Insurer AmTrust Unveils $2.7 Billion Plan to Go Private

March 1, 2018 - As promised last month, the majority shareholders of AmTrust Financial Services Inc. have set forth a $2.7 billion plan to take the insurer private.

The deal is being funded by founding family members and shareholders George and Leah Karfunkel along with its current CEO Barry Zyskind and private equity funds from Stone Point Capital. The Karfunkels and Zyskind currently own 55 percent of AmTrust.

The deal is being funded by founding family members and shareholders George and Leah Karfunkel along with its current CEO Barry Zyskind and private equity funds from Stone Point Capital. The Karfunkels and Zyskind currently own 55 percent of AmTrust.

A newly-formed entity, Evergreen Parent, will pay $13.50 in cash per AmTrust share, a 12.8 percent premium to the stock’s Wednesday closing price, buying up the 45 percent of the insurer they do not already control. The $13.50 price represents a premium of 33 percent to the stock price on Jan. 9, 2018, the last trading day before the idea of acquiring all of the outstanding common shares of AmTrust was first proposed.

“As a private enterprise, we will be able to focus on long-term decisions, without the emphasis on short-term results,” Zyskind said in a statement.

AmTrust has had a tumultuous year that included delaying its 2016 annual report and then restating its financial statements for that year and 2014 and 2015. The company then said it boosted its internal financial controls.

The insurer took a number of initiatives over the past year 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.

The company also announced plans 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. The company cited losses from hurricanes and other extreme weather. Meanwhile Zyskind said AmTrust was focused on promoting longer-term stability, raising money and improving its balance sheet.
 
AmTrust’s board of directors has unanimously approved the plan to go private based upon the unanimous recommendation of a special committee composed of independent directors not affiliated with the Karfunkel-Zyskind Family.

“We believe the proposal delivers immediate and certain value for public shareholders at a significant premium to the unaffected share price and we encourage public shareholders to support the transaction,”said Don DeCarlo, chairman of the special committee, said. ”

Zyskind noted that 2018 marks the 20th anniversary of AmTrust’s founding.