AmTrust Financial Services, Inc. announced Tuesday that regulators approved an agreement between a subsidiary and several subsidiaries of Tower Group International, Ltd.
Under the approved agreement, AmTrust will provide a 100 percent quota share reinsurance agreement and provide a cut-through endorsement on most of Tower’s commercial lines business inforce policies.
AmTrust has agreed to accept 65-70 percent of unearned premium with respect to inforce Commercial Lines policies.
The agreement is effective as of Jan. 1, 2014 for losses occurring on or after Jan. 1, 2014.
AmTrust will pay a 20 percent ceding commission to Tower on all Tower premium subject to the cut-through Reinsurance Agreement.
In a statement about the approval, Barry Zyskind, AmTrust’s President and CEO, said, “Obtaining regulatory approval… allows us to work quickly to preserve the commercial lines business [that] Tower has built over the last 15 years. We look forward to working with Tower to provide our solid balance sheet, proprietary technology and extensive industry experience to Tower’s commercial lines business,” he said, adding that the business will be “a welcome addition to our growing organization and accretive to shareholder value.”
On Jan. 6, 2014, AmTrust announced that a subsidiary of the Company had entered into an agreement with Tower to provide a cut-through reinsurance agreement as well as other agreements to transition a majority of Tower’s commercial lines business to AmTrust.
Simultaneously with this agreement, ACP Re Ltd, (“ACP Re”), a privately held Bermuda corporation, and Tower pursuant to which a subsidiary of ACP Re has agreed to acquire 100 percent of the outstanding stock of Tower for $3.00 per share and merge with Tower, subject to regulatory and shareholder approval.
In addition, National General Holdings Corp., a specialty personal lines property/casualty insurer, agreed to acquire the renewal rights and assets of the personal lines insurance operations of Tower.
AmTrust Financial Services, Inc., headquartered in New York City, is a multinational insurance holding company, which, through its insurance carriers, offers specialty property and casualty insurance products, including workers’ compensation, commercial automobile and general liability; extended service and warranty coverage.
Source: AmTrust Financial Services, Inc.
Related article: AmTrust Acquiring Tower Commercial Renewals; Tower Merging with ACP Re