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AmTrust Financial Services Inc., a New York-based insurance holding company, is reportedly the subject of a federal investigation into its accounting practices aided by an auditor who worked for accounting firm BDO USA L.L.P., which was auditing the company in 2014.
AmTrust units provide property/casualty insurance coverage, including workers compensation, for small to mid-sized businesses. The company reported $5.92 billion in direct written premiums in 2015, including $2.97 billion in workers comp direct written premiums, according to a report released last month by rating agency A.M. Best Co. Inc.
The Wall Street Journal reported Tuesday that a BDO auditor secretly taped conversations with colleagues about an audit of AmTrust using a recording device disguised as a Starbucks gift card. The auditor was cooperating as a whistleblower with the U.S. Securities and Exchange Commission and taped the conversations on behalf of the FBI, according to the article.
In a statement provided to Business Insurance, AmTrust said it is unaware of any federal investigation and has not been contacted by the FBI. The company also said it is not aware of any special examination by the New York Department of Financial Services, which the Wall Street Journal article said is also ongoing.
The auditor who conducted the recordings now works for a group associated with forensic accountant Harry Markopolous, which aims to profit from rewards handed out under the SEC’s Whistleblower Program, the article says.
“AmTrust has no direct knowledge of any of the individuals, named or unnamed, referenced in the article and is certainly not aware that they have any credibility with respect to their understanding of AmTrust or its regulators,” the statement said. The company said it was contacted by the Wall Street Journal following the filing of its 2016 annual report with the SEC and responded to questions related to short seller complaints about the company.
“There is nothing in today’s Wall Street Journal article in terms of the company’s operations or financial results that is different from these old, recycled short seller themes,” the company said.
AmTrust Financial Services Inc. has purchased Mutual Insurers Holding Co. and its subsidiary, First Nonprofit Insurance Co., the companies announced Tuesday.