| Restatement of Previously Issued Consolidated Financial Statements | Restatement of Previously Issued Consolidated Financial Statements In connection with the preparation, review and audit of the Company's consolidated financial statements required to be included in the Annual Report on Form 10-K for the year ended December 31, 2016 , management identified certain errors in the Company's historical financial statements. As a result, the Company concluded that its previously issued consolidated financial statements for fiscal years 2015 and 2014 , along with each of the four quarters included in fiscal year 2015 , as well as the first three quarters of fiscal year 2016 , needed to be restated, The Company's restated consolidated financial statements as of and for the years ended December 31, 2015 and 2014 were included in its Annual Report on Form 10-K for the year ended December 31, 2016 . Within this report, the Company has included restated unaudited interim consolidated financial statements as of and for the three months ended March 31, 2016 and 2015 . This Note 2 to the unaudited interim consolidated financial statements discloses the nature of the restatement matters and adjustments and shows the impact of the restatement for the three months ended March 31, 2016 and 2015, respectively. The restatement corrects errors primarily related to: (1) upfront recognition of the portion of warranty contract revenue associated with administration services, instead of recognizing the revenue over the life of the contract; and (2) bonuses that were expensed in the year paid but that should have been accrued as earned based on ASC 270, Interim Reporting , and ASC 450, Contingencies . The Company has also identified other adjustments described below in items (3) – (9) that have been corrected as part of this restatement. Adjustments needed to correct errors (1) Warranty fee revenue – During the preparation of its financial statements for the year ended December 31, 2016, management became aware of a misapplication of the revenue recognition guidance in relation to its accounting for warranty contract revenue associated with promotion, marketing and administration services (collectively, "administration services") provided as part of extended service plans (“ESPs”). The Company had historically recognized the majority of revenue related to administration services at the time of the sale of ESP. However, the Company revised its application of the revenue recognition guidance to record revenue related to administration services on a straight-line basis over the term of the ESP contracts. This correction of an error created an overstatement of service and fee income and an overstatement of other expenses that were also recognized upfront at the time of the sale. (2) Accrual of bonuses – In prior years, the Company had expensed discretionary bonuses paid to its employees in the year the bonuses were paid because the Company did not consider the discretionary bonuses to be “probable,” which is the standard required for accrual. Upon review of ASC 270, Interim Reporting , and ASC 450, Contingencies , management determined that its application was incorrect because, even though the bonuses were discretionary, the bonuses should have been estimated and expenses assigned to interim periods so that the interim periods bear a reasonable portion of the anticipated annual amount. This created an error resulting in an overstatement of acquisition costs and other underwriting expenses. (3) Deferred policy acquisition costs – The Company corrected errors in its calculation of deferred policy acquisition costs related to (a) the over-amortization of certain deferred acquisition costs in 2015, resulting in an overstatement of expenses in 2015, (b) the deferral of certain non-eligible salaries and consulting fees, resulting in an understatement of expenses, (c) the treatment of certain costs as both underwriting expenses and salary and benefit expenses, resulting in the duplication of the amount originally deferred, and (d) the inclusion of deferred warranty administration fees and obligor liabilities associated with the administration services provided to our ESPs, which resulted in an increase to policy acquisition expense. (4) Foreign exchange gain/(loss) – The Company corrected errors related to the re-measurement of monetary balances denominated in foreign currencies into their functional currencies that were originally recorded as a component of other comprehensive income. Given the monetary nature of some of these balances, the re-measurement impact should have been recorded as foreign currency transaction gain/(loss) in the Company's statements of income. (5) Capitalized software – The Company capitalized certain internally developed software costs that did not meet criteria for capitalization under ASC 350, Intangibles - Goodwill and Other . This error resulted overall in an over-capitalization of certain software expenses, which resulted in an understatement of expenses for the three months ended March 31, 2016 and an overstatement of expenses for the three months ended March 31, 2015. (6) Imputed interest – The Company corrected an error related to imputed interest on contingent consideration owed as a result of certain business acquisitions, which resulted in an overstatement of interest expense during the three months ended March 31, 2016 and an understatement of interest expense during the three months ended March 31 2015 . (7) Intercompany eliminations – The Company corrected an error related to internal brokerage commissions paid from one of its subsidiaries to another subsidiary, which should have been eliminated in consolidation, thereby causing an overstatement of commission income in the three months ended March 31, 2015. (8) Other items – The Company corrected other errors that impacted the three months ended March 31, 2016 and 2015 interim consolidated financial statements, including unaccrued liabilities, uncollectible other receivables, accrued commissions, unrecognized amortization expense, unrealized losses on investments and proper quarter end cut-off related to premiums and claims. (9) Balance sheet items – The Company historically recorded certain receivables (premium and other) net of commissions. The error was corrected and the Company now records the receivables on a gross basis, with the associated commission payable in other accrued expenses and liabilities. In addition, the Company corrected a classification error involving short term investments and cash and cash equivalents as of March 31, 2016 and 2015 . The following summarizes the impact of the Restatement on our previously reported unaudited interim Consolidated Balance Sheets, Consolidated Statements of Income, Consolidated Statements of Comprehensive Income, Consolidated Statements of Stockholders' Equity and Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015 : Consolidated Balance Sheet March 31, 2016 ASSETS As previously reported Adjustments As restated Reference (in thousands) Investments: Fixed maturities, available-for-sale, at fair value (amortized cost $6,221,739) $ 6,307,719 $ — $ 6,307,719 Equity securities, available-for-sale, at fair value (cost $110,594) 98,518 — 98,518 Equity securities, trading, at fair value (cost $28,142) 29,891 — 29,891 Short-term investments 34,008 (25,094 ) 8,914 9 Equity investment in unconsolidated subsidiaries – related parties 146,000 — 146,000 Other investments (related party $68,860) 126,875 — 126,875 Total investments 6,743,011 (25,094 ) 6,717,917 Cash and cash equivalents 998,282 25,094 1,023,376 8, 9 Restricted cash and cash equivalents 359,876 — 359,876 Accrued interest and dividends 57,179 — 57,179 Premiums receivable, net 2,376,689 134,804 2,511,493 8, 9 Reinsurance recoverable (related party $2,282,432) 3,097,192 — 3,097,192 Prepaid reinsurance premiums (related party $1,184,742) 1,633,866 — 1,633,866 Other assets (related party $206,298; recorded at fair value $294,573) 1,247,886 74,017 1,321,903 1 – 9 Deferred policy acquisition costs 761,802 (25,495 ) 736,307 3 Property and equipment, net 292,381 (11,448 ) 280,933 5, 8 Goodwill 426,268 — 426,268 Intangible assets 361,289 — 361,289 $ 18,355,721 $ 171,878 $ 18,527,599 LIABILITIES AND STOCKHOLDERS’ EQUITY Liabilities: Loss and loss adjustment expense reserves $ 7,516,089 $ — $ 7,516,089 Unearned premiums 4,290,528 — 4,290,528 Ceded reinsurance premiums payable (related party $571,754) 851,192 — 851,192 Accrued expenses and other liabilities (related party $167,975; recorded at fair value $101,655) 1,379,985 370,853 1,750,838 1, 2, 6, 8, 9 Debt (net of debt issuance cost of $16,616) 993,028 — 993,028 Total liabilities 15,030,822 370,853 15,401,675 Commitments and contingencies Redeemable non-controlling interest 1,332 — 1,332 Stockholders’ equity: Common stock, $0.01 par value; 500,000 shares authorized, 196,455 issued; 175,400 outstanding 1,965 — 1,965 Preferred stock, $0.01 par value; 10,000 shares authorized, 5,112 issued and outstanding; aggregated liquidation preference $626,250 626,250 — 626,250 Additional paid-in capital 1,381,282 — 1,381,282 Treasury stock at cost; 21,054 shares (177,071 ) — (177,071 ) Accumulated other comprehensive (loss) income, net of tax (97,348 ) (574 ) (97,922 ) 4 Retained earnings 1,408,177 (198,401 ) 1,209,776 1 – 8 Total AmTrust Financial Services, Inc. equity 3,143,255 (198,975 ) 2,944,280 Non-controlling interest 180,312 — 180,312 Total stockholders’ equity 3,323,567 (198,975 ) 3,124,592 $ 18,355,721 $ 171,878 $ 18,527,599 Consolidated Statement of Income Three Months Ended March 31, 2016 As previously reported Adjustments As restated Reference (in thousands, except per share) Revenues: Premium income: Net written premium $ 1,220,679 $ — $ 1,220,679 Change in unearned premium (146,397 ) — (146,397 ) Net earned premium 1,074,282 — 1,074,282 Service and fee income (related parties - $20,163) 144,201 (15,396 ) 128,805 1, 8 Net investment income 49,415 — 49,415 Net realized gain on investments 7,975 — 7,975 Total revenues 1,275,873 (15,396 ) 1,260,477 Expenses: Loss and loss adjustment expense 715,073 — 715,073 Acquisition costs and other underwriting expenses (net of ceding commission - related party - $138,391) 264,634 7,834 272,468 2, 3, 5, 8 Other 128,186 1,081 129,267 1, 5, 8 Total expenses 1,107,893 — 8,915 1,116,808 Income before other (expense) income, provision for income taxes, equity in earnings of unconsolidated subsidiaries and non-controlling interest 167,980 (24,311 ) 1 143,669 Other (expenses) income: Interest expense (net of interest income - related party - $2,188) (17,700 ) 1,826 (15,874 ) 6 Gain on investment in life settlement contracts net of profit commission 10,730 — 10,730 Foreign currency (loss) gain (35,673 ) (2,560 ) (38,233 ) 4, 8 Gain on acquisition 9,678 — 9,678 Total other (expenses) income (32,965 ) — (734 ) (33,699 ) Income before provision for income taxes, equity in earnings of unconsolidated subsidiaries and non-controlling interest 135,015 — (25,045 ) 109,970 Provision for income taxes 27,726 (8,766 ) 18,960 1 – 8 Income before equity in earnings of unconsolidated subsidiaries 107,289 — (16,279 ) 91,010 Equity in earnings of unconsolidated subsidiary – related parties 5,776 — 5,776 Net income $ 113,065 — $ (16,279 ) $ 96,786 Net income attributable to non-controlling interests and redeemable non-controlling interests of subsidiaries (4,017 ) — (4,017 ) Net income attributable to AmTrust Financial Services, Inc. $ 109,048 — $ (16,279 ) $ 92,769 Dividends on preferred stock (8,791 ) — (8,791 ) Net income attributable to AmTrust common stockholders $ 100,257 0.001 $ (16,279 ) 2 $ 83,978 Earnings per common share: Basic earnings per share $ 0.57 $ (0.09 ) $ 0.48 Diluted earnings per share $ 0.56 $ (0.09 ) $ 0.47 Dividends declared per common share $ 0.15 $ — $ 0.15 Weighted average common shares outstanding - basic 175,585 165,042 — 175,585 Weighted average common shares outstanding - diluted 177,927 168,360 — 177,927 Consolidated Statement of Comprehensive Income Three Months Ended March 31, 2016 As previously reported Adjustments As Restated Reference (in thousands) Net income $ 113,065 $ (16,279 ) $ 96,786 Other comprehensive (loss) income, net of tax: Foreign currency translation adjustments (47,845 ) 651 (47,194 ) 4 Change in fair value of interest rate swap 119 — 119 Unrealized gain on securities: Gross unrealized holding (loss) gain 124,720 2,932 127,652 8 Less tax expense 43,652 1,027 44,679 8 Net unrealized holding gain 81,068 1,905 82,973 3 Reclassification adjustment for investment loss included in net income, net of tax: Other-than-temporary impairment loss — — — Other net realized loss on investments (428 ) — (428 ) Reclassification adjustment for investment loss included in net income (428 ) — (428 ) Other comprehensive income, net of tax $ 32,914 $ 2,556 $ 35,470 Comprehensive income 145,979 (13,723 ) 132,256 Less: Comprehensive income attributable to non-controlling and redeemable non-controlling interest 4,017 — 4,017 Comprehensive income attributable to AmTrust Financial Services, Inc. $ 141,962 $ (13,723 ) $ 128,239 Consolidated Statement of Stockholders' Equity As of March 31, 2016 As previously reported Adjustment As Restated Reference (in thousands) Common stock $ 1,965 $ — $ 1,965 Preferred stock 626,250 — 626,250 Additional paid-in capital 1,381,282 — 1,381,282 Treasury stock (177,071 ) — (177,071 ) Accumulated other comprehensive income (loss) (97,348 ) (574 ) (97,922 ) 4, 8 Retained earnings 1,408,177 (198,401 ) 1,209,776 1 – 8 $ 3,143,255 $ (198,975 ) $ 2,944,280 Consolidated Statements of Cash Flows Three Months Ended March 31, 2016 As previously reported Adjustments As restated Reference (in thousands) Cash flows from operating activities: Net income $ 113,065 $ (16,279 ) $ 96,786 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 25,347 2,512 27,859 5 Net amortization of bond premium or discount 4,842 — 4,842 Equity earnings on investment in unconsolidated subsidiaries (5,776 ) (369 ) (6,145 ) 8 Gain on investment in life settlement contracts, net (10,730 ) — (10,730 ) Net realized gain on investments (7,975 ) — (7,975 ) Discount on notes payable 1,455 — 1,455 Stock based compensation 5,641 — 5,641 Bad debt expense 305 — 305 Foreign currency loss 35,673 2,560 38,233 4, 8 Gain on acquisition (9,678 ) — (9,678 ) Dividend received from equity investment — 369 369 8 Changes in assets – (increase) decrease: Premiums receivable (256,816 ) (14,504 ) (271,320 ) 8, 9 Reinsurance recoverable (72,607 ) (1,293 ) (73,900 ) 8 Deferred policy acquisition costs (57,559 ) 14,892 (42,667 ) 3 Prepaid reinsurance premiums (102,000 ) — (102,000 ) Other assets 124,952 1,256 126,208 1 – 9 Changes in liabilities – increase (decrease): Ceded reinsurance premium payable 203,594 — 203,594 Loss and loss expense adjustment reserves 271,070 — 271,070 Unearned premiums 263,749 341 264,090 8 Funds held under reinsurance treaties (30,984 ) — (30,984 ) Accrued expenses and other liabilities 192,883 24,195 217,078 1, 2, 6, 8, 9 Net cash provided by operating activities 688,451 13,680 702,131 Cash flows from investing activities: Purchases of fixed maturities, available-for-sale (870,349 ) — (870,349 ) Purchases of equity securities, available-for-sale (613 ) — (613 ) Purchases of equity securities, trading (54,382 ) — (54,382 ) Purchases of other investments (12,605 ) 7,164 (5,441 ) 8 Sales, maturities, paydowns of fixed maturities, available-for-sale 198,173 — 198,173 Sales of equity securities, available-for-sale 4,563 — 4,563 Sales of equity securities, trading 52,744 — 52,744 Sales of other investments 190 — 190 Net (purchases) of short term investments (17,926 ) (42,001 ) (59,927 ) 9 Net (purchases) of securities sold but not purchased (9,763 ) — (9,763 ) Receipt of life settlement contract proceeds 8,058 — 8,058 Acquisition of subsidiaries, net of cash obtained 3,814 — 3,814 Decrease in restricted cash and cash equivalents, net 20,823 — 20,823 Purchase of property and equipment (25,630 ) (15,392 ) (41,022 ) 5 Net cash used in investing activities (702,903 ) (50,229 ) (753,132 ) Consolidated Statements of Cash Flows Three Months Ended March 31, 2016 As previously reported Adjustments As restated Reference Cash flows from financing activities: Secured loan agreement payments (1,778 ) — (1,778 ) Common stock issuance 276 — 276 Common stock repurchase (14,668 ) — (14,668 ) Preferred stock issuance 139,070 — 139,070 Contingent consideration payments — (10,303 ) (10,303 ) 6 Stock option exercise and other (2,982 ) — (2,982 ) Dividends distributed on common stock (26,311 ) — (26,311 ) Dividends distributed on preferred stock (8,791 ) — (8,791 ) Net cash provided by financing activities 84,816 (10,303 ) 74,513 Effect of exchange rate changes on cash (4,052 ) — (4,052 ) Net increase in cash and cash equivalents 66,312 (46,852 ) 19,460 Cash and cash equivalents, beginning of year 931,970 71,946 1,003,916 1, 2, 4-9 Cash and cash equivalents, end of period $ 998,282 $ 25,094 $ 1,023,376 Supplemental Cash Flow Information Interest payments on debt $ 16,295 — $ 16,295 Income tax payments 5,467 — 5,467 Declared dividends on common stock 26,313 — 26,313 Consolidated Balance Sheet March 31, 2015 ASSETS As previously reported Adjustments As restated Reference (in thousands) Investments: Fixed maturities, available-for-sale, at fair value (amortized cost $4,292,658) $ 4,419,313 $ — $ 4,419,313 Equity securities, available-for-sale, at fair value (cost $96,261) 94,668 — 94,668 Equity securities, trading, at fair value (cost $29,353) 30,560 — 30,560 Short-term investments 42,668 (32,001 ) 10,667 9 Equity investment in unconsolidated subsidiaries – related parties 125,104 — 125,104 Other investments (related party $9,700) 45,627 — 45,627 Total investments 4,757,940 (32,001 ) 4,725,939 Cash and cash equivalents 997,007 32,001 1,029,008 8, 9 Restricted cash and cash equivalents 217,628 — 217,628 Accrued interest and dividends 42,952 — 42,952 Premiums receivable, net 2,134,647 83,918 2,218,565 8, 9 Reinsurance recoverable (related party $1,627,100) 2,544,549 — 2,544,549 Prepaid reinsurance premium (related party $1,047,486) 1,473,353 — 1,473,353 Other assets (related party $156,996; recorded at fair value $259,785) 1,050,804 421 1,051,225 1, 5, 8, 9 Deferred policy acquisition costs 651,884 (2,651 ) 649,233 3 Property and equipment, net 167,459 (8,876 ) 158,583 5, 8 Goodwill 458,042 — 458,042 Intangible assets 303,116 — 303,116 $ 14,799,381 $ 72,812 $ 14,872,193 LIABILITIES AND STOCKHOLDERS’ EQUITY Liabilities: Loss and loss adjustment expense reserves $ 5,886,149 $ — 5,886,149 Unearned premiums 3,704,419 — 3,704,419 Ceded reinsurance premiums payable (related party $533,234) 772,651 — 772,651 Accrued expenses and other liabilities (related party $167,975; recorded at fair value $33,189) 1,229,501 210,049 1,439,550 1, 2, 6, 8, 9 Debt (net of debt issuance cost of $12,295) 580,673 — 580,673 Total liabilities 12,173,393 210,049 12,383,442 Commitments and contingencies Redeemable non-controlling interest 922 — 922 Stockholders’ equity: Common stock, $0.01 par value; 300,000 shares authorized, 196,436 issued; 164,694 outstanding 1,964 — 1,964 Preferred stock, $0.01 par value; 10,000 shares authorized, 4,968 issued and outstanding 482,500 — 482,500 Additional paid-in capital 1,116,900 — 1,116,900 Treasury stock at cost; 31,562 shares (225,121 ) — (225,121 ) Accumulated other comprehensive income (loss) (2,348 ) 13,202 10,854 4, 8 Retained earnings 1,088,840 (150,439 ) 938,401 1, 2, 4, 5, 8 Total AmTrust Financial Services, Inc. equity 2,462,735 (137,237 ) 2,325,498 Non-controlling interest 162,331 — 162,331 Total stockholders’ equity 2,625,066 (137,237 ) 2,487,829 $ 14,799,381 $ 72,812 $ 14,872,193 Consolidated Statement of Income Three Months Ended March 31, 2015 As previously reported Adjustments As restated Reference (in thousands, except share data) Revenues: Premium income: Net written premium $ 1,043,189 $ — $ 1,043,189 Change in unearned premium (93,812 ) — (93,812 ) Net earned premium 949,377 — 949,377 Service and fee income (related parties - $17,404) 112,886 (10,767 ) 102,119 1 Net investment income 34,573 — 34,573 Net realized gain on investments 15,653 — 15,653 Total revenues 1,112,489 (10,767 ) 1,101,722 3,000 Expenses: 3,000 Loss and loss adjustment expense 613,283 — 613,283 Acquisition costs and other underwriting expenses (net of ceding commission - related party - $118,687) 231,676 1,105 232,781 2, 3, 5, 8 Other 98,457 2,503 100,960 1, 5, 7, 8 Total expenses 943,416 3,608 947,024 8,000 Income before other (expense) income, provision for income taxes, equity in earnings of unconsolidated subsidiaries and non-controlling interest 169,073 (14,375 ) 154,698 8,000 Other (expenses) income: 3,000 Interest expense (net of interest income - related party - $2,188) (10,255 ) (1,826 ) (12,081 ) 6 Loss on extinguishment of debt (4,714 ) — (4,714 ) Gain on investment in life settlement contracts net of profit commission 11,373 — 11,373 Foreign currency gain 39,954 (15,297 ) 24,657 4, 8 Total other (expenses) income 36,358 (17,123 ) 19,235 8,000 Income before provision for income taxes, equity in earnings of unconsolidated subsidiaries and non-controlling interest 205,431 (31,498 ) 173,933 8,000 Provision for income taxes 46,812 (10,319 ) 36,493 3,000 1, 2, 3, 4, 5, 6, 8 Income before equity in earnings of unconsolidated subsidiaries 158,619 (21,179 ) $ 137,440 Equity in earnings of unconsolidated subsidiary – related parties 5,529 — 5,529 Net income 164,148 (21,179 ) 142,969 8,000 Net (income) loss attributable to non-controlling interests and redeemable non-controlling interests of subsidiaries (4,083 ) — (4,083 ) Net income attributable to AmTrust Financial Services, Inc. $ 160,065 $ (21,179 ) $ 138,886 8,000 Dividends on preferred stock (5,369 ) — (5,369 ) Net income attributable to AmTrust common stockholders $ 154,696 $ (21,179 ) $ 133,517 Earnings per common share: Basic earnings per share $ 0.95 $ (0.13 ) $ 0.82 Diluted earnings per share $ 0.93 $ (0.13 ) $ 0.80 Dividends declared per common share $ 0.10 — $ 0.10 Weighted average common shares outstanding - basic 162,336 — 162,336 Weighted average common shares outstanding - diluted 166,874 — 166,874 Consolidated Statement of Comprehensive Income Three Months Ended March 31, 2015 As previously reported Adjustments As Restated Reference (in thousands) Net income $ 164,148 $ (21,179 ) $ 142,969 Other comprehensive (loss) income, net of tax: Foreign currency translation adjustments (65,353 ) 7,829 (57,524 ) 4 Change in fair value of interest rate swap 27 — 27 Unrealized gain on securities: Gross unrealized holding (loss) gain 11,185 1,418 12,603 8 Less tax expense 3,915 496 4,411 8 Net unrealized holding gain 7,270 922 7,000 8,192 Reclassification adjustment for investment gain (loss) included in net income, net of tax: Other-than-temporary impairment loss — — — Other net realized loss on investments (415 ) — (415 ) Reclassification adjustment for investment loss included in net income (415 ) — 7,000 (415 ) Other comprehensive (loss), net of tax $ (58,471 ) $ 8,751 $ (49,720 ) Comprehensive income 105,677 (12,428 ) 93,249 Less: Comprehensive income attributable to non-controlling and redeemable non-controlling interest 4,083 — 4,083 Comprehensive income attributable to AmTrust Financial Services, Inc. $ 101,594 $ (12,428 ) $ 89,166 Consolidated Statement of Stockholders' Equity As of March 31, 2015 As previously reported Adjustment As Restated Reference (in thousands) Common stock $ 1,964 $ — $ 1,964 Preferred stock 482,500 — 482,500 Additional paid-in capital 1,116,900 — 1,116,900 Treasury Stock (225,121 ) — (225,121 ) Accumulated other comprehensive income (loss) (2,348 ) 13,202 10,854 4, 8 Retained earnings 1,088,840 (150,439 ) 938,401 1, 2, 4, 5, 8 $ 2,462,735 $ (137,237 ) $ 2,325,498 Consolidated Statement of Cash Flows Three Months Ended March 31, 2015 As previously reported Adjustments As restated Reference (in thousands) Cash flows from operating activities: Net income $ 164,148 $ (21,179 ) $ 142,969 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 19,426 896 20,322 5 Net amortization of bond premium or discount 5,890 — 5,890 Equity earnings on investment in unconsolidated subsidiaries (5,529 ) — (5,529 ) Gain on investment in life settlement contracts, net (11,373 ) — (11,373 ) Net realized gain on investments (16,669 ) — (16,669 ) Non-cash write-down of investments 1,016 — 1,016 Discount on notes payable 1,389 — 1,389 Stock based compensation 4,914 — 4,914 Loss on extinguishment of debt 4,714 — 4,714 Bad debt expense 6,281 — 6,281 Foreign currency (gain) (39,954 ) 15,297 (24,657 ) 4 Changes in assets – (increase) decrease: Premiums receivable (289,546 ) (43,594 ) (333,140 ) 8, 9 Reinsurance recoverable (102,608 ) 95 (102,513 ) 8 Deferred policy acquisition costs (23,501 ) 3,529 (19,972 ) 3 Prepaid reinsurance premiums (170,505 ) — (170,505 ) Other assets (40,228 ) 81,420 41,192 1, 8, 9 Changes in liabilities – increase (decrease): Ceded reinsurance premium payable 89,550 — 89,550 Loss and loss adjustment expense reserves 174,000 — 174,000 Unearned premiums 232,986 (2,332 ) 230,654 8 Funds held under reinsurance treaties 18,984 — 18,984 Accrued expenses and other current liabilities 170,409 (12,106 ) 158,303 1, 2, 6, 8, 9 Net cash provided by operating activities 193,794 22,026 215,820 Cash flows from investing activities: Purchases of fixed maturities, available-for-sale (434,806 ) — (434,806 ) Purchases of equity securities, available-for-sale (15,351 ) — (15,351 ) Purchases of equity securities, trading (62,083 ) — (62,083 ) Purchases of other investments (27,233 ) 8,366 (18,867 ) 8 Sales, maturities, paydowns of fixed maturities, available-for-sale 292,961 (3,275 ) 289,686 9 Sales of equity securities, available-for-sale 9,285 — 9,285 Sales of equity securities, trading 60,268 — 60,268 Sales of other investments 13,337 — 13,337 Net sales of short term investments 41,540 32,001 73,541 9 Net sale of securities sold but not purchased 3,570 — 3,570 Receipt of life settlement contract proceeds 53,080 — 53,080 Acquisition of subsidiaries, net of cash obtained (118,464 ) — (118,464 ) Increase in restricted cash and cash equivalents, net (31,403 ) — (31,403 ) Purchase of property and equipment (21,906 ) (1,088 ) (22,994 ) 5 Net cash used in investing activities (237,205 ) 36,004 (201,201 ) Cash flows from financing activities: Revolving credit facility borrowings 200,000 — 200,000 Revolving credit facility payments (320,000 ) — (320,000 ) Secured loan agreement payments (1,733 ) — (1,733 ) Convertible senior notes payments (53,606 ) — (53,606 ) Common stock issuance 171,672 — 171,672 Preferred stock issuance 176,529 — 176,529 Consolidated Statement of Cash Flows Three Months Ended March 31, 2015 As previously reported Adjustments As restated Reference Contingent consideration payments — (4,178 ) (4,178 ) 6 Non-controlling interest capital contributions to consolidated subsidiaries, net 565 — 565 Stock option exercise and other 310 — 310 Dividends distributed on common stock (19,374 ) — (19,374 ) Dividends distributed on preferred stock (5,369 ) — (5,369 ) Net cash provided by financing activities 148,994 1 (4,178 ) 2,000 144,816 Effect of exchange rate changes on cash (11,326 ) — (11,326 ) Net increase in cash and cash equivalents 94,257 1 53,852 148,109 Cash and cash equivalents, beginning year 902,750 (21,851 ) 880,899 1,2, 4-9 Cash and cash equivalents, end of period $ 997,007 1 $ 32,001 $ 1,029,008 Supplemental Cash Flow Information Interest payments on debt $ 11,442 $ — $ 11,442 Income tax payments 96,916 — 96,916 Declared dividends on common stock 20,590 — 20,590 |
