Amtrust Financial Services Inc 7.50% Dep Shs Rep 1/40th Pfd Ser D Usd25 · OTC:AFFS
Amtrust Financial Services Inc 7.50% Dep Shs Rep 1/40th Pfd Ser D Usd25 — AmTrust Financial Services — Investor Presentation (March 2012)
22 slides from Amtrust Financial Services Inc 7.50% Dep Shs Rep 1/40th Pfd Ser D Usd25's investor presentation, Mar 5, 2012
Slide 1: AmTrust Financial Investor Update Fourth Quarter 2011
AmTrust Financial Investor Update Fourth Quarter 2011
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains certain forward - looking statements that are intended to be covered by the safe harbors created by The Private Securities Litigation Reform Act of 1995 . All statements other than statements of historical fact included in this presentation are f
Slide 3: AmTrust Overview
*Net income before after - tax net realized gains (losses) on investments, and other items. Please see the Non - GAAP Reconciliation at the end of this presentation for important information on this non - GAAP measure. $839 $1,111 $1,199 $1,561 $2,150 2007 2008 2009 2010 2011 AmTrust Overview • Lowe
Slide 4: Strong Franchises in Underserved Markets
Strong Franchises in Underserved Markets 2011 GWP Description AmTrust Advantage Client Retention Specialty Risk and Extended Warranty $1,057 mm Extended warranty coverage in U.S. and Europe Specialty products in Europe and US Medical liability (malpractice), in Italy Proprietary industry los
Slide 5: Strong Capital Generation and Returns
Strong Capital Generation and Returns Book Value Per Share Annualized Operating ROE¹ 5 $6.51 $6.54 $9.60 $12.03 $14.82 2007 2008 2009 2010 2011 24.5% 32.3% 26.3% 21.5% 22.3% 2007 2008 2009 2010 2011 1 Please see the Non - GAAP Reconciliations at the end of this presentation for important information
Slide 6: History of growth through renewal rights transactions and strategic agreements
• High level of historic growth driven by lower - risk , higher - return renewal rights transactions and strategic agreements – Eliminates risk associated with legacy balance sheets while enhancing underwriting and origination capabilities via addition of acquired team members and best practices Dec
Slide 7: AmTrust Operates in Diverse, Lower Volatility Businesses
AmTrust Operates in Diverse, Lower Volatility Businesses Product Mix 2011 Geographic Mix 2011 30% 24% 28% 5 % 5 % 8 % All Other Workers‘ Comp. Warranty Other Liability Commercial Auto Auto • Balanced mix of higher frequency, low hazard business lines – More predictable loss experience – Lower pricin
Slide 8: Efficient operating platform: 2011 revenue mix
77% 11% 8% 4% Net Earned Premium Ceding Commission Net Investment Income Service & Fee Income Efficient operating platform $1.4 Billion Total 2011 Revenue YTD 3Q11 8 • 24% of total revenue from commissions and other revenues – 41% of premiums ceded in 2011; largely tied to Maiden Holdings 40% quota
Slide 9: Multi-national Operations
9 • Geographic diversity reduces exposure to regional economic and pricing downturns through varied market cycles – Access to over 14,000 wholesale and retail agents with ability to market to ACAC’s 11,750 agent network** – Extended warranty coverage for consumer and commercial goods largely in Euro
Slide 10: Small Commercial Business
10 Combined Ratio 74.5% 82.8% 85.7% 89.9% $459 $470 $466 $610 $173 $239 $252 $320 2008 2009 2010 2011 Gross Written Premium Net Earned Premium Lower hazard small business workers’ comp and packaged products • Target lower risk, underserved businesses – Such as restaurants, retailers and professional
Slide 11: Specialty Risk & Extended Warranty
11 $416 $461 $749 $1,057 $154 $190 $304 $447 2008 2009 2010 2011 Gross Written Premium Net Earned Premium Specialty Risk & Extended Warranty $s in millions Low hazard / non - catastrophic extended warranty coverage and other specialty products largely in Europe and U.S. • Target manufacturers, small
Slide 12: Specialty Program
$236 $268 $264 $382 $112 $145 $145 $171 2008 2009 2010 2011 Gross Written Premium Net Earned Premium Specialty Program $s in millions Partner with MGAs to provide lower risk general liability, commercial auto, property coverage and workers’ comp in specialized sectors • Target lower risk/specialty b
Slide 13: History of Strong Underwriting
95.1% 91.9% 83.2% 77.8% 79.8% 85.3% 89.0.% 65.7% 63.9% 62.4% 57.7% 57.1% 63.2% 65.4% 29.4% 28.0% 20.8% 20.1% 22.7% 22.1% 23.6% 2005 2006 2007 2008* 2009 2010 2011 Net Loss Ratio Net Expense Ratio History of Strong Underwriting • Granular lower risk portfolio and geographic diversity drive lower loss
Slide 14: Growing Service and Fee Revenue
• Warranty Administrator – Warrantech provides third party administrative services to retailers • Workers’ Compensation Fund Management – Provide underwriting and claim services to eight state controlled workers’ compensation funds • Technology Fees – Technology development fees and services fee of
Slide 15: Conservative Investment Portfolio
Conservative Investment Portfolio $2.1 Billion Investment Portfolio 12/31/2011 • 78% of fixed maturities A - rated or better • 16% of fixed maturities AAA - rated or U.S. Treasuries • 12% of fixed maturities floating rate • Average fixed maturities portfolio duration of 3.7 years • Average fixed mat
Slide 16: Efficient Capital Structure
Efficient Capital Structure • Successful Reinsurance Agreement – 41% of 2011 premiums ceded to Maiden Holdings, Inc. (MHLD) • $200 million capital raise – December 2011, issued $175 million in convertible debt due 2021. An additional $25 million was issued in January 2012 – Conversion price is $31.8
Slide 17: Focus On Delivering Strong ROE
Focus On Delivering Strong ROE • Diversified balanced business model drives solid results in varying economic cycles – Target lower - risk niche business lines – Highly efficient capital structure • Focus on driving consistently strong underwriting profits – Disciplined pricing and risk selection –
Slide 18: Appendix
Appendix
Slide 19: Summary Income Statement
Summary Income Statement ¹ Net operating earnings reflect net income before after - tax net realized gains (losses) on investments and other items. ² Please see the Non - GAAP reconciliation slide at the end of this presentation for important information about these Non - GAAP measures. 19 %$ in mil
Slide 20: Balance Sheet Highlights
Balance Sheet Highlights 20 $s in millions 12/31/08 12/31/09 12/31/10 12/31/11 Cash and Investments $1,361.4 $1,414.8 $1,559.0 $2,082.3 Reinsurance Recoverable 584.8 643.3 775.4 1,098.6 Premiums Receivable, Net 419.6 495.9 727.6 933.0 Prepaid Reinsurance Premium 372.0 410.6 485.0 584.9 Deferred Poli
Slide 21: Non-GAAP Reconciliation
Non - GAAP Reconciliation 21 1) Net operating earnings, operating EPS, and operating ROE are non - GAAP Financial measures. The Company defines net operating earnings as net income less after - tax realized investment gains and losses, gains on investment in unconsolidated subsidiary net of tax, cer
Slide 22: Slide 22
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