This is a big first step in providing Risk Transfer policy holders with potentially “A-rated” paper. Learn more by reading below.
NEW YORK, Jan. 21, 2014 — AmTrust Financial Services, Inc. (Nasdaq:AFSI) (“the Company” or “AmTrust”) announced the receipt of regulatory approval to complete an agreement between a subsidiary of the Company and several Tower Group International, Ltd (“Tower”) subsidiaries to enter into a 100% quota share reinsurance agreement and provide a cut-through endorsement to (the “Cut Through Reinsurance Agreement”) at least 60% of Tower’s in force Commercial Lines policies and on most new and renewal Commercial Lines Business. AmTrust has agreed to accept 65% to 70% of unearned premium with respect to in-force Commercial Lines policies. The agreement is effective as of January 1, 2014 for losses occurring on or after January 1, 2014. The Company will pay a 20% ceding commission to Tower on all Tower premium subject to the Cut Through Reinsurance Agreement.
“AmTrust has successfully completed this important initial step of the transaction. Obtaining regulatory approval for the Cut Through Reinsurance Agreement allows us to work quickly to preserve the Commercial Lines Business 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,” commented Barry Zyskind, AmTrust’s President and CEO. “Tower’s Commercial Lines Business associated with the Cut Through Reinsurance Agreement will be a welcome addition to our growing organization and accretive to shareholder value.”
About the Tower transaction.
On January 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% 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.
For additional information on AmTrust’s transaction with Tower, please see AmTrust’s 8k filed with the Securities and Exchange Commission on January 7, 2014.
