(Source: PrimeNewswire)NEW YORK, Nov. 3, 2009 (GLOBE NEWSWIRE) -- AmTrust Financial Services, Inc. (Nasdaq:AFSI) today reported operating earnings of $31.8 million for the third quarter of 2009. Operating earnings is a non-GAAP financial measure defined by the Company as net income, excluding realized investment gains and losses, net of tax. During the third quarter of 2009, book value per share increased 12.4% to $9.03 per share. Gross written premium for the third quarter of 2009 was $295.9 million and net income was $24.2 million. For the nine months ended September 30, 2009 the Company reported gross written premium of $833.7 million, operating earnings of $93.7 million and net income of $75.2 million.

During the third quarter of 2009, the Company incurred a realized loss on an after-tax basis of $7.6 million on its investment portfolio. The realized loss related to certain fixed income and equity investments.

Third Quarter and Nine Months Highlights:

 -- Quarterly diluted operating earnings per share of $0.53 ($0.64
    in 2008)
 -- Quarterly diluted earnings per share of $0.40 ($0.15 in 2008)
 -- Nine months ended September 30, 2009 diluted operating earnings
    per share of $1.56 ($1.52 in 2008)
 -- Nine months ended September 30, 2009 diluted earnings per share
    of $1.25 ($0.95 in 2008)
 -- 25.1% annualized operating return on equity during the quarter
 -- Book value per share of $9.03 as of September 30, 2009 ($6.54
    as of December 31, 2008)
 -- Combined ratio for the third quarter of 78.0% (58.0% in 2008)
 -- Combined ratio for the nine months ended September 30, 2009 of
    79.1% (73.1% in 2008)
 -- Closed CyberComp(TM) renewal rights transaction early September
    2009

Third Quarter Overview:

Total revenue in the third quarter increased by $74.3 million to $182.0 million, or 69.0%, from $107.7 million in the third quarter of 2008. The Company reported operating earnings of $31.8 million or diluted operating earnings per share of $0.53 for the third quarter of 2009. Net income for the third quarter of 2009 was $24.2 million, or $0.40 diluted earnings per share.

Third Quarter and Nine Months Results:

Revenue:

Total revenue for the third quarter of 2009 increased $74.3 million or 69.0% to $182.0 million from $107.7 million for the third quarter of 2008. Net premium earned increased $53.0 million or 57.4% to $145.3 million during the third quarter of 2009 from $92.3 million during the third quarter of 2008. Gross written premium in the third quarter of 2009 increased by $14.7 million to $295.9 million from $281.2 million for the third quarter of 2008.

Total revenue for the nine months ended September 30, 2009 was $536.4 million, an increase of 31.2% from the nine months ended September 30, 2008. Net premium earned increased $108.8 million or 35.6% to $414.5 million during the nine months ended September 30, 2008. Gross written premium for the nine months ended September 30, 2009 increased by $16.7 million to $833.7 million from $817.0 million for the nine months ended September 30, 2008.

Third quarter 2009 net written premium (gross written premium less cessions for reinsurance, including cessions to Maiden Insurance Company (Maiden)) increased $27.9 million or 20.0% to $167.3 million from $139.4 million in the third quarter of 2008. For the nine months ended September 30, 2009, net written premium increased $51.7 million or 13.2% to $440.6 million from $388.9 million for the nine months ended September 30, 2008.

Under the terms of a reinsurance agreement with Maiden, the Company ceded approximately $269.7 million and $353.6 million of written premium during the nine months ended September 30, 2009 and 2008, respectively. This agreement with Maiden generated $27.4 million and $37.1 million of earned ceding commission for the third quarter of 2009 and 2008, respectively, and $87.2 million and $92.5 million of earned ceding commission for the nine months ended September 30, 2009 and 2008, respectively. As previously disclosed, on September 30, 2009 the parties agreed to extend the agreement until June 30, 2013. 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.

Commission and fee income (exclusive of ceding commission from Maiden) for the third quarter 2009 decreased by $1.7 million or 19.5% to $7.0 million from $8.7 million for the third quarter 2008. Commission and fee income for the nine months ended September 30, 2009 decreased by $1.4 million or 5.9% to $22.0 million from $23.4 million for the nine months ended September 30, 2008.

Net investment income, excluding realized gains and losses in the third quarter 2009, was $14.1 million compared to $15.4 million in the third quarter 2008. Net investment income, excluding realized gains and losses for the nine months ended September 30, 2009, was $41.3 million compared to $43.1 million for the nine months ended September 30, 2008. During the three months ended September 30, 2009 and 2008, the Company realized investment losses of $7.6 million and $29.8 million, respectively, on an after-tax basis. For the nine months ended September 30, 2009 and 2008, the Company realized investment losses of $18.6 million and $34.6 million, respectively, on an after-tax-basis.

Expenses:

The Company's loss ratio for the third quarter of 2009 was 53.4% compared to 40.2% for the third quarter of 2008. The Company's loss ratio for the nine months ended September 30, 2009 was 55.3% compared to 54.4% for the nine months ended December 31, 2008.