NEW YORK, Nov. 6, 2008 (GLOBE NEWSWIRE) -- AmTrust Financial Services, Inc. (Nasdaq:AFSI) today reported operating earnings of $39.2 million for the third quarter of 2008. Operating earnings is a non-GAAP financial measure defined by the Company as net income, excluding realized investment gains and losses, net of tax. Gross written premium for the third quarter of 2008 was $281.2 million and net income was $9.4 million. During the third quarter of 2008, the Company incurred a realized loss on an after-tax basis of $29.8 million on its investment portfolio. The realized loss related primarily to fixed income investments in Lehman Brothers Holdings and Washington Mutual.

Third Quarter Overview:

Gross written premium in the third quarter 2008 increased by $87.9 million to $281.2 million or 45.5% from $193.3 million in the third quarter of 2007. The Company reported basic operating earnings per share of $0.65 for the third quarter of 2008, an increase of 51.2% from the third quarter of 2007. Net income for the third quarter 2008 was $9.4 million, or $0.16 basic earnings per share.

Third Quarter and Nine Months Highlights:

 --  Quarterly basic operating earnings per share was $0.65 ($0.43 in
     2007)
 --  Quarterly basic earnings per share was $0.16 ($0.41 in 2007)
 --  Nine months ended September 30, 2008 basic operating earnings per
     share was $1.54 ($1.03 in 2007)
 --  Nine months ended September 30, 2008 basic earnings per share was
     $0.97 ($1.12 in 2007)
 --  Return on equity on operating earnings for three months ended
     September 30, 2008 was 39.0%
 --  Return on equity on operating earnings for nine months ended
     September 30, 2008 was 31.7%
 --  Book value per share was $6.48 (as of September 30, 2008)
 --  The combined ratio for the third quarter was 58.0% (74.5% in
     2007)
 --  The combined ratio for the nine months ended September 30, 2008
     was 73.1% (85.8% in 2007)
 --  The Company recognized favorable reserve developments of $15
     million or $0.16 per quarterly basic operating earnings per share

Third Quarter 2008 Results:

Revenue:

Gross written premium for the third quarter 2008 increased by $87.9 million or 45.5% to $281.2 million from $193.3 million in the third quarter 2007. Gross written premium for the nine months ended September 30, 2008 increased by $224.0 million or 37.8% to $817.0 million from $593.0 million for the nine months ended September 30, 2007. The increases were attributable to both organic growth and the continued successful integration of our recent acquisitions.

As previously disclosed, the Company entered into a reinsurance agreement with Maiden Insurance Company (Maiden) effective July 1, 2007. Under the terms of this reinsurance agreement, the Company ceded approximately $103 and $191 million of written premium to Maiden in the third quarters of 2008 and 2007, respectively, of which approximately $84 million and $63 million represented earned premium.

Net written premium (gross written premium less cessions for reinsurance, including cessions to Maiden) in the third quarter of 2008 increased $170.1 million to $139.4 million from $(30.7) million (which reflects the one-time cession to Maiden of unearned premium as of July 1, 2007) in the third quarter of 2007 and net earned premium for the third quarter of 2008 increased by $10.5 million or 12.8%, to $92.3 million from $81.8 million in the third quarter 2007.

The Company's agreement with Maiden generated $33.5 and $40.1 million of earned ceding commission for the third quarters 2008 and 2007, respectively. The Company earned $88.9 million of ceding commission from Maiden during the first nine months of 2008 compared to $40.1 million during the first nine months of 2007. The agreement continues to enable the Company to leverage its balance sheet, increase its writings, decrease its expense ratio and, most importantly, increase its return on equity.

For the nine months ended September 30, 2008, net written premium increased $95.5 million or 32.5% to $388.9 million from $293.4 million for the nine months ended September 30, 2007 and net earned premium for the first nine months of 2008 decreased by $25.2 million or 7.6%, to $305.7 million from $330.9 million in the first nine months of 2007.

Commission and fee income for the third quarter 2008 increased by $0.8 million or 10.1% to $8.7 million from $7.9 million for the third quarter 2007. Commission and fee income for the nine months ended September 30, 2008 increased by $6.7 million or 40.1% to $23.4 million from $16.7 million for the nine months ended September 30, 2007. The increase in both periods was attributable primarily to reinsurance brokerage fees from Maiden and servicing carrier fees resulting from assigned risk servicing carrier appointments in three additional states in 2008.

Net investment income, excluding realized gains and losses in the third quarter 2008, was $15.4 million compared to $13.9 million in the third quarter 2007. Average invested assets for the three months ended September 30, 2008 was approximately $1.5 billion compared to $1.1 billion for the three months ended September 30, 2007. Net investment income, excluding realized gains and losses for the nine months ended September 30, 2008, increased to $43.1 million from $38.3 million for the nine months ended September 30, 2007.

Total revenue in the third quarter of 2008 decreased by $34.7 million, or 24.4%, to $107.7 million from $142.4 million (excluding other investment loss on managed assets) in the third quarter of 2007. Total revenue for the nine months ended September 30, 2008 decreased by $26.4 million or 6.0% to $411.5 million (excluding other investment loss on managed assets) from $437.9 million in the first nine months of 2007.