American Financial Group (AFG) has signed an agreement with Atlas Financial Holdings (AFH), under which AFG’s subsidiary National Interstate will become the exclusive underwriter of AFH’s paratransit book of business.
American Financial Group expects National Interstate to start issuing policies in the third quarter of this year.Furthermore, it estimates that the majority of AFH’s $110m (£86.6m) paratransit business, which will be eligible for quotation under the agreement for the first 12 months, following the signing of the agreement.
Additionally, American Financial Group has been granted a five-year warrant to acquire 19.9% of stake in AFH’s stock at a price of $0.69 (£0.54) per share.
American Financial Group co-CEO Carl Lindner III said: “Passenger transportation is a business we know well, and we are well-positioned to act on opportunities in a market that remains in a correction mode. This paratransit book of business is a great strategic fit for AFG.
“It complements National Interstate’s existing paratransit book, and will allow us to grow our footprint within an existing specialty transportation niche that has performed very well for us. We look forward to working with Atlas and its agents to provide a smooth transition for policyholders.”
Pursuant to the agreement, an AFH subsidiary will act as an underwriting manager for National Interstate for at least 12 months following the transaction, after which National Interstate can acquire renewal rights for the business held by AFH and some of its subsidiaries.
Starting in July 2019, the subsidiaries of AFH will cease writing new paratransit business and will begin writing both new business and transitioning the existing paratransit business to underwriting management arrangement with National Interstate.
Atlas Financial Holdings president and CEO Scott Wollney said: “We are excited to partner with American Financial Group and National Interstate to transition this business in a strategic approach that we expect to benefit both companies.
“Continuing to provide our distribution partners and policyholders with the specialized customer-centric value proposition they expect from Atlas in partnership with one of the largest commercial auto focused companies in the country at a time when the market is hard is extremely valuable to all involved.”