AmTrust to Acquire Wells Fargo’s Warranty Solutions
NEW YORK — AmTrust Financial Services Inc. announced today that it has entered into a definitive agreement to acquire F&I product provider Warranty Solutions from Wells Fargo for $152 million in cash. Pending regulatory approval, the deal is expected to close in the third quarter 2015.
Warranty Solutions was part of Wachovia Dealers Services when Wells Fargo purchased the finance source in a $15.1 billion all-stock deal in October 2008. Prior to that, the Lakewood, Colo.-based F&I product provider operated as GE Money Warranty Services. Today, it administers and underwriters vehicle service contracts through a national network of more than 70 active agencies and 1,500 franchise and independent dealers.
“The acquisition of Warranty Solutions provides an outstanding opportunity for our company to expand our successful vehicle extended warranty operation while also adding to our differentiated service and fee business,” said Barry Zyskind, president and CEO of AmTrust Financial Services, in a company press release. “Warranty Solutions is an excellent fit for our organization and we look forward to welcoming the talented individuals that have built Warranty solutions into a successful business.”
Zyskind hinted that the multinational insurance holding company was closing in on an acquisition during AmTrust Financial’s first quarter earnings call on Tuesday, May 5, noting that AmTrust had raised capital during the quarter and that its balance sheet was on “very solid footing” to both grow through acquisitions and organically.
“We continue to excel, buying, looking for companies that fit within our niche, whether we are buying it below book value and gaining on the acquisitions and getting a book of business, or we’re looking for fee business that will ultimately increase our return and drive profitable premium to the organization.
“So that’s something that we continue to focus on; strengthen the team and grow our acquisition capability,” he said.
AmTrust has been active in the automotive space. In August 2010, the company completed its purchase of Warrentech. It also purchased Ally Insurance’s Car Care Plan, which provides insurance and administrative services to vehicle manufacturers for extended warranties, GAP, wholesale floorplan insurance and other F&I products, in February 2013.
A spokesperson for AmTrust said on Thursday that the company expects to retain Warranty Solutions’ management team and all of the firm’s employees. She added that there are no plans to change the name of company or move it from its Colorado offices.
Wells Fargo issued the following statement regarding the pending sale to F&I and Showroom: “As part of our normal processes, we evaluate our businesses and occasionally make decisions to expand or contract in a particular area. After an evaluation of Warranty Solutions, we determined that — under the ownership of a company like AmTrust that specializes in the aftermarket product business — Warranty Solutions would be better positioned to continue growing. We are happy that existing team members will transition to AmTrust.”
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