x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2016 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 04-3106389 | |
(State or other jurisdiction of | (IRS Employer Identification No.) | |
incorporation or organization) | ||
59 Maiden Lane, 43rd Floor, New York, New York | 10038 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer x | Accelerated filer ¨ | |
Non-accelerated filer ¨ | Smaller reporting company ¨ | |
(Do not check if a smaller reporting company) |
Page | ||
March 31, 2016 | December 31, 2015 | ||||||
ASSETS | (Unaudited) | (Audited) | |||||
Investments: | |||||||
Fixed maturities, available-for-sale, at fair value (amortized cost $6,221,739; $5,482,042) | $ | 6,307,719 | $ | 5,433,797 | |||
Equity securities, available-for-sale, at fair value (cost $110,594; $109,346) | 98,518 | 104,497 | |||||
Equity securities, trading, at fair value (cost $28,142; $26,937) | 29,891 | 27,271 | |||||
Short-term investments | 34,008 | 84,266 | |||||
Equity investment in unconsolidated subsidiaries – related party | 146,000 | 138,023 | |||||
Other investments (related party $68,860; $64,869; recorded at fair value $42,322; $30,309) | 126,875 | 99,012 | |||||
Total investments | 6,743,011 | 5,886,866 | |||||
Cash and cash equivalents | 998,282 | 931,970 | |||||
Restricted cash and cash equivalents | 359,876 | 380,699 | |||||
Accrued interest and dividends | 57,179 | 51,487 | |||||
Premiums receivable, net | 2,376,689 | 2,115,653 | |||||
Reinsurance recoverable (related party $2,282,432; $1,963,140) | 3,097,192 | 3,008,670 | |||||
Prepaid reinsurance premium (related party $1,184,742; $1,066,961) | 1,633,866 | 1,531,866 | |||||
Other assets (related party $206,298; $189,223; recorded at fair value $294,573; $264,001) | 1,247,886 | 1,398,064 | |||||
Deferred policy acquisition costs | 761,802 | 704,243 | |||||
Property and equipment, net | 292,381 | 281,456 | |||||
Goodwill | 426,268 | 432,700 | |||||
Intangible assets | 361,289 | 367,345 | |||||
$ | 18,355,721 | $ | 17,091,019 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Liabilities: | |||||||
Loss and loss adjustment expense reserves | $ | 7,516,089 | $ | 7,208,367 | |||
Unearned premiums | 4,290,528 | 4,014,728 | |||||
Ceded reinsurance premiums payable (related party $571,754; $379,988) | 851,192 | 651,051 | |||||
Accrued expenses and other liabilities (related party $167,975; $167,975; recorded at fair value $101,655; $132,558) | 1,379,985 | 1,140,830 | |||||
Debt | 993,028 | 989,356 | |||||
Total liabilities | 15,030,822 | 14,004,332 | |||||
Commitments and contingencies | |||||||
Redeemable non-controlling interest | 1,332 | 1,172 | |||||
Stockholders’ equity: | |||||||
Common stock, $0.01 par value; 500,000 shares authorized; 196,455 issued, 175,400 and 175,915 outstanding in 2016 and 2015, respectively | 1,965 | 1,964 | |||||
Preferred stock, $0.01 par value; 10,000 shares authorized; 5,112 and 4,968 issued and outstanding; $626,250 and $482,500 aggregated liquidation preference in 2016 and 2015, respectively. | 626,250 | 482,500 | |||||
Additional paid-in capital | 1,381,282 | 1,383,492 | |||||
Treasury stock at cost; 21,054 and 20,540 shares in 2016 and 2015, respectively | (177,071 | ) | (162,867 | ) | |||
Accumulated other comprehensive loss, net of tax | (97,348 | ) | (130,262 | ) | |||
Retained earnings | 1,408,177 | 1,334,233 | |||||
Total AmTrust Financial Services, Inc. equity | 3,143,255 | 2,909,060 | |||||
Non-controlling interest | 180,312 | 176,455 | |||||
Total stockholders’ equity | 3,323,567 | 3,085,515 | |||||
$ | 18,355,721 | $ | 17,091,019 |
Three Months Ended March 31, | ||||||||
2016 | 2015 | |||||||
Revenues: | ||||||||
Premium income: | ||||||||
Net written premium | $ | 1,220,679 | $ | 1,043,189 | ||||
Change in unearned premium | (146,397 | ) | (93,812 | ) | ||||
Net earned premium | 1,074,282 | 949,377 | ||||||
Service and fee income (related parties - $20,163, $17,404) | 144,201 | 112,886 | ||||||
Net investment income | 49,415 | 34,573 | ||||||
Net realized and unrealized gain on investments | 7,975 | 15,653 | ||||||
Total revenues | 1,275,873 | 1,112,489 | ||||||
Expenses: | ||||||||
Loss and loss adjustment expense | 715,073 | 613,283 | ||||||
Acquisition costs and other underwriting expenses (net of ceding commission - related party - $138,391; $118,687) | 264,634 | 231,676 | ||||||
Other | 128,186 | 98,457 | ||||||
Total expenses | 1,107,893 | 943,416 | ||||||
Income before other income (expense), income taxes and equity in earnings of unconsolidated subsidiaries | 167,980 | 169,073 | ||||||
Other income (loss): | ||||||||
Interest expense (net of interest income - related party - $2,188, $2,188) | (17,700 | ) | (10,255 | ) | ||||
Loss on extinguishment of debt | — | (4,714 | ) | |||||
Gain on investment in life settlement contracts net of profit commission | 10,730 | 11,373 | ||||||
Foreign currency (loss) gain | (35,673 | ) | 39,954 | |||||
Acquisition gain on purchase | 9,678 | — | ||||||
Total other (loss) income | (32,965 | ) | 36,358 | |||||
Income before income taxes and equity in earnings of unconsolidated subsidiaries | 135,015 | 205,431 | ||||||
Provision for income taxes | 27,726 | 46,812 | ||||||
Income before equity in earnings of unconsolidated subsidiaries | 107,289 | 158,619 | ||||||
Equity in earnings of unconsolidated subsidiaries – related parties | 5,776 | 5,529 | ||||||
Net income | $ | 113,065 | $ | 164,148 | ||||
Net income attributable to redeemable non-controlling interest and non-controlling interest of subsidiaries | (4,017 | ) | (4,083 | ) | ||||
Net income attributable to AmTrust Financial Services, Inc. | $ | 109,048 | $ | 160,065 | ||||
Dividends on preferred stock | (8,791 | ) | (5,369 | ) | ||||
Net income attributable to AmTrust common stockholders | $ | 100,257 | $ | 154,696 | ||||
Earnings per common share: | ||||||||
Basic earnings per share | $ | 0.57 | $ | 0.95 | ||||
Diluted earnings per share | $ | 0.56 | $ | 0.93 | ||||
Dividends declared per common share | $ | 0.15 | $ | 0.10 | ||||
Net realized gain on investments: | ||||||||
Total other-than-temporary impairment loss | $ | — | $ | (1,016 | ) | |||
Portion of loss recognized in other comprehensive income | — | — | ||||||
Net impairment losses recognized in earnings | — | (1,016 | ) | |||||
Net realized gain on available for sale securities | 5,272 | 16,989 | ||||||
Net unrealized gain (loss) on trading securities and other investments | 2,703 | (320 | ) | |||||
Net realized investment gain | $ | 7,975 | $ | 15,653 |
Three Months Ended March 31, | ||||||||
2016 | 2015 | |||||||
Net income | $ | 113,065 | $ | 164,148 | ||||
Other comprehensive (loss) income, net of tax: | ||||||||
Foreign currency translation adjustments | (47,845 | ) | (65,353 | ) | ||||
Change in fair value of interest rate swap | 119 | 27 | ||||||
Unrealized gain (loss) on securities: | ||||||||
Gross unrealized holding gain | 124,720 | 11,185 | ||||||
Tax expense arising during period | 43,652 | 3,915 | ||||||
Net unrealized holding gain | 81,068 | 7,270 | ||||||
Reclassification adjustments for investment gain (loss) included in net income, net of tax: | ||||||||
Other-than-temporary impairment loss | — | — | ||||||
Other net realized gain (loss) on investments | (428 | ) | (415 | ) | ||||
Reclassification adjustments for investment gain (loss) included in net income: | (428 | ) | (415 | ) | ||||
Other comprehensive income (loss), net of tax | $ | 32,914 | $ | (58,471 | ) | |||
Comprehensive income | 145,979 | 105,677 | ||||||
Less: Comprehensive income attributable to redeemable non-controlling interest and non-controlling interest | 4,017 | 4,083 | ||||||
Comprehensive income attributable to AmTrust Financial Services, Inc. | $ | 141,962 | $ | 101,594 |
Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 113,065 | $ | 164,148 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 25,347 | 19,426 | |||||
Net amortization of bond premium or discount | 4,842 | 5,890 | |||||
Equity earnings on investment in unconsolidated subsidiaries | (5,776 | ) | (5,529 | ) | |||
Gain on investment in life settlement contracts, net | (10,730 | ) | (11,373 | ) | |||
Realized gain on available for sale securities and unrealized gain on trading securities | (7,975 | ) | (16,669 | ) | |||
Non-cash write-down of available for sale securities | — | 1,016 | |||||
Discount on notes payable | 1,455 | 1,389 | |||||
Stock based compensation | 5,641 | 4,914 | |||||
Loss on extinguishment of debt | — | 4,714 | |||||
Bad debt expense | 305 | 6,281 | |||||
Foreign currency loss (gain) | 35,673 | (39,954 | ) | ||||
Acquisition gain on purchase | (9,678 | ) | — | ||||
Changes in assets - (increase) decrease: | |||||||
Premiums and note receivables | (256,816 | ) | (289,546 | ) | |||
Reinsurance recoverable | (72,607 | ) | (102,608 | ) | |||
Deferred policy acquisition costs, net | (57,559 | ) | (23,501 | ) | |||
Prepaid reinsurance premiums | (102,000 | ) | (170,505 | ) | |||
Other assets | 124,899 | 35,792 | |||||
Changes in liabilities - increase (decrease): | |||||||
Reinsurance premium payable | 203,594 | 89,550 | |||||
Loss and loss expense reserve | 271,070 | 174,000 | |||||
Unearned premiums | 263,749 | 232,986 | |||||
Funds held under reinsurance treaties | (30,984 | ) | 18,984 | ||||
Accrued expenses and other current liabilities | 192,883 | 170,409 | |||||
Deferred taxes | 53 | (76,020 | ) | ||||
Net cash provided by operating activities | 688,451 | 193,794 | |||||
Cash flows from investing activities: | |||||||
Purchases of fixed maturities, available-for-sale | (870,349 | ) | (434,806 | ) | |||
Purchases of equity securities, available-for-sale | (613 | ) | (15,351 | ) | |||
Purchase of equity securities, trading | (54,382 | ) | (62,083 | ) | |||
Purchase of other investments | (12,605 | ) | (27,233 | ) | |||
Sales of fixed maturities, available-for-sale | 198,173 | 292,961 | |||||
Sales of equity securities, available-for-sale | 4,563 | 9,285 | |||||
Sales of equity securities, trading | 52,744 | 60,268 | |||||
Sales of other investments | 190 | 13,337 | |||||
Net (purchases) sale of short term investments | (17,926 | ) | 41,540 | ||||
Net (purchases) sale of securities sold but not purchased | (9,763 | ) | 3,570 | ||||
Receipt of life settlement contract proceeds | 8,058 | 53,080 | |||||
Acquisition of subsidiaries, net of cash obtained | 3,814 | (118,464 | ) | ||||
Decrease (increase) in restricted cash and cash equivalents | 20,823 | (31,403 | ) | ||||
Purchase of property and equipment | (25,630 | ) | (21,906 | ) | |||
Net cash used in investing activities | (702,903 | ) | (237,205 | ) | |||
Cash flows from financing activities: | |||||||
Revolving credit facility borrowings | — | 200,000 | |||||
Revolving credit facility payments | — | (320,000 | ) | ||||
Secured loan agreements payments | (1,778 | ) | (1,733 | ) | |||
Convertible senior notes settlement | — | (53,606 | ) | ||||
Common stock issuance | 276 | 172,250 | |||||
Common stock repurchase | (14,668 | ) | (578 | ) | |||
Preferred stock issuance | 139,070 | 176,529 | |||||
Non-controlling interest capital contributions for consolidated subsidiaries, net | — | 565 | |||||
Stock option exercise and other | (2,982 | ) | 310 | ||||
Dividends distributed on common stock | (26,311 | ) | (19,374 | ) | |||
Dividends distributed on preferred stock | (8,791 | ) | (5,369 | ) | |||
Net cash provided by financing activities | 84,816 | 148,994 | |||||
Effect of exchange rate changes on cash | (4,052 | ) | (11,326 | ) | |||
Net increase in cash and cash equivalents | 66,312 | 94,257 | |||||
Cash and cash equivalents, beginning of the period | 931,970 | 902,750 | |||||
Cash and cash equivalents, end of the period | $ | 998,282 | $ | 997,007 | |||
Supplemental Cash Flow Information | |||||||
Income tax payments | $ | 5,467 | $ | 96,916 | |||
Interest payments on debt | $ | 16,295 | $ | 11,442 | |||
Declared dividends on common stock | $ | 26,313 | $ | 20,590 |
1. | Basis of Reporting |
2. | Recent Accounting Pronouncements |
3. | Investments |
(Amounts in Thousands) As of March 31, 2016 | Cost or amortized cost | Gross unrealized gains | Gross unrealized losses | Fair Value | ||||||||||||
Preferred stock | $ | 8,171 | $ | 163 | $ | (96 | ) | $ | 8,238 | |||||||
Common stock | 102,423 | 7,469 | (19,612 | ) | 90,280 | |||||||||||
U.S. treasury securities | 240,505 | 3,160 | (11 | ) | 243,654 | |||||||||||
U.S. government agencies | 40,167 | 475 | (8 | ) | 40,634 | |||||||||||
Municipal bonds | 572,156 | 16,929 | (1,020 | ) | 588,065 | |||||||||||
Foreign government | 123,306 | 6,617 | (723 | ) | 129,200 | |||||||||||
Corporate bonds: | ||||||||||||||||
Finance | 1,444,380 | 53,401 | (24,458 | ) | 1,473,323 | |||||||||||
Industrial | 1,911,498 | 64,634 | (51,426 | ) | 1,924,706 | |||||||||||
Utilities | 166,380 | 4,392 | (8,165 | ) | 162,607 | |||||||||||
Commercial mortgage backed securities | 171,259 | 3,984 | (3,538 | ) | 171,705 | |||||||||||
Residential mortgage backed securities: | ||||||||||||||||
Agency backed | 1,190,473 | 31,154 | (722 | ) | 1,220,905 | |||||||||||
Non-agency backed | 39,689 | 929 | (259 | ) | 40,359 | |||||||||||
Collateralized loan / debt obligations | 293,801 | 2,362 | (11,412 | ) | 284,751 | |||||||||||
Asset-backed securities | 28,125 | 30 | (345 | ) | 27,810 | |||||||||||
$ | 6,332,333 | $ | 195,699 | $ | (121,795 | ) | $ | 6,406,237 |
(Amounts in Thousands) As of December 31, 2015 | Cost or amortized cost | Gross unrealized gains | Gross unrealized losses | Fair value | ||||||||||||
Preferred stock | $ | 4,869 | $ | 150 | $ | (30 | ) | $ | 4,989 | |||||||
Common stock | 104,477 | 3,816 | (8,785 | ) | 99,508 | |||||||||||
U.S. treasury securities | 69,547 | 1,470 | (258 | ) | 70,759 | |||||||||||
U.S. government agencies | 45,586 | 235 | (263 | ) | 45,558 | |||||||||||
Municipal bonds | 530,004 | 11,952 | (1,530 | ) | 540,426 | |||||||||||
Foreign government | 109,645 | 4,912 | (812 | ) | 113,745 | |||||||||||
Corporate bonds: | ||||||||||||||||
Finance | 1,358,765 | 38,058 | (34,393 | ) | 1,362,430 | |||||||||||
Industrial | 1,706,772 | 20,542 | (80,251 | ) | 1,647,063 | |||||||||||
Utilities | 157,067 | 1,548 | (9,115 | ) | 149,500 | |||||||||||
Commercial mortgage backed securities | 151,164 | 1,334 | (1,180 | ) | 151,318 | |||||||||||
Residential mortgage backed securities: | ||||||||||||||||
Agency backed | 964,059 | 14,912 | (4,133 | ) | 974,838 | |||||||||||
Non-agency backed | 124,046 | 322 | (4,139 | ) | 120,229 | |||||||||||
Collateralized loan / debt obligation | 232,245 | 10 | (6,161 | ) | 226,094 | |||||||||||
Asset backed securities | 33,142 | 4 | (1,309 | ) | 31,837 | |||||||||||
$ | 5,591,388 | $ | 99,265 | $ | (152,359 | ) | $ | 5,538,294 |
March 31, 2016 | December 31, 2015 | |||||||||||||||
(Amounts in Thousands) | Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||
Due in one year or less | $ | 131,009 | $ | 129,490 | $ | 125,563 | $ | 124,763 | ||||||||
Due after one through five years | 1,210,531 | 1,215,729 | 913,365 | 909,634 | ||||||||||||
Due after five through ten years | 2,756,834 | 2,807,027 | 2,586,061 | 2,537,734 | ||||||||||||
Due after ten years | 400,017 | 409,945 | 352,397 | 357,288 | ||||||||||||
Mortgage and asset backed securities | 1,723,348 | 1,745,528 | 1,504,656 | 1,504,378 | ||||||||||||
Total fixed maturities | $ | 6,221,739 | $ | 6,307,719 | $ | 5,482,042 | $ | 5,433,797 |
Three Months Ended March 31, | ||||||||
(Amounts in Thousands) | 2016 | 2015 | ||||||
Equity securities recognized in earnings | $ | — | $ | 1,016 | ||||
Fixed-maturity securities recognized in earnings | — | — | ||||||
$ | — | $ | 1,016 |
Less Than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||||||||
(Amounts in Thousands) As of March 31, 2016 | 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 | $ | 33,683 | $ | (19,467 | ) | 43 | $ | 6,548 | $ | (241 | ) | 20 | $ | 40,231 | $ | (19,708 | ) | |||||||||||||
U.S. treasury securities | 7,742 | (4 | ) | 15 | 3,254 | (7 | ) | 9 | 10,996 | (11 | ) | |||||||||||||||||||
U.S. government agencies | 2,220 | (7 | ) | 2 | 182 | (1 | ) | 2 | 2,402 | (8 | ) | |||||||||||||||||||
Municipal bonds | 60,310 | (291 | ) | 51 | 17,928 | (729 | ) | 32 | 78,238 | (1,020 | ) | |||||||||||||||||||
Foreign government | 10,756 | (591 | ) | 18 | 6,269 | (132 | ) | 1 | 17,025 | (723 | ) | |||||||||||||||||||
Corporate bonds: | ||||||||||||||||||||||||||||||
Finance | 361,108 | (22,595 | ) | 220 | 63,724 | (1,863 | ) | 44 | 424,832 | (24,458 | ) | |||||||||||||||||||
Industrial | 395,296 | (39,700 | ) | 352 | 114,721 | (11,726 | ) | 75 | 510,017 | (51,426 | ) | |||||||||||||||||||
Utilities | 38,717 | (4,219 | ) | 64 | 9,496 | (3,946 | ) | 19 | 48,213 | (8,165 | ) | |||||||||||||||||||
Commercial mortgage backed securities | 83,422 | (3,303 | ) | 45 | 6,292 | (235 | ) | 42 | 89,714 | (3,538 | ) | |||||||||||||||||||
Residential mortgage backed securities: | ||||||||||||||||||||||||||||||
Agency backed | 2,586 | (7 | ) | 19 | 37,131 | (715 | ) | 48 | 39,717 | (722 | ) | |||||||||||||||||||
Non-agency backed | 11,874 | (174 | ) | 16 | 3,717 | (85 | ) | 3 | 15,591 | (259 | ) | |||||||||||||||||||
Collateralized loan / debt obligations | 173,126 | (11,412 | ) | 70 | — | — | — | 173,126 | (11,412 | ) | ||||||||||||||||||||
Asset-backed securities | 22,397 | (335 | ) | 36 | 1,177 | (10 | ) | 8 | 23,574 | (345 | ) | |||||||||||||||||||
Total temporarily impaired securities | $ | 1,203,237 | $ | (102,105 | ) | 951 | $ | 270,439 | $ | (19,690 | ) | 303 | $ | 1,473,676 | $ | (121,795 | ) |
Less Than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||||||||
(Amounts in Thousands) As of December 31, 2015 | 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 | $ | 59,302 | $ | (8,711 | ) | 67 | $ | 402 | $ | (104 | ) | 2 | $ | 59,704 | $ | (8,815 | ) | |||||||||||||
U.S. treasury securities | 31,658 | (232 | ) | 77 | 2,586 | (26 | ) | 8 | 34,244 | (258 | ) | |||||||||||||||||||
U.S. government agencies | 22,412 | (262 | ) | 20 | 182 | (1 | ) | 2 | 22,594 | (263 | ) | |||||||||||||||||||
Municipal bonds | 121,550 | (867 | ) | 111 | 17,163 | (663 | ) | 30 | 138,713 | (1,530 | ) | |||||||||||||||||||
Foreign government | 18,598 | (688 | ) | 27 | 5,977 | (124 | ) | 1 | 24,575 | (812 | ) | |||||||||||||||||||
Corporate bonds: | ||||||||||||||||||||||||||||||
Finance | 604,898 | (33,068 | ) | 349 | 59,020 | (1,325 | ) | 22 | 663,918 | (34,393 | ) | |||||||||||||||||||
Industrial | 858,632 | (65,887 | ) | 633 | 82,495 | (14,364 | ) | 55 | 941,127 | (80,251 | ) | |||||||||||||||||||
Utilities | 79,358 | (5,305 | ) | 113 | 7,712 | (3,810 | ) | 5 | 87,070 | (9,115 | ) | |||||||||||||||||||
Commercial mortgage backed securities | 35,405 | (1,079 | ) | 100 | 2,870 | (101 | ) | 6 | 38,275 | (1,180 | ) | |||||||||||||||||||
Residential mortgage backed securities: | ||||||||||||||||||||||||||||||
Agency backed | 334,224 | (2,788 | ) | 163 | 35,446 | (1,345 | ) | 29 | 369,670 | (4,133 | ) | |||||||||||||||||||
Non-agency backed | 95,001 | (4,077 | ) | 39 | 4,023 | (62 | ) | 4 | 99,024 | (4,139 | ) | |||||||||||||||||||
Collateralized loan / debt obligations | 201,086 | (6,161 | ) | 78 | — | — | — | 201,086 | (6,161 | ) | ||||||||||||||||||||
Asset-backed securities | 30,302 | (1,309 | ) | 70 | — | — | — | 30,302 | (1,309 | ) | ||||||||||||||||||||
Total temporarily impaired securities | $ | 2,492,426 | $ | (130,434 | ) | 1,847 | $ | 217,876 | $ | (21,925 | ) | 164 | $ | 2,710,302 | $ | (152,359 | ) |
(Amounts in Thousands) As of March 31, 2016 | Cost or amortized cost | Gross unrealized gains | Gross unrealized losses | Market value | ||||||||||||
Common stock | $ | 28,142 | $ | 2,129 | $ | (380 | ) | $ | 29,891 |
(Amounts in Thousands) As of December 31, 2015 | Cost or amortized cost | Gross unrealized gains | Gross unrealized losses | Market value | ||||||||||||
Common stock | $ | 26,937 | $ | 739 | $ | (405 | ) | $ | 27,271 |
Three Months Ended March 31, | ||||||||
(Amounts in Thousands) | 2016 | 2015 | ||||||
Fixed maturities, available-for-sale | $ | 46,193 | $ | 32,753 | ||||
Equity securities, available-for-sale | 2,364 | 409 | ||||||
Equity securities, trading | (153 | ) | 8 | |||||
Cash and short term investments | 1,086 | 1,665 | ||||||
49,490 | 34,835 | |||||||
Investment expenses | (75 | ) | (262 | ) | ||||
$ | 49,415 | $ | 34,573 |
(Amounts in Thousands) Three Months Ended March 31, 2016 | Gross Gains | Gross Losses | Net Gains (Losses) | |||||||||
Fixed maturities, available-for-sale | $ | 4,799 | $ | (46 | ) | $ | 4,753 | |||||
Equity securities, available-for-sale | 660 | (141 | ) | 519 | ||||||||
Equity securities, trading | 9,612 | (6,856 | ) | 2,756 | ||||||||
Other invested assets | 4 | (57 | ) | (53 | ) | |||||||
$ | 15,075 | $ | (7,100 | ) | $ | 7,975 | ||||||
(Amounts in Thousands) Three Months Ended March 31, 2015 | Gross Gains | Gross Losses | Net Gains (Losses) | |||||||||
Fixed maturities, available-for-sale | $ | 20,694 | $ | (4,190 | ) | $ | 16,504 | |||||
Equity securities, available-for-sale | 2,164 | (1,679 | ) | 485 | ||||||||
Equity securities, trading | 3,323 | (2,475 | ) | 848 | ||||||||
Other invested assets | 21 | (1,189 | ) | (1,168 | ) | |||||||
Write-down of fixed maturities, available-for-sale | — | (1,016 | ) | (1,016 | ) | |||||||
$ | 26,202 | $ | (10,549 | ) | $ | 15,653 | ||||||
Remaining Life of Notional Amount (1) | ||||||||||||||||||||
(Amounts in Thousands) | One Year | Two Through Five Years | Six Through Ten Years | After Ten Years | Total | |||||||||||||||
Interest rate swaps | $ | 70,000 | $ | — | $ | — | $ | — | $ | 70,000 |
(1) | Notional amount is not representative of either market risk or credit risk and is not recorded in the consolidated balance sheet. |
(Amounts in Thousands) | March 31, 2016 | December 31, 2015 | ||||||
Restricted cash and cash equivalents | $ | 359,876 | $ | 380,699 | ||||
Restricted investments - fixed maturities at fair value | 1,502,788 | 1,490,547 | ||||||
Total restricted cash, cash equivalents, and investments | $ | 1,862,664 | $ | 1,871,246 |
4. | Fair Value of Financial Instruments |
(Amounts in Thousands) As of March 31, 2016 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Assets: | ||||||||||||||||
U.S. treasury securities | $ | 243,654 | $ | 243,654 | $ | — | $ | — | ||||||||
U.S. government agencies | 40,634 | — | 40,634 | — | ||||||||||||
Municipal bonds | 588,065 | — | 588,065 | — | ||||||||||||
Foreign government | 129,200 | — | 129,200 | — | ||||||||||||
Corporate bonds and other bonds: | ||||||||||||||||
Finance | 1,473,323 | — | 1,473,323 | — | ||||||||||||
Industrial | 1,924,706 | — | 1,924,706 | — | ||||||||||||
Utilities | 162,607 | — | 162,607 | — | ||||||||||||
Commercial mortgage backed securities | 171,705 | — | 171,705 | — | ||||||||||||
Residential mortgage backed securities: | ||||||||||||||||
Agency backed | 1,220,905 | — | 1,220,905 | — | ||||||||||||
Non-agency backed | 40,359 | — | 40,359 | — | ||||||||||||
Collateralized loan / debt obligations | 284,751 | — | 284,751 | — | ||||||||||||
Asset-backed securities | 27,810 | — | 27,810 | — | ||||||||||||
Equity securities, available-for-sale | 98,518 | 63,155 | 9,807 | 25,556 | ||||||||||||
Equity securities, trading | 29,891 | 29,891 | — | — | ||||||||||||
Short term investments | 34,008 | 34,008 | — | — | ||||||||||||
Other investments | 42,322 | — | — | 42,322 | ||||||||||||
Life settlement contracts | 294,573 | — | — | 294,573 | ||||||||||||
$ | 6,807,031 | $ | 370,708 | $ | 6,073,872 | $ | 362,451 | |||||||||
Liabilities: | ||||||||||||||||
Equity securities sold but not yet purchased | $ | 20,360 | $ | 20,360 | $ | — | $ | — | ||||||||
Fixed maturity securities sold but not yet purchased | 8,495 | — | 8,495 | — | ||||||||||||
Life settlement contract profit commission | 7,168 | — | — | 7,168 | ||||||||||||
Contingent consideration | 64,738 | — | — | 64,738 | ||||||||||||
Derivatives | 894 | — | 894 | — | ||||||||||||
$ | 101,655 | $ | 20,360 | $ | 9,389 | $ | 71,906 |
(Amounts in Thousands) As of December 31, 2015 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Assets: | ||||||||||||||||
U.S. treasury securities | $ | 70,759 | $ | 70,759 | $ | — | $ | — | ||||||||
U.S. government agencies | 45,558 | — | 45,558 | — | ||||||||||||
Municipal bonds | 540,426 | — | 540,426 | — | ||||||||||||
Foreign government | 113,745 | — | 113,745 | — | ||||||||||||
Corporate bonds and other bonds: | ||||||||||||||||
Finance | 1,362,430 | — | 1,362,430 | — | ||||||||||||
Industrial | 1,647,063 | — | 1,647,063 | — | ||||||||||||
Utilities | 149,500 | — | 149,500 | — | ||||||||||||
Commercial mortgage backed securities | 151,318 | — | 151,318 | — | ||||||||||||
Residential mortgage backed securities: | ||||||||||||||||
Agency backed | 974,838 | — | 974,838 | — | ||||||||||||
Non-agency backed | 120,229 | — | 120,229 | — | ||||||||||||
Collateralized loan / debt obligations | 226,094 | — | 226,094 | — | ||||||||||||
Asset-backed securities | 31,837 | — | 31,837 | — | ||||||||||||
Equity securities, available-for-sale | 104,497 | 38,563 | 28,723 | 37,211 | ||||||||||||
Equity securities, trading | 27,271 | 27,271 | — | — | ||||||||||||
Short term investments | 84,266 | 84,266 | — | — | ||||||||||||
Other investments | 30,309 | — | — | 30,309 | ||||||||||||
Life settlement contracts | 264,001 | — | — | 264,001 | ||||||||||||
$ | 5,944,141 | $ | 220,859 | $ | 5,391,761 | $ | 331,521 | |||||||||
Liabilities: | ||||||||||||||||
Equity securities sold but not yet purchased | $ | 18,163 | $ | 18,163 | $ | — | $ | — | ||||||||
Fixed maturity securities sold but not yet purchased | 20,455 | — | 20,455 | — | ||||||||||||
Life settlement contract profit commission | 15,406 | — | — | 15,406 | ||||||||||||
Contingent consideration | 77,457 | — | — | 77,457 | ||||||||||||
Derivatives | 1,077 | — | 1,077 | — | ||||||||||||
$ | 132,558 | $ | 18,163 | $ | 21,532 | $ | 92,863 |
• | Level 1 – Valuations are based on unadjusted quoted market prices in active markets for identical financial assets or liabilities. |
• | Level 2 – Valuations of financial assets and liabilities are based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or liabilities in inactive markets obtained from third party pricing services or valuations based on models where the significant inputs are observable (e.g., interest rates, yield curves, prepayment speeds, default rates, loss severities, etc.) or can be corroborated by observable market data. The fair value of securities in this category are determined by management after reviewing market prices obtained from independent pricing services and brokers. |
• | Level 3 – Valuations are based on unobservable inputs for assets and liabilities where there is little or no market activity. Management’s assumptions are used in internal valuation pricing models to determine the fair value of financial assets or liabilities, which may include projected cash flows, collateral performance or liquidity circumstances in the security or similar securities that may have occurred since the prior pricing period. |
(Amounts in Thousands) | Balance as of January 1, 2016 | Net income | Other comprehensive income | Purchases and issuances | Sales and settlements | Net transfers into (out of) Level 3 | Balance as of March 31, 2016 | |||||||||||||||||||||
Other investments | $ | 30,309 | $ | (1,156 | ) | $ | — | $ | 375 | $ | (189 | ) | $ | 12,983 | $ | 42,322 | ||||||||||||
Equity securities, available-for-sale | 37,211 | — | (11,673 | ) | 18 | — | — | 25,556 | ||||||||||||||||||||
Life settlement contracts | 264,001 | 30,629 | — | — | (57 | ) | — | 294,573 | ||||||||||||||||||||
Life settlement contract profit commission | (15,406 | ) | (7,168 | ) | — | — | 15,406 | — | (7,168 | ) | ||||||||||||||||||
Contingent consideration | (77,457 | ) | — | — | 2,416 | 10,303 | — | (64,738 | ) | |||||||||||||||||||
Total | $ | 238,658 | $ | 22,305 | $ | (11,673 | ) | $ | 2,809 | $ | 25,463 | $ | 12,983 | $ | 290,545 |
(Amounts in Thousands) | Balance as of January 1, 2015 | Net income | Other comprehensive income | Purchases and issuances | Sales and settlements | Net transfers into (out of) Level 3 | Balance as of March 31, 2015 | |||||||||||||||||||||
Other investments | $ | 13,315 | $ | 472 | $ | — | $ | 1,046 | $ | (337 | ) | $ | — | $ | 14,496 | |||||||||||||
Equity securities, available-for-sale | 34,886 | — | 2,925 | — | (46 | ) | — | 37,765 | ||||||||||||||||||||
Life settlement contracts | 264,517 | 21,250 | — | — | (25,982 | ) | — | 259,785 | ||||||||||||||||||||
Life settlement contract profit commission | (16,534 | ) | 1,959 | — | — | — | — | (14,575 | ) | |||||||||||||||||||
Contingent consideration | (41,704 | ) | — | — | (44,988 | ) | 4,178 | — | (82,514 | ) | ||||||||||||||||||
Total | $ | 254,480 | $ | 23,681 | $ | 2,925 | $ | (43,942 | ) | $ | (22,187 | ) | $ | — | $ | 214,957 | ||||||||||||
Three Months Ended March 31, | ||||||||
(Amounts in Thousands) | 2016 | 2015 | ||||||
Net income | $ | 30,629 | $ | 21,250 | ||||
Premiums paid | (12,102 | ) | (11,130 | ) | ||||
Profit commission | (7,168 | ) | 1,959 | |||||
Other expenses | (629 | ) | (706 | ) | ||||
Gain on investment in life settlement contracts | $ | 10,730 | $ | 11,373 |
• | Equity and Fixed Income Investments: Fair value disclosures for these investments are disclosed above in this note. As of March 31, 2016, the Company's Level 3 equity securities consisted primarily of privately placed warrants of companies that have publicly traded common stock. The fair value of these equity securities as of March 31, 2016 was derived from the quoted price of the underlying common stock adjusted for other inputs that are not market observable. |
• | Cash and cash equivalents, restricted cash and cash equivalents, and short term investments: The carrying value of cash and cash equivalents, restricted cash and cash equivalents, and short term investments approximate their respective fair value and are classified as Level 1 in the fair value 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 fair value hierarchy. |
• | Other Investments: Other investments that are reported at fair value consisted primarily of investments in private limited partnerships, certain foreign investments, and other. Other investments reported at fair value accounted for approximately 0.5% of the Company's investment portfolio as of March 31, 2016, which the Company believes is immaterial to its overall financial position or its results of operations. The Company estimates the fair value based on significant unobservable inputs in the valuation process. As a result, the Company classified the fair value estimates as Level 3 in the fair value hierarchy. |
• | Equity Investment in Unconsolidated Subsidiaries - Related Party: The Company has an ownership percentage of approximately 12% in National General Holdings Corp. ("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 of the investment was approximately $265,458 as of March 31, 2016. The carrying value was $146,000 as of March 31, 2016. |
• | Subordinated Debentures and Debt: The fair value of the Company's material debt arrangements as of March 31, 2016 was as follows: |
Carrying Value | Fair Value | ||||||
7.25% Subordinated Notes due 2055 | $ | 145,109 | $ | 148,680 | |||
7.50% Subordinated Notes due 2055 | 130,600 | 135,702 | |||||
2.75% Convertible senior notes due 2044 | 161,763 | 184,477 | |||||
6.125% Notes due 2023 | 247,979 | 237,979 | |||||
Junior subordinated debentures due 2035-2037 | 121,962 | 77,780 | |||||
Revolving credit facility | 130,000 | 130,000 | |||||
Other | 55,615 | 55,615 |
• | Derivatives: The Company classifies interest rate swaps as Level 2 in the fair value 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. |
• | Contingent consideration: The fair value of contingent consideration is based on a discounted cash flow |
• | Life settlement contracts and life settlement contract profit commission: 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. These financial instruments are classified as Level 3 in the fair value hierarchy. 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. |
March 31, 2016 | December 31, 2015 | ||||||||
Average age of insured | 82.2 years | 82.0 years | |||||||
Average life expectancy, months (1) | 110 | 114 | |||||||
Average face amount per policy (Amounts in thousands) | $ | 6,538 | $ | 6,564 | |||||
Effective discount rate (2) | 13.9 | % | 13.7 | % | |||||
(1) | Standard life expectancy as adjusted for 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 inclusive 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 of information improves (declines), the EDR will decrease (increase). |
Change in life expectancy | ||||||||
(Amounts in Thousands) | Plus 4 Months | Minus 4 Months | ||||||
Investment in life policies: | ||||||||
March 31, 2016 | $ | (37,524 | ) | $ | 42,046 | |||
December 31, 2015 | $ | (37,697 | ) | $ | 40,997 |
Change in discount rate (1) | |||||||||
(Amounts in Thousands) | Plus 1% | Minus 1% | |||||||
Investment in life policies: | |||||||||
March 31, 2016 | $ | (26,783 | ) | $ | 29,775 | ||||
December 31, 2015 | $ | (26,558 | ) | $ | 29,644 | ||||
(1) | Discount rate is a present value calculation that considers legal risk, credit risk and liquidity risk and is a component of EDR. |
5. | Investment in Life Settlements |
(Amounts in Thousands, except number of Life Settlement Contracts) Expected Maturity Term in Years | Number of Life Settlement Contracts | Fair Value (1) | Face Value | ||||||||
As of March 31, 2016 | |||||||||||
0-1 | — | $ | — | $ | — | ||||||
1-2 | 4 | 24,573 | 32,500 | ||||||||
2-3 | 8 | 34,042 | 78,000 | ||||||||
3-4 | 7 | 16,977 | 36,500 | ||||||||
4-5 | 6 | 9,150 | 31,000 | ||||||||
Thereafter | 230 | 209,831 | 1,440,313 | ||||||||
Total | 255 | $ | 294,573 | $ | 1,618,313 |
(Amounts in Thousands, except number of Life Settlement Contracts) Expected Maturity Term in Years | Number of Life Settlement Contracts | Fair Value (1) | Face Value | |||||||||
As of December 31, 2015 | ||||||||||||
0-1 | — | $ | — | $ | — | |||||||
1-2 | — | — | — | |||||||||
2-3 | 8 | 31,261 | 70,500 | |||||||||
3-4 | 8 | 20,117 | 46,500 | |||||||||
4-5 | 4 | 6,760 | 20,000 | |||||||||
Thereafter | 235 | 205,863 | 1,481,313 | |||||||||
Total | 255 | $ | 264,001 | $ | 1,618,313 | |||||||
(1) | The Company determined the fair value as of March 31, 2016 based on 215 policies out of 255 policies, as the Company assigned no value to 40 of the policies as of March 31, 2016. The Company determined the fair value as of December 31, 2015 based on 213 policies out of 255 policies, as the Company assigned no value to 42 of the policies as of December 31, 2015. The Company estimated 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 policies 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 premium 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. |
(Amounts in Thousands, except number of Life Settlement Contracts) | March 31, 2016 | December 31, 2015 | ||||||
Number of policies with a negative value from discounted cash flow model as of period end | 40 | 42 | ||||||
Premiums paid for the preceding twelve month period for period ended | $ | 4,957 | $ | 4,971 | ||||
Death benefit received | $ | — | $ | — |
(Amounts in Thousands) | Premiums Due on Life Settlement Contracts | |||
2015 | $ | 65,789 | ||
2016 | 42,672 | |||
2017 | 41,771 | |||
2018 | 41,026 | |||
2019 | 37,998 | |||
Thereafter | 464,343 | |||
Total | $ | 693,599 |
Three Months Ended March 31, | ||||||||
(Amounts in Thousands) | 2016 | 2015 | ||||||
Balance, beginning of period | $ | 704,243 | $ | 628,383 | ||||
Acquisition costs deferred | 231,383 | 179,699 | ||||||
Amortization | (173,824 | ) | (156,198 | ) | ||||
Balance, end of period | $ | 761,802 | $ | 651,884 |
(Amounts in Thousands) | March 31, 2016 | December 31, 2015 | ||||||
Revolving credit facility | $ | 130,000 | $ | 130,000 | ||||
5.5% Convertible senior notes due 2021 (the "2021 Notes") | 5,135 | 5,103 | ||||||
2.75% Convertible senior notes due 2044 (the "2044 Notes") | 161,763 | 160,258 | ||||||
6.125% Senior notes due 2023 (the "2023 Notes") | 247,979 | 247,911 | ||||||
Junior subordinated debentures (the "2035-2037 Notes") | 121,962 | 118,226 | ||||||
7.25% Subordinated Notes due 2055 (the "7.25% 2055 Notes") | 145,109 | 145,078 | ||||||
7.50% Subordinated Notes due 2055 (the "7.50% 2055 Notes") | 130,600 | 130,572 | ||||||
Secured loan agreements | 36,676 | 38,455 | ||||||
Promissory notes | 13,804 | 13,753 | ||||||
$ | 993,028 | $ | 989,356 |
(Amounts in Thousands) | ||||||
2016 | $ | 5,408 | ||||
2017 | 7,423 | |||||
2018 | 9,590 | |||||
2019 | 134,467 | |||||
2020 | 205 | |||||
Thereafter | 852,552 | (1) | ||||
Total scheduled payments | 1,009,645 | |||||
Unamortized deferred origination costs | (16,617 | ) | ||||
993,028 | ||||||
(1) | Amount includes debt outstanding under the 2021 Notes and 2044 Notes, which is net of unamortized original issue discount of $823 and $49,211, respectively. |
(Amounts in Thousands) | Letters of Credit Limit | Letters of Credit Outstanding | Letters of Credit Available | |||||||||
Revolving credit facility | $ | 175,000 | $ | 120,562 | $ | 54,438 | ||||||
Funds at Lloyd's facility, in USD equivalent | 431,040 | 424,380 | 6,660 | |||||||||
Comerica bank letters of credit | 75,000 | 48,467 | 26,533 | |||||||||
Other letters of credit, in aggregate | 1,675 | 1,675 | — |
Three Months Ended March 31, | ||||||||
(Amounts in Thousands) | 2016 | 2015 | ||||||
Revolving credit facility | $ | 1,156 | $ | 816 | ||||
Funds at Lloyd's facility | 1,199 | 1,047 | ||||||
2021 Notes | 115 | 349 | ||||||
2023 Notes | 3,897 | 3,897 | ||||||
2035-2037 Notes | 1,515 | 2,020 | ||||||
2044 Notes | 3,116 | 3,015 | ||||||
7.25% 2055 Notes | 2,750 | — | ||||||
7.50% 2055 Notes | 2,559 | — | ||||||
Secured loan agreements | 189 | 236 | ||||||
Promissory notes | 158 | 156 | ||||||
Other, including interest income | 1,046 | (1,281 | ) | |||||
$ | 17,700 | $ | 10,255 |
8. | Acquisition Costs and Other Underwriting Expenses |
Three Months Ended March 31, | ||||||||
(Amounts in Thousands) | 2016 | 2015 | ||||||
Policy acquisition expenses | $ | 133,773 | $ | 110,967 | ||||
Salaries and benefits | 125,528 | 107,422 | ||||||
Other insurance general and administrative expenses | 5,333 | 13,287 | ||||||
$ | 264,634 | $ | 231,676 |
Three Months Ended March 31, | ||||||||
(Amounts in Thousands, except for earnings per share) | 2016 | 2015 | ||||||
Basic earnings per share: | ||||||||
Net income attributable to AmTrust common shareholders | $ | 100,257 | $ | 154,696 | ||||
Less: Net income allocated to participating securities and redeemable non-controlling interest | — | 360 | ||||||
Net income allocated to AmTrust common shareholders | $ | 100,257 | $ | 154,336 | ||||
Weighted average common shares outstanding – basic | 175,585 | 162,716 | ||||||
Less: Weighted average participating shares outstanding | — | 380 | ||||||
Weighted average common shares outstanding - basic | 175,585 | 162,336 | ||||||
Net income per AmTrust common share - basic | $ | 0.57 | $ | 0.95 | ||||
Diluted earnings per share: | ||||||||
Net income attributable to AmTrust common shareholders | $ | 100,257 | $ | 154,696 | ||||
Less: Net income allocated to participating securities and redeemable non-controlling interest | — | 360 | ||||||
Net income allocated to AmTrust common shareholders | $ | 100,257 | $ | 154,336 | ||||
Weighted average common shares outstanding – basic | 175,585 | 162,336 | ||||||
Plus: Dilutive effect of stock options, convertible debt, other | 2,342 | 4,538 | ||||||
Weighted average common shares outstanding – dilutive | 177,927 | 166,874 | ||||||
Net income per AmTrust common shares – diluted | $ | 0.56 | $ | 0.93 |
2016 | 2015 | ||||||||||||
Shares | Weighted Average Exercise Price | Shares | Weighted Average Exercise Price | ||||||||||
Outstanding at beginning of period | 2,783,880 | $ | 6.99 | 3,868,740 | $ | 5.80 | |||||||
Granted | — | — | 70,000 | 26.45 | |||||||||
Exercised | (210,018 | ) | 3.87 | (716,210 | ) | 4.36 | |||||||
Canceled or terminated | — | — | (11,350 | ) | 9.60 | ||||||||
Outstanding at end of period | 2,573,862 | 7.24 | 3,211,180 | 6.56 |
2015 | |||
Volatility | 41.05 | % | |
Risk-free interest rate | 1.91 | % | |
Weighted average expected lives in years | 6.25 | ||
Dividend rate | 1.89 | % | |
Forfeiture rate | 0.50 | % |
2016 | 2015 | ||||||||||||
Shares or Units | Weighted Average Grant Date Fair Value | Shares or Units | Weighted Average Grant Date Fair Value | ||||||||||
Non-vested at beginning of period | 1,853,516 | $ | 20.54 | 2,611,022 | $ | 16.70 | |||||||
Granted | 250,038 | 25.73 | 118,758 | 26.94 | |||||||||
Vested | (447,198 | ) | 15.78 | (474,262 | ) | 14.20 | |||||||
Forfeited | (25,264 | ) | 24.11 | (18,290 | ) | 20.33 | |||||||
Non-vested at end of period | 1,631,092 | 22.58 | 2,237,228 | 17.75 |
2016 | 2015 | ||||||||||||
Shares or Units | Weighted Average Grant Date Fair Value | Shares or Units | Weighted Average Grant Date Fair Value | ||||||||||
Non-vested at beginning of period | 752,466 | $ | 24.58 | 549,670 | $ | 19.42 | |||||||
Granted | — | — | — | — | |||||||||
Vested | — | — | — | — | |||||||||
Forfeited | (914 | ) | 22.60 | — | — | ||||||||
Non-vested at end of period | 751,552 | 24.58 | 549,670 | 19.42 |
Three Months Ended March 31, | ||||||||
(Amounts in Thousands) | 2016 | 2015 | ||||||
Income before equity in earnings of unconsolidated subsidiaries | $ | 135,015 | $ | 205,431 | ||||
Tax at federal statutory rate of 35% | $ | 47,255 | $ | 71,901 | ||||
Tax effects resulting from: | ||||||||
Tax rate differences | (18,216 | ) | (3,251 | ) | ||||
Permanent adjustments | (3,577 | ) | 2,298 | |||||
Valuation allowance | (511 | ) | — | |||||
Other, net | 2,775 | (24,136 | ) | |||||
$ | 27,726 | $ | 46,812 | |||||
Effective tax rate | 20.5 | % | 22.8 | % |
Three Months Ended March 31, | ||||||||
(Amounts in Thousands) | 2016 | 2015 | ||||||
Results of operations: | ||||||||
Premium written – ceded | $ | (543,688 | ) | $ | (528,285 | ) | ||
Change in unearned premium – ceded | 86,698 | 128,615 | ||||||
Earned premium - ceded | $ | (456,990 | ) | $ | (399,670 | ) | ||
Ceding commission on premium written | $ | 174,334 | $ | 168,773 | ||||
Ceding commission – deferred | (35,943 | ) | (50,086 | ) | ||||
Ceding commission – earned | $ | 138,391 | $ | 118,687 | ||||
Incurred loss and loss adjustment expense – ceded | $ | 354,854 | $ | 249,390 |
(Amounts in Thousands) | |||||
Assets | |||||
Cash and investments | $ | 53,917 | |||
Premium receivable, net | 15,577 | ||||
Accrued interest and dividends | 375 | ||||
Reinsurance recoverable | 17,554 | ||||
Other assets | 2,116 | ||||
Intangible assets | 250 | ||||
Total assets | $ | 89,789 | |||
Liabilities | |||||
Loss and loss adjustment expense reserves | $ | 49,949 | |||
Unearned premiums | 18,672 | ||||
Accrued expenses and other liabilities | 7,671 | ||||
Total liabilities | $ | 76,292 | |||
Acquisition price | $ | 3,819 | |||
Acquisition gain | $ | 9,678 |
(Amounts in Thousands) | |||||
Assets | |||||
Cash and investments | $ | 93,837 | |||
Premium receivable, net | 4,651 | ||||
Accrued interest and dividends | 470 | ||||
Other assets | 2,752 | ||||
Deferred tax asset | 1,905 | ||||
Property and equipment | 1,376 | ||||
Goodwill and intangible assets | 4,253 | ||||
Total assets | $ | 109,244 | |||
Liabilities | |||||
Loss and loss adjustment expense reserves | $ | 65,725 | |||
Unearned premiums | 7,006 | ||||
Accrued expenses and other liabilities | 4,199 | ||||
Reinsurance payable on paid losses | 740 | ||||
Total liabilities | $ | 77,670 | |||
Acquisition price | $ | 31,574 |
(Amounts in Thousands) | |||||
Assets | |||||
Cash and investments | $ | 192,015 | |||
Prepaid reinsurance premium | 77,777 | ||||
Other assets | 22,466 | ||||
Deferred tax asset | 50,399 | ||||
Goodwill and Intangible assets | 84,215 | ||||
Total assets | $ | 426,872 | |||
Liabilities | |||||
Loss and loss expense reserves | $ | 3,013 | |||
Unearned premiums | 182,441 | ||||
Accrued expenses and other liabilities | 85,171 | ||||
Total liabilities | $ | 270,625 | |||
Acquisition price | $ | 156,247 |
Three Months Ended March 31, | ||||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||||
(Amounts in Thousands) | AmTrust | Non-Controlling Interest | Total | AmTrust | Non-Controlling Interest | Total | ||||||||||||||||||
Balance, December 31, | $ | 2,909,060 | $ | 176,455 | $ | 3,085,515 | $ | 2,037,020 | $ | 159,181 | $ | 2,196,201 | ||||||||||||
Net income (loss) | 109,048 | 3,857 | 112,905 | 160,065 | 3,761 | 163,826 | ||||||||||||||||||
Unrealized holding (loss) gain | 81,068 | — | 81,068 | 7,270 | — | 7,270 | ||||||||||||||||||
Reclassification adjustment | (428 | ) | — | (428 | ) | (415 | ) | — | (415 | ) | ||||||||||||||
Foreign currency translation | (47,845 | ) | — | (47,845 | ) | (65,353 | ) | — | (65,353 | ) | ||||||||||||||
Unrealized gain on interest rate swap | 119 | — | 119 | 27 | — | 27 | ||||||||||||||||||
Extinguishment of 2021 senior notes, equity component | — | — | — | (3,345 | ) | (3,345 | ) | |||||||||||||||||
Share exercises, compensation and other | 2,658 | — | 2,658 | 5,224 | — | 5,224 | ||||||||||||||||||
Common share issuance (purchase), net | (14,391 | ) | — | (14,391 | ) | 171,672 | — | 171,672 | ||||||||||||||||
Common share dividends | (26,313 | ) | — | (26,313 | ) | (20,590 | ) | — | (20,590 | ) | ||||||||||||||
Preferred stock issuance, net of fees | 139,070 | — | 139,070 | 176,529 | — | 176,529 | ||||||||||||||||||
Preferred stock dividends | (8,791 | ) | — | (8,791 | ) | (5,369 | ) | — | (5,369 | ) | ||||||||||||||
Capital contribution, net | — | — | — | — | (611 | ) | (611 | ) | ||||||||||||||||
Balance, March 31, | $ | 3,143,255 | $ | 180,312 | $ | 3,323,567 | $ | 2,462,735 | $ | 162,331 | $ | 2,625,066 |
(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, 2015 | $ | (92,213 | ) | $ | (37,242 | ) | $ | (700 | ) | $ | (107 | ) | $ | (130,262 | ) | |||||
Other comprehensive (loss) income before reclassification | (73,608 | ) | 124,720 | 183 | — | 51,295 | ||||||||||||||
Amounts reclassed from accumulated other comprehensive income | — | (658 | ) | — | — | (658 | ) | |||||||||||||
Income tax benefit (expense) | 25,763 | (43,422 | ) | (64 | ) | — | (17,723 | ) | ||||||||||||
Net current-period other comprehensive (loss) income | (47,845 | ) | 80,640 | 119 | — | 32,914 | ||||||||||||||
Balance, March 31, 2016 | $ | (140,058 | ) | $ | 43,398 | $ | (581 | ) | $ | (107 | ) | $ | (97,348 | ) | ||||||
Balance, December 31, 2014 | $ | 2,582 | $ | (7,023 | ) | $ | (1,985 | ) | $ | (1,738 | ) | $ | (8,164 | ) | ||||||
Other comprehensive income before reclassification | (100,543 | ) | 11,185 | 41 | — | (89,317 | ) | |||||||||||||
Amounts reclassed from accumulated other comprehensive income | — | (638 | ) | — | — | (638 | ) | |||||||||||||
Income tax benefit (expense) | 35,190 | (3,692 | ) | (14 | ) | — | 31,484 | |||||||||||||
Net current-period other comprehensive income | (65,353 | ) | 6,855 | 27 | — | (58,471 | ) | |||||||||||||
Balance, March 31, 2015 | $ | (62,771 | ) | $ | (168 | ) | $ | (1,958 | ) | $ | (1,738 | ) | $ | (66,635 | ) |
(Amounts in Thousands) | Small Commercial Business | Specialty Risk and Extended Warranty | Specialty Program | Corporate and Other | Total | |||||||||||||||
Three Months Ended March 31, 2016: | ||||||||||||||||||||
Gross written premium | $ | 1,066,132 | $ | 529,446 | $ | 337,496 | $ | — | $ | 1,933,074 | ||||||||||
Net written premium | 624,528 | 337,833 | 258,318 | — | 1,220,679 | |||||||||||||||
Change in unearned premium | (120,434 | ) | (15,992 | ) | (9,971 | ) | — | (146,397 | ) | |||||||||||
Net earned premium | 504,094 | 321,841 | 248,347 | — | 1,074,282 | |||||||||||||||
Loss and loss adjustment expense | (332,684 | ) | (210,936 | ) | (171,453 | ) | — | (715,073 | ) | |||||||||||
Acquisition costs and other underwriting expenses | (130,428 | ) | (69,341 | ) | (64,865 | ) | — | (264,634 | ) | |||||||||||
(463,112 | ) | (280,277 | ) | (236,318 | ) | — | (979,707 | ) | ||||||||||||
Underwriting income | 40,982 | 41,564 | 12,029 | — | 94,575 | |||||||||||||||
Service and fee income | 32,537 | 89,780 | 289 | 21,595 | 144,201 | |||||||||||||||
Investment income and realized gain | 26,854 | 19,170 | 11,300 | 66 | 57,390 | |||||||||||||||
Other expenses | (70,697 | ) | (35,109 | ) | (22,380 | ) | — | (128,186 | ) | |||||||||||
Interest expense and loss on extinguishment of debt | (9,762 | ) | (4,848 | ) | (3,090 | ) | — | (17,700 | ) | |||||||||||
Foreign currency loss | — | (35,673 | ) | — | — | (35,673 | ) | |||||||||||||
Gain on life settlement contracts | 5,918 | 2,939 | 1,873 | — | 10,730 | |||||||||||||||
Acquisition gain on purchase | 9,678 | — | — | — | 9,678 | |||||||||||||||
Provision for income taxes | (6,993 | ) | (15,326 | ) | (4 | ) | (5,403 | ) | (27,726 | ) | ||||||||||
Equity in earnings of unconsolidated subsidiary – related party | — | — | — | 5,776 | 5,776 | |||||||||||||||
Net income | $ | 28,517 | $ | 62,497 | $ | 17 | $ | 22,034 | $ | 113,065 | ||||||||||
(Amounts in Thousands) | Small Commercial Business | Specialty Risk and Extended Warranty | Specialty Program | Corporate and Other | Total | |||||||||||||||
Three Months Ended March 31, 2015: | ||||||||||||||||||||
Gross written premium | $ | 901,119 | $ | 470,870 | $ | 359,147 | $ | — | $ | 1,731,136 | ||||||||||
Net written premium | 523,240 | 287,689 | 232,260 | — | 1,043,189 | |||||||||||||||
Change in unearned premium | (99,249 | ) | 41,442 | (36,005 | ) | — | (93,812 | ) | ||||||||||||
Net earned premium | 423,991 | 329,131 | 196,255 | — | 949,377 | |||||||||||||||
Loss and loss adjustment expense | (274,346 | ) | (208,640 | ) | (130,297 | ) | — | (613,283 | ) | |||||||||||
Acquisition costs and other underwriting expenses | (109,679 | ) | (70,265 | ) | (51,732 | ) | — | (231,676 | ) | |||||||||||
(384,025 | ) | (278,905 | ) | (182,029 | ) | — | (844,959 | ) | ||||||||||||
Underwriting income | 39,966 | 50,226 | 14,226 | — | 104,418 | |||||||||||||||
Service and fee income | 26,632 | 67,762 | 333 | 18,159 | 112,886 | |||||||||||||||
Investment income and realized gain | 23,246 | 16,740 | 10,150 | 90 | 50,226 | |||||||||||||||
Other expenses | (51,251 | ) | (26,780 | ) | (20,426 | ) | — | (98,457 | ) | |||||||||||
Interest expense and loss on extinguishment of debt | (7,791 | ) | (4,072 | ) | (3,106 | ) | — | (14,969 | ) | |||||||||||
Foreign currency gain | — | 39,954 | — | — | 39,954 | |||||||||||||||
Loss on life settlement contracts | 5,921 | 3,093 | 2,359 | — | 11,373 | |||||||||||||||
Provision for income taxes | (8,149 | ) | (32,602 | ) | (785 | ) | (5,276 | ) | (46,812 | ) | ||||||||||
Equity in earnings of unconsolidated subsidiary – related party | — | — | — | 5,529 | 5,529 | |||||||||||||||
Net income | $ | 28,574 | $ | 114,321 | $ | 2,751 | $ | 18,502 | $ | 164,148 |
(Amounts in Thousands) | Small Commercial Business | Specialty Risk and Extended Warranty | Specialty Program | Total | ||||||||||||
Three Months Ended March 31, 2016: | ||||||||||||||||
Workers' compensation | $ | 346,043 | $ | — | $ | 107,713 | $ | 453,756 | ||||||||
Warranty | — | 168,333 | — | 168,333 | ||||||||||||
Other liability | 5,249 | 40,713 | 70,581 | 116,543 | ||||||||||||
Commercial auto and liability, physical damage | 85,904 | 8,492 | 35,143 | 129,539 | ||||||||||||
Medical malpractice | — | 44,017 | — | 44,017 | ||||||||||||
Other | 66,898 | 60,286 | 34,910 | 162,094 | ||||||||||||
Total net earned premium | $ | 504,094 | $ | 321,841 | $ | 248,347 | $ | 1,074,282 | ||||||||
(Amounts in Thousands) | Small Commercial Business | Specialty Risk and Extended Warranty | Specialty Program | Total | ||||||||||||
Three Months Ended March 31, 2015: | ||||||||||||||||
Workers' compensation | $ | 292,065 | $ | — | $ | 77,602 | $ | 369,667 | ||||||||
Warranty | — | 151,531 | — | 151,531 | ||||||||||||
Other liability | 10,519 | 32,811 | 40,520 | 83,850 | ||||||||||||
Commercial auto and liability, physical damage | 51,920 | 3,440 | 35,233 | 90,593 | ||||||||||||
Medical malpractice | — | 36,311 | — | 36,311 | ||||||||||||
Other | 69,487 | 105,038 | 42,900 | 217,425 | ||||||||||||
Total net earned premium | $ | 423,991 | $ | 329,131 | $ | 196,255 | $ | 949,377 | ||||||||
(Amounts in Thousands) | March 31, 2016 | December 31, 2015 | ||||||
Small Commercial Business | $ | 8,871,282 | $ | 7,781,045 | ||||
Specialty Risk and Extended Warranty | 6,397,361 | 6,370,861 | ||||||
Specialty Program | 3,077,724 | 2,936,710 | ||||||
Corporate and Other | 9,354 | 2,403 | ||||||
$ | 18,355,721 | $ | 17,091,019 |
• | 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. |
• | ARI Insurance Company and ARI Casualty Company (collectively, "ARI") |
• | Springfield Insurance Company, Springfield Insurance Company Limited, and Unified Grocers Insurance Services (collectively, "Springfield") |
• | Heritage Indemnity Company, Warranty Solutions Management Corporation, Westlake Insurance Company (Bermuda), Ltd., Warranty Solutions Administrative Services, Inc., Heritage Mechanical Breakdown Corporation and WS Aftermarket Services Corporation (collectively, "Warranty Solutions") |
• | 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 Holdings Ltd. ("Maiden") in connection with our reinsurance agreement for which we receive a fee. |
• | Asset management services — We currently manage the investment portfolios of certain subsidiaries of Maiden, National General Holdings Corp. ("NGHC") and ACP Re, Ltd. ("ACP Re") for which we receive a management fee. |
• | Information technology services — We provide information technology and printing and mailing services to NGHC and its affiliates for a fee. |
• | Policy acquisition expenses comprise commissions directly attributable to those agents, wholesalers or brokers that produce premiums written on our behalf. In most instances, we pay commissions based on collected premium, which reduces our credit risk exposure associated with producers in case a policyholder does not pay a premium. We pay state and local taxes, licenses and fees, assessments and contributions to various state guaranty funds based on our premiums or losses in each state. Surcharges that we may be |
• | 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 our segments based on each segment’s proportionate share of total acquisition costs and other underwriting expenses recognized during the period. |
Three Months Ended March 31, | ||||||||
(Amounts in Thousands) | 2016 | 2015 | ||||||
Gross written premium | $ | 1,933,074 | $ | 1,731,136 | ||||
Net written premium | $ | 1,220,679 | $ | 1,043,189 | ||||
Change in unearned premium | (146,397 | ) | (93,812 | ) | ||||
Net earned premium | 1,074,282 | 949,377 | ||||||
Service and fee income (related parties - $20,163, $17,404) | 144,201 | 112,886 | ||||||
Net investment income | 49,415 | 34,573 | ||||||
Net realized and unrealized gain on investments | 7,975 | 15,653 | ||||||
Total revenues | 1,275,873 | 1,112,489 | ||||||
Loss and loss adjustment expense | 715,073 | 613,283 | ||||||
Acquisition costs and other underwriting expenses (net of ceding commission - related party - $138,391; $118,687) | 264,634 | 231,676 | ||||||
Other | 128,186 | 98,457 | ||||||
Total expenses | 1,107,893 | 943,416 | ||||||
Income before other income (expense), income taxes and equity in earnings of unconsolidated subsidiaries | 167,980 | 169,073 | ||||||
Other income (loss): | ||||||||
Interest expense (net of interest income - related party - $2,188, $2,188) | (17,700 | ) | (10,255 | ) | ||||
Loss on extinguishment of debt | — | (4,714 | ) | |||||
Net gain on investment in life settlement contracts net of profit commission | 10,730 | 11,373 | ||||||
Foreign currency (loss) gain | (35,673 | ) | 39,954 | |||||
Acquisition gain on purchase | 9,678 | — | ||||||
Total other (loss) income | (32,965 | ) | 36,358 | |||||
Income before income taxes and equity in earnings (loss) of unconsolidated subsidiaries | 135,015 | 205,431 | ||||||
Provision for income taxes | 27,726 | 46,812 | ||||||
Income before equity in earnings of unconsolidated subsidiaries | 107,289 | 158,619 | ||||||
Equity in earnings of unconsolidated subsidiaries – related parties | 5,776 | 5,529 | ||||||
Net income | 113,065 | 164,148 | ||||||
Net income attributable to redeemable non-controlling interest and non-controlling interest of subsidiaries | (4,017 | ) | (4,083 | ) | ||||
Net income attributable to AmTrust Financial Services, Inc. | 109,048 | 160,065 | ||||||
Dividends on preferred stock | (8,791 | ) | (5,369 | ) | ||||
Net income attributable to AmTrust common shareholders | $ | 100,257 | $ | 154,696 | ||||
Net realized gain (loss) on investments: | ||||||||
Total other-than-temporary impairment loss | $ | — | $ | (1,016 | ) | |||
Portion of loss recognized in other comprehensive income | — | — | ||||||
Net impairment losses recognized in earnings | — | (1,016 | ) | |||||
Net realized gain on available for sale securities | 5,272 | 16,989 | ||||||
Net unrealized gain on trading securities | 2,703 | (320 | ) | |||||
Net realized investment gain | $ | 7,975 | $ | 15,653 | ||||
Key measures: | ||||||||
Net loss ratio | 66.6 | % | 64.6 | % | ||||
Net expense ratio | 24.6 | % | 24.4 | % | ||||
Net combined ratio | 91.2 | % | 89.0 | % |
Three Months Ended March 31, | ||||||||
(Amounts in Thousands) | 2016 | 2015 | ||||||
Gross written premium | $ | 1,066,132 | $ | 901,119 | ||||
Net written premium | $ | 624,528 | $ | 523,240 | ||||
Change in unearned premium | (120,434 | ) | (99,249 | ) | ||||
Net earned premium | 504,094 | 423,991 | ||||||
Loss and loss adjustment expense | (332,684 | ) | (274,346 | ) | ||||
Acquisition costs and other underwriting expenses | (130,428 | ) | (109,679 | ) | ||||
(463,112 | ) | (384,025 | ) | |||||
Underwriting income | $ | 40,982 | $ | 39,966 | ||||
Key measures: | ||||||||
Net loss ratio | 66.0 | % | 64.7 | % | ||||
Net expense ratio | 25.9 | % | 25.9 | % | ||||
Net combined ratio | 91.9 | % | 90.6 | % |
Three Months Ended March 31, | ||||||||
(Amounts in Thousands) | 2016 | 2015 | ||||||
Gross written premium | $ | 529,446 | $ | 470,870 | ||||
Net written premium | $ | 337,833 | $ | 287,689 | ||||
Change in unearned premium | (15,992 | ) | 41,442 | |||||
Net earned premium | 321,841 | 329,131 | ||||||
Loss and loss adjustment expense | (210,936 | ) | (208,640 | ) | ||||
Acquisition costs and other underwriting expenses | (69,341 | ) | (70,265 | ) | ||||
(280,277 | ) | (278,905 | ) | |||||
Underwriting income | $ | 41,564 | $ | 50,226 | ||||
Key measures: | ||||||||
Net loss ratio | 65.5 | % | 63.4 | % | ||||
Net expense ratio | 21.6 | % | 21.3 | % | ||||
Net combined ratio | 87.1 | % | 84.7 | % |
Three Months Ended March 31, | ||||||||
(Amounts in Thousands) | 2016 | 2015 | ||||||
Gross written premium | $ | 337,496 | $ | 359,147 | ||||
Net written premium | $ | 258,318 | $ | 232,260 | ||||
Change in unearned premium | (9,971 | ) | (36,005 | ) | ||||
Net earned premium | 248,347 | 196,255 | ||||||
Loss and loss adjustment expense | (171,453 | ) | (130,297 | ) | ||||
Acquisition costs and other underwriting expenses | (64,865 | ) | (51,732 | ) | ||||
(236,318 | ) | (182,029 | ) | |||||
Underwriting income | $ | 12,029 | $ | 14,226 | ||||
Key measures: | ||||||||
Net loss ratio | 69.0 | % | 66.4 | % | ||||
Net expense ratio | 26.2 | % | 26.4 | % | ||||
Net combined ratio | 95.2 | % | 92.8 | % |
Three Months Ended March 31, | ||||||||
(Amounts in Thousands) | 2016 | 2015 | ||||||
Cash and cash equivalents provided by (used in): | ||||||||
Operating activities | $ | 688,451 | $ | 193,794 | ||||
Investing activities | (702,903 | ) | (237,205 | ) | ||||
Financing activities | 84,816 | 148,994 |
(Amounts in thousands) | March 31, 2016 | December 31, 2015 | ||||||
Selected Assets: | ||||||||
Fixed maturities, available-for-sale | $ | 6,307,719 | $ | 5,433,797 | ||||
Selected Liabilities: | ||||||||
Accrued expense and other current liabilities | 1,379,985 | 1,140,830 |
Series | Dividend rate per year % | Shares of Preferred Stock issued | Depositary shares issued | Liquidation preference amount per share of Preferred Stock $ | Net proceeds ($ in thousands) | Dividend paid during the three months ended March 31, 2016 ($ in thousands) | ||||||||||||
A | 6.75 | 4,600,000 | N/A | $ | 25 | $ | 111,130 | $ | 1,941 | |||||||||
B | 7.25 | 105,000 | 4,200,000 | 1,000 | 101,702 | 1,903 | ||||||||||||
C | 7.625 | 80,000 | 3,200,000 | 1,000 | 77,480 | 1,525 | ||||||||||||
D | 7.50 | 182,500 | 7,300,000 | 1,000 | 176,529 | 3,422 | ||||||||||||
E | 7.75 | 143,750 | 5,750,000 | 1,000 | 139,042 | — |
March 31, 2016 | December 31, 2015 | |||||||||||||
(Amounts in Thousands) | Carrying Value | Percentage of Portfolio | Carrying Value | Percentage of Portfolio | ||||||||||
Cash, cash equivalents and restricted cash | $ | 1,358,158 | 17.3 | % | $ | 1,312,669 | 18.9 | % | ||||||
Short-term investments | 34,008 | 0.4 | 84,266 | 1.2 | ||||||||||
U.S. treasury securities | 243,654 | 3.1 | 70,759 | 1.0 | ||||||||||
U.S. government agencies | 40,634 | 0.5 | 45,558 | 0.7 | ||||||||||
Municipals | 588,065 | 7.5 | 540,426 | 7.8 | ||||||||||
Foreign government | 129,200 | 1.7 | 113,745 | 1.6 | ||||||||||
Commercial mortgage back securities | 171,705 | 2.2 | 151,318 | 2.2 | ||||||||||
Residential mortgage backed securities: | ||||||||||||||
Agency backed | 1,220,905 | 15.6 | 974,838 | 14.0 | ||||||||||
Non-agency backed | 40,359 | 0.5 | 120,229 | 1.7 | ||||||||||
Collateralized loan / debt obligations | 284,751 | 3.6 | 226,094 | 3.2 | ||||||||||
Asset-backed securities | 27,810 | 0.4 | 31,837 | 0.5 | ||||||||||
Corporate bonds | 3,560,636 | 45.6 | 3,158,993 | 45.3 | ||||||||||
Preferred stocks | 8,238 | 0.1 | 4,989 | 0.1 | ||||||||||
Common stocks | 120,171 | 1.5 | 126,779 | 1.8 | ||||||||||
$ | 7,828,294 | 100.0 | % | $ | 6,962,500 | 100.0 | % |
March 31, 2016 | December 31, 2015 | ||||
U.S. Treasury | 3.9 | % | 1.3 | % | |
AAA | 8.3 | 12.2 | |||
AA | 31.9 | 29.0 | |||
A | 29.3 | 28.8 | |||
BBB, BBB+, BBB- | 23.8 | 25.8 | |||
BB, BB+, BB- | 2.0 | 1.9 | |||
B, B+, B- | 0.2 | 0.1 | |||
Other | 0.6 | 0.9 | |||
Total | 100.0 | % | 100.0 | % |
March 31, 2016 | December 31, 2015 | ||||||||
Average Yield % | Average Duration in Years | Average Yield % | Average Duration in Years | ||||||
U.S. treasury securities | 1.22 | 3.0 | 1.73 | 3.9 | |||||
U.S. government agencies | 2.76 | 1.2 | 2.63 | 4.2 | |||||
Foreign government | 2.07 | 4.6 | 2.27 | 5.7 | |||||
Corporate bonds | 3.30 | 5.5 | 3.33 | 6.1 | |||||
Municipal bonds | 3.36 | 6.7 | 3.33 | 6.9 | |||||
Collateralized loan / debt obligations | 4.68 | 0.8 | 4.22 | 1.1 | |||||
Mortgage and asset backed securities | 3.18 | 3.8 | 3.38 | 4.6 |
• | 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. |
(Amounts in Thousands) | 2016 | 2015 | ||||||
Equity securities | $ | — | $ | 1,016 | ||||
Fixed maturity securities | — | — | ||||||
$ | — | $ | 1,016 |
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 | $ | 5,692,981 | $ | (614,738 | ) | (18.5 | )% | ||||
100 basis point increase | 5,987,696 | (320,023 | ) | (9.6 | )% | ||||||
No change | 6,307,719 | — | — | ||||||||
100 basis point decrease | 6,636,025 | 328,306 | 9.9 | % | |||||||
200 basis point decrease | 6,984,726 | 677,007 | 20.4 | % |
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 | $ | 160,511 | $ | 32,102 | 1.0 | % | |||||
No change | 128,409 | — | |||||||||
25% decrease | 96,307 | (32,102 | ) | (1.0 | )% |
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 | |||||||||||
January 1 - 31, 2016 | — | $ | — | — | $ | 90,298,041 | |||||||||
February 1 - 29, 2016 | 658,552 | 24.90 | 583,559 | 75,780,744 | |||||||||||
March 1 - 31, 2016 | 5,539 | 24.96 | 5,539 | 75,642,508 | |||||||||||
Total | 664,091 | 589,098 | $ | 75,642,508 | |||||||||||
Exhibit Number | Description | |
3.1 | Certificate of Designations of 7.75% Non-Cumulative Preferred Stock, Series E (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K (No. 001-33143) filed on March 15, 2016). | |
4.1 | Form of Stock Certificate evidencing 7.75% Non-Cumulative Preferred Stock, Series E (incorporated by reference to Exhibit 4.3 to the Company's Current Report on Form 8-K (No. 001-33143) filed on March 15, 2016). | |
4.2 | Deposit Agreement, dated March 15, 2016, among the Company, American Stock Transfer & 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 March 15, 2016). | |
4.3 | Form of depositary receipt (included as Exhibit A to Exhibit 4.2) (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K (No. 001-33143) filed on March 15, 2016). | |
10.1 | Amendment No. 4, dated February 26, 2016, 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 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (No. 001-33143) filed on February 29, 2016). | |
31.1 | Certification of the Chief Executive Officer, pursuant to Rule 13a-14(a) or 15d-14(a), for the quarter ended March 31, 2016. | |
31.2 | Certification of the Chief Financial Officer, pursuant to Rule 13a-14(a) or 15d-14(a), for the quarter ended March 31, 2016. | |
32.1 | Certification of the Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, for the quarter ended March 31, 2016. | |
32.2 | Certification of the Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, for the quarter ended March 31, 2016. | |
101.1 | The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets at March 31, 2016 and December 31, 2015; (ii) the Condensed Consolidated Statements of Income for the three months ended March 31, 2016 and 2015; (iii) the Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2016 and 2015; (iv) the Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015; and (v) the Notes to Unaudited Condensed Consolidated Financial Statements. |
AmTrust Financial Services, Inc. | |||
(Registrant) | |||
Date: | May 10, 2016 | /s/ Barry D. Zyskind | |
Barry D. Zyskind | |||
President and Chief Executive Officer | |||
/s/ Ronald E. Pipoly, Jr. | |||
Ronald E. Pipoly, Jr. | |||
Chief Financial Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of AmTrust Financial Services, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | May 10, 2016 | By: | /s/ Barry Zyskind |
Barry Zyskind | |||
President and Chief Executive Officer | |||
(Principal Executive Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of AmTrust Financial Services, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | May 10, 2016 | By: | /s/ Ronald Pipoly |
Ronald Pipoly | |||
Chief Financial Officer | |||
(Principal Financial and Accounting Officer) |
1. | The Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 (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: | May 10, 2016 | By: | /s/ Barry Zyskind |
Barry Zyskind | |||
President and Chief Executive Officer | |||
(Principal Executive Officer) |
1. | The Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 (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: | May 10, 2016 | By: | /s/ Ronald Pipoly |
Ronald Pipoly | |||
Chief Financial Officer | |||
(Principal Financial and Accounting Officer) |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
May. 02, 2016 |
|
Document Documentand Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q1 | |
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 | 173,865,382 |
Condensed Consolidated Statements of Income (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Service and fee income | $ 144,201 | $ 112,886 |
Interest Income form related party | 2,188 | 2,188 |
Related Party Transactions | ||
Service and fee income | 20,163 | 17,404 |
Ceding commission - earned | $ 138,391 | $ 118,687 |
Basis of Reporting |
3 Months Ended |
---|---|
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Reporting | Basis of Reporting The accompanying unaudited interim consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X and, therefore, do not include all of the information and footnotes required by GAAP for complete financial statements. These interim statements should be read in conjunction with the financial statements and notes thereto included in the AmTrust Financial Services, Inc. (“AmTrust” or the “Company”) Annual Report on Form 10-K for the year ended December 31, 2015, previously filed with the Securities and Exchange Commission (“SEC”) on February 29, 2016. The balance sheet at December 31, 2015 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. These interim consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim period and all such adjustments are of a normal recurring nature. The results of operations for the interim period are not necessarily indicative, if annualized, of those to be expected for the full year. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The Company implemented a two-for-one stock split on February 2, 2016. As a result, the Company retrospectively adjusted all share and per share amounts in the accompanying condensed consolidated financial statements and notes to the condensed consolidated financial statements to apply the effect of the stock split for all periods presented. A detailed description of the Company’s significant accounting policies and management judgments is located in the audited consolidated financial statements for the year ended December 31, 2015, included in the Company’s Form 10-K filed with the SEC. All significant inter-company transactions and accounts have been eliminated in the consolidated financial statements. To facilitate period-to-period comparisons, certain reclassifications have been made to prior period consolidated financial statement amounts to conform to current period presentation. Correction of an Immaterial Error The Company identified an immaterial error related to its classification on the consolidated statement of cash flows for purchases and sales of securities sold but not yet purchased, at fair value. The Company determined that in prior periods reported, these amounts were improperly reflected as changes in accrued expenses and other current liabilities in cash flow from operating activities instead of securities sold but not yet purchased, at fair value, in cash flow from investing activities. The Company reviewed the impact of this error on the prior periods and determined that the error was not material to the prior period consolidated financial statements. The Company has corrected the consolidated statement of cash flows for the three months ended March 31, 2015 by presenting this amount separately within investing activities and decreasing the changes in accrued expenses and other current liabilities within operating activities. The impact of the error decreased the Company's net cash provided by operating activities by $3,570 and increased the Company's cash flows from investing activities by an equivalent amount for the period ended March 31, 2015. |
Recent Accounting Pronouncements |
3 Months Ended |
---|---|
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements With the exception of those discussed below, there have been no recent accounting pronouncements or changes in accounting pronouncements during the three months ended March 31, 2016, as compared to those described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, that are of significance, or potential significance, to the Company. In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which simplified several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or a liability, and classification on the statement of cash flows. The updated guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact this guidance will have on its results of operations, financial position or liquidity. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations, which improves the operability and understandability of the implementation guidance on principal versus agent considerations by clarifying that 1) an entity determines whether it is a principal or an agent for each specific good or service promised to the customer; 2) an entity determines the nature of each specific good or service; 3) when another party is involved in providing goods or services to a customer, an entity that is a principal obtains control of (a) a good or another asset from the other party that it then transfers to the customer, (b) a right to a service that will be performed by another party, which gives the entity the ability to direct that party to provide the service to the customer on the entity's behalf, or (c) a good or service from the other party that is combines with other goods or services to provide the specific good or service to the customer; and 4) the purpose of the indicators in paragraph 606-10-55-39 in Topic 606 is to support or assist in the assessment of control. The effective date and transition requirement for this ASU are the same as the effective date and transition requirements of ASU 2014-09, which were deferred to the quarter ending March 31, 2018 by ASU 2015-14. The Company is currently evaluating the impact this guidance will have on its results of operations, financial position or liquidity. In March 2016, the FASB issued ASU 2016-06, Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments, which clarifies the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. An entity performing the assessment under the amended guidance in this ASU is required to assess the embedded call (put) options solely in accordance with the four-step decision sequence prescribed by Topic 815. The updated guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. This ASU should be applied on a modified retrospective basis. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact this guidance will have on its results of operations, financial position or liquidity. In March 2016, the FASB issued ASU 2016-05, Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships, which clarifies that a change in the counterparty to a derivative instrument that has been designated as a hedging instrument under Topic 815 does not, in and of itself, require designation of that hedging relationship provided that all other hedge accounting criteria continue to be met. The updated guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. 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 February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires a lessee to recognize a right of use asset and a lease liability on the balance sheet for leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The updated guidance is effective for fiscal years beginning after December 31, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the impact this guidance will have on its results of operations, financial position or liquidity. In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Specifically, the guidance (a) requires equity investments to be measured at fair value with changes in fair value recognized in earnings. However, an entity may choose to measure equity investments that do not have readily determinable fair value at cost minus impairment, if any, plus or minus changes resulted from observable price changes in orderly transactions for identical or similar investments of the same issuer, (b) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment, (c) eliminates the requirement to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost, (d) requires the use of the exit price notion when measuring the fair value of financial instruments for disclosure purposes, (e) requires an entity to present separately in other comprehensive income the portion of the total change in fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option, (f) requires separate presentation of financial assets and liabilities by measurement category and form on the balance sheet or the notes to the financial statements, and (g) clarifies that the need for a valuation allowance on a deferred tax asset related to an available for sale security should be evaluated with other deferred tax assets. The updated guidance is effective for reporting periods beginning after December 15, 2017. The Company is currently evaluating the impact this guidance will have on its results of operations, financial position or liquidity. In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments, which requires that an acquirer in a business combination transaction recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The ASU requires that the acquirer record, in the same period's financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. It also requires an entity to present separately on the face of the income statement or disclose in the notes to the financial statements the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. The updated guidance was effective for reporting periods beginning after December 15, 2015, and should be applied prospectively to adjustments to provisional amounts that occur after the effective date of this ASU with earlier application permitted for financial statements that have not been issued. The Company elected to early adopt this ASU on September 30, 2015. The adoption of this guidance did not have a material effect on the Company's results of operations, financial position or liquidity. In May 2015, the FASB issued ASU 2015-09, Financial Services - Insurance (Topic 944): Disclosure about Short-Duration Contracts, which provides certain new and additional disclosure requirements about the liability for unpaid claims and claim adjustment expenses associated with short-duration contracts as defined in Topic 944. Pursuant to the updated guidance, all insurance entities that issue short-duration contracts are required to disclose, among other things, incurred and paid claims development information, a reconciliation of such information to the aggregate carrying amount of the liability for unpaid claims and claim adjustment expenses, and significant changes in methodologies and assumptions used to calculate the liability for unpaid claims and claim adjustment expenses, including the reasons for the change and the effects on the financial statements. The updated guidance is effective for reporting periods beginning after December 15, 2015, and should be applied retrospectively by providing comparative disclosures for each period presented, except for those requirements that apply only to the current period. 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 May 2015, the FASB issued ASU 2015-07, Fair Value Measurement (Topic 820): Disclosure for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent), which provides guidance that removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient, and limits certain disclosure requirements only to investments for which the entity elects to measure the fair value using that practical expedient. The updated guidance is effective for reporting periods beginning after December 15, 2015, and should be applied retrospectively for all periods presented. The Company adopted this ASU on January 1, 2016. The adoption of this guidance did not have a material effect on the Company's results of operations, financial position or liquidity. In April 2015, the FASB issued ASU 2015-05, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Fees Paid in a Cloud Computing Arrangement, which provides guidance to determine whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The updated guidance is effective for reporting periods beginning after December 15, 2015, and can be adopted either prospectively to all arrangements entered into or materially modified after the effective date, or retrospectively. The Company adopted this ASU on January 1, 2016. The adoption of this guidance did not have a material effect on the Company's results of operations, financial position or liquidity. In April 2015, the FASB issued ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which provides updated guidance to clarify the required presentation of debt issuance costs. The amended guidance requires that debt issuance costs be presented in the balance sheet as a direct reduction from the carrying amount of the recognized debt liability, consistent with the treatment of debt discounts. Amortization of debt issuance costs is to be reported as interest expense. The recognition and measurement guidance for debt issuance costs are not affected by the updated guidance. The Company adopted this ASU on January 1, 2016. The adoption of this guidance did not have a material effect on the Company's results of operations, financial position or liquidity. In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, which provides amended guidance on a reporting entity's evaluation whether to consolidate certain legal entities. Specifically, the amendments will modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities ("VIEs") or voting entities, eliminate the presumption that a general partner should consolidate a limited partnership, affect the consolidation analysis of reporting entities with interests in VIEs, particularly those that have fee arrangements and related party relationships, and provide a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds. The Company adopted this ASU on January 1, 2016. The adoption of this guidance did not have a material effect on the Company's results of operations, financial position or liquidity. |
Investments |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments |
(a) Available-for-Sale Securities The cost or amortized cost, gross unrealized gains and losses, and estimated fair value of fixed maturities and equity securities classified as available-for-sale as of March 31, 2016 and December 31, 2015, are presented below:
Investments in foreign government securities include securities issued by national entities as well as instruments that are unconditionally guaranteed by such entities. As of March 31, 2016, the Company's foreign government securities were issued or guaranteed primarily by governments in Europe, Canada and Mexico. Proceeds from the sale of investments in available-for-sale securities during the three months ended March 31, 2016 and 2015 were approximately $202,736 and $302,246, respectively. A summary of the Company’s available-for-sale fixed maturities as of March 31, 2016 and December 31, 2015, 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.
Other-than-temporary impairment ("OTTI") charges of our fixed maturities and equity securities classified as available-for-sale are presented below:
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 March 31, 2016 and December 31, 2015:
There are 1,254 and 2,011 securities at March 31, 2016 and December 31, 2015, respectively, that account for the gross unrealized loss, none of which is deemed by the Company to be OTTI. At March 31, 2016, we have determined that the unrealized losses on fixed maturities were primarily due to market interest rate movements since their date of purchase. The Company 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 $1,000,000 and in excess of 25% of cost if the issuer has a market capitalization of $1,000,000 or more) for over 24 months. Additionally, other factors influencing the Company’s determination that unrealized losses were temporary included an evaluation of the investment’s discounted cash flows, the magnitude of the unrealized losses in relation to each security’s cost, near-term and long-term prospects of the issuer or the issuer's ability to have adequate resources to fulfill contractual obligations, 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. As of March 31, 2016, for the $19,690 of unrealized losses related to securities in unrealized loss positions for a period of twelve or more consecutive months, $6,717 of those unrealized losses were related to securities in unrealized loss positions greater than or equal to 20% of amortized cost or cost. (b) Trading Securities The original or amortized cost, estimated market value and gross unrealized appreciation and depreciation of trading securities as of March 31, 2016 and December 31, 2015 are presented in the tables below:
Proceeds from the sale of investments in trading securities during the three months ended March 31, 2016 and 2015 were approximately $52,744 and $60,268, respectively. (c) Investment Income Net investment income for the three months ended March 31, 2016 and 2015 was derived from the following sources:
(d) Realized Gains and Losses The tables below summarize the gross realized gains and (losses) for the three months ended March 31, 2016 and 2015:
(e) Derivatives The Company from time to time invests in a limited number of derivatives and other financial instruments as part of its investment portfolio to manage interest rate changes or other exposures to a particular financial market. The Company records changes in valuation on its derivative positions not designated as a hedge, if any, as a component of net realized gains and losses. The Company records changes in valuation on its hedge positions as a component of other comprehensive income. As of March 31, 2016 and December 31, 2015, the Company had two interest rate swaps designated as hedges that were recorded as a liability in the total amount of $894 and $1,077, 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 March 31, 2016:
(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 are primarily in the form of cash and certain high grade securities. The fair values of the Company's restricted assets as of March 31, 2016 and December 31, 2015 are as follows:
(g) Other Securities sold but not yet purchased are securities that the Company has sold, but does not own, in anticipation of a decline in the market value of the security. The Company's risk is that the value of the security will increase rather than decline. Consequently, the settlement amount of the liability for securities sold, not yet purchased may exceed the amount recorded in the consolidated balance sheet as the Company is obligated to purchase the securities sold, not yet purchased in the market at prevailing prices to settle the obligations. To establish a position in security sold, not yet purchased, the Company needs to borrow the security for delivery to the buyer. When the transaction is open, the liability for the obligation to replace the borrowed security is marked to market and an unrealized gain or loss is recorded. At the time the transaction is closed, the Company realizes a gain or loss equal to the differences between the price at which the security was sold and the cost of replacing the borrowed security. While the transaction is open, the Company will also incur an expense for any dividends or interest which will be paid to the lender of the securities. The Company’s liability for securities to be delivered is measured at their fair value and was $28,855 and $38,618 as of March 31, 2016 and December 31, 2015, respectively. The securities sold but not yet purchased consisted primarily of equity and fixed maturity securities, and the liability for securities sold but not yet purchased is included in accrued expenses and other liabilities in the condensed consolidated balance sheet. |
Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments 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 March 31, 2016 and December 31, 2015:
There were no transfers between Level 1 and Level 2 during the three months ended March 31, 2016 and 2015, respectively. The Company classifies its financial assets and liabilities in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement. This classification requires judgment in assessing the market and pricing methodologies for a particular security. The fair value hierarchy includes the following three levels:
Examples of instruments utilizing Level 1 inputs include: exchange-traded securities and U.S. Treasury bonds.
Examples of instruments utilizing Level 2 inputs include: U.S. government-sponsored agency securities; non-U.S. government obligations; corporate and municipal bonds; mortgage-backed bonds; asset-backed securities; listed derivatives that are not actively traded; and equity securities that are not publicly traded.
Examples of instruments utilizing Level 3 inputs include: hedge and credit funds with partial transparency. The following tables provides a summary of changes in fair value of the Company’s Level 3 financial assets and liabilities for the three months ended March 31, 2016 and 2015:
The Company changed its valuation methodology from Level 2 to Level 3 in the fair value heirarchy for certain of its foreign investments of approximately $12,983 during the three months ended March 31, 2016. The Company's policy for transfers between fair value levels, transfer into the levels, and transfer out of levels is to recognize such transfers as of the actual date of the event or change in circumstances that cause the transfer. The Company had no transfers among the levels of fair value hierarchy during the three months ended March 31, 2015. A reconciliation of net income for life settlement contracts in the above table to gain on investment in life settlement contracts net of profit commission included in the Condensed Consolidated Statements of Income for the three months ended March 31, 2016 and 2015 is as follows:
The Company uses the following methods and assumptions in estimating its fair value disclosures for financial instruments:
The 7.25% subordinated notes due 2055, the 7.50% subordinated notes due 2055, the 2.75% convertible senior notes due 2044, and the 6.125% notes due 2023 are publicly traded instruments and are classified as Level 1 in the fair value hierarchy. The fair value of the revolving credit facility approximates its carrying value due to the short period to maturity. The fair value of the junior subordinated debentures due 2035-2037 was determined using the Black-Derman-Toy interest rate lattice model and is classified as Level 3 in the fair value hierarchy. The Company considers its other debt's carrying value to approximate fair value as their interest rates approximate current borrowing rates.
The Company adjusts the standard mortality for each insured for the insured's life expectancy based on reviews of the insured's medical records and the independent life expectancy reports based thereon. 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, 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. Prior to 2015, the Company established policy specific reserves for the possibility that the third party issuer of the policy would contest the payment of the death benefit payable to the Company. The Company determined that the contestability reserve was not necessary in 2015 due to historical experience. 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 March 31, 2016 and December 31, 2015 and, as described in Note 5. "Investments in Life Settlements", only includes data for policies to which the Company assigned value at those dates:
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 were held constant, the carrying value of the investment in life insurance policies would increase or (decrease) by the unaudited amounts summarized below as of March 31, 2016 and December 31, 2015:
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Investment in Life Settlements |
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Investments, All Other Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment in Life Settlements | Investment in Life Settlements The Company has a 50% ownership interest in each of four entities (collectively, the "LSC Entities") formed for the purpose of acquiring life settlement contracts, with a subsidiary of NGHC owning the remaining 50%. 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”). 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. During the three months ended March 31, 2016, the Company terminated an agreement with a third party administrator of the Tiger and AMTCH II life settlement contract portfolios, under which the third party received an administrative fee. The third party administrator was also eligible to receive a percentage of profits after certain time and performance thresholds had been met. The Company provides certain actuarial and finance functions related to the LSC Entities. In conjunction with the Company’s approximate 12% ownership percentage of NGHC, the Company ultimately receives 56% 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. Prior to 2015, the Company established policy specific reserves for the possibility that the third party issuer of the policy would contest the payment of the death benefit payable to the Company. The Company determined that the contestability reserve was not necessary in 2015 due to historical experience. 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. No capital contributions were made to the LSC Entities during the three months ended March 31, 2016. During the three months ended March 31, 2015, total capital contributions made to the LSC Entities were approximately $1,130, of which the Company contributed approximately $565. The Company recorded a gain of $10,730 and $11,373 on investment in life settlement contracts, net of profit commission, for the three months ended March 31, 2016 and 2015, respectively. The following tables describe the Company’s investment in life settlements as of March 31, 2016 and December 31, 2015:
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 during the twelve months preceding March 31, 2016 and December 31, 2015:
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 March 31, 2016, are as follows:
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Deferred Policy Acquisitions Costs |
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 three months ended March 31, 2016 and 2015:
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Debt |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt The Company’s outstanding debt consisted of the following at March 31, 2016 and December 31, 2015:
Aggregate scheduled maturities of the Company’s outstanding debt, excluding unamortized deferred origination costs, at March 31, 2016 are:
Additionally, the Company utilizes various letters of credit in its operations. The following is a summary of the Company's letters of credit as of March 31, 2016:
Interest expense, including amortization of original issue discount and deferred origination costs, as well as applicable bank fees, related to the Company's outstanding debt and letters of credit for the three months ended March 31, 2016 and 2015 was:
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Acquisition Costs and Other Underwriting Expenses |
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition Costs and Other Underwriting Expenses [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 three months ended March 31, 2016 and 2015:
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Earnings Per Share |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share The Company implemented a two-for-one stock split on February 2, 2016. As such, the weighted average number of shares used for the basic and diluted earnings per share have been adjusted retrospectively to reflect the effect of the split. During the three months ended March 31, 2015, the Company’s unvested restricted shares contained rights to receive nonforfeitable dividends and were, therefore, considered participating securities. As a result, the Company computed earnings per share using the two-class method during the three months ended March 31, 2015. There were no outstanding unvested restricted shares as of March 31, 2016. The following table is a summary of the elements used in calculating basic and diluted earnings per share for the three months ended March 31, 2016 and 2015:
The Company's anti-dilutive securities excluded from diluted earnings per share calculation were immaterial for the three months ended March 31, 2016 and 2015, respectively. |
Share Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share Based Compensation | Share Based Compensation The Company’s 2010 Omnibus Incentive Plan (the “Plan”), which permits the Company to grant to its officers, employees and non-employee directors incentive compensation directly linked to the price of the Company’s stock, authorizes up to an aggregate of 14,630,136 shares of Company stock for awards of options to purchase shares of the Company’s common stock ("Stock Option"), 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 14,630,136 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 March 31, 2016, approximately 8,100,000 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. Compensation expense for all share-based payments under ASC 718-10-30 was approximately $5,641 and $4,914 for the three months ended March 31, 2016 and 2015, respectively. The Company has unrecognized compensation cost related to unvested stock options, restricted stock and non-vested RSU awards of $39,277 and $39,111 at March 31, 2016 and December 31, 2015, respectively. On December 15, 2015, the Company’s Board of Directors declared a two-for-one stock split on the Company’s common stock, payable in the form of a 100% stock dividend. On February 2, 2016, the dividend payment date, all options outstanding were adjusted by 100% and their respective exercise prices were reduced by 50%. The Company also adjusted outstanding RSUs, unvested restricted stock and PSUs for the split. Stock Options 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 year 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 following schedule shows all options granted, exercised, and expired under the Plan for the three months ended March 31, 2016 and 2015:
The Company did not grant any stock options during the three months ended March 31, 2016. The weighted average grant date fair value of options granted was $10.60 during the three months ended March 31, 2015. The per share fair value of options was estimated at the date of grant based on the following weighted average assumptions for the three months ended March 31, 2015:
The intrinsic value of stock options exercised during the three months ended March 31, 2016 and 2015 was $4,561 and $16,336, respectively. The intrinsic value of stock options that were outstanding as of March 31, 2016 and December 31, 2015 was $48,193 and $66,300, respectively. The intrinsic value of stock options that were exercisable as of March 31, 2015 and December 31, 2015 was $47,507 and $64,705, respectively. Cash received from options exercised was $813 and $2,640 during the three months ended March 31, 2016 and 2015, respectively. The excess tax benefit from award exercises was approximately $1,539 and $3,332 for the three months ended March 31, 2016 and 2015, respectively. Such benefits were recorded as a reduction of income tax payable and an increase in additional paid-in capital. Restricted stock, RSU and PSU The Company grants restricted shares, RSUs and PSUs with a grant date fair value equal to the closing stock price of the Company’s stock on the dates the shares or units are granted. The restricted shares and RSUs vest over a period of one to four years, while PSUs vest based on the terms of the awards. A summary of the Company’s restricted stock and RSU activity for the three months ended March 31, 2016 and 2015 is shown below:
A summary of the Company's PSU activity for the three months ended March 31, 2016 and 2015 is shown below:
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 the pre-determined period. |
Income Taxes |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes The following table is a reconciliation of the Company’s statutory income tax expense to its effective tax rate for the three months ended March 31, 2016 and 2015:
As of March 31, 2016, the Company has U.S. Net Operating Losses ("NOLs") of $36,660 that expire beginning in 2019 through 2033. These NOLs are subject to certain limitations under Section 382 of the Internal Revenue Code due to changes in ownership of $2,641 per year. The Company also has foreign NOLs of $687,077 that currently have no expiration. The Company’s management believes that as of March 31, 2016, except for a portion of foreign NOLs, it will realize the benefits of its deferred tax assets, which are included as a component of the other assets on the condensed consolidated balance sheet. As a result, the Company recorded a valuation allowance of $169,474 and $170,043 as of March 31, 2016 and December 31, 2015, respectively, related to the foreign NOLs. The Company did not utilize any equalization reserves attributed to its Luxembourg reinsurance companies during the three months ended March 31, 2016 or March 31, 2015, respectively. 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 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, 2011 and forward. 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 March 31, 2016 and December 31, 2015. No interest or penalties have been recorded by the Company for the three months ended March 31, 2016 and 2015, respectively. The Company does not anticipate any significant changes to its total unrecognized tax benefits in the next 12 months. |
Related Party Transactions |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions | Related Party Transactions The following disclosure includes, among other items, transactions with companies in which Michael Karfunkel had a controlling interest, either individually or through The Michael Karfunkel 2005 Family Trust (the “Trust”). Mr. Karfunkel passed away on April 27, 2016. At that time, he and the Trust were controlling shareholders of the Company, he was the Company’s Chairman of the Board, and the chairman and chief executive officer of National General Holdings Corp. Mr. Karfunkel’s wife, Mrs. Leah Karfunkel, is the executrix of Mr. Karfunkel’s estate, and a co-trustee and primary beneficiary of the Trust. 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 shareholders, and, respectively, the Company's former chairman of the board of directors, a director, and the chief executive officer and director of the Company. As of March 31, 2016, our principal shareholders, Michael Karfunkel, Leah Karfunkel (wife of Michael Karfunkel and co-trustee of The Trust), George Karfunkel and Barry Zyskind, own or control approximately 6.1%, 7.5%, 2.3% and 4.4%, 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”), 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 of the Maiden Quota Share, including the Company’s European medical liability business discussed below, business assumed from Tower Group International, Ltd. ("Tower") 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 Reinsurance under the Maiden Quota Share (ceded business defined as “Covered Business”). 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 June 30, 2019 and will automatically renew for successive three-year terms unless either AII or Maiden Reinsurance notifies the other of its election not to renew no 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 shareholders’ equity of Maiden Reinsurance or the combined shareholders’ equity of AII and the AmTrust Ceding Insurers. The Company, through its subsidiaries AEL and AIU, has 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 has been renewed through March 31, 2017. 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 three months ended March 31, 2016 and 2015 related to Maiden Reinsurance agreements:
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 March 31, 2016 and December 31, 2015, respectively. The Company recorded $562 and $449 of interest expense during the three months ended March 31, 2016 and 2015, 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 March 31, 2016 was approximately $2,622,606. Maiden retains ownership of the collateral in the trust account. Reinsurance Brokerage Agreement The Company, through a subsidiary, has a reinsurance brokerage agreement with Maiden. Pursuant to the brokerage agreement, the Company provides brokerage services relating to the Maiden Quota Share for a fee equal to 1.25% of reinsured premium. The Company recorded $6,862 and $6,605 of brokerage commission during the three months ended March 31, 2016 and 2015, respectively. The brokerage commission was recorded as a component of service and fee income. Asset Management Agreement The Company, through a subsidiary, has 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 March 31, 2016, the Company managed approximately $4,422,711 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 exceeds $1,000,000. As a result of this agreement, the Company recorded $1,645 and $1,431 of asset management fees during the three months ended March 31, 2016 and 2015, 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 an ownership interest in NGHC of approximately 12%. NGHC is a publicly-held specialty personal lines insurance holding company (Nasdaq: NGHC) that operates fourteen insurance companies in the United States and provides a variety of insurance products, including personal and commercial automobile, homeowners and umbrella, and supplemental health. As of March 31, 2016, NGHC's two largest shareholders were The Trust and Michael Karfunkel individually. Michael Karfunkel is the Company's former Chairman of the Board of Directors and the father-in-law of Barry D. Zyskind, the President and 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 was the chairman and chief executive offer of NGHC when he passed away in April 2016, at which time Barry Karfunkel, the son of Michael Karfunkel and brother-in-law of Barry D. Zyskind, was appointed chairman 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. During the three months ended March 31, 2016 and 2015, the Company recorded $5,776 and $5,529 of income, respectively, related to its equity investment in NGHC. Master Services Agreement The Company provides NGHC and its affiliates information technology services in connection with the development and licensing of a policy management system. The Company provides the license at a cost that is currently 1.25% of gross written premium of NGHC and its affiliates plus the Company’s costs for development and support services. The Company provides development services at a price of cost plus 20%. 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 $9,910 and $7,016 of fee income during the three months ended March 31, 2016 and 2015, respectively, related to this agreement.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 certain of NGHC's 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 $2,304,636 of assets as of March 31, 2016 related to this agreement. As a result of this agreement, the Company earned approximately $793 and $526 of asset management fees during the three months ended March 31, 2016 and 2015, respectively. The asset management fees were recorded as a component of service and fee income. 800 Superior, LLC The Company and NGHC each have a fifty percent ownership interest in 800 Superior, LLC ("800 Superior"), which owns an office building in Cleveland, Ohio. The cost of the building was approximately $7,500. The Company has been appointed managing member of 800 Superior. Additionally, in conjunction with the Company’s approximate 12% ownership percentage of NGHC, the Company ultimately receives 56% of the profits and losses of 800 Superior. As such, in accordance with ASC 810-10, Consolidation, the Company consolidates this entity. NGHC's portion of the net assets and earnings are recorded within non-controlling interest in the condensed consolidated financial statements. NGHC has an office lease agreement with 800 Superior. The lease agreement is through 2027. NGHC paid 800 Superior approximately $683 and $602 of rent during the three months ended March 31, 2016 and 2015, respectively, under the lease agreement. As discussed in Note 14. "New Market Tax Credit," 800 Superior, 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. 4455 LBJ Freeway, LLC In 2015, the Company and NGHC each acquired a fifty percent ownership interest in 4455 LBJ Freeway, LLC ("4455 LBJ Freeway"), which owns an office building in Dallas, Texas. The cost of the building was approximately $21,050. The Company has been appointed managing member of 4455 LBJ Freeway. Additionally, in conjunction with the Company’s approximate 12% ownership percentage of NGHC, the Company ultimately receives 56% of the profits and losses of 4455 LBJ Freeway. As such, in accordance with ASC 810-10, Consolidation, the Company consolidates this entity. NGHC's portion of the net assets and earnings are recorded within non-controlling interest in the condensed consolidated financial statements. The Company recorded approximately $341 of service and fee income related to rent for the three months ended March 31, 2016. Significant Transactions with ACP Re, Ltd. ACP Re, Ltd. (“ACP Re”) is a privately-held Bermuda reinsurance holding company owned by the Trust. In 2014, a subsidiary of ACP Re merged with Tower. As a result of the merger, ACP Re now operates 10 insurance companies in the United States and Bermuda. The following section describes the significant 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 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 the Company's 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 the invested assets under management, excluding investment 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 $555,612 of assets as of March 31, 2016. The Company recorded approximately $231 and $466 of asset management fees during the three months ended March 31, 2016 and 2015, respectively. The asset management fees were recorded as a component of service and fee income. Commercial Lines Reinsurance Agreements Technology Insurance Company, Inc. ("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 reinsures 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. As a result of the Commercial Lines Master Agreement and CL Reinsurance Agreement, the Company generated approximately $97,003 and $70,785 of gross written premium, recorded approximately $107,532 and $63,383 of earned premium, and incurred approximately $15,577 and $39,049 of loss and loss adjustment expense during the three months ended March 31, 2016 and 2015, respectively. 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 is 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 did not record any commission during the three months ended March 31, 2016, but recorded $571 of commission under the CL MGA Agreement during the three months ended March 31, 2015. 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 charged ACP Re $4,926 and $16,697 for these services during the three months ended March 31, 2016 and 2015, respectively, which were recorded as a reduction of salary and other expense. 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, which the parties to the LPTA have agreed will be established upon reevaluation as of December 31, 2015. 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. The Stop-Loss Agreement and the Retrocession Agreement are accounted for under the deposit method of accounting. ACP Re 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. The ACP Re Credit Agreement has a maturity date of September 15, 2021. Outstanding borrowings under the ACP Re Credit Agreement 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 March 31, 2016 and December 31, 2015, the Company recorded $127,188 and $129,375, respectively, 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 $2,188 for the three months ended March 31, 2016 and 2015, respectively, under the ACP Re Credit Agreement. Other Related Party Transactions Lease Agreements The Company leases 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 lease term is through May 2023. The Company paid approximately $382 and $465 of rent during the three months ended March 31, 2016 and 2015, respectively, for the leased office space. The Company leases 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 rent of approximately $132 and $75 during the three months ended March 31, 2016 and 2015, respectively, for the leased office space. Equity Investments in Limited Partnerships In February 2015, the Company invested approximately $9,700 in North Dearborn Building Company, L.P. (“North Dearborn”), a limited partnership that owns an office building in Chicago, Illinois. NGHC is also a limited partner in North Dearborn, and the general partner is NA Advisors GP LLC (“NA Advisors”), an entity controlled by Michael Karfunkel and managed by an unrelated third party. The Company and NGHC each received a 45% limited partnership interest in North Dearborn for their respective $9,700 investments, while NA Advisors invested approximately $2,200 and holds a 10% general partnership interest and a 10% profit interest, which NA Advisors pays to the unrelated third party manager. North Dearborn appointed NA Advisors as the general manager to oversee the day-to-day operations of the office building and pays NA Advisors an annual fee for these services. This investment is included within other investments and is accounted for using the equity method of accounting on a three month lag basis. The Company recorded approximately $273 of income from this investment during the three months ended March 31, 2016. In August 2015, certain of the Company's subsidiaries invested approximately $53,715 in Illinois Center Building Company, L.P. ("Illinois Center"), a limited partnership that owns an office building complex in Chicago, Illinois. NGHC and ACP Re are also limited partners in Illinois Center, and the general partner is NA Advisors. The Company and NGHC each have a 37.5% limited partnership interest in Illinois Center, while ACP Re has a 15.0% limited partnership interest. NA Advisors holds a 10% general partnership interest and a 10% profit interest, which NA Advisors pays to the unrelated third party manager. Illinois Center appointed NA Advisors as the general manager to oversee the day-to-day operations of the office building and pays NA Advisors an annual fee for these services. This investment is included within other investments and is accounted for using the equity method of accounting on a three month lag basis. The Company recorded approximately $593 of income from this investment during the three months ended March 31, 2016. These limited partnerships are considered variable interest entities ("VIEs"). Based on current accounting guidance, the Company is required to consolidate any VIEs in which it is deemed to be the primary beneficiary through having: (i) power over the significant activities of the entity, and (ii) having an obligation to absorb losses or the right to receive benefits from the VIE that are potentially significant to the VIE. The Company performed a primary beneficiary analysis on the aforementioned limited partnerships and determined the Company was not the primary beneficiary since it does not have power over the significant activities of the entity. These limited partnerships are recorded as a component of other investments on the condensed consolidated balance sheet. The carrying value of these limited partnerships, in aggregate, was $66,860 and $64,869 as of March 31, 2016 and December 31, 2015, respectively. The maximum exposure to loss, which is the estimated loss that would be incurred under severe, hypothetical circumstances, for which the possibility of occurrence is remote, such as where the value of the Company's interests declines to zero, without any consideration of recovery or offset from any economic hedges, was $66,860 and $64,869 as of March 31, 2016 and December 31, 2015, respectively. The maximum exposure to loss is a required disclosure under US GAAP and is not an indication of expected loss. Use of the 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 the usage of their respective company-owned aircraft and cover actual expenses incurred and permissible under federal aviation regulations. Such expenses include, among others, 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. Neither the Company nor AUI charge Maiden or NGHC for the fixed costs that would be incurred in any event to operate the aircraft (for example, aircraft purchase costs, insurance and flight crew salaries). During the three months ended March 31, 2016 and 2015, Maiden paid $22 and $24, respectively, and NGHC paid $13 and $37, respectively, for their use of the company-owned aircraft under these agreements. In addition, for personal travel, Mr. Barry Zyskind, the Company’s President and Chief Executive Officer, entered into an aircraft reimbursement agreement with the Company and AUI. Since entering into such agreements, Mr. Zyskind has fully reimbursed the Company and AUI for the incremental cost billed by the Company and AUI for his personal use of the respective company-owned aircraft. During the three months ended March 31, 2016 and 2015, Mr. Zyskind reimbursed the Company and AUI, in aggregate, $80 and $212, respectively, for his personal use of the company-owned aircraft. |
Acquisitions |
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Acquisitions | Acquisitions ARI Insurance Company On January 22, 2016, the Company completed the acquisition of ARI Holdco Inc. ("ARIH") and its subsidiaries. ARIH's primary operating subsidiary, ARI Insurance Company ("ARI"), is an underwriter of commercial automobile insurance in New Jersey, Pennsylvania and Maryland. Immediately prior to the acquisition, ARI 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 ARI who held policies as of December 31, 2014 and the directors, officers and employees of ARI and its subsidiaries. The Company received subscriptions for approximately $276, resulting in the issuance by the Company of 12,347 (on a post-split basis) shares of its common stock at a discounted price of 20% (or approximately $69 in the aggregate) from the Company's market trading price . Pursuant to the stock purchase agreement, after the expiration of the offering, the Company purchased all of the authorized shares of capital stock of ARIH at a purchase price equal to the greater of the gross proceeds received by the Company in the offering, and $3,750. The Company made a payment to ARIH of $23,500, which included the $276 in proceeds the Company received in the offering, for the stock of ARI. Additionally, the Company, as part of the transaction, was required to make a payment to an employee bonus pool of ARI of $3,750, as discussed above. The remaining $23,500 of cash contributed to ARIH was retained by the Company. In accordance with FASB ASC 805-10 Business Combinations, the Company recorded an initial acquisition price of approximately $3,819. A summary of the preliminary assets acquired and liabilities assumed for ARI are as follows:
The intangible asset associated with the acquisition was initially measured at $250 and is not taxable. The Company is in the process of completing its acquisition accounting and expects to have it completed in 2016. The largest asset and liabilities that require fair value adjustment are loss and loss adjustment expense reserves and unearned premium. The intangible asset as well as ARI's results of operations will be included as a component of the Small Commercial Business segment. As a result of this acquisition, the Company recorded approximately $13,383 of gross written premium during the three months ended March 31, 2016. Springfield On October 7, 2015, the Company acquired all of the issued and outstanding stock of Springfield Insurance Company and its affiliates, Springfield Insurance Company Ltd. and Unified Grocers Insurance Services (collectively "Springfield"). Springfield, domiciled in California, is an insurance carrier providing workers' compensation and commercial package insurance to Unified Grocers Inc., an association of independently owned grocery stores, its members and its customers. The purchase agreement required the Company to pay approximately $26,574 in cash on the acquisition date and contained an earn-out provision that is contingent on Springfield meeting certain performance conditions over a five-year period. The contingent consideration associated with the earn-out provision was initially valued at $5,000 as of the acquisition date. A summary of the preliminary assets acquired and liabilities assumed for Springfield are as follows:
The goodwill and intangible assets associated with the acquisition were initially measured at $4,253 and are not taxable. The Company is in the process of completing its acquisition accounting and expects to have it completed in 2016. The goodwill and intangible assets as well as Springfield's results of operations will be included as a component of the Small Commercial Business segment. As a result of this acquisition, the Company recorded approximately $3,118 of gross written premium and $414 of service and fee income during the three months ended March 31, 2016. Warranty Solutions On September 25, 2015, the Company acquired all of the issued and outstanding stock of Warranty Solutions, a Wells Fargo business ("Warranty Solutions"), for $156,247 in cash. Warranty Solutions designs, markets, administers and underwrites vehicle service contracts for new and used automobiles through a national network of more than 70 active agencies and 1,500 franchised and independent dealers. A summary of the preliminary assets acquired and liabilities assumed for Warranty Solutions are as follows:
The goodwill and intangible assets associated with the acquisition was initially measured at $84,215, which initially included customer relationships and licenses. The goodwill associated with the acquisition is not taxable. The Company is in the process of completing its acquisition accounting and expects to have it completed in 2016. The goodwill and intangible assets as well as Warranty Solutions' results of operations are included as a component of the Special Risk and Extended Warranty segment. As a result of this acquisition, the Company recorded approximately $23,717 of gross written premium and $24,319 of service and fee income during the three months ended March 31, 2016. Magna Carta On March 11, 2016, one of our subsidiary insurance companies entered into a loss portfolio transfer with Public Service Insurance Company, Paramount Insurance Company and Western Select Insurance Company. The Company will reinsure 100% of the existing obligations with respect to their business for accident years 2014 and 2015, including a loss portfolio transfer of 100% of the loss and LAE reserves as of the effective date. The Company received approximately $163,400 of cash. As the loss portfolio transfer is considered retroactive reinsurance, the Company followed deposit accounting under the guidelines of ASC 340-30, Other Assets and Deferred Costs, and recorded the obligation of approximately $163,400 as an accrued liability. During the three months ended March 31, 2016, the Company paid losses of approximately $10,500. During the three months ended March 31, 2016, the Company did not record any gains or losses as a result of this transaction. Additionally, one of our subsidiaries entered into a renewal rights transaction, with the forenamed parties as well as Creative Intermediaries, Inc., Magna Carta Companies, Inc. and Public Service Mutual Holding Company, whereby the Company may reinsure their existing book of policies for their commercial and property insurance business. The acquisition price paid for the renewal rights transaction was approximately $1,000. |
New Market Tax Credit |
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Mar. 31, 2016 | |
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 LLC 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 from two loans originating from state and local governments of Ohio. These loans are each for a period of 15 years and have a weighted average interest rate approximately of 2.0% 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 7 years as provided in the Internal Revenue Code. During this seven-year 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 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 an approximate 12% 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 accrued liability in the accompanying condensed 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. |
Shareholder Equity and Accumulated Other Comprehensive Income (Loss) |
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Shareholder Equity and Accumulated Other Comprehensive Income (Loss) | Stockholder's Equity and Accumulated Other Comprehensive Income (Loss) Common Stock The Company implemented a two-for-one stock split on February 2, 2016. Issuances of Preferred Stock In March 2016, the Company completed a public offering of 5,750,000 of its depositary shares, each representing a 1/40th interest in a share of its 7.75% Non-Cumulative Preferred Stock, Series E, $0.01 par value per share (the "Series E 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 E Preferred Stock represented thereby (including any dividend, liquidation, redemption and voting rights). Dividends on the Series E 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 7.75% per annum, quarterly in arrears, on March 15, June 15, September 15, and December 15 of each year, beginning on June 15, 2016, from and including the date of original issuance. The Series E Preferred Stock represented by the depositary shares is not redeemable prior to March 15, 2021. After that date, the Company may redeem at its option, in whole or in part, the Series E 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 $139,070. In addition, the Company incurred $4,680 in underwriting discount and commissions and expenses, which were recognized as a reduction to additional paid-in capital. Stockholders' Equity The following table summarizes the ownership components of total stockholders' equity:
During the three months ended March 31, 2016, net income attributable to non-controlling interest was $3,857 and net income attributable to redeemable non-controlling interest was $160. Net income for AmTrust, Non-controlling interest and Redeemable non-controlling interest totaled $4,017 for the three months ended March 31, 2016. During the three months ended March 31, 2015, net income attributable to non-controlling interest was $3,761 and net income attributable to redeemable non-controlling interest was $322. Net income for AmTrust, Non-controlling interest and Redeemable non-controlling interest totaled $4,083 for the three months ended March 31, 2015. Accumulated Other Comprehensive Income (Loss) The following table summarizes the activities and components of accumulated other comprehensive income (loss):
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Contingent Liabilities |
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Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitment and Contingent Liabilities | Commitment and Contingent Liabilities 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. Pending Acquisitions N.V. Nationale Borg-Maatschappij In August 2015, the Company entered into a definitive agreement to acquire N.V. Nationale Borg-Maatschappij and its affiliates ("Nationale Borg") from Egeria and HAL Investments for approximately €154,000 (or $175,267). Nationale Borg is a 120-year old, Amsterdam-based international direct writer and reinsurer of surety and trade credit insurance with business in over 70 countries. The acquisition is subject to regulatory approval and is expected to close in the second quarter of 2016. Republic Companies, Inc In September 2015, the Company entered into agreements to acquire Republic Companies, Inc. and its affiliates ("Republic") from Delek Group Ltd. and Republic Insurance Holdings, LLC, for approximately $233,000, which is subject to purchase price adjustments. The purchase price consisted of $112,000 in cash at closing, $16,000 in cash to be paid over five years and $105,000 in a note issued by the Company to Delek Group Ltd. bearing annual interest of 5.75% with a four year maturity and scheduled principal payments to be made over the term of the note. The Company's acquisition of Republic closed in April 2016. Genworth Financial Mortgage Insurance Limited In October 2015, the Company entered into an agreement to acquire Genworth Financial Mortgage Insurance Limited ("GFMI") for approximately $60,000 in cash. Based in the U.K., GFMI operates in the European mortgage insurance market, currently providing products in the U.K., Finland, Italy and Germany. The Company's acquisition of GFMI closed in May 2016. |
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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 former segment, Personal Lines Reinsurance, which is in run-off and is now included within its Corporate and Other segment. The Corporate and Other segment also 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 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 the Company’s stockholders with an understanding of the Company’s business and operating performance. During each of the three months ended March 31, 2016 and 2015, the Company's Specialty Program segment derived over ten percent of its gross written premium primarily from one agent. The following tables summarize the results of operations of the business segments for the three months ended March 31, 2016 and 2015:
The following tables summarize net earned premium by major line of business, by segment, for the three months ended March 31, 2016 and 2015:
The following table summarizes total assets of the business segments as of March 31, 2016 and December 31, 2015:
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Subsequent Event |
3 Months Ended |
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Mar. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Event | Subsequent Event Acquisition of ANV Holdings B.V. and its affiliates ("ANV") In April 2016, the Company entered into an agreement to acquire ANV from Ontario Teachers’ Pension Plan for $218,700 in cash. ANV is a specialty insurance company that underwrites a variety of commercial property and casualty insurance products through its three Lloyd’s syndicates and managing general underwriter. The Company expects to fund the transaction with existing working capital, and, pending regulatory approval, to close the transaction during the second half of 2016. Share repurchase Subsequent to March 31, 2016, the Company repurchased 2,184,923 share of its common stock for approximately $54,110 under the share repurchase program approved by the Company's Board of Directors in 2013. |
Investments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortized Cost, Estimated Market Value and Gross Unrealized Appreciation and Depreciation of Available-for-sale Securities | The cost or amortized cost, gross unrealized gains and losses, and estimated fair value of fixed maturities and equity securities classified as available-for-sale as of March 31, 2016 and December 31, 2015, are presented below:
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Amortized Cost, Estimated Market Value and Gross Unrealized Appreciation and Depreciation of Trading Securities | The original or amortized cost, estimated market value and gross unrealized appreciation and depreciation of trading securities as of March 31, 2016 and December 31, 2015 are presented in the tables below:
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Summary of Available for Sale Fixed Securities by Contractual Maturity | A summary of the Company’s available-for-sale fixed maturities as of March 31, 2016 and December 31, 2015, 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.
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Net Investment Income | Net investment income for the three months ended March 31, 2016 and 2015 was derived from the following sources:
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Other than Temporary Impairment, Credit Losses Recognized in Earnings | Other-than-temporary impairment ("OTTI") charges of our fixed maturities and equity securities classified as available-for-sale are presented below:
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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 March 31, 2016 and December 31, 2015:
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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 March 31, 2016:
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Fair Values of Restricted Assets | The fair values of the Company's restricted assets as of March 31, 2016 and December 31, 2015 are as follows:
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Realized Gain (Loss) on Investments | The tables below summarize the gross realized gains and (losses) for the three months ended March 31, 2016 and 2015:
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Fair Value of Financial Instruments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 March 31, 2016 and December 31, 2015:
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Changes in Fair Value of Level 3 Financial Assets And Liabilities | The following tables provides a summary of changes in fair value of the Company’s Level 3 financial assets and liabilities for the three months ended March 31, 2016 and 2015:
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Fair Value Measurements, Recurring and Nonrecurring | The fair value of the Company's material debt arrangements as of March 31, 2016 was as follows:
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Schedule of Reconciliation of Net Income | A reconciliation of net income for life settlement contracts in the above table to gain on investment in life settlement contracts net of profit commission included in the Condensed Consolidated Statements of Income for the three months ended March 31, 2016 and 2015 is as follows:
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Premiums to be Paid for Each of Five Succeeding Fiscal Years to keep Life Insurance Policies in Force | The following summarizes data utilized in estimating the fair value of the portfolio of life insurance policies as of March 31, 2016 and December 31, 2015 and, as described in Note 5. "Investments in Life Settlements", only includes data for policies to which the Company assigned value at those dates:
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Increase or (Decrease) in Carrying Value of Investment in Life Insurance Policies | 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 were held constant, the carrying value of the investment in life insurance policies would increase or (decrease) by the unaudited amounts summarized below as of March 31, 2016 and December 31, 2015:
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Investment in Life Settlements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, All Other Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment in Life Settlements | The following tables describe the Company’s investment in life settlements as of March 31, 2016 and December 31, 2015:
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 during the twelve months preceding March 31, 2016 and December 31, 2015:
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Premiums to be Paid for Each of Five Succeeding Fiscal Years to keep Life Insurance Policies in Force | Premiums to be paid by the LSC Entities for each of the five succeeding fiscal years to keep the life insurance policies in force as of March 31, 2016, are as follows:
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Deferred Policy Acquisitions Costs (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Policy Acquisition Costs | The following table reflects the amounts of policy acquisition costs deferred and amortized for the three months ended March 31, 2016 and 2015:
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Debt (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowings | The Company’s outstanding debt consisted of the following at March 31, 2016 and December 31, 2015:
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Schedule of Line of Credit Facilities | Additionally, the Company utilizes various letters of credit in its operations. The following is a summary of the Company's letters of credit as of March 31, 2016:
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Aggregate Scheduled Maturities of Borrowings | Aggregate scheduled maturities of the Company’s outstanding debt, excluding unamortized deferred origination costs, at March 31, 2016 are:
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Interest Income and Interest Expense Disclosure | Interest expense, including amortization of original issue discount and deferred origination costs, as well as applicable bank fees, related to the Company's outstanding debt and letters of credit for the three months ended March 31, 2016 and 2015 was:
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Acquisition Costs and Other Underwriting Expenses (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition Costs and Other Underwriting Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisitions Components Of Acquisition Related Costs | The following table summarizes the components of acquisition costs and other underwriting expenses for the three months ended March 31, 2016 and 2015:
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Earnings Per Share (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Elements Used in Calculating Basic and Diluted Earnings Per Share | The following table is a summary of the elements used in calculating basic and diluted earnings per share for the three months ended March 31, 2016 and 2015:
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Share Based Compensation (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Option Granted, Exercised and Expired | The following schedule shows all options granted, exercised, and expired under the Plan for the three months ended March 31, 2016 and 2015:
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Summary of Restricted Stock and RSU Activity | A summary of the Company’s restricted stock and RSU activity for the three months ended March 31, 2016 and 2015 is shown below:
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Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The per share fair value of options was estimated at the date of grant based on the following weighted average assumptions for the three months ended March 31, 2015:
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Schedule of Share-based Compensation, Performance Shares [Table Text Block] | A summary of the Company's PSU activity for the three months ended March 31, 2016 and 2015 is shown below:
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Income Taxes (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 three months ended March 31, 2016 and 2015:
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Related Party Transactions (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Results of Operations Related to Reinsurance Agreements | The following is the effect on the Company’s results of operations for the three months ended March 31, 2016 and 2015 related to Maiden Reinsurance agreements:
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Acquisitions (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ARI Mutual Insurance Company | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Preliminary Assets Acquired and Liabilities Assumed | A summary of the preliminary assets acquired and liabilities assumed for ARI are as follows:
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Springfield | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Preliminary Assets Acquired and Liabilities Assumed | A summary of the preliminary assets acquired and liabilities assumed for Springfield are as follows:
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Warranty Solutions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Preliminary Assets Acquired and Liabilities Assumed | A summary of the preliminary assets acquired and liabilities assumed for Warranty Solutions are as follows:
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Shareholder Equity and Accumulated Other Comprehensive Income (Loss) (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ownership Components of Total Equity | The following table summarizes the ownership components of total stockholders' equity:
During the three months ended March 31, 2016, net income attributable to non-controlling interest was $3,857 and net income attributable to redeemable non-controlling interest was $160. Net income for AmTrust, Non-controlling interest and Redeemable non-controlling interest totaled $4,017 for the three months ended March 31, 2016. During the three months ended March 31, 2015, net income attributable to non-controlling interest was $3,761 and net income attributable to redeemable non-controlling interest was $322. Net income for AmTrust, Non-controlling interest and Redeemable non-controlling interest totaled $4,083 for the three months ended March 31, 2015. Accumulated Other Comprehensive Income (Loss) The following table summarizes the activities and components of accumulated other comprehensive income (loss):
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Schedule of Accumulated Other Comprehensive Income (Loss) | The following table summarizes the activities and components of accumulated other comprehensive income (loss):
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Segments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Results of Operations of Business Segments | The following tables summarize the results of operations of the business segments for the three months ended March 31, 2016 and 2015:
The following tables summarize net earned premium by major line of business, by segment, for the three months ended March 31, 2016 and 2015:
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Long Lived Assets and Total Assets of Business Segments | The following table summarizes total assets of the business segments as of March 31, 2016 and December 31, 2015:
|
Basis of Reporting Basis of Presentation (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2015
USD ($)
| |
Securities Sold But Not Yet Purchased, At Fair Value, Included in Changes in Accrued Expenses and Other Current Liabilities. [Member] | Securities Sold But Not Yet Purchased, At Fair Value Moved to Investing and Financing Activities [Member] | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |
Correction of immaterial error | $ 3,570 |
Investments - Summary of Available for Sale Fixed Securities by Contractual Maturity (Details) - USD ($) $ in Thousands |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Amortized Cost | ||
Total fixed maturities | $ 6,221,739 | $ 5,482,042 |
Fair Value | ||
Total fixed maturities | 6,307,719 | 5,433,797 |
Fixed maturities, available-for-sale | ||
Amortized Cost | ||
Due in one year or less | 131,009 | 125,563 |
Due after one through five years | 1,210,531 | 913,365 |
Due after five through ten years | 2,756,834 | 2,586,061 |
Due after ten years | 400,017 | 352,397 |
Mortgage and asset backed securities | 1,723,348 | 1,504,656 |
Total fixed maturities | 6,221,739 | 5,482,042 |
Due in one year or less | 129,490 | 124,763 |
Fair Value | ||
Due after one through five years | 1,215,729 | 909,634 |
Due after five through ten years | 2,807,027 | 2,537,734 |
Due after ten years | 409,945 | 357,288 |
Mortgage and asset backed securities | 1,745,528 | 1,504,378 |
Total fixed maturities | $ 6,307,719 | $ 5,433,797 |
Investments (OTTI) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||
Other-than-temporary impairment charges | $ 0 | $ 1,016 |
Fixed maturities, available-for-sale | ||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||
Other-than-temporary impairment charges | 0 | 0 |
Equity securities, available-for-sale | ||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||
Other-than-temporary impairment charges | $ 0 | $ 1,016 |
Investments (Trading Securities) (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
Dec. 31, 2015 |
|
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Trading securities, cost basis | $ 28,142 | $ 26,937 | |
Market value | 29,891 | 27,271 | |
Proceeds from sale of trading securities | 52,744 | $ 60,268 | |
Common stock | |||
Schedule of Trading Securities and Other Trading Assets [Line Items] | |||
Trading securities, cost basis | 28,142 | 26,937 | |
Gross unrealized gains | 2,129 | 739 | |
Gross unrealized losses | (380) | (405) | |
Market value | $ 29,891 | $ 27,271 |
Investments - Net Investment Income (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||
Gross investment income | $ 49,490 | $ 34,835 |
Investment expenses | (75) | (262) |
Net investment income | 49,415 | 34,573 |
Fixed maturities, available-for-sale | ||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||
Gross investment income | 46,193 | 32,753 |
Equity securities, available-for-sale | ||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||
Gross investment income | 2,364 | 409 |
Equity securities, trading | ||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||
Gross investment income | (153) | 8 |
Cash and short term investments | ||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||
Gross investment income | $ 1,086 | $ 1,665 |
Investments - Notional Amounts of Interest Rate Swaps by Remaining Maturity (Details) - Interest rate swaps $ in Thousands |
Mar. 31, 2016
USD ($)
|
---|---|
Schedule of Available-for-sale Securities [Line Items] | |
One Year | $ 70,000 |
Two Through Five Years | 0 |
Six Through Ten Years | 0 |
After Ten Years | 0 |
Total | $ 70,000 |
Investments - Fair Values of Restricted Assets (Details) - USD ($) $ in Thousands |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Investments, Debt and Equity Securities [Abstract] | ||
Restricted cash and cash equivalents | $ 359,876 | $ 380,699 |
Restricted investments - fixed maturities at fair value | 1,502,788 | 1,490,547 |
Total restricted cash, cash equivalents, and investments | $ 1,862,664 | $ 1,871,246 |
Fair Value of Financial Instruments - Reconciliation (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Net income | $ 22,305 | $ 23,681 |
Gain on investment in life settlement contracts net of profit commission | 10,730 | 11,373 |
Life settlement contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Net income | 30,629 | 21,250 |
Premiums paid | (12,102) | (11,130) |
Other Expenses | (629) | (706) |
Gain on investment in life settlement contracts net of profit commission | 10,730 | 11,373 |
Life settlement contract profit commission | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Net income | $ (7,168) | $ 1,959 |
Fair Value of Financial Instruments - Fair Value of Portfolio of Life Insurance Policies (Detail) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2016 |
Dec. 31, 2015 |
|
Life Settlement Contracts, Fair Value Method [Abstract] | ||
Average age of insured (in years) | 82 years 2 months 1 day | 82 years 1 day |
Average life expectancy, months (in months) | 110 months | 114 months |
Average face amount per policy | $ 6,538 | $ 6,564 |
Implicit discount rate (in percentage) | 13.90% | 13.70% |
Fair Value of Financial Instruments - Increase or (Decrease) in Carrying Value of Investment in Life Insurance Policies (Detail) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2016 |
Dec. 31, 2015 |
|
Life Settlement Contracts, Fair Value Method [Abstract] | ||
Life expectancy Plus 4 Months | $ (37,524) | $ (37,697) |
Life expectancy Minus 4 Months | 42,046 | 40,997 |
Discount Plus 1% | (26,783) | (26,558) |
Discount Minus 1% | $ 29,775 | $ 29,644 |
Investment in Life Settlements - Additional Information (Detail) |
3 Months Ended | |
---|---|---|
Mar. 31, 2016
USD ($)
Entity
|
Mar. 31, 2015
USD ($)
|
|
Schedule of Cost-method Investments [Line Items] | ||
Profits and losses of investment in life insurance policies and premium finance loans | 56.00% | |
Gain on investment in life settlement contracts net of profit commission | $ 10,730,000 | $ 11,373,000 |
NGHC | ||
Schedule of Cost-method Investments [Line Items] | ||
Percentage of ownership | 12.00% | |
LSC Entities | ||
Schedule of Cost-method Investments [Line Items] | ||
Percentage of ownership interest | 50.00% | |
Number of entities with ownership interest | Entity | 4 | |
Life settlement contracts | ||
Schedule of Cost-method Investments [Line Items] | ||
Capital contributions | $ 0 | 1,130,000 |
Life settlement contracts | AmTrust | ||
Schedule of Cost-method Investments [Line Items] | ||
Capital contributions | $ 565,000 | |
NGHC | LSC Entities | ||
Schedule of Cost-method Investments [Line Items] | ||
Percentage of ownership interest | 50.00% |
Investment in Life Settlements (Detail) $ in Thousands |
Mar. 31, 2016
USD ($)
Contract
|
Dec. 31, 2015
USD ($)
|
Dec. 31, 2015
Contract
|
Dec. 31, 2015
policy
|
---|---|---|---|---|
Number of Life Settlement Contracts | ||||
0-1 | Contract | 0 | 0 | ||
1-2 | Contract | 4 | 0 | ||
2-3 | Contract | 8 | 8 | ||
3-4 | Contract | 7 | 8 | ||
4-5 | Contract | 6 | 4 | ||
Thereafter | Contract | 230 | 235 | ||
Total | 255 | 255 | 255 | |
Fair Value | ||||
0-1 | $ 0 | $ 0 | ||
1-2 | 24,573 | 0 | ||
2-3 | 34,042 | 31,261 | ||
3-4 | 16,977 | 20,117 | ||
4-5 | 9,150 | 6,760 | ||
Thereafter | 209,831 | 205,863 | ||
Total | 294,573 | 264,001 | ||
Face Value | ||||
0-1 | 0 | 0 | ||
1-2 | 32,500 | 0 | ||
2-3 | 78,000 | 70,500 | ||
3-4 | 36,500 | 46,500 | ||
4-5 | 31,000 | 20,000 | ||
Thereafter | 1,440,313 | 1,481,313 | ||
Total | $ 1,618,313 | $ 1,618,313 |
Investment in Life Settlements - Additional Information (Footnotes) (Detail) $ in Thousands |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2016
USD ($)
Contract
|
Dec. 31, 2015
USD ($)
Contract
|
Mar. 31, 2016
policy
|
Dec. 31, 2015
policy
|
|
Investments, All Other Investments [Abstract] | ||||
Life settlement contracts, number of contracts with fair value | 215 | 213 | ||
Total number of Life Settlement Contracts | 255 | 255 | 255 | |
Number of policies with a negative value from discounted cash flow model as of period end | 40 | 40 | 42 | |
Premiums paid for the preceding twelve month period for period ended | $ 4,957 | $ 4,971 | ||
Death benefit received | $ 0 | $ 0 |
Investment in Life Settlements - Premiums to be Paid (Detail) - Premiums Due On Life Settlement Contracts $ in Thousands |
Mar. 31, 2016
USD ($)
|
---|---|
Life Insurance Premiums and Related Investment Income [Line Items] | |
2016 | $ 65,789 |
2017 | 42,672 |
2018 | 41,771 |
2019 | 41,026 |
2020 | 37,998 |
Thereafter | 464,343 |
Total | $ 693,599 |
Deferred Policy Acquisitions Costs (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Movement Analysis of Deferred Policy Acquisition Costs [Roll Forward] | ||
Beginning balance | $ 704,243 | $ 628,383 |
Acquisition costs deferred | 231,383 | 179,699 |
Amortization | (173,824) | (156,198) |
Ending balance | $ 761,802 | $ 651,884 |
Debt - Borrowings (Detail) - USD ($) $ in Thousands |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Debt Instrument [Line Items] | ||
Revolving credit facility | $ 130,000 | $ 130,000 |
6.125% Senior notes due 2023 (the 2023 Notes) | 247,979 | 247,911 |
Junior subordinated debentures (the 2035-2037 Notes) | 121,962 | 118,226 |
Secured loan agreements | 36,676 | 38,455 |
Promissory notes | 13,804 | 13,753 |
Total debt | 993,028 | 989,356 |
5.5% Convertible senior notes due 2021 (the 2021 Notes) | ||
Debt Instrument [Line Items] | ||
Convertible senior notes | 5,135 | 5,103 |
2.75% Convertible senior notes due 2044 (the 2044 Notes) | ||
Debt Instrument [Line Items] | ||
Convertible senior notes | 161,763 | 160,258 |
7.25% Subordinated Notes due 2055 | ||
Debt Instrument [Line Items] | ||
Subordinate Notes due 2055 | 145,109 | 145,078 |
7.50% Subordinated Notes due 2055 | ||
Debt Instrument [Line Items] | ||
Subordinate Notes due 2055 | $ 130,600 | $ 130,572 |
Debt - Aggregate Scheduled Maturities of Borrowings (Detail) - USD ($) $ in Thousands |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Debt Disclosure [Abstract] | ||
2016 | $ 5,408 | |
2017 | 7,423 | |
2018 | 9,590 | |
2019 | 134,467 | |
2020 | 205 | |
Thereafter | 852,552 | |
Total scheduled payments | 1,009,645 | |
Unamortized deferred origination costs | (16,617) | |
Total debt | $ 993,028 | $ 989,356 |
Debt - Aggregate Scheduled Maturities of Borrowings (Footnotes) (Detail) $ in Thousands |
Mar. 31, 2016
USD ($)
|
---|---|
Convertible Notes Payable | 5.5% Convertible senior notes due 2021 (the 2021 Notes) | |
Debt Instrument [Line Items] | |
Unamortized OID | $ (823) |
Senior Notes | 2.75% Convertible senior notes due 2044 (the 2044 Notes) | |
Debt Instrument [Line Items] | |
Unamortized OID | $ (49,211) |
Debt - Credit Facilities (Details) - Line of Credit |
Mar. 31, 2016
USD ($)
|
---|---|
Revolving credit facility | |
Line of Credit Facility [Line Items] | |
Line of credit, maximum borrowing capacity | $ 175,000,000 |
Letters of credit, outstanding amount | 120,562,000 |
Credit agreement, remaining borrowing capacity | 54,438,000 |
Other Letters of Credit | |
Line of Credit Facility [Line Items] | |
Line of credit, maximum borrowing capacity | 1,675,000 |
Letters of credit, outstanding amount | 1,675,000 |
Credit agreement, remaining borrowing capacity | 0 |
Lloyds | Letter of Credit | |
Line of Credit Facility [Line Items] | |
Line of credit, maximum borrowing capacity | 431,040,000 |
Letters of credit, outstanding amount | 424,380,000 |
Credit agreement, remaining borrowing capacity | 6,660,000 |
Comerica Bank | Letter of Credit | |
Line of Credit Facility [Line Items] | |
Line of credit, maximum borrowing capacity | 75,000,000 |
Letters of credit, outstanding amount | 48,467,000 |
Credit agreement, remaining borrowing capacity | $ 26,533,000 |
Acquisition Costs and Other Underwriting Expenses (Detail) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Disclosure Summary Of Components Of Acquisition Costs And Other Underwriting Expenses [Abstract] | ||
Policy acquisition expenses | $ 133,773 | $ 110,967 |
Salaries and benefits | 125,528 | 107,422 |
Other insurance general and administrative expenses | 5,333 | 13,287 |
Acquisition costs and other underwriting expenses | $ 264,634 | $ 231,676 |
Earnings Per Share - Additional Information (Detail) |
Feb. 02, 2016 |
---|---|
Earnings Per Share [Abstract] | |
Stock split, conversion ratio | 2 |
Share Based Compensation - Schedule of Option Granted, Exercised and Expired (Detail) - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Shares | ||
Outstanding at beginning of period (shares) | 2,783,880 | 3,868,740 |
Granted (shares) | 0 | 70,000 |
Exercised (shares) | (210,018) | (716,210) |
Canceled or terminated (shares) | 0 | (11,350) |
Outstanding end of period (shares) | 2,573,862 | 3,211,180 |
Weighted Average Exercise Price | ||
Outstanding at beginning of period (usd per share) | $ 6.99 | $ 5.80 |
Granted (usd per share) | 0.00 | 26.45 |
Exercised (usd per share) | 3.87 | 4.36 |
Canceled or terminated (usd per share) | 0.00 | 9.60 |
Outstanding end of period (usd per share) | $ 7.24 | $ 6.56 |
Share Based Compensation (Weighted average assumptions) (Details) |
3 Months Ended |
---|---|
Mar. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Volatility (percentage) | 41.05% |
Risk-free interest rate (percentage) | 1.91% |
Weighted average expected lives in years | 6 years 3 months |
Dividend rate (percentage) | 1.89% |
Forfeiture rate (percentage) | 0.50% |
Income Taxes - Reconciliation of Statutory Federal Income Tax Rate to Effective Tax Rate (Detail) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Income Tax Disclosure [Abstract] | ||
Income before equity in earnings of unconsolidated subsidiaries | $ 135,015 | $ 205,431 |
Tax at federal statutory rate of 35% | 47,255 | 71,901 |
Tax rate differences | (18,216) | (3,251) |
Permanent adjustments | (3,577) | 2,298 |
Other, net | 2,775 | (24,136) |
Valuation allowance | (511) | 0 |
Provision for income taxes | $ 27,726 | $ 46,812 |
Effective tax rate | 20.50% | 22.80% |
Income Taxes - Reconciliation of Statutory Federal Income Tax Rate to Effective Tax Rate (Footnotes) (Detail) |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Income Tax Disclosure [Abstract] | ||
Federal statutory rate | 35.00% | 35.00% |
Income Taxes - Additional Information (Detail) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
Dec. 31, 2015 |
|
Operating Loss Carryforwards [Line Items] | |||
Increase in effective tax rate | 20.50% | 22.80% | |
Operating loss carryforwards, limitation on use per year | $ 2,641,000 | ||
Operating loss carryforwards, valuation allowance | 169,474,000 | $ 170,043,000 | |
Domestic Tax Authority | |||
Operating Loss Carryforwards [Line Items] | |||
Operating loss carryforwards | $ 36,660,000 | ||
Foreign Tax Authority | |||
Operating Loss Carryforwards [Line Items] | |||
Operating loss carryforwards | $ 687,077,000 |
Related Party Transactions (Results of Operations Related to Reinsurance Agreements) (Detail) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Related Party Transaction [Line Items] | ||
Change in unearned premium | $ (146,397) | $ (93,812) |
Incurred loss and loss adjustment expense - ceded | 715,073 | 613,283 |
Maiden | ||
Related Party Transaction [Line Items] | ||
Premium written - ceded | (543,688) | (528,285) |
Change in unearned premium | 86,698 | 128,615 |
Earned premium - ceded | (456,990) | (399,670) |
Ceding commission on premium written | 174,334 | 168,773 |
Ceding commission – deferred | (35,943) | (50,086) |
Ceding commission - earned | 138,391 | 118,687 |
Incurred loss and loss adjustment expense - ceded | $ 354,854 | $ 249,390 |
Shareholder Equity and Accumulated Other Comprehensive Income (Loss) (Common Stock) (Details) |
Feb. 02, 2016 |
---|---|
Equity [Abstract] | |
Stock split, conversion ratio | 2 |
Segments - Long Lived Assets and Total Assets of Business Segments (Detail) - USD ($) $ in Thousands |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Segment Reporting Information [Line Items] | ||
Total assets | $ 18,355,721 | $ 17,091,019 |
Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Total assets | 18,355,721 | 17,091,019 |
Operating Segments | Small Commercial Business | ||
Segment Reporting Information [Line Items] | ||
Total assets | 8,871,282 | 7,781,045 |
Operating Segments | Specialty Risk and Extended Warranty | ||
Segment Reporting Information [Line Items] | ||
Total assets | 6,397,361 | 6,370,861 |
Operating Segments | Specialty Program | ||
Segment Reporting Information [Line Items] | ||
Total assets | 3,077,724 | 2,936,710 |
Operating Segments | Corporate and Other | ||
Segment Reporting Information [Line Items] | ||
Total assets | $ 9,354 | $ 2,403 |
Subsequent Event - Additional Information (Detail) - Subsequent Event [Member] $ in Thousands |
1 Months Ended |
---|---|
Apr. 30, 2016
USD ($)
shares
| |
ANV Holdings B.V and Affiliates [Member] | |
Subsequent Event [Line Items] | |
Definitive agreement to acquire | $ 218,700 |
Common stock | |
Subsequent Event [Line Items] | |
Shares repurchased during the period | shares | 2,184,923 |
Shares repurchased, value | $ 54,110 |
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