Former AmTrust investor Krupa files complaint alleging antitrust violations
Krupa Global Investments (KGI), a Prague-based investment firm and formerly a significant shareholder of AmTrust Financial Services, has filed a complaint against Stone Point Capital and AmTrust before the European Commission Directorate-General for Competition.
The investor, previously known as Arca Capital, is alleging that AmTrust and Stone Point violated Article 101 of the Treaty on the Functioning of the European Union by committing antitrust violations.
KGI alleges the companies colluded in advance of the deal that took AmTrust private to devalue the company’s share price, enabling the deal to take place at a much lower price.
Though AmTrust and Stone Point are based in the US, they have significant EU operations through subsidiaries. On this basis, KGI is arguing they should be accountable to EU regulations.
Stone Point Capital, along with the Zyskind/Karfunkel family together formed Evergreen LP, which purchased and privatized AmTrust in 2018 in a transaction that KGI opposed.
Now, KGI contends that AmTrust and Stone Point potentially engaged in coordinating the market behaviour of AmTrust and insurance companies controlled by Stone Point Capital. It alleges that this behaviour includes an agreement on collective boycotting of AmTrust customers and an agreement not to compete in certain areas of the insurance business.
The second alleged infringement is that AmTrust, Stone Point, and insurance companies controlled by Stone Point exchanged sensitive business information with one another thereby again adversely impacting consumers.
It also claims that announcements of issues with historic financial reporting, which caused AmTrust’s share price to plummet, may have been caused by manipulation by AmTrust management. It contends that $14.75, the eventual price at which the company was sold, is far from a fair value for AmTrust and that fair value is in excess of $20 per share.
KGI is asking the EU Commission to initiate a formal investigation into the alleged infringements of Article 101. Furthermore, KGI has recently filed a complaint in Delaware Chancery Court against AmTrust alleging breach of fiduciary duty.
Pavol Krupa, Chairman of Krupa Global Investments, said: "AmTrust, Stone Point Capital and the Zyskind/Karfunkel family have disrespected investors through pushing an absurdly low-priced privatization transaction and disenfranchising minority shareholders. They have disrespected their customers through their anti-competitive activities, which have increased prices and decreased the quality of the product.
“Now, we believe they have brazenly disrespected the European Union through violating established antitrust regulations. We believe that a full investigation by EU regulators will show conclusively that AmTrust, Stone Point and the Zyskind/Karfunkel family have failed to follow EU regulations and that subsequently appropriate action will be taken."
Get all the latest re/insurance industry news with our daily newsletter - sign up here.
More of today's news
Aviva picks new CEO in 'highly competitive process'
Enstar, Maiden terminate $2.68bn loss portfolio transfer deal
Chubb and Aon’s Impact Forecasting to develop Manhattan terrorism risk model
Arch Capital unveils strategic leadership changes
R&Q seals acquisition of NN Group's Nationale-Nederlanden
Download our whitepaper: 'Why Automation & AI Matters For Commercial Lines'
