Company Review: Amtrust Financial Services Inc (AFSI)

AMTRUST FINANCIAL SERVICES INC (AFSI)

Last Updated: Q1 2014

Description: Amtrust Financial Services, Inc. is a holding company. The Company is a multinational specialty property and casualty insurer focused on generating consistent underwriting profits. The Company operates in four business segments: small commercial business, specialty program and personal lines reinsurance. The Company transacts business through 11 insurance company subsidiaries.

How do they make money: Amtrust sells insurance and reinsurance. They take the premiums and invest it in various assets.

Key Brands: None

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Company Overview

Subsidiaries

Small Commercial Business: 45%

Workman’s Comp insurance

Specialty Risk and Extended: 31%

74% of SR&E is international

Car Care Plan England

Specialty Program: 21%

Personal Reinsurance 3%

AmTrust International: Bermuda based reinsurance

National General: ? ($14 of book value not added in. Would almost double book value)

Maiden Holdings (MHLD): Possible subsidiary. Provides 25% of AFSI premiums.

Investment Portfolio (Q4 2013)

Fixed Maturities: 74%

Cash and Short Term Investments: 23%

Other investments: 3%

Risks

Nothing specific at this time.

Competitors

ACE Limited (ACE)

American International Group (AIG)

Partnerre Ltd (PRE)

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Company Fundamentals

Company Stats	2005	2006	2007	2008	2009	2010	2011	2012	2013	2014e	5y Avg	10y Avg
Share Price	-	$7.07	$11.38	$9.59	$9.77	$14.46	$19.63	$30.22	$32.69	$50.00	$29.40	$20.53
EPS	-	0.72	1.24	1.14	1.44	1.98	2.34	2.42	3.86	3.85	2.89	2.11
EPS Growth	-	-	72.22%	-8.06%	26.32%	37.50%	18.18%	3.42%	59.50%	-0.26%	23.67%	26.10%
P/E	-	9.82	9.18	8.41	6.78	7.30	8.39	12.49	8.47	12.99	9.93	9.31
P/B	-	1.5	2.1	1.8	1.2	1.5	1.6	1.7	1.8	2.4	1.8	1.73

26% EPS growth is insane.2014 looks to be more of the same.

Dividend Stats	2005	2006	2007	2008	2009	2010	2011	2012	2013	2014e	5y Avg	10y Avg
Dividend	-	$0.03	$0.09	$0.15	$0.19	$0.24	$0.28	$0.34	$0.53	$0.64	$0.41	$0.28
Dividend Yield	-	0.42%	0.79%	1.56%	1.94%	1.66%	1.43%	1.13%	1.62%	1.28%	1.42%	1.32%
Share buyback %	-	-57.35%	-6.85%	0.00%	0.00%	0.00%	-2.67%	-3.85%	0.00%	0.00%	-1.30%	-7.86%
Div Growth	-	-	200.00%	66.67%	26.67%	26.32%	16.67%	21.43%	55.88%	20.75%	28.21%	54.30%
EPS Payout Ratio	-	4.17%	7.26%	13.16%	13.19%	12.12%	11.97%	14.05%	13.73%	16.62%	13.70%	11.81%

I am ignoring the 54% dividend growth rate because of the big increase in 2007 skews the numbers. Still, 28% is incredible and very close to their EPS growth.

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Earning Report Notes

Q1 2014

Written Premium: $1.67b

Net Income: $1.27

Expense Ratio: 22.5%

Book: $19.58

Seeing largest growth in California, Florida, New York and New Jersey.

This and last quarter mentioned their unique technology giving a competitive advantage. They don't say exactly what this advantage is.

$5b in invested assets

Q4 2013

Written Premium: $1.06b (+36.8% Y/Y)

Net Income: $0.82/share

Q&A section: Investors asking why they are being so conservative with their numbers and estimates. (NICE!)

Full year 2014

Written Premium: $4.1b ( +49% Y/Y)

Net Income: $3.67/share ($286.9m )

Expense Ratio: 23%

Cash flow:  $900m

Book: $17.85

Estimate that the Tower business on a full year basis will add between 300 million to 500 million in small commercial business

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Company and Industry specific commonly used acronyms and terms

Equalization reserve: protect against insurance volatility

Resources

Company Website: http://www.amtrustgroup.com/

Investor Relations: http://ir.amtrustgroup.com/

Morningstar: http://quotes.morningstar.com/stock/afsi/s?t=afsi

Transcripts: http://seekingalpha.com/symbol/AFSI/transcripts

Disclaimer: The investments and trades discussed are not recommendations for others. I am not a financial planner, financial adviser, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.