AmTrust Financial's Shares Gain on CorePointe Acquisition - Analyst Blog
AmTrust Financial Services, Inc.'s AFSI share price rose 0.85% after the company announced the takeover of CorePointe Insurance Company – a specialty property and casualty insurer.
AmTrust Financial had announced its intention to takeover CorePointe in Nov, 2014.
CorePointe - a wholly owned subsidiary of CorePointe Group LLC is a Michigan-based insurance company that promotes commercial package insurance products mainly to automobile and motorcycle dealerships and auto repair shops since 1964.
With this buyout, AmTrust Financial will now have access to CorePointe’s major commercial auto-related insurance products and established managing general agent (MGA) distribution that offers attractive product diversification.
Of late, Zacks Rank #2 (Buy) company has been adopting the inorganic route to expand its business. In January, the company acquired Oryx Insurance Brokerage, Inc. and TMI Solutions, LLC thereby spreading its wings in workers' compensation insurance markets. In 2014, the company acquired Florida-based Comp Options Insurance Company, Inc., Tower Renewal Rights from Tower Group International, Ltd and Insco Insurance Services, Inc.
Notably, the property and casualty insurer has been undertaking acquisitions in exchange of cash. This reflects its solid liquidity position with cash ($1.1 billion as of Dec 31, 2014, up 17%) which cushions its inorganic growth initiatives.
AmTrust Financial, however, is not the only insurer resorting to acquisitions to ramp up their growth profile. Of late, many insurers have been treading the inorganic path and acquisitions are raging in the space. Last month, HCC Insurance Holdings Inc. HCC closed the buyout of Producers Ag Insurance Group, Inc. from CUNA Mutual Group for $105 million in cash, marking its debut in crop insurance business. XL Group plc XL has also agreed to purchase Catlin Group Ltd., for $4.2 billion. In Dec 2014 ACE Limited ACE inked a deal to buy Fireman’s Fund – a high net worth personal lines insurance business in the U.S. – from German insurer Allianz.
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