AmTrust Financial Services Inc. said it will snatch up a a workers compensation insurer affiliated with Blue Cross & Blue Shield of Florida (Florida Blue) in a bid to add more low-hazard risks to its roster.
The New York-based multinational insurance holding company isn’t disclosing its purchase price for Comp Options Insurance Company, also known as OptaComp. But AmTrust said it will pay cash, and that the deal is expected to close in fall 2014.
Why is AmTrust moving to grab this company? It’s all about synergy. AmTrust President and CEO Barry Zyskind said in a statement that OptaComp offers a “complimentary target market of low-hazard workers compensation insurance risks.” AmTrust said that both companies market similarly, targeting small businesses that have a low-hazard risk profile. OptaComp also relies on a network of independent agents to sell its coverage options. OptaComp is Florida-based, and generated $60 million in workers compensation insurance premium in Florida over the last 12 months, AmTrust said in its deal announcement.
This isn’t just an acquisition, and both AmTrust and Florida Blue will likely work together in the future. Zyskind said he expects to evaluate other opportunities to work with Florida Blue, and find ways to tap into its “extensive sales network” and its approaches to managing medical costs.
Workers compensation is an important part of AmTrust’s product line. Through its insurance carriers, the company also offers specialty property and casualty coverage, commercial automobile and general liability; and extended service and warranty coverage.
Meanwhile, AmTrust is gearing up to raise significant money, which could indicate plans for more acquisitions down the line. The company said on June 25 that it had priced an underwritten public offering of 4 million of its depository shares designed to raise$100 million in gross proceeds. Net money raised will go toward “general corporate purposes,” AmTrust said.