19 March 2018Insurance

AmTrust posts $350m loss as it goes private

US specialty property/casualty insurer has posted a net loss of $348.9 million for 2017 after a net profit of $430.4 million in 2016 as the company prepares to go private.

Stone Point Capital, the Karfunkel Family, and the CEO of AmTrust Financial Services are acquiring the insurer in a transaction valued at approximately $2.7 billion.

Evergreen Parent, an entity formed by private equity funds managed Stone Point Capital, together with AmTrust CEO Barry Zyskind, George Karfunkel and Leah Karfunkel, will acquire the approximately 45 percent of the company's issued and outstanding common shares that the Karfunkel-Zyskind family does not presently own or control.

The move to go private is an attempt to fix issues at AmTrust without the pressure to present results quickly. “As a private enterprise, we will be able to focus on long-term decisions, without the emphasis on short-term results," Zyskind has said.

AmTrust’s expenses grew to $6.41 billion in 2017 from $4.94 billion in 2016, driven primarily by an increase in loss and loss adjustment expenses. The company registered a loss ratio of 80.8 percent for 2017 compared to 67.3 percent in 2016. Included in the 2017 figure was $419.0 million of prior-period adverse reserve development primarily in its small commercial business and specialty programme segments, which has led to re-underwriting, rate changes, and/or termination of certain specialty programs that generated the prior period adverse reserve development, according to the annual report. In addition, the increase was partially attributable to catastrophe losses and related reinstatement and accelerated premiums of $109.4 million.

AmTrust’s gross written premiums grew to $8.43 billion in 2017 from $7.95 billion in 2016. The combined ratio deteriorated to 112.9 percent in 2017 from 93.7 percent over the period.

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