Shares of AmTrust Financial Services, Inc. (AFSI) gained 0.04% in the after-market trading session after the property and casualty insurer announced a couple of acquisitions. The company acquired privately held Oryx Insurance Brokerage, Inc. and TMI Solutions, LLC or TIMS. Both the acquisitions were made in cash, validating the company’s solid liquidity.
AmTrust Financial has always focused on spreading its wings in workers' compensation insurance markets. The acquisition of Oryx Insurance, with which it has ties for over nine years, thus complements its portfolio. AmTrust Financial underwrote the majority of business as Oryx placed $80 million in premiums through over 135 agencies in 2014. The acquisition is expected to immediately contribute to AmTrust Financial’s results.
With respect to the other acquisition, Roswell, GA based TMI Solutions offers monthly billed warranty solutions for different consumer electronics as well as consumer protection services. Adding TMIS hence opens up new avenues to offer warranty products and services. Moreover, TMIS boasts attractive margins which would contribute to bottom-line growth at AmTrust.
AmTrust Financial undertook strategic acquisitions earlier too, to strengthen its performance. Last November, it inked a deal to buy CorePointe Insurance Company, a wholly owned subsidiary of CorePointe Group LLC. In October, the company closed the acquisition of Comp Options Insurance Company, Inc. This buyout widened its presence in one of the largest markets for workers' compensation insurance risks.
AmTrust Financial, a Zacks Rank #2 (Buy) insurer witnessed no earnings momentum in the last few weeks. With news of dual acquisitions that will be adding to its bottom line immediately, we expect analysts to revise their estimates higher, exerting upward pressure on the Zacks Rank.
It is to be noted, that AmTrust Financial is not the only insurer resorting to acquisitions to ramp up their growth profile. Of late, many insurers are treading the inorganic path and acquisitions are raging in the space. This week, 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.
Last month, 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. XL Group plc (XL) is in talk with Bermuda-based Catlin Group Ltd. to acquire the latter.
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