American Capital Completes Acquisition of GMAC Subsidiaries

American Capital Acquisition Corp. and its minority partner, insurance holding company AmTrust Financial Services, said they've completed the acquisition of 10 GMAC subsidiaries in the U.S. consumer property/casualty insurance sectors.

Financial details were not disclosed and attempts made to all three companies for comment were not immediately successful.

GMAC said it will remain headquartered in Winston-Salem, N.C., under the direction of new Chief Executive Officer Larry Pentis, according to a statement. Formerly with Massachusetts-based property/casualty insurer Commerce Group, Pentis will head a work force of about 900 employees.

The deal gives ACAC and AmTrust access to GMAC's network of 10,500 agents in 12 markets, as well as exclusive relationships with 23 affinity partners. GMAC said its U.S. consumer property/casualty business had net written premium in excess of $1 billion in 2008. It sells policies in the personal automobile, nonstandard and commercial auto, and the motorcycle and RV markets in 47 states and Washington, D.C.

According to BestLink, which provides online access to A.M. Best's Global Insurance & Banking database, GMAC had $1.53 billion in U.S. total auto direct premium written in 2008, placing it 19th among companies writing business in the sector.

GMAC said its insurance dealer products and services group and other international personal lines operations were not part of the deal. Its personal lines unit also has retained the right to use the name GMAC Insurance in association with its remaining insurance operations while a strategic review of all brand marketing is conducted.

Hammered by the financial crisis, GMAC is selling various lines to regain financial stability. The insurer has posted seven quarters of losses in the past two years and received two injections of bailout capital from the federal government to stay afloat (BestWire, Dec. 30, 2008).

American Capital Acquisition Corp., is an acquisition arm of investment broker American Capital Partners LLC, based in Hauppauge, N.Y. AmTrust, headquartered in New York City, is a multinational insurance holding company. The company offers specialty property/ casualty insurance, including workers' compensation, commercial auto and general liability; extended service and warranty coverage.

AmTrust owns and operates 11 insurance companies. Eight are domiciled in the United States and the remaining three are foreign. Its various operating companies currently have Best's Financial Strength Ratings of A- (Excellent).

GMAC Insurance Group currently has a Best's Financial Strength Rating of B++ (Good).

In midafternoon trading March 2, shares of AmTrust Financial Services (NASDAQ: AFSI) were priced at $14.47, up 1.69% from their previous close. Shares of Maiden Holdings (NASDAQ: MHLD) were priced at $7.17, unchanged from their previous close.

(Dennis Gorski, Best's Review managing editor)