A bid is afoot to take AmTrust Financial Services private.

Stone Point Capital Partners, along with AmTrust Chairman and CEO Barry Zyskind and Director George Karfunkel (and his wife, Leah Karfunkel), have announced a proposed plan to acquire all outstanding shares of AmTrust that they don’t already own. A spokesperson confirmed that the bid, if accepted by the AmTrust board of directors and approved by shareholders, would take the New York-based multinational property/casualty insurer private.

The Karfunkel-Zyskind family owns or controls about 43 percent of outstanding shares of AmTrust common stock. They propose paying $12.25 per share for the rest of the company, a nearly 21 percent premium over AmTrust’s closing stock price on Jan. 8, 2018.

According to the announcement of the proposed share purchase, the idea behind the bid to take AmTrust private is designed, in part, to allow the carrier “to focus on the long term without the emphasis on short-term results.”

Expectations are that a special committee of independent AmTrust directors will consider the proposed transaction and then make a recommendation to the full board. Plans involve the special committee using Willkie Farr & Gallagher LLP as an independent legal advisor to the special committee, and independent financial advisors will also help review the proposed share purchase.

For AmTrust to go private, the special committee must approve the proposed share purchase and shareholders outside of the Karfunkel-Zyskind family must also sign off on the idea. If the bid to go private does not go forward, “the Karfunkel-Zyskind family intend to continue as long-term stockholders of AmTrust,” according to their announcement.

A Busy Period

A move to take AmTrust private would cap a tumultuous period for the company.

In March, AmTrust delayed its 2016 annual report by a few weeks so it could conduct an audit and restate financial statements for the year, along with related disclosures for 2014 and 2015. After attributing the delay to its former independent auditor BDO USA, the company said it boosted its internal financial controls and also created a chief accounting officer position.

The insurer also took a number of initiatives over the last year to stabilize itself, including raising $300 million in new capital from the Zyskind family and the sale of its personal lines policy management system to National General Holdings for $200 million. As well, the company expected to make about $950 million by selling a majority equity interest in some of its U.S.-based fee business to private equity firm Madison Dearborn partners.

For the 2017 third quarter, AmTrust lost $174.7 million, compared to $80.7 million in net income during the 2016 third quarter. The company’s combined ratio also reached 134.4 for the quarter, compared to 93.2 in Q3 2016. Part of the issue stemmed from hurricanes and other extreme weather events, though Zyskind at the time said AmTrust was continuing to focus on promoting longer-term stability, raising money and improving its balance sheet.

Source: Stone Point Capital LLC/Karfunkel-Zyskind Family

Topics Carriers