US-based commercial auto insurer Atlas Financial Holdings has completed the previously announced sale of its subsidiary Gateway Insurance Company to ride-sharing insurance provider Buckle, as it looks to continue its transition towards an MGA model.
The transaction closed on June 16th, with $4.2 million paid to the statutory liquidator of Gateway.
A further $500,000 may be paid as additional purchase price depending on how many insurance licenses of Gateway are in force at the end of 2020.
Atlas’ strategic focus includes transitioning business previously written on its insurance subsidiaries, which are currently in rehabilitation, to alternative markets through the Company’s MGA, Anchor Group Management.
For Buckle, the acquisition importantly includes 47 state insurance licenses for commercial auto policies, including full-time taxicabs, non-emergency para-transit, limousine/livery, and business auto.
The ride-sharing insurers intends to re-capitalise Gateway to support its MGA business, Anchor Group Management, Inc. (AGMI).
Financing for the re-capitalisation was provided by clients of Hudson Structured Capital Management Ltd. (doing its re/insurance business as HSCM Bermuda Management Company).
“We are very pleased to have concluded this transaction in light of the challenging environment related to COVID-19 and to be working with dedicated partners, which now includes Buckle,” said Scott D. Wollney, President & CEO of Atlas.
“We expect that this transaction will provide positive benefits to both companies, our employees, customers, investors, and other stakeholders. At a time when many companies are focused on survival, it is important to also be working towards a successful future. Our team is working proactively on several of our main initiatives, predominantly further pursuing our specialty MGA strategy,” he continued.
“Our emphasis is being placed on generating EBITDA at the MGA level while endeavoring to reduce risk and capital requirements related to traditional primary insurance company operations. At this time it is very difficult to forecast expected business volumes, revenue and other key metrics due to the economic uncertainty.”
Marty Young, co-founder of Buckle, also commented: “We believe this deal is a win-win for both TNCs and independent contractor drivers. As this partnership drives down the costs of insurance, we are excited to continue advancing our goal of providing well-deserved support to the mobility ecosystem. Every time Buckle sells a policy, its TNC partner’s balance sheet improves as risk is moved from the TNC to the independent contractors.”
Going forward, Atlas and Buckle intend to work together in partnership to provide insurance solutions to the gig-economy sector, with an emphasis on transportation network company drivers. The parties also intend to discuss a claims handling arrangement.
AGMI also hopes to continue to write New York area business outside of New York through Global Liberty Insurance Company.
Wollney continued, “In the coming weeks, we will also continue to focus on becoming current with our financial reporting and then ultimately beginning to communicate our forward-looking strategy in an efficient and proactive manner.”
“We expect to leverage agent and customer relationships that we have cultivated over several years through our hyper-focused operating model. We believe that our customers are critical to future economic recovery and want to be well positioned to provide the insurance services necessary to support them.”