AmTrust Reports $415M Loss for 2017, Meets Extended Filing Deadline
Wednesday, March 21, 2018 | 0
AmTrust Financial Services reported a net loss of $415 million for 2017, a reversal from a net income attributable to common stockholders of $363 million in 2016 and $419 million in 2015.
Net earned premiums of $5.06 billion in 2017 were up 8.3% from the previous year. Workers’ comp net earned premiums in AmTrust’s small commercial division fell by about 1% last year, to $1.41 billion. And in the specialty program segment, workers’ comp net earned premiums were down 28%, to $379 million.
Those figures were included in the company’s Form 10-K annual report for 2017 filed with the Securities and Exchange Commission on March 16. The annual report followed the company’s notification to the SEC on March 1 that it would be late with its Form 10-K.
Submitting the form 12b-25 late-filing notice gave the company a 15-day extension for filing its annual report, a deadline that was met.
A.M. Best said this month that it would be watching to see whether AmTrust met its extended filing deadline.
“A.M. Best does not view the filing of a form 12b-25 by AFSI as cause for rating action,” A.M. Best analysts said in the rating comment. “However, this is the second consecutive use of the extension by the company for an annual filing and reflects the strain on resources to support the completion of the various major transactions in which the company has been involved. Should the March 16 deadline be missed, there is heightened potential for negative rating action.”
A.M. Best in November placed AmTrust’s ratings “under review with negative implications.” The rating company said the ratings would remain under review until it had a chance to analyze financial data in the 2017 annual report.
AmTrust’s principal insurance subsidiaries are rated “A,” or Excellent, by A.M. Best. In its annual report, AmTrust noted that a rating downgrade from A.M. Best “would likely reduce the amount of business we are able to write and could adversely impact the competitive positions of our insurance subsidiaries.”
In addition, a rating downgrade could derail a deal to privatize AmTrust, which is now publicly traded.
Under the proposed $2.7 billion deal, all of the company’s common stock would be acquired by members of AmTrust’s founding family and Stone Point Capital. The AmTrust board of directors has approved the proposal but steps remain before it’s finalized.
“Evergreen Parent (an entity formed by private equity funds managed by Stone Point Capital) may terminate the proposed merger ... if certain of our insurance subsidiaries fail to have a financial strength rating of at least ‘A’ from A.M. Best,” AmTrust said in its annual report.
AmTrust said in its annual report that it had identified “material weaknesses in our internal control over financial reporting” as of Dec. 31, 2017. While steps are underway to improve the controls over financial reporting, the company said, the measures will take time.
Issues with the accuracy or timing of financial reporting could have a number of adverse consequences, the company acknowledged, including reduced access to capital or regulatory investigations and penalties.
The filing of the annual report comes as AmTrust appears to have settled into the No. 4 spot in the National Association of Insurance Commissioners’ workers’ comp market share rankings for 2017. AmTrust was No. 3 in the 2016 ranking, which looks at insurers’ direct premiums written.
NAIC released the 2017 ranking in early March and has updated the report as more insurers have submitted their data. In the initial report, AmTrust was in the No. 16 spot, moving up to No. 4 as of March 19. NAIC has now received about 97% of property and casualty filings.
An AmTrust spokesman told WorkCompCentral last week that NAIC’s initial report didn’t include data from an AmTrust subsidiary that accounts for about $1 billion in premium.
NAIC Workers’ Comp Market 2017 share ranking as of March 19:
- Travelers Group.
- The Hartford Fire and Casualty Group.
- Zurich Insurance Group.
- AmTrust NGH Group.
- Berkshire Hathaway Group.
- Chubb Ltd. Group.
- Liberty Mutual Group.
- State Insurance Fund.
NAIC’s Workers’ Comp 2016 market share rankings:
- Travelers.
- The Hartford.
- AmTrust.
- Zurich.
- Berkshire Hathaway.
- Chubb.
- State Insurance Fund.
- Liberty Mutual Group.
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