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Investors propose taking AmTrust private

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Private equity firm Stone Point Capital L.L.C. and the family that controls 43% of the shares in AmTrust Financial Services Inc. plan to take the insurer private.

In an announcement Tuesday, Stone Point, AmTrust Chairman and CEO Barry D. Zyskind, George Karfunkel and Leah Karfunkel proposed paying $12.25 per share in cash, which represents a 20.8% premium over AmTrust’s closing price on Jan. 8 and values the insurer at about $2.4 billion.

For the first nine months of 2017, AmTrust reported $3.89 billion net written premium, a 5% increase over the same period in 2016, and a loss of $146.2 million, compared with a profit of $291.8 million in the 2016 period.

Stone Point and the Karfunkel-Zyskind family will not proceed with the deal unless it is approved by a special committee of independent directors of AmTrust, the statement said.

“Stone Point and the Karfunkel-Zyskind Family believe the proposed transaction will provide AmTrust’s common stockholders with immediate liquidity and certainty of value at a significant premium to the current share price while allowing AmTrust to focus on the long term without the emphasis on short-term results,” the statement said.

New York-based AmTrust, which is the third-largest workers compensation insurer in the United States based on 2016 figures, weathered a tough year in 2017. It delayed the filing of its 10-K with the U.S. Securities and Exchange Commission early in the year, and in April reports surfaced that it was the subject of a federal investigation into its accounting practices.

The insurer said it was unaware of any investigation, and family members of its founders injected $300 million into the company in May.

In July, it bought $400 million in adverse development coverage, and the coverage was exhausted by November. A.M. Best Co. Inc. put AmTrust’s A financial strength rating under review with negative implications.

It also sold a majority stake in another of its businesses, which raised $950 million.