Item 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On October 31, 2012, AmTrust Financial Services, Inc. (the "Company"), through
its wholly-owned subsidiary IGI Group Limited, entered into a Sale and Purchase
Agreement (the "Purchase Agreement") with Ally Insurance Holdings, Inc. (the
"Seller"), pursuant to which the Company will acquire all of the issued and
outstanding shares of capital stock of Car Care Plan (Holdings) Limited
("CCPH"), a wholly-owned subsidiary of the Seller. CCPH is an administrator,
insurer and provider of auto extended warranty, guaranteed asset protection
(GAP), Wholesale Floorplan Insurance and other complementary insurance products.
CCPH underwrites its products and the products of third-party administrators
through its subsidiary Motors Insurance Company Limited, a UK insurer authorized
by the Financial Services Authority. CCPH has approximately 350 employees and is
headquartered in Thornbury, West Yorkshire in England with operations in the
United Kingdom, Europe, China, North America and Latin America.
The purchase price to be paid by the Company for the shares of CCPH will be the
consolidated tangible book value of CCPH as of the closing, subject to certain
adjustments, including reduction for (a) costs relating to the transfer and
reorganization of certain foreign subsidiaries, (b) liabilities of CCPH in
respect of certain pension plans maintained by CCPH, and (c) costs relating to
the transfer and maintenance of information technology. The Company currently
estimates that the adjusted purchase price will be approximately $70,000,000.
The Purchase Agreement contains customary covenants of the Seller, including,
among others, the Seller's covenant to operate the business of CCPH in the
ordinary course of business consistent with past practice between the execution
of the Agreement and the closing of the transaction. Significant other covenants
of the Seller include (i) not conducting or participating in a business that
competes with the business of CCPH for a period of three years after the
closing, subject to certain limited exceptions, and (ii) not soliciting for
employment certain key employees of CCPH for a period of three years after the
closing. The Seller and the Company make customary warranties in the Purchase
Agreement, which survive the Closing and generally terminate eighteen months
thereafter, and will provide indemnity for breaches of their respective
warranties. The Seller will also provide additional indemnity for liabilities of
CCPH in respect of certain pension plans previously maintained by affiliates of
CCPH, tax liabilities and other matters.
In connection with the closing of the transaction, the parties (or their
affiliates) have agreed to enter into certain other agreements, including a
Transition Services Agreement, pursuant to which the Seller will provide certain
transitional services to IGI Group Limited and the Company, and two Reinsurance
Agreements, pursuant to which affiliates of the Seller will reinsure certain
insurance contracts of such affiliates with affiliates of IGI Group Limited.
The transaction, which is expected to close in the first quarter of 2013, is
subject to customary closing conditions, including approval of the transaction
by the Financial Services Authority of the United Kingdom.
A copy of the Company's press release announcing the foregoing transaction is
attached hereto as Exhibit 99.1.
Item 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
Exhibit No. Description
99.1 Press Release, dated November 1, 2012, announcing the transaction.