AmTrust Financial to Go Private for $2.7B

The buyout comes after a "rocky year" for the insurer, which was forced to restate its financials due to a series of accounting errors.
Matthew HellerMarch 2, 2018

After a turbulent year during which it restated its financials, insurer AmTrust Financial Services has agreed to be taken private in a $2.7 billion deal by a group of shareholders including its founding family, chief executive, and private equity funds.

George and Leah Karfunkel, whose family helped found AmTrust, and CEO Barry Zyskind currently own 55% of the company’s outstanding shares. They have formed a new entity, Evergreen Parent, with Stone Point Capital to acquire the remaining stock for $13.50 per share, representing a 12.8% premium to the Wednesday closing price.

“I believe that this transaction represents an exciting step forward for AmTrust, our employees, and the agents, brokers, partners, and customers we serve,” Zyskind said Thursday in a news release. “As a private enterprise, we will be able to focus on long-term decisions, without the emphasis on short-term results.”

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AmTrust, a Fortune 500 company, offers specialty property and casualty insurance products, including workers’ compensation, commercial automobile, general liability, and extended service and warranty coverage.

As Reuters reports, the go-private deal “comes after a rocky year for AmTrust, which grappled with a series of accounting errors that forced the company to restate three years of earnings and sent its shares sliding to multi-year lows.”

Amtrust’s accounting practices have been under investigation by the U.S. Securities and Exchange Commission.

According to Insurance Journal, the insurer has taken a number of initiatives to stabilize itself, including raising $300 million in new capital from the Zyskind family and selling its personal lines policy management system to National General Holdings for $200 million.

AmTrust also announced it would sell a majority equity interest in some of its U.S.-based fee business to private equity firm Madison Dearborn Partners.

The company swung to a loss of $174.7 million in the third quarter, compared to a profit of $80.7 million in the year-ago period. Its board unanimously approved the plan to go private.

“We believe the proposal delivers immediate and certain value for public shareholders at a significant premium to the unaffected share price,” said board member Don DeCarlo.