AmTrust Reports Fourth Quarter 2016 Net Income, Reflecting Strengthening Of Reserves

By: Jeff Hatch

February 27, 2017

AmTrust Financial Services, Inc. (Nasdaq:AFSI) ("the Company" or "AmTrust") today announced fourth quarter 2016 net income attributable to common stockholders of $98.7 million, or $0.57 per diluted share, compared to $59.7 million, or $0.35 per diluted share in the fourth quarter 2015. For the fourth quarter 2016, operating earnings was $66.3 million, or $0.38 per diluted share, compared to $115.7 million, or $0.67 per diluted share, in the fourth quarter 2015. The decrease in net income attributable to common stockholders and operating earnings reflects a reserve charge of $65.0 million, or approximately $0.24 per diluted share, primarily related to strengthening of prior year loss and loss adjustment reserves in our Specialty Program segment.
 
"Our fourth quarter caps a strong year in which we completed and integrated several strategic acquisitions, delivered higher investment returns, achieved record revenue, strengthened our balance sheet through preferred stock issuances, returned more than $262 million of capital to shareholders in the form of common share repurchases and dividends, and produced book value per share of $15.15 at year-end, an increase of over 17% from a year ago," said Barry Zyskind, Chairman and Chief Executive Officer, AmTrust. "We are very pleased with the underlying operational performance of our business in the fourth quarter and in 2016, a year in which we continued to maintain high levels of policy retention and maintain underwriting discipline. While our expense ratio was elevated in the fourth quarter, due largely to business mix as well as higher costs related to increased year-end resources, expenses were otherwise in line with our net earned premium growth."
 
"Our combined ratio of 95.5% in the fourth quarter reflects our continued profitability, particularly in our two largest segments, Small Commercial Business and Specialty Risk and Extended Warranty, but we are strengthening prior year loss and loss adjustment reserves in our Specialty Program segment following extensive internal actuarial reviews. As we have noted in the past, this segment has underperformed relative to our expectations, which led us to install new leadership and to adjust our approach to writing programs for commercial auto, general liability, and workers' compensation. We are confident that we are adequately reserved on our consolidated book of business. We have a solid foundation to build upon in 2017, and are committed to creating shareholder value through disciplined growth and steady returns."
 
Fourth Quarter 2016 Results
 
Total revenue was $1.42 billion, an increase of $219.4 million, or 18%, from $1.20 billion in the fourth quarter 2015. Gross written premium was $1.91 billion, an increase of $299.8 million, or 19%, from $1.61 billion in the fourth quarter 2015. Net written premium was $1.15 billion, an increase of $81 million, or 8%, compared to $1.07 billion in the fourth quarter 2015. Net earned premium was $1.22 billion, an increase of $157.7 million, or 15%, from $1.06 billion in the fourth quarter 2015. The combined ratio was 95.5% compared to 91.9% in fourth quarter 2015.
 
Full Year 2016 Results
 
Total revenue was $5.45 billion, an increase of $837.7 million, or 18%, from $4.62 billion in 2015. Gross written premium was $7.95 billion, an increase of $1,149.7 million, or 17%, from $6.80 billion in 2015. Net written premium was $4.85 billion, an increase of $591.3 million, or 14%, from $4.26 billion in 2015. Net earned premium of $4.67 billion increased $646.2 million, or 16%, from $4.02 billion in 2015. The combined ratio was 92.1% compared to 91.1% in 2015.
 
A summary of results is listed below along with a link to the earnings release. 
 
Financial Highlights
 
Fourth Quarter and Full Year 2016 Highlights
 
Fourth quarter gross written premium of $1.91 billion and net earned premium of $1.22 billion, up 19% and 15%, respectively, from the fourth quarter 2015
Fourth quarter service and fee income of $151.0 million, up 26% from the fourth quarter 2015
Fourth quarter net income attributable to common stockholders of $98.7 million, or $0.57 per diluted share, compared to $59.7 million, or $0.35 per diluted share, in the fourth quarter 2015
Fourth quarter operating earnings of $66.3 million, or $0.38 per diluted share, compared to $115.7 million, or $0.67 per diluted share, in the fourth quarter 2015
Current period net income attributable to common stockholders and operating earnings include a reserve charge of $65.0 million, or approximately $0.24 per diluted share;
Fourth quarter and full year combined ratio of 95.5% and 92.1%, respectively
Full year 2016 capital returned to shareholders of $262.4 million, including $152.3 million of common share repurchases
 
To view AmTrust Financial Services’ Q4 earnings release, visit the Investor Relations section at http://ir.amtrustgroup.com or click on the following link: http://ir.amtrustgroup.com/releasedetail.cfm?ReleaseID=1014558 

Filed Under: AmTrust, earnings, financial, profitability, Q4, services, Warrantech

Is Your Extended Service Plan Program Fully Supported?

By: Jeff Hatch

February 01, 2017

Having an extended service plan program that fits your business model is important. But it’s just one piece of the puzzle. Have you considered how your program is supported? Without the proper infrastructure, it might not be as effective as it could be. Making sure your customers are taken care of is as essential as the contents of a well-designed service contract and vital to the overall success of your business.
 
At Warrantech, we continuously strive to improve the quality of service provided to all customers. We believe that quality has to be the foundation of everything that we do and everything that we represent. To us, customer service is not just a team or a process, it does not have a starting point or an ending point – it is part of the culture in everything we touch.
 
To bolster this approach, Warrantech employs a dedicated Quality Assurance Department that reports directly to our Call Center Director, identifying strengths and weaknesses, and effectively managing the workforce to optimize service delivery. This department serves as the foundation for our call center as they monitor all personnel on a daily basis and provide performance feedback on: 
 
Professionalism 
Customer interaction 
Procedural adherence 
Claims adjudication 
System usage 
System documentation 
Call lengths 
 
We also make sure that customer service is readily available. Customers can file claims through a dedicated toll-free phone number, email, web chat or Claims360, our proprietary online platform. We even support mail and faxed claims as well. 
 
To handle escalated customer issues and complaints, we have created a Presidential Team. This team, which is located within the call center, maintains a close relationship with each of our partners, the Account Manager(s) and executive teams. Their task is to work with a client in the event of an escalation to ensure the best possible service. This team receives referrals from the call center associates, direct from our clients, from executive escalations and from all forms of social media. 
 
Any customer who seeks to speak to a supervisor or is contacting us for the same issue on more than one occasion is immediately transferred to the Presidential Team. These associates are equipped with advanced customer service training and problem resolution and have the full power and authority to make the appropriate decision by working with the client to ensure that together we are achieving customer satisfaction. The Presidential Team member owns the service experience through completion and documents every aspect of the resolution. 
 
The information that is recorded by the Presidential Team is reviewed monthly by call center management and Warrantech executive management, as well as the training department to identify process and procedure improvements needed to avoid future escalations. Supervisors use the feedback from the Presidential Team in their weekly meetings and individual coaching sessions with their associates. This approach creates a customer who is not only satisfied with the outcome of the transaction, but a customer who walks away from the experience with a positive outlook on the service contract, Warrantech and, most importantly, our clients. 
 
Warrantech Support Process At A Glance 
  • Every customer contact is recorded and stored
  • Appropriate staffing levels are maintained and based on program, time, date and SLAs
  • Unique telephone numbers and websites are utilized for each client
  • IVR is used to appropriately route calls based on program, contact type, etc.
  • IVR provides contact center associates with customer information prior to transfer
  • OEM and/or partner calls can be immediately routed to the appropriate entity
  • All customer contacts are monitored in real time to ensure that all service-level agreements are met

Visit warrantech.com or give us a call at 800.833.8801 to learn more about how we can support your business.

Filed Under: customers, quality, satisfaction, service, support, Warrantech

Warrantech Partners with Encompass for Sourcing and Procurement of Parts and Product replacements

By: Jeff Hatch

January 04, 2017

LAWRENCEVILLE, Ga., Jan. 04, 2017 (GLOBE NEWSWIRE) -- Encompass Supply Chain Solutions, Inc. (“Encompass” or “the Company”) a leading provider of 3PL and 4PL solutions for a diverse range of replacement parts and finished goods, today announced it has been selected by Warrantech, an AmTrust Financial Services Company and one of the country’s largest extended warranty administrators, to help provide parts and product procurement in support of Warrantech’s extended warranty service objectives.
 
Encompass will provide repair parts to the Warrantech service network, or replacement products in the event parts are not readily available or repairs are not economically feasible. The Company’s highly-seasoned Purchasing team will leverage its global network of vendors to support multiple product categories, including Consumer Electronics, Home Appliance, Heating and Cooling, Computer, Imaging, Mobile Devices and others.
 
Encompass Purchasing will be focused on creating a world-class service experience for Warrantech’s customers and the brands it supports, while helping to manage costs, decrease turn time and positively impact severity.
 
Encompass expects to reduce expensive buyouts to consumers. As Encompass President and CEO Robert Coolidge noted in a recent blog post, the use of gift cards or other means for warranty reimbursement to consumers versus repair or replacement is costly to warranty companies and raises the risk of brand displacement for manufacturers.
 
“In our ongoing mission to help our clients be more successful, we aim to curtail the industry practice of compensating consumers with gift cards to replace a defective product,” said Coolidge. “This can lead to brand displacement and decreased customer satisfaction as end users are now being tasked to find another product. Manufacturers should want to do whatever it takes to keep their brand in the customer’s home and maintain low repair costs.”
 
To provide hands-on service to Warrantech, Encompass will embed a dedicated team of Encompass employees within the Warrantech infrastructure, as well as inside key partner facilities – a practice that Encompass has deployed with other strategic partners with great success.
 
“Working side-by-side with Warrantech on site will enable Encompass to more efficiently resolve issues and eliminate communication gaps to help expedite customer claims resolution,” said Ariel Gorelik, Chief Operating Officer, Warrantech.
 
About Warrantech
Warrantech is a subsidiary of AmTrust Financial Services, a multinational property and casualty holding company that is rated "A" (Excellent) by A.M. Best Company for their financial strength and stability. An innovative, technology-driven company, AmTrust brings its financial strength to Warrantech, enabling it to offer a unique, bundled approach that includes both underwriting and administration. This creates transparency and visibility to information that enables customers to change and create plans that are both highly customized and profitable.
 
About Encompass Supply Chain Solutions, Inc. 
Encompass is a market leader in forward and reverse supply chain management and high-tech repair services for a diverse and expanding range of consumer electronics, computer, major appliances and imaging products.  Encompass provides end-to-end solutions for OEMs, retailers, independent dealers and third-party administrators.
 
Encompass manages all stages of the product lifecycle, including finished goods and replacement parts logistics, board repair and product refurbishment services, returns management, asset value recovery and eco-friendly disposal. For more information, please visit encompass.com and encompassparts.com and follow us on Facebook, LinkedIn and Twitter.

Filed Under: claims, Encompass, parts, products, replacement, services, Warrantech

Let Warrantech’s Extensive Industry Expertise Take Your Business Further

By: Jeff Hatch

November 29, 2016

There’s a lot to be said for experience. Having someone in your corner who has a greater understanding of what you are trying to accomplish can help you fully realize your goals and even uncover new opportunities that you never knew existed. That’s what we do best.  
 
Warrantech is comprised of service contract / insurance industry veterans and is led by a management team whose members each average more than 23 years in the business. Our executives are thought-leaders who serve as industry board members and conference speakers, and possess numerous industry designations and certifications. This expertise translates into a comprehensive perspective with vast insight that enables us to uncover hidden growth opportunities and structure programs that offer a high-value proposition for our partners and their customers. 
 
Our real-world experience also guides our team to help clients refine their sales strategies and create lucrative programs that build customer loyalty and enhance brand image. With a team of highly skilled underwriters, actuaries, legal/compliance professionals, marketing and management experts, Warrantech has the depth of knowledge to launch and administer your program successfully within your defined timelines. 
 
Our experienced team is masterful at driving large, complicated projects, based on years of integrating, developing and managing a variety of well-positioned acquisitions and meaningful, large-scale client programs. We are able to design, develop and implement a program with minimal strain on your team, while working within any desired parameters you establish. We typically focus on:
 
Optimization of price tiers and bands
Ensuring all eligible products are covered
Designing clear and concise customer terms and conditions
Continuous development of marketing materials and sales tools
Robust field and online training programs
Aftermarket and renewal marketing activities
Development of appropriate compensation and incentive programs  
 
The Warrantech team has the expertise to ensure that you receive a carefully coordinated program that integrates all aspects of your business, including sales, service and marketing. In turn, this ensures a perfect fit for both your business and your customers.
 
Visit warrantech.com or give us a call at 800.833.8801 to learn more about how we can help you.

Filed Under: business, expertise, industry, marketing, sales, service, Warrantech

AmTrust Announces Net Income For The Third Quarter 2016

By: Jeff Hatch

November 03, 2016

Warrantech’s parent company, AmTrust Financial Services, Inc. (AFSI) today announced third quarter 2016 net income attributable to common stockholders was $103.6 million, or $0.60 per diluted share, compared to $182.7 million, or $1.09 per diluted share, in the third quarter 2015. 

For the third quarter 2016, operating earnings was $126.3 million, or $0.73 per diluted share, compared to $150.9 million, or $0.89 per diluted share, in the third quarter 2015. Annualized return on common equity was 15.9% for the third quarter 2016 compared to 35.4% for the third quarter 2015. Third quarter 2016 annualized operating return on common equity was 19.4% compared to 29.2% in the third quarter 2015.

"We delivered a solid performance in the third quarter, with strong investment results, higher service and fee income, and growth in gross written premiums, compared with the same period a year ago," said Barry Zyskind, Chairman, President and Chief Executive Officer, AmTrust. "Our performance reflects a full quarter's contribution from Republic Companies, as well as continued strong policy retention and disciplined underwriting of new business in our small commercial business segment, as demonstrated by our stable loss ratio. The top-line results of our specialty risk and extended warranty segment reflect the impact of the decline in the British pound relative to the third quarter a year ago, and we are pleased with the underlying performance of this segment."

Mr. Zyskind also stated, "We are optimistic about our organic growth prospects, given our differentiated model in workers' compensation and commercial lines products in the U.S., as well as opportunities in our warranty insurance offering globally. We remain focused on building a portfolio of business that leverages our proprietary technology and our efficient operating structure to enhance shareholder returns."

Third Quarter 2016 Results

Total revenue was $1.41 billion, an increase of $181.3 million, or 15%, from $1.23 billion in the third quarter 2015. Gross written premium was $2.03 billion, an increase of $253.3 million, or 14%, from $1.78 billion in the third quarter 2015. Net written premium was $1.22 billion, an increase of $73.1 million, or 6%, compared to $1.14 billion in the third quarter 2015. Net earned premium was $1.20 billion, an increase of $150.8 million, or 14%, from $1.05 billion in the third quarter 2015. The combined ratio was 91.5% compared to 92.6% in third quarter 2015.

A summary of Q3 results is listed below along with a link to the earnings release. 

Financial Highlights

Third Quarter 2016

Gross written premium of $2.03 billion, up 14.2% compared to $1.78 billion in the third quarter 2015
Net earned premium of $1.20 billion, up 14.4% from $1.05 billion in the third quarter 2015 
Net income attributable to common stockholders of $103.6 million compared to $182.7 million in the third quarter 2015
Operating earnings of $126.3 million compared to $150.9 million in the third quarter 2015
Diluted EPS of $0.60 compared to $1.09 in the third quarter 2015
Operating diluted EPS of $0.73 compared to $0.89 in the third quarter 2015
Service and fee income of $146.6 million, up 16% from $126.1 million in the third quarter 2015
Combined ratio of 91.5% compared to 92.6% in the third quarter 2015
Weighted average diluted shares outstanding of 173.1 million, up 3% compared to 168.3 million in the third quarter 2015

To view AmTrust Financial Services’ Q3 earnings release, visit the Investor Relations section at http://ir.amtrustgroup.com or click on the following link: http://ir.amtrustgroup.com/releasedetail.cfm?ReleaseID=997294 

Filed Under: AmTrust, earnings, Financial, gross, income, premium, Q3, quarter, third, Warrantech, written

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