Enstar, PE firm acquire stakes in AmTrust

Bermuda-based insurance group Enstar and private equity firm Madison Dearborn Partners (MDP) are taking a stake in AmTrust Financial Services.

The move is part of the plan to take AmTrust private. Earlier in June Amtrust stockholders approved the proposed amended merger transaction which will take the insurer specialized in the coverage for small businesses private.

As part of the plan, Evergreen Parent, an entity formed by private equity funds managed by Stone Point Capital, together with Barry Zyskind, chairman and CEO of AmTrust, George Karfunkel and Leah Karfunkel, would be acquiring the approximately 45 percent of the company's issued and outstanding common shares that the Karfunkel-Zyskind Family and certain of its affiliates and related parties do not presently own or control.

The proposed transaction values the fully diluted equity of AmTrust at approximately $2.95 billion, excluding AmTrust's outstanding preferred stock.

Under the new agreement, Madison Dearborn Partners and Enstar will participate in a portion of the previously disclosed take-private purchase of approximately 45 percent of the issued and outstanding shares of common stock of AmTrust Financial Services. 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.

"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 Enstar CEO Dominic Silvester.

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.

Vahe Dombalagian, a managing director on the MDP Financial & Transaction Services team, commented: "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 US fee businesses, which is now called The Amynta Group, we have come to know AmTrust and the management team well.

"With this investment we are confident in AmTrust's ability to continue serving its partners, brokers, agents and clients through innovation and service excellence." Dombalagian added.

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