10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended June 30, 2014

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________________ to ___________________

Commission file no. 001-33143

AmTrust Financial Services, Inc.

(Exact name of registrant as specified in its charter)

Delaware	04-3106389
(State or other jurisdiction of	(IRS Employer Identification No.)
incorporation or organization)
59 Maiden Lane, 43rd Floor, New York, New York	10038
(Address of principal executive offices)	(Zip Code)

(212) 220-7120

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes      x No      ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes       x No      ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company" in Rule 12b-2 of the Exchange Act:

Large accelerated filer     x	Accelerated filer       ¨
Non-accelerated filer         ¨	Smaller reporting company      ¨
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act).

Yes      ¨ No      x

As of August 1, 2014, the Registrant had one class of Common Stock ($.01 par value), of which 75,615,496shares were issued and outstanding. 

INDEX

		Page
PART I	FINANCIAL INFORMATION	3
Item 1.	Financial Statements:	3
	Condensed Consolidated Balance Sheets as of June 30, 2014 (unaudited) and December 31, 2013 (audited)	3
	Condensed Consolidated Statements of Income — Three and six months ended June 30, 2014 and 2013 (unaudited)	4
	Condensed Consolidated Statements of Comprehensive Income – Three and six months ended June 30, 2014 and 2013 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows — Six months ended June 30, 2014 and 2013 (unaudited)	6
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	45
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	67
Item 4.	Controls and Procedures	69
PART II	OTHER INFORMATION	70
Item 1.	Legal Proceedings	70
Item 1A.	Risk Factors	70
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	70
Item 3.	Defaults Upon Senior Securities	70
Item 4.	Mine Safety Disclosures	70
Item 5.	Other Information	70
Item 6.	Exhibits	71
	Signatures	72

2

PART 1 - FINANCIAL INFORMATION

Item 1. Financial Statements

AMTRUST FINANCIAL SERVICES, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheet (In Thousands, Except Par Value)

	June 30, 2014			December 31, 2013
ASSETS	(Unaudited)			(Audited)
Investments:
Fixed maturities, available-for-sale, at market value (amortized cost $3,925,907; $3,107,043)	$	4,040,484		$	3,100,936
Equity securities, available-for-sale, at market value (cost $86,350; $16,010)	90,527			15,148
Short-term investments	76,324			114,202
Equity investment in unconsolidated subsidiaries – related party	115,325			89,756
Other investments	14,095			25,749
Securities pledged (amortized cost of $0; $316,576)	—			311,518
Total investments	4,336,755			3,657,309
Cash and cash equivalents	569,109			830,022
Restricted cash and cash equivalents	181,067			100,439
Accrued interest and dividends	29,849			27,800
Premiums receivable, net	1,867,890			1,593,975
Reinsurance recoverable (related party $1,364,749; $1,144,168)	2,241,460			1,929,848
Prepaid reinsurance premium (related party $852,592; $739,719)	1,219,324			1,011,304
Prepaid expenses and other assets (recorded at fair value $276,199; $233,024)	948,193			890,333
Deferred policy acquisition costs	609,743			468,404
Property and equipment, net	116,312			104,299
Goodwill	397,581			373,591
Intangible assets	310,676			291,802
	$	12,827,959		$	11,279,126
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Loss and loss adjustment expense reserves	$	5,078,284		$	4,368,234
Unearned premiums	3,317,438			2,680,982
Ceded reinsurance premiums payable (related party $509,338; $393,941)	785,579			635,588
Reinsurance payable on paid losses	36,069			18,818
Funds held under reinsurance treaties	40,812			27,574
Note payable on collateral loan – related party	167,975			167,975
Securities sold but not yet purchased, at market	24,309			—
Securities sold under agreements to repurchase, at contract value	—			293,222
Accrued expenses and other current liabilities (recorded at fair value $12,529; $11,945)	678,974			672,575
Deferred income taxes	271,969			274,519
Debt	561,224			560,174
Total liabilities	10,962,633			9,699,661
Commitments and contingencies
Redeemable non-controlling interest	600			600
Stockholders’ equity:
Common stock, $.01 par value; 150,000 shares authorized, 98,202 and 98,122 issued in 2014 and 2013, respectively; 75,530 and 74,765 outstanding in 2014 and 2013, respectively	980			980
Preferred stock, $.01 par value; 10,000 shares authorized, 4,600 issued and outstanding in 2014 and 2013	115,000			115,000
Additional paid-in capital	1,031,980			1,033,084
Treasury stock at cost; 22,672 and 23,357 shares in 2014 and 2013, respectively	(283,626		)	(284,891		)
Accumulated other comprehensive income (loss)	85,528			(8,164		)
Retained earnings	760,951			584,996
Total AmTrust Financial Services, Inc. equity	1,710,813			1,441,005
Non-controlling interest	153,913			137,860
Total stockholders’ equity	1,864,726			1,578,865
	$	12,827,959		$	11,279,126

See accompanying notes to unaudited condensed consolidated financial statements.

3

AmTrust Financial Services, Inc.

Condensed Consolidated Statements of Income

(Unaudited)

(In Thousands, Except Per Share Data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Revenues:
Premium income:
Net written premium	$	923,670		$	639,997		$	2,053,951		$	1,172,103
Change in unearned premium	(48,733		)	(103,458		)	(349,963		)	(227,570		)
Net earned premium	874,937			536,539			1,703,988			944,533
Service and fee income (related parties – three months $15,118; $14,414 and six months $27,318; $24,921)	99,542			88,102			190,500			148,615
Net investment income	32,594			22,634			61,121			40,729
Net realized gain on investments	3,906			2,067			9,345			19,351
Total revenues	1,010,979			649,342			1,964,954			1,153,228
Expenses:
Loss and loss adjustment expense	587,233			364,110			1,145,803			636,366
Acquisition costs and other underwriting expenses (net of ceding commission - related party - three months $91,245; $67,157 and six months $179,351; $131,115)	208,060			129,946			394,669			230,231
Other	87,588			80,985			175,179			133,137
Total expenses	882,881			575,041			1,715,651			999,734
Income before other income (expense), income taxes and equity in earnings of unconsolidated subsidiaries	128,098			74,301			249,303			153,494
Other income (expense):
Interest expense	(12,587		)	(7,608		)	(24,084		)	(14,969		)
(Loss) gain on investment in life settlement contracts net of profit commission	(5,070		)	1,080			(2,270		)	4
Foreign currency gain (loss)	1,084			783			(768		)	2,055
Acquisition gain on purchase	—			23,183			—			48,715
Gain on sale of subsidiary	6,631			—			6,631			—
Total other (expense) income	(9,942		)	17,438			(20,491		)	35,805
Income before income taxes and equity in earnings of unconsolidated subsidiaries	118,156			91,739			228,812			189,299
Provision for income taxes	17,966			27,402			45,410			43,511
Income before equity in earnings of unconsolidated subsidiaries	100,190			64,337			183,402			145,788
Equity in earnings of unconsolidated subsidiary – related party	3,999			7,060			22,515			8,610
Net income	$	104,189		$	71,397		$	205,917		$	154,398
Net loss attributable to non-controlling interest of subsidiaries	4,026			—			4,090			877
Net income attributable to AmTrust Financial Services, Inc.	$	108,215		$	71,397		$	210,007		$	155,275
Dividends on preference stock	(1,941		)	—			(3,882		)	—
Net income attributable to AmTrust common shareholders	$	106,274		$	71,397		$	206,125		$	155,275
Earnings per common share:
Basic earnings per share	$	1.41		$	0.96		$	2.75		$	2.10
Diluted earnings per share	$	1.33		$	0.93		$	2.60		$	2.02
Dividends declared per common share	$	0.20		$	0.14		$	0.40		$	0.28
Net realized gain on investments:
Total other-than-temporary impairment loss	$	(1,896	)	$	—		$	(3,539	)	$	—
Portion of loss recognized in other comprehensive income	—			—			—			—
Net impairment losses recognized in earnings	(1,896		)	—			(3,539		)	—
Other net realized gain on investments	5,802			2,067			12,884			19,351
Net realized investment gain	$	3,906		$	2,067		$	9,345		$	19,351

See accompanying notes to unaudited condensed consolidated financial statements.

4

AmTrust Financial Services, Inc.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

(In Thousands)

	Three Months Ended June 30,					Six Months Ended June 30,
	2014		2013			2014			2013
Net income	$	104,189	$	71,397		$	205,917		$	154,398
Other comprehensive income, net of tax:
Foreign currency translation adjustments	6,288		166			7,803			(15,565		)
Change in fair value of interest rate swap	42		716			234			936
Unrealized gains (losses) on securities:
Unrealized holding gain (loss) arising during period	46,578		(64,197		)	87,451			(79,483		)
Reclassification adjustment for gains (losses) included in net income	149		(275		)	(1,796		)	3,261
Other comprehensive income (loss), net of tax	$	53,057	$	(63,590	)	$	93,692		$	(90,851	)
Comprehensive income	157,246		7,807			299,609			63,547
Less: Comprehensive income (loss) attributable to non-controlling interest	64		—			(4,090		)	(877		)
Comprehensive income attributable to AmTrust Financial Services, Inc.	$	157,182	$	7,807		$	303,699		$	64,424

See accompanying notes to unaudited condensed consolidated financial statements.

5

AmTrust Financial Services, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

(In Thousands)

	Six Months Ended June 30,
	2014			2013
Cash flows from operating activities:
Net income	$	205,917		$	154,398
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	29,328			22,831
Net amortization of bond premium or discount	9,573			7,649
Equity earnings on investment in unconsolidated subsidiaries	(22,515		)	(8,610		)
(Gain) loss on investment in life settlement contracts, net	2,270			(4		)
Realized gain on marketable securities	(12,884		)	(19,351		)
Non-cash write-down of marketable securities	3,539			—
Discount on notes payable	1,585			1,454
Stock based compensation	8,661			4,781
Bad debt expense	12,607			9,754
Foreign currency loss (gain)	768			(2,055		)
Gain on acquisition or sale	(6,631		)	(48,715		)
Dividend received from equity investment	—			12,203
Changes in assets - (increase) decrease:
Premiums and note receivables	(289,596		)	(121,384		)
Reinsurance recoverable	(310,426		)	(180,905		)
Deferred policy acquisition costs, net	(163,056		)	(61,396		)
Prepaid reinsurance premiums	(208,020		)	(173,769		)
Prepaid expenses and other assets	(86,494		)	(28,965		)
Changes in liabilities - increase (decrease):
Reinsurance premium payable	150,814			(7,752		)
Loss and loss expense reserve	689,825			374,935
Unearned premiums	611,575			392,570
Funds held under reinsurance treaties	19,763			(1,229		)
Accrued expenses and other current liabilities	53,644			201,864
Deferred tax liability	(42,566		)	(40,606		)
Net cash provided by operating activities	657,681			487,698
Cash flows from investing activities:
Net purchases of securities with fixed maturities	(416,825		)	(371,163		)
Net (purchases) sales of equity securities	(10,331		)	21,904
Net sales (purchases) of other investments	14,056			(3,289		)
Acquisition of life settlement contracts	(25,419		)	—
Receipt of life settlement contract proceeds	5,027			6,047
Acquisition of subsidiaries, net of cash obtained	(75,922		)	(74,859		)
Sale of subsidiary, net of cash for subsidiary	20,059			—
Increase in restricted cash and cash equivalents	(80,628		)	(85,106		)
Purchase of property and equipment	(22,544		)	(23,355		)
Net cash used in investing activities	(592,527		)	(529,821		)
Cash flows from financing activities:
Common share (purchase) issuance	(10,969		)	472
Preferred share issuance, net	—			111,130
Repurchase agreements, net	(293,222		)	(29,750		)

6

Secured loan agreements payments	(534		)	(777		)
Promissory notes payments	(10,695		)	—
Non-controlling interest capital contribution to consolidated subsidiaries	11,090			6,158
Stock option exercise and other	2,469			2,472
Dividends distributed on common stock	(25,600		)	(9,463		)
Dividends distributed on preference stock	(3,882		)	—
Net cash (used in) provided by financing activities	(331,343		)	80,242
Effect of exchange rate changes on cash	5,276			(2,855		)
Net (decrease) increase in cash and cash equivalents	(260,913		)	35,264
Cash and cash equivalents, beginning of the period	830,022			414,370
Cash and cash equivalents, end of the period	$	569,109		$	449,634
Supplemental Cash Flow Information
Income tax payments	$	39,839		$	4,836
Interest payments on debt	$	18,453		$	10,602

See accompanying notes to unaudited condensed consolidated financial statements.

7

Notes to Unaudited Condensed Consolidated Financial Statements

(Unaudited)

(Dollars In Thousands, Except Per Share Data)

1. Basis of Reporting

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X and, therefore, do not include all of the information and footnotes required by GAAP for complete financial statements. These interim statements should be read in conjunction with the financial statements and notes thereto included in the AmTrust Financial Services, Inc. (“AmTrust” or the “Company”) Annual Report on Form 10-K for the year ended December 31, 2013, previously filed with the Securities and Exchange Commission (“SEC”) on March 3, 2014. The balance sheet at December 31, 2013 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements.

These interim consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim period and all such adjustments are of a normal recurring nature. The results of operations for the interim period are not necessarily indicative, if annualized, of those to be expected for the full year. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

A detailed description of the Company’s significant accounting policies and management judgments is located in the audited consolidated financial statements for the year ended December 31, 2013, included in the Company’s Form 10-K filed with the SEC.

As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2013, the Company identified and corrected an error in which the Company previously reported ceding commission as a component of revenue and now presents ceding commission earned as a reduction of acquisition costs and other underwriting expenses. In addition, the Company identified and corrected an error in which the Company historically recorded reductions in its Luxembourg tax liability as a reduction of policy acquisition expense and now records such reductions as a reduction of its provision for income taxes in accordance with Accounting Standards Codification (“ASC”) 740, Income Taxes. The Company assessed the materiality of these errors in accordance with the guidance in ASC Topic 250, Accounting Changes and Error Corrections, and ASC Topic 250-10-S99-1, Assessing Materiality, and determined that both errors were immaterial to the consolidated financial statements taken as a whole. The Company revised its consolidated statements of income, as well as related footnotes, for the year ended December 31, 2013 and will reflect these corrections in all future filings that contain such consolidated financial statements. The effect of correcting the immaterial error related to ceding commission on the presentation of the comparative condensed consolidated statements of income for the three months and six months ended June 30, 2013 was a decrease to total revenues and an increase to acquisition costs and other underwriting expenses of $67,157 and $131,115, respectively. The effect of correcting the immaterial error related to reductions in the Company’s Luxembourg tax liability on the presentation of the comparative condensed consolidated statements of income for the three months and six months ended June 30, 2013 was an increase to policy acquisition expenses and a decrease to income tax expense of $4,544 and $11,967, respectively (which reduced the Company’s effective tax rate by approximately 5.0% and 6.3%, respectively). There was no impact to net income or liquidity as a result of these immaterial errors.

As a result of the aforementioned above, the Company changed its accounting policy for ceding commission on reinsurance transactions during the three months ended June 30, 2014, which is stated herein below:

Ceding Commissions on Reinsurance Transactions - Ceding commissions on reinsurance transactions are commissions the Company receives from ceding gross written premiums to third party reinsurers. In connection with the Maiden Quota Share, which is the Company’s primary source of ceding commissions, the amount the Company receives is a blended rate based on a contractual formula contained in the individual reinsurance agreements, and the rate may not correlate specifically to the cost structure of the individual segments. The ceding commissions the Company receives cover a portion of its capitalized direct acquisition costs and a portion of other underwriting expenses. Ceding commissions received from reinsurance transactions that represent recovery of capitalized direct acquisition costs are recorded as a reduction of capitalized unamortized deferred acquisition costs and the net amount is charged to expense in proportion to net premium revenue recognized. Ceding commissions received from reinsurance transactions that represent the recovery of other underwriting expenses are recognized in the income statement over the insurance contract period in proportion to the insurance protection provided and classified as a reduction of acquisition costs and other underwriting expenses. Ceding commissions received, but not yet earned, that represent the recovery of other underwriting expenses are classified as a component of accrued expenses and other current liabilities. The Company allocates earned ceding commissions to its segments based on each segment’s proportionate share of total acquisition costs and other underwriting expenses recognized during the period. As a result of adopting this policy, deferred policy acquisition costs, total

8

assets, accrued expenses and other current liabilities and total liabilities increased by approximately $21,717 as of December 31, 2013.

All significant inter-company transactions and accounts have been eliminated in the consolidated financial statements.

To facilitate period-to-period comparisons, certain reclassifications have been made to prior period consolidated financial statement amounts to conform to current period presentation.

2. Recent Accounting Pronouncements

With the exception of those discussed below, there have been no recent accounting pronouncements or changes in accounting pronouncements during the six months ended June 30, 2014, as compared to those described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013, that are of significance, or potential significance, to the Company.

In June 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-11, Transfers and Serving (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures, which amends accounting for repurchase-to-maturity transactions and associated repurchase financing to secured borrowing. The revised guidance also requires expanded disclosure for certain transactions comprising (1) a transfer of a financial asset accounted for as a sale and (2) an agreement with the same transferee entered into in contemplation of the initial transfer that results in the transferor retaining substantially all of the exposure to the economic return on the transferred financial asset throughout the term of the transaction, as well as expands disclosure for repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions that are accounted for as secured borrowings. The updated guidance is effective for the period ending March 31, 2015. The adoption of this guidance is not expected to have a material effect on the Company's results of operations, financial position or liquidity.

In June 2014, the FASB issued ASU 2014-12, Compensation--Stock Compensation (Topic 718):Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period, to clarify how entities should treat performance targets that can be met after therequisite service period of a share-based payment award. The ASU states that the share-based payment award should be treatedas a performance condition that affects vesting and, therefore, an entity would not record compensation expense (measured as ofthe grant date without taking into account the effect of the performance target) related to an award for which transfer to the employeeis contingent on the entity’s satisfaction of a performance target until it becomes probable that the performance target will be met.No new disclosures are required under this ASU.ASU 2014-12 is effective beginning after December 15, 2015. Early adoption is permitted. In addition, all entities will havethe option of applying the guidance either prospectively (i.e., only to awards granted or modified on or after the effective date ofthe issue) or retrospectively. Retrospective application would only apply to awards with performance targets outstanding at orafter the beginning of the first annual period presented (i.e., the earliest presented comparative period). The adoption of thisguidance is not expected to have an impact on the Company's results of operations, financial condition or liquidity.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), to clarify the principles for recognizing revenue. While insurance contracts are not within the scope of this updated guidance, the Company’s service and fee income will be subject to this updated guidance. The updated guidance requires an entity to recognize revenue as performance obligations are met, in order to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration the entity is entitled to receive for those goods or services. The following steps are applied in the updated guidance: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the entity satisfies a performance obligation. The updated guidance is effective for the quarter ending March 31, 2017. We are currently evaluating the impact this guidance will have on the Company's results of operations, financial position or liquidity.

In April 2014, the FASB issued ASU 2014-08, Presentation of Financial Statement (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosure of Disposals of Components of an Entity, which provides revised guidance to reduce diversity in practice for reporting discontinued operations. Under the previous guidance, any component of an entity that was a reportable segment, an operating segment, a reporting unit, a subsidiary, or an asset group was eligible for discontinued operations presentation. The revised guidance only allows disposals of components of an entity that represent a strategic shift (e.g., disposal of a major geographical area, a major line of business, a major equity method investment, or other major parts of an entity) and that have a major effect on a reporting entity’s operations and financial results to be reported as discontinued operations. The revised guidance also requires expanded disclosure in the financial statements for discontinued operations as well as for disposals of significant components of an entity that do not qualify for discontinued operations presentation. The updated guidance is effective for the period ending March 31, 2015. The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

9

In July 2013, the FASB issued ASU 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, which provides guidance on the presentation of an unrecognized tax benefit when a net operating loss ("NOL") carry-forward, a similar tax loss, or a tax credit carry-forward exists. Under the ASU, an entity must present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, as a reduction to a deferred tax asset for a NOL carry-forward, similar tax loss, or a tax credit carry-forward. There are two exceptions to this form of presentation as follows:

• To the extent a NOL carry-forward, a similar tax loss, or a tax credit carry-forward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position; or

• The entity does not intend to use the deferred tax asset for this purpose.

If either of these conditions exists, an entity should present an unrecognized benefit in the financial statements as a liability and should net the unrecognizable tax benefit with a deferred tax asset. The Company adopted ASU 2013-11 on January 1, 2014 and the implementation did not have an impact on the Company's results of operations, financial condition or liquidity.

In March 2013, the FASB issued ASU 2013-05, Foreign Currency Matters (Topic 830): Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity, with the objective of resolving the diversity about whether ASC 810-10, Consolidation - Overall, or ASC 830-30, Foreign Currency Matters - Translation of Financial Statements, applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or allof its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is anonprofit activity or a business (other than a sale of in-substance real estate or conveyance of oil and gas mineral rights) within aforeign entity.

Under this guidance, when a reporting entity that is also the parent entity ceases to have a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business (other than a sale of in substance real estate or conveyance of oil and gas mineral rights) within a foreign entity, the parent is required to apply the guidance in ASC 830-30 to release any related cumulative translation adjustment into net income. Accordingly, the cumulative translation adjustment should be released into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. Additionally, for an equity method investment that is a foreign entity, the partial sale guidance in ASC 830-30-40 continues to be applicable. As such, a pro rata portion of the cumulative translation adjustment should be released into net income upon a partial sale of such an equity method investment. However, this treatment does not apply to an equity method investment that is not a foreign entity. In those instances, the cumulative translation adjustment is released into net income only if the partial sale represents a complete or substantially complete liquidation of the foreign entity that contains the equity method investment. Furthermore, the amendments in this ASU clarify that the sale of an investment in a foreign entity includes both: (1) events that result in the loss of a controlling financial interest in a foreign entity (that is, irrespective of any retained investment); and (2) events that result in an acquirer obtaining control of an acquiree in which it held an equity interest immediately before the acquisition date (sometimes also referred to as a step acquisition). Accordingly, the cumulative translation adjustment should be released into net income upon the occurrence of those events. The amendments in this ASU are effective prospectively for fiscal years (and interim reporting periods within those years) beginning after December 15, 2013. The update was adopted effective January 1, 2014. The adoption of this guidance did not have an impact on the Company's results of operations, financial condition or liquidity.

10

3. Investments

(a) Available-for-Sale Securities

The amortized cost, estimated market value and gross unrealized appreciation and depreciation of available-for-sale securities as of June 30, 2014 and December 31, 2013, are presented in the table below:

(Amounts in Thousands) As of June 30, 2014	Original or amortized cost		Gross unrealized gains		Gross unrealized losses			Market value
Preferred stock	$	4,500	$	266	$	(29	)	$	4,737
Common stock	81,850		6,543		(2,603		)	85,790
U.S. treasury securities	64,692		1,866		(88		)	66,470
U.S. government agencies	24,990		709		(7		)	25,692
Municipal bonds	520,346		11,910		(7,017		)	525,239
Foreign government	147,280		4,248		(493		)	151,035
Corporate bonds:
Finance	1,165,427		65,714		(5,758		)	1,225,383
Industrial	1,037,075		38,653		(7,825		)	1,067,903
Utilities	90,706		2,953		(645		)	93,014
Commercial mortgage backed securities	38,520		1,336		(197		)	39,659
Residential mortgage backed securities:
Agency backed	821,147		15,979		(6,991		)	830,135
Non-agency backed	13,294		231		(1		)	13,524
Asset-backed securities	2,430		2		(2		)	2,430
	$	4,012,257	$	150,410	$	(31,656	)	$	4,131,011

(Amounts in Thousands) As of December 31, 2013	Original or amortized cost		Gross unrealized gains		Gross unrealized losses			Market value
Preferred stock	$	1,498	$	82	$	(74	)	$	1,506
Common stock	14,512		1,156		(2,026		)	13,642
U.S. treasury securities	158,915		1,196		(851		)	159,260
U.S. government agencies	10,466		107		(84		)	10,489
Municipal bonds	461,325		4,781		(19,923		)	446,183
Foreign government	160,459		971		(1,325		)	160,105
Corporate bonds:
Finance	1,057,542		41,027		(13,970		)	1,084,599
Industrial	768,161		7,695		(21,439		)	754,417
Utilities	70,924		1,310		(2,008		)	70,226
Commercial mortgage backed securities	28,970		—		(404		)	28,566
Residential mortgage backed securities:
Agency backed	694,001		5,657		(13,918		)	685,740
Non-agency backed	6,737		19		(7		)	6,749
Asset backed securities	$	6,119	$	4	$	(3	)	$	6,120
	$	3,439,629	$	64,005	$	(76,032	)	$	3,427,602
Less: Securities pledged	316,576		506		(5,564		)	311,518
	$	3,123,053	$	63,499	$	(70,468	)	$	3,116,084

11

Investments in foreign government securities include securities issued by national entities as well as instruments that are unconditionally guaranteed by such entities. As of June 30, 2014, the Company's foreign government securities were issued or guaranteed primarily by governments in Canada, Europe, and Israel.

Proceeds from the sale of investments in available-for-sale securities during the six months ended June 30, 2014 and 2013 were approximately $722,847 and $1,198,185, respectively.

A summary of the Company’s available-for-sale fixed securities as of June 30, 2014 and December 31, 2013, by contractual maturity, is shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	June 30, 2014				December 31, 2013
(Amounts in Thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	156,550	$	157,578	$	128,128	$	128,214
Due after one through five years	630,676		651,908		592,703		603,942
Due after five through ten years	1,875,956		1,957,538		1,632,115		1,631,751
Due after ten years	387,334		387,712		334,846		321,372
Mortgage and asset backed securities	875,391		885,748		735,827		727,175
Total fixed maturities	$	3,925,907	$	4,040,484	$	3,423,619	$	3,412,454

(b) Investment Income

Net investment income for the three and six months ended June 30, 2014 and 2013 was derived from the following sources:

	Three Months Ended June 30,						Six Months Ended June 30,
(Amounts in Thousands)	2014			2013			2014			2013
Fixed maturity securities	$	31,068		$	18,316		$	58,740		$	35,588
Equity securities	242			3,887			301			4,289
Cash and short term investments	1,996			704			3,424			1,748
	33,306			22,907			62,465			41,625
Less:
Investment expenses and interest expense on securities sold under agreement to repurchase	(712		)	(273		)	(1,344		)	(896		)
	$	32,594		$	22,634		$	61,121		$	40,729

(c) Other-Than-Temporary Impairment

OTTI charges of our fixed-maturities and equity securities for the three and six months ended June 30, 2014 and 2013 are presented in the table below:

	Three Months Ended June 30,				Six Months Ended June 30,
(Amounts in Thousands)	2014		2013		2014		2013
Equity securities recognized in earnings	$	648	$	—	$	2,291	$	—
Fixed-maturity securities recognized in earnings	1,248		—		1,248		—
	$	1,896	$	—	$	3,539	$	—

12

The table below summarizes the gross unrealized losses of our fixed maturity and equity securities by length of time the security has continuously been in an unrealized position as of June 30, 2014 and December 31, 2013:

	Less Than 12 Months						12 Months or More						Total
(Amounts in Thousands) As of June 30, 2014	Fair Market Value		Unrealized Losses			No. of Positions Held	Fair Market Value		Unrealized Losses			No. of Positions Held	Fair Market Value		Unrealized Losses
Common and preferred stock	$	15,743	$	(2,632	)	112	$	100	$	—		1	$	15,843	$	(2,632	)
U.S. treasury securities	2,220		(52		)	11	2,053		(36		)	5	4,273		(88		)
U.S. government agencies	—		—			—	1,387		(7		)	6	1,387		(7		)
Municipal bonds	88,539		(3,461		)	107	97,084		(3,556		)	105	185,623		(7,017		)
Foreign government	35,152		(493		)	9	—		—			—	35,152		(493		)
Corporate bonds:
Finance	183,496		(3,855		)	74	103,821		(1,903		)	24	287,317		(5,758		)
Industrial	125,993		(6,318		)	68	65,998		(1,507		)	41	191,991		(7,825		)
Utilities	13,826		(594		)	11	1,128		(51		)	2	14,954		(645		)
Commercial mortgage backed securities	16		—			2	5,336		(197		)	8	5,352		(197		)
Residential mortgage backed securities:
Agency backed	258,319		(5,258		)	44	43,715		(1,733		)	30	302,034		(6,991		)
Non-agency backed	84		—			1	32		(1		)	2	116		(1		)
Asset-backed securities	1,827		(2		)	5	—		—			—	1,827		(2		)
Total temporarily impaired securities	$	725,215	$	(22,665	)	444	$	320,654	$	(8,991	)	224	$	1,045,869	$	(31,656	)

	Less Than 12 Months						12 Months or More						Total
(Amounts in Thousands) December 31, 2013	Fair Market Value		Unrealized Losses			No. of Positions Held	Fair Market Value		Unrealized Losses			No. of Positions Held	Fair Market Value		Unrealized Losses
Common and preferred stock	$	4,875	$	(2,100	)	51	$	—	$	—		—	$	4,875	$	(2,100	)
U.S. treasury securities	52,757		(851		)	18	—		—			—	52,757		(851		)
U.S. government agencies	4,135		(84		)	11	—		—			—	4,135		(84		)
Municipal bonds	254,219		(17,986		)	302	24,169		(1,937		)	9	278,388		(19,923		)
Foreign government	68,102		(1,324		)	16	999		(1		)	1	69,101		(1,325		)
Corporate bonds:
Finance	500,564		(13,402		)	182	58,923		(568		)	9	559,487		(13,970		)
Industrial	500,366		(21,203		)	263	3,383		(236		)	2	503,749		(21,439		)
Utilities	45,663		(2,008		)	21	—		—			—	45,663		(2,008		)
Commercial mortgage backed securities	28,552		(404		)	18	—		—			—	28,552		(404		)
Residential mortgage backed securities:
Agency backed	492,740		(13,918		)	120	—		—			—	492,740		(13,918		)
Non-agency backed	205		(5		)	6	23		(2		)	1	228		(7		)
Asset-backed securities	1,463		(3		)	4	—		—			—	1,463		(3		)
Total temporarily impaired securities	$	1,953,641	$	(73,288	)	1,012	$	87,497	$	(2,744	)	22	$	2,041,138	$	(76,032	)

There are 668 and 1,034 securities at June 30, 2014 and December 31, 2013, respectively, that account for the gross unrealized loss, none of which is deemed by the Company to be OTTI. Significant factors influencing the Company’s determination that unrealized losses were temporary included the magnitude of the unrealized losses in relation to each security’s cost, the nature of the investment and management’s intent not to sell these securities and it being not more likely than not that the Company will be required to sell these investments before anticipated recovery of fair value to the Company’s cost basis.

13

(d) Derivatives

The Company from time to time invests in a limited number of derivatives and other financial instruments as part of its investment portfolio to manage interest rate changes or other exposures to a particular financial market. The Company records changes in valuation on its derivative positions not designated as a hedge as a component of net realized gains and losses.

The Company records changes in valuation on its hedge positions as a component of other comprehensive income. As of June 30, 2014 and December 31, 2013, the Company had two interest rate swaps designated as hedges that were recorded as a liability in the total amount of $2,693 and $3,054, respectively, and were included as a component of accrued expenses and other liabilities.

The following table presents the notional amounts by remaining maturity of the Company’s interest rate swaps as of June 30, 2014:

	Remaining Life of Notional Amount (1)
(Amounts in Thousands)	One Year		Two Through Five Years		Six Through Ten Years		After Ten Years		Total
Interest rate swaps	$	—	$	70,000	$	—	$	—	$	70,000

^{(1)  Notional amount is not representative of either market risk or credit risk and is not recorded in the consolidated balance sheet.} 

(e) Restricted Cash and Investments

The Company, in order to conduct business in certain states, is required to maintain letters of credit or assets on deposit to support state mandated regulatory requirements and certain third party agreements. The Company also utilizes trust accounts to collateralize business with its reinsurance counterparties. These assets are primarily in the form of cash and certain high grade securities. The fair values of our restricted assets as of June 30, 2014 and December 31, 2013 are as follows:

(Amounts in Thousands)	2014		2013
Restricted cash	$	181,067	$	100,439
Restricted investments	798,772		978,910
Total restricted cash and investments	$	979,839	$	1,079,349

(f) Other

Securities sold but not yet purchased represent obligations of the Company to deliver the specified security at the contracted price and, thereby, create a liability to purchase the security in the market at prevailing prices. The Company’s liability for securities to be delivered is measured at their fair value and as of June 30, 2014 was $24,309 for equity securities. These transactions result in off-balance sheet risk, as the Company’s ultimate cost to satisfy the delivery of securities sold but not yet purchased may exceed the amount reflected at June 30, 2014. Substantially all securities owned under these arrangements are pledged to the clearing broker to sell or repledge the securities to others subject to certain limitations. The Company did not have any securities sold but not yet purchased as of December 31, 2013.

From time to time, the Company enters into repurchase agreements that are subject to a master netting arrangement, which are accounted for as collateralized borrowing transactions and are recorded at contract amounts. The Company receives cash or securities that it invests or holds in short term or fixed income securities. As of June 30, 2014, the Company had no repurchase agreements outstanding. Interest expense associated with these repurchase agreements, which was recorded as a component of investment income, was $24 and $273 for the three and six months ended June 30, 2014, respectively, and $214 and $491 for the three and six months ended June 30, 2013, respectively.

14

4. Fair Value of Financial Instruments

The following tables present the level within the fair value hierarchy at which the Company’s financial assets and financial liabilities are measured on a recurring basis as of June 30, 2014 and December 31, 2013:

(Amounts in Thousands) As of June 30, 2014	Total		Level 1		Level 2		Level 3
Assets:
U.S. treasury securities	$	66,470	$	66,470	$	—	$	—
U.S. government agencies	25,692		—		25,692		—
Municipal bonds	525,239		—		525,239		—
Foreign government	151,035		—		151,035		—
Corporate bonds and other bonds:
Finance	1,225,383		—		1,225,383		—
Industrial	1,067,903		—		1,067,903		—
Utilities	93,014		—		93,014		—
Commercial mortgage backed securities	39,659		—		39,659		—
Residential mortgage backed securities:
Agency backed	830,135		—		830,135		—
Non-agency backed	13,524		—		13,524		—
Asset-backed securities	2,430		—		2,430		—
Equity securities	90,527		90,527		—		—
Short term investments	76,324		76,324		—		—
Other investments	14,095		—		—		14,095
Life settlement contracts	276,199		—		—		276,199
	$	4,497,629	$	233,321	$	3,974,014	$	290,294
Liabilities:
Equity securities sold but not yet purchased, market	$	24,309	$	24,309	$	—	$	—
Life settlement contract profit commission	12,529		—		—		12,529
Derivatives	2,693		—		2,693		—
	$	39,531	$	24,309	$	2,693	$	12,529

15

(Amounts in Thousands) As of December 31, 2013	Total		Level 1		Level 2		Level 3
Assets:
U.S. treasury securities	$	110,345	$	110,345	$	—	$	—
U.S. government agencies	10,489		—		10,489		—
Municipal bonds	446,183		—		446,183		—
Foreign government	160,105				160,105
Corporate bonds and other bonds:
Finance	1,084,599		—		1,084,599		—
Industrial	754,417		—		754,417		—
Utilities	70,226		—		70,226		—
Commercial mortgage backed securities	28,566		—		28,566		—
Residential mortgage backed securities:
Agency backed	423,137		—		423,137		—
Non-agency backed	6,749		—		6,749		—
Asset-backed securities	6,120		—		6,120		—
Equity securities	15,148		15,148		—		—
Short term investments	114,202		114,202		—		—
Other investments	25,749		—		—		25,749
Securities held as collateral	311,518		48,915		262,603		—
Life settlement contracts	233,024		—		—		233,024
	$	3,800,577	$	288,610	$	3,253,194	$	258,773
Liabilities:
Securities sold under agreements to repurchase, at carrying value	$	293,222	$	—	$	293,222	$	—
Life settlement contract profit commission	11,945		—		—		11,945
Derivatives	3,054		—		3,054		—
	$	308,221	$	—	$	296,276	$	11,945

The Company classifies its financial assets and liabilities in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.  This classification requires judgment in assessing the market and pricing methodologies for a particular security.  The fair value hierarchy includes the following three levels:

• Level 1 – Valuations are based on unadjusted quoted market prices in active markets for identical financial assets or liabilities.

Examples of instruments utilizing Level 1 inputs include: exchange-traded securities and U.S. Treasury bonds.

• Level 2 – Valuations of financial assets and liabilities are based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or liabilities in inactive markets obtained from third party pricing services or valuations based on models where the significant inputs are observable (e.g., interest rates, yield curves, prepayment speeds, default rates, loss severities, etc.) or can be corroborated by observable market data.

Examples of instruments utilizing Level 2 inputs include: U.S. government-sponsored agency securities; non-U.S. government obligations; corporate and municipal bonds; mortgage-backed bonds; asset-backed securities and listed derivatives that are not actively traded.

• Level 3 – Valuations are based on unobservable inputs for assets and liabilities where there is little or no market activity.  Management’s assumptions are used in internal valuation pricing models to determine the fair value of financial assets or liabilities, which may include projected cash flows, collateral performance or liquidity circumstances in the security or similar securities that may have occurred since the prior pricing period.

16

Examples of instruments utilizing Level 3 inputs include: hedge and credit funds with partial transparency.

For additional discussion regarding techniques used to value the Company’s investment portfolio, refer to Note 2. “Significant Accounting Policies” in Item 8. “Financial Statements and Supplementary Data” in its 2013 Form 10-K.

The following tables provides a summary of changes in fair value of the Company’s Level 3 financial assets and liabilities for the three and six months ended June 30, 2014 and 2013:

(Amounts in Thousands)	Balance as of March 31, 2014			Net income			Other comprehensive income		Purchases and issuances		Sales and settlements			Net transfers into (out of) Level 3		Balance as of June 30, 2014
Other investments	$	18,166		$	288		$	—	$	110	$	(4,469	)	$	—	$	14,095
Life settlement contracts	268,199			5,796			—		2,204		—			—		276,199
Life settlement contract profit commission	(13,348		)	819			—		—		—			—		(12,529		)
Total	$	273,017		$	6,903		$	—	$	2,314	$	(4,469	)	$	—	$	277,765
(Amounts in Thousands)	Balance as of December 31, 2013			Net income			Other comprehensive income		Purchases and issuances		Sales and settlements			Net transfers into (out of) Level 3		Balance as of June 30, 2014
Other investments	$	25,749		$	2,402		$	—	$	3,317	$	(17,373	)	$	—	$	14,095
Life settlement contracts	233,024			22,783			—		25,419		(5,027		)	—		276,199
Life settlement contract profit commission	(11,945		)	(584		)	—		—		—			—		(12,529		)
Total	$	246,828		$	24,601		$	—	$	28,736	$	(22,400	)	$	—	$	277,765

(Amounts in Thousands)	Balance as of March 31, 2013			Net income			Other comprehensive income		Purchases and issuances		Sales and settlements			Net transfers into (out of) Level 3		Balance as of June 30, 2013
Other investments	$	16,052		$	(17	)	$	—	$	9,770	$	(1,026	)	$	—	$	24,779
Life settlement contracts	199,824			10,890			—		—		(2,020		)	—		208,694
Life settlement contract profit commission	(12,237		)	(276		)	—		—		—			—		(12,513		)
Total	$	203,639		$	10,597		$	—	$	9,770	$	(3,046	)	$	—	$	220,960
(Amounts in Thousands)	Balance as of December 31, 2012			Net income			Other comprehensive income		Purchases and issuances		Sales and settlements			Net transfers into (out of) Level 3		Balance as of June 30, 2013
Other investments	$	11,144		$	677		$	—	$	14,881	$	(1,923	)	$	—	$	24,779
Life settlement contracts	193,927			20,815			—		—		(6,048		)	—		208,694
Life settlement contract profit commission	(11,750		)	(763		)	—		—		—			—		(12,513		)
Total	$	193,321		$	20,729		$	—	$	14,881	$	(7,971	)	$	—	$	220,960

 The Company had no transfers between levels during the three and six months ended June 30, 2014 and 2013.

A reconciliation of net income for life settlement contracts in the above table to gain (loss) on investment in life settlement contracts net of profit commission included in the Condensed Consolidated Statements of Income for the three and six months ended June 30, 2014 and 2013 is as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
(Amounts in Thousands)	2014			2013			2014			2013
Net income	$	5,796		$	10,890		$	22,783		$	20,815
Premiums paid	(11,078		)	(9,119		)	(22,472		)	(18,546		)
Profit commission	819			(276		)	(584		)	(763		)
Other expenses	(607		)	(415		)	(1,997		)	(1,502		)
(Loss) gain on investment in life settlement contracts	$	(5,070	)	$	1,080		$	(2,270	)	$	4

17

The Company uses the following methods and assumptions in estimating its fair value disclosures for financial instruments:

• Equity and Fixed Income Investments: Fair value disclosures for these investments are disclosed above in this note. The carrying values of cash, short term investments and investment income accrued approximate their fair values and are classified as Level 1 in the financial hierarchy.

• Premiums Receivable: The carrying values reported in the accompanying balance sheets for these financial instruments approximate their fair values due to the short term nature of the asset and are classified as Level 1 in the financial hierarchy.

• Other Investments: The Company has approximately 0.3% of its investment portfolio in limited partnerships or hedge funds where the fair value estimate is determined by a fund manager based on recent filings, operating results, balance sheet stability, growth and other business and market sector fundamentals. Due to the significant unobservable inputs in these valuations, the Company includes the estimate in the amount disclosed in Level 3 hierarchy.

• Equity Investment in Unconsolidated Subsidiaries - Related Party: The Company has an approximate ownership percentage of 13.2% in National General Holdings Corp., which completed a Rule 144A offering during the three months ended March 31, 2014. The Company accounts for this investment under the equity method of accounting as it has the ability to exert significant influence on National General Holdings Corp. The fair value of the investment was approximately $213,940 as of June 30, 2014. The carrying value was $115,325 as of June 30, 2014.

• Subordinated Debentures and Debt: The current fair value of the Company's convertible senior notes, subordinated debentures, and 6.125% Notes was $328,440, $68,290, and $252,815 as of June 30, 2014, respectively. The convertible senior notes and the 6.125% Notes are publicly traded instruments and are classified as Level 1 in the fair value hierarchy. The subordinated debentures are classified as Level 3 in the fair value hierarchy. The fair value of the subordinated debentures was determined using the Black-Derman-Toy interest rate lattice model.

• Derivatives: The Company classifies interest rate swaps as Level 2 in fair value hierarchy.  The Company uses these interest rate swaps to hedge floating interest rates on its debt, thereby changing the variable rate exposure to a fixed rate exposure for interest on these obligations.  The estimated fair value of the interest rate swaps, which is obtained from a third party pricing service, is measured using discounted cash flow analysis that incorporates significant observable inputs, including the LIBOR forward curve and a measurement of volatility.

• Repurchase Agreements: The carrying value of repurchase agreements in the accompanying balance sheets represents their fair values and are classified as Level 2 in the financial hierarchy.

The fair value of life settlement contracts as well as life settlement profit commission liability is based on information available to the Company at the end of the reporting period. The Company considers the following factors in its fair value estimates: cost at date of purchase, recent purchases and sales of similar investments (if available and applicable), financial standing of the issuer, changes in economic conditions affecting the issuer, maintenance cost, premiums, benefits, standard actuarially developed mortality tables and life expectancy reports prepared by nationally recognized and independent third party medical underwriters. The Company estimates the fair value of a life insurance policy by applying an investment discount rate based on the cost of funding the Company's life settlement contracts as compared to returns on investments in asset classes with comparable credit quality, which the Company has determined to be 7.5%, to the expected cash flow generated by the policies in the Company's life settlement portfolio (death benefits less premium payments), net of policy specific adjustments and reserves. In order to confirm the integrity of their calculation of fair value, the Company, quarterly, retains an independent third-party actuary to verify that the actuarial modeling used by the Company to determine fair value was performed correctly and that the valuation, as determined through the Company’s actuarial modeling, is consistent with other methodologies. The Company considers this information in its assessment of the reasonableness of the life expectancy and discount rate inputs used in the valuation of these investments.

The Company adjusts the standard mortality for each insured for the insured's life expectancy based on reviews of the insured's medical records. The Company establishes policy specific reserves for the following uncertainties: improvements in mortality, the possibility that the high net worth individuals represented in its portfolio may have access to better health care, the volatility inherent in determining the life expectancy of insureds with significant reported health impairments, the possibility that the issuer of the policy or a third party will contest the payment of the death benefit payable to the Company, and the future

18

expenses related to the administration of the portfolio. The application of the investment discount rate to the expected cash flow generated by the portfolio, net of the policy specific reserves, yields the fair value of the portfolio. The effective discount rate reflects the relationship between the fair value and the expected cash flow gross of these reserves.

The following summarizes data utilized in estimating the fair value of the portfolio of life insurance policies as of June 30, 2014 and December 31, 2013 and, as described in Note 5. "Investments in Life Settlements", only includes data for policies to which the Company assigned value at those dates:

	June 30, 2014			December 31, 2013
Average age of insured	80.8 years			80.1 years
Average life expectancy, months (1)	124			131
Average face amount per policy	$	6,586,000		$	6,611,000
Effective discount rate (2)	14.1		%	14.2		%

⁽¹⁾  Standard life expectancy as adjusted for specific circumstances.

⁽²⁾  Effective Discount Rate ("EDR") is the Company's estimated internal rate of return on its life settlement contract portfolio and is determined from the gross expected cash flows and valuation of the portfolio. The valuation of the portfolio is calculated net of all reserves using a 7.5% discount rate. The EDR is implicit of the reserves and the gross expected cash flows of the portfolio. The Company anticipates that the EDR's range is between 12.5% and 17.5% and reflects the uncertainty that exists surrounding the information available as of the reporting date. As the accuracy and reliability of information improves (declines), the EDR will decrease (increase). The change in the EDR from December 31, 2013 to June 30, 2014 resulted from routine updating of life expectancies and other factors relating to operational risk.

The Company's assumptions are, by their nature, inherently uncertain and the effect of changes in estimates may be significant. The fair value measurements used in estimating the present value calculation are derived from valuation techniques generally used in the industry that include inputs for the asset that are not based on observable market data. The extent to which the fair value could reasonably vary in the near term has been quantified by evaluating the effect of changes in significant underlying assumptions used to estimate the fair value amount. If the life expectancies were increased or decreased by 4 months and the discount factors were increased or decreased by 1% while all other variables were held constant, the carrying value of the investment in life insurance policies would increase or (decrease) by the unaudited amounts summarized below as of June 30, 2014 and December 31, 2013:

	Change in life expectancy
(Amounts in Thousands)	Plus 4 Months			Minus 4 Months
Investment in life policies:
June 30, 2014	$	(34,813	)	$	36,860
December 31, 2013	$	(29,537	)	$	31,313

	Change in discount rate (1)
(Amounts in Thousands)	Plus 1%			Minus 1%
Investment in life policies:
June 30, 2014	$	(23,198	)	$	26,095
December 31, 2013	$	(20,055	)	$	22,605

⁽¹⁾ Discount rate is a present value calculation that considers legal risk, credit risk and liquidity risk and is a component of EDR.

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5. Investment in Life Settlements

The Company currently owns and periodically acquires life settlement contracts. A life settlement contract is a contract between the owner of a life insurance policy and a third-party who obtains the ownership and beneficiary rights of the underlying life insurance policy. The LSC entities may also acquire premium finance loans made in connection with the borrowers’ purchase of life insurance policies that are secured by the policies. The LSC entities acquire the underlying policies through the borrowers’ voluntary surrender of the policy in satisfaction of the loan or foreclosure. The Company currently has a fifty percent ownership interest in four subsidiaries (collectively, the “LSC entities”) that acquire life settlement contracts. A subsidiary of National General Holdings Corp. ("NGHC") owns the remaining fifty percent interest in the LSC entities. A third party serves as the administrator for two of the life settlement contract portfolios, for which it receives an administrative fee. The third party administrator is eligible to receive a percentage of profits after certain time and performance thresholds have been met. The Company provides certain actuarial and finance functions related to the LSC entities. In conjunction with the Company’s 13.2% ownership percentage of NGHC, the Company ultimately receives 56.6% of the profits and losses of the LSC entities. As such, in accordance with ASC 810-10, Consolidation, the Company has been deemed the primary beneficiary and, therefore, consolidates the LSC entities.

The Company accounts for investments in life settlements in accordance with ASC 325-30, Investments in Insurance Contracts, which states that an investor shall elect to account for its investments in life settlement contracts by using either the investment method or the fair value method. The election is made on an instrument-by-instrument basis and is irrevocable. The Company has elected to account for these policies using the fair value method. As no comparable market pricing is available, the Company determines fair value based upon its estimate of the discounted cash flow related to policies (net of the reserves for improvements in mortality, the possibility that the high net worth individuals represented in its portfolio may have access to better health care, the volatility inherent in determining the life expectancy of insureds with significant reported health impairments, the possibility that the issuer of the policy or a third party will contest the payment of the death benefit payable to the Company, and the future expenses related to the administration of the portfolio), which incorporates current life expectancy assumptions, premium payments, the credit exposure to the insurance company that issued the life settlement contracts and the rate of return that a buyer would require on the contracts.

Total capital contributions of approximately $21,776 and $10,797 were made to the LSC entities during the six months ended June 30, 2014 and 2013, respectively, for which the Company contributed approximately $10,700 and $5,388 in those same periods, respectively. The LSC entities used the contributed capital to pay premiums and purchase policies. The Company’s investments in life settlements and premium finance loans were approximately $276,199 and $233,024 as of June 30, 2014 and December 31, 2013, respectively, and are included in Prepaid expenses and other assets on the Consolidated Balance Sheet. The Company recorded a loss on investment in life settlement contracts, net of profit commission, for the three and six months ended June 30, 2014 of approximately $5,070 and $2,270, respectively, and a gain of $1,080 and $4 for the three and six months ended June 30, 2013, respectively, related to the life settlement contracts.

During the six months ended June 30, 2014, upon the voluntary surrender of the underlying life insurance policies in satisfaction of the remaining defaulted premium finance loans, the LSC entities became the owner and beneficiary under the underlying life insurance policies with respect to such loans. As of June 30, 2014, the LSC entities owned no premium finance loans. As of December 31, 2013, the LSC entities owned 2 premium finance loans which were secured by life insurance policies and were carried at a value of $0.

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The following table describes the Company’s investment in life settlements as of June 30, 2014 and December 31, 2013:

(Amounts in Thousands, except number of Life Settlement Contracts)  Expected Maturity Term in Years	Number of Life Settlement Contracts	Fair Value (1)		Face Value
As of June 30, 2014
0-1	—	$	—	$	—
1-2	3	17,688		25,000
2-3	7	41,209		68,000
3-4	2	5,370		15,000
4-5	9	16,942		43,000
Thereafter	267	194,990		1,695,209
Total	288	$	276,199	$	1,846,209

(Amounts in Thousands, except number of Life Settlement Contracts)  Expected Maturity Term in Years	Number of Life Settlement Contracts	Fair Value (1)		Face Value
As of December 31, 2013
0-1	—	$	—	$	—
1-2	—	—		—
2-3	1	2,726		5,000
3-4	13	53,767		103,000
4-5	2	5,622		13,000
Thereafter	255	170,909		1,641,409
Total	271	$	233,024	$	1,762,409

^{(1)  The Company determined the fair value as of June 30, 2014 based on 222 policies out of 288 policies, as the Company assigned no value to 66 of the policies as of June 30, 2014. The Company determined the fair value as of December 31, 2013 based on 191 policies out of 271 policies, as the Company assigned no value to 80 of the policies as of December 31, 2013. The Company estimated the fair value of a life insurance policy using a cash flow model with an appropriate discount rate. In some cases, the cash flow model calculates the value of an individual policy to be negative, and therefore the fair value of the policy is zero as no liability exists when a negative value is calculated. The Company is not contractually bound to pay the premium on its life settlement contracts and, therefore, would not pay a willing buyer to assume title of these contracts. Additionally, certain of the Company's acquired policies were structured to have low premium payments at inception of the policy term, which later escalate greatly towards the tail end of the policy term. At the current time, the Company expenses all premium paid, even on policies with zero fair value. Once the premium payments escalate, the Company may allow the policies to lapse. In the event that death benefits are realized in the time frame between initial acquisition and premium escalation, it is a benefit to cash flow.} 

For these contracts where the Company determined the fair value to be negative and therefore assigned a fair value of zero, the table below details the amount of premiums paid and the death benefits received during the twelve months preceding June 30, 2014 and December 31, 2013:

(Amounts in Thousands, except number of Life Settlement Contracts)	June 30, 2014		December 31, 2013
Number of policies with a negative value from discounted cash flow model as of period end	66		80
Premiums paid for the preceding twelve month period for period ended	$	7,342	$	9,371
Death benefit received	$	3,012	$	3,012

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Premiums to be paid by the LSC entities for each of the five succeeding fiscal years to keep the life insurance policies in force as of June 30, 2014, are as follows:

(Amounts in Thousands)	Premiums Due on Life  Settlement Contracts
2014	$	41,008
2015	43,688
2016	61,031
2017	39,847
2018	38,984
Thereafter	552,485
Total	$	777,043

6. Debt

The Company’s borrowings consisted of the following at June 30, 2014 and December 31, 2013:

(Amounts in Thousands)	June 30, 2014		December 31, 2013
Revolving credit facility	$	—	$	—
Convertible senior notes	165,803		164,218
6.125% Notes due 2023	250,000		250,000
Junior subordinated debentures	123,714		123,714
Secured loan agreements	7,207		7,742
Promissory notes	14,500		14,500
	$	561,224	$	560,174

Aggregate scheduled maturities of the Company’s borrowings at June 30, 2014 are:

(Amounts in Thousands)
2014	$	540
2015	1,116
2016	1,167
2017	1,220
2018	3,164
Thereafter	554,017		(1)

^{(1)  Amount reflected in balance sheet for convertible senior notes is net of unamortized original issue discount of $34,197.} 

Revolving Credit Agreement

The Company has a $200,000 credit agreement (the “Credit Agreement”), among JPMorgan Chase Bank, N.A., as Administrative Agent, KeyBank National Association and SunTrust Bank, as Co-Syndication Agents, Associated Bank, National Association and Lloyds Securities Inc., as Co-Documentation Agents and the various lending institutions party thereto. The credit facility is a revolving credit facility with a letter of credit sublimit of $100,000 and an expansion feature not to exceed $100,000, which, if utilized, would increase the Company's credit limit to $300,000. The Credit Agreement, which matures in August 2016, contains certain restrictive covenants customary for facilities of this type (subject to negotiated exceptions and baskets), including restrictions on indebtedness, liens, acquisitions and investments, restricted payments and dispositions. There are also financial covenants that require the Company to maintain a minimum consolidated net worth, a maximum consolidated leverage ratio, a minimum fixed charge coverage ratio, a minimum risk-based capital and a minimum statutory surplus. The Company was in compliance with all covenants as of June 30, 2014.

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As of June 30, 2014, the Company had no outstanding borrowings under this Credit Agreement. As of June 30, 2014, the Company had outstanding letters of credit in place under this Credit Agreement for $89,040, which reduced the availability for letters of credit to $10,960, and the availability under the facility to $110,960.

Borrowings under the Credit Agreement bear interest at (x) the greatest of (a) the Administrative Agent’s prime rate, (b) the federal funds effective rate plus 0.5 percent or (c) the adjusted LIBO rate for a one month interest period on such day plus 1 percent, plus (y) a margin that is adjusted on the basis of the Company’s consolidated leverage ratio. Eurodollar borrowings under the Credit Agreement will bear interest at the adjusted LIBO rate for the interest period in effect plus a margin that is adjusted on the basis of the Company’s consolidated leverage ratio. The interest rate on the credit facility as of June 30, 2014 was 1.50%. The Company recorded total interest expense of approximately $411 and $616 for the three months ended June 30, 2014 and 2013, respectively, and $751 and $1,176 for six months ended June 30, 2014 and 2013, respectively, under the Credit Agreement.

 Fees payable by the Company under the Credit Agreement include a letter of credit participation fee (which is the margin applicable to Eurodollar borrowings and was 1.50% at June 30, 2014), a letter of credit fronting fee with respect to each letter of credit (.125%) and a commitment fee on the available commitments of the lenders (a range of .20% to .30% based on the Company’s consolidated leverage ratio and was .25% at June 30, 2014).

Convertible Senior Notes

The Company has outstanding $200,000 aggregate principal amount of convertible senior notes due 2021 (the “Convertible Notes”). The Convertible Notes bear interest at a rate equal to 5.5% per year, payable semiannually in arrears on June 15th and December 15th of each year.

The Convertible Notes will mature on December 15, 2021 (the “Maturity Date”), unless earlier purchased by the Company or converted into shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”). Prior to September 15, 2021, the Convertible Notes will be convertible only upon satisfaction of certain conditions, and thereafter, at any time prior to the close of business on the second scheduled trading day immediately preceding the Maturity Date. The conversion rate at June 30, 2014 is equal to 38.5985 shares of Common Stock per $1,000 principal amount of Convertible Notes, which corresponds to a conversion price of approximately $25.91 per share of Common Stock. The conversion rate is subject to adjustment upon the occurrence of certain events as set forth in the indenture governing the Convertible Notes. Upon conversion of the Convertible Notes, the Company will, at its election, pay or deliver, as the case may be, cash, shares of Common Stock, or a combination of cash and shares of Common Stock.

Upon the occurrence of a fundamental change (as defined in the indenture governing the Convertible Notes) involving the Company, holders of the Convertible Notes will have the right to require the Company to repurchase their Convertible Notes for cash, in whole or in part, at 100% of the principal amount of the Convertible Notes to be repurchased, plus any accrued and unpaid interest, if any, to, but excluding, the fundamental change purchase date.

The Company separately allocated the proceeds for the issuance of the Convertible Notes to a liability component and an equity component, which is the embedded conversion option. The equity component was reported as an adjustment to paid-in-capital, net of tax, and is reflected as an original issue discount (“OID”). The OID of $41,679 and deferred origination costs relating to the liability component of $4,750 will be amortized into interest expense over the term of the loan of the Convertible Notes. After considering the contractual interest payments and amortization of the original discount, the Convertible Notes effective interest rate was 8.57%. Transaction costs of $1,250 associated with the equity component were netted in paid-in-capital. Interest expense, including amortization of deferred origination costs, recognized on the Convertible Notes was $3,665 and $3,600 for the three months ended June 30, 2014 and 2013, respectively, and $7,322 and $7,192 for the six months ended June 30, 2014 and 2013, respectively.

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The following table shows the amounts recorded for the Convertible Notes as of June 30, 2014 and December 31, 2013:

(Amounts in Thousands)	June 30, 2014			December 31, 2013
Liability component
Outstanding principal	$	200,000		$	200,000
Unamortized OID	(34,197		)	(35,782		)
Liability component	$	165,803		$	164,218
Equity component, net of tax	$	27,092		$	27,092

6.125% Notes due 2023

In August 2013, the Company issued $250,000 aggregate principal amount of its 6.125% notes due 2023 (the "Notes") to certain initial purchasers in a private placement. The Notes bear interest at a rate equal to 6.125% per year, payable semiannually in arrears on February 15th and August 15th of each year. The Notes will mature on August 15, 2023, unless earlier purchased by the Company. Fees associated with the Notes were approximately $2,706. The indenture governing the Notes contains covenants whereby the interest rate will increase by 0.50% per year if the Company's consolidated leverage ratio exceeds 30% and does not exceed 35% and will increase an additional 1.00% per year (for an aggregate increase of 1.50% per year) if the consolidated leverage ratio exceeds 35%. The consolidated leverage ratio under this agreement was less than 30% as of June 30, 2014. It is an event of default if the Company has a consolidated leverage ratio in excess of 35% for a period of 30 days, unless in connection with an acquisition, in which case the grace period is 18 months. The indenture governing the Notes also contains certain customary covenants, such as reporting of annual and quarterly financial results, and restrictions on certain mergers and consolidations, a limitation on liens, and a limitation on the disposition of stock of certain of the Company's subsidiaries. The Notes rank equally with existing and future unsecured and unsubordinated indebtedness, including the Company's Convertible Notes and amounts under the Credit Agreement. Interest expense, including amortization of deferred origination costs, recognized on the Notes was approximately $3,897 and $7,794 for the three and six months ended June 30, 2014, respectively.

Junior Subordinated Debt

The Company has established four special purpose trusts for the purpose of issuing trust preferred securities. The proceeds from such issuances, together with the proceeds of the related issuances of common securities of the trusts, were invested by the trusts in junior subordinated debentures issued by the Company. In accordance with FASB ASC 810-10-25, the Company does not consolidate such special purpose trusts, as the Company is not considered to be the primary beneficiary. The equity investment, totaling $3,714 as of June 30, 2014 on the Company’s consolidated balance sheet, represents the Company’s ownership of common securities issued by the trusts. The debentures require interest-only payments to be made on a quarterly basis, with principal due at maturity. The debentures contain covenants that restrict declaration of dividends on the Company’s common stock under certain circumstances, including default of payment. The Company incurred $2,605 of placement fees in connection with these issuances which is being amortized over thirty years. The Company recorded $2,028 and $2,049 of interest expense for the three months ended June 30, 2014 and 2013, respectively, and $4,048 and $4,048 for the six months ended June 30, 2014 and 2013, respectively, related to these trust preferred securities.

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 The table below summarizes the Company’s trust preferred securities as of June 30, 2014: 

(Amounts in Thousands) Name of Trust	Aggregate Liquidation Amount of Trust Preferred Securities		Aggregate Liquidation Amount of Common Securities		Aggregate Principal Amount of Notes		Stated Maturity of Notes	Per Annum Interest Rate % of Notes
AmTrust Capital Financing Trust I	$	25,000	$	774	$	25,774	3/17/2035	8.275	(1	)
AmTrust Capital Financing Trust II	25,000		774		25,774		6/15/2035	7.710	(1	)
AmTrust Capital Financing Trust III	30,000		928		30,928		9/15/2036	3.531	(2	)
AmTrust Capital Financing Trust IV	40,000		1,238		41,238		3/15/2037	3.231	(3	)
Total trust preferred securities	$	120,000	$	3,714	$	123,714

⁽¹⁾ The interest rate will change to three-month LIBOR plus 3.40% after the tenth anniversary in 2015.

⁽²⁾ The interest rate is LIBOR plus 3.30%.

⁽³⁾ The interest rate is LIBOR plus 3.00%.

The Company entered into two interest rate swap agreements related to these junior subordinated debentures, which effectively convert the interest rate on the trust preferred securities from a variable rate to a fixed rate. Each agreement is for a period of five years and commenced on September 15, 2011 for tranche III and March 15, 2012 for tranche IV.

Secured Loan Agreement

The Company, through a wholly-owned subsidiary, has a seven-year secured loan agreement with Bank of America Leasing & Capital, LLC in the aggregate amount of $10,800 to finance the purchase of an aircraft. The loan bears interest at a fixed rate of 4.45%, requires monthly installment payments of approximately $117 through February 25, 2018, and a balloon payment of $3,240 at the maturity date. The Company recorded interest expense of approximately $84 and $97 for the three months ended June 30, 2014 and 2013, respectively, and $171 and $198 for the six months ended June 30, 2014 and 2013, respectively, related to this agreement. The loan is secured by the aircraft.

The agreement contains certain covenants that are similar to the Company’s Credit Agreement. Additionally, subsequent to February 25, 2012, but prior to payment in full, if the outstanding balance of this loan exceeds 90% of the fair value of the aircraft, the Company is required to pay the lender the entire amount necessary to reduce the outstanding principal balance to be equal to or less than 90% of the fair value of the aircraft. The agreement allows the Company, under certain conditions, to repay the entire outstanding principal balance of this loan without penalty.

Promissory Notes

In September 2012, as part of its participation in the New Market Tax Credit Program discussed in Note 13. "New Market Tax Credit", the Company entered into two promissory notes totaling $8,000. The loans are for a period of 15 years and have an average interest rate of 1.7% per annum. The Company recorded interest expense of approximately $66 and $44 for the three months ended June 30, 2014 and 2013, respectively, and $132 and $141 for the six months ended June 30, 2014 and 2013, respectively, related to the notes. Additionally, the Company recorded approximately $1,430 of deferred financing fees.

In May 2013, as part of its acquisition of Mutual Insurers Holding Company ("MIHC") as discussed in Note 12. "Acquisitions", the Company assumed two promissory notes totaling $6,500 for which the principal is due in 2034 and 2035. The notes require the payment of interest on a quarterly basis and have an interest rate of 3.8% plus the three month libor per annum, which was 4.1% as of June 30, 2014. The Company recorded interest expense of approximately $59 and $23 for the three months ended June 30, 2014 and 2013, respectively, and $128 and $23 for the six months ended June 30, 2014 and 2013, respectively, related to these notes.

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ING Credit Facility

On November 26, 2013, the Company (as “Guarantor”), and two of its wholly-owned subsidiaries, AmTrust International Insurance, Ltd. (the “Account Party”) and AmTrust Corporate Capital Limited, entered into a four-year, £200,000 credit facility agreement with ING Bank, N.V., London Branch, individually and as Agent and Security Trustee. The credit facility, which matures on December 31, 2017, is a letter of credit facility that is used to support the Company’s capacity at Lloyd’s as a member of Syndicates 2526, 1206 and 44 for the 2014 underwriting year of account, as well as prior open years of account. The credit facility contains customary covenants for facilities of this type, including restrictions on indebtedness and liens, limitations on mergers, transactions with affiliates and the sale of assets, and requirements to maintain certain consolidated net worth, statutory surplus, leverage and fixed charge coverage ratios.

The facility is secured by a pledge of a collateral account pursuant to a pledge and security agreement and a Deed of Charge dated November 26, 2013. At the outset, the collateral account is 50% funded. The collateral account will be required to be 100% funded upon the occurrence of certain specified events, including an event of default, the financial strength rating of the Account Party falling below A-, the forecast underwriting losses exceeding a certain level for any year supported by a letter of credit or any non-extension notice is given with respect to any letter of credit.

As of June 30, 2014, the Company had outstanding letters of credit of £193,165 (or $328,052) in place under this credit facility, which reduced the total availability under the facility to £6,835 (or $11,608). The Company recorded total interest expense of approximately $1,313 during the six months ended June 30, 2014 related to this credit facility.

Fees payable by the Company under the credit facility include a letter of credit issuance fee, payable quarterly in arrears, on the secured portion of the letters of credit at the rate of 0.55% and on the unsecured portion of the letters of credit determined based on the Account Party’s then-current financial strength rating issued by A.M. Best. As of June 30, 2014, the applicable letter of credit fee rate on the unsecured portion was 1.15% based on the Account Party’s A.M. Best financial strength rating of “A”. The Company also pays a commitment fee of 0.35% per year on the aggregate unutilized and uncanceled amount of the facility.

Other Letters of Credit

The Company, through one of its subsidiaries, has a secured letter of credit facility with Comerica Bank. The Company utilizes this letter of credit facility to comply with the deposit requirements of the State of California and the U.S. Department of Labor as security for the Company’s obligations to workers’ compensation and Federal Longshore and Harbor Workers’ Compensation Act policyholders. The credit limit is for $75,000, of which $48,467 was utilized as of June 30, 2014. The Company is required to pay a letter of credit participation fee for each letter of credit in the amount of 0.40%.

The Company, through certain subsidiaries, has additional existing stand-by letters of credit with various lenders in the amount of $20,710 as of June 30, 2014.

7. Acquisition Costs and Other Underwriting Expenses

The following table summarizes the components of acquisition costs and other underwriting expenses for the three and six months ended June 30, 2014 and 2013:

	Three Months Ended June 30,				Six Months Ended June 30,
(Amounts in Thousands)	2014		2013		2014		2013
Policy acquisition expenses	$	115,637	$	53,473	$	209,888	$	91,203
Salaries and benefits	91,674		65,982		169,529		111,111
Other insurance general and administrative expenses	749		10,491		15,252		27,917
	$	208,060	$	129,946	$	394,669	$	230,231

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8. Earnings Per Share

Effective January 1, 2009, the Company adopted ASC subtopic 260-10, Determining Whether Instruments Granted in Share-Based Payments Transactions Are Participating Securities. ASC 260-10 provides that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are participating securities and are to be included in the computation of earnings per share under the two-class method. The Company’s unvested restricted shares contain rights to receive nonforfeitable dividends and are participating securities, requiring the two-class method of computing earnings per share.

The Company paid a ten percent stock dividend on September 4, 2013. As such, the weighted average number of shares used for basic and diluted earnings per share have been adjusted retroactively in the prior periods.

The following table is a summary of the elements used in calculating basic and diluted earnings per share for the three and six months ended June 30, 2014 and 2013:

	Three Months Ended June 30,				Six Months Ended June 30,
(Amounts in Thousands, except for earnings per share)	2014		2013		2014		2013
Basic earnings per share:
Net income attributable to AmTrust common shareholders	$	106,274	$	71,397	$	206,125	$	155,275
Less: Net income allocated to participating securities and redeemable non-controlling interest	325		68		574		164
Net income allocated to AmTrust common shareholders	$	105,949	$	71,329	$	205,551	$	155,111
Weighted average common shares outstanding – basic	75,209		74,169		74,973		74,028
Less: Weighted average participating shares outstanding	230		71		209		71
Weighted average common shares outstanding - basic	74,979		74,098		74,764		73,957
Net income per AmTrust common share - basic	$	1.41	$	0.96	$	2.75	$	2.10
Diluted earnings per share:
Net income attributable to AmTrust common shareholders	$	106,274	$	71,397	$	206,125	$	155,275
Less: Net income allocated to participating securities and redeemable non-controlling interest	325		68		574		164
Net income allocated to AmTrust common shareholders	$	105,949	$	71,329	$	205,551	$	155,111
Weighted average common shares outstanding – basic	74,979		74,098		74,764		73,957
Plus: Dilutive effect of stock options, convertible debt, other	4,700		2,807		4,201		2,824
Weighted average common shares outstanding – dilutive	79,679		76,905		78,965		76,781
Net income per AmTrust common shares – diluted	$	1.33	$	0.93	$	2.60	$	2.02

As of June 30, 2014, there were less than 10,000 anti-dilutive securities excluded from diluted earnings per share.

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9. Share Based Compensation

The Company’s 2010 Omnibus Incentive Plan (the “Plan”), which permits the Company to grant to its officers, employees and non-employee directors incentive compensation directly linked to the price of the Company’s stock, authorizes up to an aggregate of 7,315,068 shares of Company stock for awards of options to purchase shares of the Company’s common stock, restricted stock, restricted stock units (“RSU”), performance shares units (“PSU”) or appreciation rights. Shares used may be either newly issued shares or treasury shares or both. The aggregate number of shares of common stock for which awards may be issued may not exceed 7,315,068 shares, subject to the authority of the Company’s board of directors to adjust this amount in the event of a consolidation, reorganization, stock dividend, stock split, recapitalization or similar transaction affecting the Company’s common stock. As of June 30, 2014, approximately 4,600,000 shares of Company common stock remained available for grants under the Plan.

The Company recognizes compensation expense under FASB ASC 718-10-25 for its share-based payments based on the fair value of the awards. The Company grants stock options at prices equal to the closing stock price of the Company’s stock on the dates the options are granted. The options have a term of ten years from the date of grant and vest primarily in equal annual installments over the four year period following the date of grant for employee options. The Company uses the simplified method in determining the expected life. Employees have three months after the employment relationship ends to exercise all vested options. The fair value of each option grant is separately estimated for each vesting date. The fair value of each option is amortized into compensation expense on a straight-line basis between the grant date for the award and each vesting date. The Company has estimated the fair value of all stock option awards as of the date of the grant by applying the Black-Scholes-Merton multiple-option pricing valuation model. The application of this valuation model involves assumptions that are judgmental and highly sensitive in the determination of compensation expense. The Company grants restricted shares, RSUs and PSUs with a grant date value equal to the closing stock price of the Company’s stock on the dates the shares or units are granted and the restricted shares and RSUs vest over a period of two to four years, while PSUs vest based on terms of the awards.

The Company paid a ten percent stock dividend on September 4, 2013. At the dividend date, all options outstanding were adjusted by ten percent and their respective exercise prices were reduced by ten percent, which ultimately resulted in each outstanding share having the same fair value immediately prior to and subsequent to the dividend date. Therefore, the Company did not record any additional compensation expense as a result of the stock dividend. The Company also adjusted outstanding RSUs, unvested restricted stock and PSUs, resulting in no additional compensation expense. The following information and tables below for stock options, restricted stock and RSUs have been adjusted retroactively in all periods presented.

The following schedule shows all options granted, exercised, and expired under the Plan for the six months ended June 30, 2014 and 2013:

	2014				2013
	Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
Outstanding at beginning of period	2,997,460		$	10.49	3,675,776		$	9.41
Granted	27,500		32.49		66,001		28.88
Exercised	(604,646	)	8.75		(360,768	)	7.15
Cancelled or terminated	—		—		—		—
Outstanding end of period	2,420,314		$	11.18	3,381,009		$	10.03

The weighted average grant date fair value of options granted during the six months ended June 30, 2014 and 2013 was approximately $14.16 and $7.97, respectively.

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A summary of the Company’s restricted stock and RSU activity for the six months ended June 30, 2014 and 2013 is shown below:

	2014				2013
	Shares or Units		Weighted Average Grant Date Fair Value		Shares or Units		Weighted Average Grant Date Fair Value
Non-vested at beginning of period	917,015		$	24.43	888,197		$	20.86
Granted	868,702		38.88		241,963		30.16
Vested	(310,640	)	22.14		(253,655	)	20.05
Forfeited	(5,436	)	23.89		(386	)	29.31
Non-vested at end of period	1,469,641		$	33.46	876,119		$	23.66

The Company has 328,788 PSUs granted as of June 30, 2014. During the six months ended June 30, 2014, 347,875 PSUs were converted to restricted share awards based on achievements of certain targets. PSUs are conditional grants of a specified maximum number of common shares. In general, grants are earned, subject to the attainment of pre-specified performance goals at the end of the pre-determined period. The fair value of these PSUs on the date of the grants was $12,328.

Compensation expense for all share-based payments under ASC 718-10-30 was approximately $4,511 and $2,673 for the three months ended June 30, 2014 and 2013, respectively, and $8,661 and $4,781 for the six months ended June 30, 2014 and 2013, respectively.

The intrinsic value of stock options exercised during the six months ended June 30, 2014 and 2013 was $17,674 and $8,123, respectively. The intrinsic value of stock options that were outstanding as of June 30, 2014 and 2013 was $74,142 and $86,780, respectively.

Cash received from options exercised was $2,469 and $2,472 during the six months ended June 30, 2014 and 2013, respectively. The excess tax benefit from award exercises was approximately $3,463 and $2,419 for the six months ended June 30, 2014 and 2013, respectively.

10. Income Taxes

The following table is a reconciliation of the Company’s statutory income tax expense to its effective tax rate for the three and six months ended June 30, 2014 and 2013:

	Three Months Ended June 30,						Six Months Ended June 30,
(Amounts in Thousands)	2014			2013			2014			2013
Income before equity in earnings of unconsolidated subsidiaries	$	118,156		$	91,739		$	228,812		$	189,299
Tax at federal statutory rate of 35%	$	41,355		$	32,109		$	80,084		$	66,255
Tax effects resulting from:
Income (loss) of non-includible foreign subsidiaries	(14,255		)	(10,535		)	(63,133		)	(30,122		)
Other, net	(9,134		)	5,828			28,459			7,378
	$	17,966		$	27,402		$	45,410		$	43,511
Effective tax rate	15.2		%	29.9		%	19.8		%	23.0		%

The Company's effective tax rate was positively impacted by approximately 14.6% and 5.0% during the three months ended June 30, 2014 and 2013, respectively, and by approximately 8.1% and 6.3% during the six months ended June 30, 2014 and 2013, respectively, due to a decrease in the deferred tax liability associated with the Company's equalization reserves for its Luxembourg reinsurers.

The Company’s management believes that it will realize the benefits of its deferred tax assets, which is included as a component of the Company’s net deferred tax liability, and, accordingly, no valuation allowance has been recorded for the periods presented.

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The earnings of certain of the Company’s foreign subsidiaries have been indefinitely reinvested in foreign operations. Therefore, no provision has been made for any U.S. taxes or foreign withholding taxes that may be applicable upon any repatriation or disposition. The determination of any unrecognized deferred tax liability for temporary differences related to investments in certain of the Company’s foreign subsidiaries is not practicable. At June 30, 2014 and December 31, 2013, the financial reporting basis in excess of the tax basis for which no deferred taxes have been recognized was approximately $463,300 and $360,000, respectively.

The Company’s major taxing jurisdictions include the U.S. (federal and state), the United Kingdom and Ireland. The years subject to potential audit vary depending on the tax jurisdiction. Generally, the Company’s statute of limitation is open for tax years ended December 31, 2010 and forward. As permitted by FASB ASC 740-10, the Company recognizes interest and penalties, if any, related to unrecognized tax benefits in its income tax provision. The Company has not recorded any unrecognized tax benefits or any related interest and penalties at June 30, 2014 and December 31, 2013, respectively.

11. Related Party Transactions

Maiden

The Company has various reinsurance and service agreements with Maiden Holdings, Ltd. (“Maiden”). Maiden is a publicly-held Bermuda insurance holding company (Nasdaq: MHLD) formed by Michael Karfunkel, George Karfunkel and Barry Zyskind, principal shareholders, and, respectively, the chairman of the board of directors, a director, and the chief executive officer and director of the Company. As of June 30, 2014, our principal shareholders, Michael Karfunkel, Leah Karfunkel (wife of Michael Karfunkel and sole trustee of the Michael Karfunkel 2005 Grantor Retained Annuity Trust), George Karfunkel and Barry Zyskind, own or control approximately 6.2%, 7.6%, 9.3% and 5.1%, respectively, of the issued and outstanding capital stock of Maiden. Mr. Zyskind serves as the non-executive chairman of the board of Maiden’s board of directors. Maiden Insurance Company, Ltd. (“Maiden Insurance”), a wholly-owned subsidiary of Maiden, is a Bermuda reinsurer. The following section describes the agreements in place between the Company and its subsidiaries and Maiden and its subsidiaries.

Reinsurance Agreements with Maiden Holdings, Ltd.

In 2007, the Company and Maiden entered into a master agreement, as amended, by which the parties caused the Company’s Bermuda subsidiary, AmTrust International Insurance, Ltd. (“AII”) and Maiden Insurance to enter into a quota share reinsurance agreement (the “Maiden Quota Share”), as amended, by which AII retrocedes to Maiden Insurance an amount equal to 40% of the premium written by the Company’s U.S., Irish and U.K. insurance companies (the “AmTrust Ceding Insurers”), net of the cost of unaffiliated inuring reinsurance (and in the case of the Company’s U.K. insurance subsidiary, AmTrust Europe Ltd. ("AEL"), net of commissions) and 40% of losses excluding certain business that the Company commenced writing after the effective date, including the Company’s European medical liability business discussed below, business assumed from Tower Group International, Ltd. pursuant to the cut-through quota share reinsurance agreement, and risks, other than workers’ compensation risks and certain business written by the Company’s Irish subsidiary, AmTrust International Underwriters Limited (“AIU”), for which the AmTrust Ceding Insurers’ net retention exceeds $5,000 (“Covered Business”).

On March 7, 2013, after receipt of approval from each of the Company’s and Maiden’s Audit Committee, the Company and Maiden executed an amendment to the Maiden Quota Share. The amendment provides that, effective January 1, 2013, AII receives a ceding commission of 31% of ceded written premiums with respect to all Covered Business other than retail commercial package business, for which the ceding commission remains 34.375%. With regards to the Specialty Program portion of Covered Business only, the Company will be responsible for ultimate net loss otherwise recoverable from Maiden Insurance to the extent that the loss ratio to Maiden Insurance, which shall be determined on an inception to date basis from July 1, 2007 through the date of calculation, is between 81.5% and 95% (the "Specialty Program Loss Corridor"). For the purpose of determining whether the loss ratio falls within the Specialty Program Loss Corridor, workers’ compensation business written in the Company’s Specialty Program segment from July 1, 2007 through December 31, 2012 is excluded from the loss ratio calculation.

The Maiden Quota Share was renewed through July 1, 2016 and will automatically renew for successive three-year terms unless either AII or Maiden Insurance notifies the other of its election not to renew not less than nine months prior to the end of any such three-year term. In addition, either party is entitled to terminate on thirty days’ notice or less upon the occurrence of certain early termination events, which include a default in payment, insolvency, change in control of AII or Maiden Insurance, run-off, or a reduction of 50% or more of the shareholders’ equity of Maiden Insurance or the combined shareholders’ equity of AII and the AmTrust Ceding Insurers.

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Effective April 1, 2011, the Company, through its subsidiaries AEL and AIU, entered into a reinsurance agreement with Maiden Insurance by which the Company cedes to Maiden Insurance 40% of its European medical liability business, including business in force at April 1, 2011. The quota share had an initial term of one year and was renewed through March 31, 2015. The agreement can be terminated by either party on four months’ prior written notice. Maiden Insurance pays the Company a 5% ceding commission, and the Company will earn a profit commission of 50% of the amount by which the ceded loss ratio is lower than 65%.

 The following is the effect on the Company’s results of operations for the three and six months ended June 30, 2014 and 2013 related to Maiden Reinsurance agreements:

	Three Months Ended June 30,						Six Months Ended June 30,
(Amounts in Thousands)	2014			2013			2014			2013
Results of operations:
Premium written – ceded	$	(363,706	)	$	(283,052	)	$	(772,264	)	$	(588,838	)
Change in unearned premium – ceded	48,268			31,060			144,158			109,156
Earned premium - ceded	$	(315,438	)	$	(251,992	)	$	(628,106	)	$	(479,682	)
Ceding commission on premium written	$	110,969		$	82,511		$	229,309		$	172,010
Ceding commission – deferred	(19,724		)	(15,354		)	(49,958		)	(40,895		)
Ceding commission – earned	$	91,245		$	67,157		$	179,351		$	131,115
Incurred loss and loss adjustment expense – ceded	$	222,698		$	154,453		$	436,981		$	307,418

Note Payable to Maiden – Collateral for Proportionate Share of Reinsurance Obligations

In conjunction with the Maiden Quota Share, as described above, AII entered into a loan agreement with Maiden Insurance during the fourth quarter of 2007, whereby Maiden Insurance loaned to AII the amount equal to its quota share of the obligations of the AmTrust Ceding Insurers that AII was then obligated to secure. The loan agreement provides for interest at a rate of LIBOR plus 90 basis points and is payable on a quarterly basis. Advances under the loan are secured by a promissory note and totaled $167,975 as of June 30, 2014 and December 31, 2013, respectively. The Company recorded $447 and $891 of interest expense during the three and six months ended June 30, 2014, respectively, and $436 and $930 of interest expense during the three and six months ended June 30, 2013, respectively. Effective December 1, 2008, AII and Maiden Insurance entered into a Reinsurer Trust Assets Collateral agreement whereby Maiden Insurance is required to provide AII the assets required to secure Maiden’s proportional share of the Company’s obligations to its U.S. subsidiaries. The amount of this collateral as of June 30, 2014 was approximately $1,337,571. Maiden retains ownership of the collateral in the trust account.

Reinsurance Brokerage Agreement

Effective July 1, 2007, the Company, through a subsidiary, entered into a reinsurance brokerage agreement with Maiden. Pursuant to the brokerage agreement, the Company provides brokerage services relating to the Maiden Quota Share for a fee equal to 1.25% of reinsured premium. The Company recorded $4,650 and $9,670 of brokerage commission during the three and six months ended June 30, 2014, respectively, and $6,783 and $10,442 of brokerage commission during the three and six months ended June 30, 2013, respectively. The brokerage commission was recorded as a component of service and fee income.

Asset Management Agreement

Effective July 1, 2007, the Company, through a subsidiary, entered into an asset management agreement with Maiden, pursuant to which the Company provides investment management services to Maiden and its affiliates. As of June 30, 2014, the Company managed approximately $3,305,248 of assets related to this agreement. The investment management services fee is an annual rate of 0.20% for periods in which average invested assets are $1,000,000 or less and an annual rate of 0.15% for periods in which the average invested assets exceeds $1,000,000. As a result of this agreement, the Company recorded $1,265 and $2,489 of investment management fees during the three and six months ended June 30, 2014, respectively, and $1,061 and $2,102 of investment management fees during the three and six months ended June 30, 2013, respectively. The investment management fees were recorded as a component of service and fee income.

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National General Holding Corp.

The Company has a 13.2% ownership interest in National General Holding Corp. (“NGHC”). NGHC is a publicly-held insurance holding company (Nasdaq: NGHC) that operates fourteen insurance companies in the United States and writes consumer property and casualty insurance business through independent agents for automobiles. Its coverages include standard/preferred auto, RVs, non-standard auto and commercial auto. NGHC's two largest shareholders are the Michael Karfunkel 2005 Grantor Retained Annuity Trust (the “Trust”) and Michael Karfunkel individually. Michael Karfunkel is the chairman of the board of directors of the Company and the father-in-law of Barry D. Zyskind, the chief executive officer of the Company. The ultimate beneficiaries of the Trust include Michael Karfunkel’s children, one of whom is married to Mr. Zyskind. In addition, Michael Karfunkel is the Chairman, President and Chief Executive Offer of NGHC. In accordance with ASC 323-10-15, Investments-Equity Method and Joint Ventures, the Company accounts for its investment in NGHC under the equity method as it has the ability to exert significant influence on NGHC's operations.

In February 2014, NGHC issued approximately 13,600,000 shares in a follow on Rule 144A offering, which resulted in the Company reducing its ownership percentage in NGHC from 15.4% to 13.2%. As a result of the stock issuance, the Company recognized a gain on sale of its equity investment of $14,712, which is included in equity in earnings of unconsolidated subsidiary. In total, the Company recorded $3,999 and $22,515 of income during the three and six months ended June 30, 2014, respectively, and $7,060 and $8,610 of income during the three and six months ended June 30, 2013, respectively, related to its equity investment in NGHC.

Master Services Agreement

The Company provides NGHC and its affiliates information technology development services in connection with the development and licensing of a policy management system at a cost which is currently 1.25% of gross written premium of NGHC and its affiliates plus the Company’s costs for development and support services. In addition, the Company provides NGHC and its affiliates printing and mailing services at a per piece cost for policy and policy related materials, such as invoices, quotes, notices and endorsements, associated with the policies the Company processes for NGHC and its affiliates on the policy management system. The Company recorded approximately $8,024 and $13,063 of fee income during the three and six months ended June 30, 2014, respectively, and $5,996 and $11,372 of fee income during the three and six months ended June 30, 2013, respectively, related to this agreement. Additionally, the Company provided certain consulting services to NGHC related to Luxembourg-domiciled reinsurance entities, for which the Company received $1,057. The fees for these services were recorded as a component of service and fee income.

Asset Management Agreement

The Company manages the assets of NGHC and its subsidiaries for an annual fee equal to 0.20% of the average aggregate value of the assets under management for the preceding quarter if the average aggregate value for the preceding quarter is $1,000,000 or less and 0.15% of the average aggregate value of the assets under management for the preceding quarter if the average aggregate value for that quarter is more than $1,000,000. The Company managed approximately $1,421,593 of assets as of June 30, 2014 related to this agreement. As a result of this agreement, the Company earned approximately $461 and $890 of investment management fees during the three and six months ended June 30, 2014, respectively, and $490 and $853 of investment management fees during the three and six months ended June 30, 2013, respectively. The investment management fees were recorded as a component of service and fee income.

As a result of the above service agreements with NGHC, the Company recorded fees totaling approximately $8,485 and $13,953 for the three and six months ended June 30, 2014, respectively, and $6,486 and $12,225 for the three and six months ended June 30, 2013, respectively. As of June 30, 2014, the outstanding balance payable by NGHC related to these service fees and reimbursable costs was approximately $13,625.

800 Superior

In 2011, the Company formed 800 Superior, LLC with a subsidiary of NGHC for the purposes of acquiring an office building in Cleveland, Ohio. The Company and NGHC each have a fifty percent ownership interest in 800 Superior, LLC. The cost of the building was approximately $7,500. The Company has been appointed managing member of the LLC. Additionally, in conjunction with the Company’s 13.2% ownership percentage of NGHC, the Company ultimately receives 57.7% of the profits and losses of the LLC. As such, in accordance with ASC 810-10, Consolidation, the Company has been deemed the primary beneficiary and, therefore, consolidates this entity.

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Additionally in 2012, NGHC entered into an office lease with 800 Superior, LLC for approximately 134,000 square feet. The lease period is for fifteen years. NGHC paid 800 Superior, LLC approximately $533 and $935 of rent during the three and six months ended June 30, 2014, respectively, and $535 and $1,071 of rent during the three and six months ended June 30, 2013, respectively, under this lease. As discussed in Note 13. "New Market Tax Credit," 800 Superior, LLC, the Company and NGHC participated in a financing transaction related to capital improvements on the office building. As part of that transaction, NGHC and the Company entered into an agreement related to the payment and performance guaranties provided by the Company to the various parties to the financing transaction whereby NGHC has agreed to contribute 50% toward any payments the Company is required to make pursuant to the guaranties.

Sale of Personal Express Insurance Company

In April 2014, the Company completed the sale of Personal Express Insurance Company (“PEIC”) and its captive insurance agency Personal Express Insurance Services, Inc. (“PEIS” and, together with PEIC, the “Personal Express Companies”) to Integon National Insurance Company, a subsidiary of NGHC, for approximately $21,743. As a result of the the sale, the Company recorded a gain on sale of approximately $6,631. The Personal Express Companies were wholly-owned subsidiaries of Sequoia Insurance Company, which is one of the Company’s wholly-owned subsidiaries. PEIC is a California-domiciled property and casualty insurance carrier that offers retail personal lines insurance products in California.  The Personal Express Companies offer three primary lines of direct-to-market personal insurance products: personal auto, homeowners and dwelling fire insurance.

The Company’s Board of Directors established a special committee of independent directors (the “Special Committee”) to evaluate and negotiate the sale of the Personal Express Companies and alternatives thereto. The Special Committee was authorized, among other things, to take any and all actions necessary and advisable in connection with the potential sale of the Personal Express Companies, including, without limitation, the review, consideration, evaluation, negotiation and effectuation of any possible transaction involving the Personal Express Companies and to retain, at the Company’s expense, such financial, legal and other advisors as it deemed appropriate. The resolutions confirming the Special Committee’s power and authority provided that no transaction involving the Personal Express Companies would be effected without a prior favorable recommendation of the Special Committee.

Pursuant to its authority, the Special Committee retained its own independent legal counsel and financial advisor to represent it in connection with the sales process. The Special Committee, with the assistance of its legal and financial advisors, contacted over 75 potential bidders, provided various potential bidders with a confidential information memorandum and facilitated due diligence calls and meetings between members of the Personal Express Companies’ management team and potential bidders. The Special Committee, upon consideration of the proposed transaction and the alternatives thereto, including, but not limited to maintaining the Personal Express Companies as wholly-owned subsidiaries, and in consultation with its independent legal counsel and financial advisor, recommended the sale of the Personal Express Companies to a subsidiary of NGHC, on the terms and conditions negotiated by the Special Committee with the assistance of its independent counsel and financial advisor.

Personal Lines Quota Share

The Company was a party to a quota share reinsurance agreement (“Personal Lines Quota Share”) with Integon National Insurance Company ("Integon"). On August 1, 2013, the Company and its wholly-owned subsidiary, Technology Insurance Company, Inc. (“TIC”), received notice from Integon that Integon was terminating, effective August 1, 2013, TIC's participation in the Personal Lines Quota Share. The termination is on a run-off basis, meaning TIC will continue to receive net premiums and assume related net losses with respect to policies in force as of July 31, 2013 through the expiration of such policies. The results of its operations from the Personal Lines Quota Share represent the Company's Personal Lines Reinsurance segment. The Company assumed $28,975 and $59,627 of business as a result of this agreement during the three and six months ended June 30, 2013, respectively.

ACP Re, Ltd.

The Company has service and quota share agreements with ACP Re, Ltd. (“ACP Re”). ACP Re is a privately-held Bermuda reinsurance holding company formed by Michael Karfunkel, the chairman of the board of the Company. The following section describes the agreements in place between the Company and its subsidiaries and ACP Re and its subsidiaries.

Asset Management Agreement

The Company provides investment management services to ACP Re at (i) an annual rate of 0.20% of the average value of ACP Re’s invested assets, excluding investment in AmTrust stock, for the preceding calendar quarter if the average value of such assets for the quarter was $1,000,000 or less, or (ii) an annual rate of 0.15% of the average value of ACP Re’s invested assets,

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excluding investment in AmTrust stock, for the preceding calendar quarter if the average value of such assets for the quarter was greater than $1,000,000. The Company managed approximately $127,548 of assets as of June 30, 2014. The Company recorded approximately $61 and $116 of investment management fees during the three and six months ended June 30, 2014, respectively, and $58 and $110 of investment management fees during the three and six months ended June 30, 2013, respectively. The investment management fees were recorded as a component of service and fee income.

Reinsurance Agreements and Assumption of Premium from Tower

In January 2014, ACP Re, through a subsidiary, agreed to acquire 100% of the outstanding stock of Tower Group International, Ltd. (“Tower”) and merge with Tower (the “Merger”). In connection with the Merger, the Company and NGHC agreed to (i) acquire the renewal rights and certain other assets related to Tower’s commercial lines insurance operations and personal lines insurance operations, respectively, (ii) administer the run-off of Tower’s historical commercial lines claims and personal lines claims at cost, (iii) in their discretion, place commercial lines business and personal lines business with the Tower insurance companies, which they will exclusively manage and fully reinsure for a net 2% ceding fee payable to the Tower insurance companies, (iv) retain the expirations on all business written by the Tower insurance companies through the Company and NGHC, as managers, and (v) receive the agreement of the Tower insurance companies and ACP Re not to compete with respect to the commercial lines business and personal lines business.

Pursuant to the foregoing, the Company, on April 8, 2014, entered into a Commercial Lines Master Agreement with ACP Re (the “Master Agreement”), which was subsequently amended and restated on July 23, 2014, which provides for the Company's entry into the following agreements, subject to regulatory approval and the consummation of the Merger:

• a credit agreement by which the Company will provide financing to ACP Re in the aggregate principal amount of $125,000 with a seven years term, bearing interest at 7.00% per year;

• the Company, through a subsidiary, will enter into an administrative services agreement with ACP Re to manage and administer the runoff of commercial lines claims and policies written by the Tower insurance companies prior to the Merger;

• the Company, or one of its subsidiaries, will enter into a commercial lines managing general agent agreement with ACP Re to manage and administer the ongoing commercial lines policies after the Merger;

• the Company, through one of its insurance subsidiaries, will enter into a 100% quota share reinsurance agreement with ACP Re to reinsure the net retained business written post-closing by the Tower insurance companies pursuant to the commercial lines managing general agent agreement;

• the Company, along with NGHC, as reinsurers, will enter into a $250,000 aggregate stop loss reinsurance agreement with a subsidiary of Tower and ACP Re will enter into a reinsurance agreement by which it reinsures the full amount of any payments that the Company and NGHC would be obligated to pay under the aggregate stop loss reinsurance agreement; and

• the Company, through a subsidiary, will enter into an investment management agreement with ACP Re to provide investment management services to the Tower insurance companies.

As a result of the adverse development disclosed by Tower and its impact on ACP Re’s current estimate of Tower’s expected financial position at the closing of the Merger, the Company and NGHC agreed, in addition to the financing described above, to compensate ACP Re for the value the Company and NGHC are expected to achieve as a result of the transaction and the greater risk assumed by ACP Re. The Company will pay ACP Re contingent consideration in the form of an earnout (the “Contingent Payments”), payable semi-annually on the last day of January and July, of 3% of gross written premium of the Tower commercial lines business written or assumed by the Company following the closing in connection with the transaction for a three-year period. The Contingent Payments to be made by the Company are capped at a total of $30 million, in the aggregate, over the three-year period. NGHC will pay contingent consideration to ACP Re on the same terms.

The transaction remains subject to regulatory approval and the consummation of the Merger. There is no assurance that modifications to the terms of the transaction described above will not need to be made in order to obtain regulatory approval.

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Lease Agreements

The Company has an office lease for its office space at 59 Maiden Lane in New York, New York from 59 Maiden Lane Associates, LLC, an entity that is wholly-owned by Michael Karfunkel and George Karfunkel. The Company currently leases 39,992 square feet of office space and the lease term is through May 2023. The Company paid approximately $453 and $920 of rent during the three and six months ended June 30, 2014, respectively, and $163 and $364 of rent during the three and six months ended June 30, 2013, respectively, for the leased office space.

In November 2012, the Company entered into an agreement for its office space in Chicago, Illinois. The lease is with 135 LaSalle Property, LLC, an entity that is wholly-owned by entities controlled by Michael Karfunkel and George Karfunkel. The lease term is through November 30, 2022. The Company paid approximately $74 and $185 of rent during the three and six months ended June 30, 2014, respectively, and $109 and $253 of rent during the three and six months ended June 30, 2013, respectively, for the leased office space.

Use of the Company Aircraft

The Company’s wholly-owned subsidiary, AmTrust Underwriters, Inc. (“AUI”), is a party to an aircraft time share agreement with each of Maiden and NGHC. The agreements provide for payment to AUI for usage of its company-owned aircraft and covers actual expenses incurred and permissible under federal aviation regulations, including travel and lodging expenses of the crew, in-flight catering, flight planning and weather contract services, ground transportation, fuel, landing and hanger fees, and airport taxes, among others. AUI does not charge Maiden or NGHC for the fixed costs that would be incurred in any event to operate the aircraft (for example, aircraft purchase costs, insurance and flight crew salaries). The amount that each of Maiden and NGHC paid for the use of AUI's aircraft under these agreements was not material either individually or in aggregate during the three and six months ended June 30, 2014, and 2013, respectively.

In addition, for personal travel, Mr. Zyskind, the Company’s President and Chief Executive Officer and Michael Karfunkel, the Chairman of the Board, each entered into an aircraft reimbursement agreement with AUI and, since entering into such agreement, have fully reimbursed AUI for the incremental cost billed by AUI for their personal use of AUI’s aircraft. The amount that each of Mr. Zyskind and Mr. Karfunkel reimbursed the Company for his personal use of AUI's aircraft under his respective agreement was not material either individually or in aggregate during the three and six months ended June 30, 2014, and 2013, respectively.

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12. Acquisitions

The Insco Dico Group

On January 3, 2014, the Company completed the acquisition of The Insco Dico Group ("Insco Dico") and its subsidiaries for a purchase price of approximately $88,700. The transaction was funded with the Company's existing working capital. Insco Dico's subsidiaries include Developers Surety and Indemnity Company and Indemnity Company of California, which offer surety insurance to developers and contractors in all 50 states with California as the largest state. In addition, Insco Dico's subsidiary, Builders Insurance Services, markets general liability insurance policies to contractors in several states in the western region of the U.S.

A summary of the preliminary assets acquired and liabilities assumed for Insco Dico are as follows:

(Amounts in Thousands)
Assets
	Cash and investments	$	130,031
	Premium receivables	8,684
	Reinsurance recoverable	5,799
	Deferred tax asset	3,845
	Other assets	2,114
	Property and equipment	1,190
	Goodwill and intangible assets	16,494
Total assets		$	168,157
Liabilities
	Unearned premiums	$	25,715
	Loss and loss expense reserves	25,210
	Accrued liabilities	10,210
	Notes payable	10,000
	Funds held for policyholders	5,864
	Deferred tax liability	2,458
Total liabilities		$	79,457
Cash paid		$	88,700

The goodwill and intangible assets, as well as Insco Dico's results of operations, are included as a component of the Small Commercial Business segment. The identifiable intangible assets consist of agency relationships, which have a 20 year life, and licenses that have an indefinite life. The Company is in the process of completing its acquisition accounting and expects to have it completed in 2014.

As a result of this transaction, the Company recorded approximately $15,678 and $28,765 of written premium during the three and six months ended June 30, 2014, respectively, related to Insco Dico. Additionally, the Company recorded approximately $220 and $579 of fee income during the three and six months ended June 30, 2014, respectively, related to Insco Dico.

Sagicor Europe Limited

On December 23, 2013, the Company, through one of its subsidiaries, completed the acquisition of Sagicor Europe Limited and its wholly owned subsidiaries, including Sagicor at Lloyd's Limited, from Sagicor Financial Corporation for approximately $93,113. Sagicor Europe Limited and Sagicor at Lloyd's Limited subsequently changed their names to Amtrust Lloyd's Holdings Limited and AmTrust at Lloyd's Limited, respectively. AmTrust at Lloyd's Limited is a managing agency and owner of Lloyd's property/casualty insurance syndicate 1206 with stamp capacity of $330,000 and Lloyd's life insurance syndicate 44 with stamp capacity of $16,500.

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A summary of the preliminary assets acquired and liabilities assumed for AmTrust Lloyd's Holdings Limited are as follows:

(Amounts in Thousands)
Assets
	Cash and investments	$	429,476
	Prepaid insurance	122,673
	Premium receivables	89,801
	Other receivable	54,479
	Deferred tax asset	29,916
	Other assets	10,502
	Property and equipment	5,010
	Goodwill and intangible assets	33,539
Total assets		$	775,396
Liabilities
	Loss and loss expense reserves	$	496,836
	Unearned premium	113,182
	Accrued expense and other liabilities	55,950
	Ceded reinsurance	16,315
Total liabilities		$	682,283
Cash paid		$	93,113

The goodwill and intangible assets, as well as AmTrust Lloyd's Holdings Limited's results of operations, are included as a component of the Specialty Risk and Extended Warranty segment. The Company is in the process of completing its acquisition accounting and expects to have it completed in 2014.

As a result of this transaction, the Company recorded approximately $84,284 and $167,599 of written premium during the three and six months ended June 30, 2014, respectively, related to Sagicor.

Mutual Insurers Holding Company

On May 13, 2013, the Company completed the acquisition of Mutual Insurers Holding Company (“MIHC”) and its subsidiaries. MIHC's primary operating subsidiary, First Nonprofit Insurance Company ("FNIC"), is the third largest provider of property and casualty insurance products to nonprofit organizations in the U.S. Immediately prior to the acquisition, MIHC converted from a mutual form to a stock form of ownership in a transaction “sponsored” by the Company. As required by the plan of conversion and applicable Delaware law, the Company offered shares of its common stock, at a discount to the market price, to the members of MIHC who held policies as of December 31, 2012 and the directors, officers and employees of MIHC and its subsidiaries. The Company received subscriptions for approximately $472, resulting in the issuance by the Company of 18 shares of its common stock at a discounted price of 20.0% from the Company's market trading price, or approximately $118. Pursuant to the stock purchase agreement, after the expiration of the offering, the Company purchased all of the authorized shares of capital stock of MIHC at a purchase price equal to the greater of the gross proceeds received by the Company in the offering, and $8,000. The Company made a payment to MIHC of $48,500, which included the $472 in proceeds the Company received in the offering, for the stock of FNIC. Additionally, the Company as part of the transaction, was required to make a contribution to First Nonprofit Foundation, a tax exempt corporation principally funded by FNIC's predecessor and managed for the benefit of nonprofit organizations, in the amount of $7,882, which represented $8,000, as discussed above, less the discount of approximately $118 on the shares issued by the Company in the transaction. The remaining $40,618 of cash contributed to MIHC was retained by the Company. Additionally, the Company assumed $6,500 of debt in the transaction. In accordance with FASB ASC 805-10 Business Combinations, the Company recorded an acquisition price of approximately $14,500.

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A summary of the assets acquired and liabilities assumed for MIHC are as follows:

(Amounts in Thousands)
Assets
	Cash and investments	$	134,780
	Premium receivables	23,085
	Other assets	43,714
	Deferred tax asset	5,358
	Property and equipment	2,684
	Intangible assets	6,132
Total assets		$	215,753
Liabilities
	Loss and loss expense reserves	$	89,267
	Unearned premium	27,760
	Accrued liabilities	23,629
	Deferred tax liability	2,146
	Notes payable	6,500
Total liabilities		$	149,302
Cash paid		$	48,500
Acquisition gain		$	17,951

The intangible assets acquired consisted of state licenses and have an indefinite life. The intangible assets, as well as FNIC's results of operations, are included as a component of the Small Commercial Business segment.

In accordance with FASB ASC 944-805 Business Combinations, the Company adjusted to fair value FNIC's loss and LAE reserves by taking the acquired loss reserves recorded and discounting them based on expected reserve payout pattern using a current risk free rate. This risk free interest rate was then adjusted based on different cash flow scenarios that use different payout and ultimate reserve assumptions deemed to be reasonably possible based upon the inherent uncertainties present in determining the amount and timing of payment of such reserves. The difference between the acquired loss and LAE reserves and the Company's best estimate of the fair value of such reserves at acquisition date is amortized ratably over the payout period of the acquired loss and LAE reserves and was approximately $4,531. During the three months ended June 30, 2014, the Company adjusted its acquired deferred tax liability to $2,146 from $1,586 as of December 31, 2013. As a result of this adjustment, the Company retrospectively adjusted its gain recorded during the three months ended June 30, 2013 from $18,511 to $17,951. The Company completed its acquisition accounting during the three months ended June 30, 2014.

The Company recorded approximately $7,314 and $26,705 of written premium during the three and six months ended June 30, 2014, respectively, and approximately $2,238 of written premium during the three months ended June 30, 2013 related to MIHC.

Sequoia Insurance Company

On April 19, 2013, the Company completed the acquisition of all the issued and outstanding shares of common stock of Sequoia Insurance Company and its subsidiaries, Sequoia Indemnity Company and Personal Express Insurance Company (“Sequoia”) for approximately $60,000. Sequoia offers low hazard, property/casualty insurance products, including workers' compensation and commercial package insurance, to small businesses in several western states, with California representing Sequoia's largest market.

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A summary of the assets acquired and liabilities assumed for Sequoia are as follows:

(Amounts in Thousands)
Assets
	Cash and investments	$	215,473
	Premium receivables	32,870
	Reinsurance recoverables	43,793
	Other assets	4,014
	Deferred tax asset	1,242
	Property and equipment	1,022
	Intangible assets	11,848
Total assets		$	310,262
Liabilities
	Loss and loss expense reserves	$	165,487
	Unearned premium	59,773
	Accrued liabilities	15,624
	Deferred tax liability	4,147
Total liabilities		$	245,031
Purchase price		$	60,000
Acquisition gain		$	5,231

The intangible assets consists primarily of licenses and trademarks and have an indefinite life. The intangible assets, as well as Sequoia's results of operations, are included as a component of the Small Commercial Business segment.

In accordance with FASB ASC 944-805 Business Combinations, the Company adjusted to fair value Sequoia's loss and LAE reserves by taking the acquired loss reserves recorded and discounting them based on expected reserve payout pattern using a current risk free rate. This risk free interest rate was then adjusted based on different cash flow scenarios that use different payout and ultimate reserve assumptions deemed to be reasonably possible based upon the inherent uncertainties present in determining the amount and timing of payment of such reserves. The difference between the acquired loss and LAE reserves and the Company's best estimate of the fair value of such reserves at acquisition date is amortized ratably over the payout period of the acquired loss and LAE reserves and was approximately $7,448. During the three months ended June 30, 2014, the Company reduced its acquired deferred tax assets by $6,538 and increased its acquired deferred tax liability by $1,540. As a result of this adjustment, the Company retrospectively adjusted its gain recorded during the three months ended June 30, 2013 from $13,309 to $5,231. The Company completed its acquisition accounting during the three months ended June 30, 2014.

The Company recorded approximately $13,114 and $35,947 of written premium during the three and six months ended June 30, 2014, respectively, and approximately $21,457 of written premium during the three months ended June 30, 2013, respectively, related to Sequoia.

13.     New Market Tax Credit

In 2012, the Company's subsidiary, 800 Superior, LLC (an entity owned equally by the Company and NGHC) received $19,400 in net proceeds from a financing transaction the Company and NGHC entered into with Key Community Development Corporation (“KCDC”) related to a capital improvement project for an office building in Cleveland, Ohio owned by 800 Superior, LLC. The Company, NGHC and KCDC collectively made capital contributions (net of allocation fees) and loans to 800 Superior NMTC Investment Fund II LLC and 800 Superior NMTC Investment Fund I LLC (collectively, the “Investment Funds”) under a qualified New Markets Tax Credit (“NMTC”) program. The NMTC program was provided for in the Community Renewal Tax Relief Act of 2000 (the “Act”) and is intended to induce capital investment in qualified lower income communities. The Act permits taxpayers to claim credits against their federal income taxes for up to 39% of qualified investments in the equity of community development entities (“CDEs”). CDEs are privately managed investment institutions that are certified to make qualified low-income community investments (“QLICIs”).

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In addition to the capital contributions and loans from the Company, NGHC and KCDC, as part of the transaction, the Investment Funds received, directly and indirectly, proceeds of approximately $8,000 from two loans originating from state and local governments of Ohio. These loans are each for a period of 15 years and have an average interest rate of 1.7% per annum.

The Investment Funds then contributed the loan proceeds and capital contributions of $19,400 to two CDEs, which, in turn, loaned the funds on similar terms to 800 Superior, LLC. The proceeds of the loans from the CDEs (including loans representing the capital contribution made by KCDC, net of allocation fees) will be used to fund the capital improvement project. As collateral for these loans, the Company has granted a security interest in the assets acquired with the loan proceeds.

The Company and NGHC are each entitled to receive an equal portion of 49% of the benefits derived from the NMTCs generated by 800 Superior Investment Fund II LLC, while KCDC is entitled to the remaining 51%. The NMTC is subject to 100% recapture for a period of 7 years as provided in the Internal Revenue Code. During this seven-year compliance period, the entities involved are required to be in compliance with various regulations and contractual provisions that apply to the NMTC arrangement. Non-compliance with applicable requirements could result in the projected tax benefits not being realized and, therefore, could require the Company to indemnify KCDC for any loss or recapture of NMTCs related to the financing until such time as the obligation to deliver tax benefits is relieved. The Company does not anticipate any credit recaptures will be required in connection with this arrangement. In addition, this transaction includes a put/call provision whereby the Company may be obligated or entitled to repurchase KCDC's interest in the Investment Funds in September 2019 at the end of the recapture period. The Company believes that KCDC will exercise its put option and, therefore, attributed an insignificant value to the put/call.

The Company has determined that the Investment Funds are variable interest entities (“VIEs”). The ongoing activities of the Investment Funds - collecting and remitting interest and fees and NMTC compliance - were all considered in the initial design and are not expected to significantly affect economic performance throughout the life of the Investment Funds. When determining whether to consolidate the Investment Funds, Company management considered the contractual arrangements that obligate it to deliver tax benefits and provide various other guarantees to the structure, KCDC's lack of a material interest in the underlying economics of the project, and the fact that the Company is obligated to absorb losses of the Investment Funds. Also, the Company has a 13.2% ownership in NGHC, which was reduced from 15.40% as a result of the Rule 144A stock offering by NGHC in February of 2014. The Company concluded that it was the primary beneficiary and consolidated the Investment Funds, as VIEs, in accordance with the accounting standard for consolidation. KCDC's contribution, net of syndication fees, is included as accrued liability in the accompanying condensed consolidated balance sheets. Direct costs incurred in structuring the financing arrangement are deferred and will be recognized as expense over the term of the loans. Incremental costs to maintain the structure during the compliance period are recognized as incurred.

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14. Stockholder Equity and Accumulated Other Comprehensive Income (Loss)

The following table summarizes the ownership components of total stockholders' equity for the six months ended June 30, 2014 and 2013:

	2014									2013
(Amounts in Thousands)	AmTrust			Non-Controlling Interest			Total			AmTrust			Non-Controlling Interest			Total
Beginning Balance	$	1,441,005		$	137,860		$	1,578,865		$	1,144,121		$	103,344		$	1,247,465
Net income (loss)	210,007			(4,090		)	205,917			155,275			(877		)	154,398
Unrealized holding gain (loss)	87,451			—			87,451			(79,483		)	—			(79,483		)
Reclassification adjustment	(1,796		)	—			(1,796		)	3,261			—			3,261
Foreign currency translation	7,803			188			7,991			(15,565		)	—			(15,565		)
Unrealized gain on interest rate swap	234			—			234			936			—			936
Share exercises, compensation and other	11,130			—			11,130			7,253			—			7,253
Common share dividends	(30,170		)	—			(30,170		)	(18,899		)	—			(18,899		)
Preferred stock issuance, net of fees	—			—			—			111,130			—			111,130
Preferred stock dividends	(3,882		)	—			(3,882		)	—			—			—
Common share (repurchase) issuance	(10,969		)	—			(10,969		)	472			—			472
Capital contribution	—			19,955			19,955			—			6,158			6,158
Ending Balance	$	1,710,813		$	153,913		$	1,864,726		$	1,308,501		$	108,625		$	1,417,126

The following table summarizes Accumulated Other Comprehensive Income (Loss) for the six month periods ended June 30, 2014 and 2013:

(Amounts in Thousands)	Foreign Currency Items			Unrealized Gains (Losses) on Investments			Interest Rate Swap Hedge			Net Benefit Plan Assets and Obligations Recognized in Stockholders' Equity			Accumulated Other Comprehensive Income (Loss)
Balance December 31, 2013	$	2,582		$	(7,023	)	$	(1,985	)	$	(1,738	)	$	(8,164	)
Other comprehensive income before reclassification	12,005			134,540			360			—			146,905
Amounts reclassed from accumulated other comprehensive income	—			(2,763		)	—			—			(2,763		)
Income tax expense	(4,202		)	(46,122		)	(126		)	—			(50,450		)
Net current-period other comprehensive income	7,803			85,655			234			—			93,692
Balance, June 30, 2014	$	10,385		$	78,632		$	(1,751	)	$	(1,738	)	$	85,528
Balance December 31, 2012	$	(10,361	)	$	77,605		$	(3,013	)	$	—		$	64,231
Other comprehensive income before reclassification	(23,946		)	(122,281		)	1,440			—			(144,787		)
Amounts reclassed from accumulated other comprehensive income	—			5,017			—			—			5,017
Income tax benefit (expense)	8,381			41,042			(504		)				48,919
Net current-period other comprehensive income (loss)	(15,565		)	(76,222		)	936			—			(90,851		)
Balance, June 30, 2013	$	(25,926	)	$	1,383		$	(2,077	)	$	—		$	(26,620	)

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15. Contingent Liabilities

Litigation

From time to time, the Company is subject to routine legal proceedings, including arbitrations, arising in the ordinary course of business. The Company’s insurance subsidiaries are named as defendants in various legal actions arising principally from claims made under insurance policies and contracts. Those actions are considered by the Company in estimating the loss and LAE reserves. The Company’s management believes the resolution of those actions will not have a material adverse effect on the Company’s financial position or results of operations.

16. Segments

The Company currently operates three business segments, Small Commercial Business; Specialty Risk and Extended Warranty and Specialty Program. The Company's Personal Lines Reinsurance segment is in run-off due to the termination of Personal Lines Quota Share in August 2013. The “Corporate & Other” segment represents the activities of the holding company as well as a portion of service and fee revenue. In determining total assets (excluding cash and invested assets) by segment, the Company identifies those assets that are attributable to a particular segment such as deferred acquisition cost, reinsurance recoverable, goodwill, intangible assets and prepaid reinsurance while the remaining assets are allocated based on gross written premium by segment. In determining cash and invested assets by segment, the Company matches certain identifiable liabilities such as unearned premium and loss and loss adjustment expense reserves by segment. The remaining cash and invested assets are then allocated based on gross written premium by segment. Investment income and realized gains (losses) are determined by calculating an overall annual return on cash and invested assets and applying that overall return to the cash and invested assets by segment. Earned ceding commission is allocated to each segment based on that segment’s proportionate share of the Company’s overall acquisition costs. Interest expense is allocated based on gross written premium by segment. Income taxes are allocated on a pro-rata basis based on the Company’s effective tax rate. Additionally, management reviews the performance of underwriting income in assessing the performance of and making decisions regarding the allocation of resources to the segments. Underwriting income excludes, primarily, service and fee revenue, investment income and other revenues, other expenses, interest expense and income taxes. Management believes that providing this information in this manner is essential to providing the Company’s shareholders with an understanding of the Company’s business and operating performance.

The following tables summarize the results of operations of the business segments for the three and six months ended June 30, 2014 and 2013:

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(Amounts in Thousands)	Small Commercial Business			Specialty Risk and Extended Warranty			Specialty Program			Personal Lines Reinsurance - Run off			Corporate and Other			Total
Three months ended June 30, 2014:
Gross written premium	$	704,627		$	503,603		$	235,410		$	—		$	—		$	1,443,640
Net written premium	453,092			320,540			150,038			—			—			923,670
Change in unearned premium	(66,235		)	1,068			13,964			2,470			—			(48,733		)
Net earned premium	386,857			321,608			164,002			2,470			—			874,937
Loss and loss adjustment expense	(258,046		)	(215,814		)	(111,669		)	(1,704		)	—			(587,233		)
Acquisition costs and other underwriting expenses	(99,115		)	(63,643		)	(44,554		)	(748		)	—			(208,060		)
	(357,161		)	(279,457		)	(156,223		)	(2,452		)	—			(795,293		)
Underwriting income	29,696			42,151			7,779			18			—			79,644
Service and fee income	20,917			62,131			61			—			16,433			99,542
Investment income and realized gain	14,927			14,729			6,842			2			—			36,500
Other expenses	(43,224		)	(30,050		)	(14,314		)	—			—			(87,588		)
Interest expense	(6,250		)	(4,277		)	(2,060		)	—			—			(12,587		)
Foreign currency gain	—			1,084			—			—			—			1,084
Gain on life settlement contracts	(2,777		)	(1,446		)	(847		)	—			—			(5,070		)
Gain on sale of a subsidiary	6,631			—			—			—			—			6,631
Provision for income taxes	(3,003		)	(12,752		)	485			11			(2,707		)	(17,966		)
Equity in earnings of unconsolidated subsidiary  – related party	—			—			—			—			3,999			3,999
Net income attributable to AmTrust Financial Services, Inc.	$	16,917		$	71,570		$	(2,054	)	$	31		$	17,725		$	104,189
(Amounts in Thousands)	Small Commercial Business			Specialty Risk and Extended Warranty			Specialty Program			Personal Lines Reinsurance - Run off			Corporate and Other			Total
Three months ended June 30, 2013:
Gross written premium	$	389,911		$	447,885		$	173,843		$	28,975		$	—		$	1,040,614
Net written premium	218,553			290,272			102,197			28,975			—			639,997
Change in unearned premium	(30,253		)	(82,122		)	8,479			438			—			(103,458		)
Net earned premium	188,300			208,150			110,676			29,413			—			536,539
Loss and loss adjustment expense	(124,368		)	(144,050		)	(75,820		)	(19,872		)	—			(364,110		)
Acquisition costs and other underwriting expenses	(48,609		)	(43,985		)	(28,369		)	(8,983		)	—			(129,946		)
	(172,977		)	(188,035		)	(104,189		)	(28,855		)	—			(494,056		)
Underwriting income	15,323			20,115			6,487			558			—			42,483
Service and fee income	21,234			52,347			(6		)	—			14,527			88,102
Investment income and realized gain	12,239			8,563			3,442			457			—			24,701
Other expenses	(30,607		)	(33,934		)	(14,138		)	(2,306		)	—			(80,985		)
Interest expense	(2,845		)	(3,295		)	(1,257		)	(211		)	—			(7,608		)
Foreign currency gain	—			783			—			—			—			783
Gain on life settlement contracts	430			376			239			35			—			1,080
Acquisition gain on purchase	23,183			—			—			—			—			23,183
Provision for income taxes	(11,249		)	(12,981		)	1,045			330			(4,547		)	(27,402		)
Equity in earnings of unconsolidated subsidiary  – related party	—			—			—			—			7,060			7,060
Net income attributable to AmTrust Financial Services, Inc.	$	27,708		$	31,974		$	(4,188	)	$	(1,137	)	$	17,040		$	71,397

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(Amounts in Thousands)	Small Commercial Business			Specialty Risk and Extended Warranty			Specialty Program			Personal Lines Reinsurance - Run off			Corporate and Other			Total
Six months ended June 30, 2014:
Gross written premium	$	1,643,554		$	950,806		$	515,476		$	—		$	—		$	3,109,836
Net written premium	1,103,808			601,655			348,488			—			—			2,053,951
Change in unearned premium	(336,547		)	(8,532		)	(13,646		)	8,762			—			(349,963		)
Net earned premium	767,261			593,123			334,842			8,762			—			1,703,988
Loss and loss adjustment expense	(513,168		)	(398,934		)	(227,829		)	(5,872		)	—			(1,145,803		)
Acquisition costs and other underwriting expenses	(187,143		)	(116,508		)	(88,440		)	(2,578		)	—			(394,669		)
	(700,311		)	(515,442		)	(316,269		)	(8,450		)	—			(1,540,472		)
Underwriting income	66,950			77,681			18,573			312			—			163,516
Service and fee income	43,020			118,356			211			—			28,913			190,500
Investment income and realized gain (loss)	28,571			28,834			12,896			165			—			70,466
Other expenses	(92,583		)	(53,559		)	(29,037		)	—			—			(175,179		)
Interest expense	(12,729		)	(7,363		)	(3,992		)	—			—			(24,084		)
Foreign currency loss	—			(768		)	—			—			—			(768		)
Loss on life settlement contracts	(1,200		)	(694		)	(376		)	—			—			(2,270		)
Gain on sale of a subsidiary	6,631			—			—			—			—			6,631
Provision for income taxes	(6,985		)	(29,359		)	312			(86		)	(9,292		)	(45,410		)
Equity in earnings of unconsolidated subsidiary – related party	—			—			—			—			22,515			22,515
Net income attributable to AmTrust Financial Services, Inc.	$	31,675		$	133,128		$	(1,413	)	$	391		$	42,136		$	205,917
(Amounts in Thousands)	Small Commercial Business			Specialty Risk and Extended Warranty			Specialty Program			Personal Lines Reinsurance - Run off			Corporate and Other			Total
Six months ended June 30, 2013:
Gross written premium	$	765,760		$	776,214		$	382,935		$	59,627		$	—		$	1,984,536
Net written premium	392,293			474,714			245,469			59,627			—			1,172,103
Change in unearned premium	(77,393		)	(125,410		)	(23,315		)	(1,452		)	—			(227,570		)
Net earned premium	314,900			349,304			222,154			58,175			—			944,533
Loss and loss adjustment expense	(208,698		)	(237,021		)	(151,374		)	(39,273		)	—			(636,366		)
Acquisition costs and other underwriting expenses	(80,273		)	(75,303		)	(56,912		)	(17,743		)	—			(230,231		)
	(288,971		)	(312,324		)	(208,286		)	(57,016		)	—			(866,597		)
Underwriting income	25,929			36,980			13,868			1,159			—			77,936
Service and fee income	43,336			80,066			67			—			25,146			148,615
Investment income and realized gain (loss)	24,277			23,454			10,844			1,505			—			60,080
Other expenses	(51,373		)	(52,074		)	(25,690		)	(4,000		)	—			(133,137		)
Interest expense	(5,776		)	(5,855		)	(2,888		)	(450		)	—			(14,969		)
Foreign currency gain	—			2,055			—			—			—			2,055
Loss on life settlement contracts	1			2			1			—			—			4
Acquisition gain on purchase	23,183			25,532			—			—			—			48,715
Provision for income taxes	(14,601		)	(23,579		)	812			382			(6,525		)	(43,511		)
Equity in earnings of unconsolidated subsidiary – related party	—			—			—			—			8,610			8,610
Net income attributable to AmTrust Financial Services, Inc.	$	44,976		$	86,581		$	(2,986	)	$	(1,404	)	$	27,231		$	154,398

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The following tables summarize long lived assets and total assets of the business segments as of June 30, 2014 and December 31, 2013:

(Amounts in Thousands)	Small Commercial Business		Specialty Risk and Extended Warranty		Specialty Program		Personal Lines Reinsurance - Run off		Corporate and other		Total
As of June 30, 2014:
Property and equipment, net	$	61,472	$	35,561	$	19,279	$	—	$	—	$	116,312
Goodwill and intangible assets	234,124		416,874		57,259		—		—		708,257
Total assets	5,643,788		5,137,893		2,033,995		12,283		—		12,827,959
As of December 31, 2013:
Property and equipment, net	$	42,054	$	38,297	$	22,280	$	1,668	$	—	$	104,299
Goodwill and intangible assets	233,566		399,954		31,873		—		—		665,393
Total assets	4,261,764		5,036,121		1,894,538		86,703		—		11,279,126

17. Subsequent Events

On July 1, 2014, the Company completed a public offering of 4,000,000 of its depositary shares, each representing a 1/40th interest in a share of its 7.25% Non-Cumulative Preferred Stock, Series B, $0.01 par value per share (the "Series B Preferred Stock"), with a liquidation preference of $1,000 per share (equivalent to $25 per depositary share). Each depositary share entitles the holder to a proportional fractional interest in all rights and preferences of the Series B Preferred Stock represented thereby (including any dividend, liquidation, redemption and voting rights). Dividends on the Series B Preferred Stock represented by the depositary shares will be payable on the liquidation preference amount, on a non-cumulative basis, when, as and if declared by the Company’s board of directors, at a rate of 7.25% per annum, quarterly in arrears, on March 15, June 15, September 15, and December 15 of each year, beginning on September 15, 2014, from and including the date of original issuance. The Series B Preferred Stock represented by the depositary shares is not redeemable prior to July 1, 2019. After that date, the Company may redeem at its option, in whole or in part, the Series B Preferred Stock represented by the depositary shares at a redemption price of $1,000 per share (equivalent to $25 per depositary share) plus any declared and unpaid dividends for prior dividend periods and accrued but unpaid dividends (whether or not declared) for the then current dividend period. On July 10, 2014, the underwriters exercised, in part, their over-allotment option with respect to 200,000 additional depositary shares, each representing a 1/40th interest in a share of Series B Preferred Stock, on the same terms and conditions as the original issuance. A total of 4,200,000 depositary shares (equivalent to 105,000 shares of Series B Preferred Stock) were issued. Net proceeds from this offering, including the over-allotment, were $101,377. In addition, the Company incurred $3,624 in underwriting discount and commissions and expenses, which were recognized as a reduction to additional paid-in capital.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this Form 10-Q.

Note on Forward-Looking Statements

This Form 10-Q contains certain forward-looking statements that are intended to be covered by the safe harbors created by The Private Securities Litigation Reform Act of 1995. When we use words such as “anticipate,” “intend,” “plan,” “believe,” “estimate,” “expect,” or similar expressions, we do so to identify forward-looking statements. Examples of forward-looking statements include the plans and objectives of management for future operations, including those relating to future growth of our business activities and availability of funds, and are based on current expectations that involve assumptions that are difficult or impossible to predict accurately, many of which are beyond our control. There can be no assurance that actual developments will be those anticipated by us. Actual results may differ materially from those expressed or implied in these statements as a result of significant risks and uncertainties, including, but not limited to, non-receipt of expected payments from insureds or reinsurers, changes in interest rates, a downgrade in the financial strength ratings of our insurance subsidiaries, the effect of the performance of financial markets on our investment portfolio, our estimates of the fair value of our life settlement contracts, development of claims and the effect on loss reserves, accuracy in projecting loss reserves, the cost and availability of reinsurance coverage, the effects of emerging claim and coverage issues, changes in the demand for our products, our degree of success in integrating acquired businesses, the effect of general economic conditions, state and federal legislation, regulations and regulatory

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investigations into industry practices, risks associated with conducting business outside the United States, developments relating to existing agreements, disruptions to our business relationships with Maiden Holdings, Ltd., National General Holding Corp., ACP Re, Ltd., or third party agencies and warranty administrators, difficulties with technology or breaches in data security, heightened competition, changes in pricing environments, and changes in asset valuations. Additional information about these risks and uncertainties, as well as others that may cause actual results to differ materially from those projected, is contained in our filings with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2013, and our quarterly reports on Form 10-Q. The projections and statements in this report speak only as of the date of this report and we undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Overview

We are a multinational specialty property and casualty insurer focused on generating consistent underwriting profits. We provide insurance coverage for small businesses and products with high volumes of insureds and loss profiles that we believe are predictable. We target lines of insurance that we believe generally are underserved by the market. We have grown by hiring teams of underwriters with expertise in our specialty lines, through acquisitions of companies and assets that, in each case, provide access to distribution networks and renewal rights to established books of specialty insurance business. We have operations in three business segments:

• Small Commercial Business.  We provide workers’ compensation, commercial package and other commercial insurance lines produced by wholesale agents, retail agents and brokers in the United States.

• Specialty Risk and Extended Warranty. We provide coverage for consumer and commercial goods and custom designed coverages, such as accidental damage plans and payment protection plans offered in connection with the sale of consumer and commercial goods, in the United States and Europe, and certain niche property, casualty and specialty liability risks in the United States and Europe, including general liability, employers’ liability and professional and medical liability.

• Specialty Program. We write commercial insurance for narrowly defined classes of insureds, requiring an in-depth knowledge of the insured’s industry segment, through general and other wholesale agents.

Our Personal Lines Reinsurance business is currently in run-off. On August 1, 2013, we received notice that our participation in a quota share arrangement for this business was terminated. As we retained all assumed written premium through July 31, 2013 and the continuing cash flows associated with the business, we are not presenting the Personal Lines Reinsurance segment as a discontinued operation in accordance with ASC 205-20 Discontinued Operations.

We transact business primarily through our fourteen insurance subsidiaries domiciled in the United States and four insurance subsidiaries domiciled in Europe. We are authorized to write business in all 50 states in the United States and in the European Union. Our principal operating subsidiaries are rated "A"(Excellent) by A.M. Best Company ("A.M. Best").

For the six months ended June 30, 2014, our results of operations include activity for the following entities that were acquired subsequent to the six months ended June 30, 2013:

• Insco Insurance Services, Inc. and its subsidiaries, collectively known as "Insco Dico"

• AmTrust Lloyd's Holdings Limited and its wholly owned subsidiaries, including AmTrust at Lloyd's Limited, collectively known as "AmTrust Lloyd's", which was called Sagicor Europe Limited at acquisition

• Sequoia Insurance Company, Sequoia Indemnity Company and Personal Express Insurance Company, collectively known as "Sequoia"

• Mutual Insurance Holding Company and First Nonprofit Insurance Company and subsidiaries, collectively known as "FNIC"

• AMTCS Holdings, Inc. and subsidiaries, collectively known as "AMTCS", which was called CPPNA Holdings, Inc. at acquisition

In January 2014, we entered into a cut-through quota share reinsurance agreement (the "Cut Through Reinsurance Agreement")with Tower Group International, Ltd. ("Tower") to reinsure at least 60% of Tower's in force commercial lines policies and most new and renewal commercial lines business. At the inception of the Cut Through Reinsurance Agreement, we initially assumed $174 million of unearned premium. During the three and six months ended June 30, 2014, we assumed an additional $139 million and $233 million of premium, respectively. During the three months ended June 30, 2014, we had earned premium of approximately $104 million and incurred $50 million of loss and loss adjustment expense related to the Cut Through Reinsurance Agreement. Additionally, we incurred approximately $35 million of commission expense and $4 million of unallocated claims expense as part of the agreement during the three months ended June 30, 2014. During the six months ended June 30, 2014, we had earned premium

46

of approximately $196 million and incurred $109 million of loss and loss adjustment expense related to the Cut Through Reinsurance Agreement. Additionally, we incurred approximately $94 million of commission expense and $8 million of unallocated claims expense during the six months ended June 30, 2014.

Insurance, particularly workers’ compensation, is generally affected by seasonality. The first quarter generally produces greater premiums than subsequent quarters. Nevertheless, the impact of seasonality on our Small Commercial Business and Specialty Program segments has not been significant. We believe that this is because we serve many small businesses in different geographic locations. In addition, we believe seasonality is muted by our acquisition activity.

We evaluate our operations by monitoring key measures of growth and profitability. We measure our growth by examining our net income, return on average equity, and our loss, expense and combined ratios. The following summary provides further explanation of the key measures that we use to evaluate our results:

Gross Written Premium. Gross written premium represents estimated premiums from each insurance policy that we write, including as a servicing carrier for assigned risk plans, during a reporting period based on the effective date of the individual policy. Certain policies that we underwrite are subject to premium audit at that policy’s cancellation or expiration. The final actual gross premiums written may vary from the original estimate based on changes to the final rating parameters or classifications of the policy.

Net Written Premium. Net written premium is gross written premium less that portion of premium that we ceded to third party reinsurers under reinsurance agreements. The amount ceded under these reinsurance agreements is based on the contractual formula contained in the individual reinsurance agreements.

Net Earned Premium. Net earned premium is the earned portion of our net written premiums. We earn insurance premiums on a pro-rata basis over the term of the policy. At the end of each reporting period, premiums written that are not earned are classified as unearned premiums, which are earned in subsequent periods over the remaining term of the policy. Our workers’ compensation insurance and commercial package policies typically have a term of one year. Thus, for a one-year policy written on July 1, 2014 for an employer with a constant payroll during the term of the policy, we would earn half of the premiums in 2014 and the other half in 2015. We earn our specialty risk and extended warranty coverages over the estimated exposure time period. The terms vary depending on the risk and have an average duration of approximately 24 months, but range in duration from one month to 120 months.

Service and Fee Income. We currently generate service and fee income from the following sources:

• Product warranty registration and service — Our Specialty Risk and Extended Warranty business generates fee revenue for product warranty registration and claims handling services provided to unaffiliated third parties.

• Servicing carrier — We act as a servicing carrier for workers’ compensation assigned risk plans in nine states. In addition, we also offer claims adjusting and loss control services for fees to unaffiliated third parties.

• Management services — We provide services to insurance consumers, traditional insurers and insurance producers by offering flexible and cost effective alternatives to traditional insurance tools in the form of various risk retention groups and captive management companies, as well as management of workers’ compensation and commercial property programs. We also offer programs and alternative funding options for non-profit and public sector organizations for the management of their state unemployment insurance obligations.

• Installment, reinstatement and policy fees — We recognize fee income associated with the issuance of workers’ compensation policies for installment fees, in jurisdictions where it is permitted and approved, and reinstatement fees, which are fees charged to reinstate a policy after it has been canceled for non-payment, in jurisdictions where it is permitted and approved. Additionally, we recognize policy fees associated with general liability policies placed by our subsidiary, Builders & Tradesmen's Insurance Services, Inc.

• Broker services — We provide brokerage services to Maiden in connection with our reinsurance agreement for which we receive a fee.

• Asset management services — We currently manage the investment portfolios of Maiden Holdings, Ltd. ("Maiden"), National General Holdings Corp ("NGHC") and ACP Re, Ltd. ("ACP Re") for which we receive a management fee.

• Information technology services — We provide information technology and printing and mailing services to NGHC and its affiliates for a fee.

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Net Investment Income and Realized Gains and (Losses). We invest our statutory surplus funds and the funds supporting our insurance liabilities primarily in cash and cash equivalents, fixed maturity and equity securities. Our net investment income includes interest and dividends earned on our invested assets. We report net realized gains and losses on our investments separately from our net investment income. Net realized gains occur when we sell our investment securities for more than their costs or amortized costs, as applicable. Net realized losses occur when we sell our investment securities for less than their costs or amortized costs, as applicable, or we write down the investment securities as a result of other-than-temporary impairment. We classify equity securities and our fixed maturity securities as available-for-sale. We report net unrealized gains (losses) on those securities classified as available-for-sale separately within accumulated other comprehensive income on our balance sheet.

Loss and Loss Adjustment Expenses Incurred.   Loss and loss adjustment expenses (“LAE”) incurred represent our largest expense item and, for any given reporting period, include estimates of future claim payments, changes in those estimates from prior reporting periods and costs associated with investigating, defending and servicing claims. These expenses fluctuate based on the amount and types of risks we insure. We record loss and loss adjustment expenses related to estimates of future claim payments based on case-by-case valuations and statistical analysis. We seek to establish all reserves at the most likely ultimate exposure based on our historical claims experience. It is typical for our more serious bodily injury claims to take several years to settle and we revise our estimates as we receive additional information about the condition of injured employees and claimants and the costs of their medical treatment. Our ability to estimate loss and loss adjustment expenses accurately at the time of pricing our insurance policies is a critical factor in our profitability.

Acquisition Costs and Other Underwriting Expenses.   Acquisition costs and other underwriting expenses consist of policy acquisition expenses, salaries and benefits and general and administrative expenses, net of ceding commissions. These items are described below:

• Policy acquisition expenses comprise commissions directly attributable to those agents, wholesalers or brokers that produce premiums written on our behalf. In most instances, we pay commissions based on collected premium, which reduces our credit risk exposure associated with producers in case a policyholder does not pay a premium. We pay state and local taxes, licenses and fees, assessments and contributions to various state guaranty funds based on our premiums or losses in each state. Surcharges that we may be required to charge and collect from insureds in certain jurisdictions are recorded as accrued liabilities, rather than expense. These expenses are offset by ceding commissions received.

• Salaries and benefits expenses are those salaries and benefits expenses for employees that are directly involved in the origination, issuance and maintenance of policies, claims adjustment and accounting for insurance transactions. We classify salaries and benefits associated with employees that are involved in fee generating activities as other expenses.

• General and administrative expenses are comprised of other costs associated with our insurance activities, such as federal excise tax, postage, telephones and internet access charges, as well as legal and auditing fees and board and bureau charges. They also include the amortization of intangible assets.

• Ceding commission on reinsurance transactions is a commission we receive from ceding gross written premium to third party reinsurers. In connection with the Maiden Quota Share, which is our primary source of ceding commissions, the amount we receive is a blended rate based on a contractual formula contained in the individual reinsurance agreements, and the rate may not correlate specifically to the cost structure of the individual segments. The ceding commissions the Company receives cover a portion of its capitalized direct acquisition costs and a portion of other underwriting expenses. Ceding commissions received from reinsurance transactions that represent recovery of capitalized direct acquisition costs are recorded as a reduction of capitalized unamortized deferred acquisition costs and the net amount is charged to expense in proportion to net premium revenue recognized. Ceding commissions received from reinsurance transactions that represent the recovery of other underwriting expenses are recognized in the income statement over the insurance contract period in proportion to the insurance protection provided and classified as a reduction of acquisition costs and other underwriting expenses. Ceding commissions received, but not yet earned, that represent the recovery of other underwriting expenses are classified as a component of accrued expenses and other current liabilities. We allocate earned ceding commissions to its segments based on each segment’s proportionate share of total acquisition costs and other underwriting expenses recognized during the period. Ceding commission is netted against acquisition costs and other underwriting expenses.

Gain (loss) on Investment in Life Settlement Contracts.  The gain (loss) on investment in life settlement contracts includes the gain on acquisition of life settlement contracts, the gain realized upon a mortality event and the change in fair value of the investments in life settlements as evaluated at the end of each reporting period. We determine fair value based upon our estimate of the discounted cash flow related to policies (net of reserves for improvements in mortality, the possibility that the high net worth

48

individuals represented in our portfolio may have access to better health care, the volatility inherent in determining the life expectancy of insureds with significant reported health impairments, the possibility that the issuer of the policy or a third party will contest the payment of the death benefit payable to us and the future expenses related to the administration of the portfolio), which incorporates current life expectancy assumptions, premium payments, credit exposure to the insurance companies that issued the life insurance policies and the rate of return that a buyer would require on the policies as no comparable market pricing is available. The gain (loss) realized upon a mortality event is the difference between the death benefit received and the recorded fair value of that particular policy. We allocate gain (loss) on investment in life settlement contracts to our segments based on gross written premium by segment.

Net Loss Ratio. The net loss ratio is a measure of the underwriting profitability of an insurance company's business. Expressed as a percentage, this is the ratio of net losses and LAE incurred to net premiums earned.

Net Expense Ratio. The net expense ratio is a measure of an insurance company’s operational efficiency in administering its business. Expressed as a percentage, this is the ratio of the sum of acquisition costs and other underwriting expenses less ceding commission to net premiums earned. As we allocate certain acquisition costs and other underwriting expenses based on premium volume to our segments, net loss ratio on a segment basis may be impacted period over period by a shift in each segment's proportionate share of net written premium.

Net Combined Ratio. The net combined ratio is a measure of an insurance company's overall underwriting profit. This is the sum of the net loss and net expense ratios. If the net combined ratio is at or above 100%, an insurance company cannot be profitable without investment income, and may not be profitable if investment income is insufficient.

Net Premiums Earned less Expenses Included in Combined Ratio (Underwriting Income).   Underwriting income is a measure of an insurance company’s overall operating profitability before items such as investment income, interest expense and income taxes.

Return on Equity. We calculate return on equity by dividing net income by the average of shareholders’ equity.

One of the key financial measures that we use to evaluate our operating performance is return on average equity. Our return on annualized average equity was 27.8% and 23.9% for the three months ended June 30, 2014 and 2013, respectively, and 28.2% and 26.6% for the six months ended June 30, 2014 and 2013, respectively. In addition, we target a net combined ratio of 95% or lower over the long term, while seeking to maintain optimal operating leverage in our insurance subsidiaries commensurate with our A.M. Best rating objectives. Our net combined ratio was 90.9% and 92.1% for the three months ended June 30, 2014 and 2013, and 90.4% and 91.8% for the six months ended June 30, 2014 and 2013, respectively.

Critical Accounting Policies

Our discussion and analysis of our results of operations, financial condition and liquidity are based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the amounts of assets and liabilities, revenues and expenses and disclosure of contingent assets and liabilities as of the date of the financial statements. As more information becomes known, these estimates and assumptions could change, which would have an impact on actual results that may differ materially from these estimates and judgments under different assumptions. Except as discussed below, we have not made any changes in estimates or judgments that have had a significant effect on the reported amounts as previously disclosed in our Annual Report on Form 10-K for the fiscal period ended December 31, 2013.

Ceding Commissions on Reinsurance Transactions - Ceding commissions on reinsurance transactions are commissions we receive from ceding gross written premiums to third party reinsurers. In connection with the Maiden Quota Share, which is our primary source of ceding commissions, the amount we receive is a blended rate based on a contractual formula contained in the individual reinsurance agreements, and the rate may not correlate specifically to the cost structure of the individual segments. The ceding commissions we receive cover a portion of its capitalized direct acquisition costs and a portion of other underwriting expenses. Ceding commissions received from reinsurance transactions that represent recovery of capitalized direct acquisition costs are recorded as a reduction of capitalized unamortized deferred acquisition costs and the net amount is charged to expense in proportion to net premium revenue recognized. Ceding commissions received from reinsurance transactions that represent the recovery of other underwriting expenses are recognized in the income statement over the insurance contract period in proportion to the insurance protection provided and classified as a reduction of acquisition costs and other underwriting expenses. Ceding commissions received, but not yet earned, that represent the recovery of other underwriting expenses are classified as a component of accrued expenses and other current liabilities. We allocate earned ceding commissions to its segments based on each segment’s proportionate share of total acquisition costs and other underwriting expenses recognized during the period.

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Results of Operations

Consolidated Results of Operations for the Three and Six Months EndedJune 30, 2014 and 2013 (Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
(Amounts in Thousands)	2014			2013			2014			2013
Gross written premium	$	1,443,640		$	1,040,614		$	3,109,836		$	1,984,536
Net written premium	$	923,670		$	639,997		$	2,053,951		$	1,172,103
Change in unearned premium	(48,733		)	(103,458		)	(349,963		)	(227,570		)
Net earned premium	874,937			536,539			1,703,988			944,533
Service and fee income (related parties – three months $15,118; $14,414 and six months $27,318; $24,921)	99,542			88,102			190,500			148,615
Net investment income	32,594			22,634			61,121			40,729
Net realized gain on investments	3,906			2,067			9,345			19,351
Total revenues	1,010,979			649,342			1,964,954			1,153,228
Loss and loss adjustment expense	587,233			364,110			1,145,803			636,366
Acquisition costs and other underwriting expenses	208,060			129,946			394,669			230,231
Other	87,588			80,985			175,179			133,137
Total expenses	882,881			575,041			1,715,651			999,734
Income before other income (expense), income taxes and equity in earnings of unconsolidated subsidiaries	128,098			74,301			249,303			153,494
Other income (expense):
Interest expense	(12,587		)	(7,608		)	(24,084		)	(14,969		)
Net gain (loss) on investment in life settlement contracts net of profit commission	(5,070		)	1,080			(2,270		)	4
Foreign currency gain (loss)	1,084			783			(768		)	2,055
Acquisition gain on purchase	—			23,183			—			48,715
Gain on sale	6,631			—			6,631			—
Total other income (expense)	(9,942		)	17,438			(20,491		)	35,805
Income before income taxes and equity in earnings (loss) of unconsolidated subsidiaries	118,156			91,739			228,812			189,299
Provision for income taxes	17,966			27,402			45,410			43,511
Income before equity in earnings of unconsolidated subsidiaries	100,190			64,337			183,402			145,788
Equity in earnings of unconsolidated subsidiaries – related party	3,999			7,060			22,515			8,610
Net income	104,189			71,397			205,917			154,398
Non-controlling interest	4,026			—			4,090			877
Net income attributable to AmTrust Financial Services, Inc.	108,215			71,397			210,007			155,275
Dividends on preference stock	(1,941		)	—			(3,882		)	—
Net income attributable to AmTrust common shareholders	$	106,274		$	71,397		$	206,125		$	155,275
Net realized gain (loss) on investments:
Total other-than-temporary impairment loss	$	(1,896	)	$	—		$	(3,539	)	$	—
Portion of loss recognized in other comprehensive income	—			—			—			—
Net impairment losses recognized in earnings	(1,896		)	—			(3,539		)	—
Other net realized gain on investments	5,802			2,067			12,884			19,351
Net realized investment gain	$	3,906		$	2,067		$	9,345		$	19,351
Key measures:
Net loss ratio	67.1		%	67.9		%	67.2		%	67.4		%
Net expense ratio	23.8		%	24.2		%	23.2		%	24.4		%
Net combined ratio	90.9		%	92.1		%	90.4		%	91.8		%

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Consolidated Results of Operations for the Three Months Ended June 30, 2014 and 2013

Gross Written Premium. Gross written premium increased $402.9 million, or 38.7%, to $1,443.6 million from $1,040.6 million for the three months ended June 30, 2014 and 2013, respectively. The increase of $402.9 million is attributable to growth in all of our segments. The increase in Small Commercial Business resulted primarily from the assumption of premium through the Cut Through Reinsurance Agreement with Tower, the acquisition of Insco Dico and increases in the number of policies issued and the average policy size. The largest increases were in the states of California, Florida, New Jersey and New York. The increase in Specialty Risk and Extended Warranty resulted from the acquisition of AmTrust Lloyd's in 2013. The increase in Specialty Program resulted primarily from growth in existing programs and new programs.

Net Written Premium. Net written premium increased $283.7 million, or 44.3%, to $923.7 million from $640.0 million for the three months ended June 30, 2014 and 2013, respectively. The increase by segment was: Small Commercial Business - $234.5 million, Specialty Risk and Extended Warranty - $30.3 million and Specialty Program – $47.8 million. Net written premium increased for the three months ended June 30, 2014 compared to the same period in 2013 due to the increase in gross written premium in 2014 compared to 2013 and the increase in retention of gross written premium on programs in our Small Commercial Business segment and Specialty Risk and Extended Warranty segment that are not covered by the Maiden Quota Share. Our overall retention of gross written premium was 64.0% and 61.5% for the three months ended June 30, 2014 and 2013, respectively. The increase was partially offset by the reduction in premium of $28.9 million as a result of the termination of the Personal Lines Quota Share in 2013.

Net Earned Premium. Net earned premium increased $338.4 million, or 63.1%, to $874.9 million from $536.5 million for the three months ended June 30, 2014 and 2013, respectively. The increase by segment was: Small Commercial Business — $198.6 million, Specialty Risk and Extended Warranty — $113.5 million and Specialty Program — $53.3 million. The increase in net earned premium resulted from an increase in gross written premium on a twelve-month rolling basis. The increase was partially offset by the reduction in net earned premium of $27.0 million as a result of the termination of the Personal Lines Quota Share in 2013.

Service andFee Income. Service and fee income increased $11.4 million, or 13.0%, to $99.5 million from $88.1 million for the three months ended June 30, 2014 and 2013, respectively. A majority of the increase, or $6.4 million, resulted from an increase in fees generated by the acquisition of AMTCS in the second quarter of 2013. Fees related to the CNH acquisition, for the administration of commercial property and casualty insurance, also increased. Additionally, services provided to Maiden and NGHC generated higher fees of approximately $1.1 million during the three months ended June 30, 2014 compared to the same period in 2013.

Net Investment Income. Net investment income increased $10.0 million, or 44.0%, to $32.6 million from $22.6 million for the three months ended June 30, 2014 and 2013, respectively. The increase resulted primarily from having a higher average portfolio of fixed security investment securities during the three months ended June 30, 2014 compared to the same period in 2013 as a result of the acquisitions of Insco Dico and AmTrust Lloyd's, partially offset by lower overall yields.

Net Realized Gains (Losses) on Investments. We had a net realized gain on investments of $3.9 million and $2.1 million for the three months ended June 30, 2014 and 2013, respectively. The increase in the realized gains for the three months ended June 30, 2014 compared to the same period in 2013 resulted primarily from higher sales of securities in our investment portfolio during the three months ended June 30, 2014. We impaired five securities during the three months ended June 30, 2014 for $1.9 million. We had no impairment of securities during the three months ended June 30, 2013.

 Loss and Loss Adjustment Expenses. Loss and loss adjustment expenses increased $223.1 million, or 61.3%, to $587.2 million for the three months ended June 30, 2014 from $364.1 million for the three months ended June 30, 2013. Our loss ratio for the three months ended June 30, 2014 and 2013 was 67.1% and 67.9%, respectively. The decrease in the loss ratio during the three months ended June 30, 2014 primarily relates to lower ultimate loss selections in our Specialty Risk and Extended Warranty segment's European casualty business in the three months ended June 30, 2014 compared to the three months ended June 30, 2013. The decrease was partially offset as the result of having a higher percentage of earned premium in 2014 from workers' compensation policies in the state of California, for which we assign a higher ultimate loss selection than for workers' compensation policies written in other states.

Acquisition Costs and Other Underwriting Expenses. Acquisition costs and other underwriting expenses increased $78.1 million, or 60.1%, to $208.1 million for the three months ended June 30, 2014 from $129.9 million for the three months ended June 30, 2013. Acquisition costs and other underwriting expenses were reduced in each period by ceding commission primarily earned through the Maiden Quota Share, whereby we receive a ceding commission of 31% of premiums ceded for all business except retail commercial package business, and 34.375% for retail commercial package business. The ceding commission earned

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during the three months ended June 30, 2014 and 2013 was $91.2 million and $67.2 million, respectively. Ceding commission increased period over period as a result of increased premium writings, partially offset by higher retention rates of gross written premium, and was consistent period over period as a percentage of earned premium. The expense ratio decreased to 23.8% during the three months ended June 30, 2014 from 24.2% during the three months ended June 30, 2013 and was impacted primarily by our Small Commercial Business and Specialty Risk and Extended Warranty segments. The decrease related primarily to the overall expansion of written premium during the three months ended June 30, 2014, utilizing our current workforce.

Income Before Other Income (Expense), Income Taxes and Equity Earnings of Unconsolidated Subsidiaries. Income before other income (expense), income taxes and equity earnings of unconsolidated subsidiaries increased $53.8 million, or 72.4%, to $128.1 million for the three months ended June 30, 2014 from $74.3 million for the three months ended June 30, 2013. The $53.8 million increase resulted primarily from an increase in earned premium combined with a lower combined ratio period over period, as well as higher net investment income.

Interest Expense. Interest expense for the three months ended June 30, 2014 was $12.6 million, compared to $7.6 million for the same period in 2013. The increase was primarily related to interest expense on the $250 million notes issued in August 2013.

Net Gain (Loss) on Investment in Life Settlement Contracts. We recognized a loss on investment in life settlement contracts of $5.1 million for the three months ended June 30, 2014 compared to a gain of $1.1 million for the three months ended June 30, 2013. The loss from life settlement contracts resulted from an increase in premium payments and administrative expenses that exceeded increases in the fair value of the life settlement contracts.

 Provision for Income Tax. Income tax expense for the three months ended June 30, 2014 was $18.0 million, which resulted in an effective tax rate of 15.2%, compared to $27.4 million, which resulted in an effective tax rate of 29.9%, for the three months ended June 30, 2013. The effective rate decreased during the three months ended June 30, 2014 primarily from the reduction of the deferred tax liability attributable to the equalization reserves of our Luxembourg reinsurers of approximately of $18.6 million and $4.5 million during the three months ended June 30, 2014 and 2013, respectively. The effect of the $18.6 million and $4.5 million tax benefit reduced our effective tax rate by approximately 14.6% and 5.0% during the three months ended June 30, 2014 and 2013, respectively. Additionally, the decrease in the effective tax rate during the three months ended June 30, 2014 related to having a higher portion of earnings in countries with lower statutory rates than during the three months ended June 30, 2013.

Equity in Earnings of Unconsolidated Subsidiary - Related Party. Equity in earnings of unconsolidated subsidiary - related party decreased by $3.1 million for the three months ended June 30, 2014 to $4.0 million compared to $7.1 million for the three months ended June 30, 2013. The decrease resulted primarily from a gain of approximately $8.6 million realized during the three months ended June 30, 2013 resulting from a decrease in our ownership percentage of NGHC from 21.25% to 15.4% as a result of NGHC's sale of shares in a Rule 144A offering in June 2013, partially offset by an increase in earnings from our share of equity income from NGHC’s results of operations.

Consolidated Results of Operations for the Six Months Ended June 30, 2014 and 2013

Gross Written Premium. Gross written premium increased $1,125.2 million, or 56.7%, to $3,109.8 million from $1,984.5 million for the six months ended June 30, 2014 and 2013, respectively. The increase of $1,125.2 million is attributable to growth in all of our segments. The increase in Small Commercial Business resulted primarily from the assumption of premium through the Cut Through Reinsurance Agreement with Tower, the acquisitions of FNIC, Insco Dico and Sequoia, and increases in the number of policies issued and the average policy size. The largest increases were in the states of California, Florida, New Jersey and New York. The increase in Specialty Risk and Extended Warranty resulted from the acquisitions of Car Care Plan (Holdings) Limited ("CCPH") and AmTrust Lloyd's in 2013. The increase in Specialty Program resulted primarily from growth in existing programs and new programs.

Net Written Premium. Net written premium increased $881.8 million, or 75.2%, to $2,054.0 million from $1,172.1 million for the six months ended June 30, 2014 and 2013, respectively. The increase by segment was: Small Commercial Business – $711.5 million, Specialty Risk and Extended Warranty – $126.9 million and Specialty Program – $103.0 million. Net written premium increased for the six months ended June 30, 2014 compared to the same period in 2013 due to the increase in gross written premium in 2014 compared to 2013 and the increase in retention of gross written premium written on programs in our Small Commercial Business segment and Specialty Risk and Extended Warranty segment that are not covered by the Maiden Quota Share. Our overall retention of gross written premium was 66.0% and 59.1% for the six months ended June 30, 2014 and 2013, respectively. The increase was partially offset by the reduction in premium of $59.6 million as a result of the termination of the Personal Lines Quota Share in 2013.

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Net Earned Premium. Net earned premium increased $759.5 million, or 80.4%, to $1,704.0 million from $944.5 million for the six months ended June 30, 2014 and 2013, respectively. The increase by segment was: Small Commercial Business – $452.4 million, Specialty Risk and Extended Warranty – $243.8 million and Specialty Program – $112.7 million. The increase in net earned premium resulted from an increase in gross written premium on a twelve-month rolling basis. The increase was partially offset by the reduction in net earned premium of $49.4 million as a result of the termination of the Personal Lines Quota Share in 2013.

Service andFee Income. Service and fee income increased $41.9 million, or 28.2%, to $190.5 million from $148.6 million for the six months ended June 30, 2014 and 2013, respectively. The increase primarily related to additional incremental fee income of approximately $30 million during the three months ended June 30, 2014 from the acquisitions of AMTCS and CCPH during 2013. We also increased our warranty administration fees by approximately $11 million during the six months ended June 30, 2014 compared to the equivalent period in 2013. Additionally, services provided to NGHC generated higher fees of approximately $3 million during the six months ended June 30, 2014 compared to the same period in 2013, partially offset by a decrease of approximately $2 million related to fees generated by acting as a servicing carrier for workers' compensation assigned risk plans.

Net Investment Income. Net investment income increased $20.4 million, or 50.1%, to $61.1 million from $40.7 million for the six months ended June 30, 2014 and 2013, respectively. The increase resulted primarily from having a higher average portfolio of fixed security investment securities during the six months ended June 30, 2014 compared to the same period in 2013 as a result of the AmTrust Lloyd's, FNIC, Insco Dico and Sequoia acquisitions made subsequent to January 1, 2013, partially offset by lower overall yields.

Net Realized Gains (Losses) on Investments. We had a net realized gain on investments of $9.3 million and $19.4 million for the six months ended June 30, 2014 and 2013, respectively. The decrease in the realized gains for the six months ended June 30, 2014 compared to the same period in 2013 resulted from lower trading volume during the first quarter of 2014 and the impairment of six securities during the six months ended June 30, 2014 for $3.6 million. We had no impairment of securities during the six months ended June 30, 2013.

 Loss and Loss Adjustment Expenses. Loss and loss adjustment expenses increased $509.4 million, or 80.1%, to $1,145.8 million for the six months ended June 30, 2014 from $636.4 million for the six months ended June 30, 2013. Our loss ratio for the six months ended June 30, 2014 and 2013 was 67.2% and 67.4%, respectively. The loss ratio remained flat period over period as lower ultimate loss selections in our Specialty Risk and Extended Warranty segment's European casualty business in the six months ended June 30, 2014 compared to the six months ended June 30, 2013 were offset by having a higher percentage of earned premium in 2014 from workers' compensation policies in the state of California, for which we assign a higher ultimate loss selection than for workers' compensation policies written in other states.

Acquisition Costs and Other Underwriting Expenses. Acquisition costs and other underwriting expenses increased $164.4 million, or 71.4%, to $394.7 million for the six months ended June 30, 2014 from $230.2 million for the six months ended June 30, 2013. Acquisition costs and other underwriting expenses were reduced in each period by ceding commission primarily earned through the Maiden Quota Share, whereby we receive a ceding commission of 31% of premiums ceded for all business except retail commercial package business, and 34.375% for retail commercial package business. The ceding commission earned during the six months ended June 30, 2014 and 2013 was $179.4 million and $131.1 million, respectively. Ceding commission increased period over period as a result of increased premium writings, partially offset by higher retention of gross written premium in 2014, and was consistent period over period as a percentage of earned premium. The expense ratio decreased to 23.2% during the six months ended June 30, 2014 from 24.4% during the six months ended June 30, 2013 and was impacted by our Small Commercial Business and Specialty Risk and Extended Warranty segments. The decrease related primarily to the assumption of premium from the Cut Through Reinsurance Agreement, which had a blended expense ratio of 23%, and the overall expansion of written premium during the six months ended June 30, 2014, utilizing our current workforce.

Income Before Other Income (Expense), Income Taxes and Equity Earnings of Unconsolidated Subsidiaries. Income before other income (expense), income taxes and equity earnings of unconsolidated subsidiaries increased $95.8 million, or 62.4%, to $249.3 million for the six months ended June 30, 2014 from $153.5 million for the six months ended June 30, 2013. The $95.8 million increase resulted primarily from an increase in earned premium combined with a lower expense ratio period over period, as well as higher net investment income.

Interest Expense. Interest expense for the six months ended June 30, 2014 was $24.1 million compared to $15.0 million for the same period in 2013. The increase was primarily related to interest expense on the $250 million notes issued in August 2013.

Net Gain (Loss) on Investment in Life Settlement Contracts. We recognized a loss on investment in life settlement contracts of $2.3 million for the six months ended June 30, 2014 compared to recognizing an immaterial amount of profit during the six

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months ended June 30, 2013. The loss from life settlement contracts resulted from an increase in premium payments and administrative expenses that exceeded increases in the fair value of the life settlement contracts.

 Provision for Income Tax. Income tax expense for the six months ended June 30, 2014 was $45.4 million which resulted in an effective tax rate of 19.8% compared to $43.5 million, which resulted in an effective tax rate of 23.0%, for the six months ended June 30, 2013. The effective rate decreased during the six months ended June 30, 2014 primarily from the reduction of the deferred tax liability attributable to the equalization reserves of our Luxembourg reinsurers of approximately $18.6 million and $12.0 million that was recognized during the six months ended June 30, 2014 and 2013, respectively. The effect of this $18.6 million and $12.0 million tax benefit reduced the effective rate by approximately 8.1% and 6.3% during the six months ended June 30, 2014 and 2013, respectively.

Equity in Earnings of Unconsolidated Subsidiary - Related Party. Equity in earnings of unconsolidated subsidiary - related party increased by $13.9 million for the six months ended June 30, 2014 to $22.5 million compared to $8.6 million for the six months ended June 30, 2013. The increase resulted from a gain of approximately $14.7 million realized during the six months ended June 30, 2014 from a decrease in our ownership percentage of NGHC from 15.4% to 13.2% as a result of NGHC's sale of shares in a Rule 144A offering in February 2014, as compared to a realized gain of approximately $8.6 million realized during the three months ended June 30, 2013 from a decrease in our ownership percentage of NGHC from 21.25% to 15.4% as a result of NGHC’s sale of shares in a Rule 144A offering in June 2013. In addition, our earnings from our share of equity income from NGHC’s results of operations increased period over period.

Small Commercial Business Segment Results of Operations for the Three and Six Months EndedJune 30, 2014 and 2013 (Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
(Amounts in Thousands)	2014			2013			2014			2013
Gross written premium	$	704,627		$	389,911		$	1,643,554		$	765,760
Net written premium	$	453,092		$	218,553		$	1,103,808		$	392,293
Change in unearned premium	(66,235		)	(30,253		)	(336,547		)	(77,393		)
Net earned premium	386,857			188,300			767,261			314,900
Loss and loss adjustment expense	(258,046		)	(124,368		)	(513,168		)	(208,698		)
Acquisition costs and other underwriting expenses	(99,115		)	(48,609		)	(187,143		)	(80,273		)
	(357,161		)	(172,977		)	(700,311		)	(288,971		)
Underwriting income	$	29,696		$	15,323		$	66,950		$	25,929
Key measures:
Net loss ratio	66.7		%	66.0		%	66.9		%	66.3		%
Net expense ratio	25.6		%	25.8		%	24.4		%	25.5		%
Net combined ratio	92.3		%	91.9		%	91.3		%	91.8		%

Small Commercial Business Segment Results of Operations for the Three Months Ended June 30, 2014 and 2013

Gross Written Premium.  Gross written premium increased $314.7 million, or 80.7%, to $704.6 million for the three months ended June 30, 2014 from $389.9 million for the three months ended June 30, 2013. During the three months ended June 30, 2014, we assumed approximately $139 million from the Cut Through Reinsurance Agreement with Tower, that we entered into during the three months ended March 31, 2014. We also had incremental growth in gross written premium of approximately $9 million related to the acquisitions of FNIC, Insco Dico and Sequoia. Additionally, gross written premium increased approximately $177 million from increases in the number of policies issued and the average policy size. The majority of the increase, or $109 million, related to workers' compensation policies, primarily from the states of California, Florida, New Jersey and New York.

Net Written Premium.  Net written premium increased $234.5 million, or 107.3%, to $453.1 million for the three months ended June 30, 2014 from $218.6 million for the three months ended June 30, 2013. The increase resulted from an increase in gross written premium for the three months ended June 30, 2014 compared to the same period in 2013, as well as an increase in the

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retention of gross written premium period over period. Our retention of gross written premium for the segment was 64.3% and 56.1% for the three months ended June 30, 2014 and 2013, respectively.

Net Earned Premium. Net earned premium increased $198.6 million, or 105.5%, to $386.9 million for the three months ended June 30, 2014 from $188.3 million for the three months ended June 30, 2013. As premiums written are earned ratably over an annual period, the increase in net premium earned resulted from higher net written premium for the three months ended June 30, 2014 compared to the same period in 2013. Additionally, we earned approximately $54 million of the $174 million of unearned premium we assumed during the three months ended March 31, 2014 associated with the Cut Through Reinsurance Agreement with Tower.

Loss and Loss Adjustment Expenses. Loss and loss adjustment expenses increased $133.8 million, or 107.6%, to $258.0 million for the three months ended June 30, 2014 from $124.4 million for the three months ended June 30, 2013. Our loss ratio for the segment for the three months ended June 30, 2014 increased slightly to 66.7% compared to 66.0% for the three months ended June 30, 2013. The loss ratio increased as the result of having a higher percentage of earned premium in 2014 from workers' compensation policies in the state of California, for which we assign a higher ultimate loss selection than for workers' compensation policies written in other states.

Acquisition Costs and Other Underwriting Expenses. Acquisition costs and other underwriting expenses increased $50.5 million, or 103.9%, to $99.1 million for the three months ended June 30, 2014 from $48.6 million for the three months ended June 30, 2013. The expense ratio was 25.6% and 25.8% for the three months ended June 30, 2014 and 2013, respectively. Acquisition costs and other underwriting expenses were reduced by ceding commission earned during the three months ended June 30, 2014 and 2013 of $43.6 million and $28.3 million, respectively. The ceding commission increased period over period as a result of an increase in net earned premium, as the segment received a larger allocation of ceding commission for its proportionate share of our overall policy acquisition expense. The expense ratio remained consistent period over period.

Net Earned Premiums less Expense Included in Combined Ratio (Underwriting Income).  Net premiums earned less expenses included in combined ratio increased $14.4 million, or 93.8%, to $29.7 million for the three months ended June 30, 2014 from $15.3 million for the three months ended June 30, 2013. The increase resulted primarily from an increase in the level of earned premium during the three months ended June 30, 2014 compared to the three months ended June 30, 2013, along with a consistent combined ratio period over period.

Small Commercial Business Segment Results of Operations for the Six Months Ended June 30, 2014 and 2013

Gross Written Premium.  Gross written premium increased $877.8 million or 114.6%, to $1,643.6 million for the six months ended June 30, 2014 from $765.8 million for the six months ended June 30, 2013. During the six months ended June 30, 2014, we entered into the Cut Through Reinsurance Agreement with Tower, which resulted in our assumption of approximately $407 million of premium for the six months ended June 30, 2014. We also had incremental growth in gross written premium of approximately $64 million in 2014 related to the acquisitions of FNIC, Insco Dico and Sequoia. Additionally, gross written premium increased approximately $387 million from increases in the number of policies issued and the average policy size. The majority of the increase, or $291 million, related to workers' compensation policies, primarily from the states of California, Florida, New Jersey and New York.

Net Written Premium.  Net written premium increased $711.5 million, or 181.4%, to $1,103.8 million for the six months ended June 30, 2014 from $392.3 million for the six months ended June 30, 2013. The increase resulted from an increase in gross written premium for the six months ended June 30, 2014 compared to the same period in 2013, as well as an increase in the retention of gross written premium period over period. Our retention of gross written premium for the segment was 67.2% and 51.2% for the six months ended June 30, 2014 and 2013, respectively.

Net Earned Premium.  Net earned premium increased $452.4 million, or 143.7%, to $767.3 million for the six months ended June 30, 2014 from $314.9 million for the six months ended June 30, 2013. As premiums written are earned ratably over an annual period, the increase in net premium earned resulted from higher net written premium for the six months ended June 30, 2014 compared to the same period in 2013. Additionally, we earned approximately $134 million during the six months ended June 30, 2014 of the $174 million of unearned premium we assumed during the three months ended March 31, 2014 associated with the Cut Through Reinsurance Agreement with Tower.

Loss and Loss Adjustment Expenses. Loss and loss adjustment expenses increased $304.6 million, or 146.0%, to $513.2 million for the six months ended June 30, 2014 from $208.7 million for the six months ended June 30, 2013. Our loss ratio for the segment for the six months ended June 30, 2014 remained relatively flat at 66.9% compared to 66.3% for the six months ended June 30, 2013. The loss ratios were consistent period over period as we had consistent claim frequency and stable claim severity.

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Acquisition Costs and Other Underwriting Expenses. Acquisition costs and other underwriting expenses increased $106.9 million, or 133.2%, to $187.1 million for the six months ended June 30, 2014 from $80.3 million for the six months ended June 30, 2013. The expense ratio was 24.4% and 25.5% for the six months ended June 30, 2014 and 2013, respectively. Acquisition costs and other underwriting expenses were reduced by ceding commission earned during the six months ended June 30, 2014 and 2013 of $85.7 million and $52.5 million, respectively. The ceding commission increased period over period as a result of an increase in net earned premium, as the segment received a larger allocation of ceding commission for its proportionate share of our overall policy acquisition expense. The decrease in the expense ratio related primarily to the assumption of premium from the Cut Through Reinsurance Agreement, which had a blended expense ratio of 23%, and the overall expansion of written premium during the six months ended June 30, 2014, utilizing our current workforce.

Net Earned Premiums less Expense Included in Combined Ratio (Underwriting Income).  Net premiums earned less expenses included in combined ratio increased $41.0 million, or 158.2%, to $67.0 million for the six months ended June 30, 2014 from $25.9 million for the six months ended June 30, 2013. The increase resulted primarily from an increase in the level of earned premium during the three months ended June 30, 2014 compared to the six months ended June 30, 2013, along with a consistent combined ratio period over period.

Specialty Risk and Extended Warranty Segment Results of Operations for the Three and Six Months EndedJune 30, 2014 and 2013 (Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
(Amounts in Thousands)	2014			2013			2014			2013
Gross written premium	$	503,603		$	447,885		$	950,806		$	776,214
Net written premium	$	320,540		$	290,272		$	601,655		$	474,714
Change in unearned premium	1,068			(82,122		)	(8,532		)	(125,410		)
Net earned premium	321,608			208,150			593,123			349,304
Loss and loss adjustment expense	(215,814		)	(144,050		)	(398,934		)	(237,021		)
Acquisition costs and other underwriting expenses	(63,643		)	(43,985		)	(116,508		)	(75,303		)
	(279,457		)	(188,035		)	(515,442		)	(312,324		)
Underwriting income	$	42,151		$	20,115		$	77,681		$	36,980
Key measures:
Net loss ratio	67.1		%	69.2		%	67.3		%	67.9		%
Net expense ratio	19.8		%	21.1		%	19.6		%	21.6		%
Net combined ratio	86.9		%	90.3		%	86.9		%	89.4		%

Specialty Risk and Extended Warranty Segment Results of Operations for the Three Months Ended June 30, 2014 and 2013

Gross Written Premium. Gross written premium increased $55.7 million, or 12.4%, to $503.6 million for the three months ended June 30, 2014 from $447.9 million for the three months ended June 30, 2013. The segment experienced growth in Europe, which was driven primarily by the acquisition of AmTrust Lloyd's.

Net Written Premium. Net written premium increased $30.3 million, or 10.4%, to $320.5 million for the three months ended June 30, 2014 from $290.3 million for the three months ended June 30, 2013. The increase in net written premium resulted from an increase of gross written premium for the three months ended June 30, 2014 compared to the same period in 2013, partially offset by lower retention of gross written premium during 2014 compared to 2013. Our overall retention of gross written premium for the segment was 63.6% and 64.8% for the three months ended June 30, 2014 and 2013, respectively.

Net Earned Premium. Net earned premium increased $113.5 million, or 54.5%, to $321.6 million for the three months ended June 30, 2014 from $208.2 million for the three months ended June 30, 2013. As net written premium is earned ratably over the term of a policy, which on average is 24 months, net earned premium did not increase proportionately to the increases in gross written premium and net written premium during the three months ended June 30, 2014. The increase related to the assumption

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of approximately $113 million of unearned premium from the acquisition of AmTrust Lloyd's, which earned at a faster rate than other business in this segment.

Loss and Loss Adjustment Expenses. Loss and loss adjustment expenses increased $71.8 million, or 49.8%, to $215.8 million for the three months ended June 30, 2014 from $144.1 million for the three months ended June 30, 2013. Our loss ratio for the segment for the three months ended June 30, 2014 decreased to 67.1% from 69.2% for the same period in 2013. The decrease in the loss ratio for the three months ended June 30, 2014 resulted primarily from lower ultimate loss selections in our European casualty business and U.S. business in the three months ended June 30, 2014 compared to the three months ended June 30, 2013.

Acquisition Costs and Other Underwriting Expenses. Acquisition costs and other underwriting expenses increased $19.7 million, or 44.7%, to $63.6 million for the three months ended June 30, 2014 from $44.0 million for the three months ended June 30, 2013. The expense ratio decreased to 19.8% for the three months ended June 30, 2014 from 21.1% for the three months ended June 30, 2013.Acquisition costs and other underwriting expenses were reduced by ceding commission earned during the three months ended June 30, 2014 and 2013 of $28.0 million and $23.4 million, respectively. The ceding commission increased period over period as a result of an increase in net earned premium, as the segment received a larger allocation of ceding commission for its proportionate share of our overall policy acquisition expense. The decrease in the expense ratio related primarily to the overall expansion of written premium during the three months ended June 30, 2014, utilizing our current workforce, and a decline in policy acquisition costs as a percentage of earned premium.

Net Earned Premiums less Expenses Included in Combined Ratio (Underwriting Income).  Net earned premiums less expenses included in combined ratio increased $22.0 million, or 109.6%, to $42.2 million for the three months ended June 30, 2014 from $20.1 million for the three months ended June 30, 2013. The increase was attributable primarily to an increase in the segment’s net earned premium during the three months ended June 30, 2014 compared to the three months ended June 30, 2013, as well as a decrease in the segment's combined ratio.

Specialty Risk and Extended Warranty Segment Results of Operations for the Six Months Ended June 30, 2014 and 2013

Gross Written Premium. Gross written premium increased $174.6 million, or 22.5%, to $950.8 million for the six months ended June 30, 2014 from $776.2 million for the six months ended June 30, 2013. The segment experienced growth primarily in Europe, driven by the acquisitions of AmTrust Lloyd's and CCPH.

Net Written Premium. Net written premium increased $126.9 million, or 26.7%, to $601.7 million for the six months ended June 30, 2014 from $474.7 million for the six months ended June 30, 2013. The increase in net written premium resulted from an increase of gross written premium for the six months ended June 30, 2014 compared to the same period in 2013, as well as a higher retention of gross written premium during 2014 compared to 2013. Our overall retention of gross written premium for the segment was 63.3% and 61.2% for the six months ended June 30, 2014 and 2013, respectively, as certain new programs written during the six months ended June 30, 2014 are not covered by the Maiden Quota Share.

Net Earned Premium. Net earned premium increased $243.8 million, or 69.8%, to $593.1 million for the six months ended June 30, 2014 from $349.3 million for the six months ended June 30, 2013.  As net written premium is earned ratably over the term of a policy, which on average is 24 months, net earned premium did not increase proportionately to the increases in gross written premium and net written premium during the three months ended June 30, 2014. The increase related to the assumption of approximately $113 million of unearned premium from the acquisition of AmTrust Lloyd's, which earned at a faster rate than other business in this segment. 

Loss and Loss Adjustment Expenses. Loss and loss adjustment expenses increased $161.9 million, or 68.3%, to $398.9 million for the six months ended June 30, 2014 from $237.0 million for the six months ended June 30, 2013. Our loss ratio for the segment for the six months ended June 30, 2014 decreased to 67.3% from 67.9% for the same period in 2013. The decrease in the loss ratio for the six months ended June 30, 2014 resulted primarily from lower ultimate loss selections in our European casualty business and U.S. business in the six months ended June 30, 2014 compared to the six months ended June 30, 2013.

Acquisition Costs and Other Underwriting Expenses. Acquisition costs and other underwriting expenses increased $41.2 million, or 54.7%, to $116.5 million for the six months ended June 30, 2014 from $75.3 million for the six months ended June 30, 2013. The expense ratio decreased to 19.6% for the six months ended June 30, 2014 from 21.6% for the six months ended June 30, 2013.Acquisition costs and other underwriting expenses were reduced by ceding commission earned during the six months ended June 30, 2014 and 2013 of $53.3 million and $41.4 million, respectively. The ceding commission increased period over period as a result of an increase in net earned premium, as the segment received a larger allocation of ceding commission for its proportionate share of our overall policy acquisition expense. The decrease in the expense ratio related primarily to the overall

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expansion of written premium during the six months ended June 30, 2014, utilizing our current workforce, and a decline in policy acquisition costs as a percentage of earned premium.

Net Earned Premiums less Expenses Included in Combined Ratio (Underwriting Income). Net earned premiums less expenses included in combined ratio increased $40.7 million, or 110.1%, to $77.7 million for the six months ended June 30, 2014 from $37.0 million for the six months ended June 30, 2013. The increase was attributable primarily to an increase in the segment’s net earned premium during the six months ended June 30, 2014 compared to the six months ended June 30, 2013, partially offset by an increase in the segment's loss ratio.

Specialty Program Segment Results of Operations for The Three and Six Months EndedJune 30, 2014 and 2013 (Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
(Amounts in Thousands)	2014			2013			2014			2013
Gross written premium	$	235,410		$	173,843		$	515,476		$	382,935
Net written premium	$	150,038		$	102,197		$	348,488		$	245,469
Change in unearned premium	13,964			8,479			(13,646		)	(23,315		)
Net earned premium	164,002			110,676			334,842			222,154
Loss and loss adjustment expense	(111,669		)	(75,820		)	(227,829		)	(151,374		)
Acquisition costs and other underwriting expenses	(44,554		)	(28,369		)	(88,440		)	(56,912		)
	(156,223		)	(104,189		)	(316,269		)	(208,286		)
Underwriting income	$	7,779		$	6,487		$	18,573		$	13,868
Key measures:
Net loss ratio	68.1		%	68.5		%	68.0		%	68.1		%
Net expense ratio	27.2		%	25.6		%	26.4		%	25.6		%
Net combined ratio	95.3		%	94.1		%	94.5		%	93.8		%

Specialty Program Segment Results of Operations for Three Months Ended June 30, 2014 and 2013

Gross Written Premium.  Gross written premium increased $61.6 million, or 35.4%, to $235.4 million for the three months ended June 30, 2014 from $173.8 million for the same period in 2013. The segment benefited from the addition of new programs and growth in existing programs, which included primarily commercial package policy programs.

Net Written Premium.  Net written premium increased $47.8 million, or 46.8%, to $150.0 million for the three months ended June 30, 2014 from $102.2 million for the same period in 2013. The increase in net written premium resulted from an increase in gross written premium for the three months ended June 30, 2014 compared to the three months ended June 30, 2013, and a higher retention of gross written premium during 2014 compared to 2013. Our overall retention of gross written premium for the segment was 63.7% and 58.8% for the three months ended June 30, 2014 and 2013, respectively.

Net Earned Premium. Net earned premium increased $53.3 million, or 48.2%, to $164.0 million for the three months ended June 30, 2014 from $110.7 million for the same period in 2013. As premiums written are earned ratably over an annual period, the increase in net premium earned resulted from higher net written premium for the annual period prior to the three months ended June 30, 2014 compared to the same period in 2013.

Loss and Loss Adjustment Expenses. Loss and loss adjustment expenses increased $35.8 million, or 47.3%, to $111.7 million for the three months ended June 30, 2014, compared to $75.8 million for the same period in 2013. Our loss ratio for the segment for the three months ended June 30, 2014 was 68.1% compared to 68.5% for the three months ended June 30, 2013. The loss ratio remained consistent period over period as current accident year selected ultimate losses remained consistent with selected ultimate losses from prior years.

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Acquisition Costs and Other Underwriting Expenses. Acquisition costs and other underwriting expenses increased $16.2 million, or 57.1%, to $44.6 million for the three months ended June 30, 2014 from $28.4 million for the same period in 2013. The expense ratio was 27.2% for the three months ended June 30, 2014 compared to 25.6% for the three months ended June 30, 2013. Acquisition costs and other underwriting expenses were reduced by ceding commission earned during the three months ended June 30, 2014 and 2013 of $19.6 million and $15.4 million, respectively. Although ceding commission increased period over period, the segment received a smaller allocation of ceding commission for its proportionate share of our overall policy acquisition expense. As a result, the increase in expenses for the segment, which corresponded to increases in earned premium, outpaced the increase in ceding commission and resulted in a higher expense ratio in 2014.

Net Earned Premiums less Expense Included in Combined Ratio (Underwriting Income). Net earned premiums less expenses included in the combined ratio increased $1.3 million, or 19.9%, to $7.8 million for the three months ended June 30, 2014 from $6.5 million for the same period in 2013. The increase of $1.3 million resulted primarily from an increase in earned premium during the three months ended June 30, 2014 compared to the three months ended June 30, 2013, partially offset by a higher expense ratio.

Specialty Program Segment Results of Operations for Six Months Ended June 30, 2014 and 2013

Gross Written Premium.  Gross written premium increased $132.5 million, or 34.6%, to $515.5 million for the six months ended June 30, 2014 from $382.9 million for the same period in 2013. The segment benefited from the addition of new programs and growth in existing programs, which included primarily commercial package policy programs.

Net Written Premium.  Net written premium increased $103.0 million, or 42.0%, to $348.5 million for the six months ended June 30, 2014 from $245.5 million for the same period in 2013. The increase in net written premium resulted from an increase in gross written premium for the six months ended June 30, 2014 compared to the six months ended June 30, 2013, and a higher retention of gross written premium during 2014 compared to 2013. Our overall retention of gross written premium for the segment was 67.6% and 64.1% for the six months ended June 30, 2014 and 2013, respectively.

Net Earned Premium. Net earned premium increased $112.7 million, or 50.7%, to $334.8 million for the six months ended June 30, 2014 from $222.2 million for the same period in 2013. As premiums written are earned ratably over an annual period, the increase in net premium earned resulted from higher net written premium for the annual period prior to the six months ended June 30, 2014 compared to the same period in 2013. The percentage increase in earned premium in 2014 also was positively impacted by the segment's retention of gross written premium of 81% during the third quarter of 2013, which was the segment's highest historical quarterly retention rate due to certain new programs written in 2013 that are not covered by the Maiden Quota Share.

Loss and Loss Adjustment Expenses. Loss and loss adjustment expenses increased $76.5 million, or 50.5%, to $227.8 million for the six months ended June 30, 2014, compared to $151.4 million for the same period in 2013. Our loss ratio for the segment for the six months ended June 30, 2014 was 68.0% compared to 68.1% for the six months ended June 30, 2013. The loss ratio remained consistent period over period as current accident year selected ultimate losses remained consistent with selected ultimate losses from prior years.

Acquisition Costs and Other Underwriting Expenses. Acquisition costs and other underwriting expenses increased $31.5 million, or 55.4%, to $88.4 million for the six months ended June 30, 2014 from $56.9 million for the same period in 2013. The expense ratio was 26.4% for the six months ended June 30, 2014 and compared to 25.6% for the six months ended June 30, 2013. Acquisition costs and other underwriting expenses were reduced by ceding commission earned during the three months ended June 30, 2014 and 2013 of $40.5 million and $37.2 million, respectively. Although ceding commission increased period over period, the segment received a smaller allocation of ceding commission for its proportionate share of our overall policy acquisition expense. As a result, the increase in expenses for the segment, which corresponded to increases in earned premium, outpaced the increase in ceding commission, causing the segment's expense ratio to increase.

Net Earned Premiums less Expense Included in Combined Ratio (Underwriting Income). Net earned premiums less expenses included in combined ratio increased $4.7 million, or 33.9%, to $18.6 million for the six months ended June 30, 2014 from $13.9 million for the same period in 2013. The increase of $4.7 million resulted primarily from an increase in earned premium during the three months ended June 30, 2014 compared to the six months ended June 30, 2013, partially offset by a higher expense ratio.

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Personal Lines Reinsurance - Run off Results of Operations for the Three and Six Months EndedJune 30, 2014 and 2013 (Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
(Amounts in Thousands)	2014			2013			2014			2013
Gross written premium	$	—		$	28,975		$	—		$	59,627
Net written premium	$	—		$	28,975		$	—		$	59,627
Change in unearned premium	2,470			438			8,762			(1,452		)
Net earned premium	2,470			29,413			8,762			58,175
Loss and loss adjustment expense	(1,704		)	(19,872		)	(5,872		)	(39,273		)
Acquisition costs and other underwriting expenses	(748		)	(8,983		)	(2,578		)	(17,743		)
	(2,452		)	(28,855		)	(8,450		)	(57,016		)
Underwriting income	$	18		$	558		$	312		$	1,159
Key measures:
Net loss ratio	69.0		%	67.6		%	67.0		%	67.5		%
Net expense ratio	30.3		%	30.5		%	29.4		%	30.5		%
Net combined ratio	99.3		%	98.1		%	96.4		%	95.0		%

Personal Lines Reinsurance - Run off Results of Operations for the Three and Six Months EndedJune 30, 2014 and 2013

On August 1, 2013, we received notice from Integon National Insurance Company (“Integon”), a wholly-owned subsidiary of NGHC, that Integon was terminating, effective August 1, 2013, our participation in the Personal Lines Quota Share. The termination is on a run-off basis, meaning we will continue to receive net premiums and assume related net losses with respect to policies in force as of July 31, 2013 through the expiration of such policies. As we retained all assumed written premium through July 31, 2013 and the continuing cash flows associated with the business, we are not presenting the Personal Lines Reinsurance segment as a discontinued operation in accordance with ASC 205-20 Discontinued Operations. The overall results of the Personal Lines Reinsurance segment were immaterial for all periods presented.

Liquidityand Capital Resources

Our principal sources of operating funds are premiums, service and fee income, investment income and proceeds from sales and maturities of investments. Our primary uses of operating funds include payments of claims and operating expenses. Currently, we pay claims using cash flow from operations and invest our excess cash primarily in fixed maturity and equity securities. We forecast claim payments based on our historical trends. We seek to manage the funding of claim payments by actively managing available cash and forecasting cash flows on short-term and long-term bases. Cash payments for claims were approximately $684 million and $437 million in the six months ended June 30, 2014 and 2013, respectively. We expect that projected cash flow from operations will provide us sufficient liquidity for at least twelve months to fund our anticipated growth, by providing capital to increase the surplus of our insurance subsidiaries, as well as for the payment of claims and operating expenses, payment of interest and principal on our debt facilities and other holding company expenses. We anticipate net income from operations will create sufficient additional surplus at our insurance subsidiaries, which will fund our growth. However, if our growth attributable to potential acquisitions, internally generated growth or a combination of these, exceeds our projections, we may have to raise additional capital sooner to support our growth and manage our debt profile. As a result, we may from time to time raise capital from the issuance of equity, debt, equity-related debt or other capital securities, or seek to redeem, repurchase or exchange for other securities, prior to maturity, some or all of our outstanding debt in the open market, as circumstances allow. If we cannot obtain adequate capital or refinance all or a portion of our debt on favorable terms or at all, we may be unable to support future growth or operating requirements and, as a result, our business, financial condition and results of operation could be adversely affected.

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The following table is summary of our statement of cash flows:

	Six Months Ended June 30,
(Amounts in Thousands)	2014			2013
Cash and cash equivalents provided by (used in):
Operating activities	$	657,681		$	487,698
Investing activities	(592,527		)	(529,821		)
Financing activities	(331,343		)	80,242

Net cash provided by operating activities for the six months ended June 30, 2014 increased compared to cash provided by operating activities in the six months ended June 30, 2013. The increase in cash provided from operations resulted primarily from an increase in gross written premium written in 2014 compared to 2013.

Net cash used in investing activities was approximately $593 million during the six months ended June 30, 2014 and consisted primarily of approximately $427 million for the net purchase of fixed maturity and equity securities, approximately $81 million for restricted cash, approximately $73 million for acquisitions, approximately $25 million for the acquisition of life settlement contracts and approximately $23 million for capital expenditures, partially offset by the net proceeds of approximately $20 million received from the sale of a subsidiary and approximately $14 million from the net sales of other investments. Net cash used in investing activities was $530 million for the six months ended June 30, 2013 and consisted primarily of approximately $351 million for the net purchase of fixed maturity and equity securities, approximately $85 million for restricted cash, approximately $75 million for acquisitions, and approximately $23 million for capital expenditures.

Net cash used in financing activities was approximately $331 million for the six months ended June 30, 2014 compared to approximately $80 million during the six months ended June 30, 2013. In 2014, we settled approximately $293 million of repurchase agreements, paid approximately $29 million of dividends, paid approximately $11 million for share repurchases and paid off $10 million of notes obtained in the Insco Dico acquisition, partially offset by approximately $11 million received from non-controlling interest capital contributions. During the six months ended June 30, 2013, cash provided by financing activities was approximately $80 million and consisted primarily of $111 million of net proceeds from a preferred share offering and approximately $6 million from non-controlling interest capital contributions to certain subsidiaries, offset by payments of approximately $10 million of dividends and approximately $30 million to settle repurchase agreements.

Other Material Changes in Financial Position

(Amounts in thousands)	June 30, 2014		December 31, 2013
Assets:
Fixed maturities, available for sale	$	4,040,484	$	3,100,936
Cash and cash equivalents	569,109		830,022
Liabilities:
Loss and loss expense reserve	$	5,078,284	$	4,368,234
Unearned premium	3,317,438		2,680,982
Securities sold under agreements to repurchase, at contract value	—		293,222

The increase in fixed maturities, available for sale from December 31, 2013 to June 30, 2014 related to certain assets and liabilities assumed from the acquisition of Insco Dico as well as the increase in purchases of fixed maturities with excess cash on hand. The decrease in cash relates to increasing our fixed security investment portfolio and paying down repurchase agreements during the six months ended June 30, 2014. The increase in loss and loss expense reserve and unearned premium related to an increase in gross written premium during the six months ended June 30, 2014 compared to 2013, the assumption of unearned premium associated with the Tower Cut-Through Reinsurance Agreement and the acquisition of Insco Dico. The decrease in securities sold under agreements to repurchase at contract value was due to a determination by management to use some of our excess cash to reduce the amount of securities subject to repurchase agreements.

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Preferred Stock

On June 10, 2013, we issued 4,600,000 shares of 6.75% Non-Cumulative Series A Preferred Stock (the "Series A Preferred Stock"). Dividends on the Series A Preferred Stock when, as and if declared by our Board of Directors or a duly authorized committee of the Board will accrue and be payable on the liquidation preference amount, on a non-cumulative basis, quarterly in arrears on the 15th day of March, June, September and December of each year (each, a "dividend payment date"), commencing on September 15, 2013, at an annual rate of 6.75%.

Dividends on the Series A Preferred Stock are not cumulative. Accordingly, in the event dividends are not declared on the Series A Preferred Stock for payment on any dividend payment date, then those dividends will not accumulate and will not be payable. If we have not declared a dividend before the dividend payment date for any dividend period, we will have no obligation to pay dividends for that dividend period, whether or not dividends on the Series A Preferred Stock are declared for any future dividend payment. We paid approximately $1.9 million and $3.9 million in preferred dividends during the three and six months ended June 30, 2014, respectively.

Revolving Credit Agreement

We have a $200 million credit agreement (the “Credit Agreement”), among JPMorgan Chase Bank, N.A., as Administrative Agent, KeyBank National Association and SunTrust Bank, as Co-Syndication Agents, Associated Bank, National Association and Lloyds Securities Inc., as Co-Documentation Agents and the various lending institutions party thereto. The credit facility, which matures in 2016, is a revolving credit facility with a letter of credit sublimit of $100 million and an expansion feature not to exceed $100 million, which, if utilized would increase our credit limit to $300 million. Fees associated with the Credit Agreement were approximately $1.0 million. The Credit Agreement contains certain restrictive covenants customary for facilities of this type (subject to negotiated exceptions and baskets), including restrictions on indebtedness, liens, acquisitions and investments, restricted payments and dispositions. There are also financial covenants that require us to maintain a minimum consolidated net worth, a maximum consolidated leverage ratio, a minimum fixed charge coverage ratio, a minimum risk-based capital and a minimum statutory surplus. We are in compliance with all covenants as of June 30, 2014.

As of June 30, 2014, we had no outstanding borrowings under the Credit Agreement. As of June 30, 2014, we had outstanding letters of credit in place under the Credit Agreement for $89.0 million, which reduced the availability for letters of credit to $11.0 million and the availability under the facility to $111.0 million.

Borrowings under the Credit Agreement will bear interest at (x) the greatest of (a) the Administrative Agent’s prime rate, (b) the federal funds effective rate plus 0.5 percent or (c) the adjusted LIBO rate for a one month interest period on such day plus 1 percent, plus (y) a margin that is adjusted on the basis of our consolidated leverage ratio. Eurodollar borrowings under the Credit Agreement will bear interest at the adjusted LIBO rate for the interest period in effect plus a margin that is adjusted on the basis of our consolidated leverage ratio. The interest rate on our credit facility as of June 30, 2014 was 1.50%. We recorded total interest expense of approximately $0.8 million and $1.2 million for six months ended June 30, 2014 and 2013, respectively, under the Credit Agreement.

Fees payable by us under the Credit Agreement include a letter of credit participation fee (which is the margin applicable to Eurodollar borrowings and was 1.50% at June 30, 2014), a letter of credit fronting fee with respect to each letter of credit of 0.125% and a commitment fee on the available commitments of the lenders (a range of 0.20% to 0.30% based on our consolidated leverage ratio and was 0.25% at June 30, 2014).

Convertible Senior Notes

We have outstanding $200 million aggregate principal amount of convertible senior notes due 2021 (the “Convertible Notes”). The Convertible Notes bear interest at a rate equal to 5.5% per year, payable semiannually in arrears on June 15th and December 15th of each year.

The Convertible Notes will mature on December 15, 2021 (the “Maturity Date”), unless earlier purchased by us or converted into shares of our common stock, par value $0.01 per share (the “Common Stock”). Prior to September 15, 2021, the Convertible Notes will be convertible only upon satisfaction of certain conditions, and thereafter, at any time prior to the close of business on the second scheduled trading day immediately preceding the Maturity Date. The conversion rate at June 30, 2014 is equal to 38.5985 shares of Common Stock per $1,000 principal amount of Convertible Notes, which corresponds to a conversion price of approximately $25.91 per share of Common Stock. The conversion rate will be subject to adjustment upon the occurrence of

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certain events as set forth in the indenture governing the notes. Upon conversion of the Convertible Notes, we will, at its election, pay or deliver, as the case may be, cash, shares of Common Stock, or a combination of cash and shares of Common Stock.

Upon the occurrence of a fundamental change (as defined in the indenture governing the Convertible Notes), holders of the Convertible Notes will have the right to require us to repurchase their Convertible Notes for cash, in whole or in part, at 100% of the principal amount of the Convertible Notes to be repurchased, plus any accrued and unpaid interest, if any, to, but excluding, the fundamental change purchase date.

We separately allocated the proceeds for the issuance of the Convertible Notes to a liability component and an equity component, which is the embedded conversion option. The equity component was reported as an adjustment to paid-in-capital, net of tax, and is reflected as an original issue discount (“OID”). The OID of $41.7 million and deferred origination costs relating to the liability component of $4.8 million will be amortized into interest expense over the term of the Convertible Notes. After considering the contractual interest payments and amortization of the original discount, the Convertible Notes' effective interest rate was 8.57%. Transaction costs of $1.3 million associated with the equity component were netted in paid-in-capital. Interest expense, including amortization of deferred origination costs, recognized on the Convertible Notes was $7.3 million and $7.2 million for the six months ended June 30, 2014 and 2013, respectively.

6.125% Notes due 2023

In August 2013, we issued $250 million aggregate principal amount of our 6.125% notes due 2023 (the "Notes") to certain initial purchasers in a private placement. The Notes bear interest at a rate equal to 6.125% per year, payable semiannually in arrears on February 15th and August 15th of each year. The Notes will mature on August 15, 2023, unless earlier purchased by us. Fees associated with the Notes were approximately $2.7 million. The indenture governing the Notes contains covenants whereby the interest rate will increase by 0.50% per year if our consolidated leverage ratio exceeds 30% and does not exceed 35% and will increase an additional 1.00% per year (for an aggregate increase of 1.50% per year) if the consolidated leverage ratio exceeds 35%. As of June 30, 2014, the consolidated leverage ratio was less than 30%. It is an event of default if we have a consolidated leverage ratio in excess of 35% for a period of 30 days, unless in connection with an acquisition, in which case the grace period is 18 months. The indenture governing the Notes also contains certain customary covenants, such as reporting of annual and quarterly financial results, and restrictions on certain mergers and consolidations, a limitation on liens, and a limitation on the disposition of stock of certain of our subsidiaries. The Notes rank equally with existing and future unsecured and unsubordinated indebtedness, including our Convertible Notes and amounts under the Credit Agreement. Interest expense, including amortization of deferred origination costs, recognized on the Notes was approximately $7.8 million for the three and six months ended June 30, 2014, respectively.

Secured Loan Agreement

We, through a wholly-owned subsidiary, have a seven-year secured loan agreement with Bank of America Leasing & Capital, LLC in the aggregate amount of $10.8 million to finance the purchase of an aircraft. The loan bears interest at a fixed rate of 4.45%, requires monthly installment payments of approximately $0.1 million through February 25, 2018, and a balloon payment of $3.2 million at the maturity date. We recorded interest expense of approximately $0.2 million and $0.2 million for the six months ended June 30, 2014 and 2013, respectively, related to this agreement. The loan is secured by the aircraft.

The agreement contains certain covenants that are similar to our Credit Agreement. Additionally, subsequent to February 25, 2012, but prior to payment in full, if the outstanding balance of this loan exceeds 90% of the fair value of the aircraft, we are required to pay the lender the entire amount necessary to reduce the outstanding principal balance to be equal to or less than 90% of the fair value of the aircraft. The agreement allows us, under certain conditions, to repay the entire outstanding principal balance of this loan without penalty.

Securities Sold (Purchased) Under Agreements to Repurchase (Sell), at Contract Value

We enter into repurchase agreements that are subject to a master netting arrangement, which are accounted for as collateralized borrowing transactions and are recorded at contract amounts. We receive cash or securities that we invest or hold in short term or fixed income securities. As of June 30, 2014, we had no repurchase agreements outstanding, but at various times during the six months ended June 30, 2014 and 2013, we did have outstanding repurchase agreements. Interest expense associated with these repurchase agreements, which was recorded as a component of investment income, was $0.3 million and $0.5 million for the six months ended June 30, 2014 and 2013, respectively.

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Note Payable — Collateral for Proportionate Share of Reinsurance Obligation

In conjunction with the Reinsurance Agreement between AII and Maiden Insurance (see Note 11. “Related Party Transactions”), AII entered into a loan agreement with Maiden Insurance during the fourth quarter of 2007, whereby Maiden Insurance loaned to AII the amount equal to its quota share of the obligations of the AmTrust Ceding Insurers that AII was then obligated to secure.  The loan agreement provides for interest at a rate of LIBOR plus 90 basis points and is payable on a quarterly basis. Each advance under the loan is secured by a promissory note. Advances totaled $168.0 million as of June 30, 2014 and December 31, 2013.  Effective December 31, 2008,  AII and Maiden Insurance entered into a Reinsurer Trust Assets Collateral agreement whereby Maiden Insurance is required to provide AII the assets required to secure Maiden’s proportionate share of our obligations to our U.S. subsidiaries.  The amount of this collateral as of June 30, 2014 was approximately $1,337.6 million.  Maiden retains ownership of the collateral in the trust account.

ING Letter of Credit Agreement

On November 26, 2013, in connection with our acquisition of AmTrust Lloyd's, we entered into a four-year, £200 million credit facility agreement with ING Bank, N.V., London Branch, individually and as Agent and Security Trustee. The credit facility, which matures on December 31, 2017, is a letter of credit facility that is used to support our capacity at Lloyd’s as a member of Syndicates 2526, 1206 and 44 for the 2014 underwriting year of account, as well as prior open years of account. As of June 30, 2014, we had outstanding letters of credit of £193.2 million (or $328.1 million) in place under this credit facility, which reduced the total availability under the facility to £6.8 million (or $11.6 million). The Company recorded total interest expense of approximately $1.3 million during the three and six months ended June 30, 2014 related to this credit facility.

Other Letter of Credit Facilities

We, through one of our subsidiaries, have a secured letter of credit facility with Comerica Bank. We utilize the letter of credit facility to comply with the deposit requirements of the State of California and the U.S. Department of Labor as security for our obligations to workers’ compensation and federal Longshore and Harbor Workers’ Compensation Act policyholders. The credit limit is $75.0 million, of which $48.5 million was utilized as of June 30, 2014. We are required to pay a letter of credit participation fee for each letter of credit in the amount of 0.40%.

We, through certain subsidiaries, have additional existing stand-by letters of credit with various lenders in the amount of $20.7 million as of June 30, 2014.

Reinsurance

Our insurance subsidiaries utilize reinsurance agreements to transfer portions of the underlying risk of the business we write to various affiliated and third-party reinsurance companies. Reinsurance does not discharge or diminish our obligation to pay claims covered by the insurance policies we issue; however, it does permit us to recover certain incurred losses from our reinsurers and our reinsurance recoveries reduce the maximum loss that we may incur as a result of a covered loss event. We believe it is important to ensure that our reinsurance partners are financially strong and they generally carry at least an A.M. Best rating of ‘‘A-’’ (Excellent) at the time we enter into our reinsurance agreements. We also enter reinsurance relationships with third-party captives formed by agents and other business partners as a mechanism for sharing risk and profit. The total amount, cost and limits relating to the reinsurance coverage we purchase may vary from year to year based upon a variety of factors, including the availability of quality reinsurance at an acceptable price and the level of risk that we choose to retain for our own account. We have not experienced any significant changes to our reinsurance programs since December 31, 2013. For a more detailed description of our reinsurance arrangements, including our reinsurance arrangements with Maiden Insurance Company Ltd. (‘‘Maiden Insurance’’), see ‘‘Reinsurance’’ in ‘‘Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations’’ in our Annual Report on Form 10-K for the year ended December 31, 2013.

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Investment Portfolio

Our investment portfolio, including cash and cash equivalents but excluding life settlement contracts, other investments and equity investments, increased $485 million, or 10.9%, to $5.0 billion for the six months ended June 30, 2014 from $4.5 billion as of December 31, 2013. Our investment portfolio is classified as available-for-sale, as defined by ASC 320, Investments — Debt and Equity Securities. The increase in our investment portfolio during the six months ended June 30, 2014 compared to December 31, 2013 was attributable to the acquisition of Insco Dico and utilizing cash from higher gross written premium. Our fixed maturity securities, gross, had a fair value of $4.0 billion and an amortized cost of $3.9 billion as of June 30, 2014. Our equity securities are reported at fair value and totaled $90.5 million with a cost of $86.4 million as of June 30, 2014. Securities sold but not yet purchased represent our obligations to deliver the specified security at the contracted price and thereby create a liability to purchase the security in the market at prevailing rates. We account for sales of securities under repurchase agreements as collateralized borrowing transactions and we record these sales at their contracted amounts.

Our investment portfolio exclusive of life settlement contracts and other investments is summarized in the table below by type of investment:

	June 30, 2014				December 31, 2013
(Amounts in Thousands)	Carrying Value		Percentage of Portfolio		Carrying Value		Percentage of Portfolio
Cash, cash equivalents and restricted cash	$	750,176	15.1	%	$	930,461	20.8	%
Time and short-term deposits	76,324		1.5		114,202		2.6
U.S. treasury securities	66,470		1.3		159,260		3.6
U.S. government agencies	25,692		0.5		10,489		0.2
Municipals	525,239		10.6		446,183		10.0
Foreign government	151,035		3.0		160,105		3.6
Commercial mortgage back securities	39,659		0.8		28,566		0.6
Residential mortgage backed securities:
Agency backed	830,135		16.7		685,740		15.3
Non-agency backed	13,524		0.3		6,749		0.2
Asset-backed securities	2,430		—		6,120		0.1
Corporate bonds	2,386,300		48.4		1,909,242		42.7
Preferred stocks	4,737		0.1		1,506		—
Common stocks	85,790		1.7		13,642		0.3
	$	4,957,511	100.0	%	$	4,472,265	100.0	%
Less: Securities pledged	—				311,518
	$	4,957,511			$	4,160,747

The table below summarizes the credit quality of our fixed maturity securities as of June 30, 2014 and December 31, 2013, as rated by Standard and Poor’s.

	June 30, 2014		December 31, 2013
U.S. Treasury	1.6	%	4.7	%
AAA	9.6		11.6
AA	38.2		34.8
A	26.8		23.8
BBB, BBB+, BBB-	21.8		23.3
BB, BB+, BB-	1.8		1.5
B, B+, B-	0.2		0.2
Other	—		0.1
Total	100.0	%	100.0	%

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The table below summarizes the average duration by type of fixed maturity as well as detailing the average yield as of June 30, 2014 and December 31, 2013:

	June 30, 2014		December 31, 2013
	Average Yield %	Average Duration in Years	Average Yield %	Average Duration in Years
U.S. treasury securities	1.32	3.3	1.80	4.0
U.S. government agencies	2.28	3.3	3.16	2.0
Foreign government	1.44	4.0	1.91	4.0
Corporate bonds	3.43	5.4	3.36	5.3
Municipals	3.40	6.3	3.72	7.3
Mortgage and asset backed	3.45	5.0	3.41	5.1

As of June 30, 2014, the weighted average duration of our fixed income securities was 5.3 years and had a yield of 3.32%.

Quarterly, our Investment Committee (“Committee”) evaluates each security that has an unrealized loss as of the end of the subject reporting period for OTTI. We generally consider an investment to be impaired when it has been in a significant unrealized loss position (in excess of 35% of cost if the issuer has a market capitalization of under $1 billion and in excess of 25% of cost if the issuer has a market capitalization of $1 billion or more) for over 24 months. In addition, the Committee uses a set of quantitative and qualitative criteria to review our investment portfolio to evaluate the necessity of recording impairment losses for other-than-temporary declines in the fair value of our investments. The criteria the Committee primarily considers include:

• the current fair value compared to amortized cost;

• the length of time the security’s fair value has been below its amortized cost;

• specific credit issues related to the issuer such as changes in credit rating, reduction or elimination of dividends or non-payment of scheduled interest payments;

• whether management intends to sell the security and, if not, whether it is not more than likely than not that the Company will be required to sell the security before recovery of its amortized cost basis;

• the financial condition and near-term prospects of the issuer of the security, including any specific events that may affect its operations or earnings;

• the occurrence of a discrete credit event resulting in the issuer defaulting on material outstanding obligations or the issuer seeking protection under bankruptcy laws; and

• other items, including company management, media exposure, sponsors, marketing and advertising agreements, debt restructurings, regulatory changes, acquisitions and dispositions, pending litigation, distribution agreements and general industry trends.

Impairment of investment securities results in a charge to operations when a market decline below cost is deemed to be other-than-temporary. We write down investments immediately that we consider to be impaired based on the above criteria collectively.

Based on guidance in FASB ASC 320-10-65, in the event of the decline in fair value of a debt security, a holder of that security that does not intend to sell the debt security and for whom it is not more than likely than not that such holder will be required to sell the debt security before recovery of its amortized cost basis, is required to separate the decline in fair value into (a) the amount representing the credit loss and (b) the amount related to other factors. The amount of total decline in fair value related to the credit loss shall be recognized in earnings as an OTTI with the amount related to other factors recognized in accumulated other comprehensive loss net loss, net of tax. OTTI credit losses result in a permanent reduction of the cost basis of the underlying investment. The determination of OTTI is a subjective process, and different judgments and assumptions could affect the timing of the loss realization.

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The impairment charges of our fixed and equity securities for the six months ended June 30, 2014 and 2013 are presented in the table below:

(Amounts in Thousands)	2014		2013
Equity securities	$	2,291	$	—
Fixed maturity securities	1,248		—
	$	3,539	$	—

Additionally, we had gross unrealized losses of $29.0 million related to fixed maturity securities and $2.6 million related to marketable equity securities during the six months ended June 30, 2014.

As of June 30, 2014, we own 1,396 corporate bonds in the industrial, bank and financial and other sectors, which account for approximately 30%, 26% and 2%, respectively, and 59% in the aggregate of the total fair value of our fixed maturity securities, and 20%, 27% and 2%, respectively, and 49% in the aggregate of the total unrealized losses of our fixed maturity securities. We believe that the unrealized losses in these securities are the result, primarily, of general economic conditions and not the condition of the issuers, which we believe are solvent and have the ability to meet their obligations. Therefore, we expect that the market price for these securities should recover within a reasonable time. Additionally, we do not intend to sell the investments and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost basis.

Our investment in marketable equity securities consist of investments in preferred and common stock across a wide range of sectors. We evaluated the near-term prospects for recovery of fair value in relation to the severity and duration of the impairment and have determined in each case that the probability of recovery is reasonable and we have the ability and intent to hold these investments until a recovery of fair value. We believe the gross unrealized losses of $2.6 million as of June 30, 2014 are not material to our financial position.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market Risk. Market risk is the risk of potential economic loss principally arising from adverse changes in the fair value of financial instruments. The major components of market risk affecting us are interest rate risk and equity price risk.

Interest Rate Risk. We had fixed maturity securities including securities pledged (excluding $76.3 million of time and short-term deposits) with a fair value of $4.0 billion and carrying value of $3.9 billion as of June 30, 2014 that are subject to interest rate risk. Interest rate risk is the risk that we may incur losses due to adverse changes in interest rates. Fluctuations in interest rates have a direct impact on the market valuation of our fixed maturity securities. We manage our exposure to interest rate risk through a disciplined asset and liability matching and capital management process. In the management of this risk, the characteristics of duration, credit and variability of cash flows are critical elements. These risks are assessed regularly and balanced within the context of our liability and capital position.

The table below summarizes the interest rate risk associated with our fixed maturity securities by illustrating the sensitivity of the fair value and carrying value of our fixed maturity securities as of June 30, 2014 to selected hypothetical changes in interest rates, and the associated impact on our stockholders’ equity. We anticipate that we will continue to meet our obligations out of income. We classify our fixed securities and equity securities as available-for-sale. Temporary changes in the fair value of our fixed maturity securities impact the carrying value of these securities and are reported in our stockholders’ equity as a component of other comprehensive income, net of deferred taxes.

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The selected scenarios in the table below are not predictions of future events, but rather are intended to illustrate the effect such events may have on the fair value and carrying value of our fixed maturity securities and on our stockholders’ equity, each as of June 30, 2014.

Hypothetical Change in Interest Rates	Fair Value		Estimated Change in Fair Value			Hypothetical Percentage (Increase)Decrease in Shareholders’ Equity
(Amounts in Thousands)
200 basis point increase	$	3,640,435	$	(400,049	)	(23.4	)%
100 basis point increase	3,834,091		(206,393		)	(12.1	)%
No change	4,040,484		—			—
100 basis point decrease	4,257,148		216,664			12.7	%
200 basis point decrease	4,488,933		448,449			26.2	%

Changes in interest rates would affect the fair market value of our fixed rate debt instruments but would not have an impact on our earnings or cash flow. We currently have $729.2 million of debt instruments of which $554.7 million are fixed rate debt instruments. A fluctuation of 100 basis points in interest on our variable rate debt instruments, which are tied to LIBOR, would affect our earnings and cash flows by $1.7 million before income tax, on an annual basis, but would not affect the fair market value of the variable rate debt.

Liquidity Risk.   Liquidity risk represents our potential inability to meet all payment obligations when they become due. We maintain sufficient cash and marketable securities to fund claim payments and operations. We purchase reinsurance coverage to mitigate the liquidity risk of an unexpected rise in claims severity or frequency from catastrophic events or a single large loss. The availability, amount and cost of reinsurance depend on market conditions and may vary significantly.

Credit Risk. Credit risk is the potential loss arising principally from adverse changes in the financial condition of the issuers of our fixed maturity securities and the financial condition of our third party reinsurers. Additionally, we have counter-party credit risk with our repurchase agreement counter-parties and interest rate swap counter-parties.

We address the credit risk related to the issuers of our fixed maturity securities by investing primarily in fixed maturity securities that are rated “BBB-” or higher by Standard & Poor’s. We also independently monitor the financial condition of all issuers of our fixed maturity securities. To limit our risk exposure, we employ diversification policies that limit the credit exposure to any single issuer or business sector.

We are subject to credit risk with respect to our third party reinsurers. Although our third party reinsurers are obligated to reimburse us to the extent we cede risk to them, we are ultimately liable to our policyholders on all risks that have ceded. As a result, reinsurance contracts do not limit our ultimate obligations to pay claims covered under the insurance policies we issue and we might not collect amounts recoverable from our reinsurers. We address this credit risk by selecting reinsurers that have an A.M. Best rating of “A-” (Excellent) or better at the time we enter into the agreement and by performing, along with our reinsurance brokers, periodic credit reviews of our reinsurers. If one of our reinsurers suffers a credit downgrade, we may consider various options to lessen the risk of asset impairment, including commutation, novation and letters of credit.  See “Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations —Reinsurance.”

Counter-party credit risk with our repurchase agreement counter-parties is mitigated by obtaining collateral. We obtain collateral in the amount of 110% of the value of the securities we have sold with agreement to repurchase. Additionally, repurchase agreements are only transacted with pre-approved counter-parties.

Foreign Currency Risk. We write insurance in the United Kingdom and certain other European Union member countries through AIU, AEL and Motors Insurance Company, Ltd. ("MIC"). While the functional currencies of AIU, AEL and MIC are the Euro and the British Pound, we write coverages that are settled in local currencies, including, primarily, the Euro and British Pound. We attempt to maintain sufficient local currency assets on deposit to minimize our exposure to realized currency losses. Assuming a 5% increase in the exchange rate of the local currency in which the claims will be paid and that we do not hold that local currency, we would recognize a $55.6 million after tax realized currency loss based on our outstanding foreign denominated reserves of $1,710.7 million at June 30, 2014.

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Equity Price Risk. Equity price risk is the risk that we may incur losses due to adverse changes in the market prices of the equity securities we hold in our investment portfolio, which include common stocks, non-redeemable preferred stocks and master limited partnerships. We classify our portfolio of equity securities as available-for-sale and carry these securities on our balance sheet at fair value. Accordingly, adverse changes in the market prices of our equity securities result in a decrease in the value of our total assets and a decrease in our shareholders’ equity. As of June 30, 2014, the equity securities in our investment portfolio had a fair value of $90.5 million, representing approximately less than 2% of our total invested assets on that date.

The table below illustrates the impact on our equity portfolio and financial position given a hypothetical movement in the broader equity markets. The selected scenarios in the table below are not predictions of future events, but rather are intended to illustrate the effect such events may have on the carrying value of our equity portfolio and on shareholders’ equity as of June 30, 2014.

Hypothetical Change in S&P 500 Index	Fair Value		Estimated Change in Fair Value			Hypothetical Percentage (Increase) Decrease in Shareholders’ Equity
(Amounts in Thousands)
5% increase	$	95,053	$	4,526		0.3	%
No change	90,527		—
5% decrease	86,001		(4,526		)	(0.3	)%

Off Balance Sheet Risk. Securities sold but not yet purchased represent our obligations to deliver the specified security at the contracted price and, thereby, create a liability to purchase the security in the market at prevailing prices. Our liability for securities to be delivered is measured at their fair value and as of June 30, 2014 was $24.3 million for equity securities. These transactions result in off-balance sheet risk, as our ultimate cost to satisfy the delivery of securities sold but not yet purchased may exceed the amount reflected at June 30, 2014.

Item 4. Controls and Procedures

Our management, with the participation and under the supervision of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) and has concluded that, as of the end of the period covered by this report, such disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in the reports we file of submit under the Exchange Act is timely recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. During the most recent fiscal quarter, there have been no changes in our internal controls over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

We and certain of our officers are defendants in related putative securities class action lawsuits filed in February 2014 in the United States District Court for the Southern District of New York. Plaintiffs in the lawsuits purport to represent a class of our stockholders who purchased shares between February 15, 2011 and December 11, 2013. On April 24, 2014, the court issued an order consolidating the related actions, appointing lead plaintiff and approving the selection of co-lead counsel. The complaint asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and seeks damages in an unspecified amount, attorney’s fees and other relief. We believe the allegations to be unfounded and will vigorously pursue its defenses; however, we cannot reasonably estimate the potential range of loss, if any. In addition, we have received two shareholder demands for production, pursuant to Section 220 of the Delaware General Corporation Law, of our books and records that relate to the issues raised in the litigations.

Other than as discussed above, we are not involved presently in any material litigation nor, to our knowledge, is any material litigation threatened against us or our properties.

Item 1A.  Risk Factors

There are no material changes to the risk factors previously reported in our Annual Report on Form 10-K for the year ended December 31, 2013.  For more information regarding such risk factors, refer to Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2013.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

In December 2013, our board of directors approved a $150 million share repurchase program. The Board of Directors may suspend, modify or terminate the repurchase program at any time without prior notice. Under this repurchase program, we are not obligated to repurchase any particular number of shares. Unless terminated earlier by resolution of our Board of Directors, the program will expire when we have repurchased the full value of the shares authorized. During the three months ended June 30, 2014, we repurchased 266,886 shares pursuant to the authorized plan from December 2013.

The following table summarizes the Company’s stock repurchases for the three-month period ended June 30, 2014:

Period	Total Number of Shares Purchased	Average Price Paid per  Share		Total Number of Shares Purchased as Part of Publically Announced Plan or Program	Maximum number (or approximate dollar value) of  Shares that May Yet be Purchased Under Plan or Program
April 1 - 30, 2014	—	$	—	—	$	150,000,000
May 1 - 31, 2014	—	—		—	150,000,000
June 1 - 30, 2014	266,886	41.08		266,886	139,036,706
Total	266,886	$	41.08	266,886	$	139,036,706

Item 3. Defaults Upon Senior Securities

None.

Item 4.  Mine Safety Disclosures

None.

Item 5. Other Information

None.

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Item 6. Exhibits

Exhibit Number	Description
3.1	Certificate of Designations of 7.25% Non-Cumulative Preferred Stock, Series B (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (No. 001-33143) filed July 1, 2014).
4.1	Form of stock certificate evidencing 7.25% Non-Cumulative Preferred Stock, Series B (incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K (No. 001-33143) filed July 1, 2014).
4.2	Deposit Agreement, dated July 1, 2014, among the Company, American Stock Transfer & Trust Company, LLC and the holders from time to time of the depositary receipts described therein (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (No. 001-33143) filed July 1, 2014).
4.3	Form of depositary receipt (included as Exhibit A to Exhibit 4.2) (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K (No. 001-33143) filed July 1, 2014).
10.1	Commercial Lines Master Agreement, dated as of April 8, 2014, by and between the Company and ACP Re, Ltd.
10.2	Waiver and Amendment No. 3, dated April 30, 2014, to the Credit Agreement, dated August 10, 2012, among the Company, JPMorgan Chase Bank, N.A., as Administrative Agent, and the various lending institutions party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (No. 001-33143) filed on May 5, 2014).
10.3	Amended and Restated Commercial Lines Master Agreement, dated as of July 23, 2014, by and between the Company and ACP Re, Ltd.
31.1	Certification of the Chief Executive Officer, pursuant to Rule 13a-14(a) or 15d-14(a), for the quarter ended June 30, 2014.
31.2	Certification of the Chief Financial Officer, pursuant to Rule 13a-14(a) or 15d-14(a), for the quarter ended June 30, 2014.
32.1	Certification of the Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, for the quarter ended June 30, 2014.
32.2	Certification of the Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, for the quarter ended June 30, 2014.
101.1	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets at June 30, 2014 and December 31, 2013; (ii) the Condensed Consolidated Statements of Income for the three and six months ended June 30, 2014 and 2013; (iii) the Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2014 and 2013; (iv) the Consolidated Statements of Cash Flows for the six months ended June 30, 2014 and 2013; and (v) the Notes to Unaudited Condensed Consolidated Financial Statements.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		AmTrust Financial Services, Inc.
		(Registrant)
Date:	August 11, 2014		/s/ Barry D. Zyskind
			Barry D. Zyskind
			President and Chief Executive Officer
			/s/ Ronald E. Pipoly, Jr.
			Ronald E. Pipoly, Jr.
			Chief Financial Officer

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EX-10.1

Exhibit 10.1

COMMERCIAL LINES

MASTER AGREEMENT

BY AND BETWEEN

ACP RE, LTD

AND

AMTRUST FINANCIAL SERVICES, INC.

DATED AS OF APRIL 8, 2014

TABLE OF CONTENTS

ARTICLE I DEFINITIONS	2
ARTICLE II TRANSACTION CLOSING	5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF ACP	6
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF AMTRUST	7
ARTICLE V COVENANTS	9
ARTICLE VI RESERVED	11
ARTICLE VII CONDITIONS PRECEDENT	11
ARTICLE VIII INDEMNIFICATION	13
ARTICLE IX TERMINATION PRIOR TO CLOSING	14
ARTICLE X GENERAL PROVISIONS	14

EXHIBITS

Exhibit A            LPT Agreement

Exhibit B            Administrative Services Agreement

Exhibit C            Commercial Lines MGA Agreement

Exhibit D            Commercial Lines Reinsurance Agreement

Exhibit E            Stop-Loss Agreement

Exhibit F            Investment Agreement

Exhibit G            Commercial Lines Bill of Sale

Exhibit H            Tower Companies

DISCLOSURE SCHEDULE

Section Description

Section 3.3 Noncontravention; Consents

Section 4.3 Noncontravention; Consents

Section 7.1(d) Consents

COMMERCIAL LINES MASTER AGREEMENT

ThisCOMMERCIAL LINES MASTER AGREEMENT, is made as of April 8, 2014 (this "Agreement"), by and between ACP Re Ltd ("ACP"), a Bermuda exempted company, and AmTrust Financial Services, Inc. ("AmTrust"), a Delaware corporation.

WHEREAS, ACP, AmTrust and National General Holdings Corporation, a Delaware corporation ("National General") are entering into a series of agreements by which ACP has agreed to acquire Tower Group International, Ltd. ("Tower"), a Bermuda insurance holding company, which transacts commercial and personal lines insurance business in the United States through the Companies which are parties to this Agreement, and, in connection therewith, AmTrust and National General have agreed to administer the run-off of Tower’s legacy business, provide stop-loss coverage to ACP with respect thereto, and, prospectively, manage and reinsure all business to be written by the Companies after the Effective Time;

WHEREAS, ACP, pursuant to that certain Merger Agreement among ACP, Merger Sub and Tower dated as of January 3, 2014 (the "Merger Agreement") is acquiring Tower and its Subsidiaries through the merger of Merger Sub with and into Tower with Tower surviving such merger (the "Merger");

WHEREAS, AmTrust and National General have agreed to provide financing to ACP in connection with the Merger and to manage and reinsure, respectively, the Tower Companies' Commercial Lines Business and Personal Lines Business as set forth in the agreements provided for in this Agreement;

WHEREAS, AmTrust will provide financing to ACP in an aggregate principal amount of up to$125,000,000, which will pay a market interest rate and have a term of no less than seven years, pursuant to an instrument to be negotiated in good faith by ACP and AmTrust (the "Instrument");

WHEREAS, in connection with the transactions described above, CP Re and the Tower Companies will enter into that certain Loss Portfolio Transfer Agreement in substantially the form attached hereto as Exhibit A (the "LPT Agreement"), pursuant to which CP Re will assume all insurance liabilities and unearned premium liability (to the extent not previously assumed by Affiliates of AmTrust or National General) of the Tower Companies;

WHEREAS, the parties will enter into the Commercial Lines Administrative Services Agreement, in substantially the form attached as Exhibit B (the "Administrative Services Agreement"), pursuant to which AmTrust or one or more of its Affiliates will manage and administer the runoff of claims and policies arising out of the Commercial Lines Business written by the Tower Companies prior to the Effective Time;

WHEREAS, the parties will enter into the Commercial Lines Managing General Agent Agreement, in substantially the form attached as Exhibit C (the "Commercial Lines MGA Agreement"), pursuant to which AmTrust or one or more of its Affiliates will manage and administer the Commercial Lines Business written by the Tower Companies following the Effective Time;

WHEREAS, the parties will enter into the 100% Quota Share Reinsurance Agreement, in substantially the form attached as Exhibit D (the "Commercial Lines Reinsurance Agreement"), pursuant to which AmTrust or one or more of its Affiliates will reinsure business written by the Tower Companies pursuant to the Commercial Lines MGA Agreement;

WHEREAS, AmTrust and National General, as reinsurers, and CP Re, as reinsured, will enter into the $250 million Aggregate Stop Loss Reinsurance Agreement in substantially the form attached as Exhibit E (the "Stop-Loss Agreement");

WHEREAS, AmTrust, National General and ACP Re will enter into a Stop-Loss Retrocession Agreement to be negotiated in good faith by AmTrust, National General and ACP Re (the "Retrocession Agreement"), pursuant to which ACP Re will reinsure 100% of the business reinsured pursuant to the Stop-Loss Agreement;

WHEREAS, AmTrust, through its Affiliate, AII Insurance Management, Ltd., and ACP will enter into the Investment Management Agreement in substantially the form attached as Exhibit F (the "Investment Agreement"), by which AII Insurance Management, Ltd., will provide investment management services to the Tower Companies;

WHEREAS, in connection with the transactions contemplated herby and pursuant to the Commercial Lines Bill of Sale in substantially the form attached hereto as Exhibit G, AmTrust will purchase from ACP or its applicable Subsidiary, directly or indirectly, the Purchased Assets (as defined therein), on the terms and subject to the conditions set forth therein; and

WHEREAS, the transactions described in the foregoing recitals are collectively referred to herein as the "Transactions."

NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants and agreements contained in this Agreement, and of the mutual benefits to be derived from this Agreement, the parties agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1Definitions. For purposes of this Agreement, the following terms shall have the respective meanings set forth below:

"ACP" has the meaning set forth in the introductory paragraph of this Agreement.

"Administrative Services Agreement" has the meaning set forth in the Recitals.

"Affiliate" of any Person means another Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person. For purposes of this definition, "control" (including its correlative meanings "controlled by" and "under common control with") shall mean possession, directly or indirectly, of the power to direct or cause the direction of management or policies (whether through ownership or securities or partnership or other ownership interests, by contract or otherwise).

"Agreement" has the meaning set forth in the introductory paragraph of this Agreement.

"AmTrust" has the meaning set forth in the introductory paragraph of this Agreement.

"Applicable Law" means any domestic or foreign federal, state or local statute, law, ordinance or code, or any written rules, regulations or administrative interpretations issued by any Governmental Entity pursuant to any of the foregoing, and any order, writ, injunction, directive, judgment or decree of a court of competent jurisdiction applicable to the parties hereto.

-2-

"Applicable Rate" means the prime rate of interest reported from time to time in The Wall Street Journal.

"Business Day" means any day other than a Saturday, Sunday or other day on which banking institutions in New York are required or authorized by law or executive order to be closed.

"Commercial Lines Business" means all insurance contracts, policies, certificates, binders, slips, covers or other agreements of insurance, including all supplements, riders, endorsements, renewals and extensions (other than Personal Lines Business) issued by a Tower Company.

"Commercial Lines Bill of Sale" means the Commercial Lines Bill of Sale and General Assignment and Assumption Agreement dated as of the Transaction Closing Date among ACP, Affiliates of Tower acquired by ACP and AmTrust in the form annexed as Exhibit C.

"Commercial Lines Reinsurance Agreement" has the meaning set forth in the Recitals.

"Commercial Lines MGA Agreement" has the meaning set forth in the Recitals.

"CP Re" means CastlePoint Reinsurance Company, Ltd.

"Disclosure Schedule" means the Disclosure Schedule delivered in connection with, and constituting a part of, this Agreement.

"Effective Time" has the meaning set forth in Section 2.1.

"Governmental Entity" has the meaning set forth in Section 3.3.

"Indemnified Party" has the meaning set forth in Section 8.2(a).

"Indemnifying Party" has the meaning set forth in Section 8.2(a).Instrument" has the meaning set forth in the Recitals.

"Insurance Regulators" means all Governmental Entities regulating the business of insurance under Applicable Laws.

"Investment Agreement" has the meaning set forth in the Recitals.

"Liens" means pledges, restrictions, claims, liens, charges, encumbrances and security interests of any kind.

"Losses" means any and all liabilities, claims, obligations, losses, costs, disbursements, penalties, fines, expenses (including reasonable attorneys', accountants' and other out-of-pocket professional fees and expenses incurred in the investigation, collection, prosecution or defense or any claims, whether or not involving any third party) and damages, but excluding lost profits or any punitive, exemplary, consequential or similar damages (other than lost profits or any punitive, exemplary, consequential or similar damages actually paid to a third party in a Third Party Claim).

"LPT Agreement" has the meaning set forth in the Recitals.

"Merger Agreement" has the meaning set forth in the Recitals.

-3-

"Merger Sub" means London Acquisition Company Limited, a Bermuda exempted company.

"National General" has the meaning set forth in the Recitals.

"Permitted Liens" means (a) Liens for Taxes or assessments and similar charges, which either are (i) not delinquent or (ii) being contested in good faith and by any appropriate action or proceeding, and adequate reserves (as determined in accordance with SAP) have been established on the relevant Company's books with respect thereto, (b) Liens to secure, landlords, sublandlords, licensors, sublicensors or licensees under real estate leases, licenses or other rental or lease agreements, (c) deposits or pledges made in connection with, or to secure payment of, utilities or similar services, workers' compensation, unemployment insurance, pension or other social security, governmental insurance and governmental benefits mandated under Applicable Laws, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return of money bonds and similar obligations, (d) mechanics', materialmen's or contractors' Liens or any similar statutory Lien for amounts not yet due and payable and incurred in the ordinary course of business, (e) zoning, entitlement, building and other similar restrictions which are not violated by the current conduct of the Commercial Lines Business, (f) purchase money Liens in any property acquired by the Tower Companies in the ordinary course of business and (g) easements, covenants, rights of way or other encumbrances or restrictions, if any, that do not impair the use of the assets to which they relate.

"Person" means an individual, corporation, partnership (limited or general), joint venture, limited liability company, association, trust, unincorporated organization or other entity.

"Personal Lines Business" has the meaning set forth in the Personal Lines Master Agreement.

"Personal Lines Master Agreement" means that certain Personal Lines Master Agreement, dated as of the date hereof, by and between ACP Re and National General.

"Regulatory Approvals" means all approvals, consents and authorizations of the transactions contemplated by this Agreement required under applicable state insurance or insurance holding company laws, including without limitation all approvals, consents and authorizations required by the New York Department of Financial Services, the Illinois Department of Insurance, the Massachusetts Division of Insurance, the Florida Office of Insurance Regulation, the New Jersey Department of Banking and Insurance, the Maine Bureau of Insurance and any other state insurance regulator whose approval is required to consummate any of the transactions contemplated by this Agreement.

"Retrocession Agreement" has the meaning set forth in the Recitals.

"SAP" means, with respect to any Tower Company, the applicable statutory accounting principles (or local equivalents in the applicable jurisdiction) prescribed by the applicable Insurance Regulator under Applicable Law.

"Stop-Loss Agreement" has the meaning set forth in the Recitals.

"Subsidiary" of any Person means another Person 50% or more of the total combined voting power of all classes of capital stock or other voting interests of which, or 50% or more of the equity securities of which, is owned directly or indirectly by such first Person.

-4-

"Taxes" means all federal, state, local and foreign taxes of any kind, including those on or measured by or referred to as income, gross receipts, sales, use, ad valorem, franchise, profits, value added, property or windfall profits taxes, or similar fees, assessments or charges of any kind whatsoever (whether payable directly or by withholding and whether or not requiring the filing of a tax return), together with any interest and any penalties, additions to tax or additional amounts imposed thereon by any Taxing Authority, domestic or foreign.

"Taxing Authority" means any Governmental Entity or other Person responsible for and having jurisdiction over, the administration of Taxes.

"Third-Party Claim" has the meaning set forth in Section 8.2(a).

"Tower" has the meaning set forth in the Recitals.

"Tower Companies" means the companies set forth on Exhibit H hereto.

"Transaction Closing" has the meaning set forth in Section 2.1.

"Transaction Closing Date" has the meaning set forth in Section 2.1.

"Transaction Documents" means this Agreement, the Administrative Services Agreement, the Commercial Lines Bill of Sale, the Commercial Lines MGA Agreement, the Commercial Lines Reinsurance Agreement, the Instrument, the LPT Agreement, the Retrocession Agreement, the Investment Agreement, the Stop-Loss Agreement and the Investment Agreement.

"Transactions" has the meaning set forth in the Recitals.

ARTICLE II

TRANSACTION CLOSING

Section 2.1Closing. Unless this Agreement shall have been terminated pursuant to Section 9.1, and subject to the satisfaction or waiver of each of the conditions set forth in Article VII, the closing of the transactions contemplated hereby (the "Transaction Closing") shall take place at 10:00 a.m. on the "Closing Date" (as defined in the Merger Agreement), at the same location as the "Closing" (as defined in the Merger Agreement). The effective date and time of the Transaction Closing are herein referred to as the "Transaction Closing Date." All of the contemplated transactions under this Agreement shall be deemed to be consummated as of 11:59:59 p.m. Eastern Time on the Transaction Closing Date (the "Effective Time") and all actions taken at Transaction Closing shall be deemed to have occurred simultaneously and shall be deemed effective as of the dates and times specified in this Agreement.

Section 2.2ACP's Transaction Closing Date Deliveries. Subject to fulfillment or waiver (where permissible) of the conditions set forth in Article VII, at the Transaction Closing, ACP shall deliver to AmTrust all of the following:

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(a)FIRPTA Certificate. Unless ACP is a foreign person, a certification from ACP and signed by a responsible officer of ACP, as contemplated under Section 1.1445-2(b)(2) of the Treasury Regulations, certifying that ACP is not a foreign person.

(b)Transaction Documents. A copy of (i) each Transaction Document (other than this Agreement) duly executed by ACP or its applicable Affiliate and (ii) such other documents and instruments as AmTrust reasonably requests to consummate the transactions contemplated by this Agreement.

Section 2.3AmTrust's Transaction Closing Date Deliveries. Subject to fulfillment or waiver (where permissible) of the conditions set forth in Article VII, at the Transaction Closing, AmTrust shall deliver to ACP a copy of (a) each Transaction Document (other than this Agreement) duly executed by AmTrust or its applicable Affiliate and (b) such other documents and instruments as ACP reasonably requests to consummate the transactions contemplated by this Agreement.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF ACP

Subject to the exceptions and qualifications set forth in the Disclosure Schedule, ACP represents and warrants to AmTrust as follows:

Section 3.1Organization, Standing and Corporate Power. ACP is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized and has the requisite corporate power and authority to carry on its business as now being conducted.

Section 3.2Authority. ACP has the requisite corporate power and authority to enter into this Agreement and the other Transaction Documents and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the other Transaction Documents by ACP and the consummation by ACP of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of ACP and no other corporate action or proceeding on the part of ACP or any Affiliate of ACP is necessary (including any shareholder vote). This Agreement and each of the other Transaction Documents has been duly executed and delivered by ACP and, assuming this Agreement and the other Transaction Documents constitute the valid, legal and binding agreement of AmTrust, constitutes a valid, legal and binding obligation of ACP, enforceable against ACP in accordance with its terms, except that (a) such enforcement may be subject to applicable bankruptcy, insolvency or other similar laws, now or hereafter in effect, affecting creditors' rights generally and (b) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

Section 3.3Noncontravention; Consents. Neither the execution and delivery of this Agreement or the other Transaction Documents by ACP, nor the consummation by ACP of the transactions contemplated hereby or thereby, nor performance or compliance by ACP with any of the terms or provisions hereof or thereof, will (i) conflict with or violate any provision of the certificate or articles of incorporation, code of regulations, by-laws or other comparable charter or organizational documents of ACP or (ii) assuming (A) that the actions described in Section 4.02(a) of the Merger Agreement have been completed, (B) that the

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authorizations, consents and approvals referred to in this Section 3.3 are obtained and (C) that the filings referred to in this Section 3.3 are made and any waiting periods thereunder have terminated or expired, in the case of each of clauses (A) through (C), prior to the Effective Time, (x) conflict with, contravene or violate any Law, judgment, writ or injunction of any Governmental Entity applicable to ACP or the Tower Companies or (y) conflict with, contravene or violate or constitute a default or breach under any of the terms, conditions or provisions of any Contract to which ACP or any of the Tower Companies is a party or accelerate ACP's or any of the Tower Companies', if applicable, obligations under any such Contract. Except for (a) compliance with the applicable requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, (b) compliance with the rules and regulations of the NASDAQ Stock Market, (c) the filing of appropriate documents with the relevant authorities of other jurisdictions in which any of the Tower Companies is qualified to do business, (d) compliance with any applicable state securities or blue sky laws and (e) the Regulatory Approvals as set forth in Section 3.3 of the Disclosure Schedule, no consent or approval of, action by or in respect of, or filing, license, permit or authorization, declaration or registration with, any court or governmental or regulatory authority or agency, domestic or foreign (a "Governmental Entity"), the performance by ACP of its obligations pursuant to this Agreement and the other Transaction Documents and the consummation by ACP of the transactions contemplated hereunder and thereunder.

Section 3.4Brokers. No broker, investment banker, financial advisor or other Person is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the transactions contemplated by this Agreement or the other Transaction Documents based upon arrangements made by or on behalf of ACP or the Tower Companies.

Section 3.5No Other Representations and Warranties. Except for the representations and warranties contained in this Article III (including the related portions of the Disclosure Schedules), none of ACP or any other Person has made or makes any other express or implied representation or warranty, either written or oral, on behalf of ACP, including any representation or warranty as to the accuracy or completeness of any information regarding the Tower Companies furnished or made available to AmTrust and its representatives.

Section 3.6Merger Agreement Representations, Warranties and Covenants. To ACP's knowledge, the representations and warranties set forth in the Merger Agreement are true and correct as of the Closing Date (as defined in the Merger Agreement). For the avoidance of doubt, all qualifiers as to materiality, material adverse effect and all other qualifiers contained in such representations and warranties in the Merger Agreement shall be given effect in the determination of the accuracy of such representations and warranties pursuant to this Section 3.6.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF AMTRUST

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Subject to the exceptions and qualifications set forth in the Disclosure Schedule, AmTrust represents and warrants to ACP as follows:

Section 4.1Organization, Standing and Corporate Power. AmTrust is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has the requisite corporate power and authority to carry on its business as now being conducted.

Section 4.2Authority. AmTrust has the requisite corporate power and authority to enter into this Agreement and the other Transaction Documents and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the other Transaction Documents by AmTrust and the consummation by AmTrust of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of AmTrust. No action by the stockholders of AmTrust is necessary to authorize the execution and delivery by AmTrust of this Agreement and the other Transaction Documents and the consummation by AmTrust of the transactions contemplated hereby and thereby. This Agreement and each of the other Transaction Documents has been duly executed and delivered by AmTrust and, assuming this Agreement constitutes the valid, legal and binding agreement of ACP, constitutes a valid, legal and binding obligation of AmTrust, enforceable against AmTrust in accordance with its terms except that (i) such enforcement may be subject to applicable bankruptcy, insolvency or other similar laws, now or hereafter in effect, affecting creditors' rights generally and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

Section 4.3Noncontravention; Consents. The execution and delivery of this Agreement and the other Transaction Documents do not, and except as disclosed in Section 4.3 of the Disclosure Schedule, the consummation of the transactions contemplated hereby or thereby will not, (i) conflict with, be prohibited by, or require any approval that has not already been obtained under, any of the provisions of the certificate of incorporation or the by-laws of AmTrust or the comparable organizational documents of any of its Subsidiaries, (ii) subject to the matters referred to in the next sentence, conflict with, result in a breach of or default (with or without notice or lapse of time, or both) under, be prohibited by, require approval or consent under, give rise to a right of termination under, or result in the creation of any Lien (other than a Permitted Lien) on any property or asset of AmTrust or any of its Affiliates under, any agreement, permit, franchise, license or instrument to which AmTrust or any of its Subsidiaries is a party or (iii) subject to the matters referred to in the next sentence, contravene, be prohibited by, or require approval or consent under, any Applicable Law, judgment, injunction or award applicable to AmTrust or any of its Subsidiaries, which, in the case of clauses (ii) and (iii) above, would materially impair the ability of AmTrust to consummate any of the transactions contemplated hereby or thereby. No consent, approval or authorization of, or declaration or filing with, or notice to, any Governmental Entity is required by or with respect to AmTrust or any of its Subsidiaries in connection with the execution and delivery of this Agreement or the other Transaction Documents by AmTrust or the consummation by AmTrust of any of the transactions contemplated hereby or thereby, except for (i) the approvals, filings and notices required under the insurance laws of the jurisdictions set forth in Section 4.3 of the Disclosure Schedule, (ii) such other consents, approvals, authorizations, declarations, filings or notices as are set forth in Section 4.3 of the Disclosure Schedule and (iii) such other consents, approvals, authorizations, declarations, filings or notices that are not required to

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be set forth pursuant to clauses (ii) and (iii) the failure to obtain or make which, in the aggregate, would not materially impair the ability of AmTrust to consummate any of the transactions contemplated hereby.

Section 4.4Litigation. There is no suit, action, proceeding or arbitration pending or threatened in writing against or affecting AmTrust or any Affiliate of AmTrust that (i) seeks to restrain or enjoin the consummation of any of the transactions contemplated by this Agreement or the other Transaction Documents or (ii) would reasonably be expected to impair the ability of AmTrust to consummate any of the transactions contemplated by this Agreement or the other Transaction Documents.

Section 4.5Brokers. No broker, investment banker, financial advisor or other person is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the transactions contemplated by this Agreement or the other Transaction Documents based upon arrangements made by or on behalf of AmTrust or any Affiliate.

ARTICLE V

COVENANTS

Section 5.1Commercially Reasonable Efforts. Upon the terms and subject to the conditions and other agreements set forth in this Agreement, each of the parties agrees to use its commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement.

Section 5.2Consents, Approvals and Filings. ACP and AmTrust shall each use their commercially reasonable efforts, and shall cooperate fully with each other (i) to comply as promptly as practicable with all governmental requirements applicable to the transactions contemplated by this Agreement and (ii) to obtain as promptly as practicable all necessary permits, orders or other consents, approvals or authorizations of Governmental Entities and consents or waivers of all third parties necessary in connection with the consummation of the transactions contemplated by this Agreement. In connection therewith, ACP and AmTrust shall make and cause their respective Affiliates to make all legally required filings as promptly as practicable in order to facilitate prompt consummation of the transactions contemplated by this Agreement, and shall provide and shall cause their respective Affiliates to provide such information and communications to Governmental Entities as such Governmental Entities may request. The parties hereto shall not willfully take any action that will have the effect of delaying, impairing or impeding the receipt of allnecessary permits, orders or other consents, approvals or authorizations of Governmental Entities and consents or waivers of all third parties necessary in connection with the consummation of the transactions contemplated by this Agreement.

Section 5.3Public Announcements. Until the Transaction Closing Date, the parties hereto shall consult with each other before issuing, and give each other the opportunity to review and comment upon, any press release or other public statements with respect to the transactions contemplated hereunder, and shall not issue any such press release or make any such public statement prior to such consultation and joint approval of AmTrust and ACP, except as may be required by Applicable Law, court process or the rules and regulations of any national securities exchange or national securities quotation system provided that, to the

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extent possible under the circumstances, the party making such disclosure consults with the other party, and considers in good faith the views of the other party, before doing so.

Section 5.4Further Assurances. ACP and AmTrust agree, and ACP, prior to the Transaction Closing, and AmTrust, after the Transaction Closing, agree to cause the Tower Companies and each of their Subsidiaries, to execute and deliver such other documents, certificates, agreements and other writings and to take such other actions as may be reasonably necessary or desirable in order to consummate or implement expeditiously the transactions contemplated by this Agreement.

Section 5.5Notice of Events.

(a)AmTrust shall promptly notify ACP, and ACP shall promptly notify AmTrust, in writing, upon (1) becoming aware of any order or decree or any complaint praying for an order or decree restraining or enjoining the execution of this Agreement or the consummation of the transactions contemplated by this Agreement, or (2) receiving any notice from any Governmental Entity of its intention to (i) institute a suit or proceeding to restrain or enjoin the execution of this Agreement or the consummation of the transactions contemplated by this Agreement or (ii) nullify or render ineffective this Agreement or such transactions if consummated.

(b)During the period from the date hereof to the Transaction Closing Date or the earlier termination of this Agreement, AmTrust shall promptly notify ACP in writing if AmTrust becomes aware of: (i) the occurrence or non-occurrence of any event or the existence of any fact or condition that would cause or constitute a breach of any of its representations or warranties had any such representation or warranty been made as of the time of AmTrust's discovery of such event, fact or condition; (ii) any material failure on its part or ACP's or the Tower Companies' part to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; or (iii) the occurrence or non-occurrence of any event or the existence of any fact or condition that would cause or constitute a breach of any of ACP's representations or warranties hereunder.

(c)During the period from the date hereof to the Transaction Closing Date or the earlier termination of this Agreement, ACP shall promptly notify AmTrust in writing if ACP becomes aware of: (i) the occurrence or non-occurrence of any event or the existence of any fact or condition that would cause or constitute a breach of any of its representations or warranties had any such representation or warranty been made as of the time of ACP's discovery of such event, fact or condition; (ii) any material failure on its part or AmTrust's part to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; or (iii) the occurrence or non-occurrence of any event or the existence of any fact or condition that would cause or constitute a breach of any of AmTrust's representations or warranties hereunder.

Section 5.6Merger Agreement. During the period from the date hereof to the Transaction Closing Date or the earlier termination of this Agreement, ACP shall promptly notify AmTrust in writing if ACP becomes aware of: (a) the occurrence or non-occurrence of any event or the existence of any fact or condition that would cause or constitute a material breach of any of Tower's representations or warranties set forth in the Merger Agreement had any such representation or warranty been made as of the time of ACP's discovery of such event, fact or condition; (b) any material failure on Tower's part to comply with or satisfy

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any covenant, condition or agreement to be complied with or satisfied by it under the Merger Agreement; or (c) the occurrence or non-occurrence of any event or the existence of any fact or condition that would cause or constitute a material breach of any of Tower's representations or warranties under the Merger Agreement. ACP hereby agrees that without AmTrust's written consent that it shall not waive: (x) any material breach by Tower of any of its representation or warranty set forth in the Merger Agreement; or (y) any material failure by Tower to comply with any covenants or conditions to closing contained in the Merger Agreement.

Section 5.7Transition Services. From time to time following the Transaction Closing Date, AmTrust may request from ACP any transition services that AmTrust reasonably determines are necessary for the Commercial Lines Business. AmTrust shall reimburse ACP for any costs actually incurred by ACP in providing any such services to AmTrust.

Section 5.8Use of Office Space. From time to time following the Transaction Closing Date, AmTrust may elect to use of all or a portion of the office space used by any of the Companies prior to such date, including, without limitation, employee work stations, telephone and computer equipment and other facilities as AmTrust determines are reasonably necessary for the Commercial Lines Business. AmTrust shall reimburse ACP for costs actually incurred by ACP in connection therewith.

ARTICLE VI

RESERVED

ARTICLE VII

CONDITIONS PRECEDENT

Section 7.1Conditions to Each Party's Obligations. The respective obligations of each party to consummate the transactions contemplated hereby are subject to the satisfaction or waiver on or prior to the Transaction Closing Date of the following conditions:

(a)Governmental Consents. All filings required to be made prior to the Transaction Closing Date with, and all consents, approvals, permits and authorizations required to be obtained prior thereto from, Governmental Entities in connection with the consummation of the transactions contemplated hereby by ACP and AmTrust set forth in Section 3.3 and Section 4.3 of the Disclosure Schedule shall have been made or obtained.

(b)No Injunctions or Restraints. No temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction and no Applicable Law of any Governmental Entity preventing the consummation of the Transactions or any of the other transactions contemplated hereby shall be in effect; provided, that the party invoking this condition shall have used all reasonable efforts to have any such order or injunction vacated, and no Governmental Entity shall have instituted any proceeding that is pending seeking any such order, preliminary or permanent injunction or other order to prohibit the consummation of the transactions contemplated hereby or any of the other transactions contemplated hereby.

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(c)Consents. All consents, waivers, clearances, approvals and authorizations from third parties under the contracts and agreements set forth on Section 7.1(c) of the Disclosure Schedule as being required to be obtained prior to Transaction Closing shall have been retained.

(d)Merger Agreement.    The Closing (as defined in the Merger Agreement) of the Merger (as defined in the Merger Agreement) shall occur contemporaneous with the transactions contemplated herein.

(e)Personal Lines Master Agreement. The transactions contemplated by the Personal Lines Master Agreement to be effected as of the "Transaction Closing" (as defined in the Personal Lines Master Agreement) shall occur contemporaneous with the transactions contemplated herein.

Section 7.2Conditions to Obligations of AmTrust. The obligations of AmTrust to consummate the transactions contemplated hereby and the other actions to be taken at the Transaction Closing are further subject to the satisfaction or waiver by AmTrust on or prior to the Transaction Closing Date of the following conditions:

(a)Representations and Warranties. The representations and warranties of ACP in this Agreement shall be true and correct in all material respects, in each case as of the date of this Agreement and as of the Transaction Closing Date as though made on and as of the Transaction Closing Date (except as to any representation or warranty which specifically relates to another date).

(b)Performance of Obligations of ACP. ACP shall have performed in all material respects all obligations required to be performed by it under this Agreement on or prior to the Transaction Closing Date.

(c)Closing Deliveries. ACP shall have delivered to AmTrust each of the items described in Section 2.2.

Section 7.3Conditions to Obligations of ACP. The obligations of ACP to consummate the transactions contemplated hereby and the other actions to be taken at the Transaction Closing are further subject to the satisfaction or waiver by ACP on or prior to the Transaction Closing Date of the following conditions:

(a)Representations and Warranties. The representations and warranties of AmTrust set forth in this Agreement shall be true and correct in all material respects, in each case as of the date of this Agreement and as of the Transaction Closing Date as though made on and as of the Transaction Closing Date (except as to any representation or warranty which specifically relates to another date).

(b)Performance of Obligations of AmTrust. AmTrust shall have performed in all material respects all obligations required to be performed by it under this Agreement on or prior to the Transaction Closing Date.

(c)Closing Deliveries. AmTrust shall have delivered to ACP each of the items described in Section 2.3.

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Section 7.4Frustration of Closing Conditions. No party to this Agreement may rely on the failure of any condition set forth in this Article VII to be satisfied if such failure was caused by such party's failure to use reasonable best efforts to cause the Transaction Closing to occur, as required by Section 5.1 hereof.

ARTICLE VIII

INDEMNIFICATION

Section 8.1Obligation to Indemnify.

(a)ACP agrees to indemnify, defend and hold harmless AmTrust and its Affiliates and their respective representatives from and against all Losses to the extent arising from or related to any material breach of any of the covenants and agreements of ACP contained in this Agreement.

(b)AmTrust agrees to indemnify, defend and hold harmless ACP and its Affiliates and their respective representatives from and against all Losses to the extent arising from or related to any breach of any of the covenants and agreements of AmTrust contained in this Agreement.

(c)The parties' obligations pursuant to this Section 8.1 shall terminate as of the Transaction Closing Date, except for claims based on actual fraud, criminal activity or willful misconduct. Following the Transaction Closing Date, the parties' indemnification rights and obligations shall be as set forth in the applicable Transaction Document.

Section 8.2Indemnification Procedures.

(a)If any third party shall notify either party (the "Indemnified Party") with respect to any matter (a "Third-Party Claim") which may give rise to a claim for indemnification against any other Party (the "Indemnifying Party") under this Article VIII, then the Indemnified Party shall promptly (and in any event within five Business Days after receiving notice of the Third-Party Claim) notify the Indemnifying Party thereof in writing.

(b)An Indemnifying Party will have the right at any time to assume and thereafter conduct the defense of the Third-Party Claim with counsel of its choice; provided, that the Indemnifying Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third-Party Claim without the prior written consent of the Indemnified Party (not to be unreasonably withheld) unless the judgment or proposed settlement involves only the payment of money damages and does not impose an injunction or other equitable relief upon the Indemnified Party.

(c)Unless and until an Indemnifying Party assumes the defense of the Third-Party Claim as provided in Section 8.2(b) above, the Indemnified Party may defend against the Third-Party Claim in any manner it may reasonably deem appropriate.

(d)In no event will the Indemnified Party consent to the entry of any judgment on or enter into any settlement with respect to the Third-Party Claim without the prior written consent of each of the Indemnifying Parties.

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ARTICLE IX

TERMINATION PRIOR TO CLOSING

Section 9.1Termination of Agreement. This Agreement may be terminated at any time prior to the Transaction Closing:

(a)by the written agreement of AmTrust and ACP;

(b)by either ACP or AmTrust in writing, if there shall be any order, injunction or decree of any Governmental Entity which prohibits or restrains any party from consummating the transactions contemplated hereby, and such order, injunction or decree shall have become final and nonappealable;

(c)by either ACP or AmTrust in writing, if a Governmental Entity shall have disapproved a Regulatory Approval;

(d) unless ACP or AmTrust otherwise agree in writing, upon the withdrawal of filings submitted in connection with any Regulatory Approvals; or

(e)automatically, following the termination of the Merger Agreement.

Section 9.2Effect of Termination. In the event of termination pursuant to Section 9.1, this Agreement shall become null and void and have no effect (other than Section 5.3 (Public Announcements), Article VIII (Indemnification), this Section 9.2 and Article X (General Provisions), all of which shall survive termination of this Agreement), and there shall be no liability on the part of ACP, the Tower Companies or AmTrust or their respective directors, officers and Affiliates, except (a) as liability may exist pursuant to the sections specified in the immediately preceding parenthetical that survive such termination and (b) that no such termination shall relieve any party from liability for any willful and material breach by such party of any representation, warranty, covenant or agreement set forth in this Agreement or fraud. For purposes hereof, "willful and material breach" means a material breach by a party of the applicable provision of this Agreement as a result of an action or failure to act by such Person that it knew would result in a breach of this Agreement.

ARTICLE X

GENERAL PROVISIONS

Section 10.1No Survival of Representations, Warranties, Covenants and Agreements. This Article X, Article VIII and the agreements of ACP and AmTrust contained in Article II, Article V and Article VI shall survive the Effective Time. No other representations, warranties, covenants or agreements in this Agreement shall survive the Effective Time.

Section 10.2Fees and Expenses. Whether or not the transactions contemplated hereby are consummated, each party hereto shall pay its own fees and expenses incident to preparing for, entering into and carrying out this Agreement and the consummation of the transactions contemplated hereby. For the avoidance of doubt, ACP shall be solely responsible for the payment of all of the transaction expenses incurred

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by or on behalf of ACP or the Tower Companies incident to the transaction which is the subject of this Agreement, including investment banking fees, accounting fees and legal fees.

Section 10.3Notices. All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be deemed given if delivered personally, by facsimile (which is confirmed as provided below) or sent by overnight courier (providing proof of delivery) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):

if to AmTrust, to

59 Maiden Lane, 43^rd Floor
New York, New York 10038
(646) 458-7913
Fax: (212) 220-7130
Attention: Stephen Ungar, Esq.

if to ACP, toWashington Mall

7 Reid Street, Suite 404

Hamilton HM11 Bermuda

Attn: General Counsel

Notice given by personal delivery or overnight courier shall be effective upon actual receipt. Notice given by facsimile shall be confirmed by appropriate answer back and shall be effective upon actual receipt if received during the recipient's normal business hours, or at the beginning of the recipient's next Business Day if not received during the recipient's normal business hours. All notices by facsimile shall be confirmed promptly after transmission in writing by personal delivery or overnight courier.

Section 10.4Interpretation. When a reference is made in this Agreement to a section, exhibit or schedule, such reference shall be to a section of, or an exhibit or schedule to, this Agreement unless otherwise indicated. The inclusion of any information in the Disclosure Schedule will not be deemed an admission or acknowledgment, in and of itself and solely by virtue of the inclusion of such information in the Disclosure Schedule, that such information is required to be listed in the Disclosure Schedule or that such items are material to the Tower Companies. The specification of any dollar amount in the Disclosure Schedule is not intended to imply that such amount, or higher or lower amounts is or is not material for purposes of this Agreement and no party shall use the fact of the setting forth of such amount in any dispute or controversy between the parties as to whether any obligation, item or matter not described therein is or is not material for purposes of this Agreement. Unless the Agreement specifically provides otherwise, neither the specification of any item or matter in any representation or warranty contained in this Agreement nor the inclusion of any specific item in the Disclosure Schedule is intended to imply that such item or matter, or other items or matters, are or are not in the ordinary course of business (except as expressly provided herein), and no party shall use the fact of the setting forth or the inclusion of any such item or matter in any dispute or controversy among the parties as to whether any obligation, item or matter not described in this Agreement or included in any Disclosure Schedule is or is not in the ordinary course of business for purposes of this Agreement (except as expressly provided herein). The disclosure of an item in one section of the Disclosure

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Schedule as an exception to a particular covenant, representation or warranty will be deemed adequately disclosed as an exception with respect to all other covenants, representations or warranties to the extent that the relevance of such item to such other covenants, representations or warranties is reasonably apparent on the face of such item, notwithstanding the presence or absence of an appropriate section of the Disclosure Schedule with respect to such other covenants, representations or warranties or an appropriate cross-reference thereto. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words "include", "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation." Whenever the singular is used herein, the same shall include the plural, and whenever the plural is used herein, the same shall include the singular, where appropriate.

Section 10.5Entire Agreement; Third-Party Beneficiaries. This Agreement (including all exhibits and schedules hereto) constitutes the entire agreement, and supersedes all prior agreements, understandings, representations and warranties, both written and oral, among the parties with respect to the subject matter of this Agreement. AmTrust has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of the transactions contemplated hereby and is capable of bearing the economic risks thereof. Except as expressly provided herein, this Agreement is not intended to confer upon any Person other than the parties hereto any rights or remedies.

Section 10.6Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts executed in and to be performed entirely within that State, regardless of the laws that might otherwise govern under any applicable conflict of laws principles, except to the extent the provisions of the laws of Bermuda are mandatorily applicable to the Merger.

Section 10.7Assignment. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise by any of the parties without the prior written consent of the other parties, and any such assignment that is not consented to shall be null and void. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns.

Section 10.8Dispute Resolution; Enforcement.

(a)In the event of any dispute arising under this Agreement, prior to the commencement of litigation, a senior officer of AmTrust and a senior officer of ACP shall attempt in good faith to resolve the dispute consistent with the terms of this Agreement. If they are unable to resolve the dispute in this manner within a reasonable period of time, the parties may pursue judicial remedies with respect to such dispute. This section shall not apply to any application to obtain emergency judicial intervention.

(b)All actions and proceedings arising out of or relating to the interpretation and enforcement of the provisions of this Agreement and in respect of the transactions contemplated by this Agreement (except to the extent any such proceeding mandatorily must be brought in Bermuda) shall be heard and determined in the United States District Court for the Southern District of New York and any Federal appellate court therefrom (or, if United States federal jurisdiction is unavailable over a particular matter, the Supreme Court of the State of New York, New York County) and the parties hereto hereby

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irrevocably submit to the exclusive jurisdiction and venue of such courts in any such action or proceeding and irrevocably waive the defense of an inconvenient forum or lack of jurisdiction to the maintenance of any such action or proceeding. The consents to jurisdiction and venue set forth in this Section 10.8(b) shall not constitute general consents to service of process in the State of New York and shall have no effect for any purpose except as provided in this paragraph and shall not be deemed to confer rights on any Person other than the parties hereto. Each party hereto agrees that service of process upon such party in any action or proceeding arising out of or relating to this Agreement shall be effective if notice is given by overnight courier at the address set forth in Section 10.3 of this Agreement. The parties hereto agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Law; provided, that nothing in the foregoing shall restrict any party's rights to seek any post-judgment relief regarding, or any appeal from, a final trial court judgment.

Section 10.9WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY LAW, THE PARTIES HERETO HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON, ARISING OUT OF, RELATED TO OR CONNECTED WITH THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

Section 10.10Severability; Amendment and Waiver.

(a)Whenever possible, each provision or portion of any provision of this Agreement will be interpreted in such manner as to be effective and valid under Applicable Law, but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any Applicable Law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or portion of any provision in such jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein.

(b)This Agreement may be amended, and the terms hereof may be waived, only by a written instrument signed by each of the parties or, in the case of a waiver, by the party waiving compliance.

(c)No delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any right, power or privilege, nor any single or partial exercise of any such right, power or privilege, preclude any further exercise thereof or the exercise of any other such right, power or privilege.

Section 10.11Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall be deemed to be one and the same agreement. A signed

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copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

Section 10.12Commercially Reasonable Efforts. AmTrust and ACP acknowledge and agree that any reference made to commercially reasonable efforts in this Agreement shall not include any obligation to commence or continue any contested arbitration or litigation other than the filing of a proof of claim or similar filing requirement necessary to preserve a claim against any insolvent or otherwise financially impaired debtor.

Section 10.13Specific Enforcement. The parties hereto agree that irreparable damage for which monetary relief, even if available, would not be an adequate remedy, would occur in the event that any provision of this Agreement is not performed in accordance with its specific terms or is otherwise breached, including if the parties hereto fail to take any action required of them hereunder to consummate this Agreement. The parties acknowledge and agree that (a) the parties shall be entitled to an injunction or injunctions, specific performance or other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in the courts described in Section 10.8(b) without proof of damages or otherwise, this being in addition to any other remedy to which they are entitled under this Agreement and (b) the right of specific enforcement is an integral part of the transactions contemplated hereunder and without that right, neither AmTrust nor ACP would have entered into this Agreement. The parties hereto agree not to assert that a remedy of specific enforcement is unenforceable, invalid, contrary to Applicable Law or inequitable for any reason, and not to assert that a remedy of monetary damages would provide an adequate remedy or that the parties otherwise have an adequate remedy at law. The parties hereto acknowledge and agree that any party seeking an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in accordance with this Section 10.13 shall not be required to provide any bond or other security in connection with any such order or injunction.

[Signature Page Follows]

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IN WITNESS WHEREOF, ACP and AmTrust have caused this Agreement to be signed by their respective officers thereunto duly authorized as of the date first written above.

ACP RE, LTD

By /s/ Michael Karfunkel    

Name: Michael Karfunkel    

Title: Chairman    

AMTRUST FINANCIAL SERVICES, INC.

By /s/ Stephen Ungar    

Name: Stephen Ungar    

Title: SVP, Secretary and General Counsel

[Signature Page to Commercial Lines Master Agreement]

Exhibit A

LOSS PORTFOLIO TRANSFER AGREEMENT

by and AMONG

TOWER INSURANCE COMPANY OF NEW YORK,

CASTLEPOINT NATIONAL INSURANCE COMPANY,

TOWER NATIONAL INSURANCE COMPANY,

HERMITAGE INSURANCE COMPANY,

CASTLEPOINT FLORIDA INSURANCE COMPANY,

NORTH EAST INSURANCE COMPANY,

YORK INSURANCE COMPANY OF MAINE,

MASSACHUSETTS HOMELAND INSURANCE COMPANY,

PRESERVER INSURANCE COMPANY,

CASTLEPOINT INSURANCE COMPANY

(THE “COMPANIES”)

AND

CASTLEPOINT REINSURANCE COMPANY LTD,

(the “Reinsurer”)

Exhibit 10.1

TABLE OF CONTENTS

Article 1	DEFINITIONS	2
	Section 1.1	2
Article 2	BASIS OF REINSURANCE AND BUSINESS REINSURED	5
	Section 2.1 Existing Business	5
	Section 2.2 Transfer of Loss Reserves and Unearned Premium Reserves	5
	Section 2.3 Inuring Reinsurance	6
Article 3	PAYMENTS, OFFSET, AND SECURITY	6
	Section 3.1 Offset Rights	6
	Section 3.2 Reports and Remittances	7
	Section 3.3 Security	7
Article 4	CLAIMS, UNDERWRITING AND OTHER ADMINISTRATION	9
Article 5	REGULATORY MATTERS	9
Article 6	DUTY OF COOPERATION & INDEMNITY	10
	Section 6.1 Cooperation	10
	Section 6.2 Indemnity	10
Article 7	[INTENTIONALLY OMITTED]	10
Article 8	INSOLVENCY	10
Article 9	REGULATORY APPROVALS	10
Article 10	DURATION	11
Article 11	FOLLOW THE FORTUNES	11
Article 12	SURVIVAL; INDEMNIFICATION	11
	Section 12.1 Indemnification	11
Article 13	MISCELLANEOUS	12
	Section 13.1 Notices	12
	Section 13.2 Assignment; Parties in Interest	13
	Section 13.3 Waivers and Amendments; Preservation of Remedies	13
	Section 13.4 Governing Law; Venue	13
	Section 13.5 Counterparts	13
	Section 13.6 Entire Agreement; Merger	13
	Section 13.7 Exhibits and Schedules	14
	Section 13.8 Headings	14
	Section 13.9 Severability	14
	Section 13.10 Expenses	14
	Section 13.11 Currency	14

LOSS PORTFOLIO TRANSFER AGREEMENT

THIS LOSS PORTFOLIO TRANSFER AGREEMENT (this “Agreement”) is entered into as of [ ], 2014 by and among TOWER INSURANCE COMPANY OF NEW YORK, an insurance company organized under the laws of New York, CASTLEPOINT NATIONAL INSURANCE COMPANY, an insurance company organized under the laws of Illinois, TOWER NATIONAL INSURANCE COMPANY, an insurance company organized under the laws of Massachusetts, HERMITAGE INSURANCE COMPANY, an insurance company organized under the laws of New York, CASTLEPOINT FLORIDA INSURANCE COMPANY, an insurance company organized under the laws of Florida, NORTH EAST INSURANCE COMPANY, an insurance company organized under the laws of Maine, YORK INSURANCE COMPANY OF MAINE, an insurance company organized under the laws of Maine, MASSACHUSETTS HOMELAND INSURANCE COMPANY, an insurance company organized under the laws of Massachusetts, PRESERVER INSURANCE COMPANY, an insurance company organized under the laws of New Jersey, and CASTLEPOINT INSURANCE COMPANY, an insurance company organized under the laws of New York, as the Companies (collectively, the “Companies” and, individually, each a “Company”), and CastlePoint Reinsurance Company Ltd. (the “Reinsurer”) (collectively, the “Parties”).

WHEREAS, ACP Re, Ltd., a Bermuda corporation (the “Seller”), AmTrust Financial Services, Inc., a Delaware corporation (“AmTrust”), and National General Holdings Corporation, a Delaware corporation (“National General”) are entering into a series of agreements by which Seller has agreed to acquire Tower Group International, Ltd. (“Tower”), a Bermuda insurance holding company, which transacts commercial and personal lines insurance business in the United States through the Companies which are parties to this Agreement, and, in connection therewith, AmTrust and National General have agreed to administer the run-off of Tower’s legacy business, provide stop-loss coverage to Reinsurer with respect thereto, and, prospectively, manage and reinsure all business to be written by the Companies after the Effective Time;

WHEREAS, Seller, pursuant to that certain Merger Agreement among Seller, Merger Sub and Tower dated as of January 3, 2014 (the “Merger Agreement”) is acquiring Tower and its subsidiaries, including, indirectly, all of the issued and outstanding shares of capital stock of the Companies, through the merger of Merger Sub with and into Tower with Tower surviving such merger (the “Merger”);

WHEREAS, AmTrust and Seller, pursuant to that certain Commercial Lines Master Agreement dated as of April __, 2014, have agreed to enter into the Transaction Documents (as described therein) by which AmTrust will manage and reinsure Commercial Lines Business written after the Effective Time for and on behalf of the Companies;

WHEREAS, National General and Seller, pursuant to that certain Personal Lines Master Agreement dated as of April __, 2014, have agreed to enter into the Transaction Documents (as described therein) by which National General will manage and reinsure Personal Lines Business written after the Effective Time for and on behalf of the Companies;

WHEREAS, Technology Insurance Company, Inc. (the “Commercial Lines Reinsurer”) and the Companies are parties to that certain Commercial Lines Cut-Through Quota Share Reinsurance Agreement, dated January 3, 2014 (the “Commercial Lines Cut-Through QSA”) pursuant to which the Commercial Lines Reinsurer is reinsuring Subject Policies and Included Existing Contracts (as defined in the Commercial Lines Cut-Through QSA and herein called the “Commercial Lines New Policies”) relating to the Commercial Lines Business (as defined in the Commercial Lines Cut-Through QSA);

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WHEREAS, Integon National Insurance Company (the “Personal Lines Reinsurer”) and the Companies are parties to that certain Personal Lines Cut-Through Quota Share Reinsurance Agreement dated as of January 3, 2014 (the “Personal Lines Cut-Through QSA”) pursuant to which the Personal Lines Reinsurer is reinsuring Subject Policies and Included Existing Contracts (as defined in the Personal Lines Cut-Through QSA, and together with the Commercial Lines New Policies herein called the “New Policies”) relating to the Personal Lines Business (as defined in the Personal Lines Cut-Through QSA); and

WHEREAS, as more particularly set forth herein, the Companies and the Reinsurer wish to enter into a new reinsurance arrangement pursuant to which the Reinsurer will reinsure all the business written by the Companies prior to the Effective Time.

NOW, THEREFORE, in consideration of the mutual and several promises and undertakings herein contained, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties agree as follows:

ARTICLE 1

DEFINITIONS

Section 1.1Defined Terms.

The following terms shall have the respective meanings specified below throughout this Agreement.

“Agreement” has the meaning set forth in the first paragraph.

“Affiliate” (and, with a correlative meaning, “Affiliated”) means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such first Person. As used in this definition, “control” (including, with correlative meanings, “controlled by” and “under common control with”) shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract, as trustee or executor, or otherwise).

“Alternative Accountants” has the meaning set forth in Section 2.2(c).

“AmTrust” has the meaning set forth in the Recitals.

“Ancillary Agreements” shall mean the Merger Agreement, the Commercial Lines Cut-Through QSA, the Personal Lines Cut-Through QSA, the Commercial Lines Master Agreement and the Personal Lines Master Agreement.

“Applicable Law” means any domestic or foreign federal, state or local statute, law, ordinance or code, or any written rules, regulations or administrative interpretations issued by any Governmental Entity pursuant to any of the foregoing, and any order, writ, injunction, directive, judgment or decree of a court of competent jurisdiction applicable to the parties hereto.

“Claim” and “Claims” means any and all claims, requests, demands or notices made by or on behalf of policyholders, beneficiaries or third party claimants for the payment of Losses and any other amounts due or alleged to be due under or in connection with the Insurance Contracts.

“Closing Date” means the date upon which the Merger is effected.

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“Commercial Lines LPTA Administrative Services Agreement” means the Commercial Lines LPTA Administrative Services Agreement to be entered into by Reinsurer, the Companies and AmTrust North America, Inc. pursuant to the Commercial Lines Master Agreement in the form attached thereto.

“Commercial Lines New Policies” has the meaning set forth in the Recitals.

“Commercial Lines Reinsurer” has the meaning set forth in the Recitals.

“Commercial Lines Cut-Through QSA” has the meaning set forth in the Recitals.

“Commercial Lines Master Agreement” means the Commercial Lines Master Agreement dated April __, 2014 between the Seller and AmTrust.

“Company” has the meaning set forth in the first paragraph.

“Damages” means all damages, losses, liabilities and expenses (including reasonable attorneys’ fees and reasonable expenses of investigation in connection with any action, suit or proceeding).

“Effective Time” means 12:01 a.m. Eastern Time on the Closing Date.

“Governmental Entity” means any foreign, domestic, federal, territorial, state or local U.S. or non-U.S. governmental authority, quasi-governmental authority, instrumentality, court or government, self-regulatory organization, commission, tribunal or organization or any political or other subdivision, department, branch or representative of any of the foregoing.

“IBNR” has the meaning set forth in the definition for the term Loss Reserves.

“Initial Reserve Transfer Amount” has the meaning set forth in Section 2.2(a).

“Insurance Contracts” means all insurance contracts, policies, certificates, binders, slips, covers or other agreements of insurance, including all supplements, riders and endorsements issued or written in connection therewith and extensions thereto, whether or not in-force, issued, renewed, or written by or on behalf of any Company prior to the Effective Time (other than the New Policies reinsured under the Commercial Lines QSA or the Personal Lines QSA).

“Inuring Reinsurance” means all reinsurance agreements, treaties and contracts, including any renewals or extensions thereof, to the extent such reinsurance agreements, treaties and contracts provide reinsurance coverage for the Insurance Contracts.

“Losses” shall mean liabilities and obligations to make payments to policyholders, beneficiaries and/or other third party claimants under the Insurance Contracts (excluding liabilities or assessments arising from a Company’s participation, if any, in any voluntary or involuntary pools, guaranty funds, or other types of government-sponsored or government-organized insurance funds) and all loss adjustment expenses and defense costs, including, without limitation, (i) all expenses incurred by or on behalf of a Company related to the investigation, appraisal, adjustment, litigation, defense or appeal of claims under or covered by the Insurance Contracts and/or coverage actions under or covered by the Insurance Contracts, (ii) all liabilities for consequential, exemplary, punitive or similar extra contractual damages, or for statutory or regulatory fines or penalties, or for any loss in excess of the limits arising under or covered by any Insurance Contract, and (iii) court costs accrued prior to final judgment, prejudgment interest or delayed damages and interest accrued after final judgment.

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“Loss Reserves” shall mean, with respect to a Company, as of any date the amount recorded on the books of such Company, net of Inuring Reinsurance but without taking into account the reinsurance ceded to the Reinsurer hereunder, on account of its actual or potential obligations for unpaid Losses as of such date, including, without limitation, amounts for incurred but not reported Losses (“IBNR”), calculated consistent with the established actuarial practices applied by such Company in respect of the Insurance Contracts, but in all cases consistent with the reserve requirements, statutory accounting rules and actuarial principles applicable to such Company under Applicable Law as of the date at issue. For avoidance of doubt, such reserve requirements, statutory accounting rules and actuarial principles as of the date hereof shall be those in effect prior to giving effect to the Merger but thereafter such reserve requirements, statutory accounting rules and actuarial principles shall be those then in effect.

“Merger” has the meaning set forth in the Recitals.

“Merger Agreement” has the meaning set forth in the Recitals.

“Merger Sub” means London Acquisition Company Limited.

“National General” has the meaning set forth in the Recitals.

“New Policies” has the meaning set forth in the Recitals.

“Parties” has the meaning set forth in the first paragraph.

“Person” shall mean any individual, corporation, partnership, firm, joint venture, association, joint-stock company, limited liability company, trust, estate, unincorporated organization, Government Entity or other entity.

    “Personal Lines Cut-Through QSA” has the meaning set forth in the Recitals.

“Personal Lines LPTA Administrative Services Agreement” means the Commercial Lines LPTA Administrative Services Agreement to be entered into by Reinsurer, the Companies and AmTrust North America, Inc. pursuant to the Commercial Lines Master Agreement in the form attached thereto.

“Personal Lines Reinsurer” has the meaning set forth in the Recitals.

“Personal Lines Master Agreement” means that certain Personal Lines Master Agreement dated April __, 2014 between the Seller and National General Holdings Corp.

“Reinsurer” has the meaning set forth in the first paragraph.

“Reserve True Up Report” has the meaning set forth in Section 2.2(b).

“Reserve Adjustment” has the meaning set forth in Section 2.2(d).

“Seller” has the meaning set forth in the Recitals.

“Tower” has the meaning set forth in the Recitals.

“Trust Account” has the meaning set forth in Section 3.3(b).

“Trust Agreement(s)” has the meaning set forth in Section 3.3(b).

“Trustee” has the meaning set forth in Section 3.3(b).

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“Unearned Premium Reserves” means the reserves established by the Companies for their liability for return of the portion of premiums related to the unexpired term of the Insurance Contracts as of the Effective Time.

ARTICLE 2

BASIS OF REINSURANCE AND BUSINESS REINSURED

Section 2.1Existing Business.

(a)Each Company hereby cedes, and the Reinsurer hereby assumes, one hundred percent (100%) of all Losses occurring on Insurance Contracts for which such Company is liable (other than Losses assumed under the Commercial Lines Cut-Through QSA and the Personal Lines Cut-Through QSA). All Losses reinsured hereunder and any payments of Claims with respect to such Losses by the Reinsurer shall be net Inuring Reinsurance paid and collected for the benefit of the applicable Company.

(b)In the event the Reinsurer makes an indemnity payment on behalf of a Company directly to any policyholder, insured or third party pursuant to any Insurance Contract that pays, in full or in part, a Loss, cost or expense under such Insurance Contract, such payment satisfies and extinguishes any and all obligation of the Reinsurer hereunder to indemnify such Company for such Loss, cost or expense to the extent of such payment. In no event shall the Reinsurer be obligated hereunder to indemnify with respect to any Loss, cost or expense under an Insurance Contract for an amount in excess of such Loss, cost or expense.

Section 2.2Transfer of Loss Reserves and Unearned Premium Reserves.

(a)On the Closing Date, the Companies shall convey to the Reinsurer one hundred percent (100%) of the aggregate Loss Reserves and Unearned Premium Reserves of the Companies by wire transfer of immediately available funds in an amount equal to [ ] Dollars ($[ ]), which amount represents the estimate of the sum of the Loss Reserves and Unearned Premium Reserves as of the Closing Date (the “Initial Reserve Transfer Amount”).

(b)Within ninety (90) days following the Closing Date, the Reinsurer shall perform a calculation of the sum of the aggregate Loss Reserves and Unearned Premium Reserves of the Companies as of the Closing Date, and, if different from the Initial Reserve Transfer Amount, the Reinsurer shall send to the Companies its computation of the sum of such aggregate Loss Reserves and Unearned Premium Reserves together with its work papers used to compute the same (the “Reserve True Up Report”). The sum of such aggregate Loss Reserves and Unearned Premium Reserves shall be calculated utilizing the established actuarial practices as followed by the Companies in respect of the Insurance Contracts, as well as the reserve requirements, statutory accounting rules and actuarial principles applicable to the Companies as of the Effective Time.

(c)Within ten (10) days following the Companies’ receipt of the Reserve True-Up Report, the Parties shall confer in good faith with regard to any disputed calculations and an appropriate adjustment shall be made to the sum of the aggregate Loss Reserves and aggregate Unearned Premium Reserves as agreed upon by the Parties. If the Parties are unable to agree on an appropriate adjustment within twenty (20) days of the Reserve True Up Report, “Alternative Accountants,” whose decision on the matter shall be binding on the Parties, shall be designated by agreement between the Companies and the Reinsurer. If the Parties fail to agree on the selection of the Alternative Accountants, the Alternative Accountants shall be selected by mutual agreement of each of the Companies’ and the Reinsurer’s outside independent auditors.

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The Alternative Accountants shall conduct such analysis as they deem appropriate, during a period not to exceed thirty (30) days after they are selected, to determine the amounts which they conclude should have been reflected in the Reserve True Up Report and shall issue their decision (which shall be rendered in writing and shall specify the reasons for the decision) within fifteen (15) days after the conclusion of their analysis. The Alternative Accountants’ decision shall include a determination of the aggregate Loss Reserve and aggregate Unearned Premium Reserve, the amounts which they have determined should be used for the Reserve True Up Report and a determination of the Reserve Adjustment (as that term is defined in Section 2.2(d)) due to the Reinsurer or the Companies, as the case may be. Each Party shall make available to the other Party and the Alternative Accountants such work papers as may be reasonably necessary to calculate the aggregate Loss Reserves and aggregate Unearned Premium Reserves and Reserve Adjustment under this Section 2.2(c). No Party shall have any ex parte discussions or communications, directly or indirectly, with the Alternative Accountants regarding the subject matter of a dispute arising under this Section 2.2(c), unless the Party seeking such discussions or communications first obtains the other Party’s written consent to such ex parte contact with the Alternative Accountants. For the avoidance of doubt, in the event of any dispute with respect to the Loss True Up Report, such dispute shall be governed by this Section 2.2 and the procedures set forth herein.

(d)On the fifth (5th) business day following the deemed acceptance of, the mutual written agreement of the Companies and the Reinsurer to, or the determination by the Alternative Accountants of, the aggregate Loss Reserves and aggregate Unearned Premium Reserves, if the sum of the aggregate Loss Reserves and aggregate Unearned Premium Reserves exceeds the Initial Reserve Transfer Amount, the Companies shall remit funds to the Reinsurer equal to the difference, and if the sum of the aggregate Loss Reserves and Unearned Premium Reserves are less than the Initial Reserve Transfer Amount, the Companies shall be paid such difference by the Reinsurer (the amount so transferred being herein called the “Reserve Adjustment”).

(e)From and after the Effective Time, the Reinsurer shall maintain as a liability on its statutory financial statements adequate reserves for all liabilities ceded under this Agreement. The Reinsurer shall provide the Companies with its periodic reports filed with its insurance regulators and a copy of its audited financial statements along with the audit report thereon within fifteen (15) days of the Reinsurer’s filing of such statements and reports with the insurance regulator of its jurisdiction of domicile.

Section 2.3Inuring Reinsurance.

As additional consideration for the liabilities assumed by the Reinsurer pursuant to this

Agreement, the parties hereby agree that all Inuring Reinsurance shall inure to the benefit of the

Reinsurer and, accordingly, any recovery of funds under the Inuring Reinsurance shall be paid

promptly to the Reinsurer.

ARTICLE 3

PAYMENTS, OFFSET, AND SECURITY

Section 3.1Offset Rights.

Except as otherwise expressly provided, each Party hereto, and each of its respective Affiliates at the time an offset is asserted, shall have, and may exercise at any time and from time to time, the right to offset any balance or balances due to the other Party under this Agreement at the time an offset is asserted; provided, however, that in the event of the insolvency of a Party hereto or any of its Affiliates, offsets shall only be allowed in accordance with the provisions of Applicable Law.

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Section 3.2Reports and Remittances.

(a)The Parties shall conduct quarterly settlements based upon quarterly bordereaux to be provided by or on behalf of the Companies pursuant to the Commercial Lines LPTA Administrative Services Agreement and Personal Lines LPTA Administrative Services Agreement evidencing the amount due or to be due in a form, and containing such detail, as is agreed to by the Parties. Each Party shall pay or credit in cash or its equivalent to the other all gross amounts for which it may be liable under the terms and conditions of this Agreement within thirty (30) days after receipt of each monthly bordereau.

(b)The Companies and the Reinsurer shall furnish each other with such records, reports and information with respect to the Losses, Claims, Inuring Reinsurance, and the reinsurance contemplated hereby as may be reasonably required by the other Party to comply with any internal reporting requirements or reporting requirements of any Governmental Entity or to prepare and complete such Party’s quarterly and annual financial statements.

(c)If a Company or the Reinsurer receives notice of, or otherwise becomes aware of, any inquiry, investigation, proceeding, from or at the direction of a Governmental Entity, or is served or threatened with a demand for litigation, arbitration, mediation or any other similar proceeding relating to the Insurance Contracts, such Company or the Reinsurer, as applicable, shall promptly notify the other party thereof, whereupon the parties shall cooperate in good faith and use their respective commercially reasonable efforts to resolve such matter in a mutually satisfactory manner in light of all the relevant business, regulatory and legal facts and circumstances.

(d)Each Party shall have the right, through authorized representatives and upon reasonable advance notice during normal business hours, to periodically audit and inspect all books, records, and papers of the other Party solely in connection with the Insurance Contracts, the Inuring Reinsurance and any reinsurance hereunder or claims in connection therewith. Each Party shall treat the other Party’s books, records, and papers in confidence. Each Party shall comply in all material respects with its privacy policies as to and all Privacy Laws with respect to Personal Information. “Personal Information” means any information related to an identified or identifiable natural person and does not meet the definition of de-identified as defined by the Health Insurance Portability and Accountability Act of 1996. “Privacy Laws” shall mean any laws, statutes, rules, regulations, codes, orders, decrees, and rulings thereunder of any federal, state, regional, county, city, municipal or local government of the United States that relate to privacy, data protection or data transfer issues.

Section 3.3Security.

(a)As regards Insurance Contracts coming within the scope of this Agreement, each Company agrees that, when it files with the applicable jurisdiction(s) or sets up on its books reserves for the Policies covered hereunder, which it is required by law to set up, it will forward to the Reinsurer a statement showing the proportion of such reserves applicable to it. For purposes of this Article, "reserves" will consist of:

(i)Loss and loss adjustment expense paid by such Company but not recovered from the Reinsurer;

(ii)Loss and loss adjustment expense reported and outstanding;

(iii)A reserve amount for incurred but not reported losses; and

(iv)Unearned premium.

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(b)The Reinsurer hereby agrees that with respect to each Company severally, it will fund an amount equal to the Reinsurer’s proportion of such reserves by establishing a trust account pursuant to trust agreement (“Trust Account”) which may be combined with one or more of the following:

(i)Cash advances or funds withheld; or

(ii)Letters of credit

(c)Except as otherwise provided herein, the Reinsurer will have the option of determining the method of funding referred to above, provided it is reasonably acceptable to the applicable Company and, to the extent that funding is required for such Company to receive credit for the reinsurance under this Agreement, each applicable regulatory authority. Income on the amounts funded as provided above shall accrue to the benefit of the Reinsurer.

(d)If a Reinsurer's choice of funding is or includes a letter of credit, it will apply for and secure delivery to the applicable Company of a clean, irrevocable, unconditional letter of credit, dated on or before December 31 of the year in which the request is made, issued by a member of the Federal Reserve System or any other bank approved for use by the National Association of Insurance Commissioners' Securities Valuation Office and such Company, containing provisions acceptable to the insurance regulatory authorities having jurisdiction over such Company's reserves in an amount equal to the Reinsurer's proportion of such reserves as shown in the statement prepared by such Company.

(e)Any letter of credit will be issued for a period of not less than one year, and will be automatically extended for one year from its date of expiration or any future expiration date unless thirty (30) days prior to any expiration date the issuing bank notifies the Company that is the beneficiary of such letter of credit by registered mail that the issuing bank elects not to consider the letter of credit extended for any additional period. An issuing bank, not a member of the Federal Reserve System or not chartered in the state of domicile of the Company that is the beneficiary of such letter of credit, will provide 60 days’ notice to such Company prior to any expiration in the event of nonextension.

(f)Notwithstanding any other provisions of this Agreement, a Company or its court-appointed successor in interest may draw upon and apply any amounts which it may draw against such letter of credit or trust agreement (pursuant to the terms of the agreement under which the letter of credit or trust agreement is held), or any other method of funding that may apply, at any time without diminution because of the insolvency of such Company or of Reinsurer for one or more of the following purposes only:

(i)To reimburse such Company for the Reinsurer's share of unearned premium (if applicable) on Insurance Contracts reinsured hereunder on account of cancellations of such Insurance Contracts.

(ii)To pay the Reinsurer's share or to reimburse such Company for the Reinsurer's share of any Loss reinsured by this Agreement, which has not been otherwise paid.

(iii)To make refund of any sum in excess of 102% of the actual amount of the Reinsurer’s security requirement under this Agreement.

(iv)In the event of nonextension of the letter of credit as provided for above, to establish deposit of the Reinsurer's security requirement under this Agreement. Such cash deposit will be held in an interest-bearing account separate from such Company's other assets, and interest thereon will accrue to the benefit of the Reinsurer, except that any such

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interest shall accrue to the benefit of such Company to the extent that the Reinsurer has not fully complied with its funding obligations hereunder.

(v)In the event that the Reinsurer funds its obligations hereunder by use of a trust agreement, where such Company has received notification of termination of the trust account established by the trust agreement to secure the Reinsurer’s obligations to such Company and where the Reinsurer’s entire obligations to such Company under the Agreement remain unliquidated and undischarged ten (10) days prior to the termination date, to withdraw amounts equal to such Reinsurer’s obligations under the Agreement, including reserves for outstanding claims (including claims incurred but not reported), reserves for loss adjustment expenses and reserves for unearned premium, if applicable, and deposit those amounts in a separate account, in the name of such Company in any qualified United States financial institution as defined in relevant state insurance laws and regulations apart from its general assets, in trust for such uses and purposes specified above as may remain executory after such withdrawal and for any period after the termination date.

(vi)To pay the Reinsurer's share of any other amounts such Company claims are due under this Agreement.

(g)Quarterly, each Company will prepare, for the sole purpose of determining the funding required in this Article, a specific statement of the Reinsurer's security requirement under this Agreement. If the statement shows that the Reinsurer's security requirement exceeds the balance of funding as of the statement date, the Reinsurer will, within fifteen (15) days after receipt of notice of such excess, make an adjustment increasing the amount of such funding by the amount of such difference. If, however, the statement shows that the Reinsurer's security requirement is less than the balance of funding as of the statement date, such Company will, within fifteen (15) days after receipt of written request from the Reinsurer release such excess by making the appropriate adjustment.

ARTICLE 4

CLAIMS, UNDERWRITING AND OTHER ADMINISTRATION

(a)All services related to claims, underwriting and administration with respect to Commercial Lines Business reinsured hereunder shall be provided by AmTrust and its Affiliates pursuant to the Commercial Lines LPTA Administrative Services Agreement.

(b)All services related to claims, underwriting and administration with respect to Personal Lines Business reinsured hereunder shall be provided by National General and its Affiliates pursuant to the Personal Lines LPTA Administrative Services Agreement.

ARTICLE 5

REGULATORY MATTERS

At all times during the term of this Agreement, each Company and the Reinsurer shall hold and maintain all licenses and authorizations required under Applicable Law and otherwise take all actions that may be necessary to perform its obligations hereunder.

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ARTICLE 6

DUTY OF COOPERATION & INDEMNITY

Section 6.1Cooperation.

Each Party hereto shall cooperate fully with the other in all reasonable respects in order to accomplish the objectives of this Agreement.

Section 6.2Indemnity.

This Agreement is an agreement for indemnity reinsurance solely between the Companies and the Reinsurer and shall not create any legal relationship whatsoever between the Reinsurer and any Person other than the Companies.

ARTICLE 7

[INTENTIONALLY OMITTED]

ARTICLE 8

INSOLVENCY

In the event of the insolvency of a Company, this reinsurance shall be payable directly to such Company or its liquidator, receiver, conservator or statutory successor on the basis of the amount of the claims allowed in the insolvency proceeding without diminution because of the insolvency of such Company or because the liquidator, receiver, conservator or statutory successor of such Company has failed or is unable to pay all or a portion of a claim, except where (a) this Agreement specifically provides another payee of such reinsurance in the event of such Company’s insolvency, provided that this exception shall only apply to the extent that the reinsurance proceeds due such payee are actually paid by the Reinsurer, or (b) the Reinsurer, with the consent of the direct insured or insureds, has assumed such policy obligations of such Company as direct obligations of the Reinsurer to the payees under such policies and in full and complete substitution for the obligations of such Company to such payees. It is agreed, however, that the liquidator, receiver, conservator or statutory successor shall give written notice to the Reinsurer of the pendency of a claim against such Company indicating the Insurance Contract which involves a possible liability on the part of the Reinsurer within reasonable time after such claim is filed in the conservation or liquidation proceeding or in the receivership and that, during the pendency of such claim, the Reinsurer may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated, any defense or defenses that it may deem available to such Company or its liquidator, receiver, conservator or statutory successor. The expenses thus incurred by the Reinsurer shall be chargeable, subject to the Court’s approval, against such Company as part of the expense of the conservation or liquidation to the extent of a pro rata share of the benefit that may accrue to such Company solely as a result of the defense undertaken by the Reinsurer.

ARTICLE 9

REGULATORY APPROVALS

The Companies and the Reinsurer shall submit all necessary registrations, filings and notices with, and obtain all necessary consents, approvals, qualifications and waivers from, all Governmental Entities and

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other parties which may be required under Applicable Law as a result of the transactions contemplated by this Agreement. The Parties agree that where formal approval is required by any Governmental Entity, this Agreement shall not be effective as to any and all Insurance Contracts to be reinsured hereunder in such jurisdiction until such approval is obtained.

ARTICLE 10DURATION

This Agreement shall not be subject to termination by any Party except (i) by written agreement between Reinsurer and the Companies on the date indicated by such agreement, after receipt of any required approval from Government Entities, or (ii) upon the expiration of all liability on all Insurance Contracts, and the complete performance by Reinsurer and the Companies of all obligations and duties arising under this Agreement.

ARTICLE 11FOLLOW THE FORTUNES

The Reinsurer’s liability shall attach simultaneously with that of the Companies and shall be subject in all respects to the same risks, original terms and conditions, interpretations, waivers, and to the same cancellation of the Insurance Contracts as the Companies are subject to, the true intent of this Agreement being that the Reinsurer shall, in every case to which this Agreement applies, follow the fortunes and follow the settlements of the Companies.

ARTICLE 12SURVIVAL; INDEMNIFICATION

Section 12.1Indemnification.

(a)The Reinsurer agrees to indemnify and hold the Companies and their Affiliates, predecessors, successors and assigns (and their respective officers, directors, employees and agents) harmless from and against and in respect of all Damages resulting from or relating to a breach by the Reinsurer of any covenant or agreement of the Reinsurer in this Agreement and to be performed after the date hereof.

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(b)Each Company agrees, severally and not jointly, to indemnify and hold the Reinsurer and its Affiliates, predecessors, successors and assigns (and their respective officers, directors, employees and agents) harmless from and against and in respect of all Damages, resulting from or relating to a breach by such Company of any covenant or agreement of such Company in this Agreement and to be performed after the date hereof.

ARTICLE 13MISCELLANEOUS

Section 13.1Notices.All notices, requests, demands and other communications hereunder shall be given in writing and shall be: (a) personally delivered; (b) sent by telecopier, facsimile transmission or other electronic means of transmitting written documents; or (c) sent to the Parties at their respective addresses indicated herein by registered or certified U.S. mail, return receipt requested and postage prepaid, or by private overnight mail courier service. The respective addresses to be used for all such notices, demands or requests are as follows:

(a)    If to any Company, to:

Tower Group

120 Broadway

New York, NY 10271

Attention: William E. Hitselberger

Facsimile: (212) 655-2067

E-mail: bhiltselberger@twrgrp.com

or to such other person or address as the Companies shall furnish to the Reinsurer in writing.

(b) If to the Reinsurer, to:

CastlePoint Re, Ltd.

Washington Mall

7 Reid Street Suite 404

Hamilton HM11 Bermuda

Attn: General Counsel

or to such other person or address as the Reinsurer shall furnish to the Companies in writing.

If personally delivered, such communication shall be deemed delivered upon actual receipt; if electronically transmitted pursuant to this paragraph, such communication shall be deemed delivered the next business day after transmission (and sender shall bear the burden of proof of delivery); if sent by overnight courier pursuant to this paragraph, such communication shall be deemed delivered upon receipt; and if sent by U.S. mail pursuant to this paragraph, such communication shall be deemed delivered as of the date of delivery indicated on the receipt issued by the relevant postal service, or, if the addressee fails or refuses to accept delivery, as of the date of such failure or refusal. Any Party to this Agreement may change its address for the purposes of this Agreement by giving notice thereof in accordance with this Section.

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Section 13.2Assignment; Parties in Interest.

(a)Assignment. Except as expressly provided herein, the rights and obligations of a Party hereunder may not be assigned, transferred or encumbered without the prior written consent of the other Party.

(b)Parties in Interest. This Agreement shall be binding upon, inure to the benefit of, and be enforceable by the Parties and their respective successors and permitted assigns. Except as provided in Section 3.1, nothing contained herein shall be deemed to confer upon any other Person any right or remedy under or by reason of this Agreement.

Section 13.3Waivers and Amendments; Preservation of Remedies.This Agreement may be amended, superseded, canceled, renewed or extended, and the terms hereof may be waived, only by a written instrument signed by each of the Parties or, in the case of a waiver, by the Party waiving compliance. No delay on the part of any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any Party of any right, power, remedy or privilege, nor any single or partial exercise of any such right, power, remedy or privilege, preclude any further exercise thereof or the exercise of any other such right, remedy, power or privilege. The rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies that any Party may otherwise have under Applicable Law or in equity.

Section 13.4Governing Law; Venue. This Agreement shall be construed and interpreted according to the internal laws of the State of New York excluding any choice of law rules that may direct the application of the laws of another jurisdiction. Subject to the provisions of Article 7, the Parties hereby stipulate that any action or other legal proceeding arising under or in connection with this Agreement may be commenced and prosecuted in its entirety in the federal or state courts sitting in New York, New York, each Party hereby submitting to the personal jurisdiction thereof, and the Parties agree not to raise the objection that such courts are not a convenient forum. Process and pleadings mailed to a party at the address provided in Section 13.1 shall be deemed properly served and accepted for all purposes.

Section 13.5    Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

Section 13.6Entire Agreement; Merger.This Agreement, the Ancillary Agreements, and any exhibits, schedules and appendices attached hereto and thereto together constitute the final written integrated expression of all of the agreements among the Parties with respect to the subject matter hereof and is a complete and exclusive statement of those terms, and supersede all prior or contemporaneous, written or oral, memoranda, arrangements, contracts and understandings between the Parties relating to the subject matter hereof. Any representations, promises, warranties or statements made by any Party which differ in any way from the terms of this Agreement or any applicable provisions contained in the Ancillary Agreements shall be given no force or effect. The Parties specifically represent, each to the other, that there are no additional or supplemental agreements or contracts between or among them related in any way to the matters herein contained unless specifically included or referred to in this Agreement or any applicable provisions contained in the Ancillary Agreements. No addition to or modification of any provision of this Agreement or any applicable provisions of the Ancillary Agreements shall be binding upon either Party unless embodied in a dated written instrument signed by both Parties.

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Section 13.7Exhibits and Schedules.All exhibits, schedules and appendices are hereby incorporated by reference into this Agreement as if they were set forth at length in the text of this Agreement.

Section 13.8Headings.The headings in this Agreement are inserted for convenience only and shall not constitute a part hereof.

Section 13.9Severability.If any part of this Agreement is contrary to, prohibited by, or deemed invalid under Applicable Law or regulations, that provision shall not apply and shall be omitted to the extent so contrary, prohibited, or invalid; but the remainder of this Agreement shall not be invalidated and shall be given full force and effect insofar as possible.

Section 13.10Expenses.Regardless of whether or not the transactions contemplated in this Agreement are consummated, each of the Parties shall bear their own expenses and the expenses of its counsel and other agents in connection with the transactions contemplated hereby.

Section 13.11Currency.The currency of this Agreement and all transactions under this Agreement shall be in United States Dollars.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the day and year first written above to be effective as of the Effective Time.

CASTLEPOINT REINSURANCE COMPANY LTD.

By

Title

TOWER INSURANCE COMPANY OF NEW YORK

By

Title

CASTLE POINT NATIONAL INSURANCE COMPANY

By

Title

TOWER NATIONAL INSURANCE COMPANY

By

Title

HERMITAGE INSURANCE COMPANY

By

Title

CASTLE POINT FLORIDA INSURANCE COMPANY

By

Title

NORTH EAST INSURANCE COMPANY

By

Title

YORK INSURANCE COMPANY OF MAINE,

By

Title

MASSACHUSETTS HOMELAND INSURANCE COMPANY

By

Title

PRESERVER INSURANCE COMPANY

By

Title

CASTLE POINT INSURANCE COMPANY

By

Title

Exhibit B

COMMERCIAL LINES LPTA ADMINISTRATIVE SERVICES AGREEMENT

BY AND AMONG

CASTLEPOINT NATIONAL INSURANCE COMPANY,

NORTH EAST INSURANCE COMPANY,

PRESERVER INSURANCE COMPANY,

YORK INSURANCE COMPANY OF MAINE,

MASSACHUSETTS HOMELAND INSURANCE COMPANY,

TOWER INSURANCE COMPANY OF NEW YORK,

TOWER NATIONAL INSURANCE COMPANY,

HERMITAGE INSURANCE COMPANY,

CASTLEPOINT FLORIDA INSURANCE COMPANY,

CASTLEPOINT INSURANCE COMPANY,

CASTLEPOINT REINSURANCE COMPANY, LTD.

AND

AMTRUST NORTH AMERICA, INC.

COMMERCIAL LINES LPTA ADMINISTRATIVE SERVICES AGREEMENT

THIS COMMERCIAL LINES LPTA ADMINISTRATIVE SERVICES AGREEMENT (this "Agreement") is made and entered into as of __________, 2014, by and among:

1. CastlePoint National Insurance Company ("CastlePoint"), an insurance company organized under the laws of Illinois, North East Insurance Company ("North East"), an insurance company organized under the laws of Maine, Preserver Insurance Company ("Preserver,"), an insurance company organized under the laws of New Jersey, York Insurance Company of Maine ("York"), an insurance company organized under the laws of Maine, Massachusetts Homeland Insurance Company ("Massachusetts,"), an insurance company organized under the laws of Massachusetts, Tower Insurance Company of New York ("TIC"), an insurance company organized under the laws of New York, Tower National Insurance Company ("TNIC"), an insurance company organized under the laws of Massachusetts, Hermitage Insurance Company ("Hermitage"), an insurance company organized under the laws of New York, CastlePoint Florida Insurance Company ("CPF"), an insurance company organized under the laws of Florida, and CastlePoint Insurance Company ("CPIC") (collectively, the "Companies");

2. CastlePoint Reinsurance Company, Ltd., a Bermuda corporation ("Reinsurer"); and

3. AmTrust North America, Inc., a Delaware corporation (the "Administrator") (collectively, the "Parties" and each, a "Party").

RECITALS

WHEREAS, ACP Re, Ltd., a Bermuda corporation ("ACP"), AmTrust Financial Services, Inc., a Delaware corporation ("AmTrust"), and National General Holdings Corporation, a Delaware corporation ("National General") are entering into a series of agreements by which Seller has agreed to acquire Tower Group International, Ltd. ("Tower"), a Bermuda insurance holding company, which transacts commercial and personal lines insurance business in the United States through the Companies which are parties to this Agreement, and, in connection therewith, AmTrust and National General have agreed to administer the run-off of Tower’s legacy business, provide stop-loss coverage to Reinsurer with respect thereto, and, prospectively, manage and reinsure all business to be written by the Companies after the Effective Time;

WHEREAS, in connection with the transactions described above, Reinsurer and the Companies entered into that certain Loss Portfolio Transfer Agreement (the "LPTA"), pursuant to which Reinsurer assumed all insurance liabilities and unearned premium liability (to the extent not previously assumed by Affiliates of AmTrust or National General) of the Companies;

WHEREAS, each of the Companies previously conducted or currently conducts a commercial lines insurance business involving policies that fall within the Commercial Lines Business and which have been issued prior to the Effective Date in the states or other jurisdictions where they are respectively authorized to conduct such business through independent agents appointed by the Companies (collectively, the "Subject Business" or "Subject Policies," as the context dictates); and

WHEREAS, for a period of time following the Effective Date and as more particularly set forth herein, each of the Companies wishes to appoint Administrator as its third-party administrator for purposes of performing the claims administration related to the runoff of claims under Subject Policies issued by such Company prior to the Effective Time, pursuant to the LPTA, and claims administration related to Insurance Contracts and Claims arising under the Cut-Through Agreement (as defined below).

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NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants and promises contained herein, and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereto agree as follows:

ARTICLE 1:

DEFINITIONS

1.1Definitions. The following terms have the respective meanings set forth below throughout this Agreement and the following definitions are equally applicable to both the singular and plural forms of any of the terms defined herein:

"Administrator Indemnitees" has the meaning set forth in Section 9.2.

"Affiliate" means, with respect to any Person, at the time in question, any other Person controlling, controlled by or under common control with such Person.

"Agreement" has the meaning set forth in the preamble.

"AmTrust" has the meaning set forth in the Recitals.

"Assignment Termination Date" has the meaning set forth in Section 8.3.

"Books and Records" means all hard-copy and electronic policy information, data, records and policy forms in the possession or control of the Companies relating primarily to the Subject Business, including, but not limited to, administrative records, claim records, marketing compliance records, policy files, sales records, files and records relating to regulatory matters, files and records relating to tax information and tax qualification reporting, reinsurance records, underwriting records and accounting records (in whatever form maintained and wherever housed or held); provided, however, that if any such records contain information which does not relate to the Subject Business, such information shall not constitute "Books and Records" and may be redacted from the "Books and Records" as the Companies reasonably deem appropriate. Books and Records shall exclude any records that are subject to attorney-client privilege. Except with respect to records or documents that are subject to the attorney-client privilege or that do not relate to the Subject Business, the Companies shall provide Administrator with reasonable access to any books and records that are excluded herein from the definition of "Books and Records" and retained by the Companies to the extent reasonably required by Administrator to perform its obligations under this Agreement.

"Business Day" means any day other than a Saturday, Sunday or other day on which banking institutions in the State of New York are permitted or obligated by applicable Law to be closed.

"Commercial Lines Business" means all insurance contracts, policies, certificates, binders, slips, covers or other agreements of insurance, including all supplements, riders, endorsements, renewals and extensions (other than Personal Lines Business) issued by a Company.

"Companies" has the meaning set forth in the preamble.

"Company Indemnitees" has the meaning set forth in Section 9.1.

"Confidential Information" means all Books and Records and all documents and information concerning (i) one Party or any of its Affiliates, (ii) a Policyholder, or (iii) the Subject Business, in each case furnished to a Party or such Party’s Affiliates (the "Receiving Party") or representatives in

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connection with this Agreement or the Services contemplated hereby, except that, to the extent not prohibited by applicable Law, Confidential Information shall not include information which: (i) at the time of disclosure or thereafter is generally available to and known by the public other than by way of a wrongful disclosure by the Receiving Party hereto or by any representative of the Receiving Party; (ii) was available on a non-confidential basis from a source other than the Receiving Party or its representatives, provided that such source is not and was not bound by a confidentiality agreement with the Party disclosing such information; (iii) prior to the disclosure, was already in the Receiving Party’s possession as evidenced by written records kept in the ordinary course of the Receiving Party’s business or by proof of actual use by the Receiving Party (other than the Books and Records which shall remain "Confidential Information"); or (iv) was independently developed by the Receiving Party without violating any obligations under this Agreement and without the use of any Confidential Information.

"Cut-Through Agreement" means the Commercial Lines Cut-Through Quota Share Reinsurance Agreement, dated as of January 3, 2014, by and among the Companies and Technology Insurance Company, Inc., an insurance company organized under the laws of New Hampshire.

"Disbursement Account" means a bank account or accounts to be established by a Company, Reinsurer and/or Affiliate of AmTrust prior to the Effective Date and to be used by Administrator on behalf of the Companies as provided in this Agreement and as more particularly described in ARTICLE 3.

"Effective Date" means the date hereof.

"Effective Time" means 12:01 a.m. Eastern Standard Time on the Effective Date.

"Government Entity" means any court, arbitrator, department, commission, board, bureau, agency, authority, instrumentality or other body, whether federal, state, municipal, foreign or other.

"Law" or "Laws" means any statute, law, ordinance, rule, regulation, administrative or judicial order, bulletin or other governmental pronouncement issued or adopted by any Government Entity.

"Legally Required Company Action" means any specific action that the Companies are required by applicable Law or Government Entities to take on their own behalf, without Administrator acting in their name or on their behalf, solely with respect to the Subject Business.

"Loss" has the meaning set forth in Section 9.1.

"Miscellaneous Costs" has the meaning set forth in Section 5.1.

"Out-of-Pocket Costs" has the meaning set forth in Section 5.1.

"Party" or "Parties" have the meanings set forth in the preamble.

"Person" means any individual, corporation, partnership, firm, joint venture, association, joint stock company, limited liability company, trust, unincorporated organization, Government Entity, business unit, division or entity.

"Personal Lines Business" means all insurance contracts, policies, certificates, binders, slips, covers or other agreements of insurance, including all supplements, riders, endorsements, renewals and extensions for personal automobile liability and physical damage, homeowners, personal excess and umbrella coverage issued by the Companies.

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"Policyholder" means the owner and/or named insured on policies that are included within the Subject Business.

"Reinsurer" has the meaning set forth in the Recitals.

"Services" has the meaning set forth in Section 2.1(c).

"Subject Business" has the meaning set forth in the Recitals.

"Subject Business Losses" shall mean liabilities and obligations to make payments to policyholders, beneficiaries and third party claimants under the Subject Business and all loss adjustment expenses and defense costs, including (i) all expenses incurred by or on behalf of the Companies in the investigation, appraisal, adjustment, litigation, defense or appeal of claims under the Subject Business and/or coverage actions under the Subject Business, (ii) all liabilities for consequential, exemplary, punitive or similar extracontractual damages, or for statutory or regulatory fines or penalties, or for any loss in excess of the limits of any Subject Business, whether owing to the policyholders or insureds under the Subject Business, and (iii) court costs accrued prior to final judgment, prejudgment interest or delayed damages and interest accrued after final judgment.

"Subject Consideration" has the meaning set forth in Section 5.1.

"Taxes" or "Tax" means all federal, state, local or foreign taxes, charges, fees, levies, rates or dues, or other assessments, including all income, capital gains, capital, sales, use, excise, transfer, goods and services, value added, franchise, withholding, payroll, premium, gross receipts, employment, employment insurance, business, property or other taxes, customs, duties, surtaxes, fees, assessments, charges or governmental imposts of any kind whatsoever imposed by any governmental authority or taxing authority, together with any interest, penalty, fine, or addition thereto, whether disputed or not.

ARTICLE 2:

SERVICES APPOINTMENT

2.1    Appointment and Acceptance; Standards.

(a)    Effective as of the Effective Time until the complete performance by Administrator and Reinsurer of all obligations and duties arising under this Agreement, and subject to Section 2.2, the Companies and Reinsurer hereby appoint Administrator to perform on their respective behalf (i) all claims administration services related to claims under Subject Policies written by the Companies prior to the Effective Time, as more particularly set forth in this ARTICLE 2 and (ii) all claims administration services related to the Insurance Contracts and Claims under the Cut-Through Agreement (Insurance Contracts and Claims having the meaning set forth therein) (collectively, the "Services"), and Administrator hereby accepts such appointment and agrees to act as the designated representative of the Companies as necessary to perform the Services in accordance with the terms of this Agreement and applicable Law.

(b)    Subject to Section 2.2, Administrator agrees that in providing the Services it shall conduct itself in accordance with all reasonable commercial and professional standards of skill, diligence, care, effort and expertise that are at least equal in quality to the standards Administrator exercises in carrying out its own insurance business; provided, that such standards must be in material compliance with the provisions of applicable Law.

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(c)    For the avoidance of doubt, and notwithstanding anything contained herein to the contrary, no authority is given or obligations assigned or imposed upon Administrator under this Agreement with respect to (i) the administration of Personal Lines Business written by the Companies (if any), or(ii) the billing, collection, cancellation, renewals or other activities commonly associated with the issuance and administration of policies (other than claims activities) and related to the Subject Business. For the further avoidance of doubt, the claims and other administration of the Personal Lines Business or other personal lines business written by the Companies shall be provided by National General, pursuant and subject to the Personal Lines LPTA Administrative Services Agreement by and among National General and the Companies.

2.2    Control of Subject Business. The performance of the Services by Administrator pursuant to this Agreement shall in no way impair the absolute control, and responsibility for, the business and operations of the Companies by their respective officers and boards of directors. The Companies have the ultimate control over the functions and Services delegated to Administrator pursuant to this Agreement in regards to their Subject Business. Administrator shall comply with any written directions from the Companies with respect to all matters affecting the Services in regards to their Subject Business, so long as such directions comply with applicable Law and are not inconsistent with the terms of this ARTICLE 2; provided, that nothing in this Agreement shall be construed to conflict with the Companies’ ultimate authority and obligation to make decisions with respect to the administration of the Subject Business. In respect of such directions involving the Business, the Companies shall jointly and severally indemnify and hold harmless Administrator and its Affiliates in following such directions.

2.3    Power of Attorney. The Companies hereby appoint and name Administrator, acting through its duly authorized officers, employees and agents, as their true and lawful attorney-in-fact insofar as necessary to enable Administrator to provide the Services in the name of the Companies, from and after the Effective Time for so long as Administrator is authorized hereunder to provide the Services. Without limiting the foregoing, Administrator is expressly authorized, subject to Section 2.2: (a) to do any and all lawful acts that the Companies might have done with respect to the Subject Business insofar as such acts qualify as Services; (b) to proceed by all lawful means to perform any and all of the Companies’ claims administration obligations with respect to the Subject Business; (c) to enforce any right and defend against any liability arising under the Subject Business as they relate to the Services; (d) to sue or defend in the name of the Companies, or any of them, any action arising under the Subject Business; (e) to sign in the name of the Companies vouchers, receipts, releases and other papers in connection with any of the foregoing matters, and (f) to endorse checks payable to the Companies for deposit. If requested by Administrator, the Companies shall execute and deliver to Administrator powers of attorney evidencing such power in a form reasonably acceptable to the Companies.

2.4    Confidentiality and Privacy.

(a)    The Parties agree that, other than as contemplated hereunder and to the extent permitted or required to implement this Agreement, each of them will and will cause their officers, employees and agents to keep confidential and will not use or disclose Confidential Information and the terms and conditions of this Agreement, including, without limitation, the exhibits and schedules hereto, except as otherwise required by applicable Law or as may be agreed in writing by the Parties hereto.

(b)    The Parties acknowledge and agree that Administrator and its Affiliates shall and shall cause their agents to only use Confidential Information regarding Policyholders or the Subject Business in accordance with this Agreement and applicable Law and with due and careful regard for rights of confidentiality and privacy, in order to perform the Services.

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(c)    Administrator shall and shall cause its Affiliates and their officers, employees and agents to implement and maintain appropriate administrative, technical and physical safeguards to (i) ensure the security, confidentiality and integrity of Confidential Information regarding Policyholders and the Subject Business, (ii) protect against reasonably anticipated threats or hazards to the security or integrity of such Confidential Information, and (iii) protect against unauthorized access to, or use of, such Confidential Information.

(d)    Nothing in this Section 2.4 shall prohibit Administrator or any of its Affiliates providing services associated with the Subject Business from allowing disclosures of Confidential Information required under applicable Law or to Governmental Entities or as reasonably requested by rating agencies.

2.5    Communication with Government Entities. Except as otherwise provided herein, and subject to Section 2.2 and ARTICLE VI hereof, from and after the Effective Time, Administrator shall be responsible on behalf of the Companies to communicate, make filings and/or correspond with Government Entities with respect to the Subject Business and/or the Services. The Companies, as applicable, shall have the right to receive, as promptly as shall be commercially practicable, copies of all communications, filings, and correspondence with respect to the Subject Business and/or the Services, whether made to or received from Government Entities by Administrator, and shall have the right to prior review, at their expense, of such communications, filings and correspondence to or with Government Entities.

2.6    Audit Rights. During the term of this Agreement and for a period of three (3) months thereafter, each Company shall have the right, at its sole cost and expense, to audit the Services during regular business hours and upon reasonable notice.

2.7    Administrator’s Services. From and after the Effective Date and until the termination of this Agreement, and subject to Section 2.2, Administrator shall provide the following administrative services on behalf of the Companies with respect to the Subject Business in accordance with applicable Law and subject to the terms of the Subject Business:

(a)    Facilities, Supplies and Staffing. Administrator shall provide the facilities and retain all personnel required to perform the Services as determined in the reasonable discretion of the Administrator. Administrator shall also furnish all of the operating forms, printing supplies and any other related items which may become necessary for the operation of the Subject Business, except, for the forms specified by the Companies which they shall provide and which are technically compatible with Administrator’s facilities and equipment.

(b)    Losses, Claim Expenses, Attorney Appointments, Loss Reporting and Reinsurance.

(i)    Administrator shall receive, consider, review, investigate, defend, reject, supervise the adjustment of, settle, compromise and pay all Losses on the Subject Business, and shall also pay all survey, investigating, legal and other costs thereof, provided that the Companies shall have the ultimate and final authority as to payment or nonpayment of claims in regards to their respective Subject Policies and shall have reasonable access to Administrator’s claim files and other claim records in regards to their respective Subject Policies during normal business hours upon reasonable notice. Administrator shall pay all such losses and claims expenses out of funds held in the Disbursement Account. Administrator shall have no access to, or power to draw on, any other account of the Companies for purposes of this Agreement.

(ii)    Administrator shall maintain claims files on all Subject Business, which claims files shall be subject to review by the Companies, or their Representatives, in regards to their Subject Business during normal business hours and upon reasonable notice.

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(iii)    Administrator shall appoint claims, defense and loss control attorneys or other outside vendors for the Subject Business.

(iv)    Administrator shall report all losses to the Companies and any applicable reinsurers in a timely manner.

(v)    Administrator shall determine and evaluate coverage issues arising out of or in connection with the Subject Business and prepare and send all applicable correspondence relating to the Subject Business, including, but not limited to reservation of rights and coverage denial letters.

(vi)    Administrator shall have the obligation to exercise control and direction over litigation involving the Subject Business and defend against such litigation pursuant to this Agreement, and shall have the authority to settle or consent to judgment in any such litigation subject to obtaining the applicable Company’s prior written consent, which consent shall not be unreasonably withheld.

(vii)    Administrator shall perform all commercially reasonable services to pursue salvage and subrogation recoveries and to properly credit recoveries to the appropriate claim file.

(viii)    Following reasonable written request therefore, specifying information or reports and filing dates, Administrator shall prepare and submit to the Companies, as applicable, all Tax information and Tax-related business reports related to the Services and reasonably necessary for the Companies to file all Tax returns or reports, and shall do so no later than fifteen (15) days before such Tax returns or reports must be filed.

(ix)    To the extent Administrator collects any premium in respect of the Subject Business, Administrator shall remit such premium to the Companies within 15 days of the end of the month in which it was collected.

(c)    Books and Records.

(i)    From and after the Effective Time, the Companies, or their Representatives, shall deliver to Administrator a copy of any Books and Records as reasonably requested by Administrator to the extent that Administrator or any of its Affiliates does not already possess copies of such Books and Records. Administrator shall keep all information related to the Subject Business and the Books and Records confidential, subject to Section 2.4, and shall not disclose or provide access to such information to any third party, except as otherwise contemplated or permitted under this Agreement or required by applicable Law or with the Companies’ prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed. Notwithstanding the foregoing, upon termination of the Services under this Agreement, any copies of the Books and Records and all other books and records maintained at such time by Administrator pertaining to the Subject Business, or copies thereof, shall be delivered promptly to the Companies, as the case may be, or such other person or entity as they shall designate in writing.

(ii)    Administrator agrees that it will and will cause its Affiliates and agents to maintain books and records, including the Books and Records, with respect to the Services, in accordance with the same standards Administrator applies to its own business and applicable Law, including all such books and records as may be required by applicable Law, and all such books and records, including the Books and Records, shall be (A) the property of the Companies in regards to their Subject Business, and (B) available for inspection and copying by the Companies, or their Representatives, in regards to their Subject Business and at their sole cost and expense, and any

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Government Entities at any reasonable time during Administrator’s normal business hours upon prior reasonable notice. Administrator shall maintain facilities and procedures comparable to the facilities and procedures it employs for its own books and records for the safekeeping of all books and records used in the performance of the Services and in accordance with applicable Law.

(iii)    Administrator agrees to maintain an adequate system of internal controls over financial reporting as it relates to the Services, and at the Companies’ sole option and cost, to allow the Companies, or their Representatives, to conduct periodic tests of such internal controls over financial reporting in regards to their Subject Business during normal business hours and upon reasonable notice. Administrator shall make the relevant employees of Administrator or its Affiliates available to the Companies, and/or their Representatives, for purposes of this Section 2.7(c)(iii).

(d)    Accounting and Reporting. Administrator agrees to provide the following accounting and reporting services:

(i)    Within fifteen (15) days after the close of each quarter, Administrator or its Representatives shall render a quarterly account to the Companies summarizing the following items pertaining to the Subject Business and the Services and any amounts due in this regard to the Companies:

(A)    paid Subject Business Losses less subrogation and salvages and amounts received during the quarter;

(B)    a statement of the gross and net Subject Business Losses outstanding (including loss reserves) at the close of each quarter; and

(C)    a statement of reinsurance recoverables on paid and unpaid Subject Business Losses from third party reinsurance.

(ii)    Administrator or its Representatives shall also provide such other reports with respect to the Subject Business as may be reasonably requested by the Companies that arise out of or relate to the Services, including, but not limited to, such reports as are necessary to prepare the Companies’ Tax returns and financial statements, actuarial analyses of the Subject Business and related reserves, or any report required by any Government Entity, in each case within the time frame needed by the Companies to comply with their own contractual or other legal obligations or as otherwise mutually agreed by the Parties.

(iii)    The Companies and Administrator will cooperate with each other in good faith to develop a mutually acceptable format for the accounts, statements or other reports required under this Section

(iv)    The quarterly accounting and cash settlement are unconditional upon the performance of any other agreement or Person.

(e)    Miscellaneous Services. Without limiting the foregoing, Administrator shall provide any and all other services on behalf of the Companies that may be necessary, required or appropriate for the provision of the Services, including, but not limited to, the following, but only insofar as they constitute claims administration or claims-related services for the Subject Business: (i) providing or causing the provision of usual and customary services for Policyholders; (ii) processing or causing the processing of all necessary Policyholder notifications and collections; (iii) answering all inquiries; (iv) subject to ARTICLE 11, preparing and handling all regulatory filings; (v) performing all necessary accounting, financial and

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regulatory reporting, and where applicable, providing the statistical and other information required for such reporting to the Companies in a timely manner, as reasonably required by the Companies from time to time in accordance with the terms of this Agreement.

(f)    Services Not Covered. For the avoidance of doubt, each of the Companies will be responsible for performing all of its own accounting, financial and regulatory reporting, and Manager will have no responsibility with respect thereto; provided, that Manager will provide the Companies with the statistical and other information required for such reporting in a timely manner, as reasonably requested by the Companies from time to time in accordance with the terms of this Agreement.

ARTICLE 3:

DISBURSEMENT ACCOUNT

3.1    Disbursement Account.

(a)    Any and all amounts needed to pay Subject Business Losses arising under the Subject Business shall be paid on behalf of the Companies by Administrator exclusively from one or more disbursement accounts identified by the Companies and/or Reinsurer for such purposes (the "Disbursement Account").

(b)    The Disbursement Account shall be funded by the Companies and/or Reinsurer on a monthly basis based on reasonable estimates of cash flow and capital requirements; provided, that if the amounts in the Disbursement Account are insufficient to cover Subject Business Losses, the Companies and/or Reinsurer shall, within two Business Days of notice thereof from Administrator, deposit additional amounts sufficient to cover such Subject Business Losses.

(c)    No later than five days prior to the end of each month during the term of this Agreement, Administrator and its Affiliates shall remit to the Companies any and all amounts they receive for or on behalf of the Companies in respect of the Subject Business during such month.

(d)    All investment income on funds held in the Disbursement Account shall be credited to the Companies and/or the Reinsurer.

(e)    Administrator acknowledges and agrees that it has a fiduciary obligation to the Companies and/or Reinsurer to access and disburse funds from the Disbursement Account solely for the purposes set forth in this Section 3.1.

ARTICLE 4:

TERM AND TERMINATION RIGHTS

4.1    Term.

(a)    Unless terminated earlier as set forth in this Sections 4.1(a) or 4.2 of this Agreement, the Services provided hereunder with respect to the Subject Business shall terminate as to the Subject Business on the first to occur of: (i) and the complete performance by Administrator and Reinsurer of all obligations and duties arising under this Agreement; or (ii) upon the mutual written consent by the Parties hereto to the termination of this Agreement.

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(b)    Upon the expiration or termination of this Agreement pursuant to Sections 4.1(a) or 4.2, Reinsurer and/or its Affiliates shall assume responsibility for performance of the Services relative to the Subject Business, and Administrator shall cooperate with Reinsurer and/or its Affiliates to effect an orderly transition of the Services to Reinsurer and/or its Affiliates at Reinsurer’s sole cost and expense. Such cooperation on the part of Administrator shall include, without limitation: (i) transferring all Books and Records to Reinsurer or its Affiliates, and (ii) using its commercially reasonable efforts to assign at the Reinsurer’s sole cost and expense, for the benefit of Reinsurer or its Affiliates, any agreements with authorized third-party administrators or other service providers relating to the Services.

4.2    Termination Rights. Without limiting any other rights of any Party under this Agreement:

(a)    Reinsurer shall have the right to terminate this Agreement (i) if Administrator does not cure, within thirty (30) days of receiving written notice thereof: (A) any material breach of Administrator’s services hereunder, including without limitation any material breach of Administrator’s obligation to perform the Services in accordance with the standards set forth in Section 2.1, or (B) any material failure by Administrator to perform the Services to the reasonable satisfaction of Reinsurer; or (ii) upon written notice to Administrator if: (A) Administrator becomes subject to dissolution, liquidation, conservation, rehabilitation, bankruptcy, statutory reorganization, receivership, or similar proceedings in any jurisdiction, (B) creditors of Administrator take over its management, (C) Administrator otherwise enters into any arrangement with creditors or makes an assignment for the benefit of creditors, (D) any significant part of Administrator’s undertakings are enjoined, or Administrator’s property is impounded or confiscated, by actions of any Government Entity, or (E) Administrator breaches its fiduciary obligations under Section 3.1(e); and

(b)    Administrator shall have the right to terminate this Agreement upon a Change of Control of Reinsurer, provided that such Change of Control shall have been approved by all applicable insurance regulators and other Government Entities. For purposes of this Section, "Change of Control" means any transaction or a series of transactions which results, directly or indirectly, in the transfer of control of Reinsurer or all or substantially all of its assets or businesses, in all cases, to a third party not then affiliated with Reinsurer, including without limitation: (i) any merger, consolidation, reorganization, recapitalization or other business combination pursuant to which a third party not then affiliated with Reinsurer is transferred to or combined with that of another non-affiliated entity; or (ii) the acquisition by a non-affiliated person or entity of (i) beneficial ownership of any shares of capital stock (or rights to acquire the same) of Reinsurer representing more than 50% of the voting power of Reinsurer or the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the members of the board of directors of Reinsurer or (ii) all or substantially all of the assets of Reinsurer.

ARTICLE 5:

COMPENSATION

5.1    Subject Consideration. Reinsurer shall reimburse Administrator for the following costs and expenses:(i) the portion of the total actual costs incurred by Administrator for the claims operations for the Subject Business (including wages and employee benefits provided to Administrator’s employees, and overhead costs related to the performance of the Services, including without limitation, other loss adjustment expenses not incurred in relation to a specific claim within the Subject Business), (ii) all of Administrator’s out-of-pocket expenses in respect of the Subject Business, including, without limitation, claims investigations, legal fees, defense costs and loss containment expenses, or other third-party vendor costs that are incurred in relation to a specific claim within the Subject Business ("Out-of-Pocket Costs"), (iii) costs paid in connection with any modifications to Administrator’s claims system necessary to perform the Services

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("Miscellaneous Costs"), and (iv) an allocated portion of the Claims Service Expenses paid by the Companies pursuant to the Cut-Through Agreement (collectively, the "Subject Consideration").

5.2    Procedure. Within thirty (30) days following the end of each quarter, Administrator shall provide Reinsurer with requests for payment hereunder consisting of a reasonably itemized bill and other reasonable proof requested by Reinsurer for such amounts. Subject to the foregoing and relative to undisputed amounts, Reinsurer shall pay Administrator the Subject Consideration no later than 15 days following its receipt of a request for payment. Disputed amounts under this Section 5.1 will be paid subject to the dispute resolution provisions incorporated in Article 10. For the avoidance of doubt, the Subject Consideration shall not include any amounts for Out-of-Pocket Costs or Miscellaneous Costs incurred or paid by Administrator that are not reasonably related or allocable to the performance of the Services.

ARTICLE 6:

REGULATORY MATTERS

6.1    Regulatory Matters. From and after the Effective Date, Administrator, on behalf of the Companies, shall be responsible for all state insurance department filings and compliance with all regulatory requirements (if any), but only insofar as they arise out of claims administration or Services for the Subject Business, and subject to prior review and approval by the Companies in the case of any such filing outside of the ordinary course of business.

6.2    Legally Required Company Actions. From and after the Effective Date, Administrator will give the Companies timely notice of any Legally Required Company Action insofar as they arise out of the Services for the Subject Business, including, without limitation, filings with insurance regulators and other Government Entities, which, in each case, relate to the Subject Business. Administrator will, reasonably prior to the date on which such filings are required, provide to the Companies all information with respect to the Subject Business that may be required by it to prepare and make such filings. In addition, Administrator shall cooperate with the Companies and provide such information necessary for them to comply with all applicable reporting, withholding and disclosure requirements under the federal Internal Revenue Code and state and local tax laws with respect to the Subject Business.

ARTICLE 7:

CAPACITY OF ADMINISTRATOR

7.1    Capacity. Administrator has and will continue to have and maintain during the term of this Agreement all licenses, authorizations and resources necessary to provide, or to obtain a licensed and authorized subcontractor to provide, the Services in accordance with applicable Law, and Administrator has, or has available to it via agents or subcontractors, sufficient expertise, trained personnel, resources, systems, controls and procedures (financial, legal, accounting, administrative, data processing or otherwise) as may be necessary or appropriate to discharge Administrator’s services hereunder.

7.2    Insurance. Administrator agrees to maintain general liability and errors and omissions coverages for itself and for its directors, officers and employees as outlined in Schedule 7.2 and to provide updated evidence of that coverage as reasonably requested by the Companies and/or Reinsurer.

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7.3    Inability to Perform Services. Without limitation to any of the Companies’ rights hereunder, in the event that Administrator shall be unable to materially perform the Services as required by this Agreement for any reason whatsoever for a period that can reasonably be expected to exceed five Business Days, Administrator shall promptly notify the Companies and/or Reinsurer in writing and cooperate with them in obtaining an alternative means of providing such Services.

ARTICLE 8:

RESERVED

ARTICLE 9:

RESERVED

ARTICLE 10:

RESOLUTION OF DISPUTES

10.1    Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts executed in and to be performed entirely within that State.

10.2    Dispute Resolution; Enforcement.

(a)    In the event of any dispute arising under this Agreement, prior to the commencement of litigation, a senior officer of Administrator and a senior officer of Reinsurer shall attempt in good faith to resolve the dispute consistent with the terms of this Agreement. If they are unable to resolve the dispute in this manner within a reasonable period of time, the parties may pursue judicial remedies with respect to such dispute. This section shall not apply to any application to obtain emergency judicial intervention.

(b)    All actions and proceedings arising out of or relating to the interpretation and enforcement of the provisions of this Agreement and in respect of the transactions contemplated by this Agreement shall be heard and determined in the United States District Court for the Southern District of New York and any Federal appellate court therefrom (or, if United States federal jurisdiction is unavailable over a particular matter, the Supreme Court of the State of New York, New York County) and the parties hereto hereby irrevocably submit to the exclusive jurisdiction and venue of such courts in any such action or proceeding and irrevocably waive the defense of an inconvenient forum or lack of jurisdiction to the maintenance of any such action or proceeding. The consents to jurisdiction and venue set forth in this Section 10.2(b) shall not constitute general consents to service of process in the State of New York and shall have no effect for any purpose except as provided in this paragraph and shall not be deemed to confer rights on any Person other than the parties hereto. Each party hereto agrees that service of process upon such party in any action or proceeding arising out of or relating to this Agreement shall be effective if notice is given by overnight courier at the address set forth in Section 11.3 of this Agreement. The parties hereto agree that a final judgment

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in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Law; provided, that nothing in the foregoing shall restrict any party’s rights to seek any post-judgment relief regarding, or any appeal from, a final trial court judgment.

10.3    WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY LAW, THE PARTIES HERETO HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON, ARISING OUT OF, RELATED TO OR CONNECTED WITH THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

10.4    Survival. This ARTICLE 10 and Section 2.4 shall survive the termination of this Agreement.

ARTICLE 11:

MISCELLANEOUS

11.1    Cooperation. Each Party hereto shall cooperate fully with the other in all reasonable respects in order to accomplish the objectives of this Agreement.

11.2    Assignment; Parties in Interest.

(a)    Assignment. Except as expressly provided herein, the rights and obligations of a Party hereunder may not be assigned, transferred or encumbered without the prior written consent of the other Party.

(b)    Parties in Interest. This Agreement shall be binding upon, inure to the benefit of, and be enforceable by the Parties and their respective successors and permitted assigns. Nothing contained herein shall be deemed to confer upon any other Person any right or remedy under or by reason of this Agreement.

11.3    Notices. All notices, requests, demands and other communications hereunder shall be given in writing and shall be: (a) personally delivered; (b) sent by telecopier, facsimile transmission or other electronic means of transmitting written documents; or (c) sent to the Parties at their respective addresses indicated herein by registered or certified U.S. mail, return receipt requested and postage prepaid, or by private overnight mail courier service. The respective addresses to be used for all such notices, demands or requests are as follows:

If to a Company:

c/o Tower Group

120 Broadway

-13-

New York, NY 10271

Attention: William E. Hitselberger

Facsimile: (212) 655-2067

E-mail: bhiltselberger@twrgrp.com

If to Reinsurer:

c/o ACP Re, Ltd.

Washington Mall

7 Reid Street Suite 404

Hamilton HM11 Bermuda

Attn: General Counsel

If to Administrator:

c/o AmTrust Financial Services, Inc.

59 Maiden Lane, 43^rd Floor

New York, NY 10038

Attn:    Stephen Ungar

Facsimile No.: (212) 220-7130

E-mail: Steve.Ungar@amtrustgroup.com

or to such other person or address as a Party shall furnish to the Companies in writing.

If personally delivered, such communication shall be deemed delivered upon actual receipt; if electronically transmitted pursuant to this paragraph, such communication shall be deemed delivered the next Business Day after transmission (and sender shall bear the burden of proof of delivery); if sent by overnight courier pursuant to this paragraph, such communication shall be deemed delivered upon receipt; and if sent by U.S. mail pursuant to this paragraph, such communication shall be deemed delivered as of the date of delivery indicated on the receipt issued by the relevant postal service, or, if the addressee fails or refuses to accept delivery, as of the date of such failure or refusal. Any Party to this Agreement may change its address for the purposes of this Agreement by giving notice thereof in accordance with this Section.

11.4    Entire Agreement; Merger. This Agreement and any exhibits, schedules and appendices attached hereto together constitute the final written integrated expression of all of the agreements among the Parties with respect to the subject matter hereof and is a complete and exclusive statement of those terms, and supersede all prior or contemporaneous, written or oral, memoranda, arrangements, contracts and understandings between the Parties relating to the subject matter hereof, except for any applicable provisions contained in the LPTA. Any representations, promises, warranties or statements made by any Party which differ in any way from the terms of this Agreement or any applicable provisions contained in any of the LPTA shall be given no force or effect. The Parties specifically represent, each to the other, that there are no additional or supplemental agreements or contracts between or among them related in any way to the matters herein contained unless specifically included or referred to in this Agreement or any applicable provisions contained in any of the LPTA. No addition to or modification of any provision of this Agreement or any applicable provisions of any of the LPTA shall be binding upon either Party unless embodied in a dated written instrument signed by both Parties.

11.5    Waivers and Amendments; Preservation of Remedies. This Agreement may be amended, superseded, canceled, renewed or extended, and the terms hereof may be waived, only by a written instrument signed by each of the Parties or, in the case of a waiver, by the Party waiving compliance. No delay on the

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part of any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any Party of any right, power, remedy or privilege, nor any single or partial exercise of any such right, power, remedy or privilege, preclude any further exercise thereof or the exercise of any other such right, remedy, power or privilege. The rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies that any Party may otherwise have under applicable Law or in equity.

11.6    Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

11.7    Governing Law. This Agreement shall be construed and interpreted according to the internal laws of the State of New York excluding any choice of law rules that may direct the application of the laws of another jurisdiction. Subject to the provisions of ARTICLE 10, the Parties hereby stipulate that any action or other legal proceeding arising under or in connection with this Agreement may be commenced and prosecuted in its entirety in the federal or state courts having jurisdiction over New York, each Party hereby submitting to the personal jurisdiction thereof, and the Parties agree not to raise the objection that such courts are not a convenient forum. Process and pleadings mailed to a party at the address provided in Section 11.3 shall be deemed properly served and accepted for all purposes.

11.8    Headings. The headings in this Agreement are inserted for convenience only and shall not constitute a part hereof.

11.9    Severability. If any part of this Agreement is contrary to, prohibited by, or deemed invalid under applicable Law or regulations, that provision shall not apply and shall be omitted to the extent so contrary, prohibited, or invalid; but the remainder of this Agreement shall not be invalidated and shall be given full force and effect insofar as possible.

11.10    Expenses. Regardless of whether or not the transactions contemplated in this Agreement are consummated, each of the Parties shall bear its own expenses and the expenses of its counsel and other agents in connection with the transactions contemplated hereby.

11.11    Currency. The currency of this Agreement and all transactions under this Agreement shall be in United States Dollars.

[SIGNATURE PAGES FOLLOW]

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed on the day and year first written above.

AMTRUST NORTH AMERICA, INC.

By

Title

TOWER INSURANCE COMPANY OF NEW YORK

By

Title

CASTLEPOINT NATIONAL INSURANCE COMPANY

By

Title

TOWER NATIONAL INSURANCE COMPANY

By

Title

HERMITAGE INSURANCE COMPANY

By

Title

CASTLEPOINT FLORIDA INSURANCE COMPANY

By

Title

NORTH EAST INSURANCE COMPANY

By

Title

YORK INSURANCE COMPANY OF MAINE

By

Title

MASSACHUSETTS HOMELAND INSURANCE COMPANY

By

Title

PRESERVER INSURANCE COMPANY

By

Title

CASTLEPOINT INSURANCE COMPANY

By

Title

Exhibit C

COMMERCIAL LINES MANAGING GENERAL AGENT AGREEMENT

by and among

CASTLEPOINT NATIONAL INSURANCE COMPANY,

NORTH EAST INSURANCE COMPANY,

PRESERVER INSURANCE COMPANY,

YORK INSURANCE COMPANY OF MAINE,

MASSACHUSETTS HOMELAND INSURANCE COMPANY,

TOWER INSURANCE COMPANY OF NEW YORK,

TOWER NATIONAL INSURANCE COMPANY,

HERMITAGE INSURANCE COMPANY,

CASTLEPOINT FLORIDA INSURANCE COMPANY,

CASTLEPOINT INSURANCE COMPANY,

ACP RE LTD

and

AMTRUST NORTH AMERICA, INC.

dated as of

_____________ __, 2014

TABLE OF CONTENTS

		Page
I.	DEFINITIONS	2
II.	APPOINTMENTS	3
III.	TERRITORY	4
IV.	DUTIES OF MANAGER REGARDING UNDERWRITING	4
V.	DUTIES OF MANAGER REGARDING CLAIM ADMINISTRATION	5
VI.	REPORTING AND REMITTANCES	7
VII.	DUTIES AND AUTHORITY OF MANAGER	8
VIII.	DUTIES OF COMPANY	9
IX.	BOOKS AND RECORDS	10
X.	CONFIDENTIAL INFORMATION; RESTRICTIVE COVENANTS	11
XI.	COMPANY EMPLOYEES	15
XII.	REMUNERATION	15
XIII.	COMMENCEMENT AND TERMINATION	15
XIV.	CONTINUING DUTIES OF MANAGER AFTER TERMINATION	17
XV.	RELATIONSHIP OF THE PARTIES	18
XVI.	INDEMNIFICATION	18
XVII.	ADVERTISEMENT	20
XVIII.	NOTICES	20
XIX.	CHOICE OF LAW, VENUE, JURISDICTION	21
XX.	AMENDMENT	22
XXI.	WAIVER	22
XXII.	SEVERABILITY	22
XXIII.	ASSIGNMENT	22
XXIV.	COUNTERPARTS	23
XXV.	HEADINGS	23

COMMERCIAL LINES MANAGING GENERAL AGENT AGREEMENT

This Commercial Lines Managing General Agent Agreement (this "Agreement") is made as of _____________, 2014 (the "Effective Date") by and among:

1. CastlePoint National Insurance Company ("CastlePoint"), an insurance company organized under the laws of Illinois, North East Insurance Company ("North East"), an insurance company organized under the laws of Maine, Preserver Insurance Company ("Preserver"), an insurance company organized under the laws of New Jersey, York Insurance Company of Maine ("York"), an insurance company organized under the laws of Maine, Massachusetts Homeland Insurance Company ("Massachusetts"), an insurance company organized under the laws of Massachusetts, Tower Insurance Company of New York ("TIC"), an insurance company organized under the laws of New York, Tower National Insurance Company ("TNIC"), an insurance company organized under the laws of Massachusetts, Hermitage Insurance Company ("Hermitage"), an insurance company organized under the laws of New York, CastlePoint Florida Insurance Company ("CPF"), an insurance company organized under the laws of Florida, and CastlePoint Insurance Company ("CPIC") (collectively, the "Companies");

2. Solely for purposes of Section X.B hereof, ACP Re Ltd ("ACP"), a Bermuda exempted company; and

3. AmTrust North America, Inc., Delaware corporation (the "Manager" and, collectively with the Companies, the "Parties" and each, a "Party").

RECITALS

WHEREAS, this Agreement is being entered into in connection with that certain Commercial Lines MGA Quota Share Reinsurance Agreement (the "Reinsurance Agreement"), dated as of the date hereof, by and among Technology Insurance Company, Inc., a New Hampshire corporation ("Reinsurer"), and the Companies, pursuant to which Reinsurer will assume 100% of the business written by the Companies pursuant to the Program, and the Companies will cede to Reinsurer 100% of collected premium attributable to the Program;

WHEREAS, each Company desires to appoint Manager as its agent to produce certain classes of insurance in the states where it is licensed to transact insurance business;

WHEREAS, each Company and Manager have agreed that this Agreement shall govern their relationship with respect to the Program and Claim Services (each as defined herein) and compensation payable to the Parties with respect to this Agreement;

WHEREAS, Manager desires to serve as underwriting manager on behalf of each Company and to provide Claim Services for each Company with respect to the Commercial Lines Business (the "Program"); and

WHEREAS, each Company desires to engage Manager to act as underwriting manager and to provide Claim Services on the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual promises herein contained and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Parties agree as follows:

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I. DEFINITIONS.

A. "ACP Parties" shall have the meaning set forth in Section X.B.

B. "Cause" shall mean Company Cause or Manager Cause.

C. "Ceding Commission" has the meaning ascribed to such term in the Reinsurance Agreement.

D. "Claim" or "Claims" means any monetary demand or suit arising out of or in connection with any actual or alleged incident, occurrence or accident as such terms are defined in the Policy(ies) arising out of or related to the Program.

E. "Claim Services" shall have the meaning set forth in Section II(A).

F. "Commercial Lines Business" means all insurance contracts, policies, certificates, binders, slips, covers or other agreements of insurance, including all supplements, riders, endorsements, renewals and extensions (other than Personal Lines Business) issued by a Company.

G. "Cut-Through MGA Agreement" means the Managing General Agent Agreement, dated as of January 3, 2014, by and between the Manager and Tower Risk Management Corp.

H. "Laws" shall mean all federal, state and local statutes, regulations and ordinances applicable to Manager’s duties under this Agreement.

I. "Loss Fund Account" shall have the meaning set forth in Section VIII.E

J. "Master Agreement" shall mean the Commercial Lines Master Agreement, dated as of ______, 2014, by and between ACP and AmTrust Financial Services, Inc., a Delaware corporation.

K. "National General" shall mean National General Holdings Corp., a Delaware corporation.

L. "Person" means any individual, sole proprietorship, partnership, corporation, limited liability company, unincorporated society or association, trust or other entity.

M. "Personal Lines Business" means all insurance contracts, policies, certificates, binders, slips, covers or other agreements of insurance, including all supplements, riders, endorsements, renewals and extensions for personal automobile liability and physical damage, homeowners, personal excess and umbrella coverage issued by the Companies.

N. "Policy" or "Policies" shall mean all policies, master policies, binders, certificates, endorsements and contracts of insurance issued by a Company through Manager in connection with the Program.

O. "Program Losses" shall mean liabilities and obligations to make payments to policyholders, beneficiaries and third party claimants under the Program and all loss adjustment expenses and defense costs, including (i) all expenses incurred by or on behalf of the Companies in the investigation, appraisal, adjustment, litigation, defense or appeal of claims under the Program and/or coverage actions under the Program, (ii) all liabilities for consequential, exemplary, punitive or similar extracontractual damages, or for statutory or regulatory fines or penalties, or for any loss in excess of the limits of any Program, whether owing to the policyholders or insureds under the Program, and (iii) court costs accrued prior to final

2

judgment, prejudgment interest or delayed damages and interest accrued after final judgment.

P. "Recoveries" shall include any and all credits, subrogation, overpayments, voided or returned checks, or other recoveries which shall be credited to the Policy.

Q. "Reinsurance Agreement" has the meaning set forth in the recitals.

R. "Reinsurer" has the meaning set forth in the recitals.

S. The "Term" of this Agreement shall commence on the Effective Date and shall terminate or be canceled in accordance with Article XIII hereof.

T. "Termination Date" means the effective date of any termination of this Agreement, whether such termination is subject to the expiration of a notice period or is effective immediately upon notice, or otherwise.

U. "Termination Notice Date" means the date of receipt of any notice of termination.

V. "Underwriting Guidelines" means the guidelines and other instructions provided to Manager by any of the Companies describing the policy term, limits, coverage classifications, territories and including without limitation (i) the maximum annual premium volume, (ii) the basis of the rates to be charged, (iii) the types of risks which may be written, (iv) maximum limits of liability, (v) applicable exclusions, (vi) territorial limitations, (vii) policy cancellation provisions, and (viii) the maximum policy period; as modified by the applicable Company at its sole discretion from time to time.

II. APPOINTMENTS.

A. Each Company hereby appoints Manager as its underwriting manager to produce insurance risks under the Program, as more particularly set forth in Article IV, and as its provider of all claims administration services with respect to Claims under the Program (collectively, the "Claims Services"), as more particularly set forth in Article V, with such power and authority as is set forth herein. Each Company shall make the appropriate notifications of this appointment, or subsequent termination thereof, to any state insurance department as may be required of an insurer.

B. Manager hereby accepts this appointment and shall make the appropriate notifications of such appointment, or subsequent termination thereof, to any state insurance department as may be required.

C. Manager will place with each Company business covered by the Program that meets such Company's Underwriting Guidelines.

D. No Party to this Agreement shall have authority over the operations of the other Party to this Agreement. Each Party to this Agreement shall at all times continue to be directed by its respective management and board of directors.

E. Each Company at its sole discretion may immediately suspend Manager’s underwriting authority during the pendency of a dispute regarding cause for termination.

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III. TERRITORY.

A. Manager is authorized to act as underwriting manager in all states in which the applicable Company is licensed to write business pursuant to the Program, subject to the applicable Company’s filed forms and rates (the "Territory").

B. Manager is authorized to provide Claims Services in accordance with Article V in the Territory.

IV. DUTIES OF MANAGER REGARDING UNDERWRITING.

Subject to the terms and conditions of this Agreement, and subject to all Laws, Manager shall provide services for the Companies as follows:

A. Underwriting During the Term of this Agreement. Manager is hereby granted authority to solicit, receive, underwrite, bind, accept, non-renew and cancel insurance risks under the Program on behalf of each Company in accordance with the Underwriting Guidelines. In conducting such underwriting, Manager is hereby authorized to perform the following administrative services on Policies placed with each Company under this Agreement:

1. Manager shall solicit, receive, review and process all applications and submissions for insurance business under the Program in accordance with Underwriting Guidelines.

2. Manager shall determine the acceptability of any insurance risk, and issue quotes and Policies in the name of a Company on policy forms approved by such Company. Manager will utilize its policy issuance system for the issuance of quotes, Policies and other Policy documents.

3. Manager shall issue and deliver Policies to qualified insureds and maintain on behalf of the Companies such information as is necessary to assure the timely and proper issuance, delivery, execution or countersignature of all Policies.

4. Manager shall develop and maintain proper underwriting files on behalf of Company that shall contain adequate information to clearly demonstrate the reasons for acceptance or rejection of any risk and documentation of the rate development for the premiums charged under the Policy.

5. Consistent with applicable Laws and the terms and conditions of the Policy, Manager may cancel, terminate or otherwise non-renew Policies bound or written under the Program.

6. Manager shall provide proper and timely notice of any cancellation, non-renewal, change in coverage to policyholders, certificate holders, loss payee and/or any regulatory authority, as required by the Policy or any applicable Laws. Any such cancellation, non-renewal, change in coverage shall be properly documented in such underwriting files maintained by Manager on behalf of the applicable Company.

7. Manager shall market the Program and shall perform such related marketing, sales and production activities, and in so doing, shall comply at all times with applicable Laws. In addition, Manager’s marketing activities shall be subject further to the limitations under Section XVI of this Agreement.

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8. Manager shall administer the collection and receipt of premiums, any policy related fees, any applicable late payment fees, reinstatement fees and/or all other sums chargeable and/or due in respect of any and all Policies ("Premiums"), and pay return premiums due in respect of all Policies.

9. Manager shall pay commission due to producers, including Sub-Producers.

Company shall have the right to cancel or non-renew any Policy, consistent with the terms of such Policy, except as limited by applicable insurance Laws or regulations.

B. Reinsurance. Manager shall negotiate but not bind reinsurance on behalf of a Company on any business Manager places with such Company.

C. Sub-Producers. Manager shall be authorized to assign or delegate any of its authority hereunder to an affiliate of Manager without written approval from any Company. Manager shall not be authorized to assign or delegate any of its authority to an unaffiliated party without the prior written approval from the applicable Company, provided, that notwithstanding the foregoing, Manager may designate and license producers (each individually, a "Sub-Producer") solely for the production of business under the Program without written approval from the applicable Company. Manager shall ensure that any party so designated shall be lawfully licensed to transact the type of insurance for which designation is made, and shall require that during the term of such designation, such license shall be maintained continuously and in full force and effect. Manager shall be responsible to insure the compliance by all Sub-Producers with the term of this Agreement and all other written rules and regulations of the applicable Company, and treat as confidential and use only in the interest of such Company all instructions, information and materials of such Company. Manager shall be solely responsible for the performances of any Sub-Producer under the terms and provision hereof. Manager shall require each Sub-Producer to maintain Errors and Omissions and fidelity insurance in an amount and upon terms reasonably acceptable to Manager and the applicable Company. Manager will terminate the designation and licensing of any Sub-Producer at the sole discretion of the Company, with or without cause.

D. Authorizations. Manager represents and warrants that it possesses licenses or authorizations to perform the functions and duties set forth in this Agreement in the Territory, as may be required by law, and will promptly inform the applicable Company in writing of any and all changes in any of such licenses or authorizations in all states or territories relating to the authority of Manager to conduct the activities required of it under this Agreement.

V. DUTIES OF MANAGER REGARDING CLAIM ADMINISTRATION.

Subject to the terms and conditions of this Agreement, and subject to all Laws, Manager shall provide the following Claim Services in respect of Policies bound or written under this Agreement:

A. Facilities, Supplies and Staffing. Manager shall provide the facilities and retain all personnel required to perform the Claim Services as determined in the reasonable discretion of the Manager. Manager shall also furnish all of the operating forms, printing supplies and any other related items which may become necessary for the operation of the Program, except, for the forms specified by the Companies that they shall provide and that are technically compatible with Manager’s facilities and equipment.

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B. Losses, Claim Expenses, Attorney Appointments, Loss Reporting and Reinsurance.

1. Manager shall receive, consider, review, investigate, defend, reject, supervise the adjustment of, settle, compromise and pay all Losses in respect of the Program, and shall also pay all survey, investigating, legal and other costs thereof, provided that the Companies shall have the ultimate and final authority as to payment or nonpayment of claims in regards to their respective Policies and shall have reasonable access to Manager’s claim files and other claim records in regards to their respective Policies during normal business hours upon reasonable notice. Manager shall pay all such losses and claims expenses out of funds held in the Loss Fund Account. Manager shall have no access to, or power to draw on, any other account of the Companies for purposes of this Agreement.

2. Manager shall maintain claims files on all claims made under the Policies, which claims files shall be subject to review by the Companies, or their Representatives, in regards to their Policies during normal business hours and upon reasonable notice.

3. Manager shall appoint claims, defense and loss control attorneys or other outside vendors for the Program.

4. Manager shall report all losses to the Companies and any applicable reinsurers in a timely manner.

5. Manager shall determine and evaluate coverage issues arising out of or in connection with the Program and prepare and send all applicable correspondence relating to the Program, including, but not limited to reservation of rights and coverage denial letters.

6. Manager shall have the obligation to exercise control and direction over litigation involving the Program and defend against such litigation pursuant to this Agreement, and shall have the authority to settle or consent to judgment in any such litigation subject to obtaining the applicable Company’s prior written consent, which consent shall not be unreasonably withheld.

7. Manager shall perform all commercially reasonable services to pursue salvage and subrogation recoveries and to properly credit recoveries to the appropriate claim file.

8. Following reasonable written request therefore, specifying information or reports and filing dates, Manager shall prepare and submit to the Companies, as applicable, all Tax information and Tax-related business reports related to the Claim Services and reasonably necessary for the Companies to file all Tax returns or reports, and shall do so no later than fifteen (15) days before such Tax returns or reports must be filed.

C. Miscellaneous Services. Without limiting the foregoing, Manager shall provide any and all other services on behalf of the Companies that may be necessary, required or appropriate for the provision of the services provided hereunder, including, without limitation, the services described in Article IV and the Claim Services. Such other services shall include, without limitation, the following: (i) providing or causing the provision of usual and

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customary services for Policyholders; (ii) processing or causing the processing of all necessary policyholder notifications and collections; and (iii) answering all inquiries.

D. Services Not Covered. For the avoidance of doubt, each of the Companies will be responsible for performing all of its own accounting, financial and regulatory reporting, and Manager will have no responsibility with respect thereto; provided, that Manager will provide the Companies with the statistical and other information required for such reporting in a timely manner, as reasonably requested by the Companies from time to time in accordance with the terms of this Agreement.

VI. REPORTING AND REMITTANCES.

A. Manager shall provide all accounting and reporting services with respect to the Program to satisfy the requirements of each Company, including but not necessarily limited to the following:

1. No later than fifteen (15) days after the end of each month, each Company shall submit to Manager a monthly account ("Monthly Underwriting Activity Report") setting forth Premiums written, Premium collected, and Premium adjustments made, including but not limited to, additional or return premiums, audit and rate adjustments and commissions paid during such month, in each case subject to, and in accordance with, Section VI.B.

2. No later than fifteen (15) days after the close of each month, Manager or its Representatives shall render a monthly account to the Companies summarizing the following items pertaining to the Program and the Claim Services and any amounts due in this regard to the Companies:

(a) paid Program Losses less subrogation and salvages and amounts received during the month;

(b) a statement of the gross and net Program Losses outstanding (including loss reserves) at the close of each month;

(c) a statement of reinsurance recoverables on paid and unpaid Program Losses from third party reinsurance; and

(d) such other reports with respect to the Program as may be reasonably requested by the Companies that arise out of or relate to the Claim Services, including, but not limited to, such reports as are necessary to prepare the Companies’ Tax returns and financial statements, actuarial analyses of the Program and related reserves, or any report required by any insurance department or other regulatory authority, in each case within the time frame needed by the Companies to comply with their own contractual or other legal obligations or as otherwise mutually agreed by the Parties (a though d, collectively, the "Monthly Claim Services Report").

3. As reasonably requested from time to time by a Company, Manager shall submit to such Company a copy of monthly banking statements with respect to the Loss Fund Account for said month, and shall effect reconciliation of such accounts in accordance with customary accounting practices. As and when requested by a

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Company, Manager shall provide such Company with appropriate documentation in support of any specific transaction or reconciled entry.

B. Remittances.

1. Upon receipt of any Premiums (as defined in Section IV.A.8), Manager shall deposit such Premiums, net of Ceding Commission attributable thereto, into a bank account or accounts designated by Reinsurer.

2. Manager shall deposit such Ceding Commission, net of any remuneration owed to Manager pursuant to Article XI, into a bank account or accounts designated by the Companies.

VII. DUTIES AND AUTHORITY OF MANAGER.

A. Regulatory Compliance.

1. Manager shall provide, at its own expense, and within a reasonable time, as necessary, such information in its possession required to satisfy reporting requirements imposed upon the Companies by any regulatory authority, boards, bureaus or associations to enable the Companies to file required financial statements and reports, unit statistical and financial calls for information with insurance departments, regulatory bodies of competent jurisdiction, reinsurers, boards, bureaus or associations with regard to the business transacted or services provided pursuant to this Agreement.

2. Manager shall promptly forward to the applicable Company, in no event later than the first business day after receipt thereof, any written notices, complaints, or inquiries received by any insurance department or any other regulatory authority from policyholders or claimants in connection with the Program and, in addition, shall provide to the applicable Company all information from its records which will assist such Company in its response to such Insurance Department or other regulatory authority, and otherwise cooperate fully with such Company in connection with any such notice, complaint or inquiry, and if requested by such Company, shall prepare and/or assist in the preparation of any response as reasonably necessary in defense of such Company.

3. Manager shall promptly advise the applicable Company whenever it receives any notice of any regulatory audit, action or threat of sanctions charged against Manager or such Company with respect to or arising out of Manager’s acts or omissions with respect to or which affects the Program, and if requested by such Company, shall take and/or assist in any action as is reasonable and necessary to respond and/or address such matter. Manager agrees to cooperate fully in the handling of any such audit, action or regulatory sanction.

4. Any fines or penalties levied against a Company arising out of or related to the business produced, Policies serviced or Claim Services provided pursuant to this Agreement shall be paid by Manager to the extent and to the degree directly resulting from any act, error or omission whether intentional or unintentional, of Manager or any of its respective agents, sub-agents, brokers, producers, advisors, or contractors. Except however, to the extent such fine or penalty is directly attributable to an action

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of a Company, then such Company shall be responsible for a full or pro-rata share, as applicable, of such fine or penalty to the extent that such action of such Company contributed to said fine or penalty.

B. Limitations of Authority. In addition to any other limitations expressly or implicitly contained in this Agreement, Manager shall not have authority to do any of the following acts in connection with this Agreement:

1. commit a Company to participate in insurance or reinsurance syndicates, associations or pools or bind a Company to reinsurance agreements or arrangements;

2. permit any Sub-Producer to serve on Manager’s board of directors;

3. jointly employ any individual who is employed with a Company;

4. exceed the maximum Policy limits established by the applicable Company from time to time;

5. on behalf of a Company, make, accept or endorse notes or otherwise incur any liability which is not incurred in the ordinary course of business of Manager pursuant to the terms and conditions of this Agreement;

6. waive a forfeiture or issue a guaranty, other than as permitted expressly in writing by a Company;

7. waive Premium payment, withhold any monies or property of a Company, or offer or pay any rebate of Premium, without the express written consent of such Company;

8. bind coverage more than 10 dayssubsequent to the effective date of the Policy without the prior written approval of a Company;

9. effect or authorize a flat cancellation more than forty-five (45) days after the effective date without the prior written approval of the applicable Company. (In the event of such flat cancellation, Manager shall reasonably document the existence of substituted coverage or other reasons why such Company has no liability for payment of loss while coverage was in force); or

10. reinstate Policies or certificates cancelled by a Company for other than non-payment of Premium without the prior written approval of such Company.

VIII. DUTIES OF COMPANY.

Subject to the terms and conditions of this Agreement, and subject to all applicable Laws, each Company agrees to perform the following duties with respect to the Program:

A. Changes in Authorizations. Each Company will promptly inform Manager in writing of all changes in its licenses or eligibility in the Territory relating to the authority of Company to transact the business of insurance under this Agreement.

B. Manager Compensation. Each Company shall pay Manager’s compensation as provided in Section XII.

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C. Timely Cooperation. Each Company shall comply in a timely and prompt manner with any reasonable request for instructions or approvals which Manager may make from time to time in order to perform its duties under this Agreement.

D. Company Policy Issuance. During the Term of this Agreement, each Company shall accept all Policies placed by Manager under the Program in accordance with the Underwriting Guidelines of such Company and the terms of this Agreement.

E. Creation and Funding of the Loss Fund Accounts.

1. Any and all amounts needed to pay Program Losses arising under the Program shall be paid on behalf of the applicable Company by Manager exclusively from one or more disbursement accounts identified by the applicable Company for such purposes (the "Loss Fund Accounts").

2. The Loss Fund Accounts shall be funded on behalf of the applicable Company on a monthly basis based on reasonable estimates of cash flow and capital requirements; provided, that if the amounts in a Loss Fund Account are insufficient to cover Program Losses, additional amounts will be deposited on behalf of the applicable Company sufficient to cover such Program Losses within two Business Days of notice thereof from Manager to the applicable Company,

3. All investment income on funds held in the Loss Fund Accounts shall be credited to the applicable Company.

4. Manager acknowledges and agrees that it has a fiduciary obligation to the Companies to access and disburse funds from the Loss Fund Accounts solely for the purposes set forth in this Section VIII.E.

IX. BOOKS AND RECORDS.

A. During the Term of this Agreement, Manager shall maintain, at its own expense, separately identifiable books and records and electronic files in connection with the Policies and Claims under the Program and the Claim Services, including but not limited to the following: accounting records, underwriting files, claim files, Policy and premium records, Policy register, bank records, records relating to the Loss Fund Account, licensing files, records of notices, complaints, inquiries, actions and suits served against Manager or, to the extent available to Manager, the Companies, Policies (both in-force and cancelled), and reports and records required to be retained in connection with this Agreement or required under applicable Laws for and on behalf of the Companies (hereinafter collectively referred to as "Books and Records"), with respect to each Policy for a period of seven (7) years following the end of the calendar year in which such Policy expires, is cancelled, non-renewed or otherwise terminated, or for any longer period which may be required by Law. All Books and Records other than those related to policy expirations are the property of the applicable Company, and upon its request, such Company shall be entitled to receive copies of any and all Books and Records. Manager shall be responsible for retaining the Books and Records required to be maintained by Manager under this Agreement, in hard copy form, microfilm, computer software systems and/or other generally accepted information storage medium, as well as, in any reasonable back-up form directed by Company for the period described above. Manager is obligated to provide to a Company copies of any and all such Books and Records, electronically in a format acceptable to such Company.

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B. During the Term of this Agreement, the Companies, or their representatives, shall deliver to Manager a copy of any Books and Records as reasonably requested by Manager to the extent that Manager or any of its Affiliates does not already possess copies of such Books and Records.

C. Each Company or its designated representatives, without restrictions or limitations, shall, upon reasonable notice to Manager, have broad authority to inspect, copy and audit all Books and Records of Manager pertaining to the business written under this Agreement during reasonable business hours, and, at its own expense, may make copies or extracts of any Books and Records pertaining thereto as such Company may deem necessary.

D. Both during the Term of this Agreement and following the Termination Date, Manager’s use and control of the expirations, the records thereof and Manager’s work product shall remain in the undisputed possession and ownership of Manager, and each Company’s record of such expirations and other material information relating to specific risks, will not be disclosed by such Company to any agent or broker. Nothing contained in this Section IX.D. shall interfere with a Company’s obligation to renew or service policies following a Termination Date.

E. Each Company has the right at any time to place in Manager’s office up to six (6) of its underwriting and/or claim representatives to monitor Manager’s performance under this Agreement. Manager will provide such Company representatives with reasonable accommodations, including office space and services as required.

F. The ownership of Policy supplies, undelivered Policies, or other property furnished by a Company for the purpose of conducting the business which is the subject of this Agreement, shall be vested in such Company. Manager hereby agrees to surrender the same to the applicable Company, without expense to such Company. Manager has no authority to release blank Policy or certificate supplies to any Sub-Producer; and agrees to maintain a Policy register of all voided Policies and shall retain and store all voided Policies on behalf of each Company, and deliver to or make such voided Policies available to the applicable Company or its authorized representatives immediately upon the Termination Date, or at any time upon the request of such Company.

X. CONFIDENTIAL INFORMATION; RESTRICTIVE COVENANTS.

A. Confidential Information.

1. The Parties hereby agree to treat as confidential any and all reports, information, and data relating to, obtained by, prepared or assembled by, or given to the other or developed as a result of information supplied by or on behalf of any Party under this Agreement, or by reason of, or relating to, the transactions contemplated by or incidental to this Agreement, including but not limited to any materials, presentations, records, and all matters affecting or relating to the proposed business and operations under the Program (such information being collectively referred to herein as "Confidential Information"). For purposes of this Section X.A, the party disclosing Confidential Information will be referred to as the "Disclosing Party" and the party receiving Confidential Information will be referred to as the "Receiving Party."

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2. The Parties shall each take appropriate steps to ensure that all Confidential Information is kept confidential by the respective Parties and each of their directors, officers, principals, shareholders, affiliates, employees, agents and advisors, and that such Confidential Information will not be divulged, disclosed or communicated to any person, firm, association, corporation or other entity, during or subsequent to the Term of this Agreement, provided, however, that (a) disclosure of any Confidential Information to which the Disclosing Party has consented in writing may be made; (b) any Confidential Information may be disclosed to regulatory authorities or other appropriate parties pursuant to Laws or legal process after notice is given to the Disclosing Party to allow the Disclosing Party to contest or limit the scope of Confidential Information to be disclosed; (c) Confidential Information may also be disclosed to auditors of any Receiving Party, Company reinsurers or retrocessionaires, to the extent reasonably appropriate; and (d) Confidential Information may also be disclosed by a Receiving Party to its Affiliates, provided the Receiving Party directs such Affiliates to treat such Confidential Information confidentially and in accordance with the terms of this Agreement.

3. In the event of a breach of this Section X relating to Confidential Information, the affected Party shall be entitled to seek specific performance and injunctive or other equitable relief as a remedy for any such breach, which shall not be deemed to be the exclusive remedy for such breach, but shall be in addition to all the remedies available at law or equity.

4. The term "Confidential Information" as used in this Agreement does not include information which (i) was or becomes generally available to the public other than as a result of the disclosure by or on behalf of the Receiving Party; or (ii) was or becomes available on a non-confidential basis from a source other than the Receiving Party or its representatives, provided that such source is not bound by a confidentiality agreement with, or similar obligation to the Disclosing Party.

5. Manager agrees that any policyholder information, insured information, claimant information and any other information subject to a Federal, State or local Laws or regulations requiring information to be confidential, including but not limited to, non-public personal information and health information of an individual, will be treated as confidential in accordance with the requirement of such Laws or regulations. Any such confidential information about individuals that Manager obtains in furtherance of its services under this Agreement may only be used as necessary to effect, administer or enforce a policyholder transaction. Manager and its employees, agents, representatives, successors or assigns are not authorized to otherwise use or disclose such information to any third party, unless authorized by the applicable Company’s privacy policy or notice. Manager agrees to adopt and implement privacy procedures that are consistent with any applicable Laws or regulations, as well as consistent with Company’s privacy notice and policy when Manager is servicing a Company’s policyholders. Manager shall require its agents, representatives, Sub-Producers, Sub-Claim Adjusters and employees to comply with the foregoing privacy provisions. Manager shall prepare, at its own cost and expense, for the applicable Company’s review and approval, all privacy notices required by applicable statutes, rules or regulations to be sent or delivered to policyholders or other persons. Upon the applicable Company’s approval, Manager shall, at its own cost and expense, send such privacy notice to its intended recipient.

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6. Manager may from time to time provide each Company with access to certain proprietary systems developed by Manager, including without limitation, any source code, object code, executable code, data, databases, and related documentation in respect thereof (collectively, the "Manager IP"). Each Company acknowledges and agrees that the Manager IP, including without limitation program code, specifications, logic, design, ideas, techniques, know-how and procedures contained therein and all related documentation are confidential intellectual property exclusively owned by Manager.  This Agreement does not grant and shall not be construed to grant any license or right to use the Manager IP except as expressly authorized in writing by Manager. Each Company and its employees shall not disclose Manager IP or any part thereof to any third party, including affiliates, except as expressly authorized by Manager.  Each Company shall not (a) use or access the Manager IP for any purpose other than performing its duties under this Agreement; or (b) modify, enhance, reverse engineer, delink, disassemble or decompile any of the Manager IP or part thereof.

B. Covenant Not to Compete, Solicit or Hire.

1. Each Company and ACP (collectively, the "ACP Parties") acknowledges and agrees that Manager and its Affiliates would be irreparably damaged if any ACP Party were to provide services or to otherwise participate in the business of any Person competing with the Commercial Lines Business in a similar business and that any such competition by an ACP Party would result in a significant loss of goodwill by Manager in respect of the Commercial Lines Business. Each ACP Party further acknowledges and agrees that the covenants and agreements set forth in this Section X.B were a material inducement to Manager to enter into this Agreement and the other Transaction Documents (as defined in the Master Agreement) and to perform its obligations hereunder and thereunder, and that Manager and its Affiliates would not obtain the benefit of the bargain set forth in this Agreement or the other Transaction Documents as specifically negotiated by the parties hereto and thereto if any ACP Party breached the provisions of this Section X.B. Therefore, in further consideration of Manager's performance of its obligations hereunder and under the other Transaction Documents, each of the ACP Parties agrees that during the period in which any parties have any obligations under any of the Transaction Documents and the five-year period thereafter, it shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, either for itself, himself or herself or through any other Person, engage in, participate in, or permit such Person’s name to be used by any enterprise engaging in or participating in, the Commercial Lines Business. For purposes of this Agreement, the term "participate" includes any direct or indirect interest in any enterprise, whether as a stockholder, member, partner, joint venturer, franchisor, franchisee, executive, consultant or otherwise (other than by ownership of less than two percent (2%) of the stock of a publicly held corporation) or rendering any direct or indirect service or assistance to any Person. Each ACP Party agrees that this covenant is reasonably designed to protect Manager’s substantial investment and is reasonable with respect to its duration, geographical area and scope.

2. For so long as any ACP Party has continuing obligations under Section X.B.1 above, such ACP Party shall not (and shall cause its, his or her Subsidiaries not to) directly, or indirectly through another Person, (a) induce or attempt to induce (other than by

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a general solicitation advertisement, posting or similar job solicitation process) any employee, agent or producer of Manager or its Affiliates engaged in the Commercial Lines Business to leave the employ of Manager or any of its Subsidiaries or Affiliates, or in any way interfere with the relationship between Manager or any of its Subsidiaries or Affiliates and any such employee, except in accordance with Section XI, (b) hire (other than by a general solicitation advertisement, posting or similar job solicitation process) any employee, agent or producer of Manager or any of its Subsidiaries or Affiliates at any time during the six-month period immediately prior to the date on which such hiring would take place (it being conclusively presumed by the Parties so as to avoid disputes under this Section X.B.2 that any such hiring (other than by a general solicitation advertisement, posting or similar job solicitation process) within such six-month period is in violation of clause (i) above) , except in accordance with Section XI, or (c) call on, solicit or service any customer, agent, producer, supplier, licensee, licensor or other business relation of the Commercial Lines Business in order to induce or attempt to induce such Person to cease doing or decrease their business with Manager or any of its Subsidiaries or Affiliates, or in any way interfere with the relationship between any such customer, supplier, licensee or business relation and Manager or any of its Subsidiaries or Affiliates (including making any negative statements or communications about Manager or any of its Subsidiaries or Affiliates).

3. If, at the time of enforcement of any of the provisions of this Section X.B, a court determines that the restrictions stated herein are unreasonable under the circumstances then existing, then the Parties agree that the maximum period, scope or geographical area reasonable under the circumstances shall be substituted for the stated period, scope or area. The Parties further agree that such court shall be allowed to revise the restrictions contained herein to cover the maximum period, scope or geographical area permitted by law.

4. If an ACP Party the "Restricted Persons") breaches, or threatens to commit a breach of, any of the provisions of this Section X.B (the "Restrictive Covenants"), Manager will have the following rights and remedies, each of which rights and remedies shall be independent of the others and severally enforceable, and each of which is in addition to, and not in lieu of, any other rights and remedies available to Manager at law or in equity:

(a) the right and remedy to have the Restrictive Covenants specifically enforced by any court of competent jurisdiction, it being agreed that any breach or threatened breach of the Restrictive Covenants would cause irreparable injury to Manager and that money damages would not provide an adequate remedy to Manager; and

(b) the right and remedy to require the Restricted Persons to account for and pay over to Manager any profits, monies, accruals, increments or other benefits derived or received by the Restricted Persons as the result of any transactions constituting a breach of the Restrictive Covenants.

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XI. COMPANY EMPLOYEES.

A. From time to time on or after the date hereof, upon ten (10) days written notice to ACP and National General (an "Employee Offer Notice"), subject to subsection (b) below, Manager may, or may cause an Affiliate to, offer employment to employees of any Company or its Affiliates that Manager reasonably determines are necessary for the Commercial Lines Business under terms and conditions satisfying the obligations of ACP under the Merger Agreement (as defined in the Master Agreement) with respect to such employees.

B. If within ten (10) days of receipt of an Employee Offer Notice, neither National General nor ACP has objected in writing to the making of offers of employment to the employees indicated in such Employee Offer Notice, Manager may make an offer of employment to such employees. If National General or ACP provides such written objection, ACP, National General and Manager shall negotiate in good faith to coordinate the employment or retention of such employees among themselves. If an agreement as to the employment or retention of such employees is reached, Manager may make offers to such employees pursuant to such agreement. If within thirty (30) days of the delivery of any such objection, ACP, National General and Manager shall have failed to reach an agreement with respect to the employment or retention of such employees, ACP, Manager and National General shall enter mediation. In the event pursuant to such mediation ACP, National General and Manager shall reach an agreement as the employment or retention of such employees, Manager may make offers of employment to the employees designated in such agreement.

C. Nothing contained in this Agreement shall confer upon any employee of any Company or any of its Affiliates any right with respect to continued employment by Manager or any of its Affiliates. No provision of this Agreement shall create any third-party rights in any such employee, or any beneficiary or dependent thereof, with respect to the compensation, terms and conditions of employment and benefits that may be provided to such employee by Manager or any of its Affiliates or under any benefit plan that Manager or any of its Affiliates may maintain.

XII. REMUNERATION.

Manager’s sole remuneration from the Companies for all services that Manager may perform under this Agreement including, without limitation, any MGA Run-Off Services, shall be as set forth in Exhibit A attached hereto and made a part of this Agreement. Manager will deduct the amount of such remuneration from any Ceding Commission payable to the Companies, in accordance with Section VI.B.

XIII. COMMENCEMENT AND TERMINATION.

A. This Agreement shall remain in full force and effect for a term of ten (10) years and will automatically renew for additional one-year periodsunless terminated earlier by either Manager (as between Manager and one Company or all of the Companies) or a Company (as between such Company and Manager) as set forth in this Section XIII. Notwithstanding the foregoing, upon the termination by less than all of the Companies, this Agreement shall remain in full force and effect between Manager and the non-terminating Companies.

B. Each Company may terminate this Agreement (i) upon written notice to Manager following Company Cause, as defined herein, (ii) on each anniversary of the date hereof by providing written notice to Manager no later than 180 days prior to the date of such anniversary, or (iii) by mutual written agreement of the Parties or as otherwise provided herein.

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C. Manager may terminate this Agreement (i) upon written notice to the applicable Company following Manager Cause, as defined herein, (ii) following the fifth (5^th) anniversary of the date hereof, on each anniversary of the date hereof by providing written notice to the applicable Company no later than 180 days prior to the date of such anniversary, or (iii) by mutual written agreement of the Parties or as otherwise provided herein.

D. Any termination under this Section XII shall not affect the rights or obligations of the Parties hereto as to transactions, acts, or things done by any Party prior to the Termination Date. Furthermore, subject to the provisions of Section XIII, any notice of termination under this Section XII.B shall not affect the authority of Manager as described under Sections IV, V and VII from the period beginning on the Termination Notice Date through but not including the Termination Date, except as otherwise instructed by the applicable Company.

E. Upon the expiration or termination of this Agreement, the applicable Company and/or its Affiliates shall assume responsibility for performance of the Claim Services relative to the Program, and Manager shall cooperate with the applicable Company and/or its Affiliates to effect an orderly transition of the Claim Services to such Party, at such Party's sole cost and expense.

F. Notwithstanding the foregoing, upon prior written notice, a Company may terminate this Agreement immediately (as between such Company and Manager), upon occurrence of any of the following grounds ("Company Cause"):

1. if Manager or any of its affiliates, is or becomes insolvent, or is the subject of or commences any regulatory or judicial or other proceedings for its administrative oversight, conservation, supervision, dissolution, liquidation, bankruptcy, receivership or similar proceeding; or

2. if all or a controlling portion of Manager’s capital stock or all or any part of its business is sold, transferred or merged into an entity which is not an affiliate of Manager, and such Company reasonably believes that such sale, transfer or merger has, or could have a material adverse impact on the Company's interests;

3. the intentional misappropriation by Manager of any funds or property belonging to the Company;

4. the fraud, gross negligence, or willful misconduct of Manager; or

5. the material breach by Manager of this Agreement following notice and a reasonable opportunity to cure, which shall not exceed thirty (30) days.

G. Notwithstanding the foregoing, upon written notice Manager may terminate this Agreement immediately (as between Manager and the subject Company), upon occurrence of any of the following grounds ("Manager Cause"):

1. if a Company is or becomes insolvent, or is the subject of or commences any regulatory or judicial or other proceedings for the administrative oversight, conservation, supervision, dissolution, liquidation, bankruptcy, receivership or similar proceeding; or

2. if all or a controlling portion of a Company's capital stock or all or any part of its business is sold, transferred or merged into an entity which is not an affiliate of such

16

Company, and Manager reasonably believes that such sale, transfer or merger has, or could have a material adverse impact on Manager's interests.

H. If any required license or authority of a Company or Manager in any jurisdiction within the Territory covered by this Agreement is suspended, revoked or nonrenewed by a governmental or regulatory agency or becomes invalid or expires and is not renewed or reinstated, Company or Manager (as applicable for the purposes of this Section XII.E., the "Adversely Affected Party"), shall have sixty (60) days to cure such invalidity, expiration, nonrenewal, revocation and/or suspension during which time no Policies shall be issued or renewed in such jurisdictions. If the Adversely Affected Party has not, after such sixty (60) day period cured such invalidity, expiration nonrenewal, revocation or suspension, the other Party (as between such Company and Manager) may, at its option, terminate this Agreement as to such jurisdiction. This Agreement shall remain in full force and effect between Manager and Company as to such jurisdictions wherein the Adversely Affected Party’s license or authority has not been revoked, nonrenewed or suspended.

I. If in connection with any termination of this Agreement in accordance with this Section XII, the ultimate result of which could subject a Company or Manager to penalty, fine or assessment for improper cancellation or non-renewal of insurance coverages in force, or for the unlawful withdrawal of business, the other Party hereby agrees that it shall reasonably cooperate with the threatened Party to remedy or mitigate such effect in accordance with applicable Laws or regulatory directive.

J. Except as provided in Section XIII or as required by applicable Law, upon the Termination Date, the rights and/or powers granted by the terminating Company to Manager hereunder shall be revoked, and Manager shall have no further authority to bind or write Policies for such Company, nor extend, renew or increase such Company’s liability on any existing Policy, nor administer Claims for such Company. Except as provided herein, Manager shall immediately cease exercising such rights and/or shall execute any and all documents necessary or requested by the terminating Company to effect or confirm such revocation.

K. In the event that Manager shall at any time become delinquent in the payment of any amounts due Company, Manager hereby agrees to pay any expenses which Company may incur in collecting such monies, including attorneys’ fees and other costs. No provision of this Agreement must effect, be construed as or operate as a waiver of the right of the Party aggrieved by any breach of this Agreement to be compensated for any injury or damage resulting therefrom which is incurred either before or after the Termination Date.

L. Nothing contained in this Section XII shall affect or impair any rights or obligations or liabilities arising prior to or at the time of the Termination Date, or which may arise by reason of an event causing the termination of this Agreement, and all such rights, obligations and liabilities of the Parties pursuant to this Agreement shall also survive the termination of this Agreement. The rights and remedies provided in this Section XII and all other remedies provided for in this Agreement shall be cumulative and not exclusive and shall be in addition to any other remedies which the Parties may have under this Agreement or otherwise.

XIV. CONTINUING DUTIES OF MANAGER AFTER TERMINATION.

A. Continuation of Duties. Following a Termination Date, Manager shall perform all of the duties necessary pursuant to this Agreement in respect of the terminating Company and for

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the proper servicing of all Policies bound or written under this Agreement (the "MGA Run-Off Services"); provided, that at any time following a Termination Date, Reinsurer may, subject to the applicable Company's consent, which consent shall not be unreasonably withheld or delayed, assume authority from the terminating Company or Companies in all matters relating to the MGA Run-Off Services, including, without limitation, the administration of the Policies and any Claims thereunder. The MGA Run-Off Services shall include, without limitation, accounting for Premiums and commissions, statistical filing, canceling Policies, non-renewing Policies, issuing mandatory endorsements, settling of balances, and administration of Claims.

B. Authority. In furtherance of Reinsurer's right to assume authority for administration of the MGA Run-Off Services, each Company hereby appoints Reinsurer as its attorney-in-fact with respect to the rights, duties and privileges and obligations of such Company in and to the Policies, with full power and authority to act in the name, place and stead of such Company with respect to the Policies, including without limitation, the power to service such contracts, to adjust, defend, settle and to pay all Claims, to recover salvage and subrogation for any losses incurred and to take such other and further actions as may be necessary or desirable to effect the transactions contemplated by this Agreement, provided, that Reinsurer covenants to exercise such authority in a professional manner and to use the same level of care as is used in administering Reinsurer’s other insurance business. In furtherance of such assumption of authority, each Company grants full authority to Reinsurer to adjust, settle or compromise all Losses hereunder, and all such adjustments, settlements and compromises shall be binding on such Company. In connection with any such assumption of authority, each Company agrees to cooperate fully with Reinsurer in any transfer of administration, and Reinsurer agrees to be responsible for such administration.

XV. RELATIONSHIP OF THE PARTIES.

The Parties are independent contractors and nothing herein contained shall be construed to create a relationship of employer and employee between any of the Parties and any of the Parties’ employees, officers, representatives, producers, agents, brokers, Sub-Producers, Sub-Claim Adjusters, sub-agents, sub-brokers or the like. It is expressly understood and agreed by the Parties hereto that the relationship existing between each Company and Manager under this Agreement contemplates Manager as such Company’s agent or representative only in connection with the services or transactions set forth in this Agreement and directly related to each of Manager’s functions under this Agreement. Furthermore, nothing contained herein shall prohibit a Company from entering into any claims services agreement, underwriting management agreement, agency agreement, producer agreement (or similar arrangement) or reinsurance agreement with respect to the business covered by the Program with any other party or parties.

XVI. INDEMNIFICATION.

A. Indemnification of the Companies by Manager. Manager shall defend, indemnify and hold harmless each Company and their respective directors, officers, employees, shareholders, and affiliates (individually and collectively, the "Company Indemnitees") from and against any and all loss, claim, damage, or liability (or any action in respect thereof) (collectively, a "Loss") which is caused by or results from any malfeasance, negligence, action or inaction of Manager, its Sub-Producers, its Sub-Claim Adjusters and officers, directors, employees and agents of its duties and obligations under this Agreement; provided, that Manager shall not be obligated to indemnify any Company Indemnitee in respect of any Loss caused by such Company Indemnitee's negligence, willful misconduct or breach hereof. If any claim,

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demand, action, suit, or proceeding is made or brought against any of the Company Indemnitees with respect to matters that are the subject of this indemnity, Manager shall assume the defense thereof with counsel reasonably satisfactory to the Company Indemnitees and shall pay all costs of such defense. The provisions of this Section XVI.A. shall survive the termination of this Agreement.

B. Indemnification of Manager and Claim Administrator by each Company. Each Company shall defend, indemnify and hold harmless Manager and its directors, officers, employees, shareholders, and affiliates (individually and collectively, the "Manager Indemnitees") from and against any and all Loss which is caused by or results from the malfeasance, negligence, action or inaction of such Company with respect to this Agreement; provided, that no Company shall be obligated to indemnify Manager in respect of any Loss caused by Manager's negligence, willful misconduct or breach hereof. If any claim, demand, action, suit or proceeding is made or brought against any of the Manager Indemnities with respect to matters that are the subject of this indemnity, such Company shall assume the defense thereof with counsel reasonably satisfactory to the Manager Indemnitees and shall pay all costs of such defense. The provisions of this Section XVI.B shall survive the termination of this Agreement.

C. Indemnification Procedures.

1. Any Party hereto entitled to indemnification pursuant to this Section XV (the "Indemnitee"), shall promptly notify the Party responsible for such indemnification (the "Indemnitor") if the Indemnitee becomes aware of any Loss with respect to which indemnity may be asserted; and the failure to give such notice promptly shall not relieve the Indemnitor of its obligations hereunder. Promptly after (i) the receipt by an Indemnitee of notice of any third party claim or (ii) the commencement of any action or proceeding, the Indemnitee will, if a claim with respect thereto is to be made against the Indemnitor, give the Indemnitor written notice in reasonable detail of such claim or the commencement of such action or proceeding and shall permit the Indemnitor to assume the defense of any such claim or any litigation resulting from such claim. Failure by the Indemnitor to notify the Indemnitee of its election to defend any such action within a reasonable time, but in no event more than thirty (30) days after notice thereof shall have been given to the Indemnitor, shall be deemed a waiver by the Indemnitor of its right to defend such action.

2. If the Indemnitor assumes the defense of any such claim or litigation resulting therefrom, the obligations of the Indemnitor as to such claim shall be limited to taking all steps necessary in the defense or settlement of such claim or litigation resulting therefrom and to holding the Indemnitee harmless from and against any and all Losses caused by, arising out of or relating to any settlement approved by the Indemnitor or any judgment in connection with such claim or litigation resulting therefrom. The Indemnitee may participate, at its expense, in the defense of such claim or any litigation provided that the Indemnitor shall direct and control the defense of such claim or litigation. The Indemnitor shall not, in the defense of such claim or any litigation resulting therefrom, consent to entry of any judgment or enter into any settlement other than a judgment or settlement involving only the payment of money, except with the written consent of Indemnitee, such consent not to be unreasonably withheld.

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3. If the Indemnitor does not assume the defense of any such claim or litigation resulting therefrom, the Indemnitee may defend against such claim or litigation in such manner as it may deem appropriate. The Indemnitee shall not enter into any settlement of such claim or litigation without the written consent of the Indemnitor, which consent shall not be unreasonably withheld. The Indemnitor shall promptly reimburse the Indemnitee for the amount of all reasonable expenses, legal or otherwise, incurred by the Indemnitee in connection with the defense against or settlement of such claims or litigation. If no settlement of such claim or litigation is made, the Indemnitor shall promptly reimburse the Indemnitee for the amount of any judgment rendered with respect to such claim or in such litigation and of all reasonable expenses, legal or otherwise, incurred by the Indemnitee in the defense of such claim or litigation. The provisions of this Section XV.C. shall survive the termination of this Agreement.

D. Errors and Omissions. Manager represents and warrants that it shall maintain during the Term of this Agreement, and for a period of three (3) years after the effective date of termination of this Agreement, Errors and Omissions Liability insurance for Manager with policy limits equal to $5,000,000 for each occurrence and in the aggregate with deductibles not greater than $1,000,000, with an insurer acceptable to Company. The Company shall be provided a Certificate of Insurance evidencing the existence of the required errors and omissions liability insurance coverage which certificate shall contain the following provision: "The Company will receive thirty (30) days’ written notice of any cancellation or other termination of this policy."

E. Fidelity Bond. Manager represents and warrants that it shall maintain during the Term of this Agreement, and for a period of three (3) years after the effective date of termination of this Agreement, a Fidelity Bond insurance coverage for Manager with policy limits equal to $5,000,000 with an insurer and on a form and with a deductible acceptable to Company. The Company shall be provided a Certificate of Insurance for the fidelity bond which certificate shall contain the following provision: "The Company will receive thirty (30) days’ written notice of any cancellation or other termination of this policy.

XVII. ADVERTISEMENT.

Manager shall use only advertising material pertaining to the Policies and the Program that has been approved by the applicable Company in advance of its use. Subject to the applicable Company's approval, Manager may, at its own expense, develop and produce advertising or promotional materials to promote the sale of the Policies pursuant to this Agreement. None of the Parties shall use the name, logo, trademark or other such promotional material of another Party or any of its affiliates in any advertising and/or promotional materials without obtaining the prior review and consent of such other Party for each separate promotion, advertisement or use.

XVIII. NOTICES.

A. All notices, consents, requests, waivers, elections and other communications (collectively "Notices") authorized, required or permitted to be given under this Agreement shall be addressed as follows:

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To the Companies:

c/o Tower Group, Inc.

120 Broadway

New York, NY 10271

Attention: William E. Hitselberger

Facsimile: (212) 655-2067

E-mail: bhitselberger@twrgrp.com

Or to such other person or address as the applicable Company shall furnish to the other Parties in writing.

To Manager:

c/o AmTrust Financial Services, Inc.

59 Maiden Lane, 43^rd floor

New York, NY 10038

Attention: Stephen Ungar, Esq.

Facsimile No: (212) 220-7130

E-mail: stephen.ungar@amtrustgroup.com

Or to such other person or address as the Manager shall furnish to the other Parties in writing.

B. All Notices must be in writing and will be deemed to have been duly given (a) when delivered in person, (b) when dispatched by electronic transfer (by facsimile or otherwise), (c) one Business Day after having been dispatched by a nationally recognized overnight courier service or (d) five Business Days after being sent by registered or certified mail, return receipt requested, postage prepaid, to the appropriate party at the address or facsimile number specified below

C. In the event that any legal process, notice, regulatory bulletin, or the like, is served on Manager, in a suit or proceeding against Company, or for any other reason whatsoever, Manager shall promptly and forthwith forward such process, notice or bulletin to Company as directed above, via registered certified or overnight mail.

XIX. CHOICE OF LAW, VENUE, JURISDICTION.

A. This Agreement shall be governed by, and construed and enforced in accordance with the laws of the State of New York without regard to principles of conflict of laws otherwise applicable to such determination. Any judicial proceeding brought against any of the Parties to this Agreement or any dispute arising in connection with or related to this Agreement shall be brought only in the State Court located in New York County, New York or the Federal District Court located in New York, New York and by execution and delivery of this Agreement, each of the Parties to this Agreement accepts the exclusive jurisdiction of each such court and irrevocably agrees to be bound by any judgment (as finally adjudicated) rendered thereby in connection with this Agreement. To the fullest extent permitted by applicable law, each Party hereto hereby (i) irrevocably consents to the service of process outside the territorial jurisdiction of said courts in any such proceeding, (ii) agrees that any

21

trial in connection with any such proceeding shall be before the court in said venue and (iii) waives any right it may otherwise have to a trial by jury in connection with any such proceeding.

B. The Parties hereto acknowledge and agree that in the event of any breach of this Agreement, the non-breaching Party may suffer immediate and irreparable injury not compensable by money damages and for which the non-breaching Party may not have an adequate remedy available at law. Accordingly, the non-breaching Party shall be entitled to obtain, from a court of competent jurisdiction, without the posting of any bond or security, such injunctive relief, restraining orders, specific performance or other equitable relief as may be necessary or appropriate to prevent or curtail any such breach. The foregoing shall be in addition to and without prejudice to such other rights or remedies as the non-breaching Party may have at law or in equity.

NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, THIS AGREEMENT IS INTENDED TO COMPLY WITH APPLICABLE RULES AND REGULATIONS GOVERNING THE CONDUCT OF MANAGING GENERAL AGENTS, PROMULGATED BY APPLICABLE REGULATORY AUTHORITY; AS SUCH THIS AGREEMENT SHALL BE AMENDED TO THE EXTENT NECESSARY TO COMPLY WITH SUCH STATUTORY OR REGULATORY REQUIREMENT AS MAY BE AMENDED FROM TIME TO TIME.

XX. AMENDMENT.

No oral explanation or oral information by any of the Parties hereto shall alter the meaning or interpretation of this Agreement. No amendment, change or addition hereto shall be effective or binding on any of the Parties hereto unless reduced to writing, and signed by all Parties hereto.

XXI. WAIVER.

No action, failure to act or any course of conduct of any Party hereto shall constitute a waiver of any provision of this Agreement.

XXII. SEVERABILITY.

If any term or provision of this Agreement or the application thereof to any Party or circumstances shall, to any extent, be or become invalid or unenforceable, the remainder of this Agreement or the application of such term or provisions to Parties or circumstances other than those as to which it is held invalid or unenforceable under the applicable Laws now or hereafter in effect in the jurisdictions governing this Agreement, shall not be affected thereby, and each term and provision shall be valid and enforceable. To the extent that any term or provision of this Agreement or the application thereof to any Party or circumstances shall be or becomes invalid or unenforceable under the laws or Insurance Department regulations now or hereafter in effect in the jurisdictions governing this Agreement, then such term or provision shall be deemed to conform with such applicable insurance Laws or regulation, and this Agreement shall not be affected thereby, and each term and provision shall be valid and enforceable.

XXIII. ASSIGNMENT.

Except as expressly provided herein, this Agreement may not be assigned or transferred in whole or in part by any Party without the prior written consent of the other Parties.

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XXIV. COUNTERPARTS.

This Agreement may be executed in any number of counterparts, all of which when taken together shall constitute a single agreement.

XXV. HEADINGS.

All headings in this Agreement are for the purpose of information and identification only and shall not be construed as forming part of this Agreement.

[Remainder of this page intentionally left blank.]

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed on the day and year first written above.

AMTRUST NORTH AMERICA, INC.

By

Title

TOWER INSURANCE COMPANY OF NEW YORK

By

Title

CASTLEPOINT NATIONAL INSURANCE COMPANY

By

Title

TOWER NATIONAL INSURANCE COMPANY

By

Title

HERMITAGE INSURANCE COMPANY

By

Title

CASTLEPOINT FLORIDA INSURANCE COMPANY

By

Title

NORTH EAST INSURANCE COMPANY

By

Title

YORK INSURANCE COMPANY OF MAINE

By

Title

MASSACHUSETTS HOMELAND INSURANCE COMPANY

By

Title

PRESERVER INSURANCE COMPANY

By

Title

CASTLEPOINT INSURANCE COMPANY

By

Title

ACP RE LTD (SOLELY FOR PURPOSES OF SECTION X.B HEREOF)

By

Title

EXHIBIT A

REMUNERATION

During the term of this Agreement, Manager shall receive (a) a commission equal to 10% of all business written, (b) the amount of commissions payable to producing Agents for all business written and (c) an allocated portion of the Loss Adjustment Expenses paid by the Manager pursuant to the Cut-Through MGA Agreement.

Exhibit D

COMMERCIAL LINES

QUOTA SHARE REINSURANCE AGREEMENT

BY AND AMONG

TOWER INSURANCE COMPANY OF NEW YORK,

CASTLEPOINT NATIONAL INSURANCE COMPANY,

TOWER NATIONAL INSURANCE COMPANY,

HERMITAGE INSURANCE COMPANY,

CASTLEPOINT FLORIDA INSURANCE COMPANY,

NORTH EAST INSURANCE COMPANY,

YORK INSURANCE COMPANY OF MAINE,

MASSACHUSETTS HOMELAND INSURANCE COMPANY,

PRESERVER INSURANCE COMPANY,

CASTLEPOINT INSURANCE COMPANY

AND

TECHNOLOGY INSURANCE COMPANY, INC.

Exhibit 10.1

TABLE OF CONTENTS

Article 1	DEFINITIONS	1
	Section 1.1 Defined Terms	1
Article 2	BASIS OF REINSURANCE AND BUSINESS REINSURED	3
	Section 2.1 Covered Business	3
	Section 2.2 Termination of Commercial Lines Cut-Through Quota Share	4
Article 3	PAYMENTS, OFFSET, AND SECURITY	4
	Section 3.1 Premium	4
	Section 3.2 Offset Rights	4
	Section 3.3 Deposit of Premiums	4
	Section 3.4 Reports and Remittances	5
	Section 3.5 Collateral for Ceded Losses	5
Article 4	CLAIMS, UNDERWRITING AND OTHER ADMINISTRATION	6
Article 5	REGULATORY MATTERS	6
Article 6	DUTY OF COOPERATION & INDEMNITY	6
	Section 6.1 Cooperation	6
	Section 6.2 Reinsurance	6
Article 7	INSOLVENCY	6
Article 8	REGULATORY APPROVALS	7
Article 9	DURATION	7
Article 10	FOLLOW THE FORTUNES	7
Article 11	INDEMNIFICATION	7
	Section 11.1 Indemnification	7
Article 12	MISCELLANEOUS	8
	Section 12.1 Notices	8
	Section 12.2 Assignment; Parties in Interest	9
	Section 12.3 Waivers and Amendments; Preservation of Remedies	9
	Section 12.4 Governing Law; Venue	9
	Section 12.5 Counterparts	9
	Section 12.6 Entire Agreement; Merger	9
	Section 12.7 Exhibits and Schedules	10
	Section 12.8 Headings	10
	Section 12.9 Severability	10
	Section 12.10 Expenses	10
	Section 12.11 Currency	10

QUOTA SHARE REINSURANCE AGREEMENT

THIS COMMERCIAL LINES QUOTA SHARE REINSURANCE AGREEMENT (this “Agreement”) is entered into as of , 2014 by and among TOWER INSURANCE COMPANY OF NEW YORK, an insurance company organized under the laws of New York, CASTLEPOINT NATIONAL INSURANCE COMPANY, an insurance company organized under the laws of Illinois, TOWER NATIONAL INSURANCE COMPANY, an insurance company organized under the laws of Massachusetts, HERMITAGE INSURANCE COMPANY, an insurance company organized under the laws of New York, CASTLEPOINT FLORIDA INSURANCE COMPANY, an insurance company organized under the laws of Florida, NORTH EAST INSURANCE COMPANY, an insurance company organized under the laws of Maine, YORK INSURANCE COMPANY OF MAINE, an insurance company organized under the laws of Maine, MASSACHUSETTS HOMELAND INSURANCE COMPANY, an insurance company organized under the laws of Massachusetts, PRESERVER INSURANCE COMPANY, an insurance company organized under the laws of New Jersey, and CASTLEPOINT INSURANCE COMPANY, an insurance company organized under the laws of New York (the “Companies” and, each a “Company”), and TECHNOLOGY INSURANCE COMPANY, INC., an insurance company organized under the laws of New Hampshire (the “Reinsurer”) (collectively, the “Parties”).

WHEREAS, ACP Re Ltd. (“ACP Re”), has entered into that certain Agreement and Plan of Merger of even date herewith by and between Tower Group International, Ltd. (“Tower”), ACP Re and London Acquisition Company Limited (the “Merger Agreement”) whereby London Acquisition Company Limited is merging with and into Tower with Tower surviving such merger (the “Merger”);

WHEREAS, effective as of the Effective Time, the Companies and AmTrust North America, Inc. (“AmTrust”), an Affiliate of Reinsurer, have entered into that certain Commercial Lines Managing General Agency Agreement (the “CL MGA Agreement”), whereby AmTrust will produce and manage Commercial Lines Business for the Companies; and

WHEREAS, the Reinsurer, pursuant to this Agreement, will reinsure all Losses with respect to Policies (as defined herein) written by the Companies pursuant to the CL MGA Agreement.

NOW, THEREFORE, in consideration of the mutual and several promises and undertakings herein contained, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties agree as follows:

ARTICLE I DEFINITIONS

Section 1.1    Defined Terms.

The following terms shall have the respective meanings specified below throughout this Agreement.

“ACP Re” has the meaning set forth in the Recitals.

“Acquisition Costs” means actual out-of-pocket expenses incurred by the Companies for amounts paid or payable by, or on behalf of, the Companies to acquire the Policies, including all brokerage commissions and any adjustments thereto, and any Taxes, surcharges and other similar amounts on premiums required to be paid or collected by such Company or its producers or agents.

“Agreement” has the meaning set forth in the first paragraph.

“Affiliate” (and, with a correlative meaning, “Affiliated”) means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such first Person. As used in this definition, “control” (including, with correlative meanings, “controlled by” and “under common control with”) shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract, as trustee or executor, or otherwise).

“AmTrust” has the meaning set forth in the Recitals.

“Applicable Law” means any applicable order, law, statute, regulation, rule, pronouncement, ordinance, bulletin, writ, injunction, directive, judgment, decree, principle of common law, constitution or treaty enacted, promulgated, issued, enforced or entered by any Governmental Authority applicable to the parties hereto, or any of their respective businesses, properties or assets.

    “Ceding Commission” means an amount equal to the sum of (i) the Companies’ Acquisition Costs, including, without limitation, the compensation payable to AmTrust pursuant to the CL MGA Agreement, Taxes, surcharges and other similar amounts on premiums required to be paid or collected by such Company and not paid by AmTrust and (ii) two (2%) percent of gross written premium (net of cancellation and return premiums) collected by AmTrust for the Companies pursuant to the CL MGA Agreement.

“Claim” and “Claims” means any and all claims, requests, demands or notices made by or on behalf of Policyholders, beneficiaries or third party claimants for the payment of Losses and any other amounts due or alleged to be due under or in connection with Policies.

“CL MGA Agreement” has the meaning set forth in the Recitals.

“Closing Date” means the date upon which the Merger is effected.

“Commercial Lines Business” means all insurance contracts, policies, certificates, binders, slips, covers or other agreements of insurance, including all supplements, riders, endorsements, renewals and extensions (other than Personal Lines Business) issued by a Company.

“Company(ies)” has the meaning set forth in the Recitals.

“Damages” means all damages, losses, liabilities and expenses (including reasonable attorneys’ fees and reasonable expenses of investigation in connection with any action, suit or proceeding).

“Effective Time” has the meaning set forth in the Merger Agreement.

“Governmental Authority” means any foreign, domestic, federal, territorial, state or local U.S. or non-U.S. governmental authority, quasi-governmental authority, instrumentality, court or government, self-regulatory organization, commission, tribunal or organization or any political or other subdivision, department, branch or representative of any of the foregoing.

“Losses” shall mean liabilities and obligations to make payments to Policyholders, beneficiaries and/or other third party claimants under the Policies (including, without limitation, liabilities or assessments arising from a Company’s participation, if any, in any voluntary or involuntary pools, guaranty funds, or other types of government-sponsored or government-organized insurance funds) and all loss adjustment expenses and defense costs, including, without limitation, (i) all expenses incurred by or on behalf of the a Company related to the investigation, appraisal, adjustment, litigation, defense or appeal of claims under or

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covered by Policies and/or coverage actions under or covered by the Policies, (ii) all liabilities for consequential, exemplary, punitive or similar extra contractual damages, or for statutory or regulatory fines or penalties, or for any loss in excess of the limits arising under or covered by any Policy, and (iii) court costs accrued prior to final judgment, prejudgment interest or delayed damages and interest accrued after final judgment. Notwithstanding the foregoing, “Losses” shall not include any liabilities or obligations incurred by or on behalf of a Company as a result of any willful, fraudulent and/or criminal act by a Company or any of its Affiliates or any of their respective officers, directors, employees or agents following the Effective Time.

“Merger” has the meaning set forth in the Recitals.

“Merger Agreement” has the meaning set forth in the Recitals.

“Parties” has the meaning set forth in the first paragraph.

“Person” shall mean any individual, corporation, partnership, firm, joint venture, association, joint-stock company, limited liability company, trust, estate, unincorporated organization, Government Authority or other entity.

“Personal Lines Business” means all insurance contracts, policies, certificates, binders, slips, covers or other agreements of insurance, including all supplements, riders, endorsements, renewals and extensions for personal automobile liability and physical damage, homeowners, personal excess and umbrella coverage issued by the Companies.

“Personal Lines Reinsurance Agreement” means that Personal Lines Quota Share Reinsurance Agreement, dated as of the date hereof, by and among Reinsurer and the Companies.

“Policies” means all insurance contracts, policies, certificates, binders, slips, covers or other agreements of insurance, including all supplements, riders, endorsements, renewals and extensions as to the Commercial Lines Business issued by the Companies pursuant to the CL MGA Agreement.

“Policyholder” means policyholders and named insureds of the Policies.

“Premium(s)” means all gross written premium(s), considerations, deposits, premium adjustments, fees and similar amounts related to the Policies, less cancellation and return premiums.

“Reinsurer” has the meaning set forth in the first paragraph.

“Taxes” (or “Tax” as the context may require) means all United States federal, state, county, local, foreign and other taxes (including, without limitation, income taxes, payroll and employee withholding taxes, unemployment insurance, social security taxes, premium taxes, excise taxes, sales taxes, use taxes, gross receipts taxes, franchise taxes, ad valorem taxes, severance taxes, capital property taxes and import duties), and includes interest, additions to tax and penalties with respect thereto, whether disputed or not.

“Tower” has the meaning set forth in the Recitals.

ARTICLE 2BASIS OF REINSURANCE AND BUSINESS REINSURED

Section 2.1    Covered Business.

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(a)    From and after the Effective Time, each Company hereby cedes, and the Reinsurer hereby assumes, one hundred percent (100%) of all Losses for which such Company is liable in respect of the Policies that are issued pursuant to the CL MGA Agreement.

(b)    In the event the Reinsurer makes an indemnity payment on behalf of a Company directly to any Policyholder, insured or third party pursuant to any Policy that pays, in full, a Loss, cost or expense under such Policy, such payment satisfies and extinguishes any and all obligation of the Reinsurer hereunder to indemnify a Company for such Loss, cost or expense to the extent of such payment. In no event shall the Reinsurer be obligated hereunder to indemnify with respect to any Loss, cost or expense under a Policy for an amount in excess of such Loss, cost or expense.

Section 2.2    Termination of Commercial Lines Cut-Through Quota Share.

The Commercial Lines Cut-Through Quota Share Reinsurance Agreement dated January 3, 2014 between the Companies and the Reinsurer (the "Cut-Through Agreement") is hereby terminated in accordance with Article 9 thereof. Notwithstanding the foregoing, such termination shall be on a run-off basis, and the reinsurance with respect to the Subject Policies and the Included Existing Contracts (each as defined in the Cut-Through Agreement) shall remain in effect.

ARTICLE 3PAYMENTS, OFFSET, AND SECURITY

Section 3.1    Premium.

(a)    As premium for Policies ceded under this Agreement, each Company shall pay to the Reinsurer (to the extent the Reinsurer has not retained such Premiums directly pursuant to Article 4) by wire transfers of immediately available funds one hundred percent (100%) of the collected Premiums attributable to the Policies, net of Ceding Commission.

(b)    The Reinsurer shall pay to the Companies the Ceding Commission pursuant to the monthly settlement under Section 3.4; provided, that if the Reinsurer reduces the ceding commission payable to the Companies pursuant to the Personal Lines Reinsurance Agreement but does not apply such reduction to the Ceding Commission payable hereunder, and such reduction is approved by all applicable Governmental Authorities, the Reinsurer shall immediately apply the amount of such reduction to the Ceding Commission payable hereunder.

Section 3.2    Offset Rights.

Except as otherwise expressly provided, each Party hereto shall have, and may exercise at any time and from time to time, the right to offset any balance or balances due to the other Party arising under this Agreement, and regardless of whether on account of Premiums, Ceding Commissions, or Losses related to or arising under the Policies; provided, however, that in the event of the insolvency of a Party hereto or any of its Affiliates, offsets shall only be allowed in accordance with the provisions of Applicable Law.

Section 3.3    Deposit of Premiums.

(a)The Reinsurer is authorized to direct AmTrust to deposit Premiums, net of Ceding Commission, directly into one or more accounts designated by the Reinsurer. The Reinsurer and the Companies agree to maintain accounting and operational records and books in adequate detail so as to identify the specific Policies and Policyholders of the Companies with respect to all collected Premiums.

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(b)The Reinsurer shall: (i) timely pay any return premium coming due under Policies; or (ii) promptly reimburse a Company for any of the foregoing amounts that are instead paid by such Company.

Section 3.4    Reports and Remittances.

(a)    The Parties shall conduct monthly settlements based upon monthly bordereaux to be provided within fifteen (15) days of the end of each calendar month by the Companies or, at the direction of the Companies, by AmTrust, evidencing the amount due or to be due in a form, and containing such detail, as is agreed to by the Parties. Each Party shall pay or credit in cash or its equivalent to the other all net amounts for which it may be liable under the terms and conditions of this Agreement within ten (10) days after receipt of each monthly bordereau.

(b)    The Companies and the Reinsurer shall furnish each other with such records, reports and information with respect to the Losses, Claims and the reinsurance contemplated hereby as may be reasonably required by the other Party to comply with any internal reporting requirements or reporting requirements of any Governmental Authority or to prepare and complete such Party’s monthly and annual financial statements.

(c)    If any Company or the Reinsurer receives notice of, or otherwise becomes aware of, any inquiry, investigation, proceeding, from or at the direction of a Governmental Authority, or is served or threatened with a demand for litigation, arbitration, mediation or any other similar proceeding relating to the Policies, such Company or the Reinsurer, as applicable, shall promptly notify the other party thereof, whereupon the parties shall cooperate in good faith and use their respective commercially reasonable efforts to resolve such matter in a mutually satisfactory manner in light of all the relevant business, regulatory and legal facts and circumstances.

(d)    Each Party shall have the right, through authorized representatives and upon reasonable advance notice during normal business hours, to periodically audit and inspect all books, records, and papers of the other Party solely in connection with the Policies and any reinsurance hereunder or claims in connection therewith and the performance of the claims, underwriting and other administration services pursuant to Article 4. Each Party shall treat the other Party’s books, records, and papers in confidence. A Party shall be permitted to conduct such audits no more frequently than semi-annually except as is otherwise reasonably necessary in the day-to-day administration of the Policies including but not limited to Claims.

Section 3.5    Collateral for Ceded Losses.

Without limiting the Reinsurer’s other obligations under this Section 3.5, in the event pursuant to Applicable Law of any state of the United States of America or the District of Columbia having jurisdiction over a Company, such Company is no longer able to take full reserve credit on its statutory financial statements for the reinsurance ceded to the Reinsurer without qualifying collateral therefor, the Reinsurer shall promptly agree to modifications to this Agreement so that the Reinsurer shall provide collateral for its obligations hereunder in the amount and form necessary for such Company to take full reserve credit on its statutory financial statements for the reinsurance provided hereunder on terms and conditions reasonably satisfactory to such Company and Reinsurer and in accordance with Applicable Law.

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ARTICLE 4CLAIMS, UNDERWRITING AND OTHER ADMINISTRATION

All services related to claims, underwriting and administration with respect to Policies reinsured hereunder shall be provided by AmTrust pursuant to the CL MGA Agreement.

ARTICLE 5REGULATORY MATTERS

At all times during the term of this Agreement, the Companies and the Reinsurer shall hold and maintain all licenses and authorizations required under Applicable Law and otherwise take all actions that may be necessary to perform its obligations hereunder.

ARTICLE 6DUTY OF COOPERATION & INDEMNITY

Section 6.1    Cooperation.

Each Party hereto shall cooperate fully with the other in all reasonable respects in order to accomplish the objectives of this Agreement.

Section 6.2    Reinsurance.

Without written consent of the Reinsurer (which consent may be withheld at Reinsurer’s sole discretion), the Companies shall not enter into any reinsurance agreements, treaties and contracts, including any renewals or extensions thereof, to the extent such reinsurance agreements, treaties and contracts provide reinsurance coverage for the Policies.

ARTICLE 7

INSOLVENCY

In the event of the insolvency of a Company, this reinsurance as to Policies issued by such Company shall be payable directly to such Company or its liquidator, receiver, conservator or statutory successor on the basis of the amount of the claims allowed in the insolvency proceeding without diminution because of the insolvency of such Company or because the liquidator, receiver, conservator or statutory successor of such Company has failed or is unable to pay all or a portion of a claim, except where (a) this Agreement specifically provides another payee of such reinsurance in the event of such Company’s insolvency, provided that this exception shall only apply to the extent that the reinsurance proceeds due such payee are actually paid by the Reinsurer, or (b) the Reinsurer, with the consent of the direct insured or insureds, has assumed such policy obligations of such Company as direct obligations of the Reinsurer to the payees under such policies and in full and complete substitution for the obligations of such Company to such payees. It is agreed, however, that the liquidator, receiver, conservator or statutory successor shall give written notice to the Reinsurer of the pendency of a claim against such Company indicating the Policy which involves a possible liability on the part of the Reinsurer within reasonable time after such claim is filed in the conservation or liquidation proceeding or in the receivership and that, during the pendency of such claim, the Reinsurer may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be

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adjudicated, any defense or defenses that it may deem available to such Company or its liquidator, receiver, conservator or statutory successor. The expenses thus incurred by the Reinsurer shall be chargeable, subject to the Court’s approval, against such Company as part of the expense of the conservation or liquidation to the extent of a pro rata share of the benefit that may accrue to such Company solely as a result of the defense undertaken by the Reinsurer.

ARTICLE 8 REGULATORY APPROVALS

The Companies and the Reinsurer shall submit all necessary registrations, filings and notices with, and obtain all necessary consents, approvals, qualifications and waivers from, all Governmental Authorities and other parties which may be required under Applicable Law as a result of the transactions contemplated by, or to perform its respective obligations under, this Agreement. The Parties agree that where formal approval is required by any Governmental Authority, this Agreement shall not be effective as to any and all Policies to be reinsured hereunder in such jurisdiction until such approval is obtained.

ARTICLE 9

DURATION

Subject to Section 2.1 above, this Agreement shall not be subject to termination by any Party except upon the termination or expiration of the CL MGA Agreement, the expiration of all liability on all Policies, and the complete performance by Reinsurer and the Companies of all obligations and duties arising under this Agreement.

ARTICLE 10FOLLOW THE FORTUNES

The Reinsurer’s liability shall attach simultaneously with that of each Company and shall be subject in all respects to the same risks, original terms and conditions, interpretations, waivers, and to the same cancellation of the Policies as such Company is subject to, the true intent of this Agreement being that the Reinsurer shall, in every case to which this Agreement applies, follow the fortunes and follow the settlements of such Company.

ARTICLE 11

INDEMNIFICATION

Section 11.1    Indemnification.

(a)Each Company agrees to indemnify and hold the Reinsurer and its Affiliates, predecessors, successors and assigns (and their respective officers, directors, employees and agents) harmless from and against and in respect of all Damages resulting from or relating to a breach by such Company of any covenant or agreement of such Company in this Agreement.

(b)The Reinsurer agrees to indemnify and hold each Company and its Affiliates, predecessors, successors and assigns (and their respective officers, directors, employees and agents) harmless from and against and in respect of all Damages, resulting from or relating to a breach by the Reinsurer of any covenant or agreement of the Reinsurer in this Agreement or from any third party claim against a Company

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resulting from (i) the administration of Policies or Claims by Reinsurer or (ii) any action or failure to act of a Company pursuant to express written instructions of the Reinsurer.

ARTICLE 12

MISCELLANEOUS

Section 12.1    Notices.All notices, requests, demands and other communications hereunder shall be given in writing and shall be: (a) personally delivered; (b) sent by telecopier, facsimile transmission or other electronic means of transmitting written documents; or (c) sent to the Parties at their respective addresses indicated herein by registered or certified U.S. mail, return receipt requested and postage prepaid, or by private overnight mail courier service. The respective addresses to be used for all such notices, demands or requests are as follows:

(a)    If to a Company, to:

c/o Tower Group, Inc.

120 Broadway

New York, NY 10271

Attention: William E. Hitselberger

Facsimile: (212) 655-2067

E-mail: bhitselberger@twrgrp.com

or to such other person or address as the Company shall furnish to the Reinsurer in writing.

(b)    If to the Reinsurer, to:

c/o AmTrust Financial Services, Inc.

59 Maiden Lane, 43rd fl

New York, NY 10038

Attn:    Stephen Ungar, Esq.

Facsimile No.: (212) 220-7130

E-mail: Steve.Ungar@amtrustgroup.com

or to such other person or address as the Reinsurer shall furnish to the Companies in writing.

If personally delivered, such communication shall be deemed delivered upon actual receipt; if electronically transmitted pursuant to this paragraph, such communication shall be deemed delivered the next business day after transmission (and sender shall bear the burden of proof of delivery); if sent by overnight courier pursuant to this paragraph, such communication shall be deemed delivered upon receipt; and if sent by U.S. mail pursuant to this paragraph, such communication shall be deemed delivered as of the date of delivery indicated on the receipt issued by the relevant postal service, or, if the addressee fails or refuses to accept delivery, as of the date of such failure or refusal. Any Party to this Agreement may change its address for the purposes of this Agreement by giving notice thereof in accordance with this Section.

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Section 12.2    Assignment; Parties in Interest.

(a)    Assignment. Except as expressly provided herein, the rights and obligations of a Party hereunder may not be assigned, transferred or encumbered without the prior written consent of the other Party.

(b)    Parties in Interest. This Agreement shall be binding upon, inure to the benefit of, and be enforceable by the Parties and their respective successors and permitted assigns. Except as provided in Section 3.2, nothing contained herein shall be deemed to confer upon any other Person any right or remedy under or by reason of this Agreement.

Section 12.3    Waivers and Amendments; Preservation of Remedies.This Agreement may be amended, superseded, canceled, renewed or extended, and the terms hereof may be waived, only by a written instrument signed by each of the Parties or, in the case of a waiver, by the Party waiving compliance. No delay on the part of any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any Party of any right, power, remedy or privilege, nor any single or partial exercise of any such right, power, remedy or privilege, preclude any further exercise thereof or the exercise of any other such right, remedy, power or privilege. The rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies that any Party may otherwise have under Applicable Law or in equity.

Section 12.4    Governing Law; Venue. This Agreement shall be construed and interpreted according to the internal laws of the State of New York excluding any choice of law rules that may direct the application of the laws of another jurisdiction. The Parties hereby stipulate that any action or other legal proceeding arising under or in connection with this Agreement may be commenced and prosecuted in its entirety in the federal or state courts sitting in New York, New York, each Party hereby submitting to the personal jurisdiction thereof, and the Parties agree not to raise the objection that such courts are not a convenient forum. Process and pleadings mailed to a party at the address provided in Section 12.1 shall be deemed properly served and accepted for all purposes.

Section 12.5    Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

Section 12.6    Entire Agreement; Merger.This Agreement, the Transaction Documents, and any exhibits, schedules and appendices attached hereto and thereto together constitute the final written integrated expression of all of the agreements among the Parties with respect to the subject matter hereof and is a complete and exclusive statement of those terms, and supersede all prior or contemporaneous, written or oral, memoranda, arrangements, contracts and understandings between the Parties relating to the subject matter hereof. Any representations, promises, warranties or statements made by any Party which differ in any way from the terms of this Agreement or any applicable provisions contained in the Ancillary Agreements shall be given no force or effect. The Parties specifically represent, each to the other, that there are no additional or supplemental agreements or contracts between or among them related in any way to the matters herein contained unless specifically included or referred to in this Agreement or any applicable provisions contained in the Transaction Documents. No addition to or modification of any provision of this Agreement or any applicable provisions of the Transaction Documents shall be binding upon either Party unless embodied in a dated written instrument signed by both Parties.

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Section 12.7    Exhibits and Schedules.All exhibits, schedules and appendices are hereby incorporated by reference into this Agreement as if they were set forth at length in the text of this Agreement.

Section 12.8    Headings.The headings in this Agreement are inserted for convenience only and shall not constitute a part hereof.

Section 12.9    Severability.If any part of this Agreement is contrary to, prohibited by, or deemed invalid under Applicable Law or regulations, that provision shall not apply and shall be omitted to the extent so contrary, prohibited, or invalid; but the remainder of this Agreement shall not be invalidated and shall be given full force and effect insofar as possible.

Section 12.10    Expenses.Regardless of whether or not the transactions contemplated in this Agreement are consummated, each of the Parties shall bear their own expenses and the expenses of its counsel and other agents in connection with the transactions contemplated hereby.

Section 12.11    Currency. The currency of this Agreement and all transactions under this Agreement shall be in United States Dollars.

(Signature Page Follows)

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the day and year first written above to be effective as of the Effective Time.

COMPANIES:

TOWER INSURANCE COMPANY OF NEW YORK

By

Title

CASTLEPOINT NATIONAL INSURANCE COMPANY

By

Title

TOWER NATIONAL INSURANCE COMPANY

By

Title

HERMITAGE INSURANCE COMPANY

By

Title

CASTLEPOINT FLORIDA INSURANCE COMPANY

By

Title

NORTH EAST INSURANCE COMPANY

By

Title

YORK INSURANCE COMPANY OF MAINE

By

Title

MASSACHUSETTS HOMELAND INSURANCE COMPANY

By

Title

PRESERVER INSURANCE COMPANY

By

Title

CASTLEPOINT INSURANCE COMPANY

By

Title

REINSURER:

TECHNOLOGY INSURANCE COMPANY, INC.

By

Title

Exhibit E

AGGREGATE STOP LOSS REINSURANCE CONTRACT

issued to

CASTLEPOINT REINSURANCE COMPANY, LTD.

Bermuda

AGGREGATE STOP LOSS REINSURANCE CONTRACT TABLE OF CONTENTS
Article		Page
1	Business Covered	1
2	Retention and Limit	1
3	Term	2
4	Exclusions	2
5	Premium	2
6	Definitions	2
7	Uncollectability of Inuring Reinsurance	3
8	Original Conditions	3
9	No Third Party Rights	4
10	Notice of Loss and Loss Settlements	4
11	Currency	4
12	Taxes	5
13	Access to Records	5
14	Confidentiality	6
15	Indemnification and Errors and Omissions	7
16	Insolvency	8
17	Governing Law; Jurisdiction and Venue	9
18	Entire Agreement	9
19	Non-Waiver	9
20	Mode of Execution	9
	Company Signing Block

AGGREGATE STOP LOSS REINSURANCE CONTRACT

(the “Contract”)

issued to

CASTLEPOINT REINSURANCE COMPANY, LTD

Bermuda

(collectively, the “Company”)

by

THE SUBSCRIBING REINSURER(S) IDENTIFIED
IN THE INTERESTS AND LIABILITIES CONTRACT(S)
ATTACHED TO AND FORMING PART OF THIS CONTRACT

(the “Reinsurer”)

ARTICLE 1

BUSINESS COVERED

This Contract is to indemnify the Company in respect of the liability that may accrue to the Company as a result of loss or losses under Policies reinsured by the Company pursuant to the LPTA. This Contract will not apply in respect of any insurance issued by the Company, either before or after the Closing Date, other than the LPTA.

ARTICLE 2

RETENTION AND LIMIT

The Reinsurer shall indemnify the Company for 100% of the amount, if any, by which the aggregate of the Company’s Ultimate Net Loss exceeds the Retention. The Reinsurer’s aggregate limit of liability in the aggregate shall be $250 million. The liability of each person constituting the Reinsurer shall be limited to $250million multiplied by its share of the interest and liabilities of the Reinsurer, as specified in its Interest and Liabilities Contract. The liability of the persons constituting the Reinsurer is several only, and not joint and several.

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ARTICLE 3

TERM

This Contract shall take effect on the Closing Date, and shall remain in effect until the Company has no further liability for Ultimate Net Loss under the LPTA.

ARTICLE 4

EXCLUSIONS

None.

ARTICLE 5

PREMIUM

The Company shall pay to the Reinsurer

ARTICLE 6

DEFINITIONS

A. 1.    “Ultimate Net Loss” means “Losses”, as defined in the LPTA, paid by the Company or which the Company becomes liable to pay under or pursuant to the terms of the LPTA.

2. Salvages and all recoveries (including amounts due from all reinsurances that inure to the benefit of this Contract, whether recovered or not), shall be first deducted from such loss to arrive at the amount of liability attaching hereunder.

3. All salvages, recoveries or payments recovered or received subsequent to loss settlement hereunder shall be applied as if recovered or received prior to the aforesaid settlement, and all necessary adjustments shall be made by the parties hereto.

4. The Company shall be deemed to be “liable to pay” a loss when a judgment has been rendered that the Company does not plan to appeal, and/or the Company has obtained a release, and/or the Company has accepted a proof of loss.

5. Nothing in this clause shall be construed to mean that losses are not recoverable hereunder until the Company’s “Ultimate Net Loss” has been ascertained.

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B. “Policy” means any binder, policy, or contract of insurance or reinsurance issued, accepted or held covered provisionally or otherwise, which is the subject of the LPTA.

C. “Retention” means the sum of the Company’s reserves for losses and unearned premium after giving effect to, and under the terms of, the LPTA as of the Closing Date.

D. “LPTA” means the Loss Portfolio Transfer Agreement effective on the Closing Date among the Company (as Reinsurer) and the U.S. Insurers.

E. “Closing Date” means the date of the closing of the transactions described in the Merger Agreement and the Master Agreements.

F. “Merger Agreement” means the Agreement and Plan of Merger dated as of January 3, 2014 by and among Tower Group International, Ltd., ACP RE, Ltd., and London Acquisition Company Limited.

G. “Master Agreements” means the Commercial Lines Master Agreement dated April __, 2014 between ACP Re, Ltd., and AmTrust Financial Services, Inc., as amended and the Personal Lines Master Agreement dated April __, 2014 between ACP Re, Ltd., and National General Holding Corp.

H. “U.S. Insurers” mean Tower Insurance Company of New York, CastlePoint National Insurance Company, Tower National Insurance Company, Hermitage Insurance Company, CastlePoint Florida Insurance Company, Northeast Insurance Company, York Insurance Company of Maine, Massachusetts Homeland Insurance Company, Preserver Insurance Company, and CastlePoint Insurance Company.

ARTICLE 7

UNCOLLECTABILITY OF INURING REINSURANCE

This Contract applies to any loss that the Company is obligated to pay under the LPTA, including amounts payable by the Company as a result of the inability of the Company or the U.S. Insurers’ to collect from any reinsurer(s), whether specific or general, any amounts that may have become due from such reinsurer(s), whether such inability arises from the insolvency of such other reinsurer(s) or otherwise.

ARTICLE 8

ORIGINAL CONDITIONS

All liability of the Reinsurer for Ultimate Net Loss under this Contract shall be subject to the same terms, conditions, waivers and interpretations, and to the same modifications and alterations as the

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liabilities of the Company under the LPTA. However, in no event shall this be construed in any way to provide coverage outside the terms and conditions set forth in this Contract.

ARTICLE 9

NO THIRD PARTY RIGHTS

This Contract is solely between the Company and the Reinsurer, and in no instance shall any insured, claimant or other third party have any rights under this Contract except as may be expressly provided otherwise herein.

ARTICLE 10

NOTICE OF LOSS AND LOSS SETTLEMENTS

A. The Company shall advise the Reinsurer promptly of adverse development that, in the opinion of the Company, may result in Ultimate Net Loss in the aggregate exceeding 90% of the Retention and of all subsequent developments thereto that may materially affect the position of the Reinsurer.

B. As respects losses subject to this Contract, all loss settlements made by the U.S. Insurers and assumed by the Company, whether under strict Policy terms or by way of compromise, and any Extra Contractual Obligations and/or Loss in Excess of Policy Limits (as those terms are defined in the [LPTA]), shall be binding upon the Reinsurer, and the Reinsurer agrees to pay or allow, as the case may be, its share of each such settlement immediately upon receipt of proof of loss.

C. Should the aggregate of the Company’s Ultimate Net Loss exceed, at any time, an amount equal to the Retention, all additional Ultimate Net Loss thereafter shall be paid by the Reinsurer, subject to the limits of liability stated in the Retention and Limit Article. Any such payment shall be subject to adjustment in accordance with the terms of this Contract after the Reinsurer’s ultimate liability hereunder has been determined.

ARTICLE 11

CURRENCY

A. Where the word “Dollars” and/or the sign “$” appear in this Contract, they shall mean United States Dollars, and all payments hereunder shall be in United States Dollars.

B. For purposes of this Contract, where the Company receives premiums or pays losses in currencies other than United States Dollars, such premiums or losses shall be converted into

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United States Dollars at the actual rates of exchange at which these premiums or losses are entered in the Company’s books.

ARTICLE 12

TAXES

A. In consideration of the terms under which this Contract is issued, the Company undertakes not to claim any deduction of the premium hereon when making tax returns, other than Income or Profits Tax returns, to any state or territory of the United States of America or to the District of Columbia.

B. 1.    Each Subscribing Reinsurer has agreed to allow, for the purpose of paying the Federal Excise Tax, the applicable percentage of the premium payable hereon (as imposed under the Internal Revenue Code) to the extent such premium is subject to Federal Excise Tax.

2. In the event of any return of premium becoming due hereunder, the Subscribing Reinsurer shall deduct the applicable percentage of the premium from the amount of the return, and the Company or its agent should take steps to recover the Tax from the U.S. Government.

ARTICLE 13

ACCESS TO RECORDS

A. The Reinsurer or its duly authorized representatives shall have the right to visit the offices of the Company to inspect, examine, audit, and verify any of the policy, accounting or claim files (“Records”) relating to business reinsured under this Contract during regular business hours after giving five working days’ prior notice. This right shall be exercisable during the term of this Contract or after the expiration of this Contract. Notwithstanding the above, the Reinsurer shall not have any right of access to the Records of the Company if it is not current in all undisputed payments due the Company.

B. Notwithstanding the above, the Company reserves the right to withhold from the Reinsurer any Privileged Documents. However, the Company shall permit and not object to the Reinsurer’s access to Privileged Documents in connection with the underlying claim reinsured hereunder following final settlement or final adjudication of the case or cases involving such claim, with prejudice against all claimants and all parties to such adjudications; the Company may defer release of such Privileged Documents if there are subrogation, contribution, or other third party actions with respect to that claim or case, and the Company’s defense might be jeopardized by release of such Privileged Documents. In the event that the Company seeks to defer release of such Privileged Documents, it shall, in consultation with the Reinsurer,

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take other steps as reasonably necessary to provide the Reinsurer with the information it reasonably requires to indemnify the Company without causing a loss of such privileges or protections. The Reinsurer shall not have access to Privileged Documents relating to any dispute between the Company and the Reinsurer.

C. For purposes of this Article:

1. “Privileged Documents” means any documents that are Attorney-Client Privilege Documents and/or Work Product Privilege Documents.

2. “Attorney-Client Privilege Documents” means communications of a confidential nature between (a) the Company, or anyone retained by or at the direction of the Company, or its in‑house or outside legal counsel, or anyone in the control of such legal counsel, and (b) any in-house or outside legal counsel, if such communications relate to legal advice being sought by the Company and/or contain legal advice being provided to the Company.

3. “Work Product Privilege Documents” means communications, written materials and tangible things prepared by or for in-house or outside counsel, or prepared by or for the Company, in anticipation of or in connection with litigation, arbitration, or other dispute resolution proceedings.

ARTICLE 14

CONFIDENTIALITY

A. The Reinsurer hereby acknowledges that the documents, information and data provided to it by the Company, whether directly or through an authorized agent, in connection with the placement and execution of this Contract ("Confidential Information") are proprietary and confidential to the Company. Confidential Information shall not include documents, information or data that the Reinsurer can show:

1. are publicly known or have become publicly known through no unauthorized act of the Reinsurer;

2. have been rightfully received from a third person without obligation of confidentiality; or

3. were known by the Reinsurer prior to the placement of this Contract without an obligation of confidentiality.

B. Absent the written consent of the Company, the Reinsurer shall not disclose any Confidential Information to any third parties, including any affiliated companies, except:

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1. when required by retrocessionaires as respects business ceded in respect of this Contract;

2. when required by regulators performing an audit of the Reinsurer’s records and/or financial condition; or

3. when required by external auditors performing an audit of the Reinsurer’s records in the normal course of business.

Further, the Reinsurer agrees not to use any Confidential Information for any purpose not related to the performance of its obligations or enforcement of its rights under this Contract.

C. Notwithstanding the above, in the event that the Reinsurer is required by court order, other legal process or any regulatory authority to release or disclose any or all of the Confidential Information, the Reinsurer agrees to provide the Company with written notice of same at least 10 days prior to such release or disclosure and to use its best efforts to assist the Company in maintaining the confidentiality provided for in this Article.

D. The provisions of this Article shall extend to the officers, directors and employees of the Reinsurer and its affiliates, and shall be binding upon their successors and assigns.

ARTICLE 15

INDEMNIFICATION AND ERRORS AND OMISSIONS

A. The Reinsurer is reinsuring, subject to the terms and conditions of this Contract, the obligations of the Company under any Policy. The Company shall be the sole judge as to:

1. what shall constitute a claim or loss covered under any Policy;

2. the Company’s liability thereunder;

3. the amount or amounts that it shall be proper for the Company to pay thereunder.

B. The Reinsurer shall be bound by the judgment of the Company as to the obligation(s) and liability(ies) of the Company under any Policy.

C. Any inadvertent error, omission or delay in complying with the terms and conditions of this Contract shall not be held to relieve either party hereto from any liability that would attach to it hereunder if such error, omission or delay had not been made, provided such error, omission or delay is rectified immediately upon discovery.

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ARTICLE 16

INSOLVENCY

A. In the event of the insolvency of the Company, this reinsurance (or the portion of any risk or obligation assumed by the Reinsurer, if required by applicable law) shall be payable directly to the Company, or to its liquidator, receiver, conservator or statutory successor, either: (1) on the basis of the liability of the Company, or (2) on the basis of claims filed and allowed in the liquidation proceeding, whichever may be required by applicable statute, without diminution because of the insolvency of the Company or because the liquidator, receiver, conservator or statutory successor of the Company has failed to pay all or a portion of any claim. It is agreed, however, that the liquidator, receiver, conservator or statutory successor of the Company shall give written notice to the Reinsurer of the pendency of a claim against the Company indicating the Policy or bond reinsured, which claim would involve a possible liability on the part of the Reinsurer within a reasonable time after such claim is filed in the conservation or liquidation proceeding or in the receivership, and that during the pendency of such claim, the Reinsurer may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated any defense or defenses that it may deem available to the Company or its liquidator, receiver, conservator or statutory successor. The expense thus incurred by the Reinsurer shall be chargeable, subject to the approval of the court, against the Company as part of the expense of conservation or liquidation to the extent of a pro rata share of the benefit that may accrue to the Company solely as a result of the defense undertaken by the Reinsurer.

B. Where two or more reinsurers are involved in the same claim and a majority in interest elect to interpose defense to such claim, the expense shall be apportioned in accordance with the terms of this reinsurance Contract as though such expense had been incurred by the Company.

C. As to all reinsurance made, ceded, renewed or otherwise becoming effective under this Contract, the reinsurance shall be payable as set forth above by the Reinsurer to the Company or to its liquidator, receiver, conservator or statutory successor, except (1) where the Contract specifically provides another payee in the event of the insolvency of the Company, or (2) where the Reinsurer, with the consent of the direct insured or insureds, has assumed such Policy obligations of the Company as direct obligations of the Reinsurer to the payees under such Policies and in substitution for the obligations of the Company to such payees.

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ARTICLE 17

GOVERNING LAW; JURISDICTION AND VENUE

This Contract shall be governed as to performance, administration and interpretation by the laws of Bermuda. This Agreement shall be construed and interpreted according to the internal laws of Bermuda excluding any choice of law rules that may direct the application of the laws of another jurisdiction. The Parties hereby stipulate that any action or other legal proceeding arising under or in connection with this Agreement may be commenced and prosecuted in its entirety in Bermuda, each Party hereby submitting to the personal jurisdiction thereof, and the Parties agree not to raise the objection that such courts are not a convenient forum.

ARTICLE 18

ENTIRE AGREEMENT

This Contract, together with the Interest and Liabilities Contracts attached, sets forth all of the duties and obligations between the Company and the Reinsurer and supersedes any and all prior or contemporaneous written agreements with respect to matters referred to in this Contract. This Contract may not be modified or changed except by an amendment to this Contract in writing signed by the Company and all persons constituting the Reinsurer. However, this Article shall not be construed as limiting the admissibility of evidence regarding the formation, interpretation, purpose or intent of this Contract.

ARTICLE 19

NON-WAIVER

The failure of the Company or the Reinsurer to insist on compliance with this Contract or to exercise any right or remedy hereunder shall not constitute a waiver of any rights contained in this Contract nor prevent either party from thereafter demanding full and complete compliance nor prevent either party from exercising such remedy in the future.

ARTICLE 20

MODE OF EXECUTION

A. This Contract may be executed by:

1. an original written ink signature of paper documents;

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2. an exchange of facsimile copies showing the original written ink signature of paper documents;

3. electronic signature technology employing computer software and a digital signature or digitizer pen pad to capture a person’s handwritten signature in such a manner that the signature is unique to the person signing, is under the sole control of the person signing, is capable of verification to authenticate the signature and is linked to the document signed in such a manner that if the data is changed, such signature is invalidated.

B. The use of any one or a combination of these methods of execution shall constitute a legally binding and valid signing of this Contract. This Contract may be executed in one or more counterparts, each of which, when duly executed, shall be deemed an original.

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IN WITNESS WHEREOF, the Company has caused this Contract to be executed by its duly authorized representative(s) this _____day of __________, in the year of 2014.

CASTLEPOINT REINSURANCE COMPANY, LTD.

AGGREGATE STOP LOSS REINSURANCE CONTRACT

Interests and Liabilities Contract

(hereinafter referred to as the “Contract”)

of

AmTrust International Insurance, Ltd.

(hereinafter referred to as the “Subscribing Reinsurer”)

with respect to the

Aggregate Stop Loss Reinsurance Contract

Effective: ________, 2014

(hereinafter referred to as the “Stop Loss Contract”)

Issued to

CastlePoint Reinsurance Company, Ltd.

Bermuda

(the “Company”)

1. The Subscribing Reinsurer shall have a 50% share in the Interests and Liabilities of the Reinsurer (as defined in the Agreement) as set forth in the Stop Loss Contract attached hereto.

2. This Contract shall be effective from the Closing Date, as defined in the Stop Loss Contract, and shall remain in effect until there is no further liability under the Stop Loss Contract.

3. The share of the Subscribing Reinsurer in the interests and liability of the Reinsurer shall be several and not joint with the share of any other subscribing reinsurer. In no event shall the Subscribing Reinsurer participate in the interests and liabilities of the other subscribing reinsurers.

4. In the event that the Reinsurer becomes liable for the payment of Ultimate Net Loss in accordance with Article 10.C. of the Stop Loss Contract, the Company, on a monthly basis, provide the Subscribing Reinsurer such reports as the Company receives pursuant to the LPTA and the Subscribing Reinsurer shall pay to the Company such amounts for which it may be liabile under the terms and conditions of this Contract.

5. All notices, requests, demands or other communications to the Reinsurer shall be given in writing and shall be delivered to the Subscribing Reinsurer by personal delivery, overnight mail by a reputable courier service or electronic mail (as provided by the Subscribing Reinsurer) as follows:

AmTrust International Insurance, Ltd.

7 Reid Street

Suite 400

Hamilton HM 11

Bermuda

Attention: CFO

Tel: 441.444.4803

In Witness Whereof, the parties hereto by their duly authorized representatives have executed this Contract effective ______, 2014.

CASTLEPOINT REINSURANCE COMPANY, LTD

BY:

ITS:

DATE:

AMTRUST INTERNATIONAL INSURANCE, LTD

BY:

ITS:

DATE:

Exhibit F

INVESTMENT MANAGEMENT AGREEMENT

THIS INVESTMENT MANAGEMENT AGREEMENT (this "Agreement") is effective the __ day of ____, 2014, by and between AII Insurance Management Limited ("Manager"), a Bermuda company and Tower Insurance Company of New York¹ ("Company"), a New York property and casualty insurance company.

WITNESSETH

WHEREAS, ACP, AmTrust Financial Services, Inc., a Delaware corporation ("AmTrust"), and National General Holdings Corporation, a Delaware corporation ("National General") are entering into a series of agreements by which Seller has agreed to acquire Tower Group International, Ltd. ("Tower"), a Bermuda insurance holding company, which transacts commercial and personal lines insurance business in the United States through the subsidiaries of Tower set forth on Exhibit A hereto, including the Company, and, in connection therewith, AmTrust and National General have agreed to administer the run-off of Tower's legacy business, provide stop-loss coverage to CastlePoint Reinsurance Company, Ltd., a Bermuda corporation ("CP Re" and, collectively with ACP and the Companies, the "ACP Group"), with respect thereto, and, prospectively, manage and reinsure all business to be written by the Companies after the Effective Time;    

WHEREAS, Manager is duly licensed in Bermuda to engage in business as an insurance manager, in which capacity it also provides investment management services to related companies; and

WHEREAS, Company wishes to retain Manager to perform certain management and administrative services on its behalf and Manager wishes to provide such services.

NOW, THEREFORE, in consideration of their respective promises and covenants hereinafter set forth, Manager and Company agree as follows:

1.Investment Management Services

(a) Manager shall perform the investment management services on behalf of Company in accordance with the investment policy and objectives (see Appendix I), which Company may amend from time to time on five business days prior written notice, and under any regulatory requirements that would be placed on those investments. The Manager shall have the exclusive authority and responsibility to acquire, manage and dispose of Company's invested assets from time to time in its sole discretion, including the authority and power to enter into contracts binding on Company with respect thereto, and to:

(i) establish, maintain and terminate discretionary and non-discretionary investment accounts with banks, brokers, dealers, investment advisers or other investment professionals ("Investment Service Providers"), provided, such Investment Service Providers maintain all required licenses, registrations, memberships and approvals required to perform the investment services being offered. If Manager delegates any of its discretionary investment, advisory and other rights, powers and functions hereunder to any Investment Service Provider, Manage shall remain liable to the Company for its obligations hereunder. References herein to Manager shall include, as the context may require, any of Manager's affiliates that are selected to manage assets under this Agreement.

¹ NTD: Each member of the ACP Group will have its own version of this agreement.

(ii) purchase, hold, sell, write, exchange, transfer, and otherwise invest and trade in property of all kind, without limitation as detailed in the Company's investment policy and objectives as approved by the Company's board of directors.

(iii) place orders for the execution of transactions with or through Investment Service Providers as the Manager may select, and allocate transactions to such Investment Service Providers for execution on such markets, at such prices and at such commission rates as in the Manager's good faith judgment are appropriate, taking into consideration in the selection of Investment Service Providers not only the available prices and rates of brokerage commission, but also the relevant factors (such as, without limitation, reliability, financial responsibility, strength of the broker or dealer and its ability to efficiently execute transactions, research and other services provided by such Investment Service Providers which are expected to enhance the Manager's general portfolio management capabilities, the value of the Manager's ongoing relationship with such Investment Service Providers or such other factors as the Manager may lawfully consider (subject to best execution; and

(iv) vote proxies, grant consents solicited by or with respect to the issuers of securities in which assets of the Account may be invested from time to time, provided that Company reserves the right to exercise or direct the exercise of voting rights with respect to securities which are Account assets or grant its consent with respect to solicitations by or with respect to the issuers of such securities, in each case upon consultation with Company.

(b) Compliance with Statutory Limitations.

(i) Notwithstanding anything in this Agreement to contrary, Manager’s discretion shall be subject to all applicable statutory and regulatory limitations applicable to the investment of assets by such Insurer.

(ii) Notwithstanding anything in this Agreement to the contrary, this Agreement is not intended to and shall not transfer to Manager substantial control of the Company or any powers vested in its Board of Directors, its articles of incorporation or by-laws or substantially all of the basic function of such its management.

(c) Information and Reports: Monthly, the Manager shall provide Company a written report and inventory of Company's invested assets in a format approved by Company and such other reports and information as Company shall request.

2.     Portfolio Transactions.

(a)    Manager may place orders for the execution of transactions for Company with or through Investment Service Providers as Manager may select. Manager agrees that securities are to be purchased through such brokers as, in Manager's best judgment, shall offer the best combination of price and execution. Manager, in seeking to obtain best execution of portfolio transactions for the Company, may consider the quality and reliability of brokerage services, as well as research and investment information and other services provided by brokers or dealers. A broker or dealer that provides brokerage and research services to Manager may be paid an amount as commission for effecting a transaction in excess of the amount of commission that another broker or dealer would have charged for effecting that transaction, if Manager determines in good faith that such amount of commission is reasonable in relation to the value of the brokerage and research services provided by the broker or dealer. These brokers and dealers may also assist Manager in rendering

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brokerage and research services to other clients, and not all such services will necessarily be used in connection with the Company. In addition, where permitted by applicable legal and regulatory requirements, Manager or its affiliates may execute transactions on behalf of the Company.

(b)    Except with respect to investments in private placement, the Investors authorize Manager to, at Manager’s discretion, bunch or aggregate orders for the Accounts with orders of other clients and to allocate the aggregate amount of the investment among the Accounts and other accounts managed by Manager (including accounts in which Manager, its affiliates and/or their personnel have beneficial interests) in a manner in which is fair over time to the participating accounts. When portfolio decisions are made on an aggregated basis, Manager may in its discretion, place a large order to purchase or sell a particular security for the Company and its Affiliate and the accounts of other clients. Because of the prevailing trading activity, it is frequently not possible to receive the same price or execution on the entire volume of securities purchased or sold. When this occurs, the various prices may be averaged and the Company will be charged or credited with the average price; and the effect of the aggregation may operate on some occasions to one or more Investor's disadvantage. Although in such an instance the Company will be charged the average price, Manager will make the information regarding the actual transactions available to an Investor upon such Investor's request. Neither Manager nor its affiliates, however, are required to bunch or aggregate orders, and, in connection with investments in private placements, may not bunch or aggregate orders. In such cases, an Investor may not receive the average price on any given trade.

3.    Affiliated Brokerage; Principal Transactions

(a)    Subject to Manager's execution obligations described in Section 2 above, the Investors hereby authorize Manager, when determined by MAnager in its capacity of a fiduciary to be in the best interest of an Investor, to effect agency transactions and agency cross-transactions through affiliated broker-dealers. Such transactions shall be effected at prevailing market levels in accordance with the procedures under Rule 17a-7(b) of the U.S. Investment Company Act of 1940 and other applicable law. The Company at any time without penalty may terminate in whole or in part its authorization to effect such transactions by written notice to Manager.

(b)    When determined by Manager in its capacity as a fiduciary to be in the best interest of the Investors, Manager may effect transactions in which, acting for its own account or an account of its affiliate, Manager buys a security from, or sells a security to, the Company, with the Company’s consent after written disclosure by Manager to the Company of the transaction and the capacity in which Manager is acting before the completion of such transaction, in accordance with applicable regulatory requirements.

4.    Information and Reports

Manager shall or shall direct the Investment Service Providers to provide to the Company copies of all account statements and account information with respect to accounts Manager establishes for the Company. Monthly, Manager shall provide the Company an account statement and such other reports and information as the Company shall request. Valuation levels for the assets listed in the written report and inventory will reflect Manager's good faith effort to ascertain fair market levels (including accrued income, if any) for the securities and other assets in the Account based on pricing and valuation information believed by Manager to be reliable for round lot sizes. Then current exchange rates will be applied in valuing holdings in foreign currency.

5.     Custody

Custody of the cash and assets shall be held by a custodian (the "Custodian") appointed by the Company, pursuant to a separate custody agreement or by the Company. The Custodian must be a qualified

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custodian as defined in Section 206(4)-2 of the Investment Advisers Act of 1940, as amended (the "Advisers Act"). The Company authorizes Manager to give Custodian instructions for the purchase, sale, conversion, redemption, exchange or retention of any security, cash or cash equivalents or other investment. Exclusive responsibility for the custody and safekeeping of the Company’s assets shall remain with the Custodian, and MANAGER and its affiliates shall not have custody or physical control of the assets and cash in the Accounts. Manager shall provide the Custodian with such documents and information, including certification of Manager's duly authorized representatives, as the Custodian may reasonably request. All directions given by Manager to the Custodian shall be in writing, and signed by an authorized representative of Manager; provided, however, that the Custodian may accept oral directions from Manager, subject to confirmation in writing. The Company will give Manager reasonable prior notice of any change the Custodian, together with the name and other relevant information with respect to the new Custodian.

6.    Compensation and Reimbursement of Expenses

(a)    For Investment Management Services performed by Manager pursuant to this Agreement, within 30 days of the end of each calendar quarter, Company shall pay to Manager an amount equal to (i) an annual rate of 0.05% of the average value of the Company's invested assets for the preceding calendar quarter if the average value of the such assets for the quarter was $1 billion or less or (ii) an annual rate of 0.0375% of the average value of the Company's invested assets for the preceding calendar quarter if the average value of such assets for the quarter was greater than $1 billion. For the purposes of this Section 2(b), the average value of the Company's invested assets shall include all assets managed by Manager for the ACP Group, but not assets which are not actively managed by Manager, including, without limitation, investments in affiliates and certain loans made by the Company Group.

(b)    Company shall reimburse manager for the payment of expenses advanced by manager on behalf of Company.

(c)    Manager shall be responsible for all expenses incurred in connection with the provision of the services hereunder for such items as salaries, benefits, consultants, legal services, accounting services, general overhead, including, but not limited to, office supplies, postage, telephone, and courier services.

7.    Term and Termination

(a)    This Agreement shall remain in effect for a period of one year from the Effective Date (the "Initial Term"). Thereafter, this Agreement shall automatically renew for successive one year terms unless (i) Company or Manager provides notice thirty (30) days prior to the end of a term of its intent not to renew, or (ii) this Agreement is terminated pursuant to Sections 3(b) or 3(c) below.

(b)    Company may terminate this Agreement immediately, upon written notice, upon the occurrence of the following events:

(i) Manager fails to comply with any term or condition of this Agreement, or for whatever reason, does not commence fulfillment of duties provided in this Agreement, or once having commenced its duties, engages in neglect of its duties and obligations hereunder, fails or refuses to act to carry out its duties and obligations hereunder;

(ii) Manager is sold, undergoes a material change in ownership, in its capital participation or control, change in management, board of directors, officers or key personnel or causes to be sold, transferred or pledged all or substantially all of its stock or assets to a third party; or

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(iii) Manager suffers the loss, suspension or revocation of any license or certificate of authority from any regulatory body that is material to the performance of its duties and obligations herein, or such license becomes invalid or expires and is not renewed without any lapse.

(c)    The Manager may terminate this Agreement immediately, upon written notice, in the event that Company is sold, undergoes a material change in ownership, in its capital participation or control, change in management, board of directors, officers or key personnel or causes to be sold, transferred or pledged all or substantially all of its stock or assets to a third party.

(d) Upon termination, the Manager shall be entitled to all fees through the termination date.

8.    Confidentiality

It is understood and agreed that all information pertaining to Company, whether developed by Manager or Company, is the sole and exclusive property of Company ("Proprietary Information"). Manager shall maintain the confidentiality of the Proprietary Information and upon termination of this Agreement shall return or destroy all Proprietary Information as directed by Company. It is further understood and agreed that all of Company's files and records shall be made available only to inspection by directors, officers and employees of Manager, the directors, officers, employees and independent auditors of Company, and anyone properly authorized in writing by Company.

9. Choice of Law

This Agreement shall be governed and construed by the laws of the State of New YorkrEach party submits to the jurisdiction of the federal and state courts located in the State of New York, which shall be the exclusive forum for adjudicating any dispute based on, arising out of, or in connection with this Agreement

10.    Assignment

No assignment of this Agreement shall be made by any party.

11.    Notices

All notices, requests, demands and other communications under this Agreement shall be in writing and delivered in person, by fax, e-mail, recognized overnight courier, or certified mail, postage prepaid and properly addressed as follows

To the Company:

120 Broadway

New York, NY 10271

Attention: William E. Hitselberger

Facsimile: (212) 655-2067

E-mail: bhitselberger@twrgrp.com

To Manager:

AII Insurance Management Limited

7 Reid Street, Suite

Hamilton HM 11

Attention: Chris Souter

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Fax No.:

12.    General Control

Notwithstanding any other provision of this Agreement, the Insurers shall have ultimate control and responsibility of the functions delegated to AIM under this Agreement. The Insurers shall own and have custody of their general corporate accounts and records.

13.    Amendments

This Agreement shall not be amended, modified or terminated except (i) by a writing signed by all parties hereto or their respective successors, and (ii) with the prior approval of the relevant regulatory authorities.

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the Effective Date.

ACP Re Ltd.

By:    

Name:     

Its:     

AII Insurance Management Limited

By:    

Name:     

Its:     

Appendix I

ACP Re Ltd.

"Investment Policy and Objectives"

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ACP Re Ltd. ("COMPANY")

Investment Policy and Objectives

I.    Policy Identification Information

This policy to be approved by Company's Board of Directors

II.    Investment Policy

To maximize investment income and total investment returns subject to an acceptable level of risk.

III.    Investment Committee

Company has established an Investment Committee which will consist of a minimum of three members who are approved by the Board of Directors, which is responsible for monitoring compliance with this Policy, approving certain investments in accordance with this Policy, making impairment evaluations in accordance with Company's Impairment Policy (Schedule 1), regularly evaluating the effectiveness of the Policy in meeting Company's Investment Objectives and the appropriateness of the Investment Objectives and presenting recommendations to the Board of Directors regarding changes to the Policy which result from such evaluations.

IV.    Investment Objectives

a) Safety of principal;

b) Maximize yield and growth;

c) Stability of value—utilization of appropriate risk management techniques; higher levels of risk and fluctuations in asset value must be compensated by a commensurate increase in return;

d) Appropriate level of liquidity;

e) Proper diversification with respect to types of investments, geographical area, industry, maturity and individual exposures; and,

f) Maintenance of an appropriate relationship between assets and liabilities regarding term and nature.

V.    Investment Guidelines

Investment portfolios will be divided as follows:

Debt Obligations and Sinking Fund Preferred Stock—A minimum of 30% invested assets must be maintained in debt obligations or sinking fund preferred stock rated, at time of purchase, investment grade by Standard & Poors, Moody's Investor Service or Finch.

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Other Investments—Up to a maximum of 30% of invested assets may be maintained in high yield bonds, bank debt, common stock or other equity related securities, preferred stock, perpetual preferred stock, defaulted securities, direct debt obligations, put and call options, warrants and swaps.

VI.    Debt Obligations and Sinking Fund Preferred Stock Portfolio

a)    Eligible Assets

Debt obligations include U.S. Government and agency obligations, corporate bonds, taxable and tax exempt municipal securities, cash and money market instruments (including repurchase agreements) and mortgage backed securities, collateralized mortgage obligations (CMO's), and asset-backed securities, which otherwise meet requirements set forth in this section.

Preferred stock with mandatory sinking fund provision.

All securities must be rated BBB- and/or Baa3 of higher by Standard and Poors or Moody's Investor Service.

Short term investments shall be rated A2/P2. Repurchase Agreement counterparties shall be rated A2/P2.

b)    Individual Exposure

Limitation on the dollar amount of investment in any one issue of debt securities by rating category are as follows:

Rating	Limit per Issuer	Limit by Rating
AAA	None	None
AA	10% of capital	None
A	10% of capital	None
BBB	5% of capital	30% of Debt Portfolio

The foregoing limits do not apply to securities issued by the U.S. Treasury or guaranteed for timely payment of principal and interest by the U.S. Treasury or a government sponsored agency.

c)    Private Placements

All private placements are to be rated pursuant to the above quality/rating and limit per issuer guidelines.

Investment in private placements, including securities issues pursuant to Rule 144A which do not have registration requirements, will be limited to 25% of invested assets.

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d)    Credit Downgrade

Any security that is downgraded below investment grade, or below NAIC 2 will be carried in Other Investment portion of the portfolio.

VII. Other Investment Portfolio

Investment is permitted in the following asset classes up to 30% of invested assets. Investment in any individual security in the Other Investment Portfolio will be limited to $25,000,000.

• High yield bonds

• Bank debt

• Common stock

• Other equity related investments, including partnerships

• Preferred stock

• Perpetual preferred stock

• Defaulted securities

• Direct debt obligations

• Put and call options

• Warrants

• Swaps

VIII.    Investment Authority

The limitations provided for herein do not apply to investments in affiliates and where Company funds are deemed to be in excess of the security required to be provided under Company's reinsurance agreement(s).

All investments must comply with any specific underwriting guidelines or investment restrictions under which Company has been placed as a result of entering into any legally binding contracts.

The purchase or sale of (a) any equity interest in excess of $5 million in any issuer, or (b) any debt securities in excess of $20 million issued by an issuer, in a single transaction or series of transactions must be approved by the Investment Committee.

Except as set forth herein, final authority and responsibility for all investment decisions rests with the Chief Financial Officer of Company.

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Schedule I

ACP Re Ltd.

"Impairment Policy"

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ACP Re Ltd. (the "COMPANY")

INVESTMENT SECURITIES IMPAIRMENT POLICY

Statement of Financial Accounting Standards No. 115 (FAS 115) requires that an enterprise recognize an impairment of a debt or equity security that is classified as available for sale or held to maturity if the impairment is other than temporary. Impairment occurs when the fair value of the security is less than its amortized cost basis.

The determination of whether impairment is other than temporary is dependent on numerous factors, such as:

The length of time and the extent to which fair value has been less than cost;

The financial condition and near term prospects of the issuer, including any specific events that may influence the operations of the issuer; and

The intent and ability of Company to retain its investment for a period of time sufficient to allow for any anticipated recovery in fair value.

The policy of ACP Re Ltd. ("Company") regarding recognition of other than temporary impairments, which was adopted by the Board of Directors as of March 2012, is set forth below.

I.    Periodic Review

Each quarter, the Investment Committee shall, based on the criteria and guidelines set forth herein:

(a) Evaluate each security which has an unrealized loss as of the end of the quarter for other than temporary impairment and (b) determine the fair value of any security so impaired.

The Investment Committee shall establish an "Impairment Watch List" for securities which meet certain objective quantitative criteria and qualitative criteria, such as:

(i)    Quantitative Criteria

• NAIC downgrading to 5 or 6

• Market value vs. book value variances (as noted below in II (b), (c) and (d))

(ii)    Qualitative Criteria

• Trends in the market

• The issuer's capital strength

• Any adverse regulatory agreements/rulings

• Missed interest or dividend payments

• Restructuring

• Credit agency downgrading

• Poor earnings reports

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The list of criteria is not intended to be exhaustive. Any information which is relevant to the realizable value of the security should be considered.

II.    Guidelines

Company shall apply the following guidelines in connection with its evaluation of the relevant criteria:

a. Subject to paragraph (g), impairment shall be recognized if the issuer has filed a proceeding under Chapter 11 under the United States Bankruptcy Code ("Chapter 11"), except where the investment was made in contemplation of the commencement of the Chapter 11 proceeding.

Subject to paragraphs (c) and (g), impairment shall be recognized if the fair value of the security is 35% below its amortized cost basis and it has been in a loss position for 18 months or more.

Subject to paragraph (g), with respect to securities issued by an issuer with a market capitalization of $1 billion or more, impairment shall be recognized if the value of the security is 25% below its amortized cost basis and it has been in a loss position for 18 months or more.

Company utilizes short sales as a hedge against the market (as opposed to its investment portfolio). Impairment of a "short" position in a security shall be recognized if the position has been in a loss position for 24 months or more and the fair market value of the security is greater than the "short" position by 40% or more.

If the qualitative criteria set forth above indicate the need to record an impairment loss earlier than the time frames noted in paragraphs (b), (c) and (d) above, impairment will be recognized as soon as those conditions are identified.

If a decision is made to sell in the near future a security which meets the criteria noted in paragraphs (b), (c), and (d) above, an impairment loss will be immediately recognized.

Notwithstanding paragraphs (a), (b), (c) and (d) above, Company need not record an impairment loss if the Investment Committee otherwise determines that there is a reasonable expectation that the security will recover its value within a reasonable time.

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Exhibit G

COMMERCIAL LINES BILL OF SALE AND ASSIGNMENT AND ASSUMPTION AGREEMENT

This COMMERCIAL LINES BILL OF SALE AND ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Bill of Sale") is made and entered into as of _________, 2014, by and among ACP Re, Ltd., a Bermuda corporation ("ACP Re"), the Acquired Affiliates (as defined below), who are signatories hereto as Sellers (collectively with ACP Re, the "Sellers" and each one, individually, a "Seller") and AmTrust Financial Services, Inc., a Delaware corporation ("AmTrust"). Capitalized terms not otherwise defined herein have the meaning ascribed thereto in the Master Agreement (as defined below).

WHEREAS, ACP Re, AmTrust and National General Holdings Corporation, a Delaware corporation ("National General"), are jointly entering into a series of related agreements for the purpose of acquiring Tower Group International, Ltd. ("Tower"), a Bermuda insurance holding company which transacts commercial and personal lines insurance business in the United States through 15 insurance company Subsidiaries and other non-insurance company Subsidiaries (collectively the "Acquired Affiliates"), including the Subsidiaries of ACP Re that are parties hereto;

WHEREAS, in connection with that certain Commercial Lines Master Agreement, dated as of ______, 2014, by and between ACP Re and the AmTrust (the "Master Agreement"), AmTrust is acquiring the assets listed on Exhibit Aattached hereto (the "Purchased Assets"); and

WHEREAS, from and after the date hereof, AmTrust is assuming all liabilities and obligations described on Exhibit A (the "Assumed Liabilities").

NOW, THEREFORE, for good and valuable consideration paid by AmTrust to Sellers as of the date of this Bill of Sale, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Sellers, by this Bill of Sale, do hereby convey, grant, bargain, sell, transfer, set over, assign, alienate, remise, release, deliver and confirm all of Sellers' right, title, interest in and to the Purchased Assets as of the close of business on the date hereof unto AmTrust, its successors and assigns, to have and to hold, all and singular, forever.

THE PARTIES FURTHER COVENANT AND AGREE AS FOLLOWS:

1. For value received, Sellers hereby assign, and AmTrust hereby assumes and agrees to perform and discharge, all rights under the Assumed Liabilities on and after the Transaction Closing Date (as defined in the Master Agreement).

2. This Bill of Sale shall not constitute an assignment in whole or in part of any Purchased Asset or Assumed Liability if an attempted assignment of such Purchased Asset or Assumed Liability without the consent of any other party thereto or with an interest therein would constitute a breach thereof or in any way affect the rights of Sellers or AmTrust thereunder or be contrary to applicable law. If any such consent is not obtained with respect to any such Purchased Asset or Assumed Liability, then the Sellers or AmTrust and their successors and assigns, as applicable, shall act as AmTrust's agent or Sellers' agent, as applicable,

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in order to obtain for AmTrust or Sellers and their successors and assigns, as applicable, the benefits thereunder.

3. Upon written notice delivered to ACP Re and National General within ninety (90) days following the Transaction Closing Date, AmTrust may elect to acquire any assets of ACP Re or the Acquired Affiliates that are reasonably required to conduct the Commercial Lines Business and that are not included among the Purchased Assets (the "Post-Closing Purchased Assets") for no additional consideration. If within ten (10) days following National General's and ACP's receipt of such notice, neither National General nor ACP Re has objected to the acquisition of all or any of such Post-Closing Purchased Assets, ACP Re shall transfer the Post-Closing Purchased Assets as to which no objection shall have been made to AmTrust. If National General or ACP Re provides such written objection, ACP Re, National General and AmTrust shall negotiate in good faith to coordinate the transfer or retention of such Post-Closing Purchased Assets among themselves. If an agreement as to the transfer or retention of any of such Post-Closing Purchased Assets is reached, ACP Re shall transfer such Post-Closing Purchased Assets in accordance with such agreement. If within thirty (30) days of the delivery of any such objection, ACP Re, National General and AmTrust shall have failed to reach an agreement with respect to the transfer or retention of any of such Post-Closing Purchased Assets to which such objection is related, ACP Re, AmTrust and National General shall enter mediation. In the event pursuant to such mediation the ACP Re, National General and AmTrust shall reach an agreement as the transfer or retention of such Post-Closing Purchased Assets, ACP Re shall transfer such Post-Closing Purchased Assets in accordance with such agreement.

4. From time to time following the Transaction Closing Date, AmTrust may elect to assume any or all of the real or personal property leases to which any Company or ACP is a party that are reasonably necessary for the Commercial Lines Business. Upon any such assumption, AmTrust and the applicable Seller or Sellers will enter into assignment and assumption agreements in respect to such leases, on terms reasonably acceptable to the parties thereto.

5. This Bill of Sale is given pursuant to the provisions of the Master Agreement, and, except as herein otherwise provided, the transfer of the Purchased Assets hereunder is made subject to the terms and provisions of the Master Agreement.

6. This Bill of Sale shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns and shall not be relied upon, or inure to the benefit of, any other party.

7. Any notice, request or other document to be given hereunder or in connection herewith to any party hereto shall be given in the manner described in the Master Agreement.

8. This Bill of Sale shall be governed by, and construed in accordance with, the laws of the State of New York.

[Signature Page Follows]

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IN WITNESS WHEREOF, each of the parties by their respective duly authorized officers has caused this Bill of Sale to be executed as of the date first above written.

AMTRUST FINANCIAL SERVICES, INC.

By: ________________________________

Name:    
Title:    

Sellers:

ACP RE, LTD.

By: ______________________________

Name:

Title:     

TOWER INSURANCE COMPANY OF NEW YORK

By: ________________________________

Name:    
Title:    

CASTLEPOINT NATIONAL INSURANCE COMPANY

By: ________________________________

Name:    
Title:    

TOWER NATIONAL INSURANCE COMPANY

By: ________________________________

Name:    
Title:    

Signature Page to Bill of Sale

HERMITAGE INSURANCE COMPANY

By: ________________________________

Name:    
Title:    

CASTLEPOINT FLORIDA INSURANCE COMPANY

By: ________________________________

Name:    
Title:    

NORTH EAST INSURANCE COMPANY

By: ________________________________

Name:    
Title:    

Acknowledged and agreed to:

NATIONAL GENERAL HOLDINGS CORPORATION

By: ______________________________

Name:     

Title:     

Signature Page to Bill of Sale

Exhibit A

Purchased Assets and Assumed Liabilities

Purchased Assets:

[List Purchased Assets]

Assumed Liabilities:

[Describe any obligations under contracts being assigned to AmTrust]

EXHIBIT H

Tower Companies

1. CastlePoint National Insurance Company, an insurance company organized under the laws of Illinois;

2. North East Insurance Company, an insurance company organized under the laws of Maine;

3. Preserver Insurance Company, an insurance company organized under the laws of New Jersey;

4. York Insurance Company of Maine, an insurance company organized under the laws of Maine;

5. Massachusetts Homeland Insurance Company, an insurance company organized under the laws of Massachusetts;

6. Tower Insurance Company of New York, an insurance company organized under the laws of New York;

7. Tower National Insurance Company, an insurance company organized under the laws of Massachusetts;

8. Hermitage Insurance Company, an insurance company organized under the laws of New York;

9. CastlePoint Florida Insurance Company, an insurance company organized under the laws of Florida; and

10. CastlePoint Insurance Company, a New York property and casualty insurance company.

EX-10.3

Exhibit 10.3

AMENDED AND RESTATED COMMERCIAL LINES

MASTER AGREEMENT

BY AND BETWEEN

ACP RE, LTD

AND

AMTRUST FINANCIAL SERVICES, INC.

DATED AS OF JULY 23, 2014

TABLE OF CONTENTS

ARTICLE I DEFINITIONS	2
ARTICLE II TRANSACTION CLOSING	6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF ACP	7
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF AMTRUST	8
ARTICLE V COVENANTS	10
ARTICLE VI RESERVED	15
ARTICLE VII CONDITIONS PRECEDENT	15
ARTICLE VIII INDEMNIFICATION	16
ARTICLE IX TERMINATION PRIOR TO CLOSING	17
ARTICLE X GENERAL PROVISIONS	18

EXHIBITS

Exhibit A            LPT Agreement

Exhibit B            Administrative Services Agreement

Exhibit C            Commercial Lines MGA Agreement

Exhibit D            Commercial Lines Reinsurance Agreement

Exhibit E            Stop-Loss Agreement

Exhibit F            Investment Agreement

Exhibit G            Commercial Lines Bill of Sale

Exhibit H            Tower Companies

DISCLOSURE SCHEDULE

Section Description

Section 3.3 Noncontravention; Consents

Section 4.3 Noncontravention; Consents

Section 7.1(d) Consents

AMENDED AND RESTATED COMMERCIAL LINES MASTER AGREEMENT

ThisAMENDED AND RESTATED COMMERCIAL LINES MASTER AGREEMENT is made as of July 23, 2014 (this "Agreement"), by and between ACP Re Ltd ("ACP"), a Bermuda exempted company, and AmTrust Financial Services, Inc. ("AmTrust"), a Delaware corporation.

WHEREAS, ACP, AmTrust and National General Holdings Corporation, a Delaware corporation ("National General") are entering into a series of agreements by which ACP has agreed to acquire Tower Group International, Ltd. ("Tower"), a Bermuda insurance holding company, which transacts commercial and personal lines insurance business in the United States through the Companies which are parties to this Agreement, and, in connection therewith, AmTrust and National General have agreed to administer the run-off of Tower’s legacy business, provide stop-loss coverage to ACP with respect thereto, and, prospectively, manage and reinsure all business to be written by the Companies after the Effective Time;

WHEREAS, ACP, pursuant to that certain Merger Agreement among ACP, Merger Sub and Tower dated as of January 3, 2014 (the "Merger Agreement") is acquiring Tower and its Subsidiaries through the merger of Merger Sub with and into Tower with Tower surviving such merger (the "Merger");

WHEREAS, AmTrust and National General have agreed to provide financing to ACP in connection with the Merger and to manage and reinsure, respectively, the Tower Companies' Commercial Lines Business and Personal Lines Business as set forth in the agreements provided for in this Agreement;

WHEREAS, AmTrust will provide financing to ACP in an aggregate principal amount of up to$125,000,000, which will pay a market interest rate and have a term of no less than seven years, pursuant to a credit agreement, the principal terms of which have been agreed to by ACP and AmTrust (the "Credit Agreement");

WHEREAS, in connection with the transactions described above, CP Re and the Tower Companies will enter into that certain Loss Portfolio Transfer Agreement in substantially the form attached hereto as Exhibit A (the "LPT Agreement"), pursuant to which CP Re will assume all insurance liabilities and unearned premium liability (to the extent not previously assumed by Affiliates of AmTrust or National General) of the Tower Companies;

WHEREAS, the parties will enter into the Commercial Lines Administrative Services Agreement, in substantially the form attached as Exhibit B (the "Administrative Services Agreement"), pursuant to which AmTrust or one or more of its Affiliates will manage and administer the runoff of claims and policies arising out of the Commercial Lines Business written by the Tower Companies prior to the Effective Time;

WHEREAS, the parties will enter into the Commercial Lines Managing General Agent Agreement, in substantially the form attached as Exhibit C (the "Commercial Lines MGA Agreement"), pursuant to which AmTrust or one or more of its Affiliates will manage and administer the Commercial Lines Business written by the Tower Companies following the Effective Time;

WHEREAS, the parties will enter into the 100% Quota Share Reinsurance Agreement, in substantially the form attached as Exhibit D (the "Commercial Lines Reinsurance Agreement"), pursuant to which AmTrust or one or more of its Affiliates will reinsure business written by the Tower Companies pursuant to the Commercial Lines MGA Agreement;

WHEREAS, AmTrust and National General, as reinsurers, and CP Re, as reinsured, will enter into the $250 million Aggregate Stop Loss Reinsurance Agreement in substantially the form attached as Exhibit E (the "Stop-Loss Agreement");

WHEREAS, AmTrust, National General and ACP Re will enter into a Stop-Loss Retrocession Agreement to be negotiated in good faith by AmTrust, National General and ACP Re (the "Retrocession Agreement"), pursuant to which ACP Re will reinsure 100% of the business reinsured pursuant to the Stop-Loss Agreement;

WHEREAS, AmTrust, through its Affiliate, AII Insurance Management, Ltd., and ACP will enter into the Investment Management Agreement in substantially the form attached as Exhibit F (the "Investment Agreement"), by which AII Insurance Management, Ltd., will provide investment management services to the Tower Companies;

WHEREAS, in connection with the transactions contemplated hereby and pursuant to the Commercial Lines Bill of Sale in substantially the form attached hereto as Exhibit G, AmTrust will purchase from ACP or its applicable Subsidiary, directly or indirectly, the Purchased Assets (as defined therein), on the terms and subject to the conditions set forth therein;

WHEREAS, the transactions described in the foregoing recitals are collectively referred to herein as the "Transactions;" and

WHEREAS, the parties hereto entered into that certain Commercial Lines Master Agreement, dated as of April 8, 2014 (the "Original Master Agreement"), and now wish to amend and restate the Original Master Agreement in its entirety as set forth herein.

NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants and agreements contained in this Agreement, and of the mutual benefits to be derived from this Agreement, the parties agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1Definitions. For purposes of this Agreement, the following terms shall have the respective meanings set forth below:

"ACP" has the meaning set forth in the introductory paragraph of this Agreement.

"Administrative Services Agreement" has the meaning set forth in the Recitals.

"Affiliate" of any Person means another Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person. For purposes of this definition, "control" (including its correlative meanings "controlled by" and "under common control with") shall mean possession, directly or indirectly, of the power to direct or cause the direction of management or policies (whether through ownership or securities or partnership or other ownership interests, by contract or otherwise).

"Agreement" has the meaning set forth in the introductory paragraph of this Agreement.

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"AmTrust" has the meaning set forth in the introductory paragraph of this Agreement.

"Applicable Law" means any domestic or foreign federal, state or local statute, law, ordinance or code, or any written rules, regulations or administrative interpretations issued by any Governmental Entity pursuant to any of the foregoing, and any order, writ, injunction, directive, judgment or decree of a court of competent jurisdiction applicable to the parties hereto.

"Applicable Rate" means the prime rate of interest reported from time to time in The Wall Street Journal.

"Business Day" means any day other than a Saturday, Sunday or other day on which banking institutions in New York are required or authorized by law or executive order to be closed.

"Commercial Lines Business" means all insurance contracts, policies, certificates, binders, slips, covers or other agreements of insurance, including all supplements, riders, endorsements, renewals and extensions (other than Personal Lines Business) issued by a Tower Company.

"Commercial Lines Bill of Sale" means the Commercial Lines Bill of Sale and General Assignment and Assumption Agreement dated as of the Transaction Closing Date among ACP, Affiliates of Tower acquired by ACP and AmTrust in the form annexed as Exhibit C.

"Commercial Lines Reinsurance Agreement" has the meaning set forth in the Recitals.

"Commercial Lines MGA Agreement" has the meaning set forth in the Recitals.

"CP Re" means CastlePoint Reinsurance Company, Ltd.

"Credit Agreement" has the meaning set forth in the Recitals.

"Cut-Through Quota Share Agreement" means that certain Commercial Lines Cut-Through Quota Share Reinsurance Agreement, dated as of January 3, 2014, by and among Technology Insurance Company, Inc., an insurance company organized under the laws of New Hampshire, and the Companies.

"Disclosure Schedule" means the Disclosure Schedule delivered in connection with, and constituting a part of, this Agreement.

"Earn-Out Payments" has the meaning set forth in Section 2.4.

"Effective Time" has the meaning set forth in Section 2.1.

"Governmental Entity" has the meaning set forth in Section 3.3.

"Gross Written Premium" means (a) any and all amounts received, less cancellations and returns, in connection with the Commercial Lines Business that are required to be reported as direct or assumed premium on the statutory financial statement of AmTrust or its insurance company Affiliates, as the case may be, in accordance with Applicable Law, and (b) as of the Effective Time, unearned premium assumed or written in connection with the Cut-Through Quota Share Agreement or the Pre-Closing MGA Agreement.

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"Indemnified Party" has the meaning set forth in Section 8.2(a).

"Indemnifying Party" has the meaning set forth in Section 8.2(a).Instrument" has the meaning set forth in the Recitals.

"Insurance Regulators" means all Governmental Entities regulating the business of insurance under Applicable Laws.

"Investment Agreement" has the meaning set forth in the Recitals.

"Liens" means pledges, restrictions, claims, liens, charges, encumbrances and security interests of any kind.

"Losses" means any and all liabilities, claims, obligations, losses, costs, disbursements, penalties, fines, expenses (including reasonable attorneys', accountants' and other out-of-pocket professional fees and expenses incurred in the investigation, collection, prosecution or defense or any claims, whether or not involving any third party) and damages, but excluding lost profits or any punitive, exemplary, consequential or similar damages (other than lost profits or any punitive, exemplary, consequential or similar damages actually paid to a third party in a Third Party Claim).

"LPT Agreement" has the meaning set forth in the Recitals.

"Measurement Date" means the last Business Day of June and December of each calendar year.

"Merger Agreement" has the meaning set forth in the Recitals.

"Merger Sub" means London Acquisition Company Limited, a Bermuda exempted company.

"National General" has the meaning set forth in the Recitals.

"Permitted Liens" means (a) Liens for Taxes or assessments and similar charges, which either are (i) not delinquent or (ii) being contested in good faith and by any appropriate action or proceeding, and adequate reserves (as determined in accordance with SAP) have been established on the relevant Company's books with respect thereto, (b) Liens to secure, landlords, sublandlords, licensors, sublicensors or licensees under real estate leases, licenses or other rental or lease agreements, (c) deposits or pledges made in connection with, or to secure payment of, utilities or similar services, workers' compensation, unemployment insurance, pension or other social security, governmental insurance and governmental benefits mandated under Applicable Laws, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return of money bonds and similar obligations, (d) mechanics', materialmen's or contractors' Liens or any similar statutory Lien for amounts not yet due and payable and incurred in the ordinary course of business, (e) zoning, entitlement, building and other similar restrictions which are not violated by the current conduct of the Commercial Lines Business, (f) purchase money Liens in any property acquired by the Tower Companies in the ordinary course of business and (g) easements, covenants, rights of way or other encumbrances or restrictions, if any, that do not impair the use of the assets to which they relate.

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"Person" means an individual, corporation, partnership (limited or general), joint venture, limited liability company, association, trust, unincorporated organization or other entity.

"Personal Lines Business" means all insurance contracts, policies, certificates, binders, slips, covers or other agreements of insurance, including all supplements, riders, endorsements, renewals and extensions for personal automobile liability and physical damage, homeowners, personal excess and umbrella coverage issued by the Companies.

"Personal Lines Master Agreement" means that certain Personal Lines Master Agreement, dated as of the date hereof, by and between ACP Re and National General.

"Pre-Closing MGA Agreement" means the Managing General Agent Agreement, dated as of April 1, 2014, by and between AmTrust North America, Inc. and Tower Risk Management Corp.

"Regulatory Approvals" means all approvals, consents and authorizations of the transactions contemplated by this Agreement required under applicable state insurance or insurance holding company laws, including without limitation all approvals, consents and authorizations required by the New York Department of Financial Services, the Illinois Department of Insurance, the Massachusetts Division of Insurance, the Florida Office of Insurance Regulation, the New Jersey Department of Banking and Insurance, the Maine Bureau of Insurance and any other state insurance regulator whose approval is required to consummate any of the transactions contemplated by this Agreement.

"Retrocession Agreement" has the meaning set forth in the Recitals.

"SAP" means, with respect to any Tower Company, the applicable statutory accounting principles (or local equivalents in the applicable jurisdiction) prescribed by the applicable Insurance Regulator under Applicable Law.

"Stop-Loss Agreement" has the meaning set forth in the Recitals.

"Subject Premium" means Gross Written Premium in respect of the Commercial Lines Business written or assumed by AmTrust or its Affiliates in connection with the Transactions (including, without limitation, business written or assumed by AmTrust or its Affiliates pursuant to the Cut-Through Quota Share Agreement and the Pre-Closing MGA Agreement) on or following the Effective Time, including, without limitation, Gross Written Premium in respect of renewals or replacements of policies in respect of the Commercial Lines Business issued on or prior to the Effective Time, and policies in respect of the Commercial Lines Business written by AmTrust or its Affiliates following the Effective Time.

"Subsidiary" of any Person means another Person 50% or more of the total combined voting power of all classes of capital stock or other voting interests of which, or 50% or more of the equity securities of which, is owned directly or indirectly by such first Person.

"Taxes" means all federal, state, local and foreign taxes of any kind, including those on or measured by or referred to as income, gross receipts, sales, use, ad valorem, franchise, profits, value added, property or windfall profits taxes, or similar fees, assessments or charges of any kind whatsoever (whether payable directly or by withholding and whether or not requiring the filing of

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a tax return), together with any interest and any penalties, additions to tax or additional amounts imposed thereon by any Taxing Authority, domestic or foreign.

"Taxing Authority" means any Governmental Entity or other Person responsible for and having jurisdiction over, the administration of Taxes.

"Third-Party Claim" has the meaning set forth in Section 8.2(a).

"Tower" has the meaning set forth in the Recitals.

"Tower Companies" means the companies set forth on Exhibit H hereto.

"Transaction Closing" has the meaning set forth in Section 2.1.

"Transaction Closing Date" has the meaning set forth in Section 2.1.

"Transaction Documents" means this Agreement, the Administrative Services Agreement, the Commercial Lines Bill of Sale, the Commercial Lines MGA Agreement, the Commercial Lines Reinsurance Agreement, the Credit Agreement, the LPT Agreement, the Retrocession Agreement, the Investment Agreement, the Stop-Loss Agreement and the Investment Agreement.

"Transactions" has the meaning set forth in the Recitals.

ARTICLE II

TRANSACTION CLOSING

Section 2.1Closing. Unless this Agreement shall have been terminated pursuant to Section 9.1, and subject to the satisfaction or waiver of each of the conditions set forth in Article VII, the closing of the transactions contemplated hereby (the "Transaction Closing") shall take place at 10:00 a.m. on the "Closing Date" (as defined in the Merger Agreement), at the same location as the "Closing" (as defined in the Merger Agreement). The effective date and time of the Transaction Closing are herein referred to as the "Transaction Closing Date." All of the contemplated transactions under this Agreement shall be deemed to be consummated as of 11:59:59 p.m. Eastern Time on the Transaction Closing Date (the "Effective Time") and all actions taken at Transaction Closing shall be deemed to have occurred simultaneously and shall be deemed effective as of the dates and times specified in this Agreement.

Section 2.2ACP's Transaction Closing Date Deliveries. Subject to fulfillment or waiver (where permissible) of the conditions set forth in Article VII, at the Transaction Closing, ACP shall deliver to AmTrust all of the following:

(a)FIRPTA Certificate. Unless ACP is a foreign person, a certification from ACP and signed by a responsible officer of ACP, as contemplated under Section 1.1445-2(b)(2) of the Treasury Regulations, certifying that ACP is not a foreign person.

(b)Transaction Documents. A copy of (i) each Transaction Document (other than this Agreement) duly executed by ACP or its applicable Affiliate and (ii) such other documents and instruments as AmTrust reasonably requests to consummate the transactions contemplated by this Agreement.

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Section 2.3AmTrust's Transaction Closing Date Deliveries. Subject to fulfillment or waiver (where permissible) of the conditions set forth in Article VII, at the Transaction Closing, AmTrust shall deliver to ACP a copy of (a) each Transaction Document (other than this Agreement) duly executed by AmTrust or its applicable Affiliate and (b) such other documents and instruments as ACP reasonably requests to consummate the transactions contemplated by this Agreement.

Section 2.4Earn-Out Payments.

(a)AmTrust will pay to ACP and ACPwill accept from AmTrust, an amount in cash equal to three percent (3%) of Subject Premium for the three-year period following the Effective Time (the "Earn-Out Period"), which shall be payable semi-annually on the terms herein (each such payment, an "Earn-Out Payment"). The aggregate amount of all Earn-Out Payments shall not exceed $30 million. The parties agree that AmTrust shall be entitled to set off any amounts due or payable to ACP hereunder against any amounts otherwise due and payable by ACP to AmTrust or its Affiliates in connection with the Transactions.

(b)On the last Business Day of the month following each Measurement Date during the Earn-Out Period, AmTrust shall notify ACP in writing of the Subject Premium for the six-month period ending on such Measurement Date (except with respect to the initial Measurement Date, which shall provide the Subject Premium beginning at the Effective Time and ending on the initial Measurement Date) and AmTrust shall pay to ACP the Earn-Out Payment in respect of such period by wire transfer in immediately available funds to the Reserve Account (as such term is defined in the Credit Agreement). During the five-day period immediately following ACP's receipt of an Earn-Out Payment, ACP shall be permitted to review AmTrust's books and records and AmTrust's working papers to the extent solely related to the determination of the Subject Premium and the applicable Earn-Out Payment.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF ACP

Subject to the exceptions and qualifications set forth in the Disclosure Schedule, ACP represents and warrants to AmTrust as follows:

Section 3.1Organization, Standing and Corporate Power. ACP is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized and has the requisite corporate power and authority to carry on its business as now being conducted.

Section 3.2Authority. ACP has the requisite corporate power and authority to enter into this Agreement and the other Transaction Documents and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the other Transaction Documents by ACP and the consummation by ACP of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of ACP and no other corporate action or proceeding on the part of ACP or any Affiliate of ACP is necessary (including any shareholder vote). This Agreement and each of the other Transaction Documents has been duly executed and delivered by ACP and, assuming this Agreement and the other Transaction Documents constitute the valid, legal and binding agreement of AmTrust, constitutes a valid, legal and binding obligation of ACP, enforceable against ACP in accordance with its terms, except that (a) such enforcement may be subject to applicable bankruptcy, insolvency or other similar laws, now or hereafter in effect, affecting creditors' rights generally and (b) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

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Section 3.3Noncontravention; Consents. Neither the execution and delivery of this Agreement or the other Transaction Documents by ACP, nor the consummation by ACP of the transactions contemplated hereby or thereby, nor performance or compliance by ACP with any of the terms or provisions hereof or thereof, will (i) conflict with or violate any provision of the certificate or articles of incorporation, code of regulations, by-laws or other comparable charter or organizational documents of ACP or (ii) assuming (A) that the actions described in Section 4.02(a) of the Merger Agreement have been completed, (B) that the authorizations, consents and approvals referred to in this Section 3.3 are obtained and (C) that the filings referred to in this Section 3.3 are made and any waiting periods thereunder have terminated or expired, in the case of each of clauses (A) through (C), prior to the Effective Time, (x) conflict with, contravene or violate any Law, judgment, writ or injunction of any Governmental Entity applicable to ACP or the Tower Companies or (y) conflict with, contravene or violate or constitute a default or breach under any of the terms, conditions or provisions of any Contract to which ACP or any of the Tower Companies is a party or accelerate ACP's or any of the Tower Companies', if applicable, obligations under any such Contract. Except for (a) compliance with the applicable requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, (b) compliance with the rules and regulations of the NASDAQ Stock Market, (c) the filing of appropriate documents with the relevant authorities of other jurisdictions in which any of the Tower Companies is qualified to do business, (d) compliance with any applicable state securities or blue sky laws and (e) the Regulatory Approvals as set forth in Section 3.3 of the Disclosure Schedule, no consent or approval of, action by or in respect of, or filing, license, permit or authorization, declaration or registration with, any court or governmental or regulatory authority or agency, domestic or foreign (a "Governmental Entity"), the performance by ACP of its obligations pursuant to this Agreement and the other Transaction Documents and the consummation by ACP of the transactions contemplated hereunder and thereunder.

Section 3.4Brokers. No broker, investment banker, financial advisor or other Person is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the transactions contemplated by this Agreement or the other Transaction Documents based upon arrangements made by or on behalf of ACP or the Tower Companies.

Section 3.5No Other Representations and Warranties. Except for the representations and warranties contained in this Article III (including the related portions of the Disclosure Schedules), none of ACP or any other Person has made or makes any other express or implied representation or warranty, either written or oral, on behalf of ACP, including any representation or warranty as to the accuracy or completeness of any information regarding the Tower Companies furnished or made available to AmTrust and its representatives.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF AMTRUST

Subject to the exceptions and qualifications set forth in the Disclosure Schedule, AmTrust represents and warrants to ACP as follows:

Section 4.1Organization, Standing and Corporate Power. AmTrust is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has the requisite corporate power and authority to carry on its business as now being conducted.

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Section 4.2Authority. AmTrust has the requisite corporate power and authority to enter into this Agreement and the other Transaction Documents and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the other Transaction Documents by AmTrust and the consummation by AmTrust of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of AmTrust. No action by the stockholders of AmTrust is necessary to authorize the execution and delivery by AmTrust of this Agreement and the other Transaction Documents and the consummation by AmTrust of the transactions contemplated hereby and thereby. This Agreement and each of the other Transaction Documents has been duly executed and delivered by AmTrust and, assuming this Agreement constitutes the valid, legal and binding agreement of ACP, constitutes a valid, legal and binding obligation of AmTrust, enforceable against AmTrust in accordance with its terms except that (i) such enforcement may be subject to applicable bankruptcy, insolvency or other similar laws, now or hereafter in effect, affecting creditors' rights generally and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

Section 4.3Noncontravention; Consents. The execution and delivery of this Agreement and the other Transaction Documents do not, and except as disclosed in Section 4.3 of the Disclosure Schedule, the consummation of the transactions contemplated hereby or thereby will not, (i) conflict with, be prohibited by, or require any approval that has not already been obtained under, any of the provisions of the certificate of incorporation or the by-laws of AmTrust or the comparable organizational documents of any of its Subsidiaries, (ii) subject to the matters referred to in the next sentence, conflict with, result in a breach of or default (with or without notice or lapse of time, or both) under, be prohibited by, require approval or consent under, give rise to a right of termination under, or result in the creation of any Lien (other than a Permitted Lien) on any property or asset of AmTrust or any of its Affiliates under, any agreement, permit, franchise, license or instrument to which AmTrust or any of its Subsidiaries is a party or (iii) subject to the matters referred to in the next sentence, contravene, be prohibited by, or require approval or consent under, any Applicable Law, judgment, injunction or award applicable to AmTrust or any of its Subsidiaries, which, in the case of clauses (ii) and (iii) above, would materially impair the ability of AmTrust to consummate any of the transactions contemplated hereby or thereby. No consent, approval or authorization of, or declaration or filing with, or notice to, any Governmental Entity is required by or with respect to AmTrust or any of its Subsidiaries in connection with the execution and delivery of this Agreement or the other Transaction Documents by AmTrust or the consummation by AmTrust of any of the transactions contemplated hereby or thereby, except for (i) the approvals, filings and notices required under the insurance laws of the jurisdictions set forth in Section 4.3 of the Disclosure Schedule, (ii) such other consents, approvals, authorizations, declarations, filings or notices as are set forth in Section 4.3 of the Disclosure Schedule and (iii) such other consents, approvals, authorizations, declarations, filings or notices that are not required to be set forth pursuant to clauses (ii) and (iii) the failure to obtain or make which, in the aggregate, would not materially impair the ability of AmTrust to consummate any of the transactions contemplated hereby.

Section 4.4Litigation. There is no suit, action, proceeding or arbitration pending or threatened in writing against or affecting AmTrust or any Affiliate of AmTrust that (i) seeks to restrain or enjoin the consummation of any of the transactions contemplated by this Agreement or the other Transaction Documents or (ii) would reasonably be expected to impair the ability of AmTrust to consummate any of the transactions contemplated by this Agreement or the other Transaction Documents.

Section 4.5Brokers. No broker, investment banker, financial advisor or other person is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the transactions contemplated by this Agreement or the other Transaction Documents based upon arrangements made by or on behalf of AmTrust or any Affiliate.

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ARTICLE V

COVENANTS

Section 5.1Employees of the Tower Companies.

(a)    From time to time on or after the date hereof, upon ten (10) days written notice to ACP and National General (an "Employee Offer Notice"), subject to subsection (b) below, AmTrust may, or may cause an Affiliate to, offer employment to employees of any Tower Company or its Affiliates that AmTrust reasonably determines are necessary for the Commercial Lines Business under terms and conditions satisfying the obligations of ACP under the Merger Agreement (as defined in the Master Agreement) with respect to such employees.

(b)    If within ten (10) days of receipt of an Employee Offer Notice, neither National General nor ACP has objected in writing to the making of offers of employment to the employees indicated in such Employee Offer Notice, AmTrust may make an offer of employment to such employees. If National General or ACP provides such written objection, ACP, National General and AmTrust shall negotiate in good faith to coordinate the employment or retention of such employees among themselves. If an agreement as to the employment or retention of such employees is reached, AmTrust may make offers to such employees pursuant to such agreement. If within thirty (30) days of the delivery of any such objection, ACP, National General and AmTrust shall have failed to reach an agreement with respect to the employment or retention of such employees, ACP, AmTrust and National General shall enter mediation. In the event pursuant to such mediation ACP, National General and AmTrust shall reach an agreement as the employment or retention of such employees, AmTrust may make offers of employment to the employees designated in such agreement.

(c)    Nothing contained in this Agreement shall confer upon any employee of any Tower Company or any of its Affiliates any right with respect to continued employment by AmTrust or any of its Affiliates. No provision of this Agreement shall create any third-party rights in any such employee, or any beneficiary or dependent thereof, with respect to the compensation, terms and conditions of employment and benefits that may be provided to such employee by AmTrust or any of its Affiliates or under any benefit plan that AmTrust or any of its Affiliates may maintain.

Section 5.2Confidential Information.

(a)    The Parties hereby agree to treat as confidential any and all reports, information, and data relating to, obtained by, prepared or assembled by, or given to the other or developed as a result of information supplied by or on behalf of any Party under this Agreement, or by reason of, or relating to, the transactions contemplated by or incidental to this Agreement, including but not limited to any materials, presentations, records, and all matters affecting or relating to the proposed business and operations under the Program (such information being collectively referred to herein as "Confidential Information"). For purposes of this Section 5.2, the party disclosing Confidential Information will be referred to as the "Disclosing Party" and the party receiving Confidential Information will be referred to as the "Receiving Party."

(b)    The Parties shall each take appropriate steps to ensure that all Confidential Information is kept confidential by the respective Parties and each of their directors, officers, principals, shareholders, affiliates, employees, agents and advisors, and that such Confidential Information will not be divulged, disclosed or communicated to any person, firm, association, corporation or other entity, during or subsequent to the Term of this Agreement, provided, however, that (a) disclosure of any Confidential

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Information to which the Disclosing Party has consented in writing may be made; (b) any Confidential Information may be disclosed to regulatory authorities or other appropriate parties pursuant to Laws or legal process after notice is given to the Disclosing Party to allow the Disclosing Party to contest or limit the scope of Confidential Information to be disclosed; (c) Confidential Information may also be disclosed to auditors of any Receiving Party, Tower Company reinsurers or retrocessionaires, to the extent reasonably appropriate; and (d) Confidential Information may also be disclosed by a Receiving Party to its Affiliates, provided the Receiving Party directs such Affiliates to treat such Confidential Information confidentially and in accordance with the terms of this Agreement.

(c)    In the event of a breach of this Section 5.2 relating to Confidential Information, the affected Party shall be entitled to seek specific performance and injunctive or other equitable relief as a remedy for any such breach, which shall not be deemed to be the exclusive remedy for such breach, but shall be in addition to all the remedies available at law or equity.

(d)    The term "Confidential Information" as used in this Agreement does not include information which (i) was or becomes generally available to the public other than as a result of the disclosure by or on behalf of the Receiving Party; (ii) was or becomes available on a non-confidential basis from a source other than the Receiving Party or its representatives, provided that such source is not bound by a confidentiality agreement with, or similar obligation to the Disclosing Party; or (iii) is independently developed by the Receiving Party without the use of such information.

(e)    AmTrust may from time to time provide each Tower Company with access to certain proprietary systems developed by AmTrust, including without limitation, any source code, object code, executable code, data, databases, and related documentation in respect thereof (collectively, the "AmTrust IP"). Each Tower Company acknowledges and agrees that the AmTrust IP, including without limitation program code, specifications, logic, design, ideas, techniques, know-how and procedures contained therein and all related documentation are confidential intellectual property exclusively owned by AmTrust. This Agreement does not grant and shall not be construed to grant any license or right to use the AmTrust IP except as expressly authorized in writing by AmTrust. Each Tower Company and its employees shall not disclose AmTrust IP or any part thereof to any third party, including affiliates, except as expressly authorized by AmTrust. Each Tower Company shall not (a) use or access the AmTrust IP for any purpose other than performing its duties under this Agreement; or (b) modify, enhance, reverse engineer, delink, disassemble or decompile any of the AmTrust IP or part thereof.

Section 5.3Covenant Not to Compete, Solicit or Hire.

(a)    ACP and each of its subsidiaries (including, without limitation, the Tower Companies) (collectively, the "ACP Parties") acknowledges and agrees that AmTrust and its Affiliates would be irreparably damaged if any ACP Party were to provide services or to otherwise participate in the business of any Person competing with the Commercial Lines Business in a similar business and that any such competition by an ACP Party would result in a significant loss of goodwill by AmTrust in respect of the Commercial Lines Business. Each ACP Party further acknowledges and agrees that the covenants and agreements set forth in this Section 5.3 were a material inducement to AmTrust to enter into this Agreement and the other Transaction Documents (as defined in the Master Agreement) and to perform its obligations hereunder and thereunder, and that AmTrust and its Affiliates would not obtain the benefit of the bargain set forth in this Agreement or the other Transaction Documents as specifically negotiated by the parties hereto and thereto if any ACP Party breached the provisions of this Section 5.3. Therefore, in further consideration of AmTrust's performance of its obligations hereunder and under the other Transaction Documents, each of the ACP Parties agrees that during the period in which any parties have any obligations under any of the

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Transaction Documents (including, without limitation, the Credit Agreement) and the five-year period thereafter, it shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, either for itself, himself or herself or through any other Person, engage in, participate in, or permit such Person’s name to be used by any enterprise engaging in or participating in, the Commercial Lines Business; provided, that the foregoing shall not restrict or prohibit the ACP Parties from engaging in reinsurance transactions in respect of the Commercial Lines Business. For purposes of this Agreement, the term "participate" includes any direct or indirect interest in any enterprise, whether as a stockholder, member, partner, joint venturer, franchisor, franchisee, executive, consultant or otherwise (other than by ownership of less than two percent (2%) of the stock of a publicly held corporation) or rendering any direct or indirect service or assistance to any Person. Each ACP Party agrees that this covenant is reasonably designed to protect AmTrust’s substantial investment and is reasonable with respect to its duration, geographical area and scope.

(b)    For so long as any ACP Party has continuing obligations under Section 3.3(a) above, such ACP Party shall not (and shall cause its, his or her Subsidiaries not to) directly, or indirectly through another Person, (a) induce or attempt to induce (other than by a general solicitation advertisement, posting or similar job solicitation process) any employee, agent or producer of AmTrust or its Affiliates engaged in the Commercial Lines Business to leave the employ of AmTrust or any of its Subsidiaries or Affiliates, or in any way interfere with the relationship between AmTrust or any of its Subsidiaries or Affiliates and any such employee, except in accordance with Section 5.1, (b) hire (other than by a general solicitation advertisement, posting or similar job solicitation process) any employee, agent or producer of AmTrust or any of its Subsidiaries or Affiliates at any time during the six-month period immediately prior to the date on which such hiring would take place (it being conclusively presumed by the Parties so as to avoid disputes under this Section 5.3(b) that any such hiring (other than by a general solicitation advertisement, posting or similar job solicitation process) within such six-month period is in violation of clause (i) above) , except in accordance with Section 5.1, or (c) call on, solicit or service any customer, agent, producer, supplier, licensee, licensor or other business relation of the Commercial Lines Business in order to induce or attempt to induce such Person to cease doing or decrease their business with AmTrust or any of its Subsidiaries or Affiliates, or in any way interfere with the relationship between any such customer, supplier, licensee or business relation and AmTrust or any of its Subsidiaries or Affiliates (including making any negative statements or communications about AmTrust or any of its Subsidiaries or Affiliates).

(c)    If, at the time of enforcement of any of the provisions of this Section 5.3, a court determines that the restrictions stated herein are unreasonable under the circumstances then existing, then the Parties agree that the maximum period, scope or geographical area reasonable under the circumstances shall be substituted for the stated period, scope or area. The Parties further agree that such court shall be allowed to revise the restrictions contained herein to cover the maximum period, scope or geographical area permitted by law.

(d)    If an ACP Party (the "Restricted Persons") breaches, or threatens to commit a breach of, any of the provisions of this Section 5.3 (the "Restrictive Covenants"), AmTrust will have the following rights and remedies, each of which rights and remedies shall be independent of the others and severally enforceable, and each of which is in addition to, and not in lieu of, any other rights and remedies available to AmTrust at law or in equity:

(i) the right and remedy to have the Restrictive Covenants specifically enforced by any court of competent jurisdiction, it being agreed that any breach or threatened breach of the Restrictive Covenants would cause irreparable injury to AmTrust and that money damages would not provide an adequate remedy to AmTrust; and

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(ii) the right and remedy to require the Restricted Persons to account for and pay over to AmTrust any profits, monies, accruals, increments or other benefits derived or received by the Restricted Persons as the result of any transactions constituting a breach of the Restrictive Covenants.

Section 5.4Commercially Reasonable Efforts. Upon the terms and subject to the conditions and other agreements set forth in this Agreement, each of the parties agrees to use its commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement. The parties acknowledge and agree that any reference made to commercially reasonable efforts in this Agreement shall not include any obligation to commence or continue any contested arbitration or litigation other than the filing of a proof of claim or similar filing requirement necessary to preserve a claim against any insolvent or otherwise financially impaired debtor.

Section 5.5Consents, Approvals and Filings. ACP and AmTrust shall each use their commercially reasonable efforts, and shall cooperate fully with each other (i) to comply as promptly as practicable with all governmental requirements applicable to the transactions contemplated by this Agreement and (ii) to obtain as promptly as practicable all necessary permits, orders or other consents, approvals or authorizations of Governmental Entities and consents or waivers of all third parties necessary in connection with the consummation of the transactions contemplated by this Agreement. In connection therewith, ACP and AmTrust shall make and cause their respective Affiliates to make all legally required filings as promptly as practicable in order to facilitate prompt consummation of the transactions contemplated by this Agreement, and shall provide and shall cause their respective Affiliates to provide such information and communications to Governmental Entities as such Governmental Entities may request. The parties hereto shall not willfully take any action that will have the effect of delaying, impairing or impeding the receipt of allnecessary permits, orders or other consents, approvals or authorizations of Governmental Entities and consents or waivers of all third parties necessary in connection with the consummation of the transactions contemplated by this Agreement.

Section 5.6Public Announcements. Until the Transaction Closing Date, the parties hereto shall consult with each other before issuing, and give each other the opportunity to review and comment upon, any press release or other public statements with respect to the transactions contemplated hereunder, and shall not issue any such press release or make any such public statement prior to such consultation and joint approval of AmTrust and ACP, except as may be required by Applicable Law, court process or the rules and regulations of any national securities exchange or national securities quotation system provided that, to the extent possible under the circumstances, the party making such disclosure consults with the other party, and considers in good faith the views of the other party, before doing so.

Section 5.7Further Assurances. ACP and AmTrust agree, and ACP, prior to the Transaction Closing, and AmTrust, after the Transaction Closing, agree to cause the Tower Companies and each of their Subsidiaries, to execute and deliver such other documents, certificates, agreements and other writings and to take such other actions as may be reasonably necessary or desirable in order to consummate or implement expeditiously the transactions contemplated by this Agreement.

Section 5.8Notice of Events.

(a)AmTrust shall promptly notify ACP, and ACP shall promptly notify AmTrust, in writing, upon (1) becoming aware of any order or decree or any complaint praying for an order or decree

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restraining or enjoining the execution of this Agreement or the consummation of the transactions contemplated by this Agreement, or (2) receiving any notice from any Governmental Entity of its intention to (i) institute a suit or proceeding to restrain or enjoin the execution of this Agreement or the consummation of the transactions contemplated by this Agreement or (ii) nullify or render ineffective this Agreement or such transactions if consummated.

(b)During the period from the date hereof to the Transaction Closing Date or the earlier termination of this Agreement, AmTrust shall promptly notify ACP in writing if AmTrust becomes aware of: (i) the occurrence or non-occurrence of any event or the existence of any fact or condition that would cause or constitute a breach of any of its representations or warranties had any such representation or warranty been made as of the time of AmTrust's discovery of such event, fact or condition; (ii) any material failure on its part or ACP's or the Tower Companies' part to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; or (iii) the occurrence or non-occurrence of any event or the existence of any fact or condition that would cause or constitute a breach of any of ACP's representations or warranties hereunder.

(c)During the period from the date hereof to the Transaction Closing Date or the earlier termination of this Agreement, ACP shall promptly notify AmTrust in writing if ACP becomes aware of: (i) the occurrence or non-occurrence of any event or the existence of any fact or condition that would cause or constitute a breach of any of its representations or warranties had any such representation or warranty been made as of the time of ACP's discovery of such event, fact or condition; (ii) any material failure on its part or AmTrust's part to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; or (iii) the occurrence or non-occurrence of any event or the existence of any fact or condition that would cause or constitute a breach of any of AmTrust's representations or warranties hereunder.

Section 5.9Merger Agreement. During the period from the date hereof to the Transaction Closing Date or the earlier termination of this Agreement, ACP shall promptly notify AmTrust in writing if ACP becomes aware of: (a) the occurrence or non-occurrence of any event or the existence of any fact or condition that would cause or constitute a material breach of any of Tower's representations or warranties set forth in the Merger Agreement had any such representation or warranty been made as of the time of ACP's discovery of such event, fact or condition; (b) any material failure on Tower's part to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it under the Merger Agreement; or (c) the occurrence or non-occurrence of any event or the existence of any fact or condition that would cause or constitute a material breach of any of Tower's representations or warranties under the Merger Agreement. ACP hereby agrees that without AmTrust's written consent that it shall not waive: (x) any material breach by Tower of any of its representation or warranty set forth in the Merger Agreement; or (y) any material failure by Tower to comply with any covenants or conditions to closing contained in the Merger Agreement.

Section 5.10Transition Services. From time to time following the Transaction Closing Date, AmTrust may request from ACP any transition services that AmTrust reasonably determines are necessary for the Commercial Lines Business. AmTrust shall reimburse ACP for any costs actually incurred by ACP in providing any such services to AmTrust.

Section 5.11Use of Office Space. From time to time following the Transaction Closing Date, AmTrust may elect to use of all or a portion of the office space used by any of the Companies prior to such date, including, without limitation, employee work stations, telephone and computer equipment and other facilities as AmTrust determines are reasonably necessary for the Commercial Lines Business. AmTrust shall reimburse ACP for costs actually incurred by ACP in connection therewith.

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ARTICLE VI

RESERVED

ARTICLE VII

CONDITIONS PRECEDENT

Section 7.1Conditions to Each Party's Obligations. The respective obligations of each party to consummate the transactions contemplated hereby are subject to the satisfaction or waiver on or prior to the Transaction Closing Date of the following conditions:

(a)Governmental Consents. All filings required to be made prior to the Transaction Closing Date with, and all consents, approvals, permits and authorizations required to be obtained prior thereto from, Governmental Entities in connection with the consummation of the transactions contemplated hereby by ACP and AmTrust set forth in Section 3.3 and Section 4.3 of the Disclosure Schedule shall have been made or obtained.

(b)No Injunctions or Restraints. No temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction and no Applicable Law of any Governmental Entity preventing the consummation of the Transactions or any of the other transactions contemplated hereby shall be in effect; provided, that the party invoking this condition shall have used all reasonable efforts to have any such order or injunction vacated, and no Governmental Entity shall have instituted any proceeding that is pending seeking any such order, preliminary or permanent injunction or other order to prohibit the consummation of the transactions contemplated hereby or any of the other transactions contemplated hereby.

(c)Consents. All consents, waivers, clearances, approvals and authorizations from third parties under the contracts and agreements set forth on Section 7.1(c) of the Disclosure Schedule as being required to be obtained prior to Transaction Closing shall have been retained.

(d)Merger Agreement.    The Closing (as defined in the Merger Agreement) of the Merger (as defined in the Merger Agreement) shall occur contemporaneous with the transactions contemplated herein.

(e)Personal Lines Master Agreement. The transactions contemplated by the Personal Lines Master Agreement to be effected as of the "Transaction Closing" (as defined in the Personal Lines Master Agreement) shall occur contemporaneous with the transactions contemplated herein.

Section 7.2Conditions to Obligations of AmTrust. The obligations of AmTrust to consummate the transactions contemplated hereby and the other actions to be taken at the Transaction Closing are further subject to the satisfaction or waiver by AmTrust on or prior to the Transaction Closing Date of the following conditions:

(a)Representations and Warranties. The representations and warranties of ACP in this Agreement shall be true and correct in all material respects, in each case as of the date of this Agreement and as of the Transaction Closing Date as though made on and as of the Transaction Closing Date (except as to any representation or warranty which specifically relates to another date).

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(b)Performance of Obligations of ACP. ACP shall have performed in all material respects all obligations required to be performed by it under this Agreement on or prior to the Transaction Closing Date.

(c)Closing Deliveries. ACP shall have delivered to AmTrust each of the items described in Section 2.2.

Section 7.3Conditions to Obligations of ACP. The obligations of ACP to consummate the transactions contemplated hereby and the other actions to be taken at the Transaction Closing are further subject to the satisfaction or waiver by ACP on or prior to the Transaction Closing Date of the following conditions:

(a)Representations and Warranties. The representations and warranties of AmTrust set forth in this Agreement shall be true and correct in all material respects, in each case as of the date of this Agreement and as of the Transaction Closing Date as though made on and as of the Transaction Closing Date (except as to any representation or warranty which specifically relates to another date).

(b)Performance of Obligations of AmTrust. AmTrust shall have performed in all material respects all obligations required to be performed by it under this Agreement on or prior to the Transaction Closing Date.

(c)Closing Deliveries. AmTrust shall have delivered to ACP each of the items described in Section 2.3.

Section 7.4Frustration of Closing Conditions. No party to this Agreement may rely on the failure of any condition set forth in this Article VII to be satisfied if such failure was caused by such party's failure to use reasonable best efforts to cause the Transaction Closing to occur, as required by Section 5.1 hereof.

ARTICLE VIII

INDEMNIFICATION

Section 8.1Obligation to Indemnify.

(a)ACP agrees to indemnify, defend and hold harmless AmTrust and its Affiliates and their respective representatives from and against all Losses relating to a Third-Party Claim to the extent such Losses are determined to have arisen from or relate to any material breach of any of the covenants and agreements of ACP contained in this Agreement.

(b)AmTrust agrees to indemnify, defend and hold harmless ACP and its Affiliates and their respective representatives from and against all Losses relating to a Third-Party Claim to the extent such Losses are determined to have arisen from or relate to any breach of any of the covenants and agreements of AmTrust contained in this Agreement.

(c)The parties' obligations pursuant to this Section 8.1 shall terminate as of the Transaction Closing Date, except for claims based on actual fraud, criminal activity or willful misconduct. Following the Transaction Closing Date, the parties' indemnification rights and obligations shall be as set forth in the applicable Transaction Document.

Section 8.2Indemnification Procedures.

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(a)If any third party shall notify either party (the "Indemnified Party") with respect to any matter (a "Third-Party Claim") which may give rise to a claim for indemnification against any other Party (the "Indemnifying Party") under this Article VIII, then the Indemnified Party shall promptly (and in any event within five Business Days after receiving notice of the Third-Party Claim) notify the Indemnifying Party thereof in writing.

(b)An Indemnifying Party will have the right at any time to assume and thereafter conduct the defense of the Third-Party Claim with counsel of its choice; provided, that the Indemnifying Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third-Party Claim without the prior written consent of the Indemnified Party (not to be unreasonably withheld) unless the judgment or proposed settlement involves only the payment of money damages and does not impose an injunction or other equitable relief upon the Indemnified Party.

(c)Unless and until an Indemnifying Party assumes the defense of the Third-Party Claim as provided in Section 8.2(b) above, the Indemnified Party may defend against the Third-Party Claim in any manner it may reasonably deem appropriate.

(d)In no event will the Indemnified Party consent to the entry of any judgment on or enter into any settlement with respect to the Third-Party Claim without the prior written consent of each of the Indemnifying Parties.

ARTICLE IX

TERMINATION PRIOR TO CLOSING

Section 9.1Termination of Agreement. This Agreement may be terminated at any time prior to the Transaction Closing:

(a)by the written agreement of AmTrust and ACP;

(b)by either ACP or AmTrust in writing, if there shall be any order, injunction or decree of any Governmental Entity which prohibits or restrains any party from consummating the transactions contemplated hereby, and such order, injunction or decree shall have become final and nonappealable;

(c)by either ACP or AmTrust in writing, if a Governmental Entity shall have disapproved a Regulatory Approval;

(d) unless ACP or AmTrust otherwise agree in writing, upon the withdrawal of filings submitted in connection with any Regulatory Approvals; or

(e)automatically, following the termination of the Merger Agreement.

Section 9.2Effect of Termination. In the event of termination pursuant to Section 9.1, this Agreement shall become null and void and have no effect (other than Section 5.6 (Public Announcements), Article VIII (Indemnification), this Section 9.2 and Article X (General Provisions), all of which shall survive termination of this Agreement), and there shall be no liability on the part of ACP, the Tower Companies or AmTrust or their respective directors, officers and Affiliates, except (a) as liability may exist pursuant to the sections specified in the immediately preceding parenthetical that survive such termination and (b) that no such termination shall relieve any party from liability for any willful and material breach by such party of any representation, warranty, covenant or agreement set forth in this Agreement or fraud. For purposes hereof, "willful and material breach" means a material breach by a party of the applicable provision of this

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Agreement as a result of an action or failure to act by such Person that it knew would result in a breach of this Agreement.

ARTICLE X

GENERAL PROVISIONS

Section 10.1No Survival of Representations, Warranties, Covenants and Agreements. This Article X, Article VIII and the agreements of ACP and AmTrust contained in Article II, Article V and Article VI shall survive the Effective Time. No other representations, warranties, covenants or agreements in this Agreement shall survive the Effective Time.

Section 10.2Fees and Expenses. Whether or not the transactions contemplated hereby are consummated, each party hereto shall pay its own fees and expenses incident to preparing for, entering into and carrying out this Agreement and the consummation of the transactions contemplated hereby. For the avoidance of doubt, ACP shall be solely responsible for the payment of all of the transaction expenses incurred by or on behalf of ACP or the Tower Companies incident to the transaction which is the subject of this Agreement, including investment banking fees, accounting fees and legal fees.

Section 10.3Notices. All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be deemed given if delivered personally, by facsimile (which is confirmed as provided below) or sent by overnight courier (providing proof of delivery) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):

if to AmTrust, to

59 Maiden Lane, 43^rd Floor
New York, New York 10038
(646) 458-7913
Fax: (212) 220-7130
Attention: Stephen Ungar, Esq.

if to ACP, toWashington Mall

7 Reid Street, Suite 404

Hamilton HM11 Bermuda

Attn: General Counsel

Notice given by personal delivery or overnight courier shall be effective upon actual receipt. Notice given by facsimile shall be confirmed by appropriate answer back and shall be effective upon actual receipt if received during the recipient's normal business hours, or at the beginning of the recipient's next Business Day if not received during the recipient's normal business hours. All notices by facsimile shall be confirmed promptly after transmission in writing by personal delivery or overnight courier.

Section 10.4Interpretation. When a reference is made in this Agreement to a section, exhibit or schedule, such reference shall be to a section of, or an exhibit or schedule to, this Agreement unless otherwise indicated. The inclusion of any information in the Disclosure Schedule will not be deemed an admission or acknowledgment, in and of itself and solely by virtue of the inclusion of such information in the Disclosure Schedule, that such information is required to be listed in the Disclosure Schedule or that such items are material to the Tower Companies. The specification of any dollar amount in the Disclosure Schedule is not

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intended to imply that such amount, or higher or lower amounts is or is not material for purposes of this Agreement and no party shall use the fact of the setting forth of such amount in any dispute or controversy between the parties as to whether any obligation, item or matter not described therein is or is not material for purposes of this Agreement. Unless the Agreement specifically provides otherwise, neither the specification of any item or matter in any representation or warranty contained in this Agreement nor the inclusion of any specific item in the Disclosure Schedule is intended to imply that such item or matter, or other items or matters, are or are not in the ordinary course of business (except as expressly provided herein), and no party shall use the fact of the setting forth or the inclusion of any such item or matter in any dispute or controversy among the parties as to whether any obligation, item or matter not described in this Agreement or included in any Disclosure Schedule is or is not in the ordinary course of business for purposes of this Agreement (except as expressly provided herein). The disclosure of an item in one section of the Disclosure Schedule as an exception to a particular covenant, representation or warranty will be deemed adequately disclosed as an exception with respect to all other covenants, representations or warranties to the extent that the relevance of such item to such other covenants, representations or warranties is reasonably apparent on the face of such item, notwithstanding the presence or absence of an appropriate section of the Disclosure Schedule with respect to such other covenants, representations or warranties or an appropriate cross-reference thereto. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words "include", "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation." Whenever the singular is used herein, the same shall include the plural, and whenever the plural is used herein, the same shall include the singular, where appropriate.

Section 10.5Entire Agreement; Third-Party Beneficiaries. This Agreement (including all exhibits and schedules hereto) constitutes the entire agreement, and supersedes all prior agreements, understandings, representations and warranties, both written and oral, among the parties with respect to the subject matter of this Agreement. AmTrust has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of the transactions contemplated hereby and is capable of bearing the economic risks thereof. Except as expressly provided herein, this Agreement is not intended to confer upon any Person other than the parties hereto any rights or remedies.

Section 10.6Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts executed in and to be performed entirely within that State, regardless of the laws that might otherwise govern under any applicable conflict of laws principles, except to the extent the provisions of the laws of Bermuda are mandatorily applicable to the Merger.

Section 10.7Assignment. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise by any of the parties without the prior written consent of the other parties, and any such assignment that is not consented to shall be null and void. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns.

Section 10.8Dispute Resolution; Enforcement.

(a)In the event of any dispute arising under this Agreement, prior to the commencement of litigation, a senior officer of AmTrust and a senior officer of ACP shall attempt in good faith to resolve the dispute consistent with the terms of this Agreement. If they are unable to resolve the dispute in this manner within a reasonable period of time, the parties may pursue judicial remedies with respect to such dispute. This section shall not apply to any application to obtain emergency judicial intervention.

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(b)All actions and proceedings arising out of or relating to the interpretation and enforcement of the provisions of this Agreement and in respect of the transactions contemplated by this Agreement (except to the extent any such proceeding mandatorily must be brought in Bermuda) shall be heard and determined in the United States District Court for the Southern District of New York and any Federal appellate court therefrom (or, if United States federal jurisdiction is unavailable over a particular matter, the Supreme Court of the State of New York, New York County) and the parties hereto hereby irrevocably submit to the exclusive jurisdiction and venue of such courts in any such action or proceeding and irrevocably waive the defense of an inconvenient forum or lack of jurisdiction to the maintenance of any such action or proceeding. The consents to jurisdiction and venue set forth in this Section 10.8(b) shall not constitute general consents to service of process in the State of New York and shall have no effect for any purpose except as provided in this paragraph and shall not be deemed to confer rights on any Person other than the parties hereto. Each party hereto agrees that service of process upon such party in any action or proceeding arising out of or relating to this Agreement shall be effective if notice is given by overnight courier at the address set forth in Section 10.3 of this Agreement. The parties hereto agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Law; provided, that nothing in the foregoing shall restrict any party's rights to seek any post-judgment relief regarding, or any appeal from, a final trial court judgment.

Section 10.9WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY LAW, THE PARTIES HERETO HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON, ARISING OUT OF, RELATED TO OR CONNECTED WITH THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

Section 10.10Severability; Amendment and Waiver.

(a)Whenever possible, each provision or portion of any provision of this Agreement will be interpreted in such manner as to be effective and valid under Applicable Law, but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any Applicable Law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or portion of any provision in such jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein.

(b)This Agreement may be amended, and the terms hereof may be waived, only by a written instrument signed by each of the parties or, in the case of a waiver, by the party waiving compliance.

(c)No delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any right, power or privilege, nor any single or partial exercise of any such right, power or privilege, preclude any further exercise thereof or the exercise of any other such right, power or privilege.

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Section 10.11Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

[Signature Page Follows]

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IN WITNESS WHEREOF, ACP and AmTrust have caused this Agreement to be signed by their respective officers thereunto duly authorized as of the date first written above.

ACP RE, LTD

By /s/ Michael Karfunkel    

Name: Michael Karfunkel    

Title: Chairman    

AMTRUST FINANCIAL SERVICES, INC.

By /s/ Stephen Ungar    

Name: Stephen Ungar    

Title: Secretary     

[Signature Page to Amended and Restated Commercial Lines Master Agreement]

Exhibits A - H

Exhibits A-H were previously included as exhibits to the Commercial Lines Master Agreement dated as of April 8, 2014 by and between ACP Re Ltd. and the Company, filed with the Securities and Exchange Commission on August 11, 2014 as Exhibit 10.1 to the Company’s Form 10-Q for the quarter ended June 30, 2014, and are incorporated by reference herein.

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Barry Zyskind, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of AmTrust Financial Services, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	August 11, 2014	By:	/s/ Barry Zyskind
			Barry Zyskind
			President and Chief Executive Officer
			(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Ronald Pipoly, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of AmTrust Financial Services, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	August 11, 2014	By:	/s/ Ronald Pipoly
			Ronald Pipoly
			Chief Financial Officer
			(Principal Financial and Accounting Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Barry Zyskind, President and Chief Executive Officer (Principal Executive Officer) of AmTrust Financial Services, Inc. (the “Company”), hereby certify, that, to my knowledge:

1. The Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 (the “Report”) of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	August 11, 2014	By:	/s/ Barry Zyskind
			Barry Zyskind
			President and Chief Executive Officer
			(Principal Executive Officer)

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Ronald Pipoly, Chief Financial Officer (Principal Financial and Accounting Officer) of AmTrust Financial Services, Inc. (the “Company”), hereby certify, that, to my knowledge:

1. The Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 (the “Report”) of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	August 11, 2014	By:	/s/ Ronald Pipoly
			Ronald Pipoly
			Chief Financial Officer
			(Principal Financial and Accounting Officer)

XML

Investments - Summary of Available for Sale Fixed Securities by Contractual Maturity (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Total fixed maturities	$ 3,925,907	$ 3,107,043
Total fixed maturities	4,040,484	3,100,936
Fixed maturities
Schedule of Available-for-sale Securities [Line Items]
Due in one year or less	156,550	128,128
Due after one through five years	630,676	592,703
Due after five through ten years	1,875,956	1,632,115
Due after ten years	387,334	334,846
Mortgage and asset backed securities	875,391	735,827
Total fixed maturities	3,925,907	3,423,619
Due in one year or less	157,578	128,214
Due after one through five years	651,908	603,942
Due after five through ten years	1,957,538	1,631,751
Due after ten years	387,712	321,372
Mortgage and asset backed securities	885,748	727,175
Total fixed maturities	$ 4,040,484	$ 3,412,454

XML

Investment in Life Settlements - Additional Information (Parenthetical) (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2014 policy Contract	Dec. 31, 2013 policy Contract
Investments, All Other Investments [Abstract]
Life settlement contracts, number of contracts with fair value	222	191
Total number of Life Settlement Contracts	288	271
Life settlement contracts, number of contracts with no fair value	66	80
Premiums paid for the preceding twelve month period for period ended	$ 7,342	$ 9,371
Death benefit received	$ 3,012	$ 3,012

XML

Fair Value of Financial Instruments - Reconciliation (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Net income	$ 6,903	$ 10,597	$ 24,601	$ 20,729
(Loss) gain on investment in life settlement contracts net of profit commission	(5,070)	1,080	(2,270)	4
Life settlement contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Net income	5,796	10,890	22,783	20,815
Premiums paid	(11,078)	(9,119)	(22,472)	(18,546)
Other Expenses	(607)	(415)	(1,997)	(1,502)
(Loss) gain on investment in life settlement contracts net of profit commission	(5,070)	1,080	(2,270)	4
Life settlement contract profit commission
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Net income	$ 819	$ (276)	$ (584)	$ (763)

XML

Income Taxes - Reconciliation of Statutory Federal Income Tax Rate to Effective Tax Rate (Parenthetical) (Detail)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Income Tax Disclosure [Abstract]
Federal statutory rate	35.00%	35.00%

XML

Investment in Life Settlements - Premiums to be Paid (Detail) (Premiums Due On Life Settlement Contracts, USD $) In Thousands, unless otherwise specified	Jun. 30, 2014
Premiums Due On Life Settlement Contracts
Life Insurance Premiums and Related Investment Income [Line Items]
2014	$ 41,008
2015	43,688
2016	61,031
2017	39,847
2018	38,984
Thereafter	552,485
Total	$ 777,043

XML

Acquisitions - Purchase Price Allocation (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended		1 Months Ended	0 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 23, 2013 Sagicor Europe Limited	Jan. 03, 2014 Insco Dico Group
Business Acquisition [Line Items]
Cash and investments					$ 429,476	$ 130,031
Premium receivables					89,801	8,684
Prepaid insurance					122,673
Reinsurance recoverable						5,799
Other receivable					54,479
Other assets					10,502	2,114
Deferred tax asset					29,916	3,845
Property and equipment					5,010	1,190
Goodwill and intangible assets					33,539	16,494
Total assets including goodwill					775,396	168,157
Unearned premiums					113,182	25,715
Loss and loss expense reserves					496,836	25,210
Accrued liabilities					55,950	10,210
Ceded reinsurance					16,315
Notes payable						10,000
Funds held for policyholders						5,864
Deferred tax liability						2,458
Total liabilities					682,283	79,457
Cash paid					93,113	88,700
Acquisition gain	$ 0	$ 23,183	$ 0	$ 48,715

XML

Fair Value of Financial Instruments - Assets and Financial Liabilities on Recurring Basis (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	$ 4,497,629	$ 3,800,577
Fair Value of liabilities	39,531	308,221
Equity securities sold but not yet purchased, market
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair Value of liabilities	24,309
Securities sold under agreements to repurchase, at carrying value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair Value of liabilities		293,222
Life settlement contract profit commission
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair Value of liabilities	12,529	11,945
Derivatives
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair Value of liabilities	2,693	3,054
U.S. treasury securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	66,470	110,345
U.S. government agencies
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	25,692	10,489
Municipal bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	525,239	446,183
Foreign government
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	151,035	160,105
Finance | Corporate bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	1,225,383	1,084,599
Industrial | Corporate bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	1,067,903	754,417
Utilities | Corporate bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	93,014	70,226
Commercial mortgage backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	39,659	28,566
Agency, residential mortgage backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	830,135	423,137
Non-agency, residential mortgage backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	13,524	6,749
Asset-backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	2,430	6,120
Equity securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	90,527	15,148
Short term investments
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	76,324	114,202
Other investments
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	14,095	25,749
Securities Held as Collateral [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets		311,518
Life settlement contracts
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	276,199	233,024
Fair Value, Inputs, Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	233,321	288,610
Fair Value of liabilities	24,309	0
Fair Value, Inputs, Level 1 | Equity securities sold but not yet purchased, market
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair Value of liabilities	24,309
Fair Value, Inputs, Level 1 | Securities sold under agreements to repurchase, at carrying value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair Value of liabilities		0
Fair Value, Inputs, Level 1 | Life settlement contract profit commission
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair Value of liabilities	0	0
Fair Value, Inputs, Level 1 | Derivatives
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair Value of liabilities	0	0
Fair Value, Inputs, Level 1 | U.S. treasury securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	66,470	110,345
Fair Value, Inputs, Level 1 | U.S. government agencies
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	0	0
Fair Value, Inputs, Level 1 | Municipal bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	0	0
Fair Value, Inputs, Level 1 | Foreign government
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	0
Fair Value, Inputs, Level 1 | Finance | Corporate bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	0	0
Fair Value, Inputs, Level 1 | Industrial | Corporate bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	0	0
Fair Value, Inputs, Level 1 | Utilities | Corporate bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	0	0
Fair Value, Inputs, Level 1 | Commercial mortgage backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	0	0
Fair Value, Inputs, Level 1 | Agency, residential mortgage backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	0	0
Fair Value, Inputs, Level 1 | Non-agency, residential mortgage backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	0	0
Fair Value, Inputs, Level 1 | Asset-backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	0	0
Fair Value, Inputs, Level 1 | Equity securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	90,527	15,148
Fair Value, Inputs, Level 1 | Short term investments
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	76,324	114,202
Fair Value, Inputs, Level 1 | Other investments
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	0	0
Fair Value, Inputs, Level 1 | Securities Held as Collateral [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets		48,915
Fair Value, Inputs, Level 1 | Life settlement contracts
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	0	0
Fair Value, Inputs, Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	3,974,014	3,253,194
Fair Value of liabilities	2,693	296,276
Fair Value, Inputs, Level 2 | Equity securities sold but not yet purchased, market
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair Value of liabilities	0
Fair Value, Inputs, Level 2 | Securities sold under agreements to repurchase, at carrying value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair Value of liabilities		293,222
Fair Value, Inputs, Level 2 | Life settlement contract profit commission
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair Value of liabilities	0	0
Fair Value, Inputs, Level 2 | Derivatives
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair Value of liabilities	2,693	3,054
Fair Value, Inputs, Level 2 | U.S. treasury securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	0	0
Fair Value, Inputs, Level 2 | U.S. government agencies
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	25,692	10,489
Fair Value, Inputs, Level 2 | Municipal bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	525,239	446,183
Fair Value, Inputs, Level 2 | Foreign government
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	151,035	160,105
Fair Value, Inputs, Level 2 | Finance | Corporate bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	1,225,383	1,084,599
Fair Value, Inputs, Level 2 | Industrial | Corporate bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	1,067,903	754,417
Fair Value, Inputs, Level 2 | Utilities | Corporate bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	93,014	70,226
Fair Value, Inputs, Level 2 | Commercial mortgage backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	39,659	28,566
Fair Value, Inputs, Level 2 | Agency, residential mortgage backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	830,135	423,137
Fair Value, Inputs, Level 2 | Non-agency, residential mortgage backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	13,524	6,749
Fair Value, Inputs, Level 2 | Asset-backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	2,430	6,120
Fair Value, Inputs, Level 2 | Equity securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	0	0
Fair Value, Inputs, Level 2 | Short term investments
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	0	0
Fair Value, Inputs, Level 2 | Other investments
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	0	0
Fair Value, Inputs, Level 2 | Securities Held as Collateral [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets		262,603
Fair Value, Inputs, Level 2 | Life settlement contracts
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	0	0
Fair Value, Inputs, Level 3
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	290,294	258,773
Fair Value of liabilities	12,529	11,945
Fair Value, Inputs, Level 3 | Equity securities sold but not yet purchased, market
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair Value of liabilities	0
Fair Value, Inputs, Level 3 | Securities sold under agreements to repurchase, at carrying value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair Value of liabilities		0
Fair Value, Inputs, Level 3 | Life settlement contract profit commission
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair Value of liabilities	12,529	11,945
Fair Value, Inputs, Level 3 | Derivatives
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair Value of liabilities	0	0
Fair Value, Inputs, Level 3 | U.S. treasury securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	0	0
Fair Value, Inputs, Level 3 | U.S. government agencies
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	0	0
Fair Value, Inputs, Level 3 | Municipal bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	0	0
Fair Value, Inputs, Level 3 | Foreign government
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	0
Fair Value, Inputs, Level 3 | Finance | Corporate bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	0	0
Fair Value, Inputs, Level 3 | Industrial | Corporate bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	0	0
Fair Value, Inputs, Level 3 | Utilities | Corporate bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	0	0
Fair Value, Inputs, Level 3 | Commercial mortgage backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	0	0
Fair Value, Inputs, Level 3 | Agency, residential mortgage backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	0	0
Fair Value, Inputs, Level 3 | Non-agency, residential mortgage backed securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	0	0
Fair Value, Inputs, Level 3 | Asset-backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	0	0
Fair Value, Inputs, Level 3 | Equity securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	0	0
Fair Value, Inputs, Level 3 | Short term investments
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	0	0
Fair Value, Inputs, Level 3 | Other investments
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	14,095	25,749
Fair Value, Inputs, Level 3 | Securities Held as Collateral [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets		0
Fair Value, Inputs, Level 3 | Life settlement contracts
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of assets	$ 276,199	$ 233,024

XML

Related Party Transactions (Tables)

6 Months Ended

Jun. 30, 2014

Text Block [Abstract]

Results of Operations Related to Reinsurance Agreements

The following is the effect on the Company’s results of operations for the three and six months ended June 30, 2014 and 2013 related to Maiden Reinsurance agreements:

	Three Months Ended June 30,						Six Months Ended June 30,
(Amounts in Thousands)	2014			2013			2014			2013
Results of operations:
Premium written – ceded	$	(363,706	)	$	(283,052	)	$	(772,264	)	$	(588,838	)
Change in unearned premium – ceded	48,268			31,060			144,158			109,156
Earned premium - ceded	$	(315,438	)	$	(251,992	)	$	(628,106	)	$	(479,682	)
Ceding commission on premium written	$	110,969		$	82,511		$	229,309		$	172,010
Ceding commission – deferred	(19,724		)	(15,354		)	(49,958		)	(40,895		)
Ceding commission – earned	$	91,245		$	67,157		$	179,351		$	131,115
Incurred loss and loss adjustment expense – ceded	$	222,698		$	154,453		$	436,981		$	307,418

XML

Acquisitions (Sequoia and MICH Acquisition) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended		0 Months Ended	6 Months Ended	12 Months Ended		1 Months Ended	3 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	May 13, 2013 MIHC	Jun. 30, 2014 MIHC	Dec. 31, 2012 MIHC	Dec. 31, 2013 MIHC	Apr. 19, 2013 Sequoia	Jun. 30, 2014 Sequoia	Mar. 31, 2014 Sequoia
Business Acquisition [Line Items]
Cash and investments					$ 134,780				$ 215,473
Premium receivables					23,085				32,870
Reinsurance recoverable									43,793
Other assets					43,714				4,014
Deferred tax asset					5,358				1,242	7
Property and equipment					2,684				1,022
Intangible assets					6,132				11,848
Total assets					215,753				310,262
Loss and loss expense reserves					89,267				165,487
Unearned premium					27,760				59,773
Accrued liabilities					23,629				15,624
Deferred tax liability					2,146			2	4,147	2
Notes payable					6,500
Total liabilities					149,302				245,031
Cash paid					48,500
Purchase price					14,500				60,000
Acquisition gain	$ 0	$ 23,183	$ 0	$ 48,715	$ 17,951	$ 17,951	$ 19		$ 5,231	$ 5,231	$ 13

XML

Related Party Transactions - Results of Operations Related to Reinsurance Agreements (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Related Party Transaction [Line Items]
Change in unearned premium	$ (48,733)	$ (103,458)	$ (349,963)	$ (227,570)
Incurred loss and loss adjustment expense - ceded	587,233	364,110	1,145,803	636,366
Related Party Transactions
Related Party Transaction [Line Items]
Premium written - ceded	(363,706)	(283,052)	(772,264)	(588,838)
Change in unearned premium	48,268	31,060	144,158	109,156
Earned premium - ceded	(315,438)	(251,992)	(628,106)	(479,682)
Ceding commission on premium written	110,969	82,511	229,309	172,010
Ceding commission – deferred	(19,724)	(15,354)	(49,958)	(40,895)
Ceding commission - earned	91,245	67,157	179,351	131,115	131,115
Incurred loss and loss adjustment expense - ceded	$ 222,698	$ 154,453	$ 436,981	$ 307,418

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Debt - Aggregate Scheduled Maturities of Borrowings (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014
Debt Disclosure [Abstract]
2014	$ 540
2015	1,116
2016	1,167
2017	1,220
2018	3,164
Thereafter	$ 554,017

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Related Party Transactions - Additional information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended		3 Months Ended			6 Months Ended		3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended		3 Months Ended	6 Months Ended	1 Months Ended
	Jun. 30, 2014 sqft	Jun. 30, 2013	Jun. 30, 2014 sqft	Jun. 30, 2013	Jun. 30, 2014 AII	Jun. 30, 2013 AII	Dec. 31, 2007 AII	Jun. 30, 2014 AII	Jun. 30, 2013 AII	Jun. 30, 2014 Maiden	Jun. 30, 2013 Maiden	Jun. 30, 2014 Maiden	Jun. 30, 2013 Maiden	Jun. 30, 2014 NGHC	Jun. 30, 2013 NGHC	Jun. 30, 2014 NGHC	Jun. 30, 2013 NGHC	Jun. 30, 2014 59 Maiden Lane Associates, LLC	Jun. 30, 2013 59 Maiden Lane Associates, LLC	Jun. 30, 2014 59 Maiden Lane Associates, LLC	Jun. 30, 2013 59 Maiden Lane Associates, LLC	Jun. 30, 2014 33 West Monroe Associates, LLC	Jun. 30, 2013 33 West Monroe Associates, LLC	Jun. 30, 2014 33 West Monroe Associates, LLC	Jun. 30, 2013 33 West Monroe Associates, LLC	Jun. 30, 2013 Personal Lines Reinsurance	Jun. 30, 2013 Personal Lines Reinsurance	Apr. 30, 2014 Personal Express Insurance Company
Related Party Transaction [Line Items]
Proceeds from sale of business																												$ 21,743
Gain on sale of subsidiary	6,631	0	6,631	0																								6,631
Management fees														8,485	6,486	13,953	12,225
Equity in earnings of unconsolidated subsidiary – related party	3,999	7,060	22,515	8,610										3,999	7,060	22,515	8,610
Investment management fee										1,265	1,061	2,489	2,102	461	490	890	853
Service and fee income	99,542	88,102	190,500	148,615						4,650	6,783	9,670	10,442			1,057
Interest expense on collateral loan					447	436		891	930
Rate							0.90%
Office area under lease	39,992		39,992
Lease payments																		453	163	920	364	74	109	185	253
Technology services fee income														8,024	5,996	13,063	11,372
Net written premium	$ 923,670	$ 639,997	$ 2,053,951	$ 1,172,103																						$ 28,975	$ 59,627

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Shareholder Equity and Accumulated Other Comprehensive Income (Loss) - Ownership Components of Total Equity (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Class of Stock [Line Items]
Beginning Balance			$ 1,578,865	$ 1,247,465
Net income	104,189	71,397	205,917	154,398
Unrealized holding gain (loss)			87,451	(79,483)
Reclassification adjustment	149	(275)	(1,796)	3,261
Foreign currency translation			7,991	(15,565)
Unrealized gain on interest rate swap	42	716	234	936
Share exercises and compensation, other			11,130	7,253
Common share dividends			(30,170)	(18,899)
Preferred stock dividends	(1,941)	0	(3,882)	0
Capital contribution			19,955	6,158
Ending Balance	1,864,726	1,417,126	1,864,726	1,417,126
Non-Controlling Interests
Class of Stock [Line Items]
Beginning Balance			137,860	103,344
Net income			(4,090)	(877)
Foreign currency translation			188
Capital contribution			19,955	6,158
Ending Balance	153,913	108,625	153,913	108,625
AmTrust
Class of Stock [Line Items]
Beginning Balance			1,441,005	1,144,121
Net income			210,007	155,275
Unrealized holding gain (loss)			87,451	(79,483)
Reclassification adjustment			(1,796)	3,261
Foreign currency translation			7,803	(15,565)
Unrealized gain on interest rate swap			234	936
Share exercises and compensation, other			11,130	7,253
Common share dividends			(30,170)	(18,899)
Preferred stock dividends			(3,882)	0
Ending Balance	1,710,813	1,308,501	1,710,813	1,308,501
Preferred stock
Class of Stock [Line Items]
Preferred stock issuance, net of fees			0	111,130
Preferred stock | AmTrust
Class of Stock [Line Items]
Preferred stock issuance, net of fees				111,130
Common stock
Class of Stock [Line Items]
Common share (repurchase) issuance			(10,969)	472
Common stock | Non-Controlling Interests
Class of Stock [Line Items]
Common share (repurchase) issuance			0	0
Common stock | AmTrust
Class of Stock [Line Items]
Common share (repurchase) issuance			$ (10,969)	$ 472

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Acquisitions - Additional Information (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended		1 Months Ended	3 Months Ended			6 Months Ended	0 Months Ended	3 Months Ended	6 Months Ended	0 Months Ended	3 Months Ended		6 Months Ended	12 Months Ended			1 Months Ended			1 Months Ended	3 Months Ended	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Apr. 19, 2013 Sequoia	Jun. 30, 2014 Sequoia	Mar. 31, 2014 Sequoia	Jun. 30, 2013 Sequoia	Jun. 30, 2014 Sequoia	Jan. 03, 2014 Insco Dico Group State	Jun. 30, 2014 Insco Dico Group	Jun. 30, 2014 Insco Dico Group	May 13, 2013 MIHC	Jun. 30, 2014 MIHC	Jun. 30, 2013 MIHC	Jun. 30, 2014 MIHC	Dec. 31, 2012 MIHC	Dec. 31, 2013 MIHC	May 13, 2013 MIHC FNF	Dec. 23, 2013 Sagicor at Lloyd's Limited	Dec. 23, 2013 Llyods Property and Casualty Insurance syndicate	Dec. 23, 2013 Llyods Life Insurance syndicate	Dec. 23, 2013 Sagicor Europe Limited	Jun. 30, 2014 Sagicor Europe Limited	Jun. 30, 2014 Sagicor Europe Limited
Business Acquisition [Line Items]
Payment towards acquisition										$ 88,700			$ 48,500										$ 93,113
Number of sates the company wrote premiums										50
Net written premium	923,670	639,997	2,053,951	1,172,103		13,114		21,457	35,947		15,678	28,765		7,314	2,238	26,705								84,284	167,599
Service and fee income	99,542	88,102	190,500	148,615							220	579
Purchase price					60,000								14,500							93,113
Number of syndicate acquired																					1,206	44
Stamp capacity																					330,000	16,500
Subscription received by the company			(10,969)	472									472
Shares issued by the company as a part of the agreement													18,000
Discount on market price of common stock, percentage													20.00%
Discount on market price of common stock, value													118
Stock purchased by the company as part of the acquisition													8,000
Contribution to nonprofit organization																			7,882
Cash contribution retained by the company													40,618
Debt liability assumed by the company													6,500
Accrued loss reserves						7,448			7,448					4,531		4,531
Deferred tax liability					4,147	2			2	2,458			2,146					2
Acquisition gain	$ 0	$ 23,183	$ 0	$ 48,715	$ 5,231	$ 5,231	$ 13						$ 17,951			$ 17,951	$ 19

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Income Taxes - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Operating Loss Carryforwards [Line Items]
Increase in effective tax rate	15.20%	29.90%	19.80%	23.00%
Amount of unrecognized deferred tax liability	$ 463,300		$ 463,300		$ 360,000
Reclassification of Intangible to Goodwill
Operating Loss Carryforwards [Line Items]
Increase in effective tax rate	14.60%	5.00%	8.10%	6.30%

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Investments (Tables)

6 Months Ended

Jun. 30, 2014

Investments, Debt and Equity Securities [Abstract]

Amortized Cost, Estimated Market Value and Gross Unrealized Appreciation and Depreciation of Available-for-sale Securities

The amortized cost, estimated market value and gross unrealized appreciation and depreciation of available-for-sale securities as of June 30, 2014 and December 31, 2013, are presented in the table below:

(Amounts in Thousands) As of June 30, 2014	Original or amortized cost		Gross unrealized gains		Gross unrealized losses			Market value
Preferred stock	$	4,500	$	266	$	(29	)	$	4,737
Common stock	81,850		6,543		(2,603		)	85,790
U.S. treasury securities	64,692		1,866		(88		)	66,470
U.S. government agencies	24,990		709		(7		)	25,692
Municipal bonds	520,346		11,910		(7,017		)	525,239
Foreign government	147,280		4,248		(493		)	151,035
Corporate bonds:
Finance	1,165,427		65,714		(5,758		)	1,225,383
Industrial	1,037,075		38,653		(7,825		)	1,067,903
Utilities	90,706		2,953		(645		)	93,014
Commercial mortgage backed securities	38,520		1,336		(197		)	39,659
Residential mortgage backed securities:
Agency backed	821,147		15,979		(6,991		)	830,135
Non-agency backed	13,294		231		(1		)	13,524
Asset-backed securities	2,430		2		(2		)	2,430
	$	4,012,257	$	150,410	$	(31,656	)	$	4,131,011

(Amounts in Thousands) As of December 31, 2013	Original or amortized cost		Gross unrealized gains		Gross unrealized losses			Market value
Preferred stock	$	1,498	$	82	$	(74	)	$	1,506
Common stock	14,512		1,156		(2,026		)	13,642
U.S. treasury securities	158,915		1,196		(851		)	159,260
U.S. government agencies	10,466		107		(84		)	10,489
Municipal bonds	461,325		4,781		(19,923		)	446,183
Foreign government	160,459		971		(1,325		)	160,105
Corporate bonds:
Finance	1,057,542		41,027		(13,970		)	1,084,599
Industrial	768,161		7,695		(21,439		)	754,417
Utilities	70,924		1,310		(2,008		)	70,226
Commercial mortgage backed securities	28,970		—		(404		)	28,566
Residential mortgage backed securities:
Agency backed	694,001		5,657		(13,918		)	685,740
Non-agency backed	6,737		19		(7		)	6,749
Asset backed securities	$	6,119	$	4	$	(3	)	$	6,120
	$	3,439,629	$	64,005	$	(76,032	)	$	3,427,602
Less: Securities pledged	316,576		506		(5,564		)	311,518
	$	3,123,053	$	63,499	$	(70,468	)	$	3,116,084

Summary of Available for Sale Fixed Securities by Contractual Maturity

A summary of the Company’s available-for-sale fixed securities as of June 30, 2014 and December 31, 2013, by contractual maturity, is shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	June 30, 2014				December 31, 2013
(Amounts in Thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	156,550	$	157,578	$	128,128	$	128,214
Due after one through five years	630,676		651,908		592,703		603,942
Due after five through ten years	1,875,956		1,957,538		1,632,115		1,631,751
Due after ten years	387,334		387,712		334,846		321,372
Mortgage and asset backed securities	875,391		885,748		735,827		727,175
Total fixed maturities	$	3,925,907	$	4,040,484	$	3,423,619	$	3,412,454

Net Investment Income

Net investment income for the three and six months ended June 30, 2014 and 2013 was derived from the following sources:

	Three Months Ended June 30,						Six Months Ended June 30,
(Amounts in Thousands)	2014			2013			2014			2013
Fixed maturity securities	$	31,068		$	18,316		$	58,740		$	35,588
Equity securities	242			3,887			301			4,289
Cash and short term investments	1,996			704			3,424			1,748
	33,306			22,907			62,465			41,625
Less:
Investment expenses and interest expense on securities sold under agreement to repurchase	(712		)	(273		)	(1,344		)	(896		)
	$	32,594		$	22,634		$	61,121		$	40,729

Other than Temporary Impairment, Credit Losses Recognized in Earnings

OTTI charges of our fixed-maturities and equity securities for the three and six months ended June 30, 2014 and 2013 are presented in the table below:

	Three Months Ended June 30,				Six Months Ended June 30,
(Amounts in Thousands)	2014		2013		2014		2013
Equity securities recognized in earnings	$	648	$	—	$	2,291	$	—
Fixed-maturity securities recognized in earnings	1,248		—		1,248		—
	$	1,896	$	—	$	3,539	$	—

Summary of Gross Unrealized Losses of Fixed-maturities and Equity Securities

The table below summarizes the gross unrealized losses of our fixed maturity and equity securities by length of time the security has continuously been in an unrealized position as of June 30, 2014 and December 31, 2013:

	Less Than 12 Months						12 Months or More						Total
(Amounts in Thousands) As of June 30, 2014	Fair Market Value		Unrealized Losses			No. of Positions Held	Fair Market Value		Unrealized Losses			No. of Positions Held	Fair Market Value		Unrealized Losses
Common and preferred stock	$	15,743	$	(2,632	)	112	$	100	$	—		1	$	15,843	$	(2,632	)
U.S. treasury securities	2,220		(52		)	11	2,053		(36		)	5	4,273		(88		)
U.S. government agencies	—		—			—	1,387		(7		)	6	1,387		(7		)
Municipal bonds	88,539		(3,461		)	107	97,084		(3,556		)	105	185,623		(7,017		)
Foreign government	35,152		(493		)	9	—		—			—	35,152		(493		)
Corporate bonds:
Finance	183,496		(3,855		)	74	103,821		(1,903		)	24	287,317		(5,758		)
Industrial	125,993		(6,318		)	68	65,998		(1,507		)	41	191,991		(7,825		)
Utilities	13,826		(594		)	11	1,128		(51		)	2	14,954		(645		)
Commercial mortgage backed securities	16		—			2	5,336		(197		)	8	5,352		(197		)
Residential mortgage backed securities:
Agency backed	258,319		(5,258		)	44	43,715		(1,733		)	30	302,034		(6,991		)
Non-agency backed	84		—			1	32		(1		)	2	116		(1		)
Asset-backed securities	1,827		(2		)	5	—		—			—	1,827		(2		)
Total temporarily impaired securities	$	725,215	$	(22,665	)	444	$	320,654	$	(8,991	)	224	$	1,045,869	$	(31,656	)

	Less Than 12 Months						12 Months or More						Total
(Amounts in Thousands) December 31, 2013	Fair Market Value		Unrealized Losses			No. of Positions Held	Fair Market Value		Unrealized Losses			No. of Positions Held	Fair Market Value		Unrealized Losses
Common and preferred stock	$	4,875	$	(2,100	)	51	$	—	$	—		—	$	4,875	$	(2,100	)
U.S. treasury securities	52,757		(851		)	18	—		—			—	52,757		(851		)
U.S. government agencies	4,135		(84		)	11	—		—			—	4,135		(84		)
Municipal bonds	254,219		(17,986		)	302	24,169		(1,937		)	9	278,388		(19,923		)
Foreign government	68,102		(1,324		)	16	999		(1		)	1	69,101		(1,325		)
Corporate bonds:
Finance	500,564		(13,402		)	182	58,923		(568		)	9	559,487		(13,970		)
Industrial	500,366		(21,203		)	263	3,383		(236		)	2	503,749		(21,439		)
Utilities	45,663		(2,008		)	21	—		—			—	45,663		(2,008		)
Commercial mortgage backed securities	28,552		(404		)	18	—		—			—	28,552		(404		)
Residential mortgage backed securities:
Agency backed	492,740		(13,918		)	120	—		—			—	492,740		(13,918		)
Non-agency backed	205		(5		)	6	23		(2		)	1	228		(7		)
Asset-backed securities	1,463		(3		)	4	—		—			—	1,463		(3		)
Total temporarily impaired securities	$	1,953,641	$	(73,288	)	1,012	$	87,497	$	(2,744	)	22	$	2,041,138	$	(76,032	)

Notional Amounts of Interest Rate Swaps by Remaining Maturity

The following table presents the notional amounts by remaining maturity of the Company’s interest rate swaps as of June 30, 2014:

	Remaining Life of Notional Amount (1)
(Amounts in Thousands)	One Year		Two Through Five Years		Six Through Ten Years		After Ten Years		Total
Interest rate swaps	$	—	$	70,000	$	—	$	—	$	70,000

^{(1)  Notional amount is not representative of either market risk or credit risk and is not recorded in the consolidated balance sheet.} 

Fair Values of Restricted Assets

The fair values of our restricted assets as of June 30, 2014 and December 31, 2013 are as follows:

(Amounts in Thousands)	2014		2013
Restricted cash	$	181,067	$	100,439
Restricted investments	798,772		978,910
Total restricted cash and investments	$	979,839	$	1,079,349

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Fair Value of Financial Instruments - Increase or (Decrease) in Carrying Value of Investment in Life Insurance Policies (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended		12 Months Ended
	Jun. 30, 2014		Dec. 31, 2013
Life Settlement Contracts, Fair Value Method [Abstract]
Life expectancy Plus 4 Months	$ (34,813)		$ (29,537)
Life expectancy Minus 4 Months	36,860		31,313
Discount Plus 1%	(23,198)	[1]	(20,055)	[1]
Discount Minus 1%	$ 26,095	[1]	$ 22,605	[1]

[1] Discount rate is a present value calculation that considers legal risk, credit risk and liquidity risk and is a component of EDR.

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Investments - Summary of Gross Unrealized Losses of Fixed-maturities and Equity Securities (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014 Contract	Dec. 31, 2013 Contract
Schedule of Available-for-sale Securities [Line Items]
Fair Market Value	$ 725,215	$ 1,953,641
Unrealized Losses	(22,665)	(73,288)
No. of Positions Held	444	1,012
Fair Market Value	320,654	87,497
Unrealized Losses	(8,991)	(2,744)
No. of Positions Held	224	22
Total Fair Market Value	1,045,869	2,041,138
Total Unrealized Losses	(31,656)	(76,032)
Common and preferred stock
Schedule of Available-for-sale Securities [Line Items]
Fair Market Value	15,743	4,875
Unrealized Losses	(2,632)	(2,100)
No. of Positions Held	112	51
Fair Market Value	100	0
Unrealized Losses	0	0
No. of Positions Held	1	0
Total Fair Market Value	15,843	4,875
Total Unrealized Losses	(2,632)	(2,100)
U.S. treasury securities
Schedule of Available-for-sale Securities [Line Items]
Fair Market Value	2,220	52,757
Unrealized Losses	(52)	(851)
No. of Positions Held	11	18
Fair Market Value	2,053	0
Unrealized Losses	(36)	0
No. of Positions Held	5	0
Total Fair Market Value	4,273	52,757
Total Unrealized Losses	(88)	(851)
US Government and Government Agencies and Authorities [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Market Value	0	4,135
Unrealized Losses	0	(84)
No. of Positions Held	0	11
Fair Market Value	1,387	0
Unrealized Losses	(7)	0
No. of Positions Held	6	0
Total Fair Market Value	1,387	4,135
Total Unrealized Losses	(7)	(84)
Municipal bonds
Schedule of Available-for-sale Securities [Line Items]
Fair Market Value	88,539	254,219
Unrealized Losses	(3,461)	(17,986)
No. of Positions Held	107	302
Fair Market Value	97,084	24,169
Unrealized Losses	(3,556)	(1,937)
No. of Positions Held	105	9
Total Fair Market Value	185,623	278,388
Total Unrealized Losses	(7,017)	(19,923)
Foreign government
Schedule of Available-for-sale Securities [Line Items]
Fair Market Value	35,152	68,102
Unrealized Losses	(493)	(1,324)
No. of Positions Held	9	16
Fair Market Value	0	999
Unrealized Losses	0	(1)
No. of Positions Held	0	1
Total Fair Market Value	35,152	69,101
Total Unrealized Losses	(493)	(1,325)
Finance | Corporate bonds
Schedule of Available-for-sale Securities [Line Items]
Fair Market Value	183,496	500,564
Unrealized Losses	(3,855)	(13,402)
No. of Positions Held	74	182
Fair Market Value	103,821	58,923
Unrealized Losses	(1,903)	(568)
No. of Positions Held	24	9
Total Fair Market Value	287,317	559,487
Total Unrealized Losses	(5,758)	(13,970)
Industrial | Corporate bonds
Schedule of Available-for-sale Securities [Line Items]
Fair Market Value	125,993	500,366
Unrealized Losses	(6,318)	(21,203)
No. of Positions Held	68	263
Fair Market Value	65,998	3,383
Unrealized Losses	(1,507)	(236)
No. of Positions Held	41	2
Total Fair Market Value	191,991	503,749
Total Unrealized Losses	(7,825)	(21,439)
Utilities | Corporate bonds
Schedule of Available-for-sale Securities [Line Items]
Fair Market Value	13,826	45,663
Unrealized Losses	(594)	(2,008)
No. of Positions Held	11	21
Fair Market Value	1,128	0
Unrealized Losses	(51)	0
No. of Positions Held	2	0
Total Fair Market Value	14,954	45,663
Total Unrealized Losses	(645)	(2,008)
Commercial mortgage backed securities
Schedule of Available-for-sale Securities [Line Items]
Fair Market Value	16	28,552
Unrealized Losses	0	(404)
No. of Positions Held	2	18
Fair Market Value	5,336	0
Unrealized Losses	(197)	0
No. of Positions Held	8	0
Total Fair Market Value	5,352	28,552
Total Unrealized Losses	(197)	(404)
Agency, residential mortgage backed securities
Schedule of Available-for-sale Securities [Line Items]
Fair Market Value	258,319	492,740
Unrealized Losses	(5,258)	(13,918)
No. of Positions Held	44	120
Fair Market Value	43,715	0
Unrealized Losses	(1,733)	0
No. of Positions Held	30	0
Total Fair Market Value	302,034	492,740
Total Unrealized Losses	(6,991)	(13,918)
Non-agency, residential mortgage backed securities
Schedule of Available-for-sale Securities [Line Items]
Fair Market Value	84	205
Unrealized Losses	0	(5)
No. of Positions Held	1	6
Fair Market Value	32	23
Unrealized Losses	(1)	(2)
No. of Positions Held	2	1
Total Fair Market Value	116	228
Total Unrealized Losses	(1)	(7)
Asset-backed Securities
Schedule of Available-for-sale Securities [Line Items]
Fair Market Value	1,827	1,463
Unrealized Losses	(2)	(3)
No. of Positions Held	5	4
Fair Market Value	0	0
Unrealized Losses	0	0
No. of Positions Held	0	0
Total Fair Market Value	1,827	1,463
Total Unrealized Losses	$ (2)	$ (3)

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Related Party Transactions (ACP Re. Ltd) (Details) (USD $)	1 Months Ended		3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended				6 Months Ended		6 Months Ended		0 Months Ended	3 Months Ended		6 Months Ended					0 Months Ended
	Jan. 31, 2014	Apr. 08, 2014 NGHC Tower	Jun. 30, 2014 59 Maiden Lane Associates, LLC	Jun. 30, 2013 59 Maiden Lane Associates, LLC	Jun. 30, 2014 59 Maiden Lane Associates, LLC	Jun. 30, 2013 59 Maiden Lane Associates, LLC	Jun. 30, 2014 ACP Re, Ltd	Jun. 30, 2013 ACP Re, Ltd	Jun. 30, 2014 ACP Re, Ltd	Jun. 30, 2013 ACP Re, Ltd	Jan. 31, 2014 ACP Re, Ltd Tower	Jun. 30, 2014 ACP Re, Ltd Scenario 1	Jun. 30, 2014 ACP Re, Ltd Scenario 2 Maximum	Jun. 30, 2014 ACP Re, Ltd Scenario 3	Jun. 30, 2014 ACP Re, Ltd Scenario 3 Minimum	Apr. 08, 2014 ACP Re, Ltd NGHC Maximum Tower	Apr. 08, 2014 ACP Re, Ltd NGHC Minimum Tower	Jun. 30, 2014 33 West Monroe Associates, LLC	Jun. 30, 2013 33 West Monroe Associates, LLC	Jun. 30, 2014 33 West Monroe Associates, LLC	Jun. 30, 2013 33 West Monroe Associates, LLC	Jul. 23, 2014 Subsequent Event Tower AMtrust and National General Holding Corp. ACP Re, Ltd	Jul. 23, 2014 Subsequent Event ACP Re, Ltd Tower	Jul. 23, 2014 Subsequent Event ACP Re, Ltd Maximum Tower	Jul. 23, 2014 Subsequent Event ACP Re, Ltd Minimum Tower AmTrust	Jul. 23, 2014 Subsequent Event Earnout Payable Tower AMtrust and National General Holding Corp. ACP Re, Ltd
Related Party Transaction [Line Items]
Rate of interest																								7.00%
Lease payments			$ 453,000	$ 163,000	$ 920,000	$ 364,000												$ 74,000	$ 109,000	$ 185,000	$ 253,000
Asset management services fee percentage												0.20%		0.15%
Average value of assets under management													1,000,000,000		1,000,000,000
Assets managed under asset management agreement							127,548,000		127,548,000
Management fees							61,000	58,000	116,000	110,000
Percentage of outstanding stock acquired											100.00%
Ceding fees	2.00%
Financing commitment to ACP Re																125,000,000								125,000
Term of financing																	7 years								7 years
Quota share, percentage																							100.00%
Aggregate stop loss reinsurance agreement		125,000,000																				250,000
Contingent consideration arrangements, percentage of gross written premium																										3.00%
Contingent consideration arrangements, maximum consideration																										$ 30,000,000
Contingent consideration arrangements, term																										3 years

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Basis of Reporting (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Provision for income taxes	$ (17,966)	$ (27,402)	$ (45,410)	$ (43,511)
Effective tax rate	15.20%	29.90%	19.80%	23.00%
Liabilities	10,962,633		10,962,633		9,699,661
Reclassification of Ceding Commission to Acquisition and other Underwriting Expenses
Reclassification to acquisition costs and underwriting expense		67,157		131,115
Liabilities					21,717
Reclassification of Intangible to Goodwill
Provision for income taxes		$ 4,544		$ 11,967
Effective tax rate	14.60%	5.00%	8.10%	6.30%

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Investment in Life Settlements - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended			6 Months Ended			6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013	Jun. 30, 2014 Tiger Capital LLC Contract	Jun. 30, 2014 NGHC	Aug. 31, 2011 NGHC	Jun. 30, 2014 Life settlement contracts	Jun. 30, 2013 Life settlement contracts	Jun. 30, 2014 Life settlement contracts AmTrust	Jun. 30, 2013 Life settlement contracts AmTrust
Schedule of Cost-method Investments [Line Items]
Percentage of ownership interest							13.20%	13.20%
Profits and losses of investment in life insurance policies and premium finance loans			56.60%
Capital contributions									$ 21,776	$ 10,797	$ 10,700	$ 5,388
Investments in life settlements and cash value loans	276,199		276,199		233,024
(Loss) gain on investment in life settlement contracts net of profit commission	(5,070)	1,080	(2,270)	4
Number of premium finance loans						2
Value of premium finance loans						$ 0

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Share Based Compensation - Schedule of Option Granted, Exercised and Expired (Detail) (USD $)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Shares
Outstanding at beginning of period	2,997,460	3,675,776
Granted	27,500	66,001
Exercised	(604,646)	(360,768)
Cancelled or terminated	0	0
Outstanding end of period	2,420,314	3,381,009
Weighted Average Exercise Price
Outstanding at beginning of period	$ 10.49	$ 9.41
Granted	$ 32.49	$ 28.88
Exercised	$ 8.75	$ 7.15
Cancelled or terminated	$ 0.00	$ 0.00
Outstanding end of period	$ 11.18	$ 10.03

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Debt - Trust Preferred Securities (Parenthetical) (Detail) (LIBOR)	6 Months Ended
	Jun. 30, 2014
After tenth anniversary in 2015
Debt Instrument [Line Items]
Debt instrument interest rate, margin	3.40%
After fifth anniversary in 2011
Debt Instrument [Line Items]
Debt instrument interest rate, margin	3.30%
After fifth anniversary in 2012
Debt Instrument [Line Items]
Debt instrument interest rate, margin	3.00%

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Fair Value of Financial Instruments - Changes in Fair Value of Level 3 Financial Assets And Liabilities (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning Balance	$ 273,017	$ 203,639	$ 246,828	$ 193,321
Net income	6,903	10,597	24,601	20,729
Other comprehensive income	0	0	0	0
Purchases and issuances	2,314	9,770	28,736	14,881
Sales and settlements	(4,469)	(3,046)	(22,400)	(7,971)
Net transfers into (out of) Level 3	0	0	0	0
Ending Balance	277,765	220,960	277,765	220,960
Other investments
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning Balance	18,166	16,052	25,749	11,144
Net income	288	(17)	2,402	677
Other comprehensive income	0	0	0	0
Purchases and issuances	110	9,770	3,317	14,881
Sales and settlements	(4,469)	(1,026)	(17,373)	(1,923)
Net transfers into (out of) Level 3	0	0	0	0
Ending Balance	14,095	24,779	14,095	24,779
Life settlement contracts
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning Balance	268,199	199,824	233,024	193,927
Net income	5,796	10,890	22,783	20,815
Other comprehensive income	0	0	0	0
Purchases and issuances	2,204	0	25,419	0
Sales and settlements	0	(2,020)	(5,027)	(6,048)
Net transfers into (out of) Level 3	0	0	0	0
Ending Balance	276,199	208,694	276,199	208,694
Life settlement contract profit commission
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning Balance	(13,348)	(12,237)	(11,945)	(11,750)
Net income	819	(276)	(584)	(763)
Other comprehensive income	0	0	0	0
Purchases and issuances	0	0	0	0
Sales and settlements	0	0	0	0
Net transfers into (out of) Level 3	0	0	0	0
Ending Balance	$ (12,529)	$ (12,513)	$ (12,529)	$ (12,513)

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Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

Recent Accounting Pronouncements

Recent Accounting Pronouncements

With the exception of those discussed below, there have been no recent accounting pronouncements or changes in accounting pronouncements during the six months ended June 30, 2014, as compared to those described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013, that are of significance, or potential significance, to the Company.

In June 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-11, Transfers and Serving (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures, which amends accounting for repurchase-to-maturity transactions and associated repurchase financing to secured borrowing. The revised guidance also requires expanded disclosure for certain transactions comprising (1) a transfer of a financial asset accounted for as a sale and (2) an agreement with the same transferee entered into in contemplation of the initial transfer that results in the transferor retaining substantially all of the exposure to the economic return on the transferred financial asset throughout the term of the transaction, as well as expands disclosure for repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions that are accounted for as secured borrowings. The updated guidance is effective for the period ending March 31, 2015. The adoption of this guidance is not expected to have a material effect on the Company's results of operations, financial position or liquidity.

In June 2014, the FASB issued ASU 2014-12, Compensation--Stock Compensation (Topic 718):Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period, to clarify how entities should treat performance targets that can be met after therequisite service period of a share-based payment award. The ASU states that the share-based payment award should be treatedas a performance condition that affects vesting and, therefore, an entity would not record compensation expense (measured as ofthe grant date without taking into account the effect of the performance target) related to an award for which transfer to the employeeis contingent on the entity’s satisfaction of a performance target until it becomes probable that the performance target will be met.No new disclosures are required under this ASU.ASU 2014-12 is effective beginning after December 15, 2015. Early adoption is permitted. In addition, all entities will havethe option of applying the guidance either prospectively (i.e., only to awards granted or modified on or after the effective date ofthe issue) or retrospectively. Retrospective application would only apply to awards with performance targets outstanding at orafter the beginning of the first annual period presented (i.e., the earliest presented comparative period). The adoption of thisguidance is not expected to have an impact on the Company's results of operations, financial condition or liquidity.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), to clarify the principles for recognizing revenue. While insurance contracts are not within the scope of this updated guidance, the Company’s service and fee income will be subject to this updated guidance. The updated guidance requires an entity to recognize revenue as performance obligations are met, in order to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration the entity is entitled to receive for those goods or services. The following steps are applied in the updated guidance: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the entity satisfies a performance obligation. The updated guidance is effective for the quarter ending March 31, 2017. We are currently evaluating the impact this guidance will have on the Company's results of operations, financial position or liquidity.

In April 2014, the FASB issued ASU 2014-08, Presentation of Financial Statement (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosure of Disposals of Components of an Entity, which provides revised guidance to reduce diversity in practice for reporting discontinued operations. Under the previous guidance, any component of an entity that was a reportable segment, an operating segment, a reporting unit, a subsidiary, or an asset group was eligible for discontinued operations presentation. The revised guidance only allows disposals of components of an entity that represent a strategic shift (e.g., disposal of a major geographical area, a major line of business, a major equity method investment, or other major parts of an entity) and that have a major effect on a reporting entity’s operations and financial results to be reported as discontinued operations. The revised guidance also requires expanded disclosure in the financial statements for discontinued operations as well as for disposals of significant components of an entity that do not qualify for discontinued operations presentation. The updated guidance is effective for the period ending March 31, 2015. The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

In July 2013, the FASB issued ASU 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, which provides guidance on the presentation of an unrecognized tax benefit when a net operating loss ("NOL") carry-forward, a similar tax loss, or a tax credit carry-forward exists. Under the ASU, an entity must present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, as a reduction to a deferred tax asset for a NOL carry-forward, similar tax loss, or a tax credit carry-forward. There are two exceptions to this form of presentation as follows:

• To the extent a NOL carry-forward, a similar tax loss, or a tax credit carry-forward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position; or

• The entity does not intend to use the deferred tax asset for this purpose.

If either of these conditions exists, an entity should present an unrecognized benefit in the financial statements as a liability and should net the unrecognizable tax benefit with a deferred tax asset. The Company adopted ASU 2013-11 on January 1, 2014 and the implementation did not have an impact on the Company's results of operations, financial condition or liquidity.

In March 2013, the FASB issued ASU 2013-05, Foreign Currency Matters (Topic 830): Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity, with the objective of resolving the diversity about whether ASC 810-10, Consolidation - Overall, or ASC 830-30, Foreign Currency Matters - Translation of Financial Statements, applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or allof its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is anonprofit activity or a business (other than a sale of in-substance real estate or conveyance of oil and gas mineral rights) within aforeign entity.

Under this guidance, when a reporting entity that is also the parent entity ceases to have a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business (other than a sale of in substance real estate or conveyance of oil and gas mineral rights) within a foreign entity, the parent is required to apply the guidance in ASC 830-30 to release any related cumulative translation adjustment into net income. Accordingly, the cumulative translation adjustment should be released into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. Additionally, for an equity method investment that is a foreign entity, the partial sale guidance in ASC 830-30-40 continues to be applicable. As such, a pro rata portion of the cumulative translation adjustment should be released into net income upon a partial sale of such an equity method investment. However, this treatment does not apply to an equity method investment that is not a foreign entity. In those instances, the cumulative translation adjustment is released into net income only if the partial sale represents a complete or substantially complete liquidation of the foreign entity that contains the equity method investment. Furthermore, the amendments in this ASU clarify that the sale of an investment in a foreign entity includes both: (1) events that result in the loss of a controlling financial interest in a foreign entity (that is, irrespective of any retained investment); and (2) events that result in an acquirer obtaining control of an acquiree in which it held an equity interest immediately before the acquisition date (sometimes also referred to as a step acquisition). Accordingly, the cumulative translation adjustment should be released into net income upon the occurrence of those events. The amendments in this ASU are effective prospectively for fiscal years (and interim reporting periods within those years) beginning after December 15, 2013. The update was adopted effective January 1, 2014. The adoption of this guidance did not have an impact on the Company's results of operations, financial condition or liquidity.

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Debt - Additional Information (Detail)	3 Months Ended		6 Months Ended					6 Months Ended			3 Months Ended		6 Months Ended			6 Months Ended					2 Months Ended	3 Months Ended	6 Months Ended					1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended	6 Months Ended		6 Months Ended		1 Months Ended	3 Months Ended		6 Months Ended					6 Months Ended		2 Months Ended		1 Months Ended	3 Months Ended		6 Months Ended		1 Months Ended			6 Months Ended				6 Months Ended
	Jun. 30, 2014 USD ($) Derivative	Jun. 30, 2013 USD ($)	Jun. 30, 2014 USD ($) Derivative	Jun. 30, 2013 USD ($)	Dec. 31, 2013 USD ($)	Nov. 26, 2013 subsidiary	Feb. 25, 2012	Jun. 30, 2014 After tenth anniversary in 2015	Jun. 30, 2014 After fifth anniversary in 2011	Aug. 31, 2011 800 Superior LLC	Jun. 30, 2014 Revolving credit facility USD ($)	Jun. 30, 2013 Revolving credit facility USD ($)	Jun. 30, 2014 Revolving credit facility USD ($)	Jun. 30, 2013 Revolving credit facility USD ($)	Dec. 31, 2013 Revolving credit facility	Jun. 30, 2014 Revolving credit facility Federal Funds Rate	Jun. 30, 2014 Revolving credit facility One Month London Interbank Offered Rate [Member]	Jun. 30, 2014 Revolving credit facility Maximum USD ($)	Jun. 30, 2014 Revolving credit facility Minimum	Jun. 30, 2014 Letter of Credit USD ($)	Sep. 30, 2013 Senior Notes 6.125% Senior Note	Jun. 30, 2014 Senior Notes 6.125% Senior Note USD ($)	Jun. 30, 2014 Senior Notes 6.125% Senior Note USD ($)	Aug. 31, 2013 Senior Notes 6.125% Senior Note USD ($)	Aug. 31, 2013 Senior Notes Maximum 6.125% Senior Note	Jun. 30, 2014 Senior Notes Minimum 6.125% Senior Note	Aug. 31, 2013 Senior Notes Minimum 6.125% Senior Note	Feb. 28, 2011 Secured Loan USD ($)	Jun. 30, 2014 Secured Loan USD ($)	Jun. 30, 2013 Secured Loan USD ($)	Jun. 30, 2014 Secured Loan USD ($)	Jun. 30, 2013 Secured Loan USD ($)	Dec. 31, 2011 Secured Loan	Jun. 30, 2013 Promissory Note 800 Superior LLC State and Local Government of Ohio USD ($)	Dec. 31, 2013 Promissory Note 800 Superior LLC State and Local Government of Ohio USD ($)	Jun. 30, 2014 Promissory Note 800 Superior LLC State and Local Government of Ohio USD ($)	Jun. 30, 2014 Promissory Note ACP Re, Ltd 800 Superior LLC	Sep. 30, 2012 800 Superior LLC State and Local Government of Ohio Loans	Jun. 30, 2014 MIHC USD ($)	Jun. 30, 2013 MIHC USD ($)	Jun. 30, 2014 MIHC USD ($)	Jun. 30, 2013 MIHC USD ($)	May 31, 2013 MIHC USD ($)	May 31, 2013 MIHC Promissory Note	Jun. 30, 2014 LIBOR	Jun. 30, 2014 LIBOR After tenth anniversary in 2015	Jun. 30, 2014 LIBOR After fifth anniversary in 2011	Sep. 30, 2013 Increase in Leveraged Ratio by 30 Percent to 35 Percent Senior Notes Minimum 6.125% Senior Note	Sep. 30, 2013 Increase in Leveraged Ratio by More than 35 Percent Senior Notes Minimum 6.125% Senior Note	Aug. 31, 2013 Event of Default Senior Notes Maximum 6.125% Senior Note	Jun. 30, 2014 State and Local Government of Ohio Promissory Note USD ($)	Jun. 30, 2013 State and Local Government of Ohio Promissory Note USD ($)	Jun. 30, 2014 State and Local Government of Ohio Promissory Note USD ($)	Jun. 30, 2013 State and Local Government of Ohio Promissory Note USD ($)	Sep. 30, 2012 State and Local Government of Ohio 800 Superior LLC Loans	Dec. 31, 2013 State and Local Government of Ohio 800 Superior LLC Promissory Note	Jun. 30, 2014 Sagicor Europe Limited	Jun. 30, 2014 Sagicor Europe Limited Letter of Credit USD ($)	Jun. 30, 2014 Sagicor Europe Limited Letter of Credit GBP (£)	Nov. 26, 2013 Sagicor Europe Limited Letter of Credit GBP (£)	Jun. 30, 2014 Comerica Bank [Member] Letter of Credit USD ($)	Jun. 30, 2014 Comerica Bank [Member] Comerica Letter of Credit Facility
Debt Instrument [Line Items]
Term of the debt instrument																																	7 years																						15 years
Average rate of interest																																																								1.70%
Line of credit, maximum borrowing capacity											$ 200,000,000		$ 200,000,000					$ 100,000,000		$ 100,000,000																																								£ 200,000,000	$ 75,000,000
Company's credit limit											300,000,000		300,000,000
Letters of credit, outstanding amount																				89,040,000																																						328,052,000	193,165,000		48,467,000
Credit agreement, remaining borrowing capacity											110,960,000		110,960,000							10,960,000																																						11,608,000	6,835,000
Debt instrument, marginal interest rate																0.50%	1.00%																													3.40%	3.30%
Credit facility, Interest rate											1.50%		1.50%		1.50%
Interest expense											411,000	616,000	751,000	1,176,000															84,000	97,000	171,000	198,000
Fronting fee percentage																				0.125%
Commitment fee percentage													0.25%					0.30%	0.20%	1.50%																																										0.40%
Trust equity investment	3,714,000		3,714,000
Placement fees in connection with common securities issuance			2,605,000
Interest expense related to trust preferred securities	2,028,000	2,049,000	4,048,000	4,048,000
Number of interest swap agreements related to junior subordinated debentures	2		2
Maturity of interest rate swaps			5 years
Aggregate principal amount of convertible senior notes issued	200,000,000		200,000,000		200,000,000
Debt instrument, stated interest rate	5.50%		5.50%																			6.125%	6.125%	6.125%				4.45%																3.80%
Fee for debt instrument																							2,706,000
Increase(decrease) in interest rate																					1.50%																											0.50%	1.00%
Interest expense																						3,897,000	7,794,000																																			1,313,000
Ratio of Indebtedness to Net Capital																									0.35	0.3	0.3																							0.35
Number of days																																																		30 days
Grace period in case of acquisition																																																		18 months
Interest rate at period end																																													4.10%
Convertible senior notes maturity year			2021
Convertible senior notes interest payable month and day								--06-15	--12-15
Frequency of periodic payment			semiannually
Convertible senior notes maturity date			Dec. 15, 2021
Common stock, par value	$ 0.01		$ 0.01		$ 0.01
Debt Conversion earlier date			Sep. 15, 2021
Conversion rate for conversion of convertible senior notes			38.5985
Principal amount of convertible notes			1,000
Initial conversion price of per share of Common Stock	$ 25.91		$ 25.91
Notes repurchase price, percentage			100.00%
Debt Instrument original discount	41,679,000		41,679,000
Unamortized OID	34,197,000		34,197,000		35,782,000
Deferred origination costs relating to the liability component	4,750,000		4,750,000
Convertible senior notes effective interest rate	8.57%		8.57%
Transaction costs associated with the equity component			1,250,000
Interest expense	3,665,000	3,600,000	7,322,000	7,192,000																																			59,000	23,000	128,000	23,000
Number of Subsidiaries						2
Debt instrument, face amount																								250,000				10,800,000
Monthly installment payment																												117,000
Debt instrument, maturity date range, end																												Feb. 25, 2018
Balloon payment at maturity date																												3,240,000
Percentage of outstanding balance of loan in excess of fair value of aircraft							90.00%
Number of loans																																						2																	2
Promissory notes	14,500,000		14,500,000		14,500,000																														8,000,000								6,500,000
Interest expense	12,587,000	7,608,000	24,084,000	14,969,000																														12,000		0															66,000	44,000	132,000	141,000
Deferred costs																																																			1,430,000		1,430,000
Percentage of ownership interests										50.00%																											50.00%
Availability of letters of credit	$ 20,710,000		$ 20,710,000
Fee payable on secured portion of debt, percentage																																																										0.55%
Fee payable on unsecured portion of debt, percentage																																																										1.15%
Commitment fee for the unused capacity, percentage																																																										0.35%
Funding percentage of collateral account																																																									50.00%
Funding percentage required of collateral account Upon Occurrence of Events																																																									100.00%

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Investments - Notional Amounts of Interest Rate Swaps by Remaining Maturity (Details) (Interest Rate Swap [Member], USD $) In Thousands, unless otherwise specified	Jun. 30, 2014
Interest Rate Swap [Member]
Schedule of Available-for-sale Securities [Line Items]
One Year	$ 0	[1]
Two Through Five Years	70,000	[1]
Six Through Ten Years	0	[1]
After Ten years	0	[1]
Total	$ 70,000	[1]

[1] Notional amount is not representative of either market risk or credit risk and is not recorded in the consolidated balance sheet.

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Acquisition Costs and Other Underwriting Expenses (Tables)

6 Months Ended

Jun. 30, 2014

Acquisition Costs and Other Underwriting Expenses [Abstract]

Business Acquisitions Components Of Acquisition Related Costs

The following table summarizes the components of acquisition costs and other underwriting expenses for the three and six months ended June 30, 2014 and 2013:

	Three Months Ended June 30,				Six Months Ended June 30,
(Amounts in Thousands)	2014		2013		2014		2013
Policy acquisition expenses	$	115,637	$	53,473	$	209,888	$	91,203
Salaries and benefits	91,674		65,982		169,529		111,111
Other insurance general and administrative expenses	749		10,491		15,252		27,917
	$	208,060	$	129,946	$	394,669	$	230,231

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Debt (Tables)

6 Months Ended

Jun. 30, 2014

Debt Disclosure [Abstract]

Borrowings

The Company’s borrowings consisted of the following at June 30, 2014 and December 31, 2013:

(Amounts in Thousands)	June 30, 2014		December 31, 2013
Revolving credit facility	$	—	$	—
Convertible senior notes	165,803		164,218
6.125% Notes due 2023	250,000		250,000
Junior subordinated debentures	123,714		123,714
Secured loan agreements	7,207		7,742
Promissory notes	14,500		14,500
	$	561,224	$	560,174

Aggregate Scheduled Maturities of Borrowings

Aggregate scheduled maturities of the Company’s borrowings at June 30, 2014 are:

(Amounts in Thousands)
2014	$	540
2015	1,116
2016	1,167
2017	1,220
2018	3,164
Thereafter	554,017		(1)

^{(1)  Amount reflected in balance sheet for convertible senior notes is net of unamortized original issue discount of $34,197.}

Amounts Recorded for Notes

The following table shows the amounts recorded for the Convertible Notes as of June 30, 2014 and December 31, 2013:

(Amounts in Thousands)	June 30, 2014			December 31, 2013
Liability component
Outstanding principal	$	200,000		$	200,000
Unamortized OID	(34,197		)	(35,782		)
Liability component	$	165,803		$	164,218
Equity component, net of tax	$	27,092		$	27,092

Trust Preferred Securities

The table below summarizes the Company’s trust preferred securities as of June 30, 2014: 

(Amounts in Thousands) Name of Trust	Aggregate Liquidation Amount of Trust Preferred Securities		Aggregate Liquidation Amount of Common Securities		Aggregate Principal Amount of Notes		Stated Maturity of Notes	Per Annum Interest Rate % of Notes
AmTrust Capital Financing Trust I	$	25,000	$	774	$	25,774	3/17/2035	8.275	(1	)
AmTrust Capital Financing Trust II	25,000		774		25,774		6/15/2035	7.710	(1	)
AmTrust Capital Financing Trust III	30,000		928		30,928		9/15/2036	3.531	(2	)
AmTrust Capital Financing Trust IV	40,000		1,238		41,238		3/15/2037	3.231	(3	)
Total trust preferred securities	$	120,000	$	3,714	$	123,714

⁽¹⁾ The interest rate will change to three-month LIBOR plus 3.40% after the tenth anniversary in 2015.

⁽²⁾ The interest rate is LIBOR plus 3.30%.

⁽³⁾ The interest rate is LIBOR plus 3.00%.

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Debt - Borrowings (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Debt Disclosure [Abstract]
Revolving credit facility	$ 0	$ 0
Convertible senior notes	165,803	164,218
6.125% Notes due 2023	250,000	250,000
Junior subordinated debentures	123,714	123,714
Secured loan agreements	7,207	7,742
Promissory notes	14,500	14,500
Debt, Long-term and Short-term, Combined Amount, Total	$ 561,224	$ 560,174

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Investments - Fair Values of Restricted Assets (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Investments, Debt and Equity Securities [Abstract]
Restricted cash	$ 181,067	$ 100,439
Restricted investments	798,772	978,910
Total restricted cash and investments	$ 979,839	$ 1,079,349

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2014

Earnings Per Share [Abstract]

Summary of Elements Used in Calculating Basic and Diluted Earnings Per Share

The following table is a summary of the elements used in calculating basic and diluted earnings per share for the three and six months ended June 30, 2014 and 2013:

	Three Months Ended June 30,				Six Months Ended June 30,
(Amounts in Thousands, except for earnings per share)	2014		2013		2014		2013
Basic earnings per share:
Net income attributable to AmTrust common shareholders	$	106,274	$	71,397	$	206,125	$	155,275
Less: Net income allocated to participating securities and redeemable non-controlling interest	325		68		574		164
Net income allocated to AmTrust common shareholders	$	105,949	$	71,329	$	205,551	$	155,111
Weighted average common shares outstanding – basic	75,209		74,169		74,973		74,028
Less: Weighted average participating shares outstanding	230		71		209		71
Weighted average common shares outstanding - basic	74,979		74,098		74,764		73,957
Net income per AmTrust common share - basic	$	1.41	$	0.96	$	2.75	$	2.10
Diluted earnings per share:
Net income attributable to AmTrust common shareholders	$	106,274	$	71,397	$	206,125	$	155,275
Less: Net income allocated to participating securities and redeemable non-controlling interest	325		68		574		164
Net income allocated to AmTrust common shareholders	$	105,949	$	71,329	$	205,551	$	155,111
Weighted average common shares outstanding – basic	74,979		74,098		74,764		73,957
Plus: Dilutive effect of stock options, convertible debt, other	4,700		2,807		4,201		2,824
Weighted average common shares outstanding – dilutive	79,679		76,905		78,965		76,781
Net income per AmTrust common shares – diluted	$	1.33	$	0.93	$	2.60	$	2.02

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Share Based Compensation (Tables)

6 Months Ended

Jun. 30, 2014

Text Block [Abstract]

Schedule of Option Granted, Exercised and Expired

The following information and tables below for stock options, restricted stock and RSUs have been adjusted retroactively in all periods presented.

The following schedule shows all options granted, exercised, and expired under the Plan for the six months ended June 30, 2014 and 2013:

	2014				2013
	Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
Outstanding at beginning of period	2,997,460		$	10.49	3,675,776		$	9.41
Granted	27,500		32.49		66,001		28.88
Exercised	(604,646	)	8.75		(360,768	)	7.15
Cancelled or terminated	—		—		—		—
Outstanding end of period	2,420,314		$	11.18	3,381,009		$	10.03

Summary of Restricted Stock and RSU Activity

A summary of the Company’s restricted stock and RSU activity for the six months ended June 30, 2014 and 2013 is shown below:

	2014				2013
	Shares or Units		Weighted Average Grant Date Fair Value		Shares or Units		Weighted Average Grant Date Fair Value
Non-vested at beginning of period	917,015		$	24.43	888,197		$	20.86
Granted	868,702		38.88		241,963		30.16
Vested	(310,640	)	22.14		(253,655	)	20.05
Forfeited	(5,436	)	23.89		(386	)	29.31
Non-vested at end of period	1,469,641		$	33.46	876,119		$	23.66

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Basis of Reporting

6 Months Ended

Jun. 30, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Reporting

Basis of Reporting

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X and, therefore, do not include all of the information and footnotes required by GAAP for complete financial statements. These interim statements should be read in conjunction with the financial statements and notes thereto included in the AmTrust Financial Services, Inc. (“AmTrust” or the “Company”) Annual Report on Form 10-K for the year ended December 31, 2013, previously filed with the Securities and Exchange Commission (“SEC”) on March 3, 2014. The balance sheet at December 31, 2013 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements.

These interim consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim period and all such adjustments are of a normal recurring nature. The results of operations for the interim period are not necessarily indicative, if annualized, of those to be expected for the full year. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

A detailed description of the Company’s significant accounting policies and management judgments is located in the audited consolidated financial statements for the year ended December 31, 2013, included in the Company’s Form 10-K filed with the SEC.

As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2013, the Company identified and corrected an error in which the Company previously reported ceding commission as a component of revenue and now presents ceding commission earned as a reduction of acquisition costs and other underwriting expenses. In addition, the Company identified and corrected an error in which the Company historically recorded reductions in its Luxembourg tax liability as a reduction of policy acquisition expense and now records such reductions as a reduction of its provision for income taxes in accordance with Accounting Standards Codification (“ASC”) 740, Income Taxes. The Company assessed the materiality of these errors in accordance with the guidance in ASC Topic 250, Accounting Changes and Error Corrections, and ASC Topic 250-10-S99-1, Assessing Materiality, and determined that both errors were immaterial to the consolidated financial statements taken as a whole. The Company revised its consolidated statements of income, as well as related footnotes, for the year ended December 31, 2013 and will reflect these corrections in all future filings that contain such consolidated financial statements. The effect of correcting the immaterial error related to ceding commission on the presentation of the comparative condensed consolidated statements of income for the three months and six months ended June 30, 2013 was a decrease to total revenues and an increase to acquisition costs and other underwriting expenses of $67,157 and $131,115, respectively. The effect of correcting the immaterial error related to reductions in the Company’s Luxembourg tax liability on the presentation of the comparative condensed consolidated statements of income for the three months and six months ended June 30, 2013 was an increase to policy acquisition expenses and a decrease to income tax expense of $4,544 and $11,967, respectively (which reduced the Company’s effective tax rate by approximately 5.0% and 6.3%, respectively). There was no impact to net income or liquidity as a result of these immaterial errors.

As a result of the aforementioned above, the Company changed its accounting policy for ceding commission on reinsurance transactions during the three months ended June 30, 2014, which is stated herein below:

Ceding Commissions on Reinsurance Transactions - Ceding commissions on reinsurance transactions are commissions the Company receives from ceding gross written premiums to third party reinsurers. In connection with the Maiden Quota Share, which is the Company’s primary source of ceding commissions, the amount the Company receives is a blended rate based on a contractual formula contained in the individual reinsurance agreements, and the rate may not correlate specifically to the cost structure of the individual segments. The ceding commissions the Company receives cover a portion of its capitalized direct acquisition costs and a portion of other underwriting expenses. Ceding commissions received from reinsurance transactions that represent recovery of capitalized direct acquisition costs are recorded as a reduction of capitalized unamortized deferred acquisition costs and the net amount is charged to expense in proportion to net premium revenue recognized. Ceding commissions received from reinsurance transactions that represent the recovery of other underwriting expenses are recognized in the income statement over the insurance contract period in proportion to the insurance protection provided and classified as a reduction of acquisition costs and other underwriting expenses. Ceding commissions received, but not yet earned, that represent the recovery of other underwriting expenses are classified as a component of accrued expenses and other current liabilities. The Company allocates earned ceding commissions to its segments based on each segment’s proportionate share of total acquisition costs and other underwriting expenses recognized during the period. As a result of adopting this policy, deferred policy acquisition costs, total assets, accrued expenses and other current liabilities and total liabilities increased by approximately $21,717 as of December 31, 2013.

All significant inter-company transactions and accounts have been eliminated in the consolidated financial statements.

To facilitate period-to-period comparisons, certain reclassifications have been made to prior period consolidated financial statement amounts to conform to current period presentation.

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Income Taxes (Tables)

6 Months Ended

Jun. 30, 2014

Text Block [Abstract]

Reconciliation of Statutory Income Tax Rate to Effective Tax Rate

The following table is a reconciliation of the Company’s statutory income tax expense to its effective tax rate for the three and six months ended June 30, 2014 and 2013:

	Three Months Ended June 30,						Six Months Ended June 30,
(Amounts in Thousands)	2014			2013			2014			2013
Income before equity in earnings of unconsolidated subsidiaries	$	118,156		$	91,739		$	228,812		$	189,299
Tax at federal statutory rate of 35%	$	41,355		$	32,109		$	80,084		$	66,255
Tax effects resulting from:
Income (loss) of non-includible foreign subsidiaries	(14,255		)	(10,535		)	(63,133		)	(30,122		)
Other, net	(9,134		)	5,828			28,459			7,378
	$	17,966		$	27,402		$	45,410		$	43,511
Effective tax rate	15.2		%	29.9		%	19.8		%	23.0		%

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Segments - Results of Operations of Business Segments (Detail) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014 Segments	Jun. 30, 2013
Segment Reporting Information [Line Items]
Number of operating segments			3
Gross written premium	$ 1,443,640,000	$ 1,040,614,000	$ 3,109,836,000	$ 1,984,536,000
Net written premium	923,670,000	639,997,000	2,053,951,000	1,172,103,000
Change in unearned premium	(48,733,000)	(103,458,000)	(349,963,000)	(227,570,000)
Net earned premium	874,937,000	536,539,000	1,703,988,000	944,533,000
Loss and loss adjustment expense	(587,233,000)	(364,110,000)	(1,145,803,000)	(636,366,000)
Acquisition costs and other underwriting expenses	(208,060,000)	(129,946,000)	(394,669,000)	(230,231,000)
Operating Expenses	(795,293,000)	(494,056,000)	(1,540,472,000)	(866,597,000)
Underwriting income	79,644,000	42,483,000	163,516,000	77,936,000
Service and fee income	99,542,000	88,102,000	190,500,000	148,615,000
Investment income and realized gain	36,500,000	24,701,000	70,466,000	60,080,000
Other expenses	(87,588,000)	(80,985,000)	(175,179,000)	(133,137,000)
Interest expense	(12,587,000)	(7,608,000)	(24,084,000)	(14,969,000)
Foreign currency gain (loss)	1,084,000	783,000	(768,000)	2,055,000
Gain (loss) on life settlement contracts	(5,070,000)	1,080,000	(2,270,000)	4,000
Acquisition gain on purchase	0	23,183,000	0	48,715,000
Gain on sale of subsidiary	6,631,000	0	6,631,000	0
Provision for income taxes	(17,966,000)	(27,402,000)	(45,410,000)	(43,511,000)
Equity in earnings of unconsolidated subsidiary - related party	3,999,000	7,060,000	22,515,000	8,610,000
Net income	104,189,000	71,397,000	205,917,000	154,398,000
Personal Lines Reinsurance
Segment Reporting Information [Line Items]
Net written premium		28,975,000		59,627,000
Operating Segments | Small Commercial Business
Segment Reporting Information [Line Items]
Gross written premium	704,627,000	389,911,000	1,643,554,000	765,760,000
Net written premium	453,092,000	218,553,000	1,103,808,000	392,293,000
Change in unearned premium	(66,235,000)	(30,253,000)	(336,547,000)	(77,393,000)
Net earned premium	386,857,000	188,300,000	767,261,000	314,900,000
Loss and loss adjustment expense	(258,046,000)	(124,368,000)	(513,168,000)	(208,698,000)
Acquisition costs and other underwriting expenses	(99,115,000)	(48,609,000)	(187,143,000)	(80,273,000)
Operating Expenses	(357,161,000)	(172,977,000)	(700,311,000)	(288,971,000)
Underwriting income	29,696,000	15,323,000	66,950,000	25,929,000
Service and fee income	20,917,000	21,234,000	43,020,000	43,336,000
Investment income and realized gain	14,927,000	12,239,000	28,571,000	24,277,000
Other expenses	(43,224,000)	(30,607,000)	(92,583,000)	(51,373,000)
Interest expense	(6,250,000)	(2,845,000)	(12,729,000)	(5,776,000)
Foreign currency gain (loss)	0	0	0	0
Gain (loss) on life settlement contracts	(2,777,000)	430,000	(1,200,000)	1,000
Acquisition gain on purchase		23,183,000		23,183,000
Gain on sale of subsidiary	6,631,000		6,631,000
Provision for income taxes	(3,003,000)	(11,249,000)	(6,985,000)	(14,601,000)
Equity in earnings of unconsolidated subsidiary - related party	0	0	0	0
Net income	16,917,000	27,708,000	31,675,000	44,976,000
Operating Segments | Specialty Risk and Extended Warranty
Segment Reporting Information [Line Items]
Gross written premium	503,603,000	447,885,000	950,806,000	776,214,000
Net written premium	320,540,000	290,272,000	601,655,000	474,714,000
Change in unearned premium	1,068,000	(82,122,000)	(8,532,000)	(125,410,000)
Net earned premium	321,608,000	208,150,000	593,123,000	349,304,000
Loss and loss adjustment expense	(215,814,000)	(144,050,000)	(398,934,000)	(237,021,000)
Acquisition costs and other underwriting expenses	(63,643,000)	(43,985,000)	(116,508,000)	(75,303,000)
Operating Expenses	(279,457,000)	(188,035,000)	(515,442,000)	(312,324,000)
Underwriting income	42,151,000	20,115,000	77,681,000	36,980,000
Service and fee income	62,131,000	52,347,000	118,356,000	80,066,000
Investment income and realized gain	14,729,000	8,563,000	28,834,000	23,454,000
Other expenses	(30,050,000)	(33,934,000)	(53,559,000)	(52,074,000)
Interest expense	(4,277,000)	(3,295,000)	(7,363,000)	(5,855,000)
Foreign currency gain (loss)	1,084,000	783,000	(768,000)	2,055,000
Gain (loss) on life settlement contracts	(1,446,000)	376,000	(694,000)	2,000
Acquisition gain on purchase		0		25,532,000
Gain on sale of subsidiary	0		0
Provision for income taxes	(12,752,000)	(12,981,000)	(29,359,000)	(23,579,000)
Equity in earnings of unconsolidated subsidiary - related party	0	0	0	0
Net income	71,570,000	31,974,000	133,128,000	86,581,000
Operating Segments | Specialty Program
Segment Reporting Information [Line Items]
Gross written premium	235,410,000	173,843,000	515,476,000	382,935,000
Net written premium	150,038,000	102,197,000	348,488,000	245,469,000
Change in unearned premium	13,964,000	8,479,000	(13,646,000)	(23,315,000)
Net earned premium	164,002,000	110,676,000	334,842,000	222,154,000
Loss and loss adjustment expense	(111,669,000)	(75,820,000)	(227,829,000)	(151,374,000)
Acquisition costs and other underwriting expenses	(44,554,000)	(28,369,000)	(88,440,000)	(56,912,000)
Operating Expenses	(156,223,000)	(104,189,000)	(316,269,000)	(208,286,000)
Underwriting income	7,779,000	6,487,000	18,573,000	13,868,000
Service and fee income	61,000	(6,000)	211,000	67,000
Investment income and realized gain	6,842,000	3,442,000	12,896,000	10,844,000
Other expenses	(14,314,000)	(14,138,000)	(29,037,000)	(25,690,000)
Interest expense	(2,060,000)	(1,257,000)	(3,992,000)	(2,888,000)
Foreign currency gain (loss)	0	0	0	0
Gain (loss) on life settlement contracts	(847,000)	239,000	(376,000)	1,000
Acquisition gain on purchase		0		0
Gain on sale of subsidiary	0		0
Provision for income taxes	485,000	1,045,000	312,000	812,000
Equity in earnings of unconsolidated subsidiary - related party	0	0	0	0
Net income	(2,054,000)	(4,188,000)	(1,413,000)	(2,986,000)
Operating Segments | Personal Lines Reinsurance
Segment Reporting Information [Line Items]
Gross written premium	0	28,975,000	0	59,627,000
Net written premium	0	28,975,000	0	59,627,000
Change in unearned premium	2,470,000	438,000	8,762,000	(1,452,000)
Net earned premium	2,470,000	29,413,000	8,762,000	58,175,000
Loss and loss adjustment expense	(1,704,000)	(19,872,000)	(5,872,000)	(39,273,000)
Acquisition costs and other underwriting expenses	(748,000)	(8,983,000)	(2,578,000)	(17,743,000)
Operating Expenses	(2,452,000)	(28,855,000)	(8,450,000)	(57,016,000)
Underwriting income	18,000	558,000	312,000	1,159,000
Service and fee income	0	0	0	0
Investment income and realized gain	2,000	457,000	165,000	1,505,000
Other expenses	0	(2,306,000)	0	(4,000,000)
Interest expense	0	(211,000)	0	(450,000)
Foreign currency gain (loss)	0	0	0	0
Gain (loss) on life settlement contracts	0	35,000	0	0
Acquisition gain on purchase		0		0
Gain on sale of subsidiary	0		0
Provision for income taxes	11,000	330,000	(86,000)	382,000
Equity in earnings of unconsolidated subsidiary - related party	0	0	0	0
Net income	31,000	(1,137,000)	391,000	(1,404,000)
Operating Segments | Corporate and Other
Segment Reporting Information [Line Items]
Gross written premium	0	0	0	0
Net written premium	0	0	0	0
Change in unearned premium	0	0	0	0
Net earned premium	0	0	0	0
Loss and loss adjustment expense	0	0	0	0
Acquisition costs and other underwriting expenses	0	0	0	0
Operating Expenses	0	0	0	0
Underwriting income	0	0	0	0
Service and fee income	16,433,000	14,527,000	28,913,000	25,146,000
Investment income and realized gain	0	0	0	0
Other expenses	0	0	0	0
Interest expense	0	0	0	0
Foreign currency gain (loss)	0	0	0	0
Gain (loss) on life settlement contracts	0	0	0	0
Acquisition gain on purchase		0		0
Gain on sale of subsidiary	0		0
Provision for income taxes	(2,707,000)	(4,547,000)	(9,292,000)	(6,525,000)
Equity in earnings of unconsolidated subsidiary - related party	3,999,000	7,060,000	22,515,000	8,610,000
Net income	$ 17,725,000	$ 17,040,000	$ 42,136,000	$ 27,231,000

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Investments - Net Investment Income (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Gross investment income	$ 33,306	$ 22,907	$ 62,465	$ 41,625
Less: Investment expenses and interest expense on securities sold under agreement to repurchase	(712)	(273)	(1,344)	(896)
Net investment income	32,594	22,634	61,121	40,729
Fixed maturities
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Gross investment income	31,068	18,316	58,740	35,588
Equity securities
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Gross investment income	242	3,887	301	4,289
Cash and cash equivalents
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Gross investment income	$ 1,996	$ 704	$ 3,424	$ 1,748

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Investment in Life Settlements (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014 Contract		Dec. 31, 2013 Contract	Dec. 31, 2013 policy
Number of Life Settlement Contracts
0-1	0		0	0
1-2	3		0	0
2-3	7		1	1
3-4	2		13	13
4-5	9		2	2
Thereafter	267		255	255
Total	288		271	271
Fair Value
0-1	$ 0	[1]		$ 0	[1]
1-2	17,688	[1]		0	[1]
2-3	41,209	[1]		2,726	[1]
3-4	5,370	[1]		53,767	[1]
4-5	16,942	[1]		5,622	[1]
Thereafter	194,990	[1]		170,909	[1]
Total	276,199	[1]		233,024	[1]
Face Value
0-1	0			0
1-2	25,000			0
2-3	68,000			5,000
3-4	15,000			103,000
4-5	43,000			13,000
Thereafter	1,695,209			1,641,409
Total	$ 1,846,209			$ 1,762,409

[1] The Company determined the fair value as of June 30, 2014 based on 222 policies out of 288 policies, as the Company assigned no value to 66 of the policies as of June 30, 2014. The Company determined the fair value as of December 31, 2013 based on 191 policies out of 271 policies, as the Company assigned no value to 80 of the policies as of December 31, 2013. The Company estimated the fair value of a life insurance policy using a cash flow model with an appropriate discount rate. In some cases, the cash flow model calculates the value of an individual policy to be negative, and therefore the fair value of the policy is zero as no liability exists when a negative value is calculated. The Company is not contractually bound to pay the premium on its life settlement contracts and, therefore, would not pay a willing buyer to assume title of these contracts. Additionally, certain of the Company's acquired policies were structured to have low premium payments at inception of the policy term, which later escalate greatly towards the tail end of the policy term. At the current time, the Company expenses all premium paid, even on policies with zero fair value. Once the premium payments escalate, the Company may allow the policies to lapse. In the event that death benefits are realized in the time frame between initial acquisition and premium escalation, it is a benefit to cash flow.

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Related Party Transactions (Maiden) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended				3 Months Ended		6 Months Ended		3 Months Ended			6 Months Ended		1 Months Ended	3 Months Ended		6 Months Ended					6 Months Ended		1 Months Ended	6 Months Ended		6 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013	Jun. 30, 2014 Technology Insurance Company Inc	Jun. 30, 2014 Maiden	Jun. 30, 2013 Maiden	Jun. 30, 2014 Maiden	Jun. 30, 2013 Maiden	Jun. 30, 2014 AII	Jun. 30, 2013 AII	Sep. 30, 2007 AII	Jun. 30, 2014 AII	Jun. 30, 2013 AII	Apr. 30, 2011 Maiden Insurance	Jun. 30, 2014 NGHC	Jun. 30, 2013 NGHC	Jun. 30, 2014 NGHC	Jun. 30, 2013 NGHC	Jun. 30, 2014 Chief Executive Officer Maiden	Jun. 30, 2014 Board of Directors Chairman Maiden	Jun. 30, 2014 Director Maiden	Jun. 30, 2014 Minimum Maiden	Sep. 30, 2007 Minimum AII	Apr. 30, 2011 Minimum Maiden Insurance	Jun. 30, 2014 Minimum NGHC	Jun. 30, 2014 Minimum Maiden AII	Jun. 30, 2014 Maximum Maiden	Apr. 30, 2011 Maximum Maiden Insurance	Jun. 30, 2014 Maximum NGHC	Jun. 30, 2014 Maximum Maiden AII	Jun. 30, 2014 Retail Business Maiden AII
Related Party Transaction [Line Items]
Note payable on collateral loan – related party	$ 167,975		$ 167,975		$ 167,975
Percentage of capital stock							7.60%		7.60%												5.10%	6.20%	9.30%
Premiums, percentage assumed to net													40.00%
Percentage of reinsurance related losses assumed													40.00%
Reinsurance recoverable	2,241,460		2,241,460		1,929,848																				5,000
Ceding commission percentage of ceded written premiums						5.00%					31.00%			31.00%		5.00%																	34.375%
Reinsurance ceded profit ratio																50.00%
Reinsurance ceded loss ratio																												81.50%		65.00%		95.00%
Extension period of reinsurance agreement term													3 years
Expiration date reinsurance agreement																										Apr. 01, 2011
Percentage of premiums																40.00%
Term of reinsurance agreement																1 year
Interest expense on collateral loan											447	436		891	930
Collateral debt issued by maiden insurance											1,337,571			1,337,571
Percentage of reinsurance brokerage commissions							1.25%		1.25%
Brokerage commission	99,542	88,102	190,500	148,615			4,650	6,783	9,670	10,442									1,057
Assets managed under asset management agreement							3,305,248		3,305,248								1,421,593		1,421,593
Asset management services fee percentage																								0.15%			0.15%		0.20%		0.20%
Average value of assets under management																								1,000,000			1,000,000		1,000,000		1,000,000
Investment management fee							$ 1,265	$ 1,061	$ 2,489	$ 2,102							$ 461	$ 490	$ 890	$ 853

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Investments:
Fixed maturities, available-for-sale, at market value (amortized cost $3,925,907; $3,107,043)	$ 4,040,484	$ 3,100,936
Equity securities, available-for-sale, at market value (cost $86,350; $16,010)	90,527	15,148
Short-term investments	76,324	114,202
Equity investment in unconsolidated subsidiaries – related party	115,325	89,756
Other investments	14,095	25,749
Securities pledged (amortized cost of $0; $316,576)	0	311,518
Total investments	4,336,755	3,657,309
Cash and cash equivalents	569,109	830,022
Restricted cash and cash equivalents	181,067	100,439
Accrued interest and dividends	29,849	27,800
Premiums receivable, net	1,867,890	1,593,975
Reinsurance recoverable (related party $1,364,749; $1,144,168)	2,241,460	1,929,848
Prepaid reinsurance premium (related party $852,592; $739,719)	1,219,324	1,011,304
Prepaid expenses and other assets (recorded at fair value $276,199; $233,024)	948,193	890,333
Deferred policy acquisition costs	609,743	468,404
Property and equipment, net	116,312	104,299
Goodwill	397,581	373,591
Intangible assets	310,676	291,802
Total assets	12,827,959	11,279,126
Liabilities:
Loss and loss adjustment expense reserves	5,078,284	4,368,234
Unearned premiums	3,317,438	2,680,982
Ceded reinsurance premiums payable (related party $509,338; $393,941)	785,579	635,588
Reinsurance payable on paid losses	36,069	18,818
Funds held under reinsurance treaties	40,812	27,574
Note payable on collateral loan – related party	167,975	167,975
Securities sold but not yet purchased, at market	24,309	0
Securities sold under agreements to repurchase, at contract value	0	293,222
Accrued expenses and other current liabilities (recorded at fair value $12,529; $11,945)	678,974	672,575
Deferred income taxes	271,969	274,519
Debt	561,224	560,174
Total liabilities	10,962,633	9,699,661
Commitments and contingencies
Redeemable non-controlling interest	600	600
Stockholders’ equity:
Common stock, $.01 par value; 150,000 shares authorized, 98,202 and 98,122 issued in 2014 and 2013, respectively; 75,530 and 74,765 outstanding in 2014 and 2013, respectively	980	980
Preferred stock, $.01 par value; 10,000 shares authorized, 4,600 issued and outstanding in 2014 and 2013	115,000	115,000
Additional paid-in capital	1,031,980	1,033,084
Treasury stock at cost; 22,672 and 23,357 shares in 2014 and 2013, respectively	(283,626)	(284,891)
Accumulated other comprehensive income (loss)	85,528	(8,164)
Retained earnings	760,951	584,996
Total AmTrust Financial Services, Inc. equity	1,710,813	1,441,005
Non-controlling interest	153,913	137,860
Total stockholders’ equity	1,864,726	1,578,865
Total liabilities and stockholders' equity	$ 12,827,959	$ 11,279,126

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Investments - Additional Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014 Derivative Investment	Jun. 30, 2013	Jun. 30, 2014 Derivative Investment	Jun. 30, 2013	Dec. 31, 2013 Investment
Investment [Line Items]
Proceeds from the sale of investments in available-for-sale securities			$ 722,847	$ 1,198,185
Number of securities account for gross unrealized loss	668		668		1,034
Number of interest rate swaps	2		2
Securities sold but not yet purchased, at market	24,309		24,309		0
Interest rate swaps liability	2,693		2,693		3,054
Securities sold under agreements to repurchase, interest expense	24	214	273	491
Equity securities
Investment [Line Items]
Securities sold but not yet purchased, at market	$ 24,309		$ 24,309

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Condensed Consolidated Statement of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Statement of Comprehensive Income [Abstract]
Net income	$ 104,189	$ 71,397	$ 205,917	$ 154,398
Other comprehensive income, net of tax:
Foreign currency translation adjustments	6,288	166	7,803	(15,565)
Change in fair value of interest rate swap	42	716	234	936
Unrealized gains (losses) on securities:
Unrealized holding gain (loss) arising during period	46,578	(64,197)	87,451	(79,483)
Reclassification adjustment for gains (losses) included in net income	149	(275)	(1,796)	3,261
Other comprehensive income (loss), net of tax	53,057	(63,590)	93,692	(90,851)
Comprehensive income	157,246	7,807	299,609	63,547
Less: Comprehensive income (loss) attributable to non-controlling interest	64	0	(4,090)	(877)
Comprehensive income attributable to AmTrust Financial Services, Inc.	$ 157,182	$ 7,807	$ 303,699	$ 64,424

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Debt - Amounts Recorded for Notes (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Debt Disclosure [Abstract]
Outstanding principal	$ 200,000	$ 200,000
Unamortized OID	(34,197)	(35,782)
Liability component	165,803	164,218
Equity component, net of tax	$ 27,092	$ 27,092

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Shareholder Equity and Accumulated Other Comprehensive Income (Loss) (Tables)

6 Months Ended

Jun. 30, 2014

Equity [Abstract]

Ownership Components of Total Equity

The following table summarizes the ownership components of total stockholders' equity for the six months ended June 30, 2014 and 2013:

	2014									2013
(Amounts in Thousands)	AmTrust			Non-Controlling Interest			Total			AmTrust			Non-Controlling Interest			Total
Beginning Balance	$	1,441,005		$	137,860		$	1,578,865		$	1,144,121		$	103,344		$	1,247,465
Net income (loss)	210,007			(4,090		)	205,917			155,275			(877		)	154,398
Unrealized holding gain (loss)	87,451			—			87,451			(79,483		)	—			(79,483		)
Reclassification adjustment	(1,796		)	—			(1,796		)	3,261			—			3,261
Foreign currency translation	7,803			188			7,991			(15,565		)	—			(15,565		)
Unrealized gain on interest rate swap	234			—			234			936			—			936
Share exercises, compensation and other	11,130			—			11,130			7,253			—			7,253
Common share dividends	(30,170		)	—			(30,170		)	(18,899		)	—			(18,899		)
Preferred stock issuance, net of fees	—			—			—			111,130			—			111,130
Preferred stock dividends	(3,882		)	—			(3,882		)	—			—			—
Common share (repurchase) issuance	(10,969		)	—			(10,969		)	472			—			472
Capital contribution	—			19,955			19,955			—			6,158			6,158
Ending Balance	$	1,710,813		$	153,913		$	1,864,726		$	1,308,501		$	108,625		$	1,417,126

Schedule of Accumulated Other Comprehensive Income (Loss)

The following table summarizes Accumulated Other Comprehensive Income (Loss) for the six month periods ended June 30, 2014 and 2013:

(Amounts in Thousands)	Foreign Currency Items			Unrealized Gains (Losses) on Investments			Interest Rate Swap Hedge			Net Benefit Plan Assets and Obligations Recognized in Stockholders' Equity			Accumulated Other Comprehensive Income (Loss)
Balance December 31, 2013	$	2,582		$	(7,023	)	$	(1,985	)	$	(1,738	)	$	(8,164	)
Other comprehensive income before reclassification	12,005			134,540			360			—			146,905
Amounts reclassed from accumulated other comprehensive income	—			(2,763		)	—			—			(2,763		)
Income tax expense	(4,202		)	(46,122		)	(126		)	—			(50,450		)
Net current-period other comprehensive income	7,803			85,655			234			—			93,692
Balance, June 30, 2014	$	10,385		$	78,632		$	(1,751	)	$	(1,738	)	$	85,528
Balance December 31, 2012	$	(10,361	)	$	77,605		$	(3,013	)	$	—		$	64,231
Other comprehensive income before reclassification	(23,946		)	(122,281		)	1,440			—			(144,787		)
Amounts reclassed from accumulated other comprehensive income	—			5,017			—			—			5,017
Income tax benefit (expense)	8,381			41,042			(504		)				48,919
Net current-period other comprehensive income (loss)	(15,565		)	(76,222		)	936			—			(90,851		)
Balance, June 30, 2013	$	(25,926	)	$	1,383		$	(2,077	)	$	—		$	(26,620	)

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Earnings Per Share - Additional Information (Detail) In Thousands, unless otherwise specified	0 Months Ended	6 Months Ended
	Sep. 04, 2013	Jun. 30, 2014
Earnings Per Share [Abstract]
Stock dividend	10.00%
Anti-dilutive securities excluded from diluted earnings per share		10,000

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Contingent Liabilities

6 Months Ended

Jun. 30, 2014

Text Block [Abstract]

Contingent Liabilities

Contingent Liabilities

Litigation

From time to time, the Company is subject to routine legal proceedings, including arbitrations, arising in the ordinary course of business. The Company’s insurance subsidiaries are named as defendants in various legal actions arising principally from claims made under insurance policies and contracts. Those actions are considered by the Company in estimating the loss and LAE reserves. The Company’s management believes the resolution of those actions will not have a material adverse effect on the Company’s financial position or results of operations.

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Segments (Tables)

6 Months Ended

Jun. 30, 2014

Text Block [Abstract]

Results of Operations of Business Segments

The following tables summarize the results of operations of the business segments for the three and six months ended June 30, 2014 and 2013:

(Amounts in Thousands)	Small Commercial Business			Specialty Risk and Extended Warranty			Specialty Program			Personal Lines Reinsurance - Run off			Corporate and Other			Total
Three months ended June 30, 2014:
Gross written premium	$	704,627		$	503,603		$	235,410		$	—		$	—		$	1,443,640
Net written premium	453,092			320,540			150,038			—			—			923,670
Change in unearned premium	(66,235		)	1,068			13,964			2,470			—			(48,733		)
Net earned premium	386,857			321,608			164,002			2,470			—			874,937
Loss and loss adjustment expense	(258,046		)	(215,814		)	(111,669		)	(1,704		)	—			(587,233		)
Acquisition costs and other underwriting expenses	(99,115		)	(63,643		)	(44,554		)	(748		)	—			(208,060		)
	(357,161		)	(279,457		)	(156,223		)	(2,452		)	—			(795,293		)
Underwriting income	29,696			42,151			7,779			18			—			79,644
Service and fee income	20,917			62,131			61			—			16,433			99,542
Investment income and realized gain	14,927			14,729			6,842			2			—			36,500
Other expenses	(43,224		)	(30,050		)	(14,314		)	—			—			(87,588		)
Interest expense	(6,250		)	(4,277		)	(2,060		)	—			—			(12,587		)
Foreign currency gain	—			1,084			—			—			—			1,084
Gain on life settlement contracts	(2,777		)	(1,446		)	(847		)	—			—			(5,070		)
Gain on sale of a subsidiary	6,631			—			—			—			—			6,631
Provision for income taxes	(3,003		)	(12,752		)	485			11			(2,707		)	(17,966		)
Equity in earnings of unconsolidated subsidiary  – related party	—			—			—			—			3,999			3,999
Net income attributable to AmTrust Financial Services, Inc.	$	16,917		$	71,570		$	(2,054	)	$	31		$	17,725		$	104,189
(Amounts in Thousands)	Small Commercial Business			Specialty Risk and Extended Warranty			Specialty Program			Personal Lines Reinsurance - Run off			Corporate and Other			Total
Three months ended June 30, 2013:
Gross written premium	$	389,911		$	447,885		$	173,843		$	28,975		$	—		$	1,040,614
Net written premium	218,553			290,272			102,197			28,975			—			639,997
Change in unearned premium	(30,253		)	(82,122		)	8,479			438			—			(103,458		)
Net earned premium	188,300			208,150			110,676			29,413			—			536,539
Loss and loss adjustment expense	(124,368		)	(144,050		)	(75,820		)	(19,872		)	—			(364,110		)
Acquisition costs and other underwriting expenses	(48,609		)	(43,985		)	(28,369		)	(8,983		)	—			(129,946		)
	(172,977		)	(188,035		)	(104,189		)	(28,855		)	—			(494,056		)
Underwriting income	15,323			20,115			6,487			558			—			42,483
Service and fee income	21,234			52,347			(6		)	—			14,527			88,102
Investment income and realized gain	12,239			8,563			3,442			457			—			24,701
Other expenses	(30,607		)	(33,934		)	(14,138		)	(2,306		)	—			(80,985		)
Interest expense	(2,845		)	(3,295		)	(1,257		)	(211		)	—			(7,608		)
Foreign currency gain	—			783			—			—			—			783
Gain on life settlement contracts	430			376			239			35			—			1,080
Acquisition gain on purchase	23,183			—			—			—			—			23,183
Provision for income taxes	(11,249		)	(12,981		)	1,045			330			(4,547		)	(27,402		)
Equity in earnings of unconsolidated subsidiary  – related party	—			—			—			—			7,060			7,060
Net income attributable to AmTrust Financial Services, Inc.	$	27,708		$	31,974		$	(4,188	)	$	(1,137	)	$	17,040		$	71,397

(Amounts in Thousands)	Small Commercial Business			Specialty Risk and Extended Warranty			Specialty Program			Personal Lines Reinsurance - Run off			Corporate and Other			Total
Six months ended June 30, 2014:
Gross written premium	$	1,643,554		$	950,806		$	515,476		$	—		$	—		$	3,109,836
Net written premium	1,103,808			601,655			348,488			—			—			2,053,951
Change in unearned premium	(336,547		)	(8,532		)	(13,646		)	8,762			—			(349,963		)
Net earned premium	767,261			593,123			334,842			8,762			—			1,703,988
Loss and loss adjustment expense	(513,168		)	(398,934		)	(227,829		)	(5,872		)	—			(1,145,803		)
Acquisition costs and other underwriting expenses	(187,143		)	(116,508		)	(88,440		)	(2,578		)	—			(394,669		)
	(700,311		)	(515,442		)	(316,269		)	(8,450		)	—			(1,540,472		)
Underwriting income	66,950			77,681			18,573			312			—			163,516
Service and fee income	43,020			118,356			211			—			28,913			190,500
Investment income and realized gain (loss)	28,571			28,834			12,896			165			—			70,466
Other expenses	(92,583		)	(53,559		)	(29,037		)	—			—			(175,179		)
Interest expense	(12,729		)	(7,363		)	(3,992		)	—			—			(24,084		)
Foreign currency loss	—			(768		)	—			—			—			(768		)
Loss on life settlement contracts	(1,200		)	(694		)	(376		)	—			—			(2,270		)
Gain on sale of a subsidiary	6,631			—			—			—			—			6,631
Provision for income taxes	(6,985		)	(29,359		)	312			(86		)	(9,292		)	(45,410		)
Equity in earnings of unconsolidated subsidiary – related party	—			—			—			—			22,515			22,515
Net income attributable to AmTrust Financial Services, Inc.	$	31,675		$	133,128		$	(1,413	)	$	391		$	42,136		$	205,917
(Amounts in Thousands)	Small Commercial Business			Specialty Risk and Extended Warranty			Specialty Program			Personal Lines Reinsurance - Run off			Corporate and Other			Total
Six months ended June 30, 2013:
Gross written premium	$	765,760		$	776,214		$	382,935		$	59,627		$	—		$	1,984,536
Net written premium	392,293			474,714			245,469			59,627			—			1,172,103
Change in unearned premium	(77,393		)	(125,410		)	(23,315		)	(1,452		)	—			(227,570		)
Net earned premium	314,900			349,304			222,154			58,175			—			944,533
Loss and loss adjustment expense	(208,698		)	(237,021		)	(151,374		)	(39,273		)	—			(636,366		)
Acquisition costs and other underwriting expenses	(80,273		)	(75,303		)	(56,912		)	(17,743		)	—			(230,231		)
	(288,971		)	(312,324		)	(208,286		)	(57,016		)	—			(866,597		)
Underwriting income	25,929			36,980			13,868			1,159			—			77,936
Service and fee income	43,336			80,066			67			—			25,146			148,615
Investment income and realized gain (loss)	24,277			23,454			10,844			1,505			—			60,080
Other expenses	(51,373		)	(52,074		)	(25,690		)	(4,000		)	—			(133,137		)
Interest expense	(5,776		)	(5,855		)	(2,888		)	(450		)	—			(14,969		)
Foreign currency gain	—			2,055			—			—			—			2,055
Loss on life settlement contracts	1			2			1			—			—			4
Acquisition gain on purchase	23,183			25,532			—			—			—			48,715
Provision for income taxes	(14,601		)	(23,579		)	812			382			(6,525		)	(43,511		)
Equity in earnings of unconsolidated subsidiary – related party	—			—			—			—			8,610			8,610
Net income attributable to AmTrust Financial Services, Inc.	$	44,976		$	86,581		$	(2,986	)	$	(1,404	)	$	27,231		$	154,398

Long Lived Assets and Total Assets of Business Segments

The following tables summarize long lived assets and total assets of the business segments as of June 30, 2014 and December 31, 2013:

(Amounts in Thousands)	Small Commercial Business		Specialty Risk and Extended Warranty		Specialty Program		Personal Lines Reinsurance - Run off		Corporate and other		Total
As of June 30, 2014:
Property and equipment, net	$	61,472	$	35,561	$	19,279	$	—	$	—	$	116,312
Goodwill and intangible assets	234,124		416,874		57,259		—		—		708,257
Total assets	5,643,788		5,137,893		2,033,995		12,283		—		12,827,959
As of December 31, 2013:
Property and equipment, net	$	42,054	$	38,297	$	22,280	$	1,668	$	—	$	104,299
Goodwill and intangible assets	233,566		399,954		31,873		—		—		665,393
Total assets	4,261,764		5,036,121		1,894,538		86,703		—		11,279,126

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Subsequent Events

6 Months Ended

Jun. 30, 2014

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

On July 1, 2014, the Company completed a public offering of 4,000,000 of its depositary shares, each representing a 1/40th interest in a share of its 7.25% Non-Cumulative Preferred Stock, Series B, $0.01 par value per share (the "Series B Preferred Stock"), with a liquidation preference of $1,000 per share (equivalent to $25 per depositary share). Each depositary share entitles the holder to a proportional fractional interest in all rights and preferences of the Series B Preferred Stock represented thereby (including any dividend, liquidation, redemption and voting rights). Dividends on the Series B Preferred Stock represented by the depositary shares will be payable on the liquidation preference amount, on a non-cumulative basis, when, as and if declared by the Company’s board of directors, at a rate of 7.25% per annum, quarterly in arrears, on March 15, June 15, September 15, and December 15 of each year, beginning on September 15, 2014, from and including the date of original issuance. The Series B Preferred Stock represented by the depositary shares is not redeemable prior to July 1, 2019. After that date, the Company may redeem at its option, in whole or in part, the Series B Preferred Stock represented by the depositary shares at a redemption price of $1,000 per share (equivalent to $25 per depositary share) plus any declared and unpaid dividends for prior dividend periods and accrued but unpaid dividends (whether or not declared) for the then current dividend period. On July 10, 2014, the underwriters exercised, in part, their over-allotment option with respect to 200,000 additional depositary shares, each representing a 1/40th interest in a share of Series B Preferred Stock, on the same terms and conditions as the original issuance. A total of 4,200,000 depositary shares (equivalent to 105,000 shares of Series B Preferred Stock) were issued. Net proceeds from this offering, including the over-allotment, were $101,377. In addition, the Company incurred $3,624 in underwriting discount and commissions and expenses, which were recognized as a reduction to additional paid-in capital.

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Share Based Compensation - Summary of Restricted Stock and RSU Activity (Detail) (USD $)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Shares or Units
Non-vested at beginning of period	917,015	888,197
Granted	868,702	241,963
Vested	(310,640)	(253,655)
Forfeited	(5,436)	(386)
Non-vested at end of period	1,469,641	876,119
Weighted-Average Grant Date Fair Value
Non-vested at beginning of period	$ 24.43	$ 20.86
Granted	$ 38.88	$ 30.16
Vested	$ 22.14	$ 20.05
Forfeited	$ 23.89	$ 29.31
Non-vested at end of period	$ 33.46	$ 23.66

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Cash flows from operating activities:
Net income	$ 205,917	$ 154,398
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	29,328	22,831
Net amortization of bond premium or discount	9,573	7,649
Equity earnings on investment in unconsolidated subsidiaries	(22,515)	(8,610)
(Gain) loss on investment in life settlement contracts, net	2,270	(4)
Realized gain on marketable securities	(12,884)	(19,351)
Non-cash write-down of marketable securities	3,539	0
Discount on notes payable	1,585	1,454
Stock based compensation	8,661	4,781
Bad debt expense	12,607	9,754
Foreign currency loss (gain)	768	(2,055)
Gain on acquisition or sale	(6,631)	(48,715)
Dividend received from equity investment	0	12,203
Changes in assets - (increase) decrease:
Premiums and note receivables	(289,596)	(121,384)
Reinsurance recoverable	(310,426)	(180,905)
Deferred policy acquisition costs, net	(163,056)	(61,396)
Prepaid reinsurance premiums	(208,020)	(173,769)
Prepaid expenses and other assets	(86,494)	(28,965)
Changes in liabilities - increase (decrease):
Reinsurance premium payable	150,814	(7,752)
Loss and loss expense reserve	689,825	374,935
Unearned premiums	611,575	392,570
Funds held under reinsurance treaties	19,763	(1,229)
Accrued expenses and other current liabilities	53,644	201,864
Deferred tax liability	(42,566)	(40,606)
Net cash provided by operating activities	657,681	487,698
Cash flows from investing activities:
Net purchases of securities with fixed maturities	(416,825)	(371,163)
Net (purchases) sales of equity securities	(10,331)	21,904
Net sales (purchases) of other investments	14,056	(3,289)
Acquisition of life settlement contracts	(25,419)	0
Receipt of life settlement contract proceeds	5,027	6,047
Acquisition of subsidiaries, net of cash obtained	(75,922)	(74,859)
Sale of subsidiary, net of cash for subsidiary	20,059	0
Increase in restricted cash and cash equivalents	(80,628)	(85,106)
Purchase of property and equipment	(22,544)	(23,355)
Net cash used in investing activities	(592,527)	(529,821)
Cash flows from financing activities:
Common share (purchase) issuance	(10,969)	472
Preferred share issuance, net	0	111,130
Repurchase agreements, net	(293,222)	(29,750)
Secured loan agreements payments	(534)	(777)
Promissory notes payments	(10,695)	0
Non-controlling interest capital contribution to consolidated subsidiaries	11,090	6,158
Stock option exercise and other	2,469	2,472
Dividends distributed on common stock	(25,600)	(9,463)
Dividends distributed on preference stock	(3,882)	0
Net cash (used in) provided by financing activities	(331,343)	80,242
Effect of exchange rate changes on cash	5,276	(2,855)
Net (decrease) increase in cash and cash equivalents	(260,913)	35,264
Cash and cash equivalents, beginning of the period	830,022	414,370
Cash and cash equivalents, end of the period	569,109	449,634
Supplemental Cash Flow Information
Income tax payments	39,839	4,836
Interest payments on debt	$ 18,453	$ 10,602

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Fixed maturities, available-for-sale, amortized cost	$ 3,925,907	$ 3,107,043
Equity securities, available-for-sale, cost	86,350	16,010
Securities pledged	0	316,576
Reinsurance recoverable	2,241,460	1,929,848
Prepaid reinsurance premium	1,219,324	1,011,304
Prepaid expense and other assets, fair value	276,199	233,024
Ceded reinsurance premiums payable	785,579	635,588
Accrued expenses and other current liabilities	12,529	11,945
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares issued	98,202,000	98,122,000
Common stock, shares outstanding	75,530,000	74,765,000
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred Stock, shares issued	4,600,000	4,600,000
Preferred Stock, shares outstanding	4,600,000	4,600,000
Treasury stock, at cost, shares	22,672,000	23,357,000
Related Party Transactions
Reinsurance recoverable	1,364,749	1,144,168
Prepaid reinsurance premium	852,592	739,719
Ceded reinsurance premiums payable	$ 509,338	$ 393,941

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Income Taxes

6 Months Ended

Jun. 30, 2014

Text Block [Abstract]

Income Taxes

Income Taxes

The following table is a reconciliation of the Company’s statutory income tax expense to its effective tax rate for the three and six months ended June 30, 2014 and 2013:

	Three Months Ended June 30,						Six Months Ended June 30,
(Amounts in Thousands)	2014			2013			2014			2013
Income before equity in earnings of unconsolidated subsidiaries	$	118,156		$	91,739		$	228,812		$	189,299
Tax at federal statutory rate of 35%	$	41,355		$	32,109		$	80,084		$	66,255
Tax effects resulting from:
Income (loss) of non-includible foreign subsidiaries	(14,255		)	(10,535		)	(63,133		)	(30,122		)
Other, net	(9,134		)	5,828			28,459			7,378
	$	17,966		$	27,402		$	45,410		$	43,511
Effective tax rate	15.2		%	29.9		%	19.8		%	23.0		%

The Company's effective tax rate was positively impacted by approximately 14.6% and 5.0% during the three months ended June 30, 2014 and 2013, respectively, and by approximately 8.1% and 6.3% during the six months ended June 30, 2014 and 2013, respectively, due to a decrease in the deferred tax liability associated with the Company's equalization reserves for its Luxembourg reinsurers.

The Company’s management believes that it will realize the benefits of its deferred tax assets, which is included as a component of the Company’s net deferred tax liability, and, accordingly, no valuation allowance has been recorded for the periods presented. The earnings of certain of the Company’s foreign subsidiaries have been indefinitely reinvested in foreign operations. Therefore, no provision has been made for any U.S. taxes or foreign withholding taxes that may be applicable upon any repatriation or disposition. The determination of any unrecognized deferred tax liability for temporary differences related to investments in certain of the Company’s foreign subsidiaries is not practicable. At June 30, 2014 and December 31, 2013, the financial reporting basis in excess of the tax basis for which no deferred taxes have been recognized was approximately $463,300 and $360,000, respectively.

The Company’s major taxing jurisdictions include the U.S. (federal and state), the United Kingdom and Ireland. The years subject to potential audit vary depending on the tax jurisdiction. Generally, the Company’s statute of limitation is open for tax years ended December 31, 2010 and forward. As permitted by FASB ASC 740-10, the Company recognizes interest and penalties, if any, related to unrecognized tax benefits in its income tax provision. The Company has not recorded any unrecognized tax benefits or any related interest and penalties at June 30, 2014 and December 31, 2013, respectively.

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Document and Entity Information	6 Months Ended
	Jun. 30, 2014	Aug. 01, 2014
Document Documentand Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2
Trading Symbol	AFSI
Entity Registrant Name	AMTRUST FINANCIAL SERVICES, INC.
Entity Central Index Key	0001365555
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		75,615,496

XML

Related Party Transactions

6 Months Ended

Jun. 30, 2014

Text Block [Abstract]

Related Party Transactions

Related Party Transactions

Maiden

The Company has various reinsurance and service agreements with Maiden Holdings, Ltd. (“Maiden”). Maiden is a publicly-held Bermuda insurance holding company (Nasdaq: MHLD) formed by Michael Karfunkel, George Karfunkel and Barry Zyskind, principal shareholders, and, respectively, the chairman of the board of directors, a director, and the chief executive officer and director of the Company. As of June 30, 2014, our principal shareholders, Michael Karfunkel, Leah Karfunkel (wife of Michael Karfunkel and sole trustee of the Michael Karfunkel 2005 Grantor Retained Annuity Trust), George Karfunkel and Barry Zyskind, own or control approximately 6.2%, 7.6%, 9.3% and 5.1%, respectively, of the issued and outstanding capital stock of Maiden. Mr. Zyskind serves as the non-executive chairman of the board of Maiden’s board of directors. Maiden Insurance Company, Ltd. (“Maiden Insurance”), a wholly-owned subsidiary of Maiden, is a Bermuda reinsurer. The following section describes the agreements in place between the Company and its subsidiaries and Maiden and its subsidiaries.

Reinsurance Agreements with Maiden Holdings, Ltd.

In 2007, the Company and Maiden entered into a master agreement, as amended, by which the parties caused the Company’s Bermuda subsidiary, AmTrust International Insurance, Ltd. (“AII”) and Maiden Insurance to enter into a quota share reinsurance agreement (the “Maiden Quota Share”), as amended, by which AII retrocedes to Maiden Insurance an amount equal to 40% of the premium written by the Company’s U.S., Irish and U.K. insurance companies (the “AmTrust Ceding Insurers”), net of the cost of unaffiliated inuring reinsurance (and in the case of the Company’s U.K. insurance subsidiary, AmTrust Europe Ltd. ("AEL"), net of commissions) and 40% of losses excluding certain business that the Company commenced writing after the effective date, including the Company’s European medical liability business discussed below, business assumed from Tower Group International, Ltd. pursuant to the cut-through quota share reinsurance agreement, and risks, other than workers’ compensation risks and certain business written by the Company’s Irish subsidiary, AmTrust International Underwriters Limited (“AIU”), for which the AmTrust Ceding Insurers’ net retention exceeds $5,000 (“Covered Business”).

On March 7, 2013, after receipt of approval from each of the Company’s and Maiden’s Audit Committee, the Company and Maiden executed an amendment to the Maiden Quota Share. The amendment provides that, effective January 1, 2013, AII receives a ceding commission of 31% of ceded written premiums with respect to all Covered Business other than retail commercial package business, for which the ceding commission remains 34.375%. With regards to the Specialty Program portion of Covered Business only, the Company will be responsible for ultimate net loss otherwise recoverable from Maiden Insurance to the extent that the loss ratio to Maiden Insurance, which shall be determined on an inception to date basis from July 1, 2007 through the date of calculation, is between 81.5% and 95% (the "Specialty Program Loss Corridor"). For the purpose of determining whether the loss ratio falls within the Specialty Program Loss Corridor, workers’ compensation business written in the Company’s Specialty Program segment from July 1, 2007 through December 31, 2012 is excluded from the loss ratio calculation.

The Maiden Quota Share was renewed through July 1, 2016 and will automatically renew for successive three-year terms unless either AII or Maiden Insurance notifies the other of its election not to renew not less than nine months prior to the end of any such three-year term. In addition, either party is entitled to terminate on thirty days’ notice or less upon the occurrence of certain early termination events, which include a default in payment, insolvency, change in control of AII or Maiden Insurance, run-off, or a reduction of 50% or more of the shareholders’ equity of Maiden Insurance or the combined shareholders’ equity of AII and the AmTrust Ceding Insurers.

Effective April 1, 2011, the Company, through its subsidiaries AEL and AIU, entered into a reinsurance agreement with Maiden Insurance by which the Company cedes to Maiden Insurance 40% of its European medical liability business, including business in force at April 1, 2011. The quota share had an initial term of one year and was renewed through March 31, 2015. The agreement can be terminated by either party on four months’ prior written notice. Maiden Insurance pays the Company a 5% ceding commission, and the Company will earn a profit commission of 50% of the amount by which the ceded loss ratio is lower than 65%.

 The following is the effect on the Company’s results of operations for the three and six months ended June 30, 2014 and 2013 related to Maiden Reinsurance agreements:

	Three Months Ended June 30,						Six Months Ended June 30,
(Amounts in Thousands)	2014			2013			2014			2013
Results of operations:
Premium written – ceded	$	(363,706	)	$	(283,052	)	$	(772,264	)	$	(588,838	)
Change in unearned premium – ceded	48,268			31,060			144,158			109,156
Earned premium - ceded	$	(315,438	)	$	(251,992	)	$	(628,106	)	$	(479,682	)
Ceding commission on premium written	$	110,969		$	82,511		$	229,309		$	172,010
Ceding commission – deferred	(19,724		)	(15,354		)	(49,958		)	(40,895		)
Ceding commission – earned	$	91,245		$	67,157		$	179,351		$	131,115
Incurred loss and loss adjustment expense – ceded	$	222,698		$	154,453		$	436,981		$	307,418

Note Payable to Maiden – Collateral for Proportionate Share of Reinsurance Obligations

In conjunction with the Maiden Quota Share, as described above, AII entered into a loan agreement with Maiden Insurance during the fourth quarter of 2007, whereby Maiden Insurance loaned to AII the amount equal to its quota share of the obligations of the AmTrust Ceding Insurers that AII was then obligated to secure. The loan agreement provides for interest at a rate of LIBOR plus 90 basis points and is payable on a quarterly basis. Advances under the loan are secured by a promissory note and totaled $167,975 as of June 30, 2014 and December 31, 2013, respectively. The Company recorded $447 and $891 of interest expense during the three and six months ended June 30, 2014, respectively, and $436 and $930 of interest expense during the three and six months ended June 30, 2013, respectively. Effective December 1, 2008, AII and Maiden Insurance entered into a Reinsurer Trust Assets Collateral agreement whereby Maiden Insurance is required to provide AII the assets required to secure Maiden’s proportional share of the Company’s obligations to its U.S. subsidiaries. The amount of this collateral as of June 30, 2014 was approximately $1,337,571. Maiden retains ownership of the collateral in the trust account.

Reinsurance Brokerage Agreement

Effective July 1, 2007, the Company, through a subsidiary, entered into a reinsurance brokerage agreement with Maiden. Pursuant to the brokerage agreement, the Company provides brokerage services relating to the Maiden Quota Share for a fee equal to 1.25% of reinsured premium. The Company recorded $4,650 and $9,670 of brokerage commission during the three and six months ended June 30, 2014, respectively, and $6,783 and $10,442 of brokerage commission during the three and six months ended June 30, 2013, respectively. The brokerage commission was recorded as a component of service and fee income.

Asset Management Agreement

Effective July 1, 2007, the Company, through a subsidiary, entered into an asset management agreement with Maiden, pursuant to which the Company provides investment management services to Maiden and its affiliates. As of June 30, 2014, the Company managed approximately $3,305,248 of assets related to this agreement. The investment management services fee is an annual rate of 0.20% for periods in which average invested assets are $1,000,000 or less and an annual rate of 0.15% for periods in which the average invested assets exceeds $1,000,000. As a result of this agreement, the Company recorded $1,265 and $2,489 of investment management fees during the three and six months ended June 30, 2014, respectively, and $1,061 and $2,102 of investment management fees during the three and six months ended June 30, 2013, respectively. The investment management fees were recorded as a component of service and fee income.

National General Holding Corp.

The Company has a 13.2% ownership interest in National General Holding Corp. (“NGHC”). NGHC is a publicly-held insurance holding company (Nasdaq: NGHC) that operates fourteen insurance companies in the United States and writes consumer property and casualty insurance business through independent agents for automobiles. Its coverages include standard/preferred auto, RVs, non-standard auto and commercial auto. NGHC's two largest shareholders are the Michael Karfunkel 2005 Grantor Retained Annuity Trust (the “Trust”) and Michael Karfunkel individually. Michael Karfunkel is the chairman of the board of directors of the Company and the father-in-law of Barry D. Zyskind, the chief executive officer of the Company. The ultimate beneficiaries of the Trust include Michael Karfunkel’s children, one of whom is married to Mr. Zyskind. In addition, Michael Karfunkel is the Chairman, President and Chief Executive Offer of NGHC. In accordance with ASC 323-10-15, Investments-Equity Method and Joint Ventures, the Company accounts for its investment in NGHC under the equity method as it has the ability to exert significant influence on NGHC's operations.

In February 2014, NGHC issued approximately 13,600,000 shares in a follow on Rule 144A offering, which resulted in the Company reducing its ownership percentage in NGHC from 15.4% to 13.2%. As a result of the stock issuance, the Company recognized a gain on sale of its equity investment of $14,712, which is included in equity in earnings of unconsolidated subsidiary. In total, the Company recorded $3,999 and $22,515 of income during the three and six months ended June 30, 2014, respectively, and $7,060 and $8,610 of income during the three and six months ended June 30, 2013, respectively, related to its equity investment in NGHC.

Master Services Agreement

The Company provides NGHC and its affiliates information technology development services in connection with the development and licensing of a policy management system at a cost which is currently 1.25% of gross written premium of NGHC and its affiliates plus the Company’s costs for development and support services. In addition, the Company provides NGHC and its affiliates printing and mailing services at a per piece cost for policy and policy related materials, such as invoices, quotes, notices and endorsements, associated with the policies the Company processes for NGHC and its affiliates on the policy management system. The Company recorded approximately $8,024 and $13,063 of fee income during the three and six months ended June 30, 2014, respectively, and $5,996 and $11,372 of fee income during the three and six months ended June 30, 2013, respectively, related to this agreement. Additionally, the Company provided certain consulting services to NGHC related to Luxembourg-domiciled reinsurance entities, for which the Company received $1,057. The fees for these services were recorded as a component of service and fee income.

Asset Management Agreement

The Company manages the assets of NGHC and its subsidiaries for an annual fee equal to 0.20% of the average aggregate value of the assets under management for the preceding quarter if the average aggregate value for the preceding quarter is $1,000,000 or less and 0.15% of the average aggregate value of the assets under management for the preceding quarter if the average aggregate value for that quarter is more than $1,000,000. The Company managed approximately $1,421,593 of assets as of June 30, 2014 related to this agreement. As a result of this agreement, the Company earned approximately $461 and $890 of investment management fees during the three and six months ended June 30, 2014, respectively, and $490 and $853 of investment management fees during the three and six months ended June 30, 2013, respectively. The investment management fees were recorded as a component of service and fee income.

As a result of the above service agreements with NGHC, the Company recorded fees totaling approximately $8,485 and $13,953 for the three and six months ended June 30, 2014, respectively, and $6,486 and $12,225 for the three and six months ended June 30, 2013, respectively. As of June 30, 2014, the outstanding balance payable by NGHC related to these service fees and reimbursable costs was approximately $13,625.

800 Superior

In 2011, the Company formed 800 Superior, LLC with a subsidiary of NGHC for the purposes of acquiring an office building in Cleveland, Ohio. The Company and NGHC each have a fifty percent ownership interest in 800 Superior, LLC. The cost of the building was approximately $7,500. The Company has been appointed managing member of the LLC. Additionally, in conjunction with the Company’s 13.2% ownership percentage of NGHC, the Company ultimately receives 57.7% of the profits and losses of the LLC. As such, in accordance with ASC 810-10, Consolidation, the Company has been deemed the primary beneficiary and, therefore, consolidates this entity.

Additionally in 2012, NGHC entered into an office lease with 800 Superior, LLC for approximately 134,000 square feet. The lease period is for fifteen years. NGHC paid 800 Superior, LLC approximately $533 and $935 of rent during the three and six months ended June 30, 2014, respectively, and $535 and $1,071 of rent during the three and six months ended June 30, 2013, respectively, under this lease. As discussed in Note 13. "New Market Tax Credit," 800 Superior, LLC, the Company and NGHC participated in a financing transaction related to capital improvements on the office building. As part of that transaction, NGHC and the Company entered into an agreement related to the payment and performance guaranties provided by the Company to the various parties to the financing transaction whereby NGHC has agreed to contribute 50% toward any payments the Company is required to make pursuant to the guaranties.

Sale of Personal Express Insurance Company

In April 2014, the Company completed the sale of Personal Express Insurance Company (“PEIC”) and its captive insurance agency Personal Express Insurance Services, Inc. (“PEIS” and, together with PEIC, the “Personal Express Companies”) to Integon National Insurance Company, a subsidiary of NGHC, for approximately $21,743. As a result of the the sale, the Company recorded a gain on sale of approximately $6,631. The Personal Express Companies were wholly-owned subsidiaries of Sequoia Insurance Company, which is one of the Company’s wholly-owned subsidiaries. PEIC is a California-domiciled property and casualty insurance carrier that offers retail personal lines insurance products in California.  The Personal Express Companies offer three primary lines of direct-to-market personal insurance products: personal auto, homeowners and dwelling fire insurance.

The Company’s Board of Directors established a special committee of independent directors (the “Special Committee”) to evaluate and negotiate the sale of the Personal Express Companies and alternatives thereto. The Special Committee was authorized, among other things, to take any and all actions necessary and advisable in connection with the potential sale of the Personal Express Companies, including, without limitation, the review, consideration, evaluation, negotiation and effectuation of any possible transaction involving the Personal Express Companies and to retain, at the Company’s expense, such financial, legal and other advisors as it deemed appropriate. The resolutions confirming the Special Committee’s power and authority provided that no transaction involving the Personal Express Companies would be effected without a prior favorable recommendation of the Special Committee.

Pursuant to its authority, the Special Committee retained its own independent legal counsel and financial advisor to represent it in connection with the sales process. The Special Committee, with the assistance of its legal and financial advisors, contacted over 75 potential bidders, provided various potential bidders with a confidential information memorandum and facilitated due diligence calls and meetings between members of the Personal Express Companies’ management team and potential bidders. The Special Committee, upon consideration of the proposed transaction and the alternatives thereto, including, but not limited to maintaining the Personal Express Companies as wholly-owned subsidiaries, and in consultation with its independent legal counsel and financial advisor, recommended the sale of the Personal Express Companies to a subsidiary of NGHC, on the terms and conditions negotiated by the Special Committee with the assistance of its independent counsel and financial advisor.

Personal Lines Quota Share

The Company was a party to a quota share reinsurance agreement (“Personal Lines Quota Share”) with Integon National Insurance Company ("Integon"). On August 1, 2013, the Company and its wholly-owned subsidiary, Technology Insurance Company, Inc. (“TIC”), received notice from Integon that Integon was terminating, effective August 1, 2013, TIC's participation in the Personal Lines Quota Share. The termination is on a run-off basis, meaning TIC will continue to receive net premiums and assume related net losses with respect to policies in force as of July 31, 2013 through the expiration of such policies. The results of its operations from the Personal Lines Quota Share represent the Company's Personal Lines Reinsurance segment. The Company assumed $28,975 and $59,627 of business as a result of this agreement during the three and six months ended June 30, 2013, respectively.

ACP Re, Ltd.

The Company has service and quota share agreements with ACP Re, Ltd. (“ACP Re”). ACP Re is a privately-held Bermuda reinsurance holding company formed by Michael Karfunkel, the chairman of the board of the Company. The following section describes the agreements in place between the Company and its subsidiaries and ACP Re and its subsidiaries.

Asset Management Agreement

The Company provides investment management services to ACP Re at (i) an annual rate of 0.20% of the average value of ACP Re’s invested assets, excluding investment in AmTrust stock, for the preceding calendar quarter if the average value of such assets for the quarter was $1,000,000 or less, or (ii) an annual rate of 0.15% of the average value of ACP Re’s invested assets, excluding investment in AmTrust stock, for the preceding calendar quarter if the average value of such assets for the quarter was greater than $1,000,000. The Company managed approximately $127,548 of assets as of June 30, 2014. The Company recorded approximately $61 and $116 of investment management fees during the three and six months ended June 30, 2014, respectively, and $58 and $110 of investment management fees during the three and six months ended June 30, 2013, respectively. The investment management fees were recorded as a component of service and fee income.

Reinsurance Agreements and Assumption of Premium from Tower

In January 2014, ACP Re, through a subsidiary, agreed to acquire 100% of the outstanding stock of Tower Group International, Ltd. (“Tower”) and merge with Tower (the “Merger”). In connection with the Merger, the Company and NGHC agreed to (i) acquire the renewal rights and certain other assets related to Tower’s commercial lines insurance operations and personal lines insurance operations, respectively, (ii) administer the run-off of Tower’s historical commercial lines claims and personal lines claims at cost, (iii) in their discretion, place commercial lines business and personal lines business with the Tower insurance companies, which they will exclusively manage and fully reinsure for a net 2% ceding fee payable to the Tower insurance companies, (iv) retain the expirations on all business written by the Tower insurance companies through the Company and NGHC, as managers, and (v) receive the agreement of the Tower insurance companies and ACP Re not to compete with respect to the commercial lines business and personal lines business.

Pursuant to the foregoing, the Company, on April 8, 2014, entered into a Commercial Lines Master Agreement with ACP Re (the “Master Agreement”), which was subsequently amended and restated on July 23, 2014, which provides for the Company's entry into the following agreements, subject to regulatory approval and the consummation of the Merger:

• a credit agreement by which the Company will provide financing to ACP Re in the aggregate principal amount of $125,000 with a seven years term, bearing interest at 7.00% per year;

• the Company, through a subsidiary, will enter into an administrative services agreement with ACP Re to manage and administer the runoff of commercial lines claims and policies written by the Tower insurance companies prior to the Merger;

• the Company, or one of its subsidiaries, will enter into a commercial lines managing general agent agreement with ACP Re to manage and administer the ongoing commercial lines policies after the Merger;

• the Company, through one of its insurance subsidiaries, will enter into a 100% quota share reinsurance agreement with ACP Re to reinsure the net retained business written post-closing by the Tower insurance companies pursuant to the commercial lines managing general agent agreement;

• the Company, along with NGHC, as reinsurers, will enter into a $250,000 aggregate stop loss reinsurance agreement with a subsidiary of Tower and ACP Re will enter into a reinsurance agreement by which it reinsures the full amount of any payments that the Company and NGHC would be obligated to pay under the aggregate stop loss reinsurance agreement; and

• the Company, through a subsidiary, will enter into an investment management agreement with ACP Re to provide investment management services to the Tower insurance companies.

As a result of the adverse development disclosed by Tower and its impact on ACP Re’s current estimate of Tower’s expected financial position at the closing of the Merger, the Company and NGHC agreed, in addition to the financing described above, to compensate ACP Re for the value the Company and NGHC are expected to achieve as a result of the transaction and the greater risk assumed by ACP Re. The Company will pay ACP Re contingent consideration in the form of an earnout (the “Contingent Payments”), payable semi-annually on the last day of January and July, of 3% of gross written premium of the Tower commercial lines business written or assumed by the Company following the closing in connection with the transaction for a three-year period. The Contingent Payments to be made by the Company are capped at a total of $30 million, in the aggregate, over the three-year period. NGHC will pay contingent consideration to ACP Re on the same terms.

The transaction remains subject to regulatory approval and the consummation of the Merger. There is no assurance that modifications to the terms of the transaction described above will not need to be made in order to obtain regulatory approval.

Lease Agreements

The Company has an office lease for its office space at 59 Maiden Lane in New York, New York from 59 Maiden Lane Associates, LLC, an entity that is wholly-owned by Michael Karfunkel and George Karfunkel. The Company currently leases 39,992 square feet of office space and the lease term is through May 2023. The Company paid approximately $453 and $920 of rent during the three and six months ended June 30, 2014, respectively, and $163 and $364 of rent during the three and six months ended June 30, 2013, respectively, for the leased office space.

In November 2012, the Company entered into an agreement for its office space in Chicago, Illinois. The lease is with 135 LaSalle Property, LLC, an entity that is wholly-owned by entities controlled by Michael Karfunkel and George Karfunkel. The lease term is through November 30, 2022. The Company paid approximately $74 and $185 of rent during the three and six months ended June 30, 2014, respectively, and $109 and $253 of rent during the three and six months ended June 30, 2013, respectively, for the leased office space.

Use of the Company Aircraft

The Company’s wholly-owned subsidiary, AmTrust Underwriters, Inc. (“AUI”), is a party to an aircraft time share agreement with each of Maiden and NGHC. The agreements provide for payment to AUI for usage of its company-owned aircraft and covers actual expenses incurred and permissible under federal aviation regulations, including travel and lodging expenses of the crew, in-flight catering, flight planning and weather contract services, ground transportation, fuel, landing and hanger fees, and airport taxes, among others. AUI does not charge Maiden or NGHC for the fixed costs that would be incurred in any event to operate the aircraft (for example, aircraft purchase costs, insurance and flight crew salaries). The amount that each of Maiden and NGHC paid for the use of AUI's aircraft under these agreements was not material either individually or in aggregate during the three and six months ended June 30, 2014, and 2013, respectively.

In addition, for personal travel, Mr. Zyskind, the Company’s President and Chief Executive Officer and Michael Karfunkel, the Chairman of the Board, each entered into an aircraft reimbursement agreement with AUI and, since entering into such agreement, have fully reimbursed AUI for the incremental cost billed by AUI for their personal use of AUI’s aircraft. The amount that each of Mr. Zyskind and Mr. Karfunkel reimbursed the Company for his personal use of AUI's aircraft under his respective agreement was not material either individually or in aggregate during the three and six months ended June 30, 2014, and 2013, respectively.

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New Market Tax Credit (Details) (USD $) In Thousands, unless otherwise specified	1 Months Ended	6 Months Ended		1 Months Ended	2 Months Ended	1 Months Ended					1 Months Ended
	Sep. 30, 2012	Jun. 30, 2014	Jun. 30, 2013	Mar. 31, 2014 NGHC	Feb. 28, 2014 NGHC	Sep. 30, 2012 800 Superior LLC CDE	Sep. 30, 2012 800 Superior LLC NGHC	Sep. 30, 2012 Parent 800 Superior LLC	Sep. 30, 2012 State and Local Government of Ohio 800 Superior LLC Loans	Dec. 31, 2013 State and Local Government of Ohio 800 Superior LLC Promissory Note	Sep. 30, 2012 Key Community Development Corporation (KCDC) 800 Superior LLC	Sep. 30, 2012 Parent, NGHC, KCDC and State and Local Government of Ohio 800 Superior LLC	Sep. 30, 2012 Community Development Entities (CDE) [Member] 800 Superior LLC
Schedule of Tax Credit [Line Items]
Proceeds from financing transaction		$ (293,222)	$ (29,750)						$ 8,000			$ 19,400
Percentage of qualified investment income that can be claimed at tax credit against their federal income taxes	39.00%
Number of loans									2
Term of the debt instrument									15 years
Average rate of interest										1.70%
Number of CDE						2
Total benefit a company is entitled to receive							49.00%	49.00%			51.00%
Period to recapture													7 years
Ownership percentage				15.40%	13.20%

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Condensed Consolidated Statements of Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Premium income:
Net written premium	$ 923,670	$ 639,997	$ 2,053,951	$ 1,172,103
Change in unearned premium	(48,733)	(103,458)	(349,963)	(227,570)
Net earned premium	874,937	536,539	1,703,988	944,533
Service and fee income (related parties – three months $15,118; $14,414 and six months $27,318; $24,921)	99,542	88,102	190,500	148,615
Net investment income	32,594	22,634	61,121	40,729
Net realized gain on investments	3,906	2,067	9,345	19,351
Total revenues	1,010,979	649,342	1,964,954	1,153,228
Expenses:
Loss and loss adjustment expense	587,233	364,110	1,145,803	636,366
Acquisition costs and other underwriting expenses (net of ceding commission - related party - three months $91,245; $67,157 and six months $179,351; $131,115)	208,060	129,946	394,669	230,231
Other	87,588	80,985	175,179	133,137
Total expenses	882,881	575,041	1,715,651	999,734
Income before other income (expense), income taxes and equity in earnings of unconsolidated subsidiaries	128,098	74,301	249,303	153,494
Other income (expense):
Interest expense	(12,587)	(7,608)	(24,084)	(14,969)
(Loss) gain on investment in life settlement contracts net of profit commission	(5,070)	1,080	(2,270)	4
Foreign currency gain (loss)	1,084	783	(768)	2,055
Acquisition gain on purchase	0	23,183	0	48,715
Gain on sale of subsidiary	6,631	0	6,631	0
Total other (expense) income	(9,942)	17,438	(20,491)	35,805
Income before income taxes and equity in earnings of unconsolidated subsidiaries	118,156	91,739	228,812	189,299
Provision for income taxes	17,966	27,402	45,410	43,511
Income before equity in earnings of unconsolidated subsidiaries	100,190	64,337	183,402	145,788
Equity in earnings of unconsolidated subsidiary – related party	3,999	7,060	22,515	8,610
Net income	104,189	71,397	205,917	154,398
Net loss attributable to non-controlling interest of subsidiaries	4,026	0	4,090	877
Net income attributable to AmTrust Financial Services, Inc.	108,215	71,397	210,007	155,275
Dividends on preference stock	(1,941)	0	(3,882)	0
Net income attributable to AmTrust common shareholders	106,274	71,397	206,125	155,275
Earnings per common share:
Basic earnings per share	$ 1.41	$ 0.96	$ 2.75	$ 2.10
Diluted earnings per share	$ 1.33	$ 0.93	$ 2.60	$ 2.02
Dividends declared per common share	$ 0.2	$ 0.14	$ 0.4	$ 0.28
Net realized gain on investments:
Total other-than-temporary impairment loss	(1,896)	0	(3,539)	0
Portion of loss recognized in other comprehensive income	0	0	0	0
Net impairment losses recognized in earnings	(1,896)	0	(3,539)	0
Other net realized gain on investments	5,802	2,067	12,884	19,351
Net realized investment gain	$ 3,906	$ 2,067	$ 9,345	$ 19,351

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Investment in Life Settlements

6 Months Ended

Jun. 30, 2014

Investments, All Other Investments [Abstract]

Investment in Life Settlements

Investment in Life Settlements

The Company currently owns and periodically acquires life settlement contracts. A life settlement contract is a contract between the owner of a life insurance policy and a third-party who obtains the ownership and beneficiary rights of the underlying life insurance policy. The LSC entities may also acquire premium finance loans made in connection with the borrowers’ purchase of life insurance policies that are secured by the policies. The LSC entities acquire the underlying policies through the borrowers’ voluntary surrender of the policy in satisfaction of the loan or foreclosure. The Company currently has a fifty percent ownership interest in four subsidiaries (collectively, the “LSC entities”) that acquire life settlement contracts. A subsidiary of National General Holdings Corp. ("NGHC") owns the remaining fifty percent interest in the LSC entities. A third party serves as the administrator for two of the life settlement contract portfolios, for which it receives an administrative fee. The third party administrator is eligible to receive a percentage of profits after certain time and performance thresholds have been met. The Company provides certain actuarial and finance functions related to the LSC entities. In conjunction with the Company’s 13.2% ownership percentage of NGHC, the Company ultimately receives 56.6% of the profits and losses of the LSC entities. As such, in accordance with ASC 810-10, Consolidation, the Company has been deemed the primary beneficiary and, therefore, consolidates the LSC entities.

The Company accounts for investments in life settlements in accordance with ASC 325-30, Investments in Insurance Contracts, which states that an investor shall elect to account for its investments in life settlement contracts by using either the investment method or the fair value method. The election is made on an instrument-by-instrument basis and is irrevocable. The Company has elected to account for these policies using the fair value method. As no comparable market pricing is available, the Company determines fair value based upon its estimate of the discounted cash flow related to policies (net of the reserves for improvements in mortality, the possibility that the high net worth individuals represented in its portfolio may have access to better health care, the volatility inherent in determining the life expectancy of insureds with significant reported health impairments, the possibility that the issuer of the policy or a third party will contest the payment of the death benefit payable to the Company, and the future expenses related to the administration of the portfolio), which incorporates current life expectancy assumptions, premium payments, the credit exposure to the insurance company that issued the life settlement contracts and the rate of return that a buyer would require on the contracts.

Total capital contributions of approximately $21,776 and $10,797 were made to the LSC entities during the six months ended June 30, 2014 and 2013, respectively, for which the Company contributed approximately $10,700 and $5,388 in those same periods, respectively. The LSC entities used the contributed capital to pay premiums and purchase policies. The Company’s investments in life settlements and premium finance loans were approximately $276,199 and $233,024 as of June 30, 2014 and December 31, 2013, respectively, and are included in Prepaid expenses and other assets on the Consolidated Balance Sheet. The Company recorded a loss on investment in life settlement contracts, net of profit commission, for the three and six months ended June 30, 2014 of approximately $5,070 and $2,270, respectively, and a gain of $1,080 and $4 for the three and six months ended June 30, 2013, respectively, related to the life settlement contracts.

During the six months ended June 30, 2014, upon the voluntary surrender of the underlying life insurance policies in satisfaction of the remaining defaulted premium finance loans, the LSC entities became the owner and beneficiary under the underlying life insurance policies with respect to such loans. As of June 30, 2014, the LSC entities owned no premium finance loans. As of December 31, 2013, the LSC entities owned 2 premium finance loans which were secured by life insurance policies and were carried at a value of $0.

The following table describes the Company’s investment in life settlements as of June 30, 2014 and December 31, 2013:

(Amounts in Thousands, except number of Life Settlement Contracts)  Expected Maturity Term in Years	Number of Life Settlement Contracts	Fair Value (1)		Face Value
As of June 30, 2014
0-1	—	$	—	$	—
1-2	3	17,688		25,000
2-3	7	41,209		68,000
3-4	2	5,370		15,000
4-5	9	16,942		43,000
Thereafter	267	194,990		1,695,209
Total	288	$	276,199	$	1,846,209

(Amounts in Thousands, except number of Life Settlement Contracts)  Expected Maturity Term in Years	Number of Life Settlement Contracts	Fair Value (1)		Face Value
As of December 31, 2013
0-1	—	$	—	$	—
1-2	—	—		—
2-3	1	2,726		5,000
3-4	13	53,767		103,000
4-5	2	5,622		13,000
Thereafter	255	170,909		1,641,409
Total	271	$	233,024	$	1,762,409

^{(1)  The Company determined the fair value as of June 30, 2014 based on 222 policies out of 288 policies, as the Company assigned no value to 66 of the policies as of June 30, 2014. The Company determined the fair value as of December 31, 2013 based on 191 policies out of 271 policies, as the Company assigned no value to 80 of the policies as of December 31, 2013. The Company estimated the fair value of a life insurance policy using a cash flow model with an appropriate discount rate. In some cases, the cash flow model calculates the value of an individual policy to be negative, and therefore the fair value of the policy is zero as no liability exists when a negative value is calculated. The Company is not contractually bound to pay the premium on its life settlement contracts and, therefore, would not pay a willing buyer to assume title of these contracts. Additionally, certain of the Company's acquired policies were structured to have low premium payments at inception of the policy term, which later escalate greatly towards the tail end of the policy term. At the current time, the Company expenses all premium paid, even on policies with zero fair value. Once the premium payments escalate, the Company may allow the policies to lapse. In the event that death benefits are realized in the time frame between initial acquisition and premium escalation, it is a benefit to cash flow.} 

For these contracts where the Company determined the fair value to be negative and therefore assigned a fair value of zero, the table below details the amount of premiums paid and the death benefits received during the twelve months preceding June 30, 2014 and December 31, 2013:

(Amounts in Thousands, except number of Life Settlement Contracts)	June 30, 2014		December 31, 2013
Number of policies with a negative value from discounted cash flow model as of period end	66		80
Premiums paid for the preceding twelve month period for period ended	$	7,342	$	9,371
Death benefit received	$	3,012	$	3,012

Premiums to be paid by the LSC entities for each of the five succeeding fiscal years to keep the life insurance policies in force as of June 30, 2014, are as follows:

(Amounts in Thousands)	Premiums Due on Life  Settlement Contracts
2014	$	41,008
2015	43,688
2016	61,031
2017	39,847
2018	38,984
Thereafter	552,485
Total	$	777,043

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Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The following tables present the level within the fair value hierarchy at which the Company’s financial assets and financial liabilities are measured on a recurring basis as of June 30, 2014 and December 31, 2013:

(Amounts in Thousands) As of June 30, 2014	Total		Level 1		Level 2		Level 3
Assets:
U.S. treasury securities	$	66,470	$	66,470	$	—	$	—
U.S. government agencies	25,692		—		25,692		—
Municipal bonds	525,239		—		525,239		—
Foreign government	151,035		—		151,035		—
Corporate bonds and other bonds:
Finance	1,225,383		—		1,225,383		—
Industrial	1,067,903		—		1,067,903		—
Utilities	93,014		—		93,014		—
Commercial mortgage backed securities	39,659		—		39,659		—
Residential mortgage backed securities:
Agency backed	830,135		—		830,135		—
Non-agency backed	13,524		—		13,524		—
Asset-backed securities	2,430		—		2,430		—
Equity securities	90,527		90,527		—		—
Short term investments	76,324		76,324		—		—
Other investments	14,095		—		—		14,095
Life settlement contracts	276,199		—		—		276,199
	$	4,497,629	$	233,321	$	3,974,014	$	290,294
Liabilities:
Equity securities sold but not yet purchased, market	$	24,309	$	24,309	$	—	$	—
Life settlement contract profit commission	12,529		—		—		12,529
Derivatives	2,693		—		2,693		—
	$	39,531	$	24,309	$	2,693	$	12,529

(Amounts in Thousands) As of December 31, 2013	Total		Level 1		Level 2		Level 3
Assets:
U.S. treasury securities	$	110,345	$	110,345	$	—	$	—
U.S. government agencies	10,489		—		10,489		—
Municipal bonds	446,183		—		446,183		—
Foreign government	160,105				160,105
Corporate bonds and other bonds:
Finance	1,084,599		—		1,084,599		—
Industrial	754,417		—		754,417		—
Utilities	70,226		—		70,226		—
Commercial mortgage backed securities	28,566		—		28,566		—
Residential mortgage backed securities:
Agency backed	423,137		—		423,137		—
Non-agency backed	6,749		—		6,749		—
Asset-backed securities	6,120		—		6,120		—
Equity securities	15,148		15,148		—		—
Short term investments	114,202		114,202		—		—
Other investments	25,749		—		—		25,749
Securities held as collateral	311,518		48,915		262,603		—
Life settlement contracts	233,024		—		—		233,024
	$	3,800,577	$	288,610	$	3,253,194	$	258,773
Liabilities:
Securities sold under agreements to repurchase, at carrying value	$	293,222	$	—	$	293,222	$	—
Life settlement contract profit commission	11,945		—		—		11,945
Derivatives	3,054		—		3,054		—
	$	308,221	$	—	$	296,276	$	11,945

The Company classifies its financial assets and liabilities in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.  This classification requires judgment in assessing the market and pricing methodologies for a particular security.  The fair value hierarchy includes the following three levels:

• Level 1 – Valuations are based on unadjusted quoted market prices in active markets for identical financial assets or liabilities.

Examples of instruments utilizing Level 1 inputs include: exchange-traded securities and U.S. Treasury bonds.

• Level 2 – Valuations of financial assets and liabilities are based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or liabilities in inactive markets obtained from third party pricing services or valuations based on models where the significant inputs are observable (e.g., interest rates, yield curves, prepayment speeds, default rates, loss severities, etc.) or can be corroborated by observable market data.

Examples of instruments utilizing Level 2 inputs include: U.S. government-sponsored agency securities; non-U.S. government obligations; corporate and municipal bonds; mortgage-backed bonds; asset-backed securities and listed derivatives that are not actively traded.

• Level 3 – Valuations are based on unobservable inputs for assets and liabilities where there is little or no market activity.  Management’s assumptions are used in internal valuation pricing models to determine the fair value of financial assets or liabilities, which may include projected cash flows, collateral performance or liquidity circumstances in the security or similar securities that may have occurred since the prior pricing period.

Examples of instruments utilizing Level 3 inputs include: hedge and credit funds with partial transparency.

For additional discussion regarding techniques used to value the Company’s investment portfolio, refer to Note 2. “Significant Accounting Policies” in Item 8. “Financial Statements and Supplementary Data” in its 2013 Form 10-K.

The following tables provides a summary of changes in fair value of the Company’s Level 3 financial assets and liabilities for the three and six months ended June 30, 2014 and 2013:

(Amounts in Thousands)	Balance as of March 31, 2014			Net income			Other comprehensive income		Purchases and issuances		Sales and settlements			Net transfers into (out of) Level 3		Balance as of June 30, 2014
Other investments	$	18,166		$	288		$	—	$	110	$	(4,469	)	$	—	$	14,095
Life settlement contracts	268,199			5,796			—		2,204		—			—		276,199
Life settlement contract profit commission	(13,348		)	819			—		—		—			—		(12,529		)
Total	$	273,017		$	6,903		$	—	$	2,314	$	(4,469	)	$	—	$	277,765
(Amounts in Thousands)	Balance as of December 31, 2013			Net income			Other comprehensive income		Purchases and issuances		Sales and settlements			Net transfers into (out of) Level 3		Balance as of June 30, 2014
Other investments	$	25,749		$	2,402		$	—	$	3,317	$	(17,373	)	$	—	$	14,095
Life settlement contracts	233,024			22,783			—		25,419		(5,027		)	—		276,199
Life settlement contract profit commission	(11,945		)	(584		)	—		—		—			—		(12,529		)
Total	$	246,828		$	24,601		$	—	$	28,736	$	(22,400	)	$	—	$	277,765

(Amounts in Thousands)	Balance as of March 31, 2013			Net income			Other comprehensive income		Purchases and issuances		Sales and settlements			Net transfers into (out of) Level 3		Balance as of June 30, 2013
Other investments	$	16,052		$	(17	)	$	—	$	9,770	$	(1,026	)	$	—	$	24,779
Life settlement contracts	199,824			10,890			—		—		(2,020		)	—		208,694
Life settlement contract profit commission	(12,237		)	(276		)	—		—		—			—		(12,513		)
Total	$	203,639		$	10,597		$	—	$	9,770	$	(3,046	)	$	—	$	220,960
(Amounts in Thousands)	Balance as of December 31, 2012			Net income			Other comprehensive income		Purchases and issuances		Sales and settlements			Net transfers into (out of) Level 3		Balance as of June 30, 2013
Other investments	$	11,144		$	677		$	—	$	14,881	$	(1,923	)	$	—	$	24,779
Life settlement contracts	193,927			20,815			—		—		(6,048		)	—		208,694
Life settlement contract profit commission	(11,750		)	(763		)	—		—		—			—		(12,513		)
Total	$	193,321		$	20,729		$	—	$	14,881	$	(7,971	)	$	—	$	220,960

 The Company had no transfers between levels during the three and six months ended June 30, 2014 and 2013.

A reconciliation of net income for life settlement contracts in the above table to gain (loss) on investment in life settlement contracts net of profit commission included in the Condensed Consolidated Statements of Income for the three and six months ended June 30, 2014 and 2013 is as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
(Amounts in Thousands)	2014			2013			2014			2013
Net income	$	5,796		$	10,890		$	22,783		$	20,815
Premiums paid	(11,078		)	(9,119		)	(22,472		)	(18,546		)
Profit commission	819			(276		)	(584		)	(763		)
Other expenses	(607		)	(415		)	(1,997		)	(1,502		)
(Loss) gain on investment in life settlement contracts	$	(5,070	)	$	1,080		$	(2,270	)	$	4

The Company uses the following methods and assumptions in estimating its fair value disclosures for financial instruments:

• Equity and Fixed Income Investments: Fair value disclosures for these investments are disclosed above in this note. The carrying values of cash, short term investments and investment income accrued approximate their fair values and are classified as Level 1 in the financial hierarchy.

• Premiums Receivable: The carrying values reported in the accompanying balance sheets for these financial instruments approximate their fair values due to the short term nature of the asset and are classified as Level 1 in the financial hierarchy.

• Other Investments: The Company has approximately 0.3% of its investment portfolio in limited partnerships or hedge funds where the fair value estimate is determined by a fund manager based on recent filings, operating results, balance sheet stability, growth and other business and market sector fundamentals. Due to the significant unobservable inputs in these valuations, the Company includes the estimate in the amount disclosed in Level 3 hierarchy.

• Equity Investment in Unconsolidated Subsidiaries - Related Party: The Company has an approximate ownership percentage of 13.2% in National General Holdings Corp., which completed a Rule 144A offering during the three months ended March 31, 2014. The Company accounts for this investment under the equity method of accounting as it has the ability to exert significant influence on National General Holdings Corp. The fair value of the investment was approximately $213,940 as of June 30, 2014. The carrying value was $115,325 as of June 30, 2014.

• Subordinated Debentures and Debt: The current fair value of the Company's convertible senior notes, subordinated debentures, and 6.125% Notes was $328,440, $68,290, and $252,815 as of June 30, 2014, respectively. The convertible senior notes and the 6.125% Notes are publicly traded instruments and are classified as Level 1 in the fair value hierarchy. The subordinated debentures are classified as Level 3 in the fair value hierarchy. The fair value of the subordinated debentures was determined using the Black-Derman-Toy interest rate lattice model.

• Derivatives: The Company classifies interest rate swaps as Level 2 in fair value hierarchy.  The Company uses these interest rate swaps to hedge floating interest rates on its debt, thereby changing the variable rate exposure to a fixed rate exposure for interest on these obligations.  The estimated fair value of the interest rate swaps, which is obtained from a third party pricing service, is measured using discounted cash flow analysis that incorporates significant observable inputs, including the LIBOR forward curve and a measurement of volatility.

• Repurchase Agreements: The carrying value of repurchase agreements in the accompanying balance sheets represents their fair values and are classified as Level 2 in the financial hierarchy.

The fair value of life settlement contracts as well as life settlement profit commission liability is based on information available to the Company at the end of the reporting period. The Company considers the following factors in its fair value estimates: cost at date of purchase, recent purchases and sales of similar investments (if available and applicable), financial standing of the issuer, changes in economic conditions affecting the issuer, maintenance cost, premiums, benefits, standard actuarially developed mortality tables and life expectancy reports prepared by nationally recognized and independent third party medical underwriters. The Company estimates the fair value of a life insurance policy by applying an investment discount rate based on the cost of funding the Company's life settlement contracts as compared to returns on investments in asset classes with comparable credit quality, which the Company has determined to be 7.5%, to the expected cash flow generated by the policies in the Company's life settlement portfolio (death benefits less premium payments), net of policy specific adjustments and reserves. In order to confirm the integrity of their calculation of fair value, the Company, quarterly, retains an independent third-party actuary to verify that the actuarial modeling used by the Company to determine fair value was performed correctly and that the valuation, as determined through the Company’s actuarial modeling, is consistent with other methodologies. The Company considers this information in its assessment of the reasonableness of the life expectancy and discount rate inputs used in the valuation of these investments.

The Company adjusts the standard mortality for each insured for the insured's life expectancy based on reviews of the insured's medical records. The Company establishes policy specific reserves for the following uncertainties: improvements in mortality, the possibility that the high net worth individuals represented in its portfolio may have access to better health care, the volatility inherent in determining the life expectancy of insureds with significant reported health impairments, the possibility that the issuer of the policy or a third party will contest the payment of the death benefit payable to the Company, and the future expenses related to the administration of the portfolio. The application of the investment discount rate to the expected cash flow generated by the portfolio, net of the policy specific reserves, yields the fair value of the portfolio. The effective discount rate reflects the relationship between the fair value and the expected cash flow gross of these reserves.

The following summarizes data utilized in estimating the fair value of the portfolio of life insurance policies as of June 30, 2014 and December 31, 2013 and, as described in Note 5. "Investments in Life Settlements", only includes data for policies to which the Company assigned value at those dates:

	June 30, 2014			December 31, 2013
Average age of insured	80.8 years			80.1 years
Average life expectancy, months (1)	124			131
Average face amount per policy	$	6,586,000		$	6,611,000
Effective discount rate (2)	14.1		%	14.2		%

⁽¹⁾  Standard life expectancy as adjusted for specific circumstances.

⁽²⁾  Effective Discount Rate ("EDR") is the Company's estimated internal rate of return on its life settlement contract portfolio and is determined from the gross expected cash flows and valuation of the portfolio. The valuation of the portfolio is calculated net of all reserves using a 7.5% discount rate. The EDR is implicit of the reserves and the gross expected cash flows of the portfolio. The Company anticipates that the EDR's range is between 12.5% and 17.5% and reflects the uncertainty that exists surrounding the information available as of the reporting date. As the accuracy and reliability of information improves (declines), the EDR will decrease (increase). The change in the EDR from December 31, 2013 to June 30, 2014 resulted from routine updating of life expectancies and other factors relating to operational risk.

The Company's assumptions are, by their nature, inherently uncertain and the effect of changes in estimates may be significant. The fair value measurements used in estimating the present value calculation are derived from valuation techniques generally used in the industry that include inputs for the asset that are not based on observable market data. The extent to which the fair value could reasonably vary in the near term has been quantified by evaluating the effect of changes in significant underlying assumptions used to estimate the fair value amount. If the life expectancies were increased or decreased by 4 months and the discount factors were increased or decreased by 1% while all other variables were held constant, the carrying value of the investment in life insurance policies would increase or (decrease) by the unaudited amounts summarized below as of June 30, 2014 and December 31, 2013:

	Change in life expectancy
(Amounts in Thousands)	Plus 4 Months			Minus 4 Months
Investment in life policies:
June 30, 2014	$	(34,813	)	$	36,860
December 31, 2013	$	(29,537	)	$	31,313

	Change in discount rate (1)
(Amounts in Thousands)	Plus 1%			Minus 1%
Investment in life policies:
June 30, 2014	$	(23,198	)	$	26,095
December 31, 2013	$	(20,055	)	$	22,605

⁽¹⁾ Discount rate is a present value calculation that considers legal risk, credit risk and liquidity risk and is a component of EDR.

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Segments

6 Months Ended

Jun. 30, 2014

Text Block [Abstract]

Segments

Segments

The Company currently operates three business segments, Small Commercial Business; Specialty Risk and Extended Warranty and Specialty Program. The Company's Personal Lines Reinsurance segment is in run-off due to the termination of Personal Lines Quota Share in August 2013. The “Corporate & Other” segment represents the activities of the holding company as well as a portion of service and fee revenue. In determining total assets (excluding cash and invested assets) by segment, the Company identifies those assets that are attributable to a particular segment such as deferred acquisition cost, reinsurance recoverable, goodwill, intangible assets and prepaid reinsurance while the remaining assets are allocated based on gross written premium by segment. In determining cash and invested assets by segment, the Company matches certain identifiable liabilities such as unearned premium and loss and loss adjustment expense reserves by segment. The remaining cash and invested assets are then allocated based on gross written premium by segment. Investment income and realized gains (losses) are determined by calculating an overall annual return on cash and invested assets and applying that overall return to the cash and invested assets by segment. Earned ceding commission is allocated to each segment based on that segment’s proportionate share of the Company’s overall acquisition costs. Interest expense is allocated based on gross written premium by segment. Income taxes are allocated on a pro-rata basis based on the Company’s effective tax rate. Additionally, management reviews the performance of underwriting income in assessing the performance of and making decisions regarding the allocation of resources to the segments. Underwriting income excludes, primarily, service and fee revenue, investment income and other revenues, other expenses, interest expense and income taxes. Management believes that providing this information in this manner is essential to providing the Company’s shareholders with an understanding of the Company’s business and operating performance.

The following tables summarize the results of operations of the business segments for the three and six months ended June 30, 2014 and 2013:

(Amounts in Thousands)	Small Commercial Business			Specialty Risk and Extended Warranty			Specialty Program			Personal Lines Reinsurance - Run off			Corporate and Other			Total
Three months ended June 30, 2014:
Gross written premium	$	704,627		$	503,603		$	235,410		$	—		$	—		$	1,443,640
Net written premium	453,092			320,540			150,038			—			—			923,670
Change in unearned premium	(66,235		)	1,068			13,964			2,470			—			(48,733		)
Net earned premium	386,857			321,608			164,002			2,470			—			874,937
Loss and loss adjustment expense	(258,046		)	(215,814		)	(111,669		)	(1,704		)	—			(587,233		)
Acquisition costs and other underwriting expenses	(99,115		)	(63,643		)	(44,554		)	(748		)	—			(208,060		)
	(357,161		)	(279,457		)	(156,223		)	(2,452		)	—			(795,293		)
Underwriting income	29,696			42,151			7,779			18			—			79,644
Service and fee income	20,917			62,131			61			—			16,433			99,542
Investment income and realized gain	14,927			14,729			6,842			2			—			36,500
Other expenses	(43,224		)	(30,050		)	(14,314		)	—			—			(87,588		)
Interest expense	(6,250		)	(4,277		)	(2,060		)	—			—			(12,587		)
Foreign currency gain	—			1,084			—			—			—			1,084
Gain on life settlement contracts	(2,777		)	(1,446		)	(847		)	—			—			(5,070		)
Gain on sale of a subsidiary	6,631			—			—			—			—			6,631
Provision for income taxes	(3,003		)	(12,752		)	485			11			(2,707		)	(17,966		)
Equity in earnings of unconsolidated subsidiary  – related party	—			—			—			—			3,999			3,999
Net income attributable to AmTrust Financial Services, Inc.	$	16,917		$	71,570		$	(2,054	)	$	31		$	17,725		$	104,189
(Amounts in Thousands)	Small Commercial Business			Specialty Risk and Extended Warranty			Specialty Program			Personal Lines Reinsurance - Run off			Corporate and Other			Total
Three months ended June 30, 2013:
Gross written premium	$	389,911		$	447,885		$	173,843		$	28,975		$	—		$	1,040,614
Net written premium	218,553			290,272			102,197			28,975			—			639,997
Change in unearned premium	(30,253		)	(82,122		)	8,479			438			—			(103,458		)
Net earned premium	188,300			208,150			110,676			29,413			—			536,539
Loss and loss adjustment expense	(124,368		)	(144,050		)	(75,820		)	(19,872		)	—			(364,110		)
Acquisition costs and other underwriting expenses	(48,609		)	(43,985		)	(28,369		)	(8,983		)	—			(129,946		)
	(172,977		)	(188,035		)	(104,189		)	(28,855		)	—			(494,056		)
Underwriting income	15,323			20,115			6,487			558			—			42,483
Service and fee income	21,234			52,347			(6		)	—			14,527			88,102
Investment income and realized gain	12,239			8,563			3,442			457			—			24,701
Other expenses	(30,607		)	(33,934		)	(14,138		)	(2,306		)	—			(80,985		)
Interest expense	(2,845		)	(3,295		)	(1,257		)	(211		)	—			(7,608		)
Foreign currency gain	—			783			—			—			—			783
Gain on life settlement contracts	430			376			239			35			—			1,080
Acquisition gain on purchase	23,183			—			—			—			—			23,183
Provision for income taxes	(11,249		)	(12,981		)	1,045			330			(4,547		)	(27,402		)
Equity in earnings of unconsolidated subsidiary  – related party	—			—			—			—			7,060			7,060
Net income attributable to AmTrust Financial Services, Inc.	$	27,708		$	31,974		$	(4,188	)	$	(1,137	)	$	17,040		$	71,397

(Amounts in Thousands)	Small Commercial Business			Specialty Risk and Extended Warranty			Specialty Program			Personal Lines Reinsurance - Run off			Corporate and Other			Total
Six months ended June 30, 2014:
Gross written premium	$	1,643,554		$	950,806		$	515,476		$	—		$	—		$	3,109,836
Net written premium	1,103,808			601,655			348,488			—			—			2,053,951
Change in unearned premium	(336,547		)	(8,532		)	(13,646		)	8,762			—			(349,963		)
Net earned premium	767,261			593,123			334,842			8,762			—			1,703,988
Loss and loss adjustment expense	(513,168		)	(398,934		)	(227,829		)	(5,872		)	—			(1,145,803		)
Acquisition costs and other underwriting expenses	(187,143		)	(116,508		)	(88,440		)	(2,578		)	—			(394,669		)
	(700,311		)	(515,442		)	(316,269		)	(8,450		)	—			(1,540,472		)
Underwriting income	66,950			77,681			18,573			312			—			163,516
Service and fee income	43,020			118,356			211			—			28,913			190,500
Investment income and realized gain (loss)	28,571			28,834			12,896			165			—			70,466
Other expenses	(92,583		)	(53,559		)	(29,037		)	—			—			(175,179		)
Interest expense	(12,729		)	(7,363		)	(3,992		)	—			—			(24,084		)
Foreign currency loss	—			(768		)	—			—			—			(768		)
Loss on life settlement contracts	(1,200		)	(694		)	(376		)	—			—			(2,270		)
Gain on sale of a subsidiary	6,631			—			—			—			—			6,631
Provision for income taxes	(6,985		)	(29,359		)	312			(86		)	(9,292		)	(45,410		)
Equity in earnings of unconsolidated subsidiary – related party	—			—			—			—			22,515			22,515
Net income attributable to AmTrust Financial Services, Inc.	$	31,675		$	133,128		$	(1,413	)	$	391		$	42,136		$	205,917
(Amounts in Thousands)	Small Commercial Business			Specialty Risk and Extended Warranty			Specialty Program			Personal Lines Reinsurance - Run off			Corporate and Other			Total
Six months ended June 30, 2013:
Gross written premium	$	765,760		$	776,214		$	382,935		$	59,627		$	—		$	1,984,536
Net written premium	392,293			474,714			245,469			59,627			—			1,172,103
Change in unearned premium	(77,393		)	(125,410		)	(23,315		)	(1,452		)	—			(227,570		)
Net earned premium	314,900			349,304			222,154			58,175			—			944,533
Loss and loss adjustment expense	(208,698		)	(237,021		)	(151,374		)	(39,273		)	—			(636,366		)
Acquisition costs and other underwriting expenses	(80,273		)	(75,303		)	(56,912		)	(17,743		)	—			(230,231		)
	(288,971		)	(312,324		)	(208,286		)	(57,016		)	—			(866,597		)
Underwriting income	25,929			36,980			13,868			1,159			—			77,936
Service and fee income	43,336			80,066			67			—			25,146			148,615
Investment income and realized gain (loss)	24,277			23,454			10,844			1,505			—			60,080
Other expenses	(51,373		)	(52,074		)	(25,690		)	(4,000		)	—			(133,137		)
Interest expense	(5,776		)	(5,855		)	(2,888		)	(450		)	—			(14,969		)
Foreign currency gain	—			2,055			—			—			—			2,055
Loss on life settlement contracts	1			2			1			—			—			4
Acquisition gain on purchase	23,183			25,532			—			—			—			48,715
Provision for income taxes	(14,601		)	(23,579		)	812			382			(6,525		)	(43,511		)
Equity in earnings of unconsolidated subsidiary – related party	—			—			—			—			8,610			8,610
Net income attributable to AmTrust Financial Services, Inc.	$	44,976		$	86,581		$	(2,986	)	$	(1,404	)	$	27,231		$	154,398

The following tables summarize long lived assets and total assets of the business segments as of June 30, 2014 and December 31, 2013:

(Amounts in Thousands)	Small Commercial Business		Specialty Risk and Extended Warranty		Specialty Program		Personal Lines Reinsurance - Run off		Corporate and other		Total
As of June 30, 2014:
Property and equipment, net	$	61,472	$	35,561	$	19,279	$	—	$	—	$	116,312
Goodwill and intangible assets	234,124		416,874		57,259		—		—		708,257
Total assets	5,643,788		5,137,893		2,033,995		12,283		—		12,827,959
As of December 31, 2013:
Property and equipment, net	$	42,054	$	38,297	$	22,280	$	1,668	$	—	$	104,299
Goodwill and intangible assets	233,566		399,954		31,873		—		—		665,393
Total assets	4,261,764		5,036,121		1,894,538		86,703		—		11,279,126

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Acquisitions

6 Months Ended

Jun. 30, 2014

Business Combinations [Abstract]

Acquisitions

Acquisitions

The Insco Dico Group

On January 3, 2014, the Company completed the acquisition of The Insco Dico Group ("Insco Dico") and its subsidiaries for a purchase price of approximately $88,700. The transaction was funded with the Company's existing working capital. Insco Dico's subsidiaries include Developers Surety and Indemnity Company and Indemnity Company of California, which offer surety insurance to developers and contractors in all 50 states with California as the largest state. In addition, Insco Dico's subsidiary, Builders Insurance Services, markets general liability insurance policies to contractors in several states in the western region of the U.S.

A summary of the preliminary assets acquired and liabilities assumed for Insco Dico are as follows:

(Amounts in Thousands)
Assets
	Cash and investments	$	130,031
	Premium receivables	8,684
	Reinsurance recoverable	5,799
	Deferred tax asset	3,845
	Other assets	2,114
	Property and equipment	1,190
	Goodwill and intangible assets	16,494
Total assets		$	168,157
Liabilities
	Unearned premiums	$	25,715
	Loss and loss expense reserves	25,210
	Accrued liabilities	10,210
	Notes payable	10,000
	Funds held for policyholders	5,864
	Deferred tax liability	2,458
Total liabilities		$	79,457
Cash paid		$	88,700

The goodwill and intangible assets, as well as Insco Dico's results of operations, are included as a component of the Small Commercial Business segment. The identifiable intangible assets consist of agency relationships, which have a 20 year life, and licenses that have an indefinite life. The Company is in the process of completing its acquisition accounting and expects to have it completed in 2014.

As a result of this transaction, the Company recorded approximately $15,678 and $28,765 of written premium during the three and six months ended June 30, 2014, respectively, related to Insco Dico. Additionally, the Company recorded approximately $220 and $579 of fee income during the three and six months ended June 30, 2014, respectively, related to Insco Dico.

Sagicor Europe Limited

On December 23, 2013, the Company, through one of its subsidiaries, completed the acquisition of Sagicor Europe Limited and its wholly owned subsidiaries, including Sagicor at Lloyd's Limited, from Sagicor Financial Corporation for approximately $93,113. Sagicor Europe Limited and Sagicor at Lloyd's Limited subsequently changed their names to Amtrust Lloyd's Holdings Limited and AmTrust at Lloyd's Limited, respectively. AmTrust at Lloyd's Limited is a managing agency and owner of Lloyd's property/casualty insurance syndicate 1206 with stamp capacity of $330,000 and Lloyd's life insurance syndicate 44 with stamp capacity of $16,500.

A summary of the preliminary assets acquired and liabilities assumed for AmTrust Lloyd's Holdings Limited are as follows:

(Amounts in Thousands)
Assets
	Cash and investments	$	429,476
	Prepaid insurance	122,673
	Premium receivables	89,801
	Other receivable	54,479
	Deferred tax asset	29,916
	Other assets	10,502
	Property and equipment	5,010
	Goodwill and intangible assets	33,539
Total assets		$	775,396
Liabilities
	Loss and loss expense reserves	$	496,836
	Unearned premium	113,182
	Accrued expense and other liabilities	55,950
	Ceded reinsurance	16,315
Total liabilities		$	682,283
Cash paid		$	93,113

The goodwill and intangible assets, as well as AmTrust Lloyd's Holdings Limited's results of operations, are included as a component of the Specialty Risk and Extended Warranty segment. The Company is in the process of completing its acquisition accounting and expects to have it completed in 2014.

As a result of this transaction, the Company recorded approximately $84,284 and $167,599 of written premium during the three and six months ended June 30, 2014, respectively, related to Sagicor.

Mutual Insurers Holding Company

On May 13, 2013, the Company completed the acquisition of Mutual Insurers Holding Company (“MIHC”) and its subsidiaries. MIHC's primary operating subsidiary, First Nonprofit Insurance Company ("FNIC"), is the third largest provider of property and casualty insurance products to nonprofit organizations in the U.S. Immediately prior to the acquisition, MIHC converted from a mutual form to a stock form of ownership in a transaction “sponsored” by the Company. As required by the plan of conversion and applicable Delaware law, the Company offered shares of its common stock, at a discount to the market price, to the members of MIHC who held policies as of December 31, 2012 and the directors, officers and employees of MIHC and its subsidiaries. The Company received subscriptions for approximately $472, resulting in the issuance by the Company of 18 shares of its common stock at a discounted price of 20.0% from the Company's market trading price, or approximately $118. Pursuant to the stock purchase agreement, after the expiration of the offering, the Company purchased all of the authorized shares of capital stock of MIHC at a purchase price equal to the greater of the gross proceeds received by the Company in the offering, and $8,000. The Company made a payment to MIHC of $48,500, which included the $472 in proceeds the Company received in the offering, for the stock of FNIC. Additionally, the Company as part of the transaction, was required to make a contribution to First Nonprofit Foundation, a tax exempt corporation principally funded by FNIC's predecessor and managed for the benefit of nonprofit organizations, in the amount of $7,882, which represented $8,000, as discussed above, less the discount of approximately $118 on the shares issued by the Company in the transaction. The remaining $40,618 of cash contributed to MIHC was retained by the Company. Additionally, the Company assumed $6,500 of debt in the transaction. In accordance with FASB ASC 805-10 Business Combinations, the Company recorded an acquisition price of approximately $14,500.

A summary of the assets acquired and liabilities assumed for MIHC are as follows:

(Amounts in Thousands)
Assets
	Cash and investments	$	134,780
	Premium receivables	23,085
	Other assets	43,714
	Deferred tax asset	5,358
	Property and equipment	2,684
	Intangible assets	6,132
Total assets		$	215,753
Liabilities
	Loss and loss expense reserves	$	89,267
	Unearned premium	27,760
	Accrued liabilities	23,629
	Deferred tax liability	2,146
	Notes payable	6,500
Total liabilities		$	149,302
Cash paid		$	48,500
Acquisition gain		$	17,951

The intangible assets acquired consisted of state licenses and have an indefinite life. The intangible assets, as well as FNIC's results of operations, are included as a component of the Small Commercial Business segment.

In accordance with FASB ASC 944-805 Business Combinations, the Company adjusted to fair value FNIC's loss and LAE reserves by taking the acquired loss reserves recorded and discounting them based on expected reserve payout pattern using a current risk free rate. This risk free interest rate was then adjusted based on different cash flow scenarios that use different payout and ultimate reserve assumptions deemed to be reasonably possible based upon the inherent uncertainties present in determining the amount and timing of payment of such reserves. The difference between the acquired loss and LAE reserves and the Company's best estimate of the fair value of such reserves at acquisition date is amortized ratably over the payout period of the acquired loss and LAE reserves and was approximately $4,531. During the three months ended June 30, 2014, the Company adjusted its acquired deferred tax liability to $2,146 from $1,586 as of December 31, 2013. As a result of this adjustment, the Company retrospectively adjusted its gain recorded during the three months ended June 30, 2013 from $18,511 to $17,951. The Company completed its acquisition accounting during the three months ended June 30, 2014.

The Company recorded approximately $7,314 and $26,705 of written premium during the three and six months ended June 30, 2014, respectively, and approximately $2,238 of written premium during the three months ended June 30, 2013 related to MIHC.

Sequoia Insurance Company

On April 19, 2013, the Company completed the acquisition of all the issued and outstanding shares of common stock of Sequoia Insurance Company and its subsidiaries, Sequoia Indemnity Company and Personal Express Insurance Company (“Sequoia”) for approximately $60,000. Sequoia offers low hazard, property/casualty insurance products, including workers' compensation and commercial package insurance, to small businesses in several western states, with California representing Sequoia's largest market.

A summary of the assets acquired and liabilities assumed for Sequoia are as follows:

(Amounts in Thousands)
Assets
	Cash and investments	$	215,473
	Premium receivables	32,870
	Reinsurance recoverables	43,793
	Other assets	4,014
	Deferred tax asset	1,242
	Property and equipment	1,022
	Intangible assets	11,848
Total assets		$	310,262
Liabilities
	Loss and loss expense reserves	$	165,487
	Unearned premium	59,773
	Accrued liabilities	15,624
	Deferred tax liability	4,147
Total liabilities		$	245,031
Purchase price		$	60,000
Acquisition gain		$	5,231

The intangible assets consists primarily of licenses and trademarks and have an indefinite life. The intangible assets, as well as Sequoia's results of operations, are included as a component of the Small Commercial Business segment.

In accordance with FASB ASC 944-805 Business Combinations, the Company adjusted to fair value Sequoia's loss and LAE reserves by taking the acquired loss reserves recorded and discounting them based on expected reserve payout pattern using a current risk free rate. This risk free interest rate was then adjusted based on different cash flow scenarios that use different payout and ultimate reserve assumptions deemed to be reasonably possible based upon the inherent uncertainties present in determining the amount and timing of payment of such reserves. The difference between the acquired loss and LAE reserves and the Company's best estimate of the fair value of such reserves at acquisition date is amortized ratably over the payout period of the acquired loss and LAE reserves and was approximately $7,448. During the three months ended June 30, 2014, the Company reduced its acquired deferred tax assets by $6,538 and increased its acquired deferred tax liability by $1,540. As a result of this adjustment, the Company retrospectively adjusted its gain recorded during the three months ended June 30, 2013 from $13,309 to $5,231. The Company completed its acquisition accounting during the three months ended June 30, 2014.

The Company recorded approximately $13,114 and $35,947 of written premium during the three and six months ended June 30, 2014, respectively, and approximately $21,457 of written premium during the three months ended June 30, 2013, respectively, related to Sequoia.

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Segments - Long Lived Assets and Total Assets of Business Segments (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Segment Reporting Information [Line Items]
Property and equipment, net	$ 116,312	$ 104,299
Goodwill and intangible assets	708,257	665,393
Total assets	12,827,959	11,279,126
Operating Segments | Small Commercial Business
Segment Reporting Information [Line Items]
Property and equipment, net	61,472	42,054
Goodwill and intangible assets	234,124	233,566
Total assets	5,643,788	4,261,764
Operating Segments | Specialty Risk and Extended Warranty
Segment Reporting Information [Line Items]
Property and equipment, net	35,561	38,297
Goodwill and intangible assets	416,874	399,954
Total assets	5,137,893	5,036,121
Operating Segments | Specialty Program
Segment Reporting Information [Line Items]
Property and equipment, net	19,279	22,280
Goodwill and intangible assets	57,259	31,873
Total assets	2,033,995	1,894,538
Operating Segments | Personal Lines Reinsurance
Segment Reporting Information [Line Items]
Property and equipment, net	0	1,668
Goodwill and intangible assets	0	0
Total assets	12,283	86,703
Operating Segments | Corporate and Other
Segment Reporting Information [Line Items]
Property and equipment, net	0	0
Goodwill and intangible assets	0	0
Total assets	$ 0	$ 0

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Earnings Per Share

6 Months Ended

Jun. 30, 2014

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

Effective January 1, 2009, the Company adopted ASC subtopic 260-10, Determining Whether Instruments Granted in Share-Based Payments Transactions Are Participating Securities. ASC 260-10 provides that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are participating securities and are to be included in the computation of earnings per share under the two-class method. The Company’s unvested restricted shares contain rights to receive nonforfeitable dividends and are participating securities, requiring the two-class method of computing earnings per share.

The Company paid a ten percent stock dividend on September 4, 2013. As such, the weighted average number of shares used for basic and diluted earnings per share have been adjusted retroactively in the prior periods.

The following table is a summary of the elements used in calculating basic and diluted earnings per share for the three and six months ended June 30, 2014 and 2013:

	Three Months Ended June 30,				Six Months Ended June 30,
(Amounts in Thousands, except for earnings per share)	2014		2013		2014		2013
Basic earnings per share:
Net income attributable to AmTrust common shareholders	$	106,274	$	71,397	$	206,125	$	155,275
Less: Net income allocated to participating securities and redeemable non-controlling interest	325		68		574		164
Net income allocated to AmTrust common shareholders	$	105,949	$	71,329	$	205,551	$	155,111
Weighted average common shares outstanding – basic	75,209		74,169		74,973		74,028
Less: Weighted average participating shares outstanding	230		71		209		71
Weighted average common shares outstanding - basic	74,979		74,098		74,764		73,957
Net income per AmTrust common share - basic	$	1.41	$	0.96	$	2.75	$	2.10
Diluted earnings per share:
Net income attributable to AmTrust common shareholders	$	106,274	$	71,397	$	206,125	$	155,275
Less: Net income allocated to participating securities and redeemable non-controlling interest	325		68		574		164
Net income allocated to AmTrust common shareholders	$	105,949	$	71,329	$	205,551	$	155,111
Weighted average common shares outstanding – basic	74,979		74,098		74,764		73,957
Plus: Dilutive effect of stock options, convertible debt, other	4,700		2,807		4,201		2,824
Weighted average common shares outstanding – dilutive	79,679		76,905		78,965		76,781
Net income per AmTrust common shares – diluted	$	1.33	$	0.93	$	2.60	$	2.02

As of June 30, 2014, there were less than 10,000 anti-dilutive securities excluded from diluted earnings per share.

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Debt - Trust Preferred Securities (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014		Dec. 31, 2013
Debt Instrument [Line Items]
Aggregate Liquidation Amount of Trust Preferred Securities	$ 120,000
Aggregate Liquidation Amount of Common Securities	3,714
Aggregate Principal Amount of Notes	123,714		123,714
Stated Maturity of Notes	Dec. 15, 2021
Per Annum Interest Rate of Notes	5.50%
AmTrust Capital Financing Trust I
Debt Instrument [Line Items]
Aggregate Liquidation Amount of Trust Preferred Securities	25,000
Aggregate Liquidation Amount of Common Securities	774
Aggregate Principal Amount of Notes	25,774
Stated Maturity of Notes	Mar. 17, 2035
Per Annum Interest Rate of Notes	8.275%	[1]
AmTrust Capital Financing Trust II
Debt Instrument [Line Items]
Aggregate Liquidation Amount of Trust Preferred Securities	25,000
Aggregate Liquidation Amount of Common Securities	774
Aggregate Principal Amount of Notes	25,774
Stated Maturity of Notes	Jun. 15, 2035
Per Annum Interest Rate of Notes	7.71%	[1]
AmTrust Capital Financing Trust III
Debt Instrument [Line Items]
Aggregate Liquidation Amount of Trust Preferred Securities	30,000
Aggregate Liquidation Amount of Common Securities	928
Aggregate Principal Amount of Notes	30,928
Stated Maturity of Notes	Sep. 15, 2036
Per Annum Interest Rate of Notes	353.10%	[2]
AmTrust Capital Financing Trust IV
Debt Instrument [Line Items]
Aggregate Liquidation Amount of Trust Preferred Securities	40,000
Aggregate Liquidation Amount of Common Securities	1,238
Aggregate Principal Amount of Notes	$ 41,238
Stated Maturity of Notes	Mar. 15, 2037
Per Annum Interest Rate of Notes	323.10%	[3]

[1] The interest rate will change to three-month LIBOR plus 3.40% after the tenth anniversary in 2015.

[2] The interest rate is LIBOR plus

[3] The interest rate is LIBOR plus 3.00%.

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Debt

6 Months Ended

Jun. 30, 2014

Debt Disclosure [Abstract]

Debt

Debt

The Company’s borrowings consisted of the following at June 30, 2014 and December 31, 2013:

(Amounts in Thousands)	June 30, 2014		December 31, 2013
Revolving credit facility	$	—	$	—
Convertible senior notes	165,803		164,218
6.125% Notes due 2023	250,000		250,000
Junior subordinated debentures	123,714		123,714
Secured loan agreements	7,207		7,742
Promissory notes	14,500		14,500
	$	561,224	$	560,174

Aggregate scheduled maturities of the Company’s borrowings at June 30, 2014 are:

(Amounts in Thousands)
2014	$	540
2015	1,116
2016	1,167
2017	1,220
2018	3,164
Thereafter	554,017		(1)

^{(1)  Amount reflected in balance sheet for convertible senior notes is net of unamortized original issue discount of $34,197.} 

Revolving Credit Agreement

The Company has a $200,000 credit agreement (the “Credit Agreement”), among JPMorgan Chase Bank, N.A., as Administrative Agent, KeyBank National Association and SunTrust Bank, as Co-Syndication Agents, Associated Bank, National Association and Lloyds Securities Inc., as Co-Documentation Agents and the various lending institutions party thereto. The credit facility is a revolving credit facility with a letter of credit sublimit of $100,000 and an expansion feature not to exceed $100,000, which, if utilized, would increase the Company's credit limit to $300,000. The Credit Agreement, which matures in August 2016, contains certain restrictive covenants customary for facilities of this type (subject to negotiated exceptions and baskets), including restrictions on indebtedness, liens, acquisitions and investments, restricted payments and dispositions. There are also financial covenants that require the Company to maintain a minimum consolidated net worth, a maximum consolidated leverage ratio, a minimum fixed charge coverage ratio, a minimum risk-based capital and a minimum statutory surplus. The Company was in compliance with all covenants as of June 30, 2014.

As of June 30, 2014, the Company had no outstanding borrowings under this Credit Agreement. As of June 30, 2014, the Company had outstanding letters of credit in place under this Credit Agreement for $89,040, which reduced the availability for letters of credit to $10,960, and the availability under the facility to $110,960.

Borrowings under the Credit Agreement bear interest at (x) the greatest of (a) the Administrative Agent’s prime rate, (b) the federal funds effective rate plus 0.5 percent or (c) the adjusted LIBO rate for a one month interest period on such day plus 1 percent, plus (y) a margin that is adjusted on the basis of the Company’s consolidated leverage ratio. Eurodollar borrowings under the Credit Agreement will bear interest at the adjusted LIBO rate for the interest period in effect plus a margin that is adjusted on the basis of the Company’s consolidated leverage ratio. The interest rate on the credit facility as of June 30, 2014 was 1.50%. The Company recorded total interest expense of approximately $411 and $616 for the three months ended June 30, 2014 and 2013, respectively, and $751 and $1,176 for six months ended June 30, 2014 and 2013, respectively, under the Credit Agreement.

 Fees payable by the Company under the Credit Agreement include a letter of credit participation fee (which is the margin applicable to Eurodollar borrowings and was 1.50% at June 30, 2014), a letter of credit fronting fee with respect to each letter of credit (.125%) and a commitment fee on the available commitments of the lenders (a range of .20% to .30% based on the Company’s consolidated leverage ratio and was .25% at June 30, 2014).

Convertible Senior Notes

The Company has outstanding $200,000 aggregate principal amount of convertible senior notes due 2021 (the “Convertible Notes”). The Convertible Notes bear interest at a rate equal to 5.5% per year, payable semiannually in arrears on June 15th and December 15th of each year.

The Convertible Notes will mature on December 15, 2021 (the “Maturity Date”), unless earlier purchased by the Company or converted into shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”). Prior to September 15, 2021, the Convertible Notes will be convertible only upon satisfaction of certain conditions, and thereafter, at any time prior to the close of business on the second scheduled trading day immediately preceding the Maturity Date. The conversion rate at June 30, 2014 is equal to 38.5985 shares of Common Stock per $1,000 principal amount of Convertible Notes, which corresponds to a conversion price of approximately $25.91 per share of Common Stock. The conversion rate is subject to adjustment upon the occurrence of certain events as set forth in the indenture governing the Convertible Notes. Upon conversion of the Convertible Notes, the Company will, at its election, pay or deliver, as the case may be, cash, shares of Common Stock, or a combination of cash and shares of Common Stock.

Upon the occurrence of a fundamental change (as defined in the indenture governing the Convertible Notes) involving the Company, holders of the Convertible Notes will have the right to require the Company to repurchase their Convertible Notes for cash, in whole or in part, at 100% of the principal amount of the Convertible Notes to be repurchased, plus any accrued and unpaid interest, if any, to, but excluding, the fundamental change purchase date.

The Company separately allocated the proceeds for the issuance of the Convertible Notes to a liability component and an equity component, which is the embedded conversion option. The equity component was reported as an adjustment to paid-in-capital, net of tax, and is reflected as an original issue discount (“OID”). The OID of $41,679 and deferred origination costs relating to the liability component of $4,750 will be amortized into interest expense over the term of the loan of the Convertible Notes. After considering the contractual interest payments and amortization of the original discount, the Convertible Notes effective interest rate was 8.57%. Transaction costs of $1,250 associated with the equity component were netted in paid-in-capital. Interest expense, including amortization of deferred origination costs, recognized on the Convertible Notes was $3,665 and $3,600 for the three months ended June 30, 2014 and 2013, respectively, and $7,322 and $7,192 for the six months ended June 30, 2014 and 2013, respectively.

The following table shows the amounts recorded for the Convertible Notes as of June 30, 2014 and December 31, 2013:

(Amounts in Thousands)	June 30, 2014			December 31, 2013
Liability component
Outstanding principal	$	200,000		$	200,000
Unamortized OID	(34,197		)	(35,782		)
Liability component	$	165,803		$	164,218
Equity component, net of tax	$	27,092		$	27,092

6.125% Notes due 2023

In August 2013, the Company issued $250,000 aggregate principal amount of its 6.125% notes due 2023 (the "Notes") to certain initial purchasers in a private placement. The Notes bear interest at a rate equal to 6.125% per year, payable semiannually in arrears on February 15th and August 15th of each year. The Notes will mature on August 15, 2023, unless earlier purchased by the Company. Fees associated with the Notes were approximately $2,706. The indenture governing the Notes contains covenants whereby the interest rate will increase by 0.50% per year if the Company's consolidated leverage ratio exceeds 30% and does not exceed 35% and will increase an additional 1.00% per year (for an aggregate increase of 1.50% per year) if the consolidated leverage ratio exceeds 35%. The consolidated leverage ratio under this agreement was less than 30% as of June 30, 2014. It is an event of default if the Company has a consolidated leverage ratio in excess of 35% for a period of 30 days, unless in connection with an acquisition, in which case the grace period is 18 months. The indenture governing the Notes also contains certain customary covenants, such as reporting of annual and quarterly financial results, and restrictions on certain mergers and consolidations, a limitation on liens, and a limitation on the disposition of stock of certain of the Company's subsidiaries. The Notes rank equally with existing and future unsecured and unsubordinated indebtedness, including the Company's Convertible Notes and amounts under the Credit Agreement. Interest expense, including amortization of deferred origination costs, recognized on the Notes was approximately $3,897 and $7,794 for the three and six months ended June 30, 2014, respectively.

Junior Subordinated Debt

The Company has established four special purpose trusts for the purpose of issuing trust preferred securities. The proceeds from such issuances, together with the proceeds of the related issuances of common securities of the trusts, were invested by the trusts in junior subordinated debentures issued by the Company. In accordance with FASB ASC 810-10-25, the Company does not consolidate such special purpose trusts, as the Company is not considered to be the primary beneficiary. The equity investment, totaling $3,714 as of June 30, 2014 on the Company’s consolidated balance sheet, represents the Company’s ownership of common securities issued by the trusts. The debentures require interest-only payments to be made on a quarterly basis, with principal due at maturity. The debentures contain covenants that restrict declaration of dividends on the Company’s common stock under certain circumstances, including default of payment. The Company incurred $2,605 of placement fees in connection with these issuances which is being amortized over thirty years. The Company recorded $2,028 and $2,049 of interest expense for the three months ended June 30, 2014 and 2013, respectively, and $4,048 and $4,048 for the six months ended June 30, 2014 and 2013, respectively, related to these trust preferred securities.

 The table below summarizes the Company’s trust preferred securities as of June 30, 2014: 

(Amounts in Thousands) Name of Trust	Aggregate Liquidation Amount of Trust Preferred Securities		Aggregate Liquidation Amount of Common Securities		Aggregate Principal Amount of Notes		Stated Maturity of Notes	Per Annum Interest Rate % of Notes
AmTrust Capital Financing Trust I	$	25,000	$	774	$	25,774	3/17/2035	8.275	(1	)
AmTrust Capital Financing Trust II	25,000		774		25,774		6/15/2035	7.710	(1	)
AmTrust Capital Financing Trust III	30,000		928		30,928		9/15/2036	3.531	(2	)
AmTrust Capital Financing Trust IV	40,000		1,238		41,238		3/15/2037	3.231	(3	)
Total trust preferred securities	$	120,000	$	3,714	$	123,714

⁽¹⁾ The interest rate will change to three-month LIBOR plus 3.40% after the tenth anniversary in 2015.

⁽²⁾ The interest rate is LIBOR plus 3.30%.

⁽³⁾ The interest rate is LIBOR plus 3.00%.

The Company entered into two interest rate swap agreements related to these junior subordinated debentures, which effectively convert the interest rate on the trust preferred securities from a variable rate to a fixed rate. Each agreement is for a period of five years and commenced on September 15, 2011 for tranche III and March 15, 2012 for tranche IV.

Secured Loan Agreement

The Company, through a wholly-owned subsidiary, has a seven-year secured loan agreement with Bank of America Leasing & Capital, LLC in the aggregate amount of $10,800 to finance the purchase of an aircraft. The loan bears interest at a fixed rate of 4.45%, requires monthly installment payments of approximately $117 through February 25, 2018, and a balloon payment of $3,240 at the maturity date. The Company recorded interest expense of approximately $84 and $97 for the three months ended June 30, 2014 and 2013, respectively, and $171 and $198 for the six months ended June 30, 2014 and 2013, respectively, related to this agreement. The loan is secured by the aircraft.

The agreement contains certain covenants that are similar to the Company’s Credit Agreement. Additionally, subsequent to February 25, 2012, but prior to payment in full, if the outstanding balance of this loan exceeds 90% of the fair value of the aircraft, the Company is required to pay the lender the entire amount necessary to reduce the outstanding principal balance to be equal to or less than 90% of the fair value of the aircraft. The agreement allows the Company, under certain conditions, to repay the entire outstanding principal balance of this loan without penalty.

Promissory Notes

In September 2012, as part of its participation in the New Market Tax Credit Program discussed in Note 13. "New Market Tax Credit", the Company entered into two promissory notes totaling $8,000. The loans are for a period of 15 years and have an average interest rate of 1.7% per annum. The Company recorded interest expense of approximately $66 and $44 for the three months ended June 30, 2014 and 2013, respectively, and $132 and $141 for the six months ended June 30, 2014 and 2013, respectively, related to the notes. Additionally, the Company recorded approximately $1,430 of deferred financing fees.

In May 2013, as part of its acquisition of Mutual Insurers Holding Company ("MIHC") as discussed in Note 12. "Acquisitions", the Company assumed two promissory notes totaling $6,500 for which the principal is due in 2034 and 2035. The notes require the payment of interest on a quarterly basis and have an interest rate of 3.8% plus the three month libor per annum, which was 4.1% as of June 30, 2014. The Company recorded interest expense of approximately $59 and $23 for the three months ended June 30, 2014 and 2013, respectively, and $128 and $23 for the six months ended June 30, 2014 and 2013, respectively, related to these notes.

ING Credit Facility

On November 26, 2013, the Company (as “Guarantor”), and two of its wholly-owned subsidiaries, AmTrust International Insurance, Ltd. (the “Account Party”) and AmTrust Corporate Capital Limited, entered into a four-year, £200,000 credit facility agreement with ING Bank, N.V., London Branch, individually and as Agent and Security Trustee. The credit facility, which matures on December 31, 2017, is a letter of credit facility that is used to support the Company’s capacity at Lloyd’s as a member of Syndicates 2526, 1206 and 44 for the 2014 underwriting year of account, as well as prior open years of account. The credit facility contains customary covenants for facilities of this type, including restrictions on indebtedness and liens, limitations on mergers, transactions with affiliates and the sale of assets, and requirements to maintain certain consolidated net worth, statutory surplus, leverage and fixed charge coverage ratios.

The facility is secured by a pledge of a collateral account pursuant to a pledge and security agreement and a Deed of Charge dated November 26, 2013. At the outset, the collateral account is 50% funded. The collateral account will be required to be 100% funded upon the occurrence of certain specified events, including an event of default, the financial strength rating of the Account Party falling below A-, the forecast underwriting losses exceeding a certain level for any year supported by a letter of credit or any non-extension notice is given with respect to any letter of credit.

As of June 30, 2014, the Company had outstanding letters of credit of £193,165 (or $328,052) in place under this credit facility, which reduced the total availability under the facility to £6,835 (or $11,608). The Company recorded total interest expense of approximately $1,313 during the six months ended June 30, 2014 related to this credit facility.

Fees payable by the Company under the credit facility include a letter of credit issuance fee, payable quarterly in arrears, on the secured portion of the letters of credit at the rate of 0.55% and on the unsecured portion of the letters of credit determined based on the Account Party’s then-current financial strength rating issued by A.M. Best. As of June 30, 2014, the applicable letter of credit fee rate on the unsecured portion was 1.15% based on the Account Party’s A.M. Best financial strength rating of “A”. The Company also pays a commitment fee of 0.35% per year on the aggregate unutilized and uncanceled amount of the facility.

Other Letters of Credit

The Company, through one of its subsidiaries, has a secured letter of credit facility with Comerica Bank. The Company utilizes this letter of credit facility to comply with the deposit requirements of the State of California and the U.S. Department of Labor as security for the Company’s obligations to workers’ compensation and Federal Longshore and Harbor Workers’ Compensation Act policyholders. The credit limit is for $75,000, of which $48,467 was utilized as of June 30, 2014. The Company is required to pay a letter of credit participation fee for each letter of credit in the amount of 0.40%.

The Company, through certain subsidiaries, has additional existing stand-by letters of credit with various lenders in the amount of $20,710 as of June 30, 2014.

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Acquisition Costs and Other Underwriting Expenses

6 Months Ended

Jun. 30, 2014

Acquisition Costs and Other Underwriting Expenses [Abstract]

Acquisition Costs and Other Underwriting Expenses

Acquisition Costs and Other Underwriting Expenses

The following table summarizes the components of acquisition costs and other underwriting expenses for the three and six months ended June 30, 2014 and 2013:

	Three Months Ended June 30,				Six Months Ended June 30,
(Amounts in Thousands)	2014		2013		2014		2013
Policy acquisition expenses	$	115,637	$	53,473	$	209,888	$	91,203
Salaries and benefits	91,674		65,982		169,529		111,111
Other insurance general and administrative expenses	749		10,491		15,252		27,917
	$	208,060	$	129,946	$	394,669	$	230,231

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Share Based Compensation

6 Months Ended

Jun. 30, 2014

Text Block [Abstract]

Share Based Compensation

Share Based Compensation

The Company’s 2010 Omnibus Incentive Plan (the “Plan”), which permits the Company to grant to its officers, employees and non-employee directors incentive compensation directly linked to the price of the Company’s stock, authorizes up to an aggregate of 7,315,068 shares of Company stock for awards of options to purchase shares of the Company’s common stock, restricted stock, restricted stock units (“RSU”), performance shares units (“PSU”) or appreciation rights. Shares used may be either newly issued shares or treasury shares or both. The aggregate number of shares of common stock for which awards may be issued may not exceed 7,315,068 shares, subject to the authority of the Company’s board of directors to adjust this amount in the event of a consolidation, reorganization, stock dividend, stock split, recapitalization or similar transaction affecting the Company’s common stock. As of June 30, 2014, approximately 4,600,000 shares of Company common stock remained available for grants under the Plan.

The Company recognizes compensation expense under FASB ASC 718-10-25 for its share-based payments based on the fair value of the awards. The Company grants stock options at prices equal to the closing stock price of the Company’s stock on the dates the options are granted. The options have a term of ten years from the date of grant and vest primarily in equal annual installments over the four year period following the date of grant for employee options. The Company uses the simplified method in determining the expected life. Employees have three months after the employment relationship ends to exercise all vested options. The fair value of each option grant is separately estimated for each vesting date. The fair value of each option is amortized into compensation expense on a straight-line basis between the grant date for the award and each vesting date. The Company has estimated the fair value of all stock option awards as of the date of the grant by applying the Black-Scholes-Merton multiple-option pricing valuation model. The application of this valuation model involves assumptions that are judgmental and highly sensitive in the determination of compensation expense. The Company grants restricted shares, RSUs and PSUs with a grant date value equal to the closing stock price of the Company’s stock on the dates the shares or units are granted and the restricted shares and RSUs vest over a period of two to four years, while PSUs vest based on terms of the awards.

The Company paid a ten percent stock dividend on September 4, 2013. At the dividend date, all options outstanding were adjusted by ten percent and their respective exercise prices were reduced by ten percent, which ultimately resulted in each outstanding share having the same fair value immediately prior to and subsequent to the dividend date. Therefore, the Company did not record any additional compensation expense as a result of the stock dividend. The Company also adjusted outstanding RSUs, unvested restricted stock and PSUs, resulting in no additional compensation expense. The following information and tables below for stock options, restricted stock and RSUs have been adjusted retroactively in all periods presented.

The following schedule shows all options granted, exercised, and expired under the Plan for the six months ended June 30, 2014 and 2013:

	2014				2013
	Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
Outstanding at beginning of period	2,997,460		$	10.49	3,675,776		$	9.41
Granted	27,500		32.49		66,001		28.88
Exercised	(604,646	)	8.75		(360,768	)	7.15
Cancelled or terminated	—		—		—		—
Outstanding end of period	2,420,314		$	11.18	3,381,009		$	10.03

The weighted average grant date fair value of options granted during the six months ended June 30, 2014 and 2013 was approximately $14.16 and $7.97, respectively.

A summary of the Company’s restricted stock and RSU activity for the six months ended June 30, 2014 and 2013 is shown below:

	2014				2013
	Shares or Units		Weighted Average Grant Date Fair Value		Shares or Units		Weighted Average Grant Date Fair Value
Non-vested at beginning of period	917,015		$	24.43	888,197		$	20.86
Granted	868,702		38.88		241,963		30.16
Vested	(310,640	)	22.14		(253,655	)	20.05
Forfeited	(5,436	)	23.89		(386	)	29.31
Non-vested at end of period	1,469,641		$	33.46	876,119		$	23.66

The Company has 328,788 PSUs granted as of June 30, 2014. During the six months ended June 30, 2014, 347,875 PSUs were converted to restricted share awards based on achievements of certain targets. PSUs are conditional grants of a specified maximum number of common shares. In general, grants are earned, subject to the attainment of pre-specified performance goals at the end of the pre-determined period. The fair value of these PSUs on the date of the grants was $12,328.

Compensation expense for all share-based payments under ASC 718-10-30 was approximately $4,511 and $2,673 for the three months ended June 30, 2014 and 2013, respectively, and $8,661 and $4,781 for the six months ended June 30, 2014 and 2013, respectively.

The intrinsic value of stock options exercised during the six months ended June 30, 2014 and 2013 was $17,674 and $8,123, respectively. The intrinsic value of stock options that were outstanding as of June 30, 2014 and 2013 was $74,142 and $86,780, respectively.

Cash received from options exercised was $2,469 and $2,472 during the six months ended June 30, 2014 and 2013, respectively. The excess tax benefit from award exercises was approximately $3,463 and $2,419 for the six months ended June 30, 2014 and 2013, respectively.

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Earnings Per Share - Summary of Elements Used in Calculating Basic and Diluted Earnings Per Share (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Basic earnings per share:
Net income attributable to AmTrust common shareholders	$ 106,274	$ 71,397	$ 206,125	$ 155,275
Less: Net income allocated to participating securities and redeemable non-controlling interest	325	68	574	164
Net income allocated to AmTrust common shareholders	105,949	71,329	205,551	155,111
Weighted average common shares outstanding - basic (in shares)	75,209	74,169	74,973	74,028
Less: Weighted average participating shares outstanding (in shares)	230	71	209	71
Weighted average common shares outstanding - basic (in shares)	74,979	74,098	74,764	73,957
Net income per AmTrust Financial Services, Inc. common share - basic (usd per share)	$ 1.41	$ 0.96	$ 2.75	$ 2.10
Diluted earnings per share:
Net income allocated to AmTrust Financial Services, Inc. common shareholders	106,274	71,397	206,125	155,275
Less: Net income allocated to participating securities and redeemable non-controlling interest	325	68	574	164
Net income allocated to AmTrust common shareholders	$ 105,949	$ 71,329	$ 205,551	$ 155,111
Weighted average common shares outstanding - basic (in shares)	74,979	74,098	74,764	73,957
Plus: Dilutive effect of stock options, convertible debt, other (in shares)	4,700	2,807	4,201	2,824
Weighted average common shares outstanding - dilutive (in shares)	79,679	76,905	78,965	76,781
Net income per AmTrust Financial Services, Inc. common shares - diluted (usd per share)	$ 1.33	$ 0.93	$ 2.60	$ 2.02

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Subsequent Events - Additional Information (Detail) (USD $) In Thousands, except Share data, unless otherwise specified			0 Months Ended
	Jun. 30, 2014	Dec. 31, 2013	Jul. 10, 2014 Subsequent Event	Jul. 10, 2014 American Depository Shares [Member] Subsequent Event	Jul. 02, 2014 American Depository Shares [Member] Subsequent Event	Jul. 10, 2014 American Depository Shares [Member] Subsequent Event	Jul. 02, 2014 Noncumulative Preferred Stock [Member] Subsequent Event	Jul. 10, 2014 Noncumulative Preferred Stock [Member] Subsequent Event
Subsequent Event [Line Items]
Public offering by the company				200,000	4,000,000	4,200,000		105,000
Percentage of interest in preferred stock					0.025
Rate of interest							7.25%
Preferred stock, par value	$ 0.01	$ 0.01					$ 0.01
Liquidation preference (in dollars per share)					$ 25		$ 1,000
Net proceeds from the offering						$ 101,377
Discount and expenses on issuance of stock			$ 3,624

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Share Based Compensation - Additional Information (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	0 Months Ended	3 Months Ended		6 Months Ended				6 Months Ended
	Sep. 04, 2013	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014 Omnibus Incentive Plan	Dec. 31, 2010 Omnibus Incentive Plan	Jun. 30, 2014 Restricted Stock Units (RSUs) Minimum	Jun. 30, 2014 Restricted Stock Units (RSUs) Maximum	Jun. 30, 2014 Performance Share Units	Jun. 30, 2014 Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Intrensic value of the stock oprion exercised				$ 17,674	$ 8,123
PSU's granted during the period				868,702	241,963					328,788	347,875
Number of shares authorized for stock award, maximum							7,315,068
Common stock remained available for grants						4,600,000
Stock options, expiration term				10 years
Share based award, vesting period								2 years	4 years
Stock dividend	10.00%
Adjustment to options outstanding due to dividend paid	10.00%
Decrease in exercise price due to dividends paid	10.00%
Exercise period of vested option after employment relationship end				3 months
Weighted average grant date fair value of options granted				$ 14.16	$ 7.97
Intrinsic value of stock options		74,142	86,780	74,142	86,780
Stock option exercise and other				2,469	2,472
Fair value of PSU on the date of the grant										12,328
Stock based compensation		4,511	2,673	8,661	4,781
Excess tax benefit from award exercised				$ 3,463	$ 2,419

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Acquisition Costs and Other Underwriting Expenses (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Disclosure Summary Of Components Of Acquisition Costs And Other Underwriting Expenses [Abstract]
Policy acquisition expenses	$ 115,637	$ 53,473	$ 209,888	$ 91,203
Salaries and benefits	91,674	65,982	169,529	111,111
Other insurance general and administrative expenses	749	10,491	15,252	27,917
Acquisition costs and other underwriting expenses	$ 208,060	$ 129,946	$ 394,669	$ 230,231

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Acquisitions Acquistions (Tables)

6 Months Ended

Jun. 30, 2014

Insco Dico Group

Business Acquisition [Line Items]

Schedule of Preliminary Assets Acquired and Liabilities Assumed

A summary of the preliminary assets acquired and liabilities assumed for Insco Dico are as follows:

(Amounts in Thousands)
Assets
	Cash and investments	$	130,031
	Premium receivables	8,684
	Reinsurance recoverable	5,799
	Deferred tax asset	3,845
	Other assets	2,114
	Property and equipment	1,190
	Goodwill and intangible assets	16,494
Total assets		$	168,157
Liabilities
	Unearned premiums	$	25,715
	Loss and loss expense reserves	25,210
	Accrued liabilities	10,210
	Notes payable	10,000
	Funds held for policyholders	5,864
	Deferred tax liability	2,458
Total liabilities		$	79,457
Cash paid		$	88,700

Sagicor Europe Limited

Business Acquisition [Line Items]

Schedule of Preliminary Assets Acquired and Liabilities Assumed

A summary of the preliminary assets acquired and liabilities assumed for AmTrust Lloyd's Holdings Limited are as follows:

(Amounts in Thousands)
Assets
	Cash and investments	$	429,476
	Prepaid insurance	122,673
	Premium receivables	89,801
	Other receivable	54,479
	Deferred tax asset	29,916
	Other assets	10,502
	Property and equipment	5,010
	Goodwill and intangible assets	33,539
Total assets		$	775,396
Liabilities
	Loss and loss expense reserves	$	496,836
	Unearned premium	113,182
	Accrued expense and other liabilities	55,950
	Ceded reinsurance	16,315
Total liabilities		$	682,283
Cash paid		$	93,113

MIHC

Business Acquisition [Line Items]

Schedule of Preliminary Assets Acquired and Liabilities Assumed

A summary of the assets acquired and liabilities assumed for MIHC are as follows:

(Amounts in Thousands)
Assets
	Cash and investments	$	134,780
	Premium receivables	23,085
	Other assets	43,714
	Deferred tax asset	5,358
	Property and equipment	2,684
	Intangible assets	6,132
Total assets		$	215,753
Liabilities
	Loss and loss expense reserves	$	89,267
	Unearned premium	27,760
	Accrued liabilities	23,629
	Deferred tax liability	2,146
	Notes payable	6,500
Total liabilities		$	149,302
Cash paid		$	48,500
Acquisition gain		$	17,951

Sequoia

Business Acquisition [Line Items]

Schedule of Preliminary Assets Acquired and Liabilities Assumed

A summary of the assets acquired and liabilities assumed for Sequoia are as follows:

(Amounts in Thousands)
Assets
	Cash and investments	$	215,473
	Premium receivables	32,870
	Reinsurance recoverables	43,793
	Other assets	4,014
	Deferred tax asset	1,242
	Property and equipment	1,022
	Intangible assets	11,848
Total assets		$	310,262
Liabilities
	Loss and loss expense reserves	$	165,487
	Unearned premium	59,773
	Accrued liabilities	15,624
	Deferred tax liability	4,147
Total liabilities		$	245,031
Purchase price		$	60,000
Acquisition gain		$	5,231

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Fair Value of Financial Instruments - Additional Information (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended		12 Months Ended									6 Months Ended
	Jun. 30, 2014		Dec. 31, 2013		Jun. 30, 2014 Senior Notes	Jun. 30, 2014 Subordinated Debt	Jun. 30, 2014 NGHC	Feb. 28, 2014 NGHC	Jan. 31, 2014 NGHC	Jun. 30, 2014 6.125% Senior Note Senior Notes	Aug. 31, 2013 6.125% Senior Note Senior Notes	Jun. 30, 2014 Minimum		Jun. 30, 2014 Maximum		Jun. 30, 2014 Carrying value	Jun. 30, 2014 Fair value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	$ 252,815				$ 328,440	$ 68,290
Debt instrument, stated interest rate	5.50%									6.125%	6.125%
Investment discount rate	7.50%
Maximum investment in Limited Partnership and Hedge Funds	0.30%
Percentage of ownership in NGHC							13.20%	13.20%	15.40%
Discount rate	7.50%
Implicit discount rate	14.10%	[1]	14.20%	[1]								12.50%	[1]	17.50%	[1]
Fair value of investment in NGHC																$ 115,325	$ 213,940

[1] Effective Discount Rate ("EDR") is the Company's estimated internal rate of return on its life settlement contract portfolio and is determined from the gross expected cash flows and valuation of the portfolio. The valuation of the portfolio is calculated net of all reserves using a 7.5% discount rate. The EDR is implicit of the reserves and the gross expected cash flows of the portfolio. The Company anticipates that the EDR's range is between 12.5% and 17.5% and reflects the uncertainty that exists surrounding the information available as of the reporting date. As the accuracy and reliability of information improves (declines), the EDR will decrease (increase). The change in the EDR from December 31, 2013 to June 30, 2014 resulted from routine updating of life expectancies and other factors relating to operational risk.

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Shareholder Equity and Accumulated Other Comprehensive Income (Loss)

6 Months Ended

Jun. 30, 2014

Equity [Abstract]

Shareholder Equity and Accumulated Other Comprehensive Income (Loss)

Stockholder Equity and Accumulated Other Comprehensive Income (Loss)

The following table summarizes the ownership components of total stockholders' equity for the six months ended June 30, 2014 and 2013:

	2014									2013
(Amounts in Thousands)	AmTrust			Non-Controlling Interest			Total			AmTrust			Non-Controlling Interest			Total
Beginning Balance	$	1,441,005		$	137,860		$	1,578,865		$	1,144,121		$	103,344		$	1,247,465
Net income (loss)	210,007			(4,090		)	205,917			155,275			(877		)	154,398
Unrealized holding gain (loss)	87,451			—			87,451			(79,483		)	—			(79,483		)
Reclassification adjustment	(1,796		)	—			(1,796		)	3,261			—			3,261
Foreign currency translation	7,803			188			7,991			(15,565		)	—			(15,565		)
Unrealized gain on interest rate swap	234			—			234			936			—			936
Share exercises, compensation and other	11,130			—			11,130			7,253			—			7,253
Common share dividends	(30,170		)	—			(30,170		)	(18,899		)	—			(18,899		)
Preferred stock issuance, net of fees	—			—			—			111,130			—			111,130
Preferred stock dividends	(3,882		)	—			(3,882		)	—			—			—
Common share (repurchase) issuance	(10,969		)	—			(10,969		)	472			—			472
Capital contribution	—			19,955			19,955			—			6,158			6,158
Ending Balance	$	1,710,813		$	153,913		$	1,864,726		$	1,308,501		$	108,625		$	1,417,126

The following table summarizes Accumulated Other Comprehensive Income (Loss) for the six month periods ended June 30, 2014 and 2013:

(Amounts in Thousands)	Foreign Currency Items			Unrealized Gains (Losses) on Investments			Interest Rate Swap Hedge			Net Benefit Plan Assets and Obligations Recognized in Stockholders' Equity			Accumulated Other Comprehensive Income (Loss)
Balance December 31, 2013	$	2,582		$	(7,023	)	$	(1,985	)	$	(1,738	)	$	(8,164	)
Other comprehensive income before reclassification	12,005			134,540			360			—			146,905
Amounts reclassed from accumulated other comprehensive income	—			(2,763		)	—			—			(2,763		)
Income tax expense	(4,202		)	(46,122		)	(126		)	—			(50,450		)
Net current-period other comprehensive income	7,803			85,655			234			—			93,692
Balance, June 30, 2014	$	10,385		$	78,632		$	(1,751	)	$	(1,738	)	$	85,528
Balance December 31, 2012	$	(10,361	)	$	77,605		$	(3,013	)	$	—		$	64,231
Other comprehensive income before reclassification	(23,946		)	(122,281		)	1,440			—			(144,787		)
Amounts reclassed from accumulated other comprehensive income	—			5,017			—			—			5,017
Income tax benefit (expense)	8,381			41,042			(504		)				48,919
Net current-period other comprehensive income (loss)	(15,565		)	(76,222		)	936			—			(90,851		)
Balance, June 30, 2013	$	(25,926	)	$	1,383		$	(2,077	)	$	—		$	(26,620	)

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Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

Fair Value Measurement of Financial Assets and Financial Liabilities on Recurring Basis

The following tables present the level within the fair value hierarchy at which the Company’s financial assets and financial liabilities are measured on a recurring basis as of June 30, 2014 and December 31, 2013:

(Amounts in Thousands) As of June 30, 2014	Total		Level 1		Level 2		Level 3
Assets:
U.S. treasury securities	$	66,470	$	66,470	$	—	$	—
U.S. government agencies	25,692		—		25,692		—
Municipal bonds	525,239		—		525,239		—
Foreign government	151,035		—		151,035		—
Corporate bonds and other bonds:
Finance	1,225,383		—		1,225,383		—
Industrial	1,067,903		—		1,067,903		—
Utilities	93,014		—		93,014		—
Commercial mortgage backed securities	39,659		—		39,659		—
Residential mortgage backed securities:
Agency backed	830,135		—		830,135		—
Non-agency backed	13,524		—		13,524		—
Asset-backed securities	2,430		—		2,430		—
Equity securities	90,527		90,527		—		—
Short term investments	76,324		76,324		—		—
Other investments	14,095		—		—		14,095
Life settlement contracts	276,199		—		—		276,199
	$	4,497,629	$	233,321	$	3,974,014	$	290,294
Liabilities:
Equity securities sold but not yet purchased, market	$	24,309	$	24,309	$	—	$	—
Life settlement contract profit commission	12,529		—		—		12,529
Derivatives	2,693		—		2,693		—
	$	39,531	$	24,309	$	2,693	$	12,529

(Amounts in Thousands) As of December 31, 2013	Total		Level 1		Level 2		Level 3
Assets:
U.S. treasury securities	$	110,345	$	110,345	$	—	$	—
U.S. government agencies	10,489		—		10,489		—
Municipal bonds	446,183		—		446,183		—
Foreign government	160,105				160,105
Corporate bonds and other bonds:
Finance	1,084,599		—		1,084,599		—
Industrial	754,417		—		754,417		—
Utilities	70,226		—		70,226		—
Commercial mortgage backed securities	28,566		—		28,566		—
Residential mortgage backed securities:
Agency backed	423,137		—		423,137		—
Non-agency backed	6,749		—		6,749		—
Asset-backed securities	6,120		—		6,120		—
Equity securities	15,148		15,148		—		—
Short term investments	114,202		114,202		—		—
Other investments	25,749		—		—		25,749
Securities held as collateral	311,518		48,915		262,603		—
Life settlement contracts	233,024		—		—		233,024
	$	3,800,577	$	288,610	$	3,253,194	$	258,773
Liabilities:
Securities sold under agreements to repurchase, at carrying value	$	293,222	$	—	$	293,222	$	—
Life settlement contract profit commission	11,945		—		—		11,945
Derivatives	3,054		—		3,054		—
	$	308,221	$	—	$	296,276	$	11,945

Changes in Fair Value of Level 3 Financial Assets And Liabilities

The following tables provides a summary of changes in fair value of the Company’s Level 3 financial assets and liabilities for the three and six months ended June 30, 2014 and 2013:

(Amounts in Thousands)	Balance as of March 31, 2014			Net income			Other comprehensive income		Purchases and issuances		Sales and settlements			Net transfers into (out of) Level 3		Balance as of June 30, 2014
Other investments	$	18,166		$	288		$	—	$	110	$	(4,469	)	$	—	$	14,095
Life settlement contracts	268,199			5,796			—		2,204		—			—		276,199
Life settlement contract profit commission	(13,348		)	819			—		—		—			—		(12,529		)
Total	$	273,017		$	6,903		$	—	$	2,314	$	(4,469	)	$	—	$	277,765
(Amounts in Thousands)	Balance as of December 31, 2013			Net income			Other comprehensive income		Purchases and issuances		Sales and settlements			Net transfers into (out of) Level 3		Balance as of June 30, 2014
Other investments	$	25,749		$	2,402		$	—	$	3,317	$	(17,373	)	$	—	$	14,095
Life settlement contracts	233,024			22,783			—		25,419		(5,027		)	—		276,199
Life settlement contract profit commission	(11,945		)	(584		)	—		—		—			—		(12,529		)
Total	$	246,828		$	24,601		$	—	$	28,736	$	(22,400	)	$	—	$	277,765

(Amounts in Thousands)	Balance as of March 31, 2013			Net income			Other comprehensive income		Purchases and issuances		Sales and settlements			Net transfers into (out of) Level 3		Balance as of June 30, 2013
Other investments	$	16,052		$	(17	)	$	—	$	9,770	$	(1,026	)	$	—	$	24,779
Life settlement contracts	199,824			10,890			—		—		(2,020		)	—		208,694
Life settlement contract profit commission	(12,237		)	(276		)	—		—		—			—		(12,513		)
Total	$	203,639		$	10,597		$	—	$	9,770	$	(3,046	)	$	—	$	220,960
(Amounts in Thousands)	Balance as of December 31, 2012			Net income			Other comprehensive income		Purchases and issuances		Sales and settlements			Net transfers into (out of) Level 3		Balance as of June 30, 2013
Other investments	$	11,144		$	677		$	—	$	14,881	$	(1,923	)	$	—	$	24,779
Life settlement contracts	193,927			20,815			—		—		(6,048		)	—		208,694
Life settlement contract profit commission	(11,750		)	(763		)	—		—		—			—		(12,513		)
Total	$	193,321		$	20,729		$	—	$	14,881	$	(7,971	)	$	—	$	220,960

Schedule of Reconciliation of Net Income

A reconciliation of net income for life settlement contracts in the above table to gain (loss) on investment in life settlement contracts net of profit commission included in the Condensed Consolidated Statements of Income for the three and six months ended June 30, 2014 and 2013 is as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
(Amounts in Thousands)	2014			2013			2014			2013
Net income	$	5,796		$	10,890		$	22,783		$	20,815
Premiums paid	(11,078		)	(9,119		)	(22,472		)	(18,546		)
Profit commission	819			(276		)	(584		)	(763		)
Other expenses	(607		)	(415		)	(1,997		)	(1,502		)
(Loss) gain on investment in life settlement contracts	$	(5,070	)	$	1,080		$	(2,270	)	$	4

Premiums to be Paid for Each of Five Succeeding Fiscal Years to keep Life Insurance Policies in Force

The following summarizes data utilized in estimating the fair value of the portfolio of life insurance policies as of June 30, 2014 and December 31, 2013 and, as described in Note 5. "Investments in Life Settlements", only includes data for policies to which the Company assigned value at those dates:

	June 30, 2014			December 31, 2013
Average age of insured	80.8 years			80.1 years
Average life expectancy, months (1)	124			131
Average face amount per policy	$	6,586,000		$	6,611,000
Effective discount rate (2)	14.1		%	14.2		%

⁽¹⁾  Standard life expectancy as adjusted for specific circumstances.

⁽²⁾  Effective Discount Rate ("EDR") is the Company's estimated internal rate of return on its life settlement contract portfolio and is determined from the gross expected cash flows and valuation of the portfolio. The valuation of the portfolio is calculated net of all reserves using a 7.5% discount rate. The EDR is implicit of the reserves and the gross expected cash flows of the portfolio. The Company anticipates that the EDR's range is between 12.5% and 17.5% and reflects the uncertainty that exists surrounding the information available as of the reporting date. As the accuracy and reliability of information improves (declines), the EDR will decrease (increase). The change in the EDR from December 31, 2013 to June 30, 2014 resulted from routine updating of life expectancies and other factors relating to operational risk.

Increase or (Decrease) in Carrying Value of Investment in Life Insurance Policies

The Company's assumptions are, by their nature, inherently uncertain and the effect of changes in estimates may be significant. The fair value measurements used in estimating the present value calculation are derived from valuation techniques generally used in the industry that include inputs for the asset that are not based on observable market data. The extent to which the fair value could reasonably vary in the near term has been quantified by evaluating the effect of changes in significant underlying assumptions used to estimate the fair value amount. If the life expectancies were increased or decreased by 4 months and the discount factors were increased or decreased by 1% while all other variables were held constant, the carrying value of the investment in life insurance policies would increase or (decrease) by the unaudited amounts summarized below as of June 30, 2014 and December 31, 2013:

	Change in life expectancy
(Amounts in Thousands)	Plus 4 Months			Minus 4 Months
Investment in life policies:
June 30, 2014	$	(34,813	)	$	36,860
December 31, 2013	$	(29,537	)	$	31,313

	Change in discount rate (1)
(Amounts in Thousands)	Plus 1%			Minus 1%
Investment in life policies:
June 30, 2014	$	(23,198	)	$	26,095
December 31, 2013	$	(20,055	)	$	22,605

⁽¹⁾ Discount rate is a present value calculation that considers legal risk, credit risk and liquidity risk and is a component of EDR.

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Fair Value of Financial Instruments - Fair Value of Portfolio of Life Insurance Policies (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended		12 Months Ended
	Jun. 30, 2014		Dec. 31, 2013
Life Settlement Contracts, Fair Value Method [Abstract]
Average age of insured	80 years 9 months 0 days		80 years 1 month 6 days
Average life expectancy, months	124 months		131 months
Average face amount per policy	$ 6,586		$ 6,611
Implicit discount rate	14.10%	[1]	14.20%	[1]

[1] Effective Discount Rate ("EDR") is the Company's estimated internal rate of return on its life settlement contract portfolio and is determined from the gross expected cash flows and valuation of the portfolio. The valuation of the portfolio is calculated net of all reserves using a 7.5% discount rate. The EDR is implicit of the reserves and the gross expected cash flows of the portfolio. The Company anticipates that the EDR's range is between 12.5% and 17.5% and reflects the uncertainty that exists surrounding the information available as of the reporting date. As the accuracy and reliability of information improves (declines), the EDR will decrease (increase). The change in the EDR from December 31, 2013 to June 30, 2014 resulted from routine updating of life expectancies and other factors relating to operational risk.

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Investments - OTTI (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Other than Temporary Impairment Losses, Investments, Portion Recognized in Earnings, Net, Available-for-sale Securities	$ 1,896	$ 0	$ 3,539	$ 0
Equity securities
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Other than Temporary Impairment Losses, Investments, Portion Recognized in Earnings, Net, Available-for-sale Securities	648	0	2,291	0
Fixed maturities
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Other than Temporary Impairment Losses, Investments, Portion Recognized in Earnings, Net, Available-for-sale Securities	$ 1,248	$ 0	$ 1,248	$ 0

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Condensed Consolidated Statements of Income (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Service and fee income	$ 99,542	$ 88,102	$ 190,500	$ 148,615
Related Party Transactions
Service and fee income	15,118	14,414	27,318	24,921
Ceding commission - earned	$ 91,245	$ 67,157	$ 179,351	$ 131,115

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Investments

6 Months Ended

Jun. 30, 2014

Investments, Debt and Equity Securities [Abstract]

Investments

Investments

(a) Available-for-Sale Securities

The amortized cost, estimated market value and gross unrealized appreciation and depreciation of available-for-sale securities as of June 30, 2014 and December 31, 2013, are presented in the table below:

(Amounts in Thousands) As of June 30, 2014	Original or amortized cost		Gross unrealized gains		Gross unrealized losses			Market value
Preferred stock	$	4,500	$	266	$	(29	)	$	4,737
Common stock	81,850		6,543		(2,603		)	85,790
U.S. treasury securities	64,692		1,866		(88		)	66,470
U.S. government agencies	24,990		709		(7		)	25,692
Municipal bonds	520,346		11,910		(7,017		)	525,239
Foreign government	147,280		4,248		(493		)	151,035
Corporate bonds:
Finance	1,165,427		65,714		(5,758		)	1,225,383
Industrial	1,037,075		38,653		(7,825		)	1,067,903
Utilities	90,706		2,953		(645		)	93,014
Commercial mortgage backed securities	38,520		1,336		(197		)	39,659
Residential mortgage backed securities:
Agency backed	821,147		15,979		(6,991		)	830,135
Non-agency backed	13,294		231		(1		)	13,524
Asset-backed securities	2,430		2		(2		)	2,430
	$	4,012,257	$	150,410	$	(31,656	)	$	4,131,011

(Amounts in Thousands) As of December 31, 2013	Original or amortized cost		Gross unrealized gains		Gross unrealized losses			Market value
Preferred stock	$	1,498	$	82	$	(74	)	$	1,506
Common stock	14,512		1,156		(2,026		)	13,642
U.S. treasury securities	158,915		1,196		(851		)	159,260
U.S. government agencies	10,466		107		(84		)	10,489
Municipal bonds	461,325		4,781		(19,923		)	446,183
Foreign government	160,459		971		(1,325		)	160,105
Corporate bonds:
Finance	1,057,542		41,027		(13,970		)	1,084,599
Industrial	768,161		7,695		(21,439		)	754,417
Utilities	70,924		1,310		(2,008		)	70,226
Commercial mortgage backed securities	28,970		—		(404		)	28,566
Residential mortgage backed securities:
Agency backed	694,001		5,657		(13,918		)	685,740
Non-agency backed	6,737		19		(7		)	6,749
Asset backed securities	$	6,119	$	4	$	(3	)	$	6,120
	$	3,439,629	$	64,005	$	(76,032	)	$	3,427,602
Less: Securities pledged	316,576		506		(5,564		)	311,518
	$	3,123,053	$	63,499	$	(70,468	)	$	3,116,084

Investments in foreign government securities include securities issued by national entities as well as instruments that are unconditionally guaranteed by such entities. As of June 30, 2014, the Company's foreign government securities were issued or guaranteed primarily by governments in Canada, Europe, and Israel.

Proceeds from the sale of investments in available-for-sale securities during the six months ended June 30, 2014 and 2013 were approximately $722,847 and $1,198,185, respectively.

A summary of the Company’s available-for-sale fixed securities as of June 30, 2014 and December 31, 2013, by contractual maturity, is shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	June 30, 2014				December 31, 2013
(Amounts in Thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	156,550	$	157,578	$	128,128	$	128,214
Due after one through five years	630,676		651,908		592,703		603,942
Due after five through ten years	1,875,956		1,957,538		1,632,115		1,631,751
Due after ten years	387,334		387,712		334,846		321,372
Mortgage and asset backed securities	875,391		885,748		735,827		727,175
Total fixed maturities	$	3,925,907	$	4,040,484	$	3,423,619	$	3,412,454

(b) Investment Income

Net investment income for the three and six months ended June 30, 2014 and 2013 was derived from the following sources:

	Three Months Ended June 30,						Six Months Ended June 30,
(Amounts in Thousands)	2014			2013			2014			2013
Fixed maturity securities	$	31,068		$	18,316		$	58,740		$	35,588
Equity securities	242			3,887			301			4,289
Cash and short term investments	1,996			704			3,424			1,748
	33,306			22,907			62,465			41,625
Less:
Investment expenses and interest expense on securities sold under agreement to repurchase	(712		)	(273		)	(1,344		)	(896		)
	$	32,594		$	22,634		$	61,121		$	40,729

(c) Other-Than-Temporary Impairment

OTTI charges of our fixed-maturities and equity securities for the three and six months ended June 30, 2014 and 2013 are presented in the table below:

	Three Months Ended June 30,				Six Months Ended June 30,
(Amounts in Thousands)	2014		2013		2014		2013
Equity securities recognized in earnings	$	648	$	—	$	2,291	$	—
Fixed-maturity securities recognized in earnings	1,248		—		1,248		—
	$	1,896	$	—	$	3,539	$	—

The table below summarizes the gross unrealized losses of our fixed maturity and equity securities by length of time the security has continuously been in an unrealized position as of June 30, 2014 and December 31, 2013:

	Less Than 12 Months						12 Months or More						Total
(Amounts in Thousands) As of June 30, 2014	Fair Market Value		Unrealized Losses			No. of Positions Held	Fair Market Value		Unrealized Losses			No. of Positions Held	Fair Market Value		Unrealized Losses
Common and preferred stock	$	15,743	$	(2,632	)	112	$	100	$	—		1	$	15,843	$	(2,632	)
U.S. treasury securities	2,220		(52		)	11	2,053		(36		)	5	4,273		(88		)
U.S. government agencies	—		—			—	1,387		(7		)	6	1,387		(7		)
Municipal bonds	88,539		(3,461		)	107	97,084		(3,556		)	105	185,623		(7,017		)
Foreign government	35,152		(493		)	9	—		—			—	35,152		(493		)
Corporate bonds:
Finance	183,496		(3,855		)	74	103,821		(1,903		)	24	287,317		(5,758		)
Industrial	125,993		(6,318		)	68	65,998		(1,507		)	41	191,991		(7,825		)
Utilities	13,826		(594		)	11	1,128		(51		)	2	14,954		(645		)
Commercial mortgage backed securities	16		—			2	5,336		(197		)	8	5,352		(197		)
Residential mortgage backed securities:
Agency backed	258,319		(5,258		)	44	43,715		(1,733		)	30	302,034		(6,991		)
Non-agency backed	84		—			1	32		(1		)	2	116		(1		)
Asset-backed securities	1,827		(2		)	5	—		—			—	1,827		(2		)
Total temporarily impaired securities	$	725,215	$	(22,665	)	444	$	320,654	$	(8,991	)	224	$	1,045,869	$	(31,656	)

	Less Than 12 Months						12 Months or More						Total
(Amounts in Thousands) December 31, 2013	Fair Market Value		Unrealized Losses			No. of Positions Held	Fair Market Value		Unrealized Losses			No. of Positions Held	Fair Market Value		Unrealized Losses
Common and preferred stock	$	4,875	$	(2,100	)	51	$	—	$	—		—	$	4,875	$	(2,100	)
U.S. treasury securities	52,757		(851		)	18	—		—			—	52,757		(851		)
U.S. government agencies	4,135		(84		)	11	—		—			—	4,135		(84		)
Municipal bonds	254,219		(17,986		)	302	24,169		(1,937		)	9	278,388		(19,923		)
Foreign government	68,102		(1,324		)	16	999		(1		)	1	69,101		(1,325		)
Corporate bonds:
Finance	500,564		(13,402		)	182	58,923		(568		)	9	559,487		(13,970		)
Industrial	500,366		(21,203		)	263	3,383		(236		)	2	503,749		(21,439		)
Utilities	45,663		(2,008		)	21	—		—			—	45,663		(2,008		)
Commercial mortgage backed securities	28,552		(404		)	18	—		—			—	28,552		(404		)
Residential mortgage backed securities:
Agency backed	492,740		(13,918		)	120	—		—			—	492,740		(13,918		)
Non-agency backed	205		(5		)	6	23		(2		)	1	228		(7		)
Asset-backed securities	1,463		(3		)	4	—		—			—	1,463		(3		)
Total temporarily impaired securities	$	1,953,641	$	(73,288	)	1,012	$	87,497	$	(2,744	)	22	$	2,041,138	$	(76,032	)

There are 668 and 1,034 securities at June 30, 2014 and December 31, 2013, respectively, that account for the gross unrealized loss, none of which is deemed by the Company to be OTTI. Significant factors influencing the Company’s determination that unrealized losses were temporary included the magnitude of the unrealized losses in relation to each security’s cost, the nature of the investment and management’s intent not to sell these securities and it being not more likely than not that the Company will be required to sell these investments before anticipated recovery of fair value to the Company’s cost basis.

(d) Derivatives

The Company from time to time invests in a limited number of derivatives and other financial instruments as part of its investment portfolio to manage interest rate changes or other exposures to a particular financial market. The Company records changes in valuation on its derivative positions not designated as a hedge as a component of net realized gains and losses.

The Company records changes in valuation on its hedge positions as a component of other comprehensive income. As of June 30, 2014 and December 31, 2013, the Company had two interest rate swaps designated as hedges that were recorded as a liability in the total amount of $2,693 and $3,054, respectively, and were included as a component of accrued expenses and other liabilities.

The following table presents the notional amounts by remaining maturity of the Company’s interest rate swaps as of June 30, 2014:

	Remaining Life of Notional Amount (1)
(Amounts in Thousands)	One Year		Two Through Five Years		Six Through Ten Years		After Ten Years		Total
Interest rate swaps	$	—	$	70,000	$	—	$	—	$	70,000

^{(1)  Notional amount is not representative of either market risk or credit risk and is not recorded in the consolidated balance sheet.} 

(e) Restricted Cash and Investments

The Company, in order to conduct business in certain states, is required to maintain letters of credit or assets on deposit to support state mandated regulatory requirements and certain third party agreements. The Company also utilizes trust accounts to collateralize business with its reinsurance counterparties. These assets are primarily in the form of cash and certain high grade securities. The fair values of our restricted assets as of June 30, 2014 and December 31, 2013 are as follows:

(Amounts in Thousands)	2014		2013
Restricted cash	$	181,067	$	100,439
Restricted investments	798,772		978,910
Total restricted cash and investments	$	979,839	$	1,079,349

(f) Other

Securities sold but not yet purchased represent obligations of the Company to deliver the specified security at the contracted price and, thereby, create a liability to purchase the security in the market at prevailing prices. The Company’s liability for securities to be delivered is measured at their fair value and as of June 30, 2014 was $24,309 for equity securities. These transactions result in off-balance sheet risk, as the Company’s ultimate cost to satisfy the delivery of securities sold but not yet purchased may exceed the amount reflected at June 30, 2014. Substantially all securities owned under these arrangements are pledged to the clearing broker to sell or repledge the securities to others subject to certain limitations. The Company did not have any securities sold but not yet purchased as of December 31, 2013.

From time to time, the Company enters into repurchase agreements that are subject to a master netting arrangement, which are accounted for as collateralized borrowing transactions and are recorded at contract amounts. The Company receives cash or securities that it invests or holds in short term or fixed income securities. As of June 30, 2014, the Company had no repurchase agreements outstanding. Interest expense associated with these repurchase agreements, which was recorded as a component of investment income, was $24 and $273 for the three and six months ended June 30, 2014, respectively, and $214 and $491 for the three and six months ended June 30, 2013, respectively.

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Debt - Aggregate Scheduled Maturities of Borrowings (Parenthetical) (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Debt Disclosure [Abstract]
Unamortized OID	$ 34,197	$ 35,782

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Shareholder Equity and Accumulated Other Comprehensive Income (Loss) - AOCI (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance			$ (8,164)	$ 64,231
Other comprehensive income (loss) before reclassifications			146,905	(144,787)
Amounts reclassed from accumulated other comprehensive loss			(2,763)	5,017
Income tax benefit (expense)			(50,450)	48,919
Other comprehensive income (loss), net of tax	53,057	(63,590)	93,692	(90,851)
Ending balance	85,528	(26,620)	85,528	(26,620)
Foreign Currency Items
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance			2,582	(10,361)
Other comprehensive income (loss) before reclassifications			12,005	(23,946)
Amounts reclassed from accumulated other comprehensive loss			0	0
Income tax benefit (expense)			(4,202)	8,381
Other comprehensive income (loss), net of tax			7,803	(15,565)
Ending balance	10,385	(25,926)	10,385	(25,926)
Unrealized Gains (Losses) on Investments
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance			(7,023)	77,605
Other comprehensive income (loss) before reclassifications			134,540	(122,281)
Amounts reclassed from accumulated other comprehensive loss			(2,763)	5,017
Income tax benefit (expense)			(46,122)	41,042
Other comprehensive income (loss), net of tax			85,655	(76,222)
Ending balance	78,632	1,383	78,632	1,383
Interest Rate Swap Hedge
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance			(1,985)	(3,013)
Other comprehensive income (loss) before reclassifications			360	1,440
Amounts reclassed from accumulated other comprehensive loss			0	0
Income tax benefit (expense)			(126)	(504)
Other comprehensive income (loss), net of tax			234	936
Ending balance	(1,751)	(2,077)	(1,751)	(2,077)
Net Benefit Plan Assets and Obligations Recognized in Stockholders' Equity
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance			(1,738)	0
Other comprehensive income (loss) before reclassifications			0	0
Amounts reclassed from accumulated other comprehensive loss			0	0
Income tax benefit (expense)			0
Other comprehensive income (loss), net of tax			0	0
Ending balance	$ (1,738)	$ 0	$ (1,738)	$ 0

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Income Taxes - Reconciliation of Statutory Federal Income Tax Rate to Effective Tax Rate (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Income Tax Disclosure [Abstract]
Income before equity in earnings of unconsolidated subsidiaries	$ 118,156	$ 91,739	$ 228,812	$ 189,299
Tax at federal statutory rate of 35%	41,355	32,109	80,084	66,255
Income (loss) of non-includible foreign subsidiaries	(14,255)	(10,535)	(63,133)	(30,122)
Other, net	(9,134)	5,828	28,459	7,378
Provision for income taxes	$ 17,966	$ 27,402	$ 45,410	$ 43,511
Effective tax rate	15.20%	29.90%	19.80%	23.00%

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Investment in Life Settlements (Tables)

6 Months Ended

Jun. 30, 2014

Investments, All Other Investments [Abstract]

Investment in Life Settlements

The following table describes the Company’s investment in life settlements as of June 30, 2014 and December 31, 2013:

(Amounts in Thousands, except number of Life Settlement Contracts)  Expected Maturity Term in Years	Number of Life Settlement Contracts	Fair Value (1)		Face Value
As of June 30, 2014
0-1	—	$	—	$	—
1-2	3	17,688		25,000
2-3	7	41,209		68,000
3-4	2	5,370		15,000
4-5	9	16,942		43,000
Thereafter	267	194,990		1,695,209
Total	288	$	276,199	$	1,846,209

(Amounts in Thousands, except number of Life Settlement Contracts)  Expected Maturity Term in Years	Number of Life Settlement Contracts	Fair Value (1)		Face Value
As of December 31, 2013
0-1	—	$	—	$	—
1-2	—	—		—
2-3	1	2,726		5,000
3-4	13	53,767		103,000
4-5	2	5,622		13,000
Thereafter	255	170,909		1,641,409
Total	271	$	233,024	$	1,762,409

^{(1)  The Company determined the fair value as of June 30, 2014 based on 222 policies out of 288 policies, as the Company assigned no value to 66 of the policies as of June 30, 2014. The Company determined the fair value as of December 31, 2013 based on 191 policies out of 271 policies, as the Company assigned no value to 80 of the policies as of December 31, 2013. The Company estimated the fair value of a life insurance policy using a cash flow model with an appropriate discount rate. In some cases, the cash flow model calculates the value of an individual policy to be negative, and therefore the fair value of the policy is zero as no liability exists when a negative value is calculated. The Company is not contractually bound to pay the premium on its life settlement contracts and, therefore, would not pay a willing buyer to assume title of these contracts. Additionally, certain of the Company's acquired policies were structured to have low premium payments at inception of the policy term, which later escalate greatly towards the tail end of the policy term. At the current time, the Company expenses all premium paid, even on policies with zero fair value. Once the premium payments escalate, the Company may allow the policies to lapse. In the event that death benefits are realized in the time frame between initial acquisition and premium escalation, it is a benefit to cash flow.} 

For these contracts where the Company determined the fair value to be negative and therefore assigned a fair value of zero, the table below details the amount of premiums paid and the death benefits received during the twelve months preceding June 30, 2014 and December 31, 2013:

(Amounts in Thousands, except number of Life Settlement Contracts)	June 30, 2014		December 31, 2013
Number of policies with a negative value from discounted cash flow model as of period end	66		80
Premiums paid for the preceding twelve month period for period ended	$	7,342	$	9,371
Death benefit received	$	3,012	$	3,012

Premiums to be Paid for Each of Five Succeeding Fiscal Years to keep Life Insurance Policies in Force

Premiums to be paid by the LSC entities for each of the five succeeding fiscal years to keep the life insurance policies in force as of June 30, 2014, are as follows:

(Amounts in Thousands)	Premiums Due on Life  Settlement Contracts
2014	$	41,008
2015	43,688
2016	61,031
2017	39,847
2018	38,984
Thereafter	552,485
Total	$	777,043

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Related Party Transactions (NGHC) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended		1 Months Ended		3 Months Ended		6 Months Ended			3 Months Ended		6 Months Ended		0 Months Ended	3 Months Ended	6 Months Ended				3 Months Ended		6 Months Ended
	Jun. 30, 2014 sqft	Jun. 30, 2013	Jun. 30, 2014 sqft	Jun. 30, 2013	Feb. 28, 2014 NGHC	Aug. 31, 2011 NGHC	Jun. 30, 2014 NGHC Entity	Jun. 30, 2013 NGHC	Jun. 30, 2014 NGHC Entity	Jun. 30, 2013 NGHC	Jan. 31, 2014 NGHC	Jun. 30, 2014 ACP Re, Ltd	Jun. 30, 2013 ACP Re, Ltd	Jun. 30, 2014 ACP Re, Ltd	Jun. 30, 2013 ACP Re, Ltd	Jun. 06, 2013 Private Placement NGHC	Jun. 30, 2013 Personal Lines Reinsurance	Jun. 30, 2013 Personal Lines Reinsurance	Jun. 30, 2014 Maximum NGHC	Jun. 30, 2014 Minimum NGHC	Aug. 31, 2011 800 Superior LLC	Jun. 30, 2014 800 Superior LLC NGHC	Jun. 30, 2013 800 Superior LLC NGHC	Jun. 30, 2014 800 Superior LLC NGHC	Jun. 30, 2013 800 Superior LLC NGHC	Dec. 31, 2012 800 Superior LLC NGHC sqft	Aug. 31, 2011 800 Superior LLC NGHC	Aug. 31, 2011 800 Superior LLC ACP Re, Ltd
Related Party Transaction [Line Items]
Percentage of ownership in NGHC					13.20%		13.20%		13.20%		15.40%
Number of reportable entities							14		14
Shares issued by the company as a part of the agreement					13,600,000
Gain on sale of investment																$ 14,712
Equity in earnings of unconsolidated subsidiary – related party	3,999	7,060	22,515	8,610			3,999	7,060	22,515	8,610
Net written premium	923,670	639,997	2,053,951	1,172,103													28,975	59,627
License fee percentage							1.25%		1.25%
Technology services fee income							8,024	5,996	13,063	11,372
Asset management services fee percentage																			0.20%	0.15%
Average value of assets under management																			1,000,000	1,000,000
Assets managed under asset management agreement							1,421,593		1,421,593			127,548		127,548
Investment management fee							461	490	890	853
Management fees							8,485	6,486	13,953	12,225		61	58	116	110
Asset management fees payable							13,625		13,625
Cost of acquiring office building						7,500
Percentage of ownership interest						13.20%	13.20%		13.20%												50.00%						50.00%
Percentage of profits and losses																												57.70%
Office area under lease	39,992		39,992																							134,000
Office lease period																								15 years
Office lease expenses																						$ 533	$ 535	$ 935	$ 1,071
Contribution towards payment for guaranties, percentage							50.00%		50.00%

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Investments - Amortized Cost, Estimated Market Value and Gross Unrealized Appreciation and Depreciation of Available-for-sale Securities (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Original or amortized cost		$ 3,439,629
Gross unrealized gains		64,005
Gross unrealized losses		(76,032)
Market value		3,427,602
Original and amortized cost, securities pledged	0	316,576
Securities pledged, gross unrealized gains		506
Securities pledged, gross unrealized losses		(5,564)
Securities pledged as collateral	0	311,518
Original and amortized cost, net of securities pledged	4,012,257	3,123,053
Gross unrealized gains, net of securities pledged	150,410	63,499
Gross unrealized losses, net of securities pledged	(31,656)	(70,468)
Fair value, net of securities pledged	4,131,011	3,116,084
Preferred stock
Schedule of Available-for-sale Securities [Line Items]
Original or amortized cost	4,500	1,498
Gross unrealized gains	266	82
Gross unrealized losses	(29)	(74)
Market value	4,737	1,506
Common stock
Schedule of Available-for-sale Securities [Line Items]
Original or amortized cost	81,850	14,512
Gross unrealized gains	6,543	1,156
Gross unrealized losses	(2,603)	(2,026)
Market value	85,790	13,642
U.S. treasury securities
Schedule of Available-for-sale Securities [Line Items]
Original or amortized cost	64,692	158,915
Gross unrealized gains	1,866	1,196
Gross unrealized losses	(88)	(851)
Market value	66,470	159,260
U.S. government agencies
Schedule of Available-for-sale Securities [Line Items]
Original or amortized cost	24,990	10,466
Gross unrealized gains	709	107
Gross unrealized losses	(7)	(84)
Market value	25,692	10,489
Municipal bonds
Schedule of Available-for-sale Securities [Line Items]
Original or amortized cost	520,346	461,325
Gross unrealized gains	11,910	4,781
Gross unrealized losses	(7,017)	(19,923)
Market value	525,239	446,183
Foreign government
Schedule of Available-for-sale Securities [Line Items]
Original or amortized cost	147,280	160,459
Gross unrealized gains	4,248	971
Gross unrealized losses	(493)	(1,325)
Market value	151,035	160,105
Finance | Corporate bonds
Schedule of Available-for-sale Securities [Line Items]
Original or amortized cost	1,165,427	1,057,542
Gross unrealized gains	65,714	41,027
Gross unrealized losses	(5,758)	(13,970)
Market value	1,225,383	1,084,599
Industrial | Corporate bonds
Schedule of Available-for-sale Securities [Line Items]
Original or amortized cost	1,037,075	768,161
Gross unrealized gains	38,653	7,695
Gross unrealized losses	(7,825)	(21,439)
Market value	1,067,903	754,417
Utilities | Corporate bonds
Schedule of Available-for-sale Securities [Line Items]
Original or amortized cost	90,706	70,924
Gross unrealized gains	2,953	1,310
Gross unrealized losses	(645)	(2,008)
Market value	93,014	70,226
Commercial mortgage backed securities
Schedule of Available-for-sale Securities [Line Items]
Original or amortized cost	38,520	28,970
Gross unrealized gains	1,336	0
Gross unrealized losses	(197)	(404)
Market value	39,659	28,566
Agency, residential mortgage backed securities
Schedule of Available-for-sale Securities [Line Items]
Original or amortized cost	821,147	694,001
Gross unrealized gains	15,979	5,657
Gross unrealized losses	(6,991)	(13,918)
Market value	830,135	685,740
Non-agency, residential mortgage backed securities
Schedule of Available-for-sale Securities [Line Items]
Original or amortized cost	13,294	6,737
Gross unrealized gains	231	19
Gross unrealized losses	(1)	(7)
Market value	13,524	6,749
Asset-backed Securities
Schedule of Available-for-sale Securities [Line Items]
Original or amortized cost	2,430	6,119
Gross unrealized gains	2	4
Gross unrealized losses	(2)	(3)
Market value	$ 2,430	$ 6,120

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New Market Tax Credit

6 Months Ended

Jun. 30, 2014

New Market Tax Credit [Abstract]

New Market Tax Credit

New Market Tax Credit

In 2012, the Company's subsidiary, 800 Superior, LLC (an entity owned equally by the Company and NGHC) received $19,400 in net proceeds from a financing transaction the Company and NGHC entered into with Key Community Development Corporation (“KCDC”) related to a capital improvement project for an office building in Cleveland, Ohio owned by 800 Superior, LLC. The Company, NGHC and KCDC collectively made capital contributions (net of allocation fees) and loans to 800 Superior NMTC Investment Fund II LLC and 800 Superior NMTC Investment Fund I LLC (collectively, the “Investment Funds”) under a qualified New Markets Tax Credit (“NMTC”) program. The NMTC program was provided for in the Community Renewal Tax Relief Act of 2000 (the “Act”) and is intended to induce capital investment in qualified lower income communities. The Act permits taxpayers to claim credits against their federal income taxes for up to 39% of qualified investments in the equity of community development entities (“CDEs”). CDEs are privately managed investment institutions that are certified to make qualified low-income community investments (“QLICIs”).

In addition to the capital contributions and loans from the Company, NGHC and KCDC, as part of the transaction, the Investment Funds received, directly and indirectly, proceeds of approximately $8,000 from two loans originating from state and local governments of Ohio. These loans are each for a period of 15 years and have an average interest rate of 1.7% per annum.

The Investment Funds then contributed the loan proceeds and capital contributions of $19,400 to two CDEs, which, in turn, loaned the funds on similar terms to 800 Superior, LLC. The proceeds of the loans from the CDEs (including loans representing the capital contribution made by KCDC, net of allocation fees) will be used to fund the capital improvement project. As collateral for these loans, the Company has granted a security interest in the assets acquired with the loan proceeds.

The Company and NGHC are each entitled to receive an equal portion of 49% of the benefits derived from the NMTCs generated by 800 Superior Investment Fund II LLC, while KCDC is entitled to the remaining 51%. The NMTC is subject to 100% recapture for a period of 7 years as provided in the Internal Revenue Code. During this seven-year compliance period, the entities involved are required to be in compliance with various regulations and contractual provisions that apply to the NMTC arrangement. Non-compliance with applicable requirements could result in the projected tax benefits not being realized and, therefore, could require the Company to indemnify KCDC for any loss or recapture of NMTCs related to the financing until such time as the obligation to deliver tax benefits is relieved. The Company does not anticipate any credit recaptures will be required in connection with this arrangement. In addition, this transaction includes a put/call provision whereby the Company may be obligated or entitled to repurchase KCDC's interest in the Investment Funds in September 2019 at the end of the recapture period. The Company believes that KCDC will exercise its put option and, therefore, attributed an insignificant value to the put/call.

The Company has determined that the Investment Funds are variable interest entities (“VIEs”). The ongoing activities of the Investment Funds - collecting and remitting interest and fees and NMTC compliance - were all considered in the initial design and are not expected to significantly affect economic performance throughout the life of the Investment Funds. When determining whether to consolidate the Investment Funds, Company management considered the contractual arrangements that obligate it to deliver tax benefits and provide various other guarantees to the structure, KCDC's lack of a material interest in the underlying economics of the project, and the fact that the Company is obligated to absorb losses of the Investment Funds. Also, the Company has a 13.2% ownership in NGHC, which was reduced from 15.40% as a result of the Rule 144A stock offering by NGHC in February of 2014. The Company concluded that it was the primary beneficiary and consolidated the Investment Funds, as VIEs, in accordance with the accounting standard for consolidation. KCDC's contribution, net of syndication fees, is included as accrued liability in the accompanying condensed consolidated balance sheets. Direct costs incurred in structuring the financing arrangement are deferred and will be recognized as expense over the term of the loans. Incremental costs to maintain the structure during the compliance period are recognized as incurred.