AmTrust Financial Services, Inc. Reports Record Second Quarter Net Income of $21.4 Million


NEW YORK, Aug. 8, 2007 (PRIME NEWSWIRE) -- AmTrust Financial Services Inc. (Nasdaq:AFSI), today reported net income of $21.4 million and revenues of $152.9 million for the second quarter 2007. "The second quarter results confirm the validity of our strategic growth objectives, as well as underscore the unique niche that AmTrust continues to occupy in specialized areas of insurance," stated Barry Zyskind, president and chief executive officer.

In addition, AmTrust announced that it has no exposure to sub-prime mortgages. Virtually all of the mortgage-backed securities in the Company's portfolio are government or agency-guaranteed.

The Company reported $21.4 million in net income, or $0.36 per basic share, for the quarter ended June 30, 2007.

Second Quarter and Six Months Highlights:



  * Net income from continuing operations up 121.4% for the second
    quarter of 2007 compared to the second quarter of 2006
  * Net income from continuing operations up 127.4% for the six months
    of 2007 compared to the six months of 2006
  * Quarterly operating earnings per basic share was $0.31
  * Quarterly net realized gains per basic share was $0.05
  * Quarterly earnings per basic share was $0.36
  * Six months ended June 30, 2007 earnings per basic share was $0.72
  * Annualized quarterly return on equity for the second quarter was
    23.1%
  * Book value per basic share was $6.32 (as of June 30, 2007)
  * GAAP combined ratio for the second quarter was 90.0%
  * GAAP combined ratio for the six months ended was 89.6%

Second Quarter and Six Months Results:

Revenue:

Net revenue in the second quarter 2007 increased by $65.6 million or 75.1% to $152.9 million (excluding other investment gain on managed assets) from $87.3 million in the second quarter 2006. Net revenue for the six months ended June 30, 2007 increased by $127.6 million or 76.9% to $293.5 million (excluding other investment gain on managed assets) from $165.9 million in the second quarter 2006.

Net earned premium in the second quarter 2007 increased by $58.0 million or 80.1%, to $130.4 million from $72.4 million in the second quarter 2006. Net earned premium for the six months ended June 30, 2007 increased by $106.9 million or 75.2%, to $249.1 million from $142.2 million in the second quarter 2006. The increase is primarily attributable to premium growth achieved through the successful integration of business acquired in renewal rights transactions as well as internal growth.

Net investment income including realized gains and losses in the second quarter 2007 increased by $7.6 million or 71.7% to $18.2 million from $10.6 million in the second quarter 2006. Average invested assets for the three months ended June 30, 2007 was $896.5 million compared to $613.8 million for the three months ended June 30, 2006. Net investment income including realized gains and losses for the six months ended June 30, 2007 increased by $18.1 million or 103.4% to $35.6 million from $17.5 million in the first half of 2006. The primary reason for the increase is the growth in average invested assets over the periods.

Expenses:

The Company's loss ratio for the quarter ended June 30, 2007 was 65.2% compared to 64.7% for the quarter ended June 30, 2006. The Company's loss ratio for the six months ended June 30, 2007 was 64.0% compared to 63.7% for the six months ended June 30, 2006.

Policy Acquisition Expense, Salaries and Benefits Expense and Other Insurance General and Administrative Expense for the quarter ended June 30, 2007 increased by $11.4 million to $32.4 million from $21.0 million for the quarter ended June 30, 2006. Despite the increase, the expense ratio for the quarter ended June 30, 2007 decreased to 24.8% from 29.0% for the quarter ended June 30, 2006. Policy Acquisition Expense, Salaries and Benefits Expense and Other Insurance General and Administrative Expense for the six months ended June 30, 2007 increased by $22.3 million to $63.5 million from $41.2 million for the six months ended June 30, 2006. Despite the increase, the expense ratio for the quarter ended June 30, 2007 decreased to 25.5% from 29.0% for the six months ended June 30, 2006.

The decreases are the result of the Company's ability to leverage its current infrastructure.

Interest expense in the second quarter 2007 increased to $2.5 million from $1.0 million in the second quarter of 2006. The increase is the result of the issuance by the Company in the last twelve months of $70.0 million of trust preferred securities.

Other Matters:

Shareholders' Equity as of June 30, 2007 increased to $379.2 million from $306.9 million as of June 30, 2006.

As of June 30, 2007 the Company's debt-to-capitalization ratio was 24.6%. The Company's debt relates to four trust preferred securities offerings in which the Company participated in between 2005 and March 2007.

Conference Call:

On August 9, 2007 at 10 a.m. ET, the company will hold a conference call that can be accessed as follows:



       Dial-in:  866.409.1555
       Passcode: 6234315

In order to participate in the conference call, you must register at:



       http://ir.amtrustgroup.com

A live broadcast of the call will be available on-line at the above website. An on-line replay will follow shortly after the call.

In addition, a telephonic replay will be available for seven days and can be accessed by dialing 888.203.1112. Enter replay passcode 6234315.

About AmTrust Financial Services, Inc.

AmTrust Financial Services, Inc., headquartered in New York City, is a multinational specialty property and casualty holding company, which, through its insurance carriers, offers specialty property and casualty insurance products, including workers' compensation, commercial automobile and general liability; extended service and warranty coverage. For more information about AmTrust, visit www.amtrustgroup.com, or call AmTrust toll-free at 866.203.3037.

Forward Looking Statement

This news release contains "forward-looking statements" which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements are based on the Company's current expectations and beliefs concerning future developments and their potential effects on the Company. There can be no assurance that actual developments will be those anticipated by the Company. Actual results may differ materially from those projected as a result of significant risks and uncertainties, including non-receipt of the expected payments, changes in interest rates, effect of the performance of financial markets on investment income and fair values of investments, development of claims and the effect on loss reserves, accuracy in projecting loss reserves, the impact of competition and pricing environments, changes in the demand for the Company's products, the effect of general economic conditions, adverse state and federal legislation, regulations and regulatory investigations into industry practices, developments relating to existing agreements, heightened competition, changes in pricing environments, and changes in asset valuations. The Company undertakes no obligation to publicly update any forward-looking statements.



                 AmTrust Financial Services, Inc.                   
                        Income Statement                            
              (in thousands, except per share data)                 
                           (Unaudited)                              
                                                                    
                                                                    
                       Three Months Ended       Six Months Ended    
                            June 30,                June 30,        
                      ---------------------   --------------------- 
                        2007        2006        2007        2006    
                      ---------   ---------   ---------   --------- 
                                                                    
 Gross premium                                                      
  written             $ 210,020   $ 113,732   $ 399,693   $ 237,010 
                                                                    
 Premium income                                                     
 Net premium                                                        
  written             $ 163,522   $  97,991   $ 324,141   $ 208,744 
 Change in                                                          
  unearned premium       33,102      25,556      75,029      66,499 
                      ---------   ---------   ---------   --------- 
                        130,420      72,435     249,112     142,245 
                                                                    
 Fee  income              4,292       4,229       8,782       6,115 
 Investment                                                         
  income, net            13,234       6,086      24,625      11,421 
 Net realized gains       4,962       4,515      11,022       6,091 
 Other investment                                                   
  gain on managed                                                   
  assets                  2,191          --       1,901          -- 
                      ---------   ---------   ---------   --------- 
                                                                    
                         24,679      14,830      46,330      23,627 
                      ---------   ---------   ---------   --------- 
                                                                    
 Total revenue          155,099      87,265     295,442     165,872 
                      ---------   ---------   ---------   --------- 
                                                                    
 Loss and loss                                                      
  adjustment                                                        
  expense                84,999      46,884     159,556      90,658 
 Policy acquisition                                                 
  expenses               17,447       8,149      32,030      16,472 
 Salaries and                                                       
  benefits                9,921       6,614      18,933      11,732 
 Other insurance                                                    
  general and                                                       
  administrative                                                    
  expense                 5,004       6,256      12,578      13,039 
 Other underwriting                                                 
  expenses                3,427       4,850       6,540       5,826 
                      ---------   ---------   ---------   --------- 
                        120,798      72,753     229,637     137,727 
                      ---------   ---------   ---------   --------- 
                                                                    
 Income from                                                        
  continuing                                                        
  operations             34,301      14,512      65,805      28,145 
                                                                    
 Other income                                                       
  (expense)                                                         
 Foreign currency                                                   
  gain (loss)               629        (113)        119         (15)
 Loss from equity                                                   
  investment               (215)         --        (215)         -- 
 Interest expense        (2,531)     (1,030)     (4,335)     (2,243)
                      ---------   ---------   ---------   --------- 
                         (2,117)     (1,143)     (4,431)     (2,258)
                      ---------   ---------   ---------   --------- 
                                                                    
 Income from                                                        
  continuing                                                        
  operations                                                        
  before provision                                                  
  for income taxes       32,184      13,369      61,374      25,887 
                                                                    
 Provision for                                                      
  income taxes            8,597       3,816      16,599       7,075 
 Minority interest                                                  
  in net loss                                                       
  of subsidiary           2,191          --       1,901          -- 
                      ---------   ---------   ---------   --------- 
 Income from                                                        
  continuing                                                        
  operations             21,396       9,553      42,874      18,812 
 Discontinued                                                       
  operations                 --         250          --         250 
                      ---------   ---------   ---------   --------- 
 Net income                                                         
  available                                                         
  to common                                                         
  shareholders        $  21,396   $   9,803   $  42,874   $  19,062 
                      =========   =========   =========   ========= 
                                                                    
 Earnings per                                                       
  common share:                                                     
 Basic earnings                                                     
  per share           $    0.36   $    0.16   $    0.72   $    0.36 
 Diluted earnings                                                   
  per share           $    0.35   $    0.16   $    0.71   $    0.36 
                      =========   =========   =========   ========= 
                                                                    
 Weighted average                                                   
  number of                                                         
  basic shares                                                      
  outstanding            59,959      59,943      59,959      52,289 
 Weighted average                                                   
  number of                                                         
  diluted shares                                                    
  outstanding            60,535      59,943      60,297      52,289 
                                                                    
 Combined ratio            90.0%       93.7%       89.6%       92.7%
 Annualized return                                                  
  on equity                23.1%       12.9%       23.8%       17.9%
 
 
            AmTrust Financial Services, Inc.                      
               Balance Sheet Highlights                           
                   (in thousands)                                 
                    (Unaudited)                                   
                                                                  
                                          June 30,    December 31,
                                            2007         2006     
                                         ----------   ---------- 
                                                                  
 Cash, cash equivalents                                           
  and investments, net                   $  929,654   $  785,780  
 Premiums receivables                       239,257      147,779  
 Goodwill and intangible assets              40,376       29,369  
 Total assets                             1,653,950    1,223,715  
 Loss and loss expense reserves             385,961      295,805  
 Unearned premium                           451,995      323,155  
 Junior subordinate debt                    123,714       82,476  
 Total stockholders' equity              $  379,187   $  340,479  


            

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