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AmTrust Financial Services, Inc. (NASDAQ:AFSI)

Q1 2010 Earnings Call

May 3, 2010 9:00 am ET

Executives

Ellen Taylor – Investor Relations

Barry Zyskind – Chief Executive Officer, President

Ronald Pipoly – Chief Financial Officer

Analysts

Bijan Moazami – FBR Capital Markets

Beth Malone – Wunderlich Securities

Robert Farnam – KBW

Dan Schlemmer – Macquarie Research Equities

Operator

Good day, ladies and gentlemen, and welcome to the AmTrust financial first quarter 2010 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. (Operator Instructions) As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Ellen Taylor, Investor Relations.

Ellen Taylor

Hello, everyone, thanks so much for joining us this morning. Today, of course, we are going to start off the call with our president and CEO, Barry Zyskind; and he'll be followed by Ron Pipoly, our CFO. We will plan to take questions at the end of the call.

Before we begin, I've got a few reminders. Any forward-looking statements made on this call are subject to risks and uncertainties. Factors that could cause AmTrust results to differ materially from any forward-looking statements are set forth in AmTrust's public reports filed with the SEC, including our current report on Form 8-K filed today.

Then, also some of our discussions about our company's performance today will include reference to non-GAAP financial measures. Information that reconciles these measures to GAAP may be found in our filings with the SEC and in the news release located on our investor relations website.

Finally, the company undertakes no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events, or otherwise. With that, I will turn it over to Barry.

Barry Zyskind

Good morning, and thank you everyone for joining us for our conference call. I'm very pleased to report that we had a very strong quarter at AmTrust. This is the second quarter in a row that we had strong premium growth in excess of 20%. In addition, we are very proud of our ROE, which continues to be in excess of 20%.

The growth this quarter came from our specialty risk and extended warranty. As we mentioned in our last couple of calls, we continue to grow this sector. We continue to gain market recognition. We are seeing a lot of strong deal flow in this sector in both here in the United States, and we believe we will continue to see nice growth in this sector for the next couple of years.

Although our small commercial was slightly down, we are starting to see very encouraging signs as the economy is starting to pick up. We're starting to see higher renewal retentions and better business coming in; and we are very, very encouraged by what we're seeing in April. So far this year in April things are looking to be stronger, and we're starting to see growth. So we expect to see growth in this sector in the next couple of quarters as well.

As we mentioned before, we brought in several teams in 2009 that continue to contribute to AmTrust. We are very confident that they will continue adding business, and we are seeking additional teams and transactions to continue growing our company.

I'm also pleased to report that we closed on ACAC March 1 of this year. We are very excited about its prospects, and we are beginning to see how it will contribute very nicely to earnings on several fronts. As we mentioned, we will see it in fees and reinsurance and by earnings.

The earnings that it earns on its own income statement will, of course, be included in our numbers on the equity method. We already are also starting to put into motion our cross-selling opportunities between the two organizations which we believe will also give us very nice growth in the future.

Our balance sheet continues to be very strong. Our book value was $605 million at the end of the quarter. We believe we are very well positioned with our capital base to take advantage of future opportunities while still, even though we're overcapitalized today, we are still able to achieve returns in excess of 20%. Of course, if we're able to find good renewal rights transactions, that will even further increase our return on equity.

I just want to end, as we mentioned in the last call, we built our company to perform well in all cycles of the market place. We are not here at AmTrust waiting around for a soft market, for a hard market. We know that we're in a soft market, and this soft market can continue for several years. Because of our expense ratio and the efficiencies and the niches we play in, we believe we positioned the company very well to take advantage of the soft market. And of course if the market gets hard, we will do even better. With that, I would like to turn it over to Ron Pipoly to give some financial highlights.

Ron Pipoly

Thank you, Barry, good morning. The first quarter of 2010 was a very solid quarter for AmTrust as we continue to build on the momentum from the fourth quarter of 2009. We experienced increases in gross written premium, operating income, net income, and earnings per share when compared to the first quarter of 2009.

Gross written premiums for the quarter increased by $70.7 million, or 26.4%, from $267.5 million to $338.2 million. While not all of our segments experienced growth this quarter, we are encouraged by the trends we are seeing. Our small commercial business segment decreased by 3.7%, or $4.8 million, from $127.5 million for the first quarter of 2009 to $122.7 million.

This decrease was primarily due to the company's continued re-underwriting of the commercial package business as well as the 6% mandated rate reduction in Florida workers' compensation rates. Partially offsetting the decrease was an increase in our workers' compensation production from the CyberComp renewal rights acquisition. For the quarter, we wrote approximately $13.7 million of CyberComp premium.

The specialty risk and extended warranty segment increased by 84%, or $69.5 million, from $82.7 million to $152.2 million. The increase was driven internationally as we successfully added new programs and expanded existing relationships.

The specialty programs segment, formerly known as specialty middle market, decreased by 4.7% or $2.7 million from $57.4 million to $54.7 million. The decrease is the result of the company maintaining its pricing and administrative discipline which resulted in a decrease in production from one particular MGA. Partially offsetting that decrease are new programs that were brought on by a team of underwriters that were hired in mid-2009.

As a result of our strategic investment in American Capital Acquisition Corp. and their subsequent acquisition of the GMAC personal lines operations on March 1, 2010, we now have a fourth operating segment, personal lines reinsurance. For the quarter, we assumed $8.7 million of premium as a result of our quota share relationship with ACAC. As I've already mentioned, we continue to exercise pricing and risk selection discipline in all of our segments.

Our net written premium for the quarter increased from $136.2 million for the first quarter of 2009 to $189.4 million for 2010. During the quarter, the company ceded $114.1 million of written premium to Maiden. Net earned premium increased from $132.4 million for the first quarter of 2009 to $148.1 million for 2010.

During the first quarter of 2009, the company ceded $102.4 million of earned premium to Maiden. We earned $31.9 million of ceded commission revenue from Maiden during the quarter, compared to $27.6 million in the first quarter of 2009.

The overall combined ratio for the first quarter was 80.3% compared to 79.7% for the first quarter of 2009. In terms of the components of our combined ratio, the loss ratio for the first quarter was 60.6% compared to 56.6% for the first quarter of 2009.

I would like to point out that in the first quarter 2009 conference call we had mentioned that our specialty risk and extended warranty segment had benefited as a result of a portfolio transfer that we had accomplished. When you would really normalize the effect of that portfolio transfer on the loss ratio for the first quarter of 2009, it would have been 56.9%. So our loss ratios are very, very comparable.

The expense ratio for the first quarter was 19.6% compared to 23.1% for the first quarter of 2009. Our expense ratio in the first quarter of 2010 without the effect of Maiden's ceding commission would have been 24.5%, and that compares to 25.6% for last year.

The combined ratio of the small commercial business segment was 80.6%, which was made up of a loss ratio of 58.9% and an expense ratio of 21.7. The combined ratio of the specialty risk and extended warranty segment was 73.4%, which was made up of a loss ratio of 60.2% and an expense ratio of 13.2%. The combined ratio of the specialty program business was 89.6%, which was made up of a loss ratio of 64.2% and an expense ratio of 25.4%.

Net operating income was $30.7 million or $0.51 per diluted share. Net income was $31.9 million for $0.53 per diluted share. For the first quarter, our investment income was $13.6 million and net realized gains were $1.2 million.

One of the other items I'd like to mention associated with investment income is that, for the duration of the first quarter, we were holding a slightly higher concentration of cash as we were waiting to close on the ACAC transaction which, as we previously mentioned, closed March 1.

Annualized return on equity from operating income was 20.9% and annualized return on equity was 21.7%. Total shareholders' equity is $604.9 million, which represents a book value of $10.19 per share. The increase in book value per share since March 31, 2009, has been $2.42 per share. We also declared a quarterly dividend of $0.07 per common share.

Total assets as of March 31 were approximately $3.6 billion. The total invested assets were $1.5 billion. Fixed maturities comprised 77.1% of the portfolio; cash and short-term investments, 14.7%; equity securities, 3.7%; and other investments, 4.5%. Other investments include our first stock investment in ACAC. The average yield on the portfolio was 3.96% at the end of the quarter.

With that, I will turn it back over to Ellen. Thank you.

Ellen Taylor

Actually we will take questions now.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) Your first question comes from Bijan Moazami from Wunderlich Securities.

Bijan Moazami – FBR Capital Markets

Good morning. It's Bijan Moazami – FBR Capital Markets. Very quickly, could you disclose what is the percentage premium from each one of your product lines?

Barry Zyskind

You mean segmental premium?

Bijan Moazami – FBR Capital Markets

Warranties versus workers' comp and others.

Ron Pipoly

Warranty, we wrote $338 million for the quarter. Specialty risk and extended warranty was $152 million, so approximately 45%. Then you had about $122 million-$123 million from the small commercial business segment which, again, would be roughly one-third; and then the rest would have come from the specialty, sorry, the specialty programs division.

Bijan Moazami – FBR Capital Markets

If you can break down your acquisition growth versus your organic growth. My understanding is that when you have a bad economy like that, you really don't want to have a lot of organic growth. But did you have much?

Barry Zyskind

If you look at on the specialty risk and extended warranty, obviously, a lot of that was organic growth and the hiring of the teams that we brought on that were able to bring on books the business from the companies they came from. Then on the small commercial, I think Ron mentioned the new and renewal on CyberComp was around $13 million. So, most, we didn't even grow that segment. But what we grew of that segment, what we sort of kept it, was the growth that came in was from the CyberComp transaction.

Obviously, we are continuing in the way we've done in the past when we're paring down the book, and we're cherry-picking, and we're renewing and writing new what we think is the best business; and we're trying to get as much of it as we can.

Bijan Moazami – FBR Capital Markets

On this acquisition of CyberComp that you closed the renewal right, are you getting the kind of loss ratio you were expecting?

Ron Pipoly

To date, this is Ron, to date we are having loss ratios that meet our expectations. But the book is green. But based on our maintenance of risk selection and pricing discipline, I am comfortable that CyberComp will perform the way we expect it to.

Barry Zyskind

I think we still feel, based on our pricing, how we put in the market place underwriting guidelines, it's very similar to what we do on the small com. We're confident; and we're very hopeful that it will be very much within the range of our loss ratio, which was better than it was when we acquired it.

Bijan Moazami – FBR Capital Markets

One last question before I re-queue. Are you guys also assuming a little bit of higher loss ratio to deal with the recessionary environment of '08, '09? Or do you still think that the same loss ratio is going to be recurring in your core book of business?

Ron Pipoly

This is Ron. In terms of loss ratio, we haven't seen, from a workers' comp perspective or even from a commercial [inaudible] perspective, we haven't seen an erosion in underwriting or claims fundamentals in terms of severity or loss frequency.

Obviously loss ratios are a byproduct of earned premium; and to the extent that if it's a softer market out there, you may have slight upticks in your loss ratio. But we feel that on a monthly basis we're taking a look at our loss reserves, which translates into reviews of lines of business that we're writing. I think we're being very proactive in making the necessary adjustments to maintain very, very solid loss ratios.

Barry Zyskind

I think, this is Barry, we do see at times because we look at it monthly and we have the technology to monitor it, sometimes when we see a certain sector in a certain state where there's a frequency pick up, we react quickly to it. Either we get out of it, or we increase the pricing, change the guidelines.

It's something that it's a state-by-state, product-by-product, and we just have to be on top of it, which we are and watch it carefully. But, overall, the book is performing very well in similar fashion to previous years.

Bijan Moazami – FBR Capital Markets

Wonderful. Thank you.

Operator

Your next question comes from Beth Malone – Wunderlich Securities.

Beth Malone – Wunderlich Securities

Thank you. Good morning. Congratulations on the quarter. I have a couple questions. One, on the yield on the investment portfolio, should we anticipate that the yield improves going forward because of the contribution of the ACA investment?

Ron Pipoly

Beth, in terms of the ACAC investment, obviously, as Barry mentioned, we feel very positively about the yield, if you will, associated with our preferred stock investment, which we are required to account for using the equity method based on the way it's structured. So, again, we feel very positive that's going to make a contribution to the bottom line.

Barry Zyskind

That will not come in in investment income, Beth. That will come on in on below the line, it will come in as --

Ron Pipoly

Equity income and as a consolidated subsidiary.

Beth Malone – Wunderlich Securities

Okay. Thank you for clarifying. Also, on the contribution from Maiden Holdings, your reinsurance relationship, should we anticipate that over time that will contribute less to the total as AmTrust continues to grow? Or will you keep it basically, is it the intent to keep the percentage that goes to Maiden the same?

Barry Zyskind

I think right now, at this current point, we just renewed the contract, 40% to Maiden at the same terms. Our expectation today is that we will continue ceding to them 40% of our business. That's going to go for another 3 years starting in June. For the future, I would say we project right now that everything stays the same.

Beth Malone – Wunderlich Securities

Okay. Then in terms of acquisitions, do you see, is the opportunity for you to make these strategic acquisitions being driven somewhat by the soft pricing environment? And if we were to start to see harder pricing, do you think those acquisition opportunities would go away?

Barry Zyskind

That's a good question. I think if you look at our history, we really benefit in both cycles. For example, now the opportunities we look for are companies that, because of the softer market, have less premium, and therefore their expense ratio is a higher percentage of the overall combined.

As their loss ratio creeps up, their expense ratio is creeping up and suddenly companies that maybe were running at 95, 96, are now running at 103, 104, 105. So in terms, that gives us opportunities right now to find inefficient players that we can put on our platform. We mentioned about CyberComp. That was a great example of a book that was running 109, 110, that we were able to put on our book, we think, in the 80s. We continue to look for smaller players, smaller books of business that we can gain efficiencies and that we have the expense advantage. That's a soft market phenomenon.

Then when you look at the hard market, usually what causes a hard market, and we benefited the last hard market cycle, was that companies mispriced risks, were pricing it too cheap, and they have to take reserve increases and, because of that, they get out of lines of business wholesale. That's an opportunity where it's not an expense issue; it's a loss ratio issue, and that we're able to take advantage of that.

I think if you look at what we've done over the cycles, depending where we are in the cycle, we've seen opportunities on both ends of it. We're confident that we'll continue to see opportunities even if it's a soft market or a hard market.

Beth Malone – Wunderlich Securities

Okay. Then you talked about signs the economy is improving. Do you see that as contributing to an improving pricing environment or is it more related to just volume?

Barry Zyskind

I think it's both. I think obviously the first one, the second one you gave, is just more businesses staying around, more new businesses opening. For us, especially, the small business is what we focus on. We just see more opportunities, less companies letting people go; so payrolls are increasing and not flat or decreasing. In terms of pricing, that we will have to wait and see if that causes increased pricing.

Beth Malone – Wunderlich Securities

Then one last question right now. On the consumer warranty business, the international business, obviously that's been a big success story for you in growth. It's just, it seems a little contradictory to the stories we hear about how difficult the European markets are and how unstable the economies are there.

I am just wondering how is it you're able to grow what appears to be a consumer-oriented kind of product in a market that's so difficult?

Barry Zyskind

I think it's a combination. I think we're seeing the growth is not just international. We are seeing a lot of good opportunities and good growth in the U.S. as well. So I think it's a combination of seeing really nice opportunities here in the U.S. as well as in the Europe.

And, we mentioned in the previous, it's a combination also in the teams we brought on. And one of the companies that we had over there, a company that we acquired, IGI, several years back got the rating last year. So they started seeing a lot more opportunities.

So these opportunities, Beth, are not just new opportunities in the market place, which there are, but they're also new opportunities to us where either a team of individuals brought over their book which was at another carrier or the recent rating of IGI attracted in their distribution base more customers.

On the U.S., over here we started this probably 5 or 6 years ago, really focusing on the U.S. market which we mentioned several times. We're just starting to get a lot of momentum, a lot of market recognition. We're starting to get a lot of [RMPs]. We're starting to see just a lot of opportunities that we did not see in the past. We're being successful in landing accounts.

So some of it is business that's already out there; their business may be slowing down. But for us it's an opportunity that we didn't have in the past. I think we're very, very well positioned. In fact, with the technology, with our expense ratio, with the fact that we do it both in the U.S. and Europe, we've demonstrated that we're a real player in this market. There's not that many players in it; and we still continue to focus on the smaller manufacturers, retailers, and customers. It's something that we just see a lot of opportunity. We're going to continue pushing in this segment.

Beth Malone – Wunderlich Securities

Okay. Thank you.

Operator

Your next question comes from Robert Farnam – KBW.

Robert Farnam – KBW

Good morning. In your comments regarding acquisitions and the ability to make acquisitions, you talked about being overcapitalized today. Can you give us any quantitative feeling for how overcapitalized you believe you are?

Ron Pipoly

I think if you look at the first quarter, we ended the quarter with about $189 million of net written premium and shareholders' equity of about $605 million; and then when you take the trust preferreds and put that into a total cap, now you're up into the $730 million range. I think for the year you are going the probably look at a leverage ratio of net written premium to shareholders' equity of maybe 1.1, 1.2 to 1.

I think that puts us in a very good position to look at additional acquisitions without having to worry about whether we have the surplus or the capital base to support it.

Barry Zyskind

Again, also, in terms of if we continue achieving in excess returns of 20%, which we're confident we can, we are creating a lot of capital as well.

Robert Farnam – KBW

Okay. Good. Admittedly it's very green at this point, but can you give us an idea of how the cross-selling initiatives have been going?

Barry Zyskind

It's very early on. My point I want to say is we just started putting into motion. We just started having meetings about it. What we're basically doing is we're going to focus on areas where they're strong in certain states where we're not and we believe it's a good healthy market for us and vice versa. Where we're strong and they may not be, we're going to cross sell to them.

We just started having the meetings. We just started getting our sales people together. We are trying to get, we've looked historically, and when you look at joint ventures and cross selling, they've not particularly worked out too well.

The reason why we're very hopeful it will work out over here is two reasons. One is we want to cross sell the agents. Most of their small agents are really very hungry for a small commercial product, which is very good for us. A lot of these small retail agents that sell auto would love to have access to a commercial writer, which we do, and we sell a lot of small commercial policies through small agents. That's very good for us. We are going to really train, cross train, our sales people and their sales people to really be proficient in each other's products.

The other issue that I think really will help us is, as you know, we're building the technology platform for them, which we're well on our way. We think once we get it out, because it will be similar ease of use and once the agent gets the password, he will be able to cross over into the commercial and vice versa. That will give us a real advantage in able to making this successful.

Robert Farnam – KBW

Right. I think you said in prior calls maybe how long you expect that development, the ACAC systems development?

Barry Zyskind

We're on track. I think we said 12 to 18 months. I would say that we started that process a few months before we closed. I would say 12 months from here would be a very good date for us to be up and running and starting to see the full service fee revenue and getting all the benefits.

Robert Farnam – KBW

Great. Last question for me. Any movement in your loss reserves for the quarter?

Ron Pipoly

This is Ron. In terms of loss reserve movement, we didn't have any obviously wholesale reserve releases related to the prior accident year. As we've discussed, we're looking at loss reserves on a by line on a monthly basis.

Obviously they naturally move between lines; but in terms of any wholesale reserve releases, we certainly didn't have those. In terms of any adverse development with any particular line, we did not have any significant adverse development and certainly are very comfortable with where we are from a loss reserve position.

Robert Farnam – KBW

Great. That's it for me. Thanks.

Operator

Your next question comes from Dan Schlemmer – Macquarie Research Equities.

Dan Schlemmer – Macquarie Research Equities

Good morning. I guess another question on the specialty risk and warranty segment. I mean the growth was pretty eye popping, 84% I think was the gross number. Give us a metric for how much of that is actually just the consumer coming back, sort of a same-store sales type of measure or just it doesn't have anything to do with bringing on teams' new accounts or anything else, what portion is just that consumer coming back?

Barry Zyskind

I would say actually the last couple quarters, especially end of '08 and beginning of '09, we saw consumers going away. Probably the last quarter we saw consumers coming back and sort of getting back to maybe before the crisis started. But you are not seeing a lot of growth in the consumer, but it's not the panic that it was at the end of '08 and '09. We're starting to see consumers coming back.

And we're starting to see positive trends. Most of the growth came really in what we call new real estate, by bringing on new accounts, maintaining our current accounts, and those accounts doing well, not declining. So those things stable and being able to bring on new accounts.

Dan Schlemmer – Macquarie Research Equities

Great. Thanks. Then a separate question on the amount of ceded premium, hopefully I got my numbers right. I think your cession rate on a written base is 51% in Q1 '09, 54% for full year '09, and then 56% Q1 2010. I'm sorry; I said that wrong. That's the retention rate. So you're retaining more year-over-year – the 56% versus the 51% retained a year ago. Can you explain what's going on there? What's the change year-over-year is?

Ron Pipoly

Dan, there's a couple of things. One of the dynamics is that on the $8.7 million of premium we assumed as part of our reinsurance relationship with ACAC, that is obviously not subject to the Maiden quota share relationship because they have their own quota share relationship with ACAC.

In addition to that, we've had a few programs in the past in which they were ceded out 100%. A by product of our acquisition of Wesco, we had a program with HSDC in which we ceded them 100% of the premium. That premium is down for the first quarter of 2010 as we wind down that relationship.

Therefore, naturally, our retention as an overall percentage is going to increase as we write less premiums in the programs that are ceded 100%. Really, it's kind of just a by product of the addition of the ACAC reinsurance relationship as well as the shift in writings among programs that had previous reinsurance relationships associated with them.

Dan Schlemmer – Macquarie Research Equities

Great. Thanks. Then on the ACAC, you said the $8.7 million you assume, and I guess you're retaining all of that. Is that $8.7 million that's one month, is that a good run rate that we should be thinking about going forward?

Ron Pipoly

This is Ron. Yes. The 8.7 represents the March session. I think that's a reasonable run rate on a monthly basis.

Dan Schlemmer – Macquarie Research Equities

Then last question. I guess, Barry, you had talked in your prepared comments about just overall soft pricing, which is, of course, what we're seeing across the market. Can you talk some what you're seeing right now in terms of are you getting a better hit rate on your quoting than you have or getting worse? Just what your renewal rates have been like.

Barry Zyskind

I think I would say that our renewal rates were down the last couple of months historically, a few points, not much, but a few points from where they were in the past. Most of that really was just businesses going out so on and so forth. Not that much due to the competition which, of course, played some part but not a big role.

But what we're seeing in terms of pricing, Dan, is we're actually starting to see I think the market is stable. I mean we are not seeing the decreases you saw a year ago and 18 months ago. I think we see a stable market. We believe it's efficient at this point. We think it can stay at these levels for the next couple of years. We still think we can get good returns out of it because of what we focused on, the low hazard class, how we underwrite it, and of course our efficiencies and expense ratio.

I think when we look at it we also are seeing some encouraging signs that we are seeing higher hit ratios. We're quoting more business. I was down with the underwriters last week, talking to them. I think they're encouraged at seeing positive momentum across the commercial lines, so in the comp and the package business where they're seeing more business and they're getting better hit ratios. I think, you know, we're starting, if the market stays stable where it is and doesn't decline, we feel we're very, very well positioned to start growing the small commercial sections.

Dan Schlemmer – Macquarie Research Equities

Great. Thanks. Last question, a bit of a backtrack on the question I asked before, ceded premium and you're retaining more. It's not a situation where you have an excess of loss or a cat cover that maybe you've changed the layers that AmTrust retains. So you're not taking on, or is there any change in that type of program?

Barry Zyskind

There is one change. It's just in our, we used to buy excess of $1 million in our [com]. Because of the quota share and our capital base and basically the returns that we've seen in the business, we're now taking the first $5 million ourself. That's something that we changed. I don't think that will contribute too much to the premium.

Ron Pipoly

Because the rate on the contract was not that significant.

Dan Schlemmer – Macquarie Research Equities

Great. Thank you.

Operator

Our next question is a follow-up from Beth Malone – Wunderlich Securities.

Beth Malone – Wunderlich Securities

Thank you. On the share repurchases, were there any in the quarter? And what is the policy or how do you decide whether you are going to be buying back stock? It's obvious you have excess capital, but it seems like you might have better uses for it than buying back your own shares.

Barry Zyskind

I think if you looked at what we've done historically, obviously, when the market had its issues and the stock was down out there and there were opportunities to buy blocks of stock, we did it. Or sometimes we went into the market place. Again it's exactly, the answer to your question is depending on the opportunities we're seeing.

So if we're looking at acquisitions and we think there's opportunities that can help us continue achieving a return in excess of 20%, then we're going to try to buy things to continue growing the operation and using our capital. If we end up in a position where we don't think we have such opportunity, then we will continue buying back our stock.

As we sit here today, we want to have that flexibility; and right now we are looking at things so we want to be able to use our capital to continue increasing the return on the business.

Beth Malone – Wunderlich Securities

Okay. Thank you.

Operator

I'm showing no further questions in the queue.

Ellen Taylor

Okay. Thanks everyone again for joining us today. Please don't hesitate to call if you have any follow-up questions. Take care. Thanks.

Barry Zyskind

Thank you.

Operator

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may all disconnect. Everyone have a great day.

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Source: AmTrust Financial Services, Inc. Q1 2010 Earnings Call Transcript
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