Wally, if you follow the IJ on mergers and acquistions, you will find a lot of this activity going on all the time. The biggest recent acquisition was ACE buying Chubb for about $28 Billion.
Republic is a very good regional carrier that I represent. It is a problem when they keep getting sold every few years. Delek bought them several years ago, then sold majority interest to an investor group and now they are getting gobbled up by AmTrust. Some of the employees are more than a little concerned for their jobs. Mergers and acquisitions usually result in a new management team and a lot of good employees are scrambling to find work.
A year or so ago, the NY Dept. of Fin. Services came down hard on AmTrust for the “significant recent growth in AmTrust’s gross written premium and the likely further future growth”, putting some controls on them and requiring them to take certain steps.
Anyone know to what extent they’ve complied with that order? Seems like they just keep going.
I have no idea but agree they are buying many players that price the business very thin (from what I have seen in the marketplace). I would assume they are going to have integration/execution risks with so many deals and keeping them on pace to perform.
Republic has slowly gotten smaller and smaller. They’ve struggled to be profitable in their core competencies. Numerous agency reductions. Numerous layoffs. Bought and sold. New lines of business. New products. New markets. More and more load to carry. Tough to be a profitable regional carrier. Too much expense.
Well, I got another bulletin and Republic received a Best rating of A- with positive reservations after AmTrust announced. I wonder what the rating would have been had AmTrust not come riding in to the rescue. A $6 Billion company with $16 Billion in assets is a pretty strong player. It will be interesting to see where this goes and whether the Republic brand survives or it is all under AmTrust in the near future.
They purchased Sequoia Insurance Company from JP Morgan in CA a few years ago at a price lower than the book value. They used most of their home office staff to replace actuarial and many accounting functions. They eliminated the agriculture book. Ends up being a more efficient model with more focus.
I know from experience it won’t be the same company to the employees. If they keep you and that could be a big if, they take away vacation time. Everyone only has 2 weeks vacation. You may have to reapply for a job and then at lower pay. They are not known for taking care of their employees
Well, I suppose that many current Republic Group people will consider applying at Liberty Mutual who is nearing completion of a nearly 1 million sq ft building in Plano. They say up to 4,000 employees will be needed there. It sounds to me like Liberty Mutual may be thinking about moving their Home Office to Plano. That is a huge investment.
What a weird answer! A company makes a huge investment in a building, announces up to 4,000 employees required to man it and you speculate that they might move to Switzerland?????? By the way, State Farm has cut their Illinois home office size down significantly and has expanded the office in DFW tremendously. Why would they want to remain in Illinois with its multitude of problems and excessive taxation? Taxachusetts is much the same way.
AmTrust, who writes through MGAs, either has a problem with maintaining statutory policyholders surplus v. writing ratios or they are having IBNR problems. AmTrust seems to be everywhere and seems to write just about everything. Like many TX based companies of their ilk who preceeded them over the years, they retain little, cede a ton to reinsurers and struggle to write ahead of their losses. At the beginning of their run they pruned their MGAs but that seems to have ceased in the past year. The problem with their game is that eventually they have to retain more or begin to use alien reinsurers for which cessions they cannot take credit on their convention statements. That opens up a large who in their statements and places those liabilities squarely back onto the company. Super aggressive growth insurers are like teenagers who think they know it all and that they are pulling a fast one on their elders. Eventually they find out that they weren’t as smart as they thought and they pay for their indiscretions. In the insurance industry that equates to the stupid reinsurers all being burned and the standing ones being unwilling to support such continued nonsense. AmTrust, like Tower, Clarendon and others will fall and although it will surprise many people those of us old guys who know a pig in a poke won’t shed a tear.
Seen, I hate to disagree, but AmTrust Group is HQ in NY, not Texas. They own 15 domestic companies and several foreign companies. They do write through Independents as well with the old Unitrin Group paper. What I am concerned about is what they will do with Republic Group. Something smells a bit fishy on this acquisition and Republic had to be somewhat troubled not to bring more in this sale.
Yes, I think if AM Best rated them prior to this sale, they might have been put on supervision. It is really too bad. I know a lot of good people at Republic and I think that new CEO they had was responsible for the mess.
Is AmTrust the new smartest-guy-in-the-room on the next big disaster?
I meant “or” the next big disaster, not “on.” I really don’t know these guys, but they are buying up some of the smaller players.
Wally, if you follow the IJ on mergers and acquistions, you will find a lot of this activity going on all the time. The biggest recent acquisition was ACE buying Chubb for about $28 Billion.
Republic is a very good regional carrier that I represent. It is a problem when they keep getting sold every few years. Delek bought them several years ago, then sold majority interest to an investor group and now they are getting gobbled up by AmTrust. Some of the employees are more than a little concerned for their jobs. Mergers and acquisitions usually result in a new management team and a lot of good employees are scrambling to find work.
When an investor group buys a company, it will inevitably be sold or put up for an IPO.
A year or so ago, the NY Dept. of Fin. Services came down hard on AmTrust for the “significant recent growth in AmTrust’s gross written premium and the likely further future growth”, putting some controls on them and requiring them to take certain steps.
Anyone know to what extent they’ve complied with that order? Seems like they just keep going.
I have no idea but agree they are buying many players that price the business very thin (from what I have seen in the marketplace). I would assume they are going to have integration/execution risks with so many deals and keeping them on pace to perform.
sounds like another Tower in the making
Yes, they bought Tower. That was the company that I was thinking of. I guess if the price is right they can make money.
Republic has slowly gotten smaller and smaller. They’ve struggled to be profitable in their core competencies. Numerous agency reductions. Numerous layoffs. Bought and sold. New lines of business. New products. New markets. More and more load to carry. Tough to be a profitable regional carrier. Too much expense.
Well, I got another bulletin and Republic received a Best rating of A- with positive reservations after AmTrust announced. I wonder what the rating would have been had AmTrust not come riding in to the rescue. A $6 Billion company with $16 Billion in assets is a pretty strong player. It will be interesting to see where this goes and whether the Republic brand survives or it is all under AmTrust in the near future.
They purchased Sequoia Insurance Company from JP Morgan in CA a few years ago at a price lower than the book value. They used most of their home office staff to replace actuarial and many accounting functions. They eliminated the agriculture book. Ends up being a more efficient model with more focus.
I know from experience it won’t be the same company to the employees. If they keep you and that could be a big if, they take away vacation time. Everyone only has 2 weeks vacation. You may have to reapply for a job and then at lower pay. They are not known for taking care of their employees
Well, I suppose that many current Republic Group people will consider applying at Liberty Mutual who is nearing completion of a nearly 1 million sq ft building in Plano. They say up to 4,000 employees will be needed there. It sounds to me like Liberty Mutual may be thinking about moving their Home Office to Plano. That is a huge investment.
Plano is not nearing completion. They just broke ground with about a 2 year completion horizon. Probably count on 3.
Doubt Liberty will leave Boston. Might go to Switzerland though ;^)
What a weird answer! A company makes a huge investment in a building, announces up to 4,000 employees required to man it and you speculate that they might move to Switzerland?????? By the way, State Farm has cut their Illinois home office size down significantly and has expanded the office in DFW tremendously. Why would they want to remain in Illinois with its multitude of problems and excessive taxation? Taxachusetts is much the same way.
AmTrust, who writes through MGAs, either has a problem with maintaining statutory policyholders surplus v. writing ratios or they are having IBNR problems. AmTrust seems to be everywhere and seems to write just about everything. Like many TX based companies of their ilk who preceeded them over the years, they retain little, cede a ton to reinsurers and struggle to write ahead of their losses. At the beginning of their run they pruned their MGAs but that seems to have ceased in the past year. The problem with their game is that eventually they have to retain more or begin to use alien reinsurers for which cessions they cannot take credit on their convention statements. That opens up a large who in their statements and places those liabilities squarely back onto the company. Super aggressive growth insurers are like teenagers who think they know it all and that they are pulling a fast one on their elders. Eventually they find out that they weren’t as smart as they thought and they pay for their indiscretions. In the insurance industry that equates to the stupid reinsurers all being burned and the standing ones being unwilling to support such continued nonsense. AmTrust, like Tower, Clarendon and others will fall and although it will surprise many people those of us old guys who know a pig in a poke won’t shed a tear.
Seen, I hate to disagree, but AmTrust Group is HQ in NY, not Texas. They own 15 domestic companies and several foreign companies. They do write through Independents as well with the old Unitrin Group paper. What I am concerned about is what they will do with Republic Group. Something smells a bit fishy on this acquisition and Republic had to be somewhat troubled not to bring more in this sale.
What is the connection of Amtrust and Alexander Chatfield and Barry Zyskind?
Republic has a 5 year combined ratio of 112% and a surplus that’s about 1/3 of its direct premiums, they were clearly in trouble.
Yes, I think if AM Best rated them prior to this sale, they might have been put on supervision. It is really too bad. I know a lot of good people at Republic and I think that new CEO they had was responsible for the mess.