In an effort to strengthen its foothold in domestic surety
AmTrust Financial Services, Inc.
) inked a deal to buy the Insco Dico Group (Insco Dico) for about
$85 million. The market reacted positively to the news of the
impending acquisition, which came after a hiatus of four months.
As a result, the share price went up by 2.1% to close at $39.80
AmTrust Financial intends to deploy working capital to finance
the purchase consideration. The purchase consideration of $85
million is $7.0 million above its tangible book value. The
acquisition is expected to culminate within the next six months,
subject to closing conditions.
Insco Dico's subsidiaries - Developers Surety and Indemnity
Company and Indemnity Company of California offers surety
insurance to developers and contractors across the U.S.
Another subsidiary, Builders Insurance Services, markets general
liability insurance policies to contractors in many of the
The addition of Insco Dico widens AmTrust Financial's insurance
products suite, also adding to its distribution capabilities.
Furthermore, the company expects improvements in the economy and
the housing market to generate greater demand for Insco Dico's
surety insurance products. This, in turn will benefit AmTrust
Financial's product portfolio and subsequently, ensure a steady
Earlier on Jul 29, 2013, AmTrust Financial announced that one of
its subsidiaries agreed to purchase Sagicor Europe Limited from
Sagicor Financial Corporation and its wholly-owned subsidiaries
(SEL), for about $86.1 million (£56 million).
AmTrust Financial has been keenly adopting the inorganic route to
fortify its product portfolio. By far in 2013, the property and
casualty insurer has completed four acquisitions. In May, it
acquired Mutual Insurers Holding Company and its subsidiaries,
while its subsidiary AMT Warranty Corp. acquired CPPNA Holdings,
Inc. for about $0.04 million.
Earlier in April, it had acquired Sequoia Insurance Company
and its subsidiaries for $0.06 million. In February, IGI Group
Limited, the subsidiary of AmTrust Financial, had acquired Car
Care Plan (Holdings) Limited.
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Several other property and casualty insurers are also adopting
the inorganic route to ramp up their growth. In June,
The Travelers Companies, Inc
) has proposed the acquisition of The Dominion of Canada General
Insurance Company for a cash consideration of $1.1 billion. This
acquisition was directed to strengthen the former's foothold in
In an effort to strengthen mortgage services business,
Fidelity National Financial Inc
) also inked a deal in May to acquire
Lender Processing Services Inc
) for $2.9 billion.
There was no earnings momentum in the last 30 days. With optimism
over the current acquisition, we expect analysts to pull their
estimates upward, thereby exerting upward pressure on the Zacks
Rank. AmTrust Financial carries a Zacks Rank #3 (Hold).