After two delays, AmTrust Financial Services has finally released its 2016 annual report and updated financials dating back to 2014. Investors appear to be elated by the news.

AmTrust’s stock soared by more than 20 percent on the NASDAQ in late morning trading on April 4 in response to the news, hitting $22.02. Similarly, the New York City-based insurance holding company’s stock price increased on the New York Stock Exchange by nearly 4 percent by around the same time, hitting $23.35 just before noon.

In late March, AmTrust had disclosed that it received warnings from both the NASDAQ and the NYSE that it was not in compliance with listing rules due to its 10-K filing delays.

Over the last few weeks, AmTrust’s stock has fluctuated based on the revelation that it had to twice delay filing of its 2016 10-K, because of the need to give an internal audit going back to 2014 extra time for completion.

AmTrust’s April 4 disclosure that it filed its Form 10-K for 2016 includes news of restated financial statements and related disclosures for 2014 and 2015. The company reiterated that the restatements affected revenue from its service and fee business.

The audit had some impact in 2014 and 2015 net income. According to AmTrust, the restatements led to a 7.2 percent decline of net income attributable to common stockholders in 2014 and an 11.2 percent drop in 2015.

The final results, according to AmTrust: net income attributable to common stockholders for 2014, 2015 and 2016 was $402.9 million, $419.1 million and $363.1 million, respectively. AmTrust added that “gross written premium, net earned premium, loss and loss adjustment expense and loss ratio for 2016 and loss and loss adjustment expense reserves as of Dec. 31, 2016, remained unchanged” from its 2016 earnings release on Feb. 27.

AmTrust reported Q4 2016 net written premium of $1.91 billion and net earned premium of $1.22 billion, up 19 percent and 15 percent, respectively, from the same period in 2015. It said that Q4 net income came to $98.7 million, or $0.57 per diluted share, versus $59.7 million, or $0.35 per diluted share in the 2015 fourth quarter.

The Q4 combined ratio reached 95.5, AmTrust said, up from 91.9 over the same period a year ago.

AmTrust had said that it needed the audit because its previously issued consolidated financial statements for 2014 and 2015, the first three quarters of 2016, the 2016 fourth quarter and fiscal 2016 earnings statements and related press materials “should no longer be relied upon.” AmTrust also disclosed that the reports of its former independent auditor BDO USA were at issue, particularly its assessment of consolidated financial statements for 2014 and 2015.

AmTrust Chairman and Chief Executive Officer Barry Zyskind said that with the financial restatements complete, the company is moving forward.

“We are well positioned in the markets we serve to continue to realize AmTrust’s potential,” Zyskind said in prepared remarks. “Our operations are financially sound and appropriately reserved. We are committed to delivering outstanding service and innovative products to our network of agents, brokers, partners and customers.”

He added that AmTrust is also beefing up its financial reporting capabilities.

“To support our size and scale, we are continuing to enhance our financial reporting organization, adding the commensurate finance and accounting resources,” Zyskind said.

Source: AmTrust Financial Services

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