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

By: Jeff Hatch

February 27, 2017

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

Filed Under: earnings, financial, profitability, Q4, services, 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, a company of The Amynta Group 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 The Amynta Group, 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, The Amynta Group 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

Top 10 Reasons To Select AmTrust

By: Jeff Hatch

October 19, 2015

Warrantech is a subsidiary of AmTrust, one of the strongest and most financially stable companies in the industry. AmTrust brings this financial strength to Warrantech, which allows us to offer customizable plans and benefits that most competitors simply cannot provide. 
 
1. Financial Strength and Stability – Publicly traded on the NASDAQ (AFSI) with more than $6.1 billion in gross written premium and over $15 billion in assets, with an A.M. Best rating of "A" (Excellent), Financial Size “XIII.”
 
2. Multi-State Capability – Workers’ comp written in over 40 states, and all lines of insurance written in more than 30 states.
 
3. Flexible Payment Plans – Installment plans, AmTrust AutoPay (direct debit) and Pay-As-You-Owe® (PAYO®) provide seamless premium payments, saving time and money.
 
4. Superior Claims Handling – 24/7 claims reporting with live assistance, and seasoned claims professionals with assigned case loads well below the industry average.
 
5. Exceptional Loss Control – Representatives located nationwide to conduct safety inspections, site evaluations and loss prevention training.
 
6. User-Friendly Submission System – Easy-to-use, web-based system provides policy, endorsement and loss history at your fingertips, and allows you to submit and chat online with your underwriter about a submitted risk.
 
7. Competitive LCM Rate Structure – We are continuously evaluating and adjusting our LCMs to reflect our loss experience and competitive environment.
 
8. Competitive Agency Commission – Our commission rates generally range from 9%-20% based upon the product written.
 
9. Expanding P&C Product Offering – We are continuously evaluating the market and our agents’ needs to deliver new coverages from Workers’ Comp to Commercial Package and a wide variety of niche products.
 
10. Satisfying Customer Service – Exceptional service is the mantra at AmTrust, delivered by our field marketing representatives, regional underwriters and centralized customer service professionals.

Filed Under: customer, financial, services, stability, strength, Warrantech