In connection with the acquisition by ACAC of GMAC's U.S. consumer property and casualty insurance business
AmTrust Financial Services (AFSI) has entered into an agreement to make a strategic investment in American Capital Acquisition Corporation (ACAC) in connection with the acquisition by ACAC of GMAC’s U.S. consumer property and casualty insurance business.
AmTrust will initially invest approximately $42.5 million dollars in a Convertible Preferred Security.
GMAC’s consumer property and casualty insurance business is a writer of automobile coverages through independent agents in the US. GMAC’s U.S. consumer property and casualty insurance business had a net written premium in excess of $1 billion dollars in 2008 that encompassed all fifty states. Its coverages include standard/preferred auto, RVs, non-standard auto and commercial auto. The investment includes ten statutory insurance companies that write the automobile coverages for GMAC.
Barry Zyskind, president and CEO of AmTrust, said: This investment is not only a very attractive preferred equity investment for AmTrust, but it provides strong strategic advantages as well. Primarily it provides us immediate access to a new distribution force of 10,500 agents that will be equipped to cross sell our AmTrust products. Additionally, this investment will generate substantial fee income for AmTrust, from both the development of our unique IT platform and for asset management services, as well as generate underwriting profits through the contemplated reinsurance agreement.
The acquisition is subject to regulatory approval and is expected to close in the first quarter of 2010.