AmTrust delays 2016 report, restates 2015 and 2014 filings
New York-based property/casualty insurer AmTrust Financial Services has delayed its 2016 consolidated financial statements (10-K) and said that the company's 2014 and 2015 financial reports will be restated and should no longer be relied upon.
"The 10-K delay and restatement largely relate to the timing of recognition of revenue, as previously announced, in the company's service and fee business, which we expect will remain profitable in each of the fiscal years 2014, 2015 and 2016,” said Barry Zyskind, chairman and CEO of AmTrust.
“In addition, we believe the corrections will have no material impact on the company's ongoing insurance operations, statutory entities or statutory surplus. We believe that AmTrust remains financially strong, and we continue to see opportunities for organic growth within our existing operations, as demonstrated by the gross written and net earned premiums that we recently reported.”
The company is restating its financial statements and related disclosures primarily to correct two errors reported in its historical consolidated financial statements. One error relates to upfront recognition of a portion of warranty contract revenue associated with administration services used in the previously filed financial statements related to multiple-element revenue recognition, instead of deferring recognition of the revenue over the life of the contract. In addition, the restatement is set to correct bonuses that were expensed in the year paid but that should have been accrued in the year earned.
“Notwithstanding these corrections, we are proud of the results that we expect to report for 2014, 2015 and 2016," said Zyskind. "We are also making the necessary improvements in our finance and accounting resources to address the issues identified and better match AmTrust's increased global reach. We appreciate the hard work of the AmTrust team and the support of KPMG in these efforts. We are confident in our ability to successfully move through this period and remain focused on leveraging our proprietary technology and efficient operating structure to enhance shareholder returns, best serve our customers and create exciting career growth and development opportunities for AmTrust employees."
Notwithstanding the foregoing and subject to final review by the company and its independent auditors, management expects that the company's gross written premium, net earned premium, loss and loss adjustment expense, and loss ratio for fiscal years 2014 and 2015 will remain unchanged from the amounts previously disclosed in the company's prior year Forms 10-K. In addition, gross written premium, net earned premium, loss and loss adjustment expense and loss ratio for the fourth quarter and full year 2016, and loss and loss adjustment expense reserves as of Dec. 31, 2016, will remain unchanged from the amounts disclosed in the company's earnings release dated February 27, 2017.
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