NEW YORK — AmTrust Financial Services, through its subsidiary AMT Warranty Corp., it has acquired the remaining 73 percent ownership interest in Warrantech Corp., bringing its total ownership interest to 100 percent.
Warrantech is a Bedford, Texas-based developer, marketer and third party administrator of service contracts and aftermarket warranty products that largely serves the consumer products and automotive industries in the U.S. and Canada. Warrantech offers products such as vehicle service contract (VSC) programs through partnerships with brands such as Castrol.
"We are excited about the additional revenue opportunities and diversification that the Warrantech transaction provides," said AmTrust Financial Services President and CEO, Barry Zyskind. "By bringing together these two robust warranty administration platforms, we expect to significantly increase our fee income and benefit from enhanced scale and technology efficiencies while further strengthening AmTrust’s market presence and premium opportunities in the warranty space. We believe the talent and experience of the newly combined platform will provide additional momentum as we continue to deliver strong value for our clients and shareholders."
From 2007 through the second quarter of 2010, AmTrust says it has generated more than $224 million in written premium with strong underwriting profits as a result of its original ownership interest in Warrantech.
The transaction was funded with a net $7.5 million in cash and includes an earn-out payment to the sellers of a minimum of $2 million with a maximum of $3 million based on AMT Warranty Corp.’s EBITDA. Additionally, immediately following the transaction, the company’s existing $24.1 million note receivable from Warrantech was transferred to AMT Warranty Corp.
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