Madison Dearborn Partners and Enstar Group Ltd agreed to invest $350 million to acquire a minority stake in AmTrust Financial Services Inc. In June, shareholders approved the $2.95 billion take private of AmTrust from Stone Point Capital and the Karfunkel-Zyskind family. AmTrust, of New York, is a property and casualty insurance company. Madison Dearborn’s and Enstar’s investment is expected to reduce the Stone Point’s and Karfunkel-Zyskind’s equity in the take private.
Madison Dearborn Partners and Enstar Group Limited Enter Into Agreements with Evergreen Parent L.P. to Participate in Portion of Equity Financing for Take-Private Transaction of AmTrust Financial Services
NEW YORK, July 24, 2018 /PRNewswire/ — Evergreen Parent, L.P. (“Evergreen”), an entity formed by private equity funds managed by Stone Point Capital LLC (“Stone Point”) and the Karfunkel-Zyskind Family, has entered agreements with an entity affiliated with private equity firm Madison Dearborn Partners (“MDP”) and Enstar Group Limited (NASDAQ: ESGR) (“Enstar”). Under the terms of this agreement, each of MDP and Enstar will participate in a portion of the previously disclosed take-private purchase of approximately 45% of the issued and outstanding shares of common stock of AmTrust Financial Services, Inc. (NASDAQ: AFSI) (“AmTrust”) that the Karfunkel-Zyskind Family and certain of its affiliates and related parties do not presently own or control. MDP and Enstar will own a minority equity position in AmTrust once the take-private transaction is completed, with Stone Point and the Karfunkel-Zyskind Family owning the balance.
MDP, based in Chicago, is a leading private equity investment firm in the United States, with significant insurance industry experience. Enstar, based in Bermuda, is a multi-faceted insurance group, with over $15.6 billion in assets, that offers innovative capital release solutions and specialty underwriting capabilities through its network of group companies.
Subject to the terms and conditions of their respective agreements with Evergreen, MDP and Enstar will collectively contribute a total of $350 million to Evergreen in exchange for equity interests in Evergreen to partially fund a portion of the take-private transaction of AmTrust. The previously disclosed equity commitments of an investment fund affiliated with Stone Point and an investment entity controlled by the Karfunkel-Zyskind Family in the take-private transaction, will be reduced proportionately as a result of the participation by MDP and Enstar in the equity financing.
As previously disclosed in the amended merger agreement, the proposed transaction values the fully diluted equity of AmTrust at approximately $2.95 billion, excluding AmTrust’s outstanding preferred stock. The take-private transaction was approved by AmTrust’s stockholders on June 21, 2018, and is expected to close during the second half of 2018, subject to the satisfaction of customary closing conditions, including approval by regulatory authorities.
“We are excited to join with Enstar, the Karfunkel-Zyskind Family, and Stone Point and have the opportunity to invest in AmTrust itself. Following our acquisition earlier this year of a number of AmTrust’s U.S. fee businesses, which is now called The Amynta Group, we have come to know AmTrust and the management team well,” said Vahe Dombalagian, a Managing Director on the MDP Financial & Transaction Services team. “With this investment we are confident in AmTrust’s ability to continue serving its partners, brokers, agents and clients through innovation and service excellence.”
“We are pleased to partner with the Karfunkel-Zyskind Family, Stone Point, and MDP in this investment opportunity, and believe that AmTrust will benefit from this combination of experienced investors,” said Dominic Silvester, director and Chief Executive Officer of Enstar Group Limited.
About AmTrust Financial Services, Inc. AmTrust Financial Services, Inc., a multinational insurance holding company headquartered in New York, offers specialty property and casualty insurance products, including workers’ compensation, commercial automobile, general liability and extended service and warranty coverage through its primary insurance subsidiaries rated “A-” (Excellent) by A.M. Best. AmTrust is included in the Fortune 500 list of largest companies. For more information about AmTrustvisit www.amtrustfinancial.com.
About Stone Point Capital
Stone Point Capital LLC (www.stonepoint.com) is a financial services-focused private equity firm based in Greenwich, CT. The firm has raised and managed seven private equity funds — the Trident Funds — with aggregate committed capital of approximately $19 billion. Stone Point targets investments in the global financial services industry, including investments in companies that provide outsourced services to financial institutions, banks and depository institutions, asset management firms, insurance and reinsurance companies, insurance distribution and other insurance-related businesses, specialty lending and other credit opportunities, mortgage services companies and employee benefits and healthcare companies.
About Madison Dearborn Partners, LLC
Madison Dearborn Partners, LLC (MDP), based in Chicago, is a leading private equity investment firm in the United States. Since MDP’s formation in 1992, the firm has raised seven funds with aggregate capital of approximately $23 billion and has completed approximately 130 investments. MDP is currently investing out of its most recent fund, $4.4 billion MDCP Fund VII, in businesses across a broad spectrum of industries, including financial and transaction services; basic industries; business and government services; health care; and telecom, media and technology (TMT) services. For more information, please visit http://www.mdcp.com.
About Enstar Group Limited
Enstar is a multi-faceted insurance group, with over $15.6 billion in assets, that offers innovative capital release solutions and specialty underwriting capabilities through its network of group companies in Bermuda, the United States, the United Kingdom, Continental Europe, Australia, and other international locations. Enstar is a market leader in completing legacy acquisitions, having acquired over 80 companies and portfolios since its formation in 2001. Enstar’s active underwriting businesses include the StarStone group of companies, an A- rated global specialty insurance group with multiple global underwriting platforms, and the Atrium group of companies, which manage and underwrite specialty insurance and reinsurance business for Lloyd’s Syndicate 609. For further information about Enstar, see www.enstargroup.com.
Forward Looking Statements
This press release contains statements regarding the proposed transaction that may be deemed to be “forward-looking statements” within the meaning of applicable securities laws and the Karfunkel-Zyskind Family, Stone Point or Enstar may make related oral, forward-looking statements on or following the date hereof. Forward-looking statements, by their nature, are subject to a variety of inherent risks and uncertainties that could cause actual results to differ materially from the results projected. Many of these risks and uncertainties cannot be controlled by the Karfunkel-Zyskind Family, Stone Point or Enstar and include the possibility that the proposed transaction may not be completed on the terms described in this press release or at all, including as a result of changes in the business or prospects of AmTrust. Any forward-looking statements in this press release are made only as of the date of this press release. None of the Karfunkel-Zyskind Family, Stone Point, MDP or Enstar assumes any obligation to publicly update any forward-looking statements except as required by law. No information contained on any website referenced in this press release is incorporated by reference herein.