance products to nonprofit organizations in the U.S. Immediately prior to the acquisition, MIHC converted from a mutual form to a stock form of ownership in a transaction “sponsored” by the Company. As required by the plan of conversion and applicable Delaware law, the Company offered shares of its common stock, at a discount to the market price, to the members of MIHC who held policies as of December 31, 2012 and the directors, officers and employees of MIHC and its subsidiaries. The Company received subscriptions for approximately $472, resulting in the issuance by the Company of 18,052 shares of its common stock at a discounted price of 20% from the Company's market trading price, or approximately $118. Pursuant to the stock purchase agreement, after the expiration of the offering, the Company purchased all of the authorized shares of capital stock of MIHC at a purchase price equal to the greater of the gross proceeds received by the Company in the offering, and $8,000. The Company made a payment to MIHC of $48,500, which included the $472 in proceeds the Company received in the offering, for the stock of FNIC. Additionally, the Company as part of the transaction, was required to make a contribution to First Nonprofit Foundation, a tax exempt corporation principally funded by FNIC's predecessor and managed for the benefit of nonprofit organizations, in the amount of $7,882, which represented $8,000, as discussed above, less the discount of approximately $118 on the shares issued by the Company in the transaction. The remaining $40,618 of cash contributed to MIHC was retained by the Company. Additionally, the Company assumed $6,500 of debt in the transaction. In accordance with FASB ASC 805-10 Business Combinations, the Company recorded an acquisition price of approximately $14,500.

A summary of the assets acquired and liabilities assumed for MIHC are as follows:

(Amounts in Thousands)
Assets
	Cash and investments	$	134,780
	Premium receivable	23,085
	Prepaid expenses and other assets	43,714
	Deferred tax asset	5,358
	Property and equipment	2,684
	Intangible assets	6,132
Total assets		$	215,753
Liabilities
	Loss and loss expense reserves	$	89,267
	Unearned premiums	27,760
	Accrued expenses and other current liabilities	23,629
	Deferred tax liability	2,146
	Notes payable	6,500
Total liabilities		$	149,302
Cash paid		$	48,500
Acquisition gain		$	17,951

The intangible assets consisted of state licenses and have an indefinite life. The intangible assets, as well as FNIC's results of operations, are included as a component of the Small Commercial Business segment.

In accordance with FASB ASC 944-805 Business Combinations, the Company adjusted to fair value FNIC's loss and LAE reserves by taking the acquired loss reserves recorded and discounting them based on expected reserve payout pattern using a current risk free rate. This risk free interest rate was then adjusted based on different cash flow scenarios that use different payout and ultimate reserve assumptions deemed to be reasonably possible based upon the inherent uncertainties present in determining the amount and timing of payment of such reserves. The difference between the acquired loss and LAE reserves and the Company's best estimate of the fair value of such reserves at acquisition date is recorded as an intangible asset and is amortized proportionately to the decrease in the acquired loss and LAE reserves and was approximately $4,531. As a result of this transaction, the Company recorded an acquisition gain of approximately $17,951.

The Company recorded approximately $58,096 and $32,144 of written premium for the years ended December 31, 2014 and 2013, respectively, related to FNIC.

AMTCS Holdings, Inc.

On May 3, 2013, the Company, through its wholly-owned subsidiary AMT Warranty Corp., completed the acquisition of CPPNA Holdings, Inc. (“CPPNA”) from CPP Group LLC, a company based in the United Kingdom, for approximately $40,000. CPPNA subsequently changed its name to AMTCS Holdings, Inc. (“AMTCS”). AMTCS provides administrative services for consumer protection products in the United States, including identity theft protection and warranties related to credit card purchases, to customers of AMTCS's financial services partners. In accordance with FASB ASC 805-10 Business Combinations, the Company recorded a purchase price of approximately $40,000, which consisted primarily of goodwill and intangible assets of approximately $17,327 and $34,700, respectively, and a deferred tax liability of $12,145. The intangible asset consists of customer relationships and has a life of 12 years. The goodwill and intangibles, as well as AMTCS's results of operations, are included as a component of the Specialty Risk and Extended Warranty segment from the date of acquisition.

The Company recorded approximately $58,360 and $44,540 of service and fee income during the years ended December 31, 2014 and 2013, respectively, related to AMTCS.

Sequoia Insurance Company

On April 19, 2013, the Company completed the acquisition of all the issued and outstanding shares of common stock of Sequoia Insurance Company and its subsidiaries, Sequoia Indemnity Company and Personal Express Insurance Company (“Sequoia”), for approximately $60,000. Sequoia offers low hazard, property/casualty insurance products, including workers' compensation and commercial package insurance, to small businesses in several western states, with California representing Sequoia's largest market.

A summary of the assets acquired and liabilities assumed for Sequoia are as follows:

(Amounts in Thousands)
Assets
	Cash and investments	$	215,473
	Premium receivable	32,870
	Reinsurance recoverables	43,793
	Prepaid expenses and other assets	4,014
	Deferred tax asset	1,242
	Property and equipment	1,022
	Intangible assets	11,848
Total assets		$	310,262
Liabilities
	Loss and loss expense reserves	$	165,487
	Unearned premium	59,773
	Accrued expenses and other current liabilities	15,624
	Deferred tax liability	4,147
Total liabilities		$	245,031
Cash paid		$	60,000
Acquisition gain		$	5,231

The intangible assets consists primarily of licenses and trademarks and have an indefinite life. The intangible assets, as well as Sequoia's results of operations, are included as a component of the Small Commercial Business segment.

In accordance with FASB ASC 944-805 Business Combinations, the Company adjusted to fair value Sequoia's loss and LAE reserves by taking the acquired loss reserves recorded and discounting them based on expected reserve payout pattern using a current risk free rate. This risk free interest rate was then adjusted based on different cash flow scenarios that use different payout and ultimate reserve assumptions deemed to be reasonably possible based upon the inherent uncertainties present in determining the amount and timing of payment of such reserves. The difference between the acquired loss and LAE reserves and the Company's best estimate of the fair value of such reserves at acquisition date is recorded as an intangible asset and is amortized proportionately to the decrease in the acquired loss and LAE reserves and was approximately $7,448. As a result of this transaction, the Company recorded an acquisition gain of approximately $5,231.

The Company recorded approximately $68,262 and $79,666 of written premium for the years ended December 31, 2014 and 2013, respectively, related to Sequoia.

Car Care

On February 28, 2013, the Company, through its wholly-owned subsidiary AmTrust International Limited, acquired all of the issued and outstanding shares of capital stock of Car Care Plan (Holdings) Limited (“CCPH”) from Ally Insurance Holdings, Inc (“AIH”). CCPH is an administrator, insurer and provider of auto extended warranty, guaranteed asset protection, Wholesale Floorplan Insurance and other complementary insurance products. CCPH underwrites its products and the products of third-party administrators through its subsidiary Motors Insurance Company Limited, a United Kingdom based insurer. CCPH has operations in the United Kingdom, Europe, China, North America and Latin America. The Company paid $72,412 for the purchase of CCPH.

Certain employees, former employees and retirees of CCPH participate in a defined benefit pension plan. The plan was frozen and curtailed in 2007. The impact of the plan on the Company's results of operations was immaterial. For further information on the pension plan, see "Note 18. Employee Benefit Plans".

A summary of the assets acquired and liabilities assumed for CCPH are as follows:

(Amounts in Thousands)
Assets
	Cash and investments	$	253,257
	Premium receivable	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	9,703
	Unearned premium	131,494
	Accrued expenses and other current liabilities	83,993
	Deferred tax liability	6,215
Total liabilities		$	231,405
Cash paid		$	72,412
Acquisition gain		$	25,532

The intangible assets consist primarily of customer relationships and have a life of fifteen years. The intangible assets, as well as CCPH's results of operations, are included as a component of the Specialty Risk and Extended Warranty segment from the date of acquisition. As a result of this transaction, the Company recognized a gain on the acquisition of approximately $25,532.

The Company recorded approximately $110,769 and $98,865 of written premium for the years ended December 31, 2014 and 2013, respectively. In addition, the Company recorded $42,435 and $31,568 of service and fee income for the years ended December 31, 2014 and 2013, respectively, related to CCPH.

AHL

During 2013, AmTrust Holdings Luxembourg S.A.R.L. (“AHL”) completed two acquisitions described below. AHL is a holding company that purchases Luxembourg-domiciled reinsurance entities. In connection with these transactions, the Company acquires cash and equalization reserves of the reinsurance companies. An equalization reserve is a catastrophe reserve in excess of required reserves established pursuant to Luxembourg law. Equalization reserves are required to be established for Luxembourg statutory and tax purposes, but are not recognized under U.S. GAAP. The equalization reserves originally established by the seller under Luxembourg law allowed the reinsurer to offset any taxable income. Equalization reserves are calculated on a line of business basis and are subject to a theoretical maximum amount, or cap, based on the expected premium volume described in the business plan of the reinsurance company as approved by the Luxembourg regulators and is subject to reassessment every five years. Each year, the Luxembourg reinsurer is required to adjust its equalization reserves by an amount equal to its statutory net income or net loss, determined based on premiums and investment income less incurred losses and other operating expenses. The yearly adjustment of the equalization reserve generally results in zero pretax income on a Luxembourg statutory and tax basis, as follows: in a year in which the reinsurer’s operations result in a statutory loss, the equalization reserves are taken down in an amount to balance the income statement to zero pretax income, and in a year in which the operations result in a gain, the equalization reserves are increased in an amount to balance the income statement to zero pretax income. If the reinsurer were to produce underwriting income in excess of the equalization reserve cap, or if the cap were to be reduced below the amount of the carried equalization reserves, the reinsurer would incur Luxembourg tax on the amount of such excess income or the amount by which the reserves exceeded the reduced cap, as applicable.

If a Luxembourg reinsurer can assume sufficient premium to maintain its equalization reserves or assume losses, which then reduce the equalization reserves, the reinsurer can permanently defer the income tax. Subsequent to the acquisition, the Company cedes premium and associated losses to the reinsurance companies through intercompany reinsurance arrangements. Provided the Company is able to cede business that generates a net loss to the reinsurance companies through intercompany reinsurance arrangements sufficient to offset the reinsurers’ required reductions of the equalization reserves, Luxembourg would not, under laws currently in effect, impose any income, corporation or profits tax on the reinsurance companies. However, if the reinsurance companies were to cease reinsuring business without exhausting the equalization reserves, they would be taxed by Luxembourg at a rate of approximately 30%. As of December 31, 2014, the Company had approximately $314,050 of unutilized equalization reserves and an associated deferred tax liability of approximately $94,215. During 2014, 2013 and 2012, the Company was able to reduce overall expenses by a net amount of $30,379, $214 and $9,274, respectively, to reflect the net reduction of the deferred tax liability offset by goodwill impairment charges related to the utilization of the equalization reserves. Under its business plans currently in effect, the Company expects that the ceded losses and expenses net of reinsurance premiums paid under the intercompany reinsurance agreements will cause the equalization reserves to be fully utilized in three to five years subsequent to the acquisition of the Luxembourg reinsurer, at which point the deferred tax liability relating to the equalization reserves will be extinguished. The effects of these intercompany reinsurance agreements are appropriately eliminated in consolidation and did not impact the Company's gross and net loss reserves or loss ratio.

In December 2013, AHL acquired all the issued and outstanding stock of Atlas COPCO Reinsurance S.A., a Luxembourg domiciled reinsurance company, from ATLAS COPCO AB. The purchase price of Atlas COPCO Reinsurance S.A. was approximately $80,700. The Company recorded approximately $89,100 of cash, goodwill of $16,900 and a deferred tax liability of $25,300. Atlas COPCO Reinsurance S.A. subsequently changed its name to AmTrust Re Aries S.A.

In November 2013, AHL acquired all the issued and outstanding stock of Re'A FIN S.A., a Luxembourg domiciled reinsurance company, from SRIW Finance SA and SPARXIS SA. The purchase price of Re'A FIN S.A. was approximately $93,400. The Company recorded approximately $102,800 of cash, goodwill of $18,700 and a deferred tax liability of $28,100. Re'A FIN S.A. subsequently changed its name to AmTrust Re Taurus S.A.

XML

Investment in Life Settlements

12 Months Ended

Dec. 31, 2014

Investments, All Other Investments [Abstract]

Investment in Life Settlements

Investment in Life Settlements

The Company currently has a 50% ownership interest in each of four entities for the purpose of acquiring life settlement contracts, with a subsidiary of NGHC owning the other 50%. A life settlement contract is a contract between the owner of a life insurance policy and a third-party who obtains the ownership and beneficiary rights of the underlying life insurance policy. The entities (collectively, the “LSC Entities”) are:

•Tiger Capital LLC (“Tiger”);

•AMT Capital Alpha, LLC (“AMT Alpha”);

•AMT Capital Holdings, S.A. (“AMTCH”); and

•AMT Capital Holdings II, S.A. (“AMTCH II”).

The LSC Entities may also acquire premium finance loans made in connection with the borrowers’ purchase of life insurance policies that are secured by the policies. The LSC Entities acquire the underlying policies through the borrowers’ voluntary surrender of the policy in satisfaction of the loan or foreclosure. A third party serves as the administrator of the Tiger and AMTCH II life settlement contract portfolios, for which it receives an administrative fee. The third party administrator is eligible to receive a percentage of profits after certain time and performance thresholds have been met. The Company provides certain actuarial and finance functions related to the LSC Entities. In conjunction with the Company’s 13.2% ownership percentage of NGHC, the Company ultimately receives 56.6% of the profits and losses of the LSC Entities. As such, in accordance with ASC 810-10, Consolidation, the Company has been deemed the primary beneficiary and, therefore, consolidate the LSC Entities.

The Company accounts for investments in life settlements in accordance with ASC 325-30, Investments in Insurance Contracts, which states that an investor shall elect to account for its investments in life settlement contracts by using either the investment method or the fair value method. The election is made on an instrument-by-instrument basis and is irrevocable. The Company has elected to account for these policies using the fair value method. The Company determines fair value based upon its estimate of the discounted cash flow related to policies (net of the reserves for improvements in mortality, the possibility that the high net worth individuals represented in its portfolio may have access to better health care, the volatility inherent in determining the life expectancy of insureds with significant reported health impairments, the possibility that the issuer of the policy or a third party will contest the payment of the death benefit payable to the Company, and the future expenses related to the administration of the portfolio), which incorporates current life expectancy assumptions, premium payments, the credit exposure to the insurance company that issued the life settlement contracts and the rate of return that a buyer would require on the contracts as no comparable market pricing is available.

Total capital contributions of $36,115 and $70,780 were committed to the LSC Entities during the years ended December 31, 2014 and 2013, respectively, for which the Company's proportionate share was approximately $17,907 and $35,380 in those same periods. $1,271 of this $17,907 capital contribution was funded in January 2015. The LSC Entities used the contributed capital to pay premiums and purchase policies. The Company’s investments in life settlements and premium finance loans were approximately $264,517 and $233,024 as of December 31, 2014 and 2013, respectively, and are included in Prepaid expenses and other assets on the Consolidated Balance Sheet. The Company recorded a gain on investment on investment in life settlement contracts net of profit commission of approximately $12,306, $3,800 and $13,822 for the years ended December 31, 2014, 2013 and 2012, respectively, related to the life settlement contracts.

As of December 31, 2014, the LSC Entities owned no premium finance loans. As of December 31, 2013, the LSC Entities owned two premium finance loans, which were secured by the underlying life insurance policies and were carried at a value of $0 at December 31, 2013.

The following tables describe the Company’s investment in life settlements as of December 31, 2014 and 2013:

(Amounts in thousands, except Life Settlement Contracts) Expected Maturity Term in Years	Number of Life Settlement Contracts	Fair Value (1)		Face Value
As of December 31, 2014
0 – 1	—	$	—	$	—
1 – 2	—	—		—
2 – 3	8	43,593		70,500
3 – 4	5	10,081		22,500
4 – 5	7	14,335		49,000
Thereafter	254	196,508		1,596,209
Total	274	$	264,517	$	1,738,209
As of December 31, 2013
0 – 1	—	$	—	$	—
1 – 2	—	—		—
2 – 3	1	2,726		5,000
3 – 4	13	53,767		103,000
4 – 5	2	5,622		13,000
Thereafter	255	170,909		1,641,409
Total	271	$	233,024	$	1,762,409

⁽¹⁾ The Company determined the fair value as of December 31, 2014 based on 218 policies out of 274 policies, as the Company assigned no value to 56 of the policies as of December 31, 2014. The Company determined the fair value as of December 31, 2013 based on 191 policies out of 271 policies, as the Company assigned no value to 80 of the policies as of December 31, 2013. The Company estimates the fair value of a life insurance policy using a cash flow model with an appropriate discount rate. In some cases, the cash flow model calculates the value of an individual policy to be negative, and therefore the fair value of the policy is zero as no liability exists when a negative value is calculated. The Company is not contractually bound to pay the premium on its life settlement contracts and, therefore, would not pay a willing buyer to assume title of these contracts. Additionally, certain of the Company’s acquired polices were structured to have low premium payments at inception of the policy term, which later escalate greatly towards the tail end of the policy term. At the current time, the Company expenses all premiums paid, even on policies with zero fair value. Once the premium payments escalate, the Company may allow the policies to lapse. In the event that death benefits are realized in the time frame between initial acquisition and premium escalation, it is a benefit to cash flow.

For these contracts where the Company determined the fair value to be negative and therefore assigned a fair value of zero, the table below details the amount of premiums paid and the death benefits received for the years ended December 31, 2014 and 2013:

	2014		2013
Number of policies with a negative value from discounted cash flow model	56		80
Premiums paid for the year ended	$	5,963	$	9,371
Death benefit received	$	4,950	$	3,012

Premiums to be paid by the LSC Entities for each of the five succeeding fiscal years to keep the life insurance policies in force as of December 31, 2014, are as follows:

(Amounts in Thousands)	Premiums Due on Life Settlement Contracts
2015	$	40,961
2016	54,208
2017	52,291
2018	40,117
2019	39,777
Thereafter	552,579
	$	779,933

XML

Commitment and Contingencies (Employment Agreements) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014 employee
Commitments and Contingencies Disclosure [Abstract]
Number of key executives and employees	44
2015	$ 13,616
2016	7,293
2017	3,818
2018	919
2019	602
2020 and Thereafter	422
Other Commitment	$ 26,670

XML

Intangible Assets and Goodwill

12 Months Ended

Dec. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets and Goodwill

Intangible Assets and Goodwill

The composition of goodwill and intangible assets is summarized as follows:

(Amounts in Thousands) As of December 31, 2014	Gross Balance		Accumulated Amortization		Net Value		Useful Life
Goodwill	$	352,685	$	—	$	352,685	Indefinite Life
Renewal rights	62,367		16,732		45,635		7 – 17 years
Distribution networks	115,480		36,009		79,471		5 – 20 years
Software	3,547		2,101		1,446		3 - 20 years
Customer relationships	132,744		31,807		100,937		8 – 18 years
Trademarks	5,220		5,132		88		15 years
Trademarks	6,327		—		6,327		Indefinite Life
Licenses	12,608		6,151		6,457		5 - 50 years
Licenses	25,055		—		25,055		Indefinite Life
Use rights	41,468		—		41,468		Indefinite Life
Other	16,348		8,236		8,112		4 - 10 years
Total	$	773,849	$	106,168	$	667,681	13 years average

(Amounts in Thousands) As of December 31, 2013	Gross Balance		Accumulated Amortization		Net Value		Useful Life
Goodwill	$	373,591	$	—	$	373,591	Indefinite Life
Renewal rights	30,880		11,438		19,442		7 – 17 years
Covenant not to compete	7,756		7,692		64		3 – 9 years
Distribution networks	100,163		28,136		72,027		10 – 20 years
Software	2,266		2,076		190		20 years
Customer relationships	132,266		18,215		114,051		8 – 18 years
Trademarks	5,001		4,751		250		2 – 15 years
Trademarks	6,460		—		6,460		Indefinite Life
Licenses	12,608		3,702		8,906		5 - 50 years
Licenses	21,540		—		21,540		Indefinite Life
Use rights	38,507		—		38,507		Indefinite Life
Other	14,736		4,371		10,365		4 -10 years
Total	$	745,774	$	80,381	$	665,393	14 years average

The Company identifies reporting units for goodwill impairment testing in accordance with ASC 350-20-35 Intangibles - Goodwill and Other. The Company generally combines reporting units, which are a component of an operating segment, when they have similar economic characteristics, nature of services, types of customer, distribution methods and regulatory environment. For the years ended December 31, 2014 and 2013, the Company had seven reporting units that it tested for goodwill impairment, which is tested as of October 1st. The Company had one reporting unit, Specialty Risk and Extended Warranty - Luxembourg reporting unit (“RU”), which was at risk of failing step 1 in the goodwill impairment test required under ASC 350 Intangibles - Goodwill and Other. This RU had $121,761 and $96,866 of goodwill as of the test date in 2014 and 2013, respectively. For the RU, a step 1 analysis was performed to determine whether an impairment existed using an October 1st measurement date. Since Luxembourg reinsurance companies are regularly bought and sold between third parties and the transaction data information is available, the Guideline Transactions Method of the Market Approach was utilized to determine the fair value of the RU. The Guideline Transactions Method is based on valuation multiples derived from actual transactions for comparable companies and was used to develop an estimate of value for the subject company. In applying this method, valuation multiples are derived from historical data of selected transactions, then evaluated and adjusted, if necessary, based on the strengths and weaknesses of the subject company relative to the derived market data. In the case of the RU, the most appropriate multiple to utilize was determined to be a Price to Invested Assets (“P/IA”) multiple, since invested assets and the corresponding regulatory reserves are metrics utilized by market participants to negotiate the purchase price of the transaction. These P/IA multiples are then applied to the appropriate invested assets of the subject company to arrive at an indication of fair value. Step 1 of the impairment test indicated that the RU’s carrying value exceeded its fair value. Accordingly, the Company performed a Step 2 impairment test and recorded a non-cash goodwill impairment charge of $61,512, $10,226 and $16,389 as of December 31, 2014, 2013, and 2012, respectively. Additionally, certain goodwill attributable to the Specialty Risk and Extended Warranty - Europe RU was impaired for $1,386 due to deterioration in a subsidiary's operating performance with which the goodwill was associated.

The changes in the carrying amount of goodwill by segment for the years ended December 31, 2014 and 2013 are as follows:

(Amounts in Thousands)	Small Commercial Business		Specialty Risk and Extended Warranty			Specialty Program		Total
Balance as of January 1, 2013	$	116,272	$	194,554		$	15,820	$	326,646
Goodwill additions	—		54,932			2,121		57,053
Goodwill impairment	—		(10,226		)	—		(10,226		)
Foreign currency translation	—		118			—		118
Balance as of January 1, 2014	$	116,272	$	239,378		$	17,941	$	373,591
Goodwill additions	24,304		18,617					42,921
Goodwill impairment	—		(62,898		)	—		(62,898		)
Foreign currency translation	—		(929		)	—		(929		)
Balance as of December 31, 2014	$	140,576	$	194,168		$	17,941	$	352,685

Goodwill added during 2014 resulted primarily from the acquisitions of Insco Dico and Comp Options in the Small Commercial Business segment as well as certain insignificant acquisitions in the Specialty Risk and Extended Warranty segment. Goodwill added during 2013 resulted primarily from the acquisitions of AmTrust Re Aries S.A., AmTrust Re Taurus S.A., and AMTCS in the Specialty Risk and Extended Warranty segment.

Finite lived intangible assets are generally amortized under the straight-line method, except for renewal rights, which the Company amortizes using a 125% accelerated method, and certain customer relationships, which are amortized based on cash flows associated with the respective customer relationships. Amortization expense for 2014, 2013 and 2012 was $33,543, $31,667 and $17,169, respectively. The estimated aggregate amortization expense for each of the next five years is:

(Amounts in Thousands)
2015	$	38,727
2016	35,972
2017	30,336
2018	25,249
2019	23,501

XML

Quarterly Financial Data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2014

Quarterly Financial Data [Abstract]

Summary of Quarterly Financial Information

The following is a summary of the unaudited quarterly results of operations:

	2014
(Amounts in Thousands)	March 31,		June 30,		September 30,			December 31,
Earned premium	$	829,051	$	874,937	$	914,413		$	908,163
Investment income	28,527		32,594		34,552			35,928
Total revenue	953,975		1,010,979		1,071,634			1,047,743
Loss and loss adjustment expense	558,570		587,233		609,352			587,464
Acquisition costs and other underwriting expense	186,609		208,060		225,512			236,742
Other expense	87,591		87,588		103,493			157,678
Provision for income taxes	27,444		17,966		(7,664		)	15,940
Net income	101,728		104,189		157,156			83,525
Income attributable to Common Stockholders	99,851		106,274		156,590			71,561
Basic EPS	$1.34		$1.41		$2.09			$0.94
Diluted EPS	$1.27		$1.33		$1.97			$0.88

	2013
(Amounts in Thousands)	March 31,		June 30,		September 30,		December 31,
Earned premium	$	407,994	$	536,539	$	613,895	$	707,562
Investment income	18,095		22,634		23,290		20,800
Total revenue	503,886		649,342		728,278		816,389
Loss and loss adjustment expense	272,256		364,110		410,579		470,416
Acquisition costs and other underwriting expense	100,285		129,946		137,186		165,745
Other expense	52,152		80,985		90,195		68,285
Provision for income taxes	16,109		27,402		23,880		30,628
Net income	83,001		71,397		59,689		66,506
Income attributable to Common Stockholders	83,878		71,397		58,238		64,724
Basic EPS	$1.13		$0.96		$0.78		$0.87
Diluted EPS	$1.08		$0.93		$0.74		$0.82

Due to changes in number of shares outstanding from quarter to quarter, the total earnings per share of the four quarters may not necessarily equal the earnings per share for the year.

XML

Income Taxes (Components of Income Taxes) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Income Tax Disclosure [Abstract]
Current federal tax expense (benefit)									$ 219,413	$ 49,565	$ 6,402
Current foreign tax expense (benefit)									26,142	29,935	21,052
Current income tax expense (benefit)									245,555	79,500	27,454
Deferred federal income tax expense (benefit)									(8,376)	13,741	9,919
Deferred foreign income tax expense (benefit)									(183,493)	4,778	(16,081)
Deferred income tax expense (benefit)									(191,869)	18,519	(6,162)
Provision for income taxes	$ 15,940	$ (7,664)	$ 17,966	$ 27,444	$ 30,628	$ 23,880	$ 27,402	$ 16,109	$ 53,686	$ 98,019	$ 21,292

XML

Acquisitions - Purchase Price Allocation (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended			0 Months Ended		1 Months Ended	0 Months Ended	1 Months Ended	3 Months Ended	1 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Oct. 01, 2014	Jan. 03, 2014	Dec. 23, 2013	May 13, 2013	Apr. 19, 2013	Dec. 31, 2014	Feb. 28, 2013
Business Acquisition [Line Items]
Acquisition gain	$ 0	$ 48,715	$ 0
Comp Options Insurance Company, Inc.
Business Acquisition [Line Items]
Cash and investments				80,051
Premium receivable				33,530
Other assets				6,642
Deferred tax asset				5,024
Goodwill and intangible assets				17,353
Total assets				142,600
Loss and loss expense reserves				34,364
Unearned premium				55,752
Accrued expenses and other current liabilities				16,561
Deferred tax liability				1,632
Total liabilities				108,309
Cash paid				34,291
Insco Dico Group
Business Acquisition [Line Items]
Cash and investments					130,031
Premium receivable					8,684
Reinsurance recoverables					5,799
Other assets					1,783
Deferred tax asset					3,104
Property and equipment					1,190
Goodwill and intangible assets					17,765
Total assets					168,356
Loss and loss expense reserves					25,210
Unearned premium					25,715
Accrued expenses and other current liabilities					10,210
Deferred tax liability					2,657
Notes payable					10,000
Funds held for policyholders					5,864
Total liabilities					79,656
Cash paid					88,700
Sagicor Europe Limited
Business Acquisition [Line Items]
Cash and investments						429,476
Prepaid insurance						122,673
Premium receivable						89,801
Other assets						64,981
Deferred tax asset						29,916
Property and equipment						5,010
Goodwill and intangible assets						33,539
Total assets						775,396
Loss and loss expense reserves						496,836
Unearned premium						113,182
Accrued expenses and other current liabilities						55,950
Ceded reinsurance premiums payable						16,315
Total liabilities						682,283
Cash paid						93,113
MIHC
Business Acquisition [Line Items]
Cash and investments							134,780
Premium receivable							23,085
Other assets							43,714
Deferred tax asset							5,358
Property and equipment							2,684
Intangible assets							6,132
Total assets							215,753
Loss and loss expense reserves							89,267
Unearned premium							27,760
Accrued expenses and other current liabilities							23,629
Deferred tax liability							2,146
Notes payable							6,500
Total liabilities							149,302
Cash paid							14,500
Cash paid							48,500
Acquisition gain	17,951
Sequoia Insurance Company
Business Acquisition [Line Items]
Cash and investments								215,473
Premium receivable								32,870
Reinsurance recoverables								43,793
Other assets								4,014
Deferred tax asset								1,242
Property and equipment								1,022
Intangible assets								11,848
Total assets								310,262
Loss and loss expense reserves								165,487
Unearned premium								59,773
Accrued expenses and other current liabilities								15,624
Deferred tax liability								4,147
Total liabilities								245,031
Cash paid								60,000
Acquisition gain								5,231	5,231
Car Care Plan (Holding) Limited
Business Acquisition [Line Items]
Cash and investments										253,257
Premium receivable										26,001
Reinsurance recoverables										12,186
Other assets										2,979
Property and equipment										589
Intangible assets										34,337
Total assets										329,349
Loss and loss expense reserves										9,703
Unearned premium										131,494
Accrued expenses and other current liabilities										83,993
Deferred tax liability										6,215
Total liabilities										231,405
Cash paid										72,412
Acquisition gain										$ 25,532

XML

Significant Accounting Policies (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Feb. 28, 2014	Jan. 31, 2014	Aug. 31, 2011
Change in Accounting Estimate [Line Items]
Allowance for doubtful accounts	$ 45,024				$ 32,132				$ 45,024	$ 32,132
Percentage of investments in portfolio									0.60%
Increase in deferred policy acquisition costs									159,979	97,561	68,135
Amortization									538,710	367,288	242,887
Assessment expenses									23,205	33,772	39,546
Impairment of goodwill									62,898	10,226	16,389
Income tax benefit (expense)	(15,940)	7,664	(17,966)	(27,444)	(30,628)	(23,880)	(27,402)	(16,109)	(53,686)	(98,019)	(21,292)
Increase in total assets due to reclassification of intangible to goodwill	13,847,368				11,279,126				13,847,368	11,279,126
Amount reclassified from fixed maturities available-for-sale	0				311,518				0	311,518
Percentage of stock dividend paid										10.00%
Minimum
Change in Accounting Estimate [Line Items]
Investment maturity									91 days
Maximum
Change in Accounting Estimate [Line Items]
Investment maturity									1 year
Market Capitalization under $1 billion
Change in Accounting Estimate [Line Items]
Percentage of Cost	35.00%								35.00%
Market Capitalization	1,000,000								1,000,000
Market Capitalization over $1 billion
Change in Accounting Estimate [Line Items]
Percentage of Cost	25.00%								25.00%
Market Capitalization	$ 1,000,000								$ 1,000,000
Building
Change in Accounting Estimate [Line Items]
Useful life									40 years
Equipment | Minimum
Change in Accounting Estimate [Line Items]
Useful life									5 years
Equipment | Maximum
Change in Accounting Estimate [Line Items]
Useful life									7 years
Computer Equipment | Minimum
Change in Accounting Estimate [Line Items]
Useful life									3 years
Computer Equipment | Maximum
Change in Accounting Estimate [Line Items]
Useful life									20 years
Leasehold Improvements
Change in Accounting Estimate [Line Items]
Useful life									15 years
NGHC
Change in Accounting Estimate [Line Items]
Percentage of ownership interests	13.20%	13.20%							13.20%			13.20%	15.40%
Percentage of ownership interest	13.20%								13.20%					13.20%

XML

Debt (Aggregate Scheduled Maturities of Borrowings Footnotes) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Debt Disclosure [Abstract]
Unamortized original issue discount	$ 64,619	$ 35,782

XML

Segments (Tables)

12 Months Ended

Dec. 31, 2014

Segment Reporting [Abstract]

Results of Operations of Business Segments

The following tables summarize business segments as follows for 2014, 2013 and 2012:

(Amounts in Thousands)	Small Commercial Business			Specialty Risk and Extended Warranty			Specialty Program			Personal Lines Reinsurance - Run off			Corporate and Other			Total
Year Ended December 31, 2014:
Gross written premium	$	2,999,714		$	1,983,052		$	1,105,199		$	—		$	—		$	6,087,965
Net written premium	$	1,882,383		$	1,333,747		$	740,488		$	—		$	—		$	3,956,618
Change in unearned premium	(275,578		)	(101,509		)	(61,876		)	8,909			—			(430,054		)
Net earned premium	1,606,805			1,232,238			678,612			8,909			—			3,526,564
Loss and loss adjustment expense	(1,055,521		)	(817,780		)	(456,422		)	(12,896		)	—			(2,342,619		)
Acquisition costs and other underwriting expenses	(416,965		)	(253,794		)	(183,541		)	(2,623		)	—			(856,923		)
	(1,472,486		)	(1,071,574		)	(639,963		)	(15,519		)	—			(3,199,542		)
Underwriting income	134,319			160,664			38,649			(6,610		)	—			327,022
Service and fee income	95,430			253,220			428			—			60,665			409,743
Investment income and realized gain	62,810			56,852			27,994			368			—			148,024
Other expenses	(215,002		)	(142,134		)	(79,214		)	—			—			(436,350		)
Interest expense including loss on extinguishment of debt	(27,439		)	(18,139		)	(10,110		)	—			—			(55,688		)
Foreign currency gain	—			60,245			—			—			—			60,245
Gain on investment in life settlement contracts net of profit commission	6,064			4,008			2,234			—			—			12,306
Gain on sale of subsidiary	6,631			—			—			—			—			6,631
Provision for income taxes	(6,741		)	(40,211		)	2,148			670			(9,552		)	(53,686		)
Equity in earnings of unconsolidated subsidiaries –  related party	—			—			—			—			28,351			28,351
Net income	$	56,072		$	334,505		$	(17,871	)	$	(5,572	)	$	79,464		$	446,598

(Amounts in Thousands)	Small Commercial Business			Specialty Risk and Extended Warranty			Specialty Program			Personal Lines Reinsurance - Run off			Corporate and Other			Total
Year Ended December 31, 2013:
Gross written premium	$	1,659,980		$	1,511,649		$	879,455		$	65,827		$	—		$	4,116,911
Net written premium	$	935,313		$	944,081		$	620,452		$	65,827		$	—		$	2,565,673
Change in unearned premium	(101,501		)	(132,244		)	(100,081		)	34,143			—			(299,683		)
Net earned premium	833,812			811,837			520,371			99,970			—			2,265,990
Loss and loss adjustment expense	(548,598		)	(545,516		)	(355,067		)	(68,180		)	—			(1,517,361		)
Acquisition costs and other underwriting expenses	(212,824		)	(151,188		)	(138,650		)	(30,500		)	—			(533,162		)
	(761,422		)	(696,704		)	(493,717		)	(98,680		)	—			(2,050,523		)
Underwriting income	72,390			115,133			26,654			1,290			—			215,467
Service and fee income	87,519			191,941			114			—			51,985			331,559
Investment income and realized gain	34,665			46,304			18,464			913			—			100,346
Other expenses	(117,583		)	(107,076		)	(62,295		)	(4,663		)	—			(291,617		)
Interest expense	(13,987		)	(12,738		)	(7,411		)	(555		)	—			(34,691		)
Foreign currency loss	—			(6,533		)	—			—			—			(6,533		)
Gain on investment in life settlement contracts net of profit commission	1,532			1,395			812			61			—			3,800
Acquisition gain on purchase	23,183			25,532			—			—			—			48,715
Provision for income taxes	(24,389		)	(64,281		)	5,989			748			(16,086		)	(98,019		)
Equity in earnings of unconsolidated subsidiaries –  related party	—			—			—			—			11,566			11,566
Net income	$	63,330		$	189,677		$	(17,673	)	$	(2,206	)	$	47,465		$	280,593

(Amounts in Thousands)	Small Commercial Business			Specialty Risk and Extended Warranty			Specialty Program			Personal Lines Reinsurance - Run off			Corporate and Other			Total
Year Ended December 31, 2012:
Total gross written premium	$	933,740		$	1,118,710		$	578,735		$	118,141		$	—		$	2,749,326
Net written premium	$	474,381		$	624,555		$	430,960		$	118,141		$	—		$	1,648,037
Change in unearned premium	(57,816		)	(82,982		)	(82,392		)	(5,995		)	—			(229,185		)
Net earned premium	416,565			541,573			348,568			112,146						1,418,852
Loss and loss adjustment expense	(270,843		)	(341,196		)	(238,302		)	(72,334		)	—			(922,675		)
Acquisition costs and other underwriting expenses	(110,895		)	(112,491		)	(98,415		)	(34,204		)	—			(356,005		)
	(381,738		)	(453,687		)	(336,717		)	(106,538		)				(1,278,680		)
Underwriting income	34,827			87,886			11,851			5,608			—			140,172
Service and fee income	53,886			86,672			1,342			—			30,274			172,174
Investment income and realized gain	27,217			30,952			16,362			2,617			—			77,148
Other expenses	(54,788		)	(82,031		)	(33,958		)	(6,932		)	—			(177,709		)
Interest expense	(9,682		)	(11,600		)	(6,001		)	(1,225		)	—			(28,508		)
Foreign currency loss	—			(242		)	—			—			—			(242		)
Gain on investment in life settlement contracts net of profit commission	4,694			5,624			2,910			594			—			13,822
Acquisition gain on purchase	—			—			—			—			—			—
Provision for income taxes	(5,800		)	(12,109		)	774			(68		)	(4,089		)	(21,292		)
Equity in earnings of unconsolidated subsidiaries – related party	$	—		$	—		$	—		$	—		$	9,295		$	9,295
Net income	$	50,354		$	105,152		$	(6,720	)	$	594		$	35,480		$	184,860

The following tables summarize net earned premium by major line of business, by segment, for 2014, 2013 and 2012:

(Amounts in Thousands)	Small Commercial Business		Specialty Risk and Extended Warranty		Specialty Program		Personal Lines Reinsurance - Run off		Total
Year Ended December 31, 2014:
Workers' compensation	$	1,061,130	$	—	$	260,756	$	—	$	1,321,886
Warranty	—		433,710		234		—		433,944
Other liability	98,846		198,505		127,364		—		424,715
Commercial auto and liability, physical damage	162,377		25,255		116,528		1,563		305,723
Medical malpractice	—		176,608		—		—		176,608
Other	284,452		398,160		173,730		7,346		863,688
Total net earned premium	$	1,606,805	$	1,232,238	$	678,612	$	8,909	$	3,526,564
Year Ended December 31, 2013:
Workers' compensation	$	665,087	$	—	$	166,071	$	—	$	831,158
Warranty	—		397,978		1,952		—		399,930
Other liability	37,308		108,018		125,827		7		271,160
Commercial auto and liability, physical damage	51,623		13,631		108,962		8,612		182,828
Medical malpractice	—		191,217		—		—		191,217
Other	79,794		100,993		117,559		91,351		389,697
Total net earned premium	$	833,812	$	811,837	$	520,371	$	99,970	$	2,265,990
Year Ended December 31, 2012:
Workers' compensation	$	340,221	$	—	$	96,326	$	—	$	436,547
Warranty	—		226,559		10,303		—		236,862
Other liability	25,996		93,914		71,526		7		191,443
Commercial auto and liability, physical damage	26,893		8,516		89,599		7,108		132,116
Medical malpractice	—		170,078		—		—		170,078
Other	23,455		42,506		80,814		105,031		251,806
Total net earned premium	$	416,565	$	541,573	$	348,568	$	112,146	$	1,418,852

The following tables summarize total asses and long lived assets, by segment, as of December 31, 2014 and 2013:

(Amounts in Thousands)	Small Commercial Business		Specialty Risk and Extended Warranty		Specialty Program		Personal Lines Reinsurance		Corporate and other		Total
As of December 31, 2014:
Fixed assets	$	75,966	$	50,220	$	27,989	$	—	$	—	$	154,175
Goodwill and intangible assets	285,583		348,216		33,882		—		—		667,681
Total assets	6,142,645		5,441,378		2,248,901		14,444		—		13,847,368
As of December 31, 2013:
Fixed assets	$	42,054	$	38,297	$	22,280	$	1,668	$	—	$	104,299
Goodwill and intangible assets	233,566		399,954		31,873		—		—		665,393
Total assets	4,261,764		5,036,121		1,894,538		86,703		—		11,279,126

XML

Intangible Assets and Goodwill (Schedule of Finite lived and Indefinite-lived Intangible Assets, Including Goodwill) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Acquired Finite-Lived Intangible Assets [Line Items]
Goodwill	352,685	373,591	$ 326,646
Finite-lived intangible assets, Accumulated Amortization	106,168	80,381
Indefinite-lived and finite-lived intangibles, including goodwill, Gross	773,849	745,774
Goodwill and intangible assets, Net Value	667,681	665,393
Trademarks
Acquired Finite-Lived Intangible Assets [Line Items]
Indefinite-lived intangible assets	6,327	6,460
Licenses
Acquired Finite-Lived Intangible Assets [Line Items]
Indefinite-lived intangible assets	25,055	21,540
Use rights
Acquired Finite-Lived Intangible Assets [Line Items]
Indefinite-lived intangible assets		38,507
Renewal Rights
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, Gross Balance	62,367	30,880
Finite-lived intangible assets, Accumulated Amortization	16,732	11,438
Finite-lived intangible assets, Net Value	45,635	19,442
Renewal Rights | Minimum
Acquired Finite-Lived Intangible Assets [Line Items]
Useful life	7 years	7 years
Renewal Rights | Maximum
Acquired Finite-Lived Intangible Assets [Line Items]
Useful life	17 years	17 years
Noncompete Agreements
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, Gross Balance		7,756
Finite-lived intangible assets, Accumulated Amortization		7,692
Finite-lived intangible assets, Net Value		64
Noncompete Agreements | Minimum
Acquired Finite-Lived Intangible Assets [Line Items]
Useful life		3 years
Noncompete Agreements | Maximum
Acquired Finite-Lived Intangible Assets [Line Items]
Useful life		9 years
Distribution Networks
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, Gross Balance	115,480	100,163
Finite-lived intangible assets, Accumulated Amortization	36,009	28,136
Finite-lived intangible assets, Net Value	79,471	72,027
Distribution Networks | Minimum
Acquired Finite-Lived Intangible Assets [Line Items]
Useful life	5 years	10 years
Distribution Networks | Maximum
Acquired Finite-Lived Intangible Assets [Line Items]
Useful life	20 years	20 years
Software
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, Gross Balance	3,547	2,266
Finite-lived intangible assets, Accumulated Amortization	2,101	2,076
Finite-lived intangible assets, Net Value	1,446	190
Useful life	20 years	20 years
Software | Minimum
Acquired Finite-Lived Intangible Assets [Line Items]
Useful life	3 years
Customer Relationships
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, Gross Balance	132,744	132,266
Finite-lived intangible assets, Accumulated Amortization	31,807	18,215
Finite-lived intangible assets, Net Value	100,937	114,051
Customer Relationships | Minimum
Acquired Finite-Lived Intangible Assets [Line Items]
Useful life	8 years	8 years
Customer Relationships | Maximum
Acquired Finite-Lived Intangible Assets [Line Items]
Useful life	18 years	10 years
Trademarks
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, Gross Balance	5,220	5,001
Finite-lived intangible assets, Accumulated Amortization	5,132	4,751
Finite-lived intangible assets, Net Value	88	250
Trademarks | Minimum
Acquired Finite-Lived Intangible Assets [Line Items]
Useful life		2 years
Trademarks | Maximum
Acquired Finite-Lived Intangible Assets [Line Items]
Useful life	15 years	15 years
Licenses
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, Gross Balance	12,608	12,608
Finite-lived intangible assets, Accumulated Amortization	6,151	3,702
Finite-lived intangible assets, Net Value	6,457	8,906
Licenses | Minimum
Acquired Finite-Lived Intangible Assets [Line Items]
Useful life	5 years	5 years
Licenses | Maximum
Acquired Finite-Lived Intangible Assets [Line Items]
Useful life	50 years	50 years
Use rights
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, Gross Balance	41,468
Finite-lived intangible assets, Accumulated Amortization	0
Finite-lived intangible assets, Net Value	41,468
Other
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, Gross Balance	16,348	14,736
Finite-lived intangible assets, Accumulated Amortization	8,236	4,371
Finite-lived intangible assets, Net Value	8,112	10,365
Other | Minimum
Acquired Finite-Lived Intangible Assets [Line Items]
Useful life	4 years	4 years
Other | Maximum
Acquired Finite-Lived Intangible Assets [Line Items]
Useful life	10 years	10 years

XML

Employee Benefit Plans (Excess Projected Benefit Obligation and Accumulated Benefit Obligation Over Plan Assets (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013	Feb. 28, 2013
Compensation and Retirement Disclosure [Abstract]
Projected benefit obligation and accumulated benefit obligation	$ 49,546	$ 46,873	$ 39,877
Fair value of plan assets	46,734	43,592
Excess of projected benefit obligation and accumulated benefit obligation over plan assets	$ 2,812	$ 3,281

XML

Quarterly Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2014

Quarterly Financial Data [Abstract]

Quarterly Financial Data (Unaudited)

Quarterly Financial Data (Unaudited)

The Company paid a ten percent stock dividend on September 4, 2013. As such, the weighted average number of shares used for basic and diluted earnings per share have been adjusted retroactively for all periods presented and the prior quarters' basic and diluted earnings per share has been adjusted.

During the three months ended June 30, 2014, the Company retrospectively adjusted its gains related to its acquisitions of Sequoia and FNIC from $13,309 to $5,231 and from $18,511 to $17,951, respectively, for the three months ended June 30, 2013.

The following is a summary of the unaudited quarterly results of operations:

	2014
(Amounts in Thousands)	March 31,		June 30,		September 30,			December 31,
Earned premium	$	829,051	$	874,937	$	914,413		$	908,163
Investment income	28,527		32,594		34,552			35,928
Total revenue	953,975		1,010,979		1,071,634			1,047,743
Loss and loss adjustment expense	558,570		587,233		609,352			587,464
Acquisition costs and other underwriting expense	186,609		208,060		225,512			236,742
Other expense	87,591		87,588		103,493			157,678
Provision for income taxes	27,444		17,966		(7,664		)	15,940
Net income	101,728		104,189		157,156			83,525
Income attributable to Common Stockholders	99,851		106,274		156,590			71,561
Basic EPS	$1.34		$1.41		$2.09			$0.94
Diluted EPS	$1.27		$1.33		$1.97			$0.88

	2013
(Amounts in Thousands)	March 31,		June 30,		September 30,		December 31,
Earned premium	$	407,994	$	536,539	$	613,895	$	707,562
Investment income	18,095		22,634		23,290		20,800
Total revenue	503,886		649,342		728,278		816,389
Loss and loss adjustment expense	272,256		364,110		410,579		470,416
Acquisition costs and other underwriting expense	100,285		129,946		137,186		165,745
Other expense	52,152		80,985		90,195		68,285
Provision for income taxes	16,109		27,402		23,880		30,628
Net income	83,001		71,397		59,689		66,506
Income attributable to Common Stockholders	83,878		71,397		58,238		64,724
Basic EPS	$1.13		$0.96		$0.78		$0.87
Diluted EPS	$1.08		$0.93		$0.74		$0.82

Due to changes in number of shares outstanding from quarter to quarter, the total earnings per share of the four quarters may not necessarily equal the earnings per share for the year.

XML

Segments (Long Lived Assets and Total Assets of Business Segments) (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Segment Reporting Information [Line Items]
Fixed assets	$ 154,175	$ 104,299
Goodwill and intangible assets	667,681	665,393
Total assets	13,847,368	11,279,126
Operating Segments [Member] | Small Commercial Business
Segment Reporting Information [Line Items]
Fixed assets	75,966	42,054
Goodwill and intangible assets	285,583	233,566
Total assets	6,142,645	4,261,764
Operating Segments [Member] | Specialty Risk and Extended Warranty
Segment Reporting Information [Line Items]
Fixed assets	50,220	38,297
Goodwill and intangible assets	348,216	399,954
Total assets	5,441,378	5,036,121
Operating Segments [Member] | Specialty Program
Segment Reporting Information [Line Items]
Fixed assets	27,989	22,280
Goodwill and intangible assets	33,882	31,873
Total assets	2,248,901	1,894,538
Operating Segments [Member] | Personal Lines Reinsurance
Segment Reporting Information [Line Items]
Fixed assets	0	1,668
Goodwill and intangible assets	0	0
Total assets	14,444	86,703
Operating Segments [Member] | Corporate and Other
Segment Reporting Information [Line Items]
Fixed assets	0	0
Goodwill and intangible assets	0	0
Total assets	$ 0	$ 0

XML

Debt (Tables)

12 Months Ended

Dec. 31, 2014

Debt Disclosure [Abstract]

Borrowings

The Company’s outstanding debt consisted of the following at December 31, 2014 and 2013:

(Amounts in Thousands) As of December 31,	2014		2013
Revolving credit facility	$	120,000	$	—
5.5% Convertible senior notes due 2021 (the "2021 Notes")	56,745		164,218
2.75% Convertible senior notes due 2044 (the "2044 Notes")	157,679		—
6.125% Notes due 2023	250,000		250,000
Subordinated debentures	123,714		123,714
Secured loan agreements	35,233		7,742
Promissory notes	14,500		14,500
	$	757,871	$	560,174

Aggregate Scheduled Maturities of Borrowings

Aggregate scheduled maturities of the Company’s outstanding debt at December 31, 2014 are:

(Amounts in Thousands)
2015	$	168,689	(1)
2016	7,186
2017	7,377
2018	9,400
2019	4,269
Thereafter	560,950		(2)

⁽¹⁾  Amount includes debt outstanding under revolving credit facility as of December 31, 2014 that was paid down in 2015, amount of 2021 Notes, net of $8,417 unamortized original issue discount, submitted for conversion in 2014 that were settled in 2015 as discussed in Note 27. "Subsequent Events", as well as principal payments under our secured loan agreements.

⁽²⁾  Amount reflected in balance sheet for the 2021 Notes and the 2044 Notes is net of unamortized original issue discount of $2,957 and $53,245, respectively.

The annual future minimums in the aggregate are as follows through 2020:

(Amounts in Thousands)
2015	$	13,616
2016	7,293
2017	3,818
2018	919
2019	602
2020 and Thereafter	422
	$	26,670

Amounts Recorded for Notes

The following table shows the amounts recorded for the 2021 Notes and 2044 Notes as of December 31, 2014 and 2013:

	2014							2013
(Amounts in Thousands)	Outstanding Principal		Unamortized OID			Net Carrying Amount		Outstanding Principal		Unamortized OID			Net Carrying Amount
2021 Notes	$	68,119	$	(11,374	)	$	56,745	$	200,000	$	(35,782	)	$	164,218
2044 Notes	210,924		(53,245		)	157,679		—		—			—
	$	279,043	$	(64,619	)	$	214,424	$	200,000	$	(35,782	)	$	164,218

Trust Preferred Securities

The table below summarizes the Company’s trust preferred securities as of December 31, 2014:

(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	3.541	(2)
AmTrust Capital Financing Trust IV	40,000		1,238		41,238		3/15/2037	3.241	(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%.

XML

Reinsurance

12 Months Ended

Dec. 31, 2014

Reinsurance Disclosures [Abstract]

Reinsurance

Reinsurance

The Company structures its reinsurance programs by analyzing its tolerance for risk in each line of business and on an overall consolidated basis, based on a number of factors, including market conditions, pricing, competition and the inherent risks associated with each business type. Based on its analysis of these factors, the Company may determine not to purchase reinsurance for some lines of business. The Company generally purchases reinsurance to reduce its net liability on individual risks and to protect against catastrophe losses and volatility. The Company retains underwriting risk in certain lines of business in order to retain a greater proportion of expected underwriting profits. The Company has chosen not to purchase any reinsurance on businesses where volatility or catastrophe risks are considered remote and policy limits are within its risk tolerance.

The Company purchases reinsurance on a proportional basis to cover loss frequency, individual risk severity and catastrophe exposure. The Company also purchases reinsurance on an excess of loss basis to cover individual risk, severity and catastrophe exposure. Additionally, the Company may obtain facultative reinsurance protection on a single risk. The type and amount of reinsurance the Company purchases varies year to year based on its risk assessment, its desired retention levels based on profitability and other considerations, and the market availability of quality reinsurance at prices the Company considers acceptable. Our reinsurance programs renew throughout the year, and the price changes in recent years have not been material to the Company's net underwriting results. The Company's reinsurance generally does not cover war or nuclear, biological, chemical or radiological terrorism risks.

In its proportional reinsurance programs, the Company generally receives a commission on the premium ceded to reinsurers. This “ceding commission” compensates the Company's insurance companies for the direct costs associated with production of the business, the servicing of the business during the term of the policies ceded, and the costs associated with placement of reinsurance that benefits the proportional programs. In addition, certain of the Company's reinsurance treaties allow it to share in any net profits generated under such treaties with the reinsurers. Various reinsurance brokers may arrange for the placement of this reinsurance coverage on the Company's behalf and are compensated, directly or indirectly, by the reinsurers. The Company also places reinsurance with direct markets and enters reinsurance relationships with third-party captives formed by agents and other business partners as a mechanism for sharing risk and profit.

In order to reduce its exposure to reinsurance credit risk, the Company evaluates the financial condition of its reinsurers and places its reinsurance with a diverse group of companies and syndicates that it believes to be financially sound. The Company carefully monitors the credit quality of its reinsurers when the Company places new and renewal reinsurance, as well as on an ongoing, current basis. The Company uses objective criteria to select and retain its reinsurers, including requiring minimum surplus of $500,000 and a financial strength rating of “A-” or better from A.M. Best Company, Inc. or Standard & Poor's Corporation. The Company approves exceptions to these criteria when warranted.

The Company monitors its financial exposure to the reinsurance market and takes necessary actions in an attempt to mitigate its exposure to possible loss. The Company limits its liquidity exposure for uncollected recoverables by holding funds, letters of credit or other security, with the result that net balances due from reinsurers are significantly less than the gross balances shown in its consolidated balance sheets. The Company monitors the collectability of its reinsurance recoverables and records a reserve for uncollectible reinsurance when it determines an amount is potentially uncollectible. The Company's evaluation is based on its periodic reviews of its disputed and aged recoverables, as well as its assessment of recoverables due from reinsurers known to be in financial difficulty. In some cases, the Company makes estimates as to what portion of a recoverable may be uncollectible. The Company's estimates and judgment about the collectability of the recoverables and the financial condition of reinsurers can change, and these changes can affect the level of reserve required.

Reinsurance Programs and Retentions

The following tables provide a summary of the Company's primary reinsurance programs as of December 31, 2014 for the United States and internationally:

(Amounts in Thousands)	2014 Domestic Reinsurance Program
Type of Reinsurance	Retention		Event Protection		Coverage
Workers’ Compensation, Excess of Loss	$	5,000	$	510,000	98.5% of $505,000
Property, Per Risk Excess of Loss	$	2,000	$	30,000	95% of $28,000
Property, Occurrence Excess of loss	$	20,000	$	400,000	99% of $380,000
Surety, Excess of Loss	$	500	$	20,000	70% of $19,500
Casualty/Umbrella, Excess of Loss and Quota Share	$	2,500	$	50,000	95% of $50,000
Equipment Breakdown, Quota Share	$	—	$	100,000	100% of $100,000

(Amounts in Thousands)	2014 International Reinsurance Program
Type of Reinsurance	Retention		Event Protection		Coverage
Property, Per Risk Excess of Loss	$	800	$	4,400	100% of $3,600
Property, Occurrence Excess of Loss	$	8,000	$	160,000	97% of $152,000
Surety, Excess of Loss and Quota Share	$	4,500	$	45,000	100% of $41,500
Casualty, Excess of Loss	$	3,000	$	15,000	100% of $12,000
Latent Defect, Excess of Loss	$	3,200	$	40,000	100% of $36,800
Accident and Health, Excess of Loss	$	800	$	32,000	100% of $31,200
Car Care, Excess of Loss	$	1,000	$	105,000	97.5% of $104,000
Medical Malpractice, Quota Share	$	7,800	$	13,000	40% of $13,000

(Amounts in Thousands)	2014 AmTrust at Lloyds Reinsurance Programs
Type of Reinsurance	Retention		Event Protection		Coverage
Property, Per Risk Excess of Loss	$	1,600	$	8,000	100% of $6,400
Property, Occurrence Excess of Loss	$	20,000	$	120,000	98% of $90,000
Casualty, Excess of Loss	$	4,000	$	20,000	100% of $16,000
Personal Accident, Excess of Loss	$	2,000	$	50,000	100% of $48,000
Pecuniary Risks	$	5,000	$	35,000	100% of $30,000

If the Company incurs catastrophe losses and loss settlement expenses that exceed the coverage limits of its reinsurance program, many of its property catastrophe programs have built in a fixed number of reinstatement of limits. For example, if the Company incurs a property catastrophe loss, it is required to pay the reinsurers a reinstatement premium equal to the percentage of the limit exhausted by the loss, multiplied by the amount of the original reinsurance premium.

During the third quarter of 2007, the Company entered into a master agreement with Maiden, as amended, by which its Bermuda subsidiary, AII, and Maiden Reinsurance entered into a quota share reinsurance agreement, as amended (the “Maiden Quota Share”). For a description of this agreement, see Note 14. “Related Party Transactions.”

The effect of reinsurance with unrelated companies on premiums and losses for 2014, 2013 and 2012 are as follows:

	Year Ended December 31,
	2014						2013						2012
(Amounts in Thousands)	Written			Earned			Written			Earned			Written			Earned
Premiums:
Direct	$	5,422,484		$	4,816,607		$	3,869,893		$	3,308,136		$	2,494,846		$	2,067,635
Assumed	665,481			562,193			247,018			254,863			254,480			270,008
Ceded	(2,131,347		)	(1,852,236		)	(1,551,238		)	(1,297,009		)	(1,101,289		)	(918,791		)
	$	3,956,618		$	3,526,564		$	2,565,673		$	2,265,990		$	1,648,037		$	1,418,852

	As of December 31,
	2014					2013					2012
(Amounts in Thousands)	Assumed		Ceded			Assumed		Ceded			Assumed		Ceded
Loss and LAE reserves	$	623,193	$	(2,149,444	)	$	378,564	$	(1,739,689	)	$	503,174	$	(1,185,056	)
Unearned premiums	211,177		(1,302,848		)	103,878		(1,011,304		)	108,679		(754,844		)
Loss and LAE expense incurred	424,754		(1,217,593		)	91,109		(975,434		)	166,191		(638,595		)

The Company continuously updates the reserves on these lines of business based on information available from the ceding insurers. During 2014 and 2013, the Company had no commutations related to workers’ compensation that were included in ceded reinsurance treaties.

XML

Acquisition Costs and Other Underwriting Expenses (Summary of Components of Acquisition Costs and Other Underwriting Expenses) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Insurance [Abstract]
Policy acquisition expenses									$ 460,010	$ 244,461	$ 178,633
Salaries and benefits									367,549	247,173	155,441
Other insurance general and administrative expenses									29,364	41,528	21,931
Acquisition costs and other underwriting expenses	$ 236,742	$ 225,512	$ 208,060	$ 186,609	$ 165,745	$ 137,186	$ 129,946	$ 100,285	$ 856,923	$ 533,162	$ 356,005

XML

Employee Benefit Plans

12 Months Ended

Dec. 31, 2014

Compensation and Retirement Disclosure [Abstract]

Employee Benefit Plans

Employee Benefit Plans

Defined Benefit Plan

In association with the acquisition of CCPH in 2013, the Company assumed a frozen defined benefit pension plan on February 28, 2013. The plan is funded and covers approximately 300 participants in the United Kingdom.

Changes in benefit obligations and plan assets as of December 31, 2014 and 2013 is as follows:

(Amounts in Thousands)	2014			2013
Change in Benefit Obligation
Benefit obligation at January 1, 2014 and February 28, 2013	$	46,873		$	39,877
Interest cost	2,074			1,608
Actuarial loss	4,621			2,074
Benefits paid net of retiree contributions	(820		)	(553		)
Exchange rate changes	(3,202		)	3,867
Benefit Obligation at End of Year	49,546			$	46,873
Change in Plan Assets
Fair Value of Plan Assets at January 1, 2014 and February 28, 2013	43,592			$	34,832
Actual return on assets	5,974			1,820
Employer contributions	1,004			3,958
Benefits and expenses paid net of retiree contributions	(820		)	(553		)
Exchange rate changes	(3,016		)	3,535
Fair Value of Plan Assets at End of Year	$	46,734		$	43,592
Funded Status at December 31, 2014 and 2013	$	(2,812	)	$	(3,281	)

Net periodic benefit cost for the year ended December 31, 2014 and 2013 is as follows:

(Amounts in Thousands)	2014			2013
Net Periodic Benefit Costs
Interest costs on benefit obligation	$	2,074		$	1,608
Assumed return on plan assets	(2,600		)	(1,900		)
Total	$	(526	)	$	(292	)

The Company made $1,004 and $3,958 in contributions to its plans during 2014 and 2013, respectively. The Company anticipates that it will be required to make a contribution to its pension plans of approximately $950 in 2015 and have pension income of approximately $614 in 2015.

Estimated future benefit payments to retirees from the Company's Non-U.S. pension trust are as follows:

(Amounts in Thousands)
2015	$	749
2016	858
2017	910
2018	815
2019	1,055
2020 - 2024	7,531

Information regarding the pension plan with projected benefit obligations and accumulated benefit obligations in excess of the fair value of plan assets as of December 31, 2014 and 2013 is as follows:

(Amounts in Thousands)	2014		2013
Non-U.S. Pension Plan
Projected benefit obligation and accumulated benefit obligation	$	49,546	$	46,873
Fair value of plan assets	46,734		43,592
Excess of projected benefit obligation and accumulated benefit obligation over plan assets	$	2,812	$	3,281

Weighted average assumptions used to measure the benefit obligation for the Company's defined benefit plan as of December 31, 2014 and 2013 is as follows:

	2014		2013
Weighted Average Assumptions
Discount rate used for liability determination	3.75	%	4.50	%
Measurement date	September 30		September 30

Weighted average assumptions used to measure the net periodic benefit cost for the Company's defined benefit plan for the year ended December 31, 2014 and 2013 is as follows:

	2014		2013
Weighted Average Assumptions
Discount rate used for expense determination	4.50	%	4.75	%
Long term rate of return on assets	6.00	%	6.00	%
Assumed rate of increase for pension payments	3.25	%	3.25	%

Actual and target allocation of the plan assets for 2014 and 2013 by asset category are as follows:

	2014				2013
	Target Allocation		Actual Allocation		Target Allocation		Actual Allocation
Asset Category
Equity securities	47.5	%	48.0	%	47.5	%	51.0	%
Fixed income securities	40.0	%	42.0	%	40.0	%	39.0	%
Real estate partnerships	12.5	%	10.0	%	12.5	%	10.0	%
Total	100.0	%	100.0	%	100.0	%	100.0	%

The following table sets forth, by level within the fair value hierarchy, the Company's defined benefit plan assets as of December 31, 2014 and 2013:

(Amounts in Thousands) As of December 31, 2014	Total		Level 1		Level 2		Level 3
Money market funds	$	185	$	185	$	—	$	—
Registered investment companies:
Equity mutual funds	22,376		22,376		—		—
Fixed income mutual funds	19,423		19,423		—		—
Total registered investment companies	41,799		41,799		—		—
Real estate partnerships	4,750				4,750		—
	$	46,734	$	41,984	$	4,750	$	—

(Amounts in Thousands) As of December 31, 2013	Total		Level 1		Level 2		Level 3
Money market funds	$	196	$	196	$	—	$	—
Registered investment companies:
Equity mutual funds	22,159		22,159		—		—
Fixed income mutual funds	16,871		16,871		—		—
Total registered investment companies	39,030		39,030		—		—
Real estate partnerships	4,366		—		4,366		—
	$	43,592	$	39,226	$	4,366	$	—

Defined Contribution Plans

The Company sponsors multiple defined contribution pension plans, which are available to a majority of its employees. Contributions to these plans were based on a percentage of employee contributions or earnings. The cost of the Company's domestic plan was approximately $4,241, $2,561 and $1,919 for the years ended December 31, 2014, 2013 and 2012, respectively. The cost of the Company's European plans was approximately $6,167, $2,575, and $1,054 for the years ended December 31, 2014, 2013 and 2012, respectively.

XML

Intangible Assets and Goodwill (Impairment Charge and Amortization Expense) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Acquired Finite-Lived Intangible Assets [Line Items]
Amortization expense	$ 33,543	$ 31,667	$ 17,169
Renewal Rights
Acquired Finite-Lived Intangible Assets [Line Items]
Percentage used for amortization of renewal rights	125.00%

XML

Liability for Unpaid Loss and LAE (Tables)

12 Months Ended

Dec. 31, 2014

Insurance [Abstract]

Schedule of Liability for Unpaid Claims and Claims Adjustment Expense

The following table provides a reconciliation of the beginning and ending balances for unpaid losses and LAE, reported in the accompanying consolidated balance sheets as of December 31, 2014, 2013 and 2012:

(Amounts in Thousands)	2014			2013			2012
Unpaid losses and LAE, gross of related reinsurance recoverables at beginning of year	$	4,368,234		$	2,426,400		$	1,879,175
Less: Reinsurance recoverables at beginning of year	1,739,689			1,180,212			972,392
Net balance, beginning of year	2,628,545			1,246,188			906,783
Incurred related to:
Current year	2,324,062			1,486,418			909,818
Prior year	18,557			30,943			12,857
Total incurred losses during the year	2,342,619			1,517,361			922,675
Paid losses and LAE related to:
Current year	(886,724		)	(617,539		)	(406,238		)
Prior year	(554,495		)	(335,621		)	(285,479		)
Total payments for losses and LAE	(1,441,219		)	(953,160		)	(691,717		)
Commuted loss reserves	—			—			91,529
Acquired outstanding loss and loss adjustment reserve	71,755			807,592			13,137
Effect of foreign exchange rates	(86,939		)	10,564			3,781
Net balance, December 31	3,514,761			2,628,545			1,246,188
Plus reinsurance recoverables at end of year	2,149,444			1,739,689			1,180,212
Unpaid losses and LAE, gross of related reinsurance recoverables at end of year	$	5,664,205		$	4,368,234		$	2,426,400

XML

Debt (Trust Preferred Securities Footnotes) (Details)	12 Months Ended
	Dec. 31, 2014
After tenth anniversary in 2015 | Three Month LIBOR
Debt Instrument [Line Items]
Debt instrument interest rate, margin	3.40%
After fifth anniversary in 2011 | LIBOR
Debt Instrument [Line Items]
Debt instrument interest rate, margin	3.30%
After fifth anniversary in 2012 | LIBOR
Debt Instrument [Line Items]
Debt instrument interest rate, margin	3.00%

XML

Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Basis of Reporting

Basis of Reporting — The consolidated financial statements of the Company have been prepared in conformity with accounting principles generally accepted in the United States of America. The consolidated financial statements include the accounts of the Company and its domestic and foreign subsidiaries. The Company uses the equity method of accounting for its investment in National General Holding Corp. (“NGHC”) in which it owns a 13.2% ownership interest. All significant intercompany transactions and accounts have been eliminated in the consolidated financial statements.

Premiums

Premiums — Insurance premiums, except for certain specialty risk and extended warranty programs, are recognized as earned on the straight-line basis over the contract period. Insurance premiums on specialty risk and extended warranty programs are earned based on an estimated program coverage period. These estimates are based on the expected distribution of coverage periods by contract at inception, and because a single contract may contain multiple coverage period options, these estimates are revised based on the actual coverage period selected by the insured. Unearned premiums represent the portion of premiums written which is applicable to the unexpired term of the contract or policy in force. Premium adjustments on contracts and audit premiums are based on estimates made over the contract period. Premiums earned but not yet billed to insureds are estimated and accrued, net of related costs. These estimates are subject to the effects of trends in payroll audit adjustments. Although considerable variability is inherent in such estimates, management believes that the accrual for earned but unbilled premiums is reasonable. The estimates are continually reviewed and adjusted as necessary as experience develops or new information becomes known; such adjustments are included in current operations. The Company historically has used a percentage of premium for establishing its allowance for doubtful accounts. The Company reviews its bad debt write-offs at least annually and adjusts its premium percentage as required. Allowance for doubtful accounts were approximately $45,024 and $32,132 at December 31, 2014 and 2013, respectively.

Loss and LAE

Loss and Loss Adjustment Expenses — Loss and loss adjustment expenses (“LAE”) represent the estimated ultimate net costs of all reported and unreported losses incurred through December 31, 2014. The reserves for unpaid losses and LAE are estimated using individual case-basis valuations and statistical analysis and are not discounted. Although considerable variability is inherent in the estimates of reserves for losses and LAE, management believes that the reserves for losses and LAE are adequate. The estimates are continually reviewed and adjusted as necessary as experience develops or new information becomes known. Such adjustments are included in current operations.

Fair Value of Financial Instruments

Fair Value of Financial Instruments — The Company’s estimates of fair value for financial assets and financial liabilities are based on the framework established in ASC 820 Fair Value Measurements and Disclosures. The framework is based on the inputs used in valuation and gives the highest priority to quoted prices in active markets and requires that observable inputs be used in the valuations when available. The disclosure of fair value estimates in the ASC 820 hierarchy is based on whether the significant inputs into the valuation are observable. In determining the level of the hierarchy in which the estimate is disclosed, the highest priority is given to unadjusted quoted prices in active markets and the lowest priority to unobservable inputs that reflect the Company’s significant market assumptions. Additionally, valuation of fixed maturity investments is more subjective when markets are less liquid due to lack of market based inputs, which may increase the potential that the estimated fair value of an investment is not reflective of the price at which an actual transaction could occur. Fair values of other financial instruments approximate their carrying values.

For investments that have quoted market prices in active markets, the Company uses the quoted market prices as fair value and includes these prices in the amounts disclosed in the Level 1 hierarchy. The Company receives the quoted market prices from nationally recognized third-party pricing services (“pricing service”). When quoted market prices are unavailable, the Company utilizes a pricing service to determine an estimate of fair value. This pricing method is used, primarily, for fixed maturities. The fair value estimates provided by the pricing service are included in the Level 2 hierarchy. If the Company determines that the fair value estimate provided by the pricing service does not represent fair value or if quoted market prices and an estimate from pricing services are unavailable, the Company produces an estimate of fair value based on dealer quotations of the bid price for recent activity in positions with the same or similar characteristics to that being valued or through consensus pricing of a pricing service. Depending on the level of observable inputs, the Company will then determine if the estimate is Level 2 or Level 3 hierarchy.

Fixed Maturities

Fixed Maturities. The Company utilizes a pricing service to estimate fair value measurements for all of its fixed maturities. The pricing service utilizes market quotations for fixed maturity securities that have quoted market prices in active markets. Since fixed maturities other than U.S. treasury securities generally do not trade on a daily basis, the pricing service prepares estimates of fair value measurements using relevant market data, benchmark curves, sector groupings and matrix pricing. The pricing service utilized by the Company has indicated it will produce an estimate of fair value only if there is verifiable information to produce a valuation. As the fair value estimates of most fixed maturity investments are based on observable market information rather than market quotes, the estimates of fair value other than U.S. Treasury securities are included in Level 2 of the hierarchy. U.S. Treasury securities are included in the amount disclosed in Level 1 as the estimates are based on unadjusted prices. The Company’s Level 2 investments include obligations of U.S. government agencies, municipal bonds, corporate debt securities and other mortgage backed securities.

Equity Securities. The Company utilizes a pricing service to estimate the fair value of the majority of its available-for-sale and trading equity securities. The pricing service utilizes market quotations for equity securities that have quoted market prices in active markets and their respective quoted prices are provided as fair value. The Company classifies the values of these equity securities as Level 1. The pricing service also provides fair value estimates for certain equity securities whose fair value is based on observable market information rather than market quotes. The Company classifies the value of these equity securities as Level 2. The Company also holds certain equity securities that are issued by privately-held entities or direct equity investments that do not have an active market. The Company estimates the fair value of these securities primarily based on inputs such as third party broker quotes, issuers' book value, market multiples, and other inputs. These equity securities are classified as Level 3 due to significant unobservable inputs used in the valuation.

Other Investments. Other investments consisted primarily of investments in limited partnerships, an interest in syndicated term loan, and annuities. Other investments accounted for approximately 0.6% of the Company's investment portfolio as of December 31, 2014. The Company estimates the fair value of other investments based on significant unobservable inputs in the valuation process. As a result, the Company classified the fair value estimates as Level 3 in the financial hierarchy. The Company has determined that its investments in Level 3 securities are not material to its financial position or results of operations.

Investments — The Company accounts for its investments in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 320 Investments — Debt and Equity Securities, which requires that fixed-maturity and equity securities that have readily determined fair values be segregated into categories based upon the Company’s intention for those securities. In accordance with ASC 320, the Company has classified its fixed-maturities and certain equity securities as available-for-sale. The Company may sell its available-for-sale securities in response to changes in interest rates, risk/reward characteristics, liquidity needs or other factors. Available for sale fixed-maturity securities and equity securities are reported at their estimated fair values based on quoted market prices or a recognized pricing service, with unrealized gains and losses, net of tax effects, reported as a separate component of comprehensive income in stockholders’ equity. Additionally, the Company classified certain equity securities as trading securities. Unrealized gains and losses on trading securities are reported within realized gains and losses. Realized gains and losses are determined on the specific identification method.

Quarterly, the Company’s Investment Committee (“Committee”) evaluates each security that has an unrealized loss as of the end of the subject reporting period for other-than-temporary-impairment (“OTTI”). The Company generally considers an investment to be impaired when it has been in a significant unrealized loss position (in excess of 35% of cost if the issuer has a market capitalization of under $1 billion and in excess of 25% of cost if the issuer has a market capitalization of $1 billion or more) for over 24 months. In addition, the Committee uses a set of quantitative and qualitative criteria to review the Company's investment portfolio to evaluate the necessity of recording impairment losses for other-than-temporary declines in the fair value of our investments. The criteria the Committee primarily considers include:

• 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 restructuring, regulatory changes, acquisitions and dispositions, pending litigation, distribution agreements and general industry trends.

Impairment of investment securities results in a charge to operations when a market decline below cost is deemed to be other-than-temporary. The Company writes down investments immediately that it considers to be impaired based on the above criteria collectively.

Based on guidance in FASB ASC 320-10-65, in the event of the decline in fair value of a debt security, a holder of that security that does not intend to sell the debt security and for whom it is not more than likely than not that such holder will be required to sell the debt security before recovery of its amortized cost basis, is required to separate the decline in fair value into (a) the amount representing the credit loss and (b) the amount related to other factors. The amount of total decline in fair value related to the credit loss shall be recognized in earnings as an OTTI with the amount related to other factors recognized in accumulated other comprehensive loss net loss, net of tax. OTTI credit losses result in a permanent reduction of the cost basis of the underlying investment. The determination of OTTI is a subjective process, and different judgments and assumptions could affect the timing of the loss realization.

In 2014, the Company also classified certain of its equity securities as trading securities. Equity securities classified as trading securities are generally held for resale in anticipation of short-term market movement. Trading securities are stated at estimated fair market value. Gains and losses, both realized and unrealized, are included in the net realized gain or loss on investment on the Consolidated Statements of Income.

The Company has the following types of investments:

(a) Short-term investments — Short term investments are carried at cost, which approximates fair value, and include investments with maturities between 91 days and less than 1 year at date of acquisition. As of December 31, 2014 and 2013, short term investments consisted primarily of money market investments.

(b) Fixed maturities and equity securities, available-for-sale — Fixed maturities and equity securities (common stocks, mutual funds and non-redeemable preferred stock) are classified as available-for-sale and carried at fair value. Unrealized gains or losses on available-for-sale securities are reported as a component of accumulated other comprehensive income.

(c) Equity securities, trading —  Equity securities classified as trading are carried at estimated fair market value. Gains and losses, both realized and unrealized, are reported in the net realized gain or loss on investment.

(d) Mortgage and asset backed securities — For mortgage and asset backed securities, the Company recognizes income using the retrospective adjustment method based on prepayments and the estimated economic life of the securities. The effective yield reflects actual payments to date plus anticipated future payments.

(e) Limited partnerships — The Company uses the equity method of accounting for investments in limited partnerships in which its ownership interest of the limited partnership enables the Company to influence the operating or financial decisions of the investee company, but the Company’s interest in the limited partnership does not require consolidation. The Company’s proportionate share of equity in net income of these unconsolidated affiliates is reported in net investment income.

(f) Derivatives and hedging activities — The Company from time to time invests in a limited amount of derivatives and other financial instruments as part of its investment portfolio. Derivatives are financial arrangements among two or more parties with returns linked to an underlying equity, debt, commodity, asset, liability, foreign exchange rate or other index. Unless subject to a scope exclusion, the Company carries all derivatives on the consolidated balance sheet at fair value. For derivatives that do not qualify for hedge accounting, the changes in fair value of the derivative are presented as a component of operating income. The Company primarily utilizes interest rate swaps, which are valued in terms of the contract between the Company and the issuer of the swaps, are based on the difference between the stated floating rate of the underlying indebtedness, and a predetermined fixed rate for such indebtedness with the result that the indebtedness carries a net fixed interest rate.

(g) Securities sold under agreements to repurchase, at contract value — The Company from time to time invests in securities sold under agreements to repurchase, which are accounted for as collateralized borrowing transactions and are recorded at their contracted repurchase amounts, plus accrued interest. The Company minimizes the credit risk that counterparties to transactions might be unable to fulfill their contractual obligations by monitoring exposure and collateral value and generally requiring additional collateral to be deposited with the Company when necessary.

Net investment income consists primarily of interest and dividends less expenses. Interest on fixed maturities, adjusted for any amortization of premium or discount, is recorded as income when earned. Investment expenses are accrued as incurred. Realized investment gains or losses are computed using the specific costs of securities sold, and, if applicable, include write-downs on investments having other-than-temporary declines in value.

Derivatives

Derivatives. The Company estimates fair value using information provided by a pricing service for interest rate swaps and classifies derivatives as Level 2 hierarchy.

Investment in Life Settlement

Investment in Life Settlements — When the Company becomes the owner of a life insurance policy either by direct purchase or following a default on a premium finance loan, the life insurance premium for such policy is accounted for as an investment in life settlements. Investments in life settlements are accounted for in accordance with ASC 325-30, Investments in Insurance Contracts, which states that an investor shall elect to account for its investments in life settlement contracts using either the investment method or the fair value method. The election is made on an instrument-by-instrument basis and is irrevocable. The Company has elected to account for these investments using the fair value method. Fair value of the investment in policies is determined using unobservable Level 3 inputs and is calculated by performing a net present value calculation of the face amount of the life policies less premiums for the total portfolio. The unobservable Level 3 inputs use new or updated information that affects the Company's assumptions about remaining life expectancy, credit worthiness of the policy issuer, funds needed to maintain the asset until maturity, and discount rates.

Life Settlement Profit Commission — Investments in life settlements are accounted for in accordance with ASC 325-30, Investments in Insurance Contracts, and the Company has elected to account for its investment in life settlements using the fair value method. The Company retains a third party service provider to perform certain administration functions to effectively manage the life settlement contracts held by Tiger Capital, LLC and AMT Capital Holdings II S.A. and a portion of their fee is contingent on the overall profitability of the life settlement contracts. The Company accrues the related profit commission on life settlements at fair value, in relation to life settlements purchased prior to December 31, 2010. This profit commission is calculated based on the discounted anticipated cash flows and the provisions of the underlying contract. In addition, the Company accrues a best estimate in relation to profit commission due on certain life settlement contracts acquired subsequent to December 31, 2010 as no contractual relationship currently exists.

Warranty Fee Revenue

Warranty Fee Revenue — The Company promotes and markets extended service plans (“ESP”) to consumers through retailers and certain other marketing organizations usually with terms of coverage ranging from one to three years, commencing at the expiration of the manufacturers’ warranty, if applicable. The Company generally insures the obligations under ESPs through contractual liability insurance issued by one of its insurance company subsidiaries. Under the terms of service agreements with various retailers, the Company provides for marketing and administrative services related to ESP. These agreements are generally for one-year terms and can be canceled by either party with thirty days advance notice. The Company recognizes revenue related to promotion, marketing and administration services at the time of the sale of ESP. However, the Company defers a portion of service revenue based upon an estimate of administrative services to be provided in future periods.

Deferred Policy Acquisition Costs

Deferred Policy Acquisition Costs — The Company defers commission expenses, premium taxes and assessments as well as underwriting and safety costs that vary with and are primarily related to the successful acquisition of insurance policies. These acquisition costs are capitalized and charged to expense ratably as premiums are earned. The Company may realize deferred policy acquisition costs only if the ratio of loss and loss adjustment expense reserves (calculated on a discounted basis) to the premiums to be earned is less than 100%, as it historically has been. If, hypothetically, that ratio were to be above 100%, the Company could not continue to record deferred policy acquisition costs as an asset and may be required to establish a liability for a premium deficiency reserve. The Company considers anticipated investment income in determining whether a premium deficiency relating to short duration contracts exists. The change in net deferred acquisition costs was $159,979, $97,561 and $68,135 for the years ended December 31, 2014, 2013 and 2012, respectively.

Reinsurance

Reinsurance — Reinsurance premiums, losses and LAE ceded to other companies are accounted for on a basis consistent with those used in accounting for the original policies issued and pursuant to the terms of the reinsurance contracts. The Company records premiums earned and losses and LAE incurred and ceded to other companies as reductions of premium revenue and losses and LAE. The Company accounts for commissions allowed by reinsurers on business ceded as ceding commission, which is a reduction of acquisition of costs and other underwriting expenses. The Company earns commissions on reinsurance premiums ceded in a manner consistent with the recognition of the earned premium on the underlying insurance policies, on a pro rata basis over the terms of the policies reinsured. Reinsurance recoverables relate to the portion of reserves and paid losses and LAE that are ceded to other companies. The Company remains contingently liable for all loss payments in the event of failure to collect from the reinsurer.

Ceding Commissions on Reinsurance Transactions — Ceding commissions on reinsurance transactions are commissions the Company receives from ceding gross written premiums to third party reinsurers. In connection with the Maiden Quota Share, which is the Company's primary source of ceding commissions, the amount the Company receives is a blended rate based on a contractual formula contained in the individual reinsurance agreements, and the rate may not correlate specifically to the cost structure of the individual segments. The ceding commissions the Company receives cover a portion of its capitalized direct acquisition costs and a portion of other underwriting expenses. Ceding commissions received from reinsurance transactions that represent recovery of capitalized direct acquisition costs are recorded as a reduction of capitalized unamortized deferred acquisition costs and the net amount is charged to expense in proportion to net premium revenue recognized. Ceding commissions received from reinsurance transactions that represent the recovery of other underwriting expenses are recognized in the income statement over the insurance contract period in proportion to the insurance protection provided and classified as a reduction of acquisition costs and other underwriting expenses. Ceding commissions received, but not yet earned, that represent the recovery of other underwriting expenses are classified as a component of accrued expenses and other current liabilities. The Company allocates earned ceding commissions to its segments based on each segment’s proportionate share of total acquisition costs and other underwriting expenses recognized during the period.

Assessments

Assessments — Insurance related assessments are accrued in the period in which they have been incurred. A typical obligating event would be the issuance of an insurance policy or the occurrence of a claim. The Company is subject to a variety of assessments, such as assessments by state guaranty funds and workers’ compensation second injury funds. State guaranty funds assessments are used by state insurance regulators to cover losses of policyholders of insolvent insurance companies and for the operating expenses of such agencies. The Company uses estimated assessment rates in determining the appropriate assessment expense and accrual. The Company uses estimates derived from state regulators and/or National Association of Insurance Commissioners (“NAIC”) Tax and Assessments Guidelines.

Property and Equipment

Property and Equipment — Property and equipment are recorded at cost. Maintenance and repairs are charged to operations as incurred. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets, as follows:

Building	40 years
Equipment	5 to 7 years
Computer equipment and software	3 to 20 years (primarily 3 years)
Leasehold improvements	Lesser of lease term or 15 years

The Company accounts for its internal use software under ASC 350 Intangibles — Goodwill and Other. Accordingly, the Company capitalizes costs of computer software developed or obtained for internal use that is specifically identifiable, has determinable lives and relates to future use.

Business Combinations

Business Combinations — The Company accounts for business combinations under the acquisition method of accounting, which requires the Company to record assets acquired, liabilities assumed and any non-controlling interest in the acquiree at their respective fair values as of the acquisition date in the Company's consolidated financial statements. The Company accounts for the insurance and reinsurance contracts under the acquisition method as new contracts, which requires the Company to record assets and liabilities at fair value. The Company adjusts the fair value loss and LAE reserves by recording the acquired loss reserves based on the Company’s existing accounting policies and then discounting them based on expected reserve payout patterns using a current risk-free rate of interest. This risk free interest rate is then adjusted based on different cash flow scenarios that use different payout and ultimate reserve assumptions deemed to be reasonably possible based upon the inherent uncertainties present in determining the amount and timing of payment of such reserves. The difference between the acquired loss and LAE reserves and the Company’s best estimate of the fair value of such reserves at the acquisition date is recorded either an an intangible asset or another liability, as applicable, and amortized proportionately to the decrease in the acquired loss and LAE reserves over the payout period for the acquired loss and LAE reserves. The Company records contingent consideration at fair value based on the terms of the purchase agreement with subsequent changes in fair value recorded through earnings. The determination of fair value may require management to make significant estimates and assumptions. The purchase price is the fair value of the total consideration conveyed to the seller and the Company records the excess of the purchase price over the fair value of the acquired net assets, where applicable, as goodwill. The Company assigns fair values to intangible assets based on valuation techniques including the income and market approaches. The Company expenses costs associated with the acquisition of a business in the period incurred. The Company includes the results of operations of an acquired business in its consolidated financial statements from the date of the acquisition.

Goodwill and Intangible Assets

Goodwill and Intangible Assets — The Company accounts for goodwill and intangible assets in accordance with ASC 350 Intangibles — Goodwill and Other. Upon the completion of an acquisition, the Company completes purchase price accounting in accordance with ASC 805, Business Combinations, which requires an acquirer to assign values to the acquired assets and liabilities based on their fair value. In the event that a purchase price paid is in excess of the net assets acquired, any unidentified excess is deemed to be goodwill. Goodwill is not amortized. Additionally as a result of an acquisition, the Company may obtain identifiable intangible assets. Indefinite lived intangible assets are not amortized. Intangible assets with a finite life are amortized over the estimated useful life of the asset. Intangible assets with an indefinite useful life are not amortized. Goodwill and intangible assets with an indefinite useful life are tested for impairment on an annual basis or more frequently if changes in circumstances indicate that the carrying amount may not be recoverable. If the goodwill or intangible asset is impaired, it is written down to its realizable value with a corresponding expense reflected in the consolidated statement of operations. The Company tests for impairment of goodwill at the reporting unit level. The Company generally combines reporting units, which are a component of an operating segment when they have similar economic characteristics, nature of services, types of customer, distribution methods and regulatory environment

Income Taxes

Income Taxes — The Company files a consolidated United States ("US") income tax return for its eligible domestic subsidiaries. The Company's non-domestic subsidiaries file income tax returns in their respective local jurisdictions. As part of the US consolidated income tax return filing, the Company is party to federal income tax allocation agreements amongst the includible entities. Under the tax allocation agreements, the Company pays to or receives from its subsidiaries the amount, if any, by which the group’s federal income tax liability was affected by virtue of inclusion of the subsidiary in the consolidated federal return.

Deferred income taxes reflect the impact of “temporary differences” between the amount of assets and liabilities for financial reporting purposes and such amounts as measured by tax laws and regulations. The deferred tax asset primarily consists of book versus tax differences for premiums earned, loss and loss adjustment expense reserve discounting, policy acquisition costs, earned but unbilled premiums, and unrealized holding gains and losses on marketable equity securities. Changes in deferred income tax assets and liabilities that are associated with components of other comprehensive income, primarily unrealized investment gains and losses, are recorded directly to other comprehensive income. Otherwise, changes in deferred income tax assets and liabilities are included as a component of income tax expense.

In assessing the recoverability of deferred tax assets, management considers whether it is more likely than not that the Company will generate future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, tax planning strategies and projected future taxable income in making this assessment. If necessary, the Company establishes a valuation allowance to reduce the deferred tax assets to the amounts that are more likely than not to be realized.

The Company recognizes tax benefits only for tax positions that are more likely than not to be sustained upon examination by taxing authorities. The Company’s policy is to prospectively classify accrued interest and penalties related to any unrecognized tax benefits in its income tax provision. The Company files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. Primarily tax years 2009 through 2013 are still subject to examination. The Company does not anticipate any significant changes to its total unrecognized tax benefits within the next 12 months.

Foreign Currency

Foreign Currency — The Company assigns functional currencies to its foreign operations, which are generally the currencies of the local operating environment. Foreign currency amounts are remeasured to the functional currency and the resulting foreign exchange gains and losses are reflected in earnings. Functional currency amounts from the Company’s foreign operations are then translated into U.S. dollars. The change in unrealized foreign currency translation gain or loss during the year, net of tax, is a component of accumulated other changes in equity from nonowner sources. The foreign currency remeasurement and translation are calculated using current exchange rates for the items reported on the balance sheets and average exchange rates for items recorded in earnings.

Stock Compensation Expense

Stock Compensation Expense — The Company follows ASC 720 Compensation — Stock Compensation and recognizes compensation expense for its share-based payments based on the fair value of the awards. Share-based payments include restricted stock, restricted stock units, performance share units and stock option grants under the Company’s 2005 Equity Incentive Plan and 2010 Omnibus Incentive Plan. ASC 720 requires share-based compensation expense recognized to be based on estimated grant date fair value.

Earnings Per Share

Earnings Per Share — The Company accounts for earnings per share under the two-class method, as described in ASC 260, Earnings Per Share. Under the two-class method, earnings for the period are allocated between common stockholders and other stockholders based on their respective rights to receive dividends. Restricted stock awards granted to employees under the Company’s 2005 Equity Incentive Plan and 2010 Omnibus Incentive Plan are considered participating securities as they receive dividends on this stock. Additionally, the Company follows the treasury stock method related to its contingently convertible debt, as the Company has the ability to settle the conversion premium in either cash or stock. The Company had contingently convertible shares that were dilutive for the Company's earnings per share calculations in 2014 and 2013 and anti-dilutive in 2012.

Treasury Stock

Treasury Stock — The Company accounts for the treasury stock at the repurchase price as a reduction to stockholders’ equity.

Concentration and Credit Risk

Concentration and Credit Risk — Financial instruments that potentially subject the Company to concentration of credit risk are primarily cash and cash equivalents, investments and premium receivable. Investments are diversified through the types of investments, industry sectors and geographic regions. The Company limits the amount of credit exposure with any one financial institution and believes that no significant concentration of credit risk exists with respect to cash and investments. At December 31, 2014 and 2013, the outstanding premium receivable balance is generally diversified due to the number of entities composing the Company’s customer base. To reduce credit risk, the Company performs ongoing evaluations of its customers’ financial condition. The Company also has receivables from its reinsurers. Reinsurance contracts do not relieve the Company from its obligations to policyholders. Failure of reinsurers to honor their obligations could result in losses to the Company. The Company periodically evaluates the financial condition of its reinsurers to minimize its exposure to significant losses from reinsurer insolvencies. It is the policy of management to review all outstanding receivables at period end as well as the bad debt write-offs experienced in the past and establish an allowance for doubtful accounts, if deemed necessary.

Non-Controlling Interest

Non-controlling Interest — The ownership interest in consolidated subsidiaries of non-controlling interests is reflected as non-controlling interest. The Company’s consolidation principles would also consolidate any entity in which the Company would be deemed a primary beneficiary. Non-controlling interest expense represents such non-controlling interests’ in the earnings of that entity. All significant transactions and account balances between the Company and its subsidiaries were eliminated during consolidation.

Use of Estimates

Use of Estimates — The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions, which include the reserves for losses and loss adjustment expenses, are subject to considerable estimation error due to the inherent uncertainty in projecting ultimate claim amounts that will be reported and settled over a period of many years. In addition, estimates and assumptions associated with the recognition and amortization of deferred policy acquisition costs, the determination of fair value of invested assets and related impairments, and the determination of goodwill and intangible impairments require considerable judgment by management. On an on-going basis, management reevaluates its assumptions and the methods of calculating its estimates. Actual results may differ from the estimates and assumptions used in preparing the consolidated financial statements.

Reclassification

Reclassifications — Certain accounts in the prior years’ consolidated financial statements have been reclassified for comparative purposes to conform to the current year’s presentation.

Recent Accounting Literature

Recent Accounting Literature

In November 2014, the FASB issued Accounting Standards Update ("ASU") 2014-16, Derivative and Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity, which requires an entity (an issuer or an investor) of hybrid financial instruments to determine the nature of the host contract by considering the economic characteristics and risks of the entire hybrid financial instrument, including the embedded derivative feature that is being evaluated for separate accounting from the host contract. The updated guidance is effective for the period ending March 15, 2016. The adoption of this guidance is not expected to have a material effect on the Company's results of operations, financial position or liquidity.

In June 2014, the FASB issued ASU 2014-11, Transfers and Serving (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures, which amends accounting for repurchase-to-maturity transactions and associated repurchase financing to secured borrowing. The revised guidance also requires expanded disclosure for certain transactions comprising (1) a transfer of a financial asset accounted for as a sale and (2) an agreement with the same transferee entered into in contemplation of the initial transfer that results in the transferor retaining substantially all of the exposure to the economic return on the transferred financial asset throughout the term of the transaction, as well as expands disclosure for repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions that are accounted for as secured borrowings. The updated guidance is effective for the period ending March 31, 2015. The adoption of this guidance is not expected to have a material effect on the Company's results of operations, financial position or liquidity.

In June 2014, the FASB issued ASU 2014-12, Compensation-Stock Compensation (Topic 718):Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period, to clarify how entities should treat performance targets that can be met after therequisite service period of a share-based payment award. The ASU states that the share-based payment award should be treatedas a performance condition that affects vesting and, therefore, an entity would not record compensation expense (measured as ofthe grant date without taking into account the effect of the performance target) related to an award for which transfer to the employeeis contingent on the entity’s satisfaction of a performance target until it becomes probable that the performance target will be met.No new disclosures are required under this ASU.ASU 2014-12 is effective beginning after December 15, 2015. Early adoption is permitted. In addition, all entities will havethe option of applying the guidance either prospectively (i.e., only to awards granted or modified on or after the effective date ofthe issue) or retrospectively. Retrospective application would only apply to awards with performance targets outstanding at orafter the beginning of the first annual period presented (i.e., the earliest presented comparative period). The adoption of thisguidance is not expected to have an impact on the Company's results of operations, financial condition or liquidity.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), to clarify the principles for recognizing revenue. While insurance contracts are not within the scope of this updated guidance, the Company’s service and fee income will be subject to this updated guidance. The updated guidance requires an entity to recognize revenue as performance obligations are met, in order to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration the entity is entitled to receive for those goods or services. The following steps are applied in the updated guidance: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the entity satisfies a performance obligation. The updated guidance is effective for the quarter ending March 31, 2017. The Company is currently evaluating the impact this guidance will have on the Company's results of operations, financial position or liquidity.

In April 2014, the FASB issued ASU 2014-08, Presentation of Financial Statement (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosure of Disposals of Components of an Entity, which provides revised guidance to reduce diversity in practice for reporting discontinued operations. Under the previous guidance, any component of an entity that was a reportable segment, an operating segment, a reporting unit, a subsidiary, or an asset group was eligible for discontinued operations presentation. The revised guidance only allows disposals of components of an entity that represent a strategic shift (e.g., disposal of a major geographical area, a major line of business, a major equity method investment, or other major parts of an entity) and that have a major effect on a reporting entity’s operations and financial results to be reported as discontinued operations. The revised guidance also requires expanded disclosure in the financial statements for discontinued operations as well as for disposals of significant components of an entity that do not qualify for discontinued operations presentation. The updated guidance is effective for the period ending March 31, 2015. The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

In July 2013, the FASB issued ASU 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, which provides guidance on the presentation of an unrecognized tax benefit when a net operating loss (“NOL”) carry-forward, a similar tax loss, or a tax credit carry-forward exists. Under the ASU, an entity must present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, as a reduction to a deferred tax asset for a NOL carry-forward, similar tax loss, or a tax credit carry-forward. There are two exceptions to this form of presentation as follows:

• To the extent a NOL carry-forward, a similar tax loss, or a tax credit carry-forward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position; and

• The entity does not intend to use the deferred tax asset for this purpose.

If either of these conditions exists, an entity should present an unrecognized benefit in the financial statements as a liability and should net the unrecognizable tax benefit with a deferred tax asset. The amendments in this update were effective for fiscal years, and interim periods within those years, beginning after December 31, 2013. The adoption of this guidance did not have a material impact on the Company's results of operations, financial condition or liquidity.

In March 2013, the FASB issued ASU 2013-05, Foreign Currency Matters (Topic 830): Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity, with the objective of resolving the diversity about whether ASC 810-10, Consolidation - Overall, or ASC 830-30, Foreign Currency Matters - Translation of Financial Statements, applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or allof its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is anonprofit activity or a business (other than a sale of in-substance real estate or conveyance of oil and gas mineral rights) within aforeign entity.

Under this guidance, when a reporting entity that is also the parent entity ceases to have a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business (other than a sale of in substance real estate or conveyance of oil and gas mineral rights) within a foreign entity, the parent is required to apply the guidance in ASC 830-30 to release any related cumulative translation adjustment into net income. Accordingly, the cumulative translation adjustment should be released into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. Additionally, for an equity method investment that is a foreign entity, the partial sale guidance in ASC 830-30-40 continues to be applicable. As such, a pro rata portion of the cumulative translation adjustment should be released into net income upon a partial sale of such an equity method investment. However, this treatment does not apply to an equity method investment that is not a foreign entity. In those instances, the cumulative translation adjustment is released into net income only if the partial sale represents a complete or substantially complete liquidation of the foreign entity that contains the equity method investment. Furthermore, the amendments in this ASU clarify that the sale of an investment in a foreign entity includes both: (1) events that result in the loss of a controlling financial interest in a foreign entity (that is, irrespective of any retained investment); and (2) events that result in an acquirer obtaining control of an acquiree in which it held an equity interest immediately before the acquisition date (sometimes also referred to as a step acquisition). Accordingly, the cumulative translation adjustment should be released into net income upon the occurrence of those events. The amendments in this ASU are effective prospectively for fiscal years (and interim reporting periods within those years) beginning after December 15, 2013. The update was adopted effective January 1, 2014. The adoption of this guidance did not have an impact on the Company's results of operations, financial condition or liquidity.

XML

Debt (Convertible Senior Notes) (Details) (USD $)	12 Months Ended			2 Months Ended	3 Months Ended	1 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Jan. 31, 2012 day	Dec. 31, 2014	Aug. 31, 2013
Debt Instrument [Line Items]
Common stock, par value (per share)	$ 0.01	$ 0.01			$ 0.01
Outstanding principal	$ 279,043,000	$ 200,000,000			$ 279,043,000
Convertible senior notes	214,424,000	164,218,000			214,424,000
Loss on extinguishment of debt	(9,831,000)	0	0
Unamortized original issue discount	64,619,000	35,782,000			64,619,000
Debt issuance cost	2,605,000
5.5% Convertible senior notes due 2021 (the 2021 Notes)
Debt Instrument [Line Items]
Outstanding principal	68,119,000	200,000,000			68,119,000
Convertible senior notes	56,745,000	164,218,000			56,745,000
Unamortized original issue discount	11,374,000	35,782,000			11,374,000
2.75% Convertible senior notes due 2044 (the 2044 Notes)
Debt Instrument [Line Items]
Outstanding principal	210,924,000	0			210,924,000
Convertible senior notes	157,679,000	0			157,679,000
Unamortized original issue discount	53,245,000	0			53,245,000
Convertible Senior Notes
Debt Instrument [Line Items]
Convertible senior notes effective interest rate	7.46%				7.46%
Equity component, net of tax	34,693,000				34,693,000
Debt issuance cost	503,000
Convertible Senior Notes | 5.5% Convertible senior notes due 2021 (the 2021 Notes)
Debt Instrument [Line Items]
Debt instrument, face amount				200,000,000
Common stock, par value (per share)	$ 0.01				$ 0.01
Debt conversion earlier date	Sep. 15, 2021
Threshold percentage of stock price trigger				130.00%
Threshold consecutive trading days				30 years
Threshold consecutive trading days				20
Principal amount per note used in conversion rate	1,000
Initial conversion price of per share of Common Stock	$ 25.91				$ 25.91
Conversion rate for conversion of convertible senior notes	38.5985
Notes submitted for conversion, amount					50,105,000
Per annum interest rate of notes (percentage)	5.50%				5.50%
Deferred origination costs relating to the liability component	4,750,000				4,750,000
Convertible senior notes effective interest rate	8.57%				8.57%
Transaction costs associated with the equity component	1,250,000
Interest expense	13,933,000	14,476,000	14,031,000
Redemption price, percentage of principal amount redeemed	100.00%
Unamortized OID	41,679,000				41,679,000
Unamortized original issue discount	2,957,000				2,957,000
Convertible Senior Notes | 2.75% Convertible senior notes due 2044 (the 2044 Notes)
Debt Instrument [Line Items]
Debt instrument, face amount	158,257,000				158,257,000
Conversion rate for conversion of convertible senior notes	2,731,727
Outstanding principal	210,831,000				210,831,000
Per annum interest rate of notes (percentage)	2.75%				2.75%
Issuance of additional convertible senior notes	76,000,000
Percentage of face amount	0.9				0.9
Rate of accretion, percentage	0.06				0.06
Contingent interest, percentage of principal amount	130.00%
Contingent payment of principal or interest, amount	1,000
Average trading price, percentage	0.25%
Principal amount at maturity	1,000				1,000
Issue price for indenture at maturity	900				900
Convertible senior notes	157,457,000				157,457,000
Unamortized OID	53,374,000				53,374,000
Senior Notes | 6.125% Notes due 2023
Debt Instrument [Line Items]
Debt instrument, face amount						250,000,000
Per annum interest rate of notes (percentage)	6.125%				6.125%	6.125%
Commitment fees and debt issuance costs						2,740,000
Interest and debt expense	15,587,000	5,845,000
Minimum | Senior Notes | 6.125% Notes due 2023
Debt Instrument [Line Items]
Increase (decrease) in interest rate						1.00%
Ratio of indebtedness to net capital						0.3
Maximum | Senior Notes | 6.125% Notes due 2023
Debt Instrument [Line Items]
Ratio of indebtedness to net capital						0.35
Increase in Leveraged Ratio by More than 35 Percent [Member] | Minimum | Senior Notes | 6.125% Notes due 2023
Debt Instrument [Line Items]
Increase (decrease) in interest rate						0.50%
Increase in Leveraged Ratio by 30 Percent to 35 Percent | Minimum | Senior Notes | 6.125% Notes due 2023
Debt Instrument [Line Items]
Increase (decrease) in interest rate						1.50%
Event of Default | Maximum | Senior Notes | 6.125% Notes due 2023
Debt Instrument [Line Items]
Grace period in case of acquisition						18 months
On or before December 15, 2018 | Convertible Senior Notes | 2.75% Convertible senior notes due 2044 (the 2044 Notes)
Debt Instrument [Line Items]
Threshold percentage of stock price trigger	130.00%
On or before December 15, 2018 | Minimum | Convertible Senior Notes | 2.75% Convertible senior notes due 2044 (the 2044 Notes)
Debt Instrument [Line Items]
Stock price trigger	$ 97.50
After December 15, 2024 | Convertible Senior Notes | 2.75% Convertible senior notes due 2044 (the 2044 Notes)
Debt Instrument [Line Items]
Redemption price, percentage of principal amount redeemed	100.00%
On or Before December Fifteen Twenty Eighteen [Member] | Convertible Senior Notes | 2.75% Convertible senior notes due 2044 (the 2044 Notes)
Debt Instrument [Line Items]
Redemption price, percentage of principal amount redeemed	100.00%
After December Fifteen Twenty Eighteen [Member] | Convertible Senior Notes | 2.75% Convertible senior notes due 2044 (the 2044 Notes)
Debt Instrument [Line Items]
Redemption price, percentage of principal amount redeemed	100.00%
2.75% Convertible senior notes due 2044 (the 2044 Notes) | Convertible Senior Notes
Debt Instrument [Line Items]
Notes retired, amount	131,881,000
Convertible senior notes	110,346,000				110,346,000
Write off of issuance cost	2,195,000
Convertible debt, fair value disclosures	117,982,000				117,982,000
Loss on extinguishment of debt	$ 9,831,000

XML

Condensed Consolidated Statements of Income (Parenthetical) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Service, fee and other revenues	$ 409,743	$ 331,559	$ 172,174
Interest income	2,601	0	0
Related Party Transactions
Service, fee and other revenues	58,428	51,545	29,041
Ceding commission earned	$ 405,071	$ 276,556	$ 196,982

XML

Investment in Life Settlements (Additional Information) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014 Contract policy	Dec. 31, 2013 Contract policy	Dec. 31, 2012	Aug. 31, 2011
Schedule of Cost-method Investments [Line Items]
Investments in life settlements and cash value loans	$ 264,517	$ 233,024
Gain on investment in life settlement contracts net of profit commission	12,306	3,800	13,822
Number of life settlement contracts	274	271
Face value of life settlement contracts	1,738,209	1,762,409
Tiger Capital
Schedule of Cost-method Investments [Line Items]
Number of premium finance loans	2
Face value of premium finance loans	0
NGHC
Schedule of Cost-method Investments [Line Items]
Percentage of ownership interest	13.20%			13.20%
AMTCH
Schedule of Cost-method Investments [Line Items]
Percentage of ownership interest	50.00%
Tiger Capital
Schedule of Cost-method Investments [Line Items]
Percentage of ownership interest	50.00%
AMT Alpha
Schedule of Cost-method Investments [Line Items]
Percentage of ownership interest	50.00%
LSC
Schedule of Cost-method Investments [Line Items]
Profits and losses of investment in life insurance policies and premium finance loans	56.60%
Capital contribution for LSC	36,115	70,780
LSC | Parent
Schedule of Cost-method Investments [Line Items]
Capital contribution for LSC	$ 17,907	$ 35,380

XML

Significant Accounting Polices

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Significant Accounting Policies

Significant Accounting Policies

Basis of Reporting — The consolidated financial statements of the Company have been prepared in conformity with accounting principles generally accepted in the United States of America. The consolidated financial statements include the accounts of the Company and its domestic and foreign subsidiaries. The Company uses the equity method of accounting for its investment in National General Holding Corp. (“NGHC”) in which it owns a 13.2% ownership interest. All significant intercompany transactions and accounts have been eliminated in the consolidated financial statements.

Premiums — Insurance premiums, except for certain specialty risk and extended warranty programs, are recognized as earned on the straight-line basis over the contract period. Insurance premiums on specialty risk and extended warranty programs are earned based on an estimated program coverage period. These estimates are based on the expected distribution of coverage periods by contract at inception, and because a single contract may contain multiple coverage period options, these estimates are revised based on the actual coverage period selected by the insured. Unearned premiums represent the portion of premiums written which is applicable to the unexpired term of the contract or policy in force. Premium adjustments on contracts and audit premiums are based on estimates made over the contract period. Premiums earned but not yet billed to insureds are estimated and accrued, net of related costs. These estimates are subject to the effects of trends in payroll audit adjustments. Although considerable variability is inherent in such estimates, management believes that the accrual for earned but unbilled premiums is reasonable. The estimates are continually reviewed and adjusted as necessary as experience develops or new information becomes known; such adjustments are included in current operations. The Company historically has used a percentage of premium for establishing its allowance for doubtful accounts. The Company reviews its bad debt write-offs at least annually and adjusts its premium percentage as required. Allowance for doubtful accounts were approximately $45,024 and $32,132 at December 31, 2014 and 2013, respectively.

Loss and Loss Adjustment Expenses — Loss and loss adjustment expenses (“LAE”) represent the estimated ultimate net costs of all reported and unreported losses incurred through December 31, 2014. The reserves for unpaid losses and LAE are estimated using individual case-basis valuations and statistical analysis and are not discounted. Although considerable variability is inherent in the estimates of reserves for losses and LAE, management believes that the reserves for losses and LAE are adequate. The estimates are continually reviewed and adjusted as necessary as experience develops or new information becomes known. Such adjustments are included in current operations.

Investments — The Company accounts for its investments in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 320 Investments — Debt and Equity Securities, which requires that fixed-maturity and equity securities that have readily determined fair values be segregated into categories based upon the Company’s intention for those securities. In accordance with ASC 320, the Company has classified its fixed-maturities and certain equity securities as available-for-sale. The Company may sell its available-for-sale securities in response to changes in interest rates, risk/reward characteristics, liquidity needs or other factors. Available for sale fixed-maturity securities and equity securities are reported at their estimated fair values based on quoted market prices or a recognized pricing service, with unrealized gains and losses, net of tax effects, reported as a separate component of comprehensive income in stockholders’ equity. Additionally, the Company classified certain equity securities as trading securities. Unrealized gains and losses on trading securities are reported within realized gains and losses. Realized gains and losses are determined on the specific identification method.

Quarterly, the Company’s Investment Committee (“Committee”) evaluates each security that has an unrealized loss as of the end of the subject reporting period for other-than-temporary-impairment (“OTTI”). The Company generally considers an investment to be impaired when it has been in a significant unrealized loss position (in excess of 35% of cost if the issuer has a market capitalization of under $1 billion and in excess of 25% of cost if the issuer has a market capitalization of $1 billion or more) for over 24 months. In addition, the Committee uses a set of quantitative and qualitative criteria to review the Company's investment portfolio to evaluate the necessity of recording impairment losses for other-than-temporary declines in the fair value of our investments. The criteria the Committee primarily considers include:

• 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 restructuring, regulatory changes, acquisitions and dispositions, pending litigation, distribution agreements and general industry trends.

Impairment of investment securities results in a charge to operations when a market decline below cost is deemed to be other-than-temporary. The Company writes down investments immediately that it considers to be impaired based on the above criteria collectively.

Based on guidance in FASB ASC 320-10-65, in the event of the decline in fair value of a debt security, a holder of that security that does not intend to sell the debt security and for whom it is not more than likely than not that such holder will be required to sell the debt security before recovery of its amortized cost basis, is required to separate the decline in fair value into (a) the amount representing the credit loss and (b) the amount related to other factors. The amount of total decline in fair value related to the credit loss shall be recognized in earnings as an OTTI with the amount related to other factors recognized in accumulated other comprehensive loss net loss, net of tax. OTTI credit losses result in a permanent reduction of the cost basis of the underlying investment. The determination of OTTI is a subjective process, and different judgments and assumptions could affect the timing of the loss realization.

In 2014, the Company also classified certain of its equity securities as trading securities. Equity securities classified as trading securities are generally held for resale in anticipation of short-term market movement. Trading securities are stated at estimated fair market value. Gains and losses, both realized and unrealized, are included in the net realized gain or loss on investment on the Consolidated Statements of Income.

The Company has the following types of investments:

(a) Short-term investments — Short term investments are carried at cost, which approximates fair value, and include investments with maturities between 91 days and less than 1 year at date of acquisition. As of December 31, 2014 and 2013, short term investments consisted primarily of money market investments.

(b) Fixed maturities and equity securities, available-for-sale — Fixed maturities and equity securities (common stocks, mutual funds and non-redeemable preferred stock) are classified as available-for-sale and carried at fair value. Unrealized gains or losses on available-for-sale securities are reported as a component of accumulated other comprehensive income.

(c) Equity securities, trading —  Equity securities classified as trading are carried at estimated fair market value. Gains and losses, both realized and unrealized, are reported in the net realized gain or loss on investment.

(d) Mortgage and asset backed securities — For mortgage and asset backed securities, the Company recognizes income using the retrospective adjustment method based on prepayments and the estimated economic life of the securities. The effective yield reflects actual payments to date plus anticipated future payments.

(e) Limited partnerships — The Company uses the equity method of accounting for investments in limited partnerships in which its ownership interest of the limited partnership enables the Company to influence the operating or financial decisions of the investee company, but the Company’s interest in the limited partnership does not require consolidation. The Company’s proportionate share of equity in net income of these unconsolidated affiliates is reported in net investment income.

(f) Derivatives and hedging activities — The Company from time to time invests in a limited amount of derivatives and other financial instruments as part of its investment portfolio. Derivatives are financial arrangements among two or more parties with returns linked to an underlying equity, debt, commodity, asset, liability, foreign exchange rate or other index. Unless subject to a scope exclusion, the Company carries all derivatives on the consolidated balance sheet at fair value. For derivatives that do not qualify for hedge accounting, the changes in fair value of the derivative are presented as a component of operating income. The Company primarily utilizes interest rate swaps, which are valued in terms of the contract between the Company and the issuer of the swaps, are based on the difference between the stated floating rate of the underlying indebtedness, and a predetermined fixed rate for such indebtedness with the result that the indebtedness carries a net fixed interest rate.

(g) Securities sold under agreements to repurchase, at contract value — The Company from time to time invests in securities sold under agreements to repurchase, which are accounted for as collateralized borrowing transactions and are recorded at their contracted repurchase amounts, plus accrued interest. The Company minimizes the credit risk that counterparties to transactions might be unable to fulfill their contractual obligations by monitoring exposure and collateral value and generally requiring additional collateral to be deposited with the Company when necessary.

Net investment income consists primarily of interest and dividends less expenses. Interest on fixed maturities, adjusted for any amortization of premium or discount, is recorded as income when earned. Investment expenses are accrued as incurred. Realized investment gains or losses are computed using the specific costs of securities sold, and, if applicable, include write-downs on investments having other-than-temporary declines in value.

Fair Value of Financial Instruments — The Company’s estimates of fair value for financial assets and financial liabilities are based on the framework established in ASC 820 Fair Value Measurements and Disclosures. The framework is based on the inputs used in valuation and gives the highest priority to quoted prices in active markets and requires that observable inputs be used in the valuations when available. The disclosure of fair value estimates in the ASC 820 hierarchy is based on whether the significant inputs into the valuation are observable. In determining the level of the hierarchy in which the estimate is disclosed, the highest priority is given to unadjusted quoted prices in active markets and the lowest priority to unobservable inputs that reflect the Company’s significant market assumptions. Additionally, valuation of fixed maturity investments is more subjective when markets are less liquid due to lack of market based inputs, which may increase the potential that the estimated fair value of an investment is not reflective of the price at which an actual transaction could occur. Fair values of other financial instruments approximate their carrying values.

For investments that have quoted market prices in active markets, the Company uses the quoted market prices as fair value and includes these prices in the amounts disclosed in the Level 1 hierarchy. The Company receives the quoted market prices from nationally recognized third-party pricing services (“pricing service”). When quoted market prices are unavailable, the Company utilizes a pricing service to determine an estimate of fair value. This pricing method is used, primarily, for fixed maturities. The fair value estimates provided by the pricing service are included in the Level 2 hierarchy. If the Company determines that the fair value estimate provided by the pricing service does not represent fair value or if quoted market prices and an estimate from pricing services are unavailable, the Company produces an estimate of fair value based on dealer quotations of the bid price for recent activity in positions with the same or similar characteristics to that being valued or through consensus pricing of a pricing service. Depending on the level of observable inputs, the Company will then determine if the estimate is Level 2 or Level 3 hierarchy.

Fixed Maturities. The Company utilizes a pricing service to estimate fair value measurements for all of its fixed maturities. The pricing service utilizes market quotations for fixed maturity securities that have quoted market prices in active markets. Since fixed maturities other than U.S. treasury securities generally do not trade on a daily basis, the pricing service prepares estimates of fair value measurements using relevant market data, benchmark curves, sector groupings and matrix pricing. The pricing service utilized by the Company has indicated it will produce an estimate of fair value only if there is verifiable information to produce a valuation. As the fair value estimates of most fixed maturity investments are based on observable market information rather than market quotes, the estimates of fair value other than U.S. Treasury securities are included in Level 2 of the hierarchy. U.S. Treasury securities are included in the amount disclosed in Level 1 as the estimates are based on unadjusted prices. The Company’s Level 2 investments include obligations of U.S. government agencies, municipal bonds, corporate debt securities and other mortgage backed securities.

Equity Securities. The Company utilizes a pricing service to estimate the fair value of the majority of its available-for-sale and trading equity securities. The pricing service utilizes market quotations for equity securities that have quoted market prices in active markets and their respective quoted prices are provided as fair value. The Company classifies the values of these equity securities as Level 1. The pricing service also provides fair value estimates for certain equity securities whose fair value is based on observable market information rather than market quotes. The Company classifies the value of these equity securities as Level 2. The Company also holds certain equity securities that are issued by privately-held entities or direct equity investments that do not have an active market. The Company estimates the fair value of these securities primarily based on inputs such as third party broker quotes, issuers' book value, market multiples, and other inputs. These equity securities are classified as Level 3 due to significant unobservable inputs used in the valuation.

Other Investments. Other investments consisted primarily of investments in limited partnerships, an interest in syndicated term loan, and annuities. Other investments accounted for approximately 0.6% of the Company's investment portfolio as of December 31, 2014. The Company estimates the fair value of other investments based on significant unobservable inputs in the valuation process. As a result, the Company classified the fair value estimates as Level 3 in the financial hierarchy. The Company has determined that its investments in Level 3 securities are not material to its financial position or results of operations.

Derivatives. The Company estimates fair value using information provided by a pricing service for interest rate swaps and classifies derivatives as Level 2 hierarchy.

Investment in Life Settlements — When the Company becomes the owner of a life insurance policy either by direct purchase or following a default on a premium finance loan, the life insurance premium for such policy is accounted for as an investment in life settlements. Investments in life settlements are accounted for in accordance with ASC 325-30, Investments in Insurance Contracts, which states that an investor shall elect to account for its investments in life settlement contracts using either the investment method or the fair value method. The election is made on an instrument-by-instrument basis and is irrevocable. The Company has elected to account for these investments using the fair value method. Fair value of the investment in policies is determined using unobservable Level 3 inputs and is calculated by performing a net present value calculation of the face amount of the life policies less premiums for the total portfolio. The unobservable Level 3 inputs use new or updated information that affects the Company's assumptions about remaining life expectancy, credit worthiness of the policy issuer, funds needed to maintain the asset until maturity, and discount rates.

Life Settlement Profit Commission — Investments in life settlements are accounted for in accordance with ASC 325-30, Investments in Insurance Contracts, and the Company has elected to account for its investment in life settlements using the fair value method. The Company retains a third party service provider to perform certain administration functions to effectively manage the life settlement contracts held by Tiger Capital, LLC and AMT Capital Holdings II S.A. and a portion of their fee is contingent on the overall profitability of the life settlement contracts. The Company accrues the related profit commission on life settlements at fair value, in relation to life settlements purchased prior to December 31, 2010. This profit commission is calculated based on the discounted anticipated cash flows and the provisions of the underlying contract. In addition, the Company accrues a best estimate in relation to profit commission due on certain life settlement contracts acquired subsequent to December 31, 2010 as no contractual relationship currently exists.

Warranty Fee Revenue — The Company promotes and markets extended service plans (“ESP”) to consumers through retailers and certain other marketing organizations usually with terms of coverage ranging from one to three years, commencing at the expiration of the manufacturers’ warranty, if applicable. The Company generally insures the obligations under ESPs through contractual liability insurance issued by one of its insurance company subsidiaries. Under the terms of service agreements with various retailers, the Company provides for marketing and administrative services related to ESP. These agreements are generally for one-year terms and can be canceled by either party with thirty days advance notice. The Company recognizes revenue related to promotion, marketing and administration services at the time of the sale of ESP. However, the Company defers a portion of service revenue based upon an estimate of administrative services to be provided in future periods.

Deferred Policy Acquisition Costs — The Company defers commission expenses, premium taxes and assessments as well as underwriting and safety costs that vary with and are primarily related to the successful acquisition of insurance policies. These acquisition costs are capitalized and charged to expense ratably as premiums are earned. The Company may realize deferred policy acquisition costs only if the ratio of loss and loss adjustment expense reserves (calculated on a discounted basis) to the premiums to be earned is less than 100%, as it historically has been. If, hypothetically, that ratio were to be above 100%, the Company could not continue to record deferred policy acquisition costs as an asset and may be required to establish a liability for a premium deficiency reserve. The Company considers anticipated investment income in determining whether a premium deficiency relating to short duration contracts exists. The change in net deferred acquisition costs was $159,979, $97,561 and $68,135 for the years ended December 31, 2014, 2013 and 2012, respectively. The amortization for deferred acquisition costs was approximately $538,710, $367,288, and $242,887 in 2014, 2013 and 2012, respectively.

Reinsurance — Reinsurance premiums, losses and LAE ceded to other companies are accounted for on a basis consistent with those used in accounting for the original policies issued and pursuant to the terms of the reinsurance contracts. The Company records premiums earned and losses and LAE incurred and ceded to other companies as reductions of premium revenue and losses and LAE. The Company accounts for commissions allowed by reinsurers on business ceded as ceding commission, which is a reduction of acquisition of costs and other underwriting expenses. The Company earns commissions on reinsurance premiums ceded in a manner consistent with the recognition of the earned premium on the underlying insurance policies, on a pro rata basis over the terms of the policies reinsured. Reinsurance recoverables relate to the portion of reserves and paid losses and LAE that are ceded to other companies. The Company remains contingently liable for all loss payments in the event of failure to collect from the reinsurer.

Ceding Commissions on Reinsurance Transactions — Ceding commissions on reinsurance transactions are commissions the Company receives from ceding gross written premiums to third party reinsurers. In connection with the Maiden Quota Share, which is the Company's primary source of ceding commissions, the amount the Company receives is a blended rate based on a contractual formula contained in the individual reinsurance agreements, and the rate may not correlate specifically to the cost structure of the individual segments. The ceding commissions the Company receives cover a portion of its capitalized direct acquisition costs and a portion of other underwriting expenses. Ceding commissions received from reinsurance transactions that represent recovery of capitalized direct acquisition costs are recorded as a reduction of capitalized unamortized deferred acquisition costs and the net amount is charged to expense in proportion to net premium revenue recognized. Ceding commissions received from reinsurance transactions that represent the recovery of other underwriting expenses are recognized in the income statement over the insurance contract period in proportion to the insurance protection provided and classified as a reduction of acquisition costs and other underwriting expenses. Ceding commissions received, but not yet earned, that represent the recovery of other underwriting expenses are classified as a component of accrued expenses and other current liabilities. The Company allocates earned ceding commissions to its segments based on each segment’s proportionate share of total acquisition costs and other underwriting expenses recognized during the period.

Assessments — Insurance related assessments are accrued in the period in which they have been incurred. A typical obligating event would be the issuance of an insurance policy or the occurrence of a claim. The Company is subject to a variety of assessments, such as assessments by state guaranty funds and workers’ compensation second injury funds. State guaranty funds assessments are used by state insurance regulators to cover losses of policyholders of insolvent insurance companies and for the operating expenses of such agencies. The Company uses estimated assessment rates in determining the appropriate assessment expense and accrual. The Company uses estimates derived from state regulators and/or National Association of Insurance Commissioners (“NAIC”) Tax and Assessments Guidelines. Assessment expense for the years ended December 31, 2014, 2013 and 2012 was approximately $23,205, $33,772 and $39,546, respectively.

Business Combinations — The Company accounts for business combinations under the acquisition method of accounting, which requires the Company to record assets acquired, liabilities assumed and any non-controlling interest in the acquiree at their respective fair values as of the acquisition date in the Company's consolidated financial statements. The Company accounts for the insurance and reinsurance contracts under the acquisition method as new contracts, which requires the Company to record assets and liabilities at fair value. The Company adjusts the fair value loss and LAE reserves by recording the acquired loss reserves based on the Company’s existing accounting policies and then discounting them based on expected reserve payout patterns using a current risk-free rate of interest. This risk free interest rate is then adjusted based on different cash flow scenarios that use different payout and ultimate reserve assumptions deemed to be reasonably possible based upon the inherent uncertainties present in determining the amount and timing of payment of such reserves. The difference between the acquired loss and LAE reserves and the Company’s best estimate of the fair value of such reserves at the acquisition date is recorded either an an intangible asset or another liability, as applicable, and amortized proportionately to the decrease in the acquired loss and LAE reserves over the payout period for the acquired loss and LAE reserves. The Company records contingent consideration at fair value based on the terms of the purchase agreement with subsequent changes in fair value recorded through earnings. The determination of fair value may require management to make significant estimates and assumptions. The purchase price is the fair value of the total consideration conveyed to the seller and the Company records the excess of the purchase price over the fair value of the acquired net assets, where applicable, as goodwill. The Company assigns fair values to intangible assets based on valuation techniques including the income and market approaches. The Company expenses costs associated with the acquisition of a business in the period incurred. The Company includes the results of operations of an acquired business in its consolidated financial statements from the date of the acquisition.

Goodwill and Intangible Assets — The Company accounts for goodwill and intangible assets in accordance with ASC 350 Intangibles — Goodwill and Other. Upon the completion of an acquisition, the Company completes purchase price accounting in accordance with ASC 805, Business Combinations, which requires an acquirer to assign values to the acquired assets and liabilities based on their fair value. In the event that a purchase price paid is in excess of the net assets acquired, any unidentified excess is deemed to be goodwill. Goodwill is not amortized. Additionally as a result of an acquisition, the Company may obtain identifiable intangible assets. Indefinite lived intangible assets are not amortized. Intangible assets with a finite life are amortized over the estimated useful life of the asset. Intangible assets with an indefinite useful life are not amortized. Goodwill and intangible assets with an indefinite useful life are tested for impairment on an annual basis or more frequently if changes in circumstances indicate that the carrying amount may not be recoverable. If the goodwill or intangible asset is impaired, it is written down to its realizable value with a corresponding expense reflected in the consolidated statement of operations. The Company tests for impairment of goodwill at the reporting unit level. The Company generally combines reporting units, which are a component of an operating segment when they have similar economic characteristics, nature of services, types of customer, distribution methods and regulatory environment. The Company had seven reporting units as of December 31, 2014.

Property and Equipment — Property and equipment are recorded at cost. Maintenance and repairs are charged to operations as incurred. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets, as follows:

Building	40 years
Equipment	5 to 7 years
Computer equipment and software	3 to 20 years (primarily 3 years)
Leasehold improvements	Lesser of lease term or 15 years

The Company accounts for its internal use software under ASC 350 Intangibles — Goodwill and Other. Accordingly, the Company capitalizes costs of computer software developed or obtained for internal use that is specifically identifiable, has determinable lives and relates to future use.

Equalization reserves —The Company owns several Luxembourg-domiciled reinsurance entities. In connection with these entities, the Company acquires cash and equalization reserves of the reinsurance companies. An equalization reserve is a catastrophe reserve established in excess of required reserves as established by the laws of Luxembourg. The equalization reserves were originally established by the seller of the reinsurance entities, and under Luxembourg law allowed the reinsurance company to reduce its income tax paid.

Income Taxes — The Company files a consolidated United States ("US") income tax return for its eligible domestic subsidiaries. The Company's non-domestic subsidiaries file income tax returns in their respective local jurisdictions. As part of the US consolidated income tax return filing, the Company is party to federal income tax allocation agreements amongst the includible entities. Under the tax allocation agreements, the Company pays to or receives from its subsidiaries the amount, if any, by which the group’s federal income tax liability was affected by virtue of inclusion of the subsidiary in the consolidated federal return.

Deferred income taxes reflect the impact of “temporary differences” between the amount of assets and liabilities for financial reporting purposes and such amounts as measured by tax laws and regulations. The deferred tax asset primarily consists of book versus tax differences for premiums earned, loss and loss adjustment expense reserve discounting, policy acquisition costs, earned but unbilled premiums, and unrealized holding gains and losses on marketable equity securities. Changes in deferred income tax assets and liabilities that are associated with components of other comprehensive income, primarily unrealized investment gains and losses, are recorded directly to other comprehensive income. Otherwise, changes in deferred income tax assets and liabilities are included as a component of income tax expense.

In assessing the recoverability of deferred tax assets, management considers whether it is more likely than not that the Company will generate future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, tax planning strategies and projected future taxable income in making this assessment. If necessary, the Company establishes a valuation allowance to reduce the deferred tax assets to the amounts that are more likely than not to be realized.

The Company recognizes tax benefits only for tax positions that are more likely than not to be sustained upon examination by taxing authorities. The Company’s policy is to prospectively classify accrued interest and penalties related to any unrecognized tax benefits in its income tax provision. The Company files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. Primarily tax years 2009 through 2013 are still subject to examination. The Company does not anticipate any significant changes to its total unrecognized tax benefits within the next 12 months.

Pensions — The Company accounts for its pension plan by recognizing in its balance sheets the overfunded or underfunded status of defined benefit plans measured as the difference between the fair value of plan assets and the projected benefit obligation. The Company recognizes the change in the funded status of the plan in the year in which the change occurs through Accumulated Other Comprehensive Income.

Foreign Currency — The Company assigns functional currencies to its foreign operations, which are generally the currencies of the local operating environment. Foreign currency amounts are remeasured to the functional currency and the resulting foreign exchange gains and losses are reflected in earnings. Functional currency amounts from the Company’s foreign operations are then translated into U.S. dollars. The change in unrealized foreign currency translation gain or loss during the year, net of tax, is a component of accumulated other changes in equity from nonowner sources. The foreign currency remeasurement and translation are calculated using current exchange rates for the items reported on the balance sheets and average exchange rates for items recorded in earnings.

Stock Compensation Expense — The Company follows ASC 720 Compensation — Stock Compensation and recognizes compensation expense for its share-based payments based on the fair value of the awards. Share-based payments include restricted stock, restricted stock units, performance share units and stock option grants under the Company’s 2005 Equity Incentive Plan and 2010 Omnibus Incentive Plan. ASC 720 requires share-based compensation expense recognized to be based on estimated grant date fair value.

Earnings Per Share — The Company accounts for earnings per share under the two-class method, as described in ASC 260, Earnings Per Share. Under the two-class method, earnings for the period are allocated between common stockholders and other stockholders based on their respective rights to receive dividends. Restricted stock awards granted to employees under the Company’s 2005 Equity Incentive Plan and 2010 Omnibus Incentive Plan are considered participating securities as they receive dividends on this stock. Additionally, the Company follows the treasury stock method related to its contingently convertible debt, as the Company has the ability to settle the conversion premium in either cash or stock. The Company had contingently convertible shares that were dilutive for the Company's earnings per share calculations in 2014 and 2013 and anti-dilutive in 2012.

Treasury Stock — The Company accounts for the treasury stock at the repurchase price as a reduction to stockholders’ equity.

Concentration and Credit Risk — Financial instruments that potentially subject the Company to concentration of credit risk are primarily cash and cash equivalents, investments and premium receivable. Investments are diversified through the types of investments, industry sectors and geographic regions. The Company limits the amount of credit exposure with any one financial institution and believes that no significant concentration of credit risk exists with respect to cash and investments. At December 31, 2014 and 2013, the outstanding premium receivable balance is generally diversified due to the number of entities composing the Company’s customer base. To reduce credit risk, the Company performs ongoing evaluations of its customers’ financial condition. The Company also has receivables from its reinsurers. Reinsurance contracts do not relieve the Company from its obligations to policyholders. Failure of reinsurers to honor their obligations could result in losses to the Company. The Company periodically evaluates the financial condition of its reinsurers to minimize its exposure to significant losses from reinsurer insolvencies. It is the policy of management to review all outstanding receivables at period end as well as the bad debt write-offs experienced in the past and establish an allowance for doubtful accounts, if deemed necessary.

Non-controlling Interest — The ownership interest in consolidated subsidiaries of non-controlling interests is reflected as non-controlling interest. The Company’s consolidation principles would also consolidate any entity in which the Company would be deemed a primary beneficiary. Non-controlling interest expense represents such non-controlling interests’ in the earnings of that entity. All significant transactions and account balances between the Company and its subsidiaries were eliminated during consolidation.

Use of Estimates — The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions, which include the reserves for losses and loss adjustment expenses, are subject to considerable estimation error due to the inherent uncertainty in projecting ultimate claim amounts that will be reported and settled over a period of many years. In addition, estimates and assumptions associated with the recognition and amortization of deferred policy acquisition costs, the determination of fair value of invested assets and related impairments, and the determination of goodwill and intangible impairments require considerable judgment by management. On an on-going basis, management reevaluates its assumptions and the methods of calculating its estimates. Actual results may differ from the estimates and assumptions used in preparing the consolidated financial statements.

Reclassifications — Certain accounts in the prior years’ consolidated financial statements have been reclassified for comparative purposes to conform to the current year’s presentation.

Recent Accounting Literature

In November 2014, the FASB issued Accounting Standards Update ("ASU") 2014-16, Derivative and Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity, which requires an entity (an issuer or an investor) of hybrid financial instruments to determine the nature of the host contract by considering the economic characteristics and risks of the entire hybrid financial instrument, including the embedded derivative feature that is being evaluated for separate accounting from the host contract. The updated guidance is effective for the period ending March 15, 2016. The adoption of this guidance is not expected to have a material effect on the Company's results of operations, financial position or liquidity.

In June 2014, the FASB issued ASU 2014-11, Transfers and Serving (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures, which amends accounting for repurchase-to-maturity transactions and associated repurchase financing to secured borrowing. The revised guidance also requires expanded disclosure for certain transactions comprising (1) a transfer of a financial asset accounted for as a sale and (2) an agreement with the same transferee entered into in contemplation of the initial transfer that results in the transferor retaining substantially all of the exposure to the economic return on the transferred financial asset throughout the term of the transaction, as well as expands disclosure for repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions that are accounted for as secured borrowings. The updated guidance is effective for the period ending March 31, 2015. The adoption of this guidance is not expected to have a material effect on the Company's results of operations, financial position or liquidity.

In June 2014, the FASB issued ASU 2014-12, Compensation-Stock Compensation (Topic 718):Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period, to clarify how entities should treat performance targets that can be met after therequisite service period of a share-based payment award. The ASU states that the share-based payment award should be treatedas a performance condition that affects vesting and, therefore, an entity would not record compensation expense (measured as ofthe grant date without taking into account the effect of the performance target) related to an award for which transfer to the employeeis contingent on the entity’s satisfaction of a performance target until it becomes probable that the performance target will be met.No new disclosures are required under this ASU.ASU 2014-12 is effective beginning after December 15, 2015. Early adoption is permitted. In addition, all entities will havethe option of applying the guidance either prospectively (i.e., only to awards granted or modified on or after the effective date ofthe issue) or retrospectively. Retrospective application would only apply to awards with performance targets outstanding at orafter the beginning of the first annual period presented (i.e., the earliest presented comparative period). The adoption of thisguidance is not expected to have an impact on the Company's results of operations, financial condition or liquidity.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), to clarify the principles for recognizing revenue. While insurance contracts are not within the scope of this updated guidance, the Company’s service and fee income will be subject to this updated guidance. The updated guidance requires an entity to recognize revenue as performance obligations are met, in order to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration the entity is entitled to receive for those goods or services. The following steps are applied in the updated guidance: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the entity satisfies a performance obligation. The updated guidance is effective for the quarter ending March 31, 2017. The Company is currently evaluating the impact this guidance will have on the Company's results of operations, financial position or liquidity.

In April 2014, the FASB issued ASU 2014-08, Presentation of Financial Statement (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosure of Disposals of Components of an Entity, which provides revised guidance to reduce diversity in practice for reporting discontinued operations. Under the previous guidance, any component of an entity that was a reportable segment, an operating segment, a reporting unit, a subsidiary, or an asset group was eligible for discontinued operations presentation. The revised guidance only allows disposals of components of an entity that represent a strategic shift (e.g., disposal of a major geographical area, a major line of business, a major equity method investment, or other major parts of an entity) and that have a major effect on a reporting entity’s operations and financial results to be reported as discontinued operations. The revised guidance also requires expanded disclosure in the financial statements for discontinued operations as well as for disposals of significant components of an entity that do not qualify for discontinued operations presentation. The updated guidance is effective for the period ending March 31, 2015. The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

In July 2013, the FASB issued ASU 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, which provides guidance on the presentation of an unrecognized tax benefit when a net operating loss (“NOL”) carry-forward, a similar tax loss, or a tax credit carry-forward exists. Under the ASU, an entity must present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, as a reduction to a deferred tax asset for a NOL carry-forward, similar tax loss, or a tax credit carry-forward. There are two exceptions to this form of presentation as follows:

• To the extent a NOL carry-forward, a similar tax loss, or a tax credit carry-forward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position; and

• The entity does not intend to use the deferred tax asset for this purpose.

If either of these conditions exists, an entity should present an unrecognized benefit in the financial statements as a liability and should net the unrecognizable tax benefit with a deferred tax asset. The amendments in this update were effective for fiscal years, and interim periods within those years, beginning after December 31, 2013. The adoption of this guidance did not have a material impact on the Company's results of operations, financial condition or liquidity.

In March 2013, the FASB issued ASU 2013-05, Foreign Currency Matters (Topic 830): Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity, with the objective of resolving the diversity about whether ASC 810-10, Consolidation - Overall, or ASC 830-30, Foreign Currency Matters - Translation of Financial Statements, applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or allof its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is anonprofit activity or a business (other than a sale of in-substance real estate or conveyance of oil and gas mineral rights) within aforeign entity.

Under this guidance, when a reporting entity that is also the parent entity ceases to have a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business (other than a sale of in substance real estate or conveyance of oil and gas mineral rights) within a foreign entity, the parent is required to apply the guidance in ASC 830-30 to release any related cumulative translation adjustment into net income. Accordingly, the cumulative translation adjustment should be released into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. Additionally, for an equity method investment that is a foreign entity, the partial sale guidance in ASC 830-30-40 continues to be applicable. As such, a pro rata portion of the cumulative translation adjustment should be released into net income upon a partial sale of such an equity method investment. However, this treatment does not apply to an equity method investment that is not a foreign entity. In those instances, the cumulative translation adjustment is released into net income only if the partial sale represents a complete or substantially complete liquidation of the foreign entity that contains the equity method investment. Furthermore, the amendments in this ASU clarify that the sale of an investment in a foreign entity includes both: (1) events that result in the loss of a controlling financial interest in a foreign entity (that is, irrespective of any retained investment); and (2) events that result in an acquirer obtaining control of an acquiree in which it held an equity interest immediately before the acquisition date (sometimes also referred to as a step acquisition). Accordingly, the cumulative translation adjustment should be released into net income upon the occurrence of those events. The amendments in this ASU are effective prospectively for fiscal years (and interim reporting periods within those years) beginning after December 15, 2013. The update was adopted effective January 1, 2014. The adoption of this guidance did not have an impact on the Company's results of operations, financial condition or liquidity.

XML

Earnings Per Share Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2014

Earnings Per Share [Abstract]

Summary of Elements Used in Calculating Basic and Diluted Earnings Per Share

The following, is a summary of the elements used in calculating basic and diluted earnings per share for the years ended December 31, 2014, 2013 and 2012:

(Amounts in Thousands, except for earnings per share)	2014		2013		2012
Basics earnings per share:
Net income attributable to AmTrust common stockholders	$	434,276	$	278,237	$	177,987
Less: Net income allocated to participating securities and redeemable non-controlling interest	1,217		431		706
Net income allocated to AmTrust common stockholders	$	433,059	$	277,806	$	177,281
Weighted average common shares outstanding – basic	75,144		74,278		73,534
Less: Weighted average participating shares outstanding	211		115		265
Weighted average common shares outstanding – basic	74,933		74,163		73,269
Net income per AmTrust common shares – basic	$	5.78	$	3.75	$	2.42
Diluted earnings per share:
Net income attributable to AmTrust common stockholders	$	434,276	$	278,237	$	177,987
Less: Net income allocated to participating securities and redeemable non-controlling interest	1,217		431		706
Net income allocated to AmTrust common stockholders	$	433,059	$	277,806	$	177,281
Weighted average common shares outstanding – basic	74,933		74,163		73,269
Plus: Dilutive effect of stock options, convertible debt, other	4,584		3,821		2,351
Weighted average common shares outstanding – dilutive	79,517		77,984		75,620
Net income per AmTrust common shares – diluted	$	5.45	$	3.56	$	2.34

XML

Fair Value of Financial Instruments (Increase or (Decrease) in Carrying Value of Investment in Life Insurance Policies) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Fair Value Disclosures [Abstract]
Life expectancy Plus 4 Months	$ (34,686)	$ (29,537)
Life expectancy Minus 4 Months	36,486	31,313
Discount Plus 1%	(22,705)	(20,055)
Discount Minus 1%	$ 25,456	$ 22,605

XML

Debt (Revolving Credit Agreement) (Details) (USD $)	12 Months Ended			0 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Sep. 12, 2014	Sep. 11, 2014
Line of Credit Facility [Line Items]
Term of debt instrument	5 years
Revolving credit facility	$ 120,000,000	$ 0
Revolving Credit Facility
Line of Credit Facility [Line Items]
Interest expense	1,662,000	1,752,000	1,884,000
LIBOR
Line of Credit Facility [Line Items]
Debt instrument, interest rate (percentage)	4.10%
Sagicor Europe Limited | Letter of Credit
Line of Credit Facility [Line Items]
Commitment fee percentage	0.15%
Line of Credit
Line of Credit Facility [Line Items]
Letters of credit, outstanding amount	97,346,000
Line of Credit | Revolving Credit Facility
Line of Credit Facility [Line Items]
Term of debt instrument				5 years
Line of credit, maximum borrowing capacity				350,000,000
Credit agreement, remaining borrowing capacity	132,654,000				200,000,000
Deferred finance costs					967,000
Revolving credit facility	120,000,000
Commitment fee percentage				0.175%
Effective interest rate, minimum, percentage	1.563%
Effective interest rate, maximum, percentage	3.625%
Line of Credit | Letter of Credit
Line of Credit Facility [Line Items]
Line of credit, maximum borrowing capacity				175,000,000
Additional borrowing capacity				150,000,000
Credit agreement, remaining borrowing capacity	$ 77,654,000
Line of Credit | Maximum | Revolving Credit Facility
Line of Credit Facility [Line Items]
Commitment fee percentage				0.25%
Line of Credit | Minimum | Revolving Credit Facility
Line of Credit Facility [Line Items]
Commitment fee percentage				0.15%
Line of Credit | Federal Funds Effective Swap Rate | Revolving Credit Facility
Line of Credit Facility [Line Items]
Interest rate, variable, percentage				0.50%
Line of Credit | LIBOR | Maximum | Revolving Credit Facility
Line of Credit Facility [Line Items]
Interest rate, variable, percentage				1.625%
Line of Credit | LIBOR | Minimum | Revolving Credit Facility
Line of Credit Facility [Line Items]
Interest rate, variable, percentage				1.125%
Line of Credit | One Month London Interbank Offered Rate | Revolving Credit Facility
Line of Credit Facility [Line Items]
Interest rate, variable, percentage				1.00%
Line of Credit | Base Rate | Maximum | Revolving Credit Facility
Line of Credit Facility [Line Items]
Interest rate, variable, percentage				0.625%
Line of Credit | Base Rate | Minimum | Revolving Credit Facility
Line of Credit Facility [Line Items]
Interest rate, variable, percentage				0.125%

XML

Investments (Other Than Temporary Investment) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Other-than-temporary impairment charges	$ 8,039	$ 2,869	$ 2,965
Equity securities
Schedule of Available-for-sale Securities [Line Items]
Other-than-temporary impairment charges	2,646	2,869	2,965
Fixed maturities
Schedule of Available-for-sale Securities [Line Items]
Other-than-temporary impairment charges	$ 5,393	$ 0	$ 0

XML

Earnings Per Share

12 Months Ended

Dec. 31, 2014

Earnings Per Share [Abstract]

Earnings Per Share

Earnings per Share

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

The Company paid a ten percent stock dividend on September 4, 2013 and September 20, 2012 As such, the weighted average number of shares used for basic and diluted earnings per share have been adjusted retroactively in the prior periods.

The following, is a summary of the elements used in calculating basic and diluted earnings per share for the years ended December 31, 2014, 2013 and 2012:

(Amounts in Thousands, except for earnings per share)	2014		2013		2012
Basics earnings per share:
Net income attributable to AmTrust common stockholders	$	434,276	$	278,237	$	177,987
Less: Net income allocated to participating securities and redeemable non-controlling interest	1,217		431		706
Net income allocated to AmTrust common stockholders	$	433,059	$	277,806	$	177,281
Weighted average common shares outstanding – basic	75,144		74,278		73,534
Less: Weighted average participating shares outstanding	211		115		265
Weighted average common shares outstanding – basic	74,933		74,163		73,269
Net income per AmTrust common shares – basic	$	5.78	$	3.75	$	2.42
Diluted earnings per share:
Net income attributable to AmTrust common stockholders	$	434,276	$	278,237	$	177,987
Less: Net income allocated to participating securities and redeemable non-controlling interest	1,217		431		706
Net income allocated to AmTrust common stockholders	$	433,059	$	277,806	$	177,281
Weighted average common shares outstanding – basic	74,933		74,163		73,269
Plus: Dilutive effect of stock options, convertible debt, other	4,584		3,821		2,351
Weighted average common shares outstanding – dilutive	79,517		77,984		75,620
Net income per AmTrust common shares – diluted	$	5.45	$	3.56	$	2.34

As of December 31, 2014, there were less than 8,000 anti-dilutive securities excluded from diluted earnings per share.

XML

Share Based Compensation (Schedule of Option Activity) (Details) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Shares
Outstanding at beginning of period	2,997,460	3,675,776	4,546,678
Granted	37,500	78,001	45,981
Exercised	(1,092,120)	(747,272)	(821,745)
Forfeited	(8,470)	(9,045)	(95,138)
Outstanding end of period	1,934,370	2,997,460	3,675,776
Weighted Average Exercise Price
Outstanding at beginning of period	$ 10.49	$ 9.41	$ 9.06
Granted	$ 37.87	$ 29.78	$ 23.63
Exercised	$ 9.50	$ 7.21	$ 7.98
Forfeited	$ 7.03	$ 8.90	$ 11.87
Outstanding end of period	$ 11.60	$ 10.49	$ 9.41

XML

Employee Benefit Plans (Assumptions Used) (Details)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Benefit Obligation [Abstract]
Discount rate used for liability determination	3.75%	4.50%
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Net Periodic Benefit Cost [Abstract]
Discount rate used for expense determination	4.50%	4.75%
Long term rate of return on assets	6.00%	6.00%
Assumed rate of increase for pension payments	3.25%	3.25%

XML

Employee Benefit Plans (Change in Benefit Obligation) (Details) (USD $) In Thousands, unless otherwise specified	10 Months Ended	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2014	Dec. 31, 2013
Change in Benefit Obligation
Beginning balance	$ 39,877	$ 46,873
Interest cost	1,608	2,074
Actuarial loss	2,074	4,621
Benefits and expenses paid net of retiree contributions	(553)	(820)
Exchange rate changes	3,867	(3,202)
Ending balance	46,873	49,546	46,873
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward]
Beginning balance	34,832	43,592
Actual return on assets	1,820	5,974
Employer contributions	3,958	1,004	3,958
Benefits and expenses paid net of retiree contributions	(553)	(820)
Exchange rate changes	3,535	(3,016)
Ending balance	43,592	46,734	43,592
Funded Status at December 31, 2014 and 2013	$ (3,281)	$ (2,812)	$ (3,281)

XML

Investments (Summary of Realized Gain and Loss) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Gross Gains	$ 41,207
Write-down	(8,039)	(2,869)	(2,965)
Total of gross loss and write-downs	(24,784)
Net gain and losses, including write-down	16,423
Fixed maturities
Schedule of Available-for-sale Securities [Line Items]
Write-down	(5,393)	0	0
Equity securities
Schedule of Available-for-sale Securities [Line Items]
Write-down	(2,646)	(2,869)	(2,965)
Available-for-sale Securities
Schedule of Available-for-sale Securities [Line Items]
Gross Gains		39,960	18,028
Total of gross loss and write-downs		(24,433)	(9,047)
Net gain and losses, including write-down		15,527	8,981
Available-for-sale Securities | Fixed maturities
Schedule of Available-for-sale Securities [Line Items]
Gross Gains	16,611	28,696	10,310
Gross Losses	(4,946)	(18,066)	(1,066)
Net Gain and Losses	11,665	10,630	9,244
Write-down	(5,393)		(2,965)
Available-for-sale Securities | Equity securities
Schedule of Available-for-sale Securities [Line Items]
Gross Gains	14,121	11,264	7,718
Gross Losses	(3,928)	(3,498)	(5,016)
Net Gain and Losses	10,193	7,766	2,702
Write-down	(2,646)	(2,869)
Trading Securities | Equity securities
Schedule of Available-for-sale Securities [Line Items]
Gross Gains	10,475
Gross Losses	(7,871)
Net Gain and Losses	$ 2,604

XML

Schedule III - Supplementary Insurance Information

12 Months Ended

Dec. 31, 2014

Supplementary Insurance Information [Abstract]

Schedule III - Supplementary Insurance Information

AMTRUST FINANCIAL SERVICES, INC.

AND SUBSIDIARIES SUPPLEMENTARY INSURANCE INFORMATION

At December 31, 2014, 2013 and 2012 and for the years then ended:

Segment	Deferred Policy Acquisition Costs		Reserves for Losses and Loss Expenses, Future Policy Benefits		Reserves for Unearned Premiums		Premium Revenue		Net Investment Income		Losses and Loss Expenses Incurred, Benefits		Amortization of Deferred Policy Acquisition Costs		Other Operating Expenses		Net Premiums Written
	(In Thousands)
2014
Small Commercial Business	$	179,771	$	2,854,379	$	1,193,628	$	1,606,805	$	55,842	1,055,521		$	276,876	$	140,089	$	1,882,383
Specialty Risk and Extended Warranty	389,763		1,669,293		1,832,560		1,232,238		50,544		817,780		152,141		101,653		1,333,747
Specialty Program	58,502		1,126,436		421,015		678,612		24,888		456,422		107,074		76,467		740,488
Personal Lines Reinsurance	347		14,097		—		8,909		327		12,896		2,619		4		—
Total	$	628,383	$	5,664,205	$	3,447,203	$	3,526,564	$	131,601	$	2,342,619	$	538,710	$	318,213	$	3,956,618
2013
Small Commercial Business	$	98,275	$	1,982,977	$	704,234	$	833,812	$	29,301	548,598		$	143,036	$	69,788	$	935,313
Specialty Risk and Extended Warranty	310,230		1,537,887		1,599,167		811,837		39,139		545,516		114,662		36,526		944,081
Specialty Program	56,949		817,272		368,673		520,371		15,607		355,067		86,317		52,333		620,452
Personal Lines Reinsurance	2,950		30,098		8,908		99,970		772		68,180		23,273		7,227		65,827
Total	$	468,404	$	4,368,234	$	2,680,982	$	2,265,990	$	84,819	$	1,517,361	$	367,288	$	165,874	$	2,565,673
2012
Small Commercial Business	$	58,690	$	1,266,261	$	413,707	$	416,565	$	24,049	$	270,843	$	60,709	$	49,866	$	474,381
Specialty Risk and Extended Warranty	234,490		605,366		1,063,999		541,573		27,349		341,196		94,945		17,546		624,555
Specialty Program	42,468		524,928		252,835		348,568		14,457		238,302		63,775		34,640		430,960
Personal Lines Reinsurance	13,478		29,845		43,052		112,146		2,312		72,334		23,458		10,746		118,141
Total	$	349,126	$	2,426,400	$	1,773,593	$	1,418,852	$	68,167	$	922,675	$	242,887	$	112,798	$	1,648,037

XML

Debt

12 Months Ended

Dec. 31, 2014

Debt Disclosure [Abstract]

Debt

Debt

The Company’s outstanding debt consisted of the following at December 31, 2014 and 2013:

(Amounts in Thousands) As of December 31,	2014		2013
Revolving credit facility	$	120,000	$	—
5.5% Convertible senior notes due 2021 (the "2021 Notes")	56,745		164,218
2.75% Convertible senior notes due 2044 (the "2044 Notes")	157,679		—
6.125% Notes due 2023	250,000		250,000
Subordinated debentures	123,714		123,714
Secured loan agreements	35,233		7,742
Promissory notes	14,500		14,500
	$	757,871	$	560,174

Aggregate scheduled maturities of the Company’s outstanding debt at December 31, 2014 are:

(Amounts in Thousands)
2015	$	168,689	(1)
2016	7,186
2017	7,377
2018	9,400
2019	4,269
Thereafter	560,950		(2)

⁽¹⁾  Amount includes debt outstanding under revolving credit facility as of December 31, 2014 that was paid down in 2015, amount of 2021 Notes, net of $8,417 unamortized original issue discount, submitted for conversion in 2014 that were settled in 2015 as discussed in Note 27. "Subsequent Events", as well as principal payments under our secured loan agreements.

⁽²⁾  Amount reflected in balance sheet for the 2021 Notes and the 2044 Notes is net of unamortized original issue discount of $2,957 and $53,245, respectively.

Revolving Credit Agreement

On September 12, 2014, the Company entered into a five-year, $350,000 credit agreement (the “Credit Agreement”), among JPMorgan Chase Bank, N.A., as Administrative Agent, KeyBank National Association and SunTrust Bank, as Co-Syndication Agents, Lloyd's Bank PLC and Associated Bank, as Co-Documentation Agents and the various lending institutions party thereto. The credit facility is a revolving credit facility with a letter of credit sublimit of $175,000 and an expansion feature of not more than an additional $150,000. The Credit Agreement has a maturity date of September 12, 2019. In connection with entering into the Credit Agreement, the Company terminated its existing $200,000 credit agreement (the "Preceding Credit Agreement"), dated August 10, 2012, with JPMorgan Chase Bank, N.A., as Administrative Agent, KeyBank National Association and SunTrust Bank, as Co-Syndication Agents, Associated Bank, National Association and Lloyds Securities Inc., as Co-Documentation Agents, and the various lending institutions party thereto. Letters of credit issued and outstanding under the Preceding Credit Agreement were deemed issued and outstanding under the Credit Agreement. Deferred origination costs associated with the Credit Agreement were approximately $967 and are being amortized into interest expense over the term of the Credit Agreement.

The Credit Agreement contains certain restrictive covenants customary for facilities of this type (subject to negotiated exceptions and baskets), including restrictions on indebtedness, liens, acquisitions and investments, restricted payments and dispositions. There are also financial covenants that require the Company to maintain a minimum consolidated net worth, a maximum consolidated leverage ratio, a minimum consolidated fixed charge coverage ratio, a minimum consolidated risk-based capital and a minimum consolidated statutory surplus. The Company was in compliance with all of its covenants as of December 31, 2014.

As of December 31, 2014, the Company had $120,000 of borrowings and $97,346 letters of credit outstanding under this Credit Agreement, which reduced the availability for letters of credit to $77,654, and the total aggregate availability under the facility to $132,654.

Borrowings under the Credit Agreement bear interest at either the Alternate Base Rate or the LIBO rate. Borrowings bearing interest at a rate determined by reference to the Alternate Base Rate will bear interest at (x) the greatest of (a) the administrative agent’s prime rate, (b) the federal funds effective rate plus 0.5%, or (c) the adjusted LIBO rate for a one-month interest period on such day plus 1.0%, plus (y) a margin ranging from 0.125% to 0.625%, adjusted on the basis of the Company’s consolidated leverage ratio. Eurodollar borrowings will bear interest at the adjusted LIBO rate for the interest period in effect plus a margin ranging from 1.125% to 1.625%, adjusted on the basis of the Company’s consolidated leverage ratio. The interest rate on the outstanding borrowings under this credit facility as of December 31, 2014 range from 1.563% to 3.625%.

Fees payable by the Company under the Credit Agreement include a letter of credit participation fee (equal to the margin applicable to Eurodollar borrowings), a letter of credit fronting fee with respect to each letter of credit (0.125%) and a commitment fee on the available commitments of the lenders (a range of 0.15% to 0.25% based on the Company’s consolidated leverage ratio, which was 0.175%).

Interest expense, including amortization of the deferred origination costs and fees associated with the letters of credit under the Credit Agreement and the Preceding Credit Agreement, was approximately $1,662, $1,752, and $1,884 for the year ended December 31, 2014, 2013 and 2012, respectively.

Convertible Senior Notes

5.5% Convertible Senior Notes due 2021

In December 2011 and January 2012, the Company issued $200,000 in aggregate principal amount of its 2021 Notes. The 2021 Notes will mature on December 15, 2021 (the “Maturity Date”), unless earlier purchased by the Company or converted into shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”). Prior to September 15, 2021, the 2021 Notes will be convertible only in the following circumstances: (i) during any fiscal quarter, and only during any such fiscal quarter, if the last reported sale price of the Company’s Common Stock was greater than or equal to 130% of the applicable conversion price for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on the last trading day of the previous fiscal quarter (the “Sale Price Condition”); (ii) during the five consecutive business day period following any five consecutive trading day period in which, for each day of that period, the trading price for the 2021 Notes was less than 98% of the product of the last reported sale price of the Company’s Common Stock and the applicable conversion rate on such trading day; or (iii) upon the occurrence of specified corporate transactions. On or after September 15, 2021, the 2021 Notes will be convertible at any time prior to the close of business on the second scheduled trading day immediately preceding the Maturity Date. The conversion rate at December 31, 2014 is equal to 38.5985 shares of Common Stock per $1,000 principal amount of 2021 Notes, which corresponds to a conversion price of approximately $25.91 per share of Common Stock. The conversion rate is subject to adjustment upon the occurrence of certain events as set forth in the indenture governing the 2021 Notes. Upon conversion of the 2021 Notes, the Company will, at its election, pay or deliver, as the case may be, cash, shares of Common Stock, or a combination of cash and shares of Common Stock. As of October 1, 2014, the 2021 Notes were convertible under the Sale Price Condition.

Upon the occurrence of a fundamental change (as defined in the indenture governing the notes) involving the Company, holders of the 2021 Notes will have the right to require the Company to repurchase their 2021 Notes for cash, in whole or in part, at 100% of the principal amount of the 2021 Notes to be repurchased, plus any accrued and unpaid interest, if any, to, but excluding, the fundamental change purchase date.

During 2014, the Company entered into separate, privately negotiated exchange agreements under which the Company retired $131,881 in aggregate principal amount of its outstanding 2021 Notes in exchange for the issuance of 2044 Notes in an aggregate principal amount of $158,257 and the issuance of 2,731,727 shares of Common Stock. As of December 31, 2014, $68,119 in aggregate principal amount of the 2021 Notes remain outstanding with terms unchanged. Please see the description of the 2044 Notes below.

As of December 31, 2014, certain of the remaining 2021 Notes holders had submitted approximately $50,105 of the remaining $68,119 2021 Notes for conversion under the Sale Price Condition described above. Based on the terms of the 2021 Notes, the conversions will settle during the first three months of 2015.

The Company separately allocated the proceeds for the issuance of the 2021 Notes to a liability component and an equity component, which is the embedded conversion option. The equity component was reported as an adjustment to paid-in-capital, net of tax, and is reflected as an original issue discount (“OID”). The OID of $41,679 and deferred origination costs relating to the liability component of $4,750 are being amortized into interest expense over the term of the 2021 Notes. After considering the contractual interest payments and amortization of the original discount, the effective interest rate of the 2021 Notes was 8.57%. Transaction costs of $1,250 associated with the equity component were netted in paid-in-capital. Interest expense, including amortization of OID and deferred origination costs, recognized on the 2021 Notes was $13,933, $14,476, and $14,031 for the years ended December 31, 2014, 2013 and 2012, respectively.

2.75% Convertible Senior Notes due 2044

As described above, during 2014, the Company entered into separate, privately negotiated exchange agreements under which the Company retired $131,881 in aggregate principal amount of the outstanding 2021 Notes in exchange for issuance of a new series of 2.75% 2044 Notes in an aggregate principal amount of $158,257 and the issuance of 2,731,727 shares of Common Stock. The Company also entered into separate, privately negotiated purchase agreements (the “Purchase Agreements”) to issue an additional $76,000 in aggregate principal amount of the 2044 Notes for a price equal to 90% of their face value.

The principal amount of the 2044 Notes accretes at a rate of 6% per year compounding on a semi-annual basis, until December 15, 2024. The accreted portion of the principal is payable in cash upon maturity but does not bear cash interest and is not convertible into shares of Common Stock. The 2044 Notes will mature on December 15, 2044 (the “Maturity Date”), unless earlier repurchased or redeemed by the Company or converted. On or before December 15, 2018, the 2044 Notes will be subject to redemption for cash, in whole or in part, at the Company’s option, provided the trading price of Common Stock equals or exceeds $97.50 (or 130% of the then applicable conversion price) for the required measurement period, at a redemption price equal to 100% of the principal amount of the 2044 Notes to be redeemed, plus any accrued and unpaid interest. Thereafter, the 2044 Notes will be subject to redemption for cash, in whole or in part, at the Company’s option at a redemption price equal to 100% of the accreted amount of the 2044 Notes to be redeemed, plus any accrued and unpaid interest. In addition, holders of the 2044 Notes will have the right to require the Company to purchase their 2044 Notes for cash, in whole or in part, on December 15, 2024 or upon the occurrence of a fundamental change. In each such case, the repurchase price would be 100% of the principal amount of the 2044 Notes being repurchased, plus any accrued and unpaid interest.

The 2044 Notes will bear interest at a rate of 2.75% per annum, payable semi-annually in arrears on June 15th and December 15th of each year, beginning on June 15, 2015. Beginning with the six-month period starting December 15, 2021, holders of the 2044 Notes will receive contingent interest for certain periods if the trading price of the 2044 Notes is greater than or equal to 130% of the principal amount of the 2044 Notes. The amount of contingent interest payable per $1,000 principal amount of 2044 Notes in respect of any contingent interest period is equal to 0.25% of the average trading price of the 2044 Notes during the specified measurement period. Any contingent interest payable on the 2044 Notes will be in addition to the regular interest payable on the 2044 Notes. The 2044 Notes will rank pari passu with the Company’s existing and future senior unsecured debt, including the 2021 Notes that will remain outstanding. The 2044 Notes will be effectively subordinated to the existing and future secured indebtedness of the Company to the extent of the value of the collateral securing those obligations and structurally subordinated to the existing and future indebtedness of the Company’s subsidiaries.

Each $1,000 principal amount at maturity of 2044 Notes will have an issue price of $900 for purposes of the indenture for the 2044 Notes. An amount equal to the difference between the issue price and the principal amount at maturity will accrue in accordance with a schedule to be set forth in the indenture. The issue price plus such accrued amount per $1,000 principal amount at maturity of 2044 Notes is referred to herein as the “accreted principal amount.”

Pursuant to ASC 470-50 Debt - Modifications and Extinguishments, this exchange transaction is being accounted for as an extinguishment of debt because the terms of the two debt instruments are substantially different under the accounting rules. The Company retired $131,881of the outstanding 2021 Notes with a carrying value of $110,346 and wrote-off unamortized debt issuance costs of $2,195. The 2044 Notes issued as part of the exchange had a fair value of $117,982 which resulted in a loss on the early extinguishment of debt of $9,831.

The Company separately accounts for the liability and equity components of its 2044 Notes in a manner that reflects the Company's nonconvertible debt borrowing rate when interest is recognized in subsequent periods. The Company measured the debt component of the 2044 Notes using an effective interest rate of 7.46%. Upon issuance of the 2044 Notes in December 2014, in accordance with accounting standards related to convertible debt instruments that may be settled in cash upon conversion, the Company recorded an OID of $53,374, thereby reducing the initial carrying the value of the 2044 Notes from $210,831to $157,457 and recorded an equity component net of tax of $34,693. Interest expense, including amortization of OID and deferred origination costs, recognized on the 2044 Notes was $503 for the year ended December 31, 2014.

The following table shows the amounts recorded for the 2021 Notes and 2044 Notes as of December 31, 2014 and 2013:

	2014							2013
(Amounts in Thousands)	Outstanding Principal		Unamortized OID			Net Carrying Amount		Outstanding Principal		Unamortized OID			Net Carrying Amount
2021 Notes	$	68,119	$	(11,374	)	$	56,745	$	200,000	$	(35,782	)	$	164,218
2044 Notes	210,924		(53,245		)	157,679		—		—			—
	$	279,043	$	(64,619	)	$	214,424	$	200,000	$	(35,782	)	$	164,218

6.125% Notes due 2023

In August 2013, the Company issued $250,000 aggregate principal amount of its 6.125% notes due 2023 (the "2023 Notes") to certain initial purchasers in a private placement. The 2023 Notes bear interest at a rate equal to 6.125% per year, payable semiannually in arrears on February 15th and August 15th of each year. The 2023 Notes will mature August 15, 2023, unless earlier purchased by the Company. Fees associated with the Notes we approximately $2,740. The indenture governing the Notes contains covenants whereby the interest rates will increase by 0.50% per year if the Company's consolidated leverage ratio exceeds 30% and does not exceed 35% and will increase an additional 1.00% per year (for an aggregate increase of 1.50% per year) if the consolidated leverage ratio exceeds 35%. The consolidated leverage ratio, as calculated under this agreement, was less than 30% as of December 31, 2014. It is an event of default if the Company has a consolidated leverage ratio in excess of 35% for a period of 30 days, unless in connection with an acquisition, in which case the grace period is 18 months. The indenture governing the 2023 Notes also contains customary covenants, such as reporting of annual and quarterly financial results, and restrictions on certain mergers and consolidations, a limitation on liens, and a limitation on the disposition of stock of certain of the Company's subsidiaries. The 2023 Notes rank equally with existing and future unsecured and unsubordinated indebtedness, including the Company's convertible senior notes and amounts under the Credit Agreement. Interest expense, including amortization of deferred origination costs, recognized on the 2023 Notes was approximately $15,587 and $5,845 for the years ended December 31, 2014 and 2013, respectively.

Junior Subordinated Debt

The Company has established four special purpose trusts for the purpose of issuing trust preferred securities. The proceeds from such issuances, together with the proceeds of the related issuances of common securities of the trusts, were invested by the trusts in junior subordinated debentures issued by the Company. In accordance with FASB ASC 810-10-25, the Company does not consolidate such special purpose trusts, as the Company is not considered to be the primary beneficiary. The equity investment, totaling $3,714 as of December 31, 2014 on the Company’s consolidated balance sheet, represents the Company’s ownership of common securities issued by the trusts. The debentures require interest-only payments to be made on a quarterly basis, with principal due at maturity. The debentures contain covenants that restrict declaration of dividends on the Company’s common stock under certain circumstances, including default of payment. The Company incurred $2,605 of placement fees in connection with these issuances which is being amortized over thirty years. The Company recorded $8,100, $8,099 and $8,297 of interest expense for the years ended December 31, 2014, 2013 and 2012, respectively, related to these trust preferred securities.

The table below summarizes the Company’s trust preferred securities as of December 31, 2014:

(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	3.541	(2)
AmTrust Capital Financing Trust IV	40,000		1,238		41,238		3/15/2037	3.241	(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%.

The Company entered into two interest rate swap agreements related to these junior subordinated debentures, which effectively convert the interest rate on the trust preferred securities from a variable rate to a fixed rate. Each agreement is for a period of 5 years and commenced on September 15, 2011 for tranche III and March 15, 2012 for tranche IV.

Secured Loan Agreements

The Company, through a wholly-owned subsidiary, has a seven year secured loan agreement with Bank of America Leasing & Capital, LLC in the aggregate amount of $10,800 to finance the purchase of an aircraft. The loan bears interest at a fixed rate of 4.45%, requires monthly installment payments of approximately $117 through February 25, 2018, and a balloon payment of $2,970 at the maturity date. The Company recorded interest expense of approximately $330, $380 and $432 for the years ended December 31, 2014, 2013 and 2012, respectively, related to this agreement. The loan is secured by the aircraft.

The agreement contains certain covenants that are similar to the Credit Agreement. Additionally, subsequent to February 25, 2012, but prior to payment in full, if the outstanding balance of this loan exceeds 90% of the fair value of the aircraft, the Company is required to pay the lender the entire amount necessary to reduce the outstanding principal balance to be equal to or less than 90% of the fair value of the aircraft. During 2013, the Company paid an additional $270 to reduce the outstanding principal balance as required by these terms. The agreement allows the Company, under certain conditions, to repay the entire outstanding principal balance of this loan without penalty.

On August 29, 2014, the Company entered into a five-year secured loan agreement with Key Equipment Finance, which was subsequently assigned to RBS Citizens Bank, in the aggregate amount of $30,500 to finance the purchase of an aircraft. The loan bears interest at a fixed rate of 2.27% per annum and requires monthly installment payments of approximately $538 through August 31, 2019. The Company recorded interest expense of approximately $227 for the year ended December 31, 2014. The loan is secured by the aircraft.

Promissory Notes

In September 2012, as part of its participation in the New Market Tax Credit Program discussed in Note 21. "New Market Tax Credit", the Company entered into two promissory notes totaling $8,000. The loans are for a period of 15 years and have an average interest rate of 1.7% per annum. The Company recorded approximately $1,430 of deferred origination costs associated with the promissory notes. The Company recorded interest expense of approximately $312, $290, and $100 for the years ended December 31, 2014, 2013 and 2012, respectively, related to the promissory notes.

The Company assumed two promissory notes in 2013 totaling $6,500 as a result of its acquisition of MIHC as discussed in Note 5. "Significant Acquisitions". The principal of these notes is due in 2034 and 2035. The notes require the payment of interest on a quarterly basis and have an interest rate of 3.8% plus the three months LIBOR per annum, which was 4.1% as of December 31, 2014. The Company recorded $365 and $210 of interest expense related to these notes for the years ended December 31, 2014 and 2013, respectively.

ING Credit Agreement

On November 25, 2014, AmTrust Financial Services, Inc. (as Guarantor), and four of its wholly-owned subsidiaries, AmTrust International Insurance, Ltd. (as Account Party), AmTrust Corporate Capital Limited, AmTrust Corporate Member Limited and AmTrust Corporate Member Two Limited (as Corporate Members and collectively with the Guarantor and the Account Party, the “Company”) entered into an Amended and Restated Agreement ("Amended and Restated Credit Facility") relating to its £200,000 credit facility agreement ("Preceding Credit Facility") with ING Bank, N.V., London Branch, individually and as Agent and Security Trustee. The Amended and Restated Credit Facility increases the maximum amount of the letter of credit facility to £235,000 to be used to support the Company’s capacity at Lloyd’s as a member and/or reinsurer of Syndicates 2526, 1206 and 44 for the 2015 underwriting year of account, as well as prior open years of account. Letters of credit issued and outstanding under the Preceding Credit Facility were deemed issued and outstanding under the Amended and Restated Credit Facility.

The Amended and Restated Credit Facility contains customary covenants for facilities of this type, including restrictions on indebtedness and liens, limitations on mergers, transactions with affiliates and the sale of assets, and requirements to maintain certain consolidated net worth, statutory surplus, leverage and fixed charge coverage ratios. The Amended and Restated Credit Facility also provides for customary events of default, including, without limitation, failure to pay principal, interest or fees when due, failure to comply with certain covenants, any representation or warranty made by the Company being false or misleading in any material respect, default under certain other indebtedness, certain insolvency or receivership events affecting the Company and its subsidiaries, the occurrence of certain material judgments, or a change in control of the Account Party or the Corporate Member. Upon an event of default, the lender may immediately terminate its obligations to issue letters of credit, declare the Company’s obligations under the amended and restated credit facility to become immediately due and payable, and require the Company to deposit collateral with a value equal to 100%of the aggregate face amount of any outstanding letters of credit consisting of cash or other specified collateral including time deposits, certificates of deposit, money market deposits and U.S. government securities subject to varying advance rates.

The ability to have letters of credit issued under this amended and restated facility expires on December 31, 2015 and the maturity date for the facility is July 31, 2019. The facility is 40% secured by a pledge of a collateral account established in the United States pursuant to a pledge and security agreement and in the United Kingdom pursuant to a Deed of Charge dated as of November 26, 2013. In addition to upon an event of default as discussed above, the collateral account will be required to be 100% funded upon the occurrence of certain specified events, including the A.M. Best financial strength rating of the Account Party falling below A-, the forecast underwriting losses exceeding a certain level for any year supported by a letter of credit, or any non-extension notice is given with respect to any letter of credit.

Fees payable by the Company under the Amended and Restated Credit Facility include a letter of credit issuance fee, payable quarterly in arrears, on the secured portion of the letters of credit at the rate of 0.50% and on the unsecured potion of the letters of credit determined based on the Account Party’s then-current financial strength rating issued by A.M. Best. As of December 31, 2014, the applicable letter of credit fee rate on the unsecured portion was 1.15% based on the Account Party’s A.M. Best financial strength rating of “A”. The Company also pays a commitment fee of 0.35% per year on the aggregate unutilized and un-canceled amount of the facility, and a facility fee upon closing of 0.15% of the total aggregate commitment.

As of December 31, 2014, the Company had outstanding letters of credit of £227,989 (or $355,178) in place under the Amended and Restated Credit Facility. The aggregate unutilized amount under this facility was £7,011 (or $10,923) as of December 31, 2014. The Company recorded total interest expense of $2,795 for the year ended December 31, 2014 under the Amended and Restated Credit Facility. Interest expense recorded in 2013 under the Preceding Credit Facility was not material.

Other Letters of Credit

The Company, through one of its subsidiaries, has a secured letter of credit facility with Comerica Bank.The Company utilizes this letter of credit facility to comply with the deposit requirements of the State of California and the U.S. Department of Labor as security for the Company's obligations to workers' compensation and Federal Longshore and Harbor Workers' Compensation Act policyholders. The credit limit is for $75,000, of which $48,467 was utilized as of December 31, 2014. The Company is required to pay a letter of credit participation fee for each letter of credit in the amount of 0.40%.

The Company, through certain subsidiaries, has additional existing stand-by letters of credit with various lenders in the amount of $6,265 as of December 31, 2014.

XML

Debt (Aggregate Scheduled Maturities of Borrowings) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014
Debt Disclosure [Abstract]
2015	$ 168,689
2016	7,186
2017	7,377
2018	9,400
2019	4,269
Thereafter	$ 560,950