US-based commercial auto insurer Atlas Financial Holdings looks set to sell its subsidiary Gateway Insurance Company to ride-sharing insurance provider Buckle, as it looks to continue its transition towards an MGA model.
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.
Buckle entered a non-binding letter of intent to acquire the stock of Gateway and its corporate charter and forty-seven state insurance licenses as well as state statutory deposits for $4.7 million plus the value of all purchased deposits.
This figure will be paid to the rehabilitator for the benefit of the rehabilitation estate of Gateway, with a tentative closing date in March of 2020.
Upon closing, Buckle plans to recapitalise Gateway to support the writing of new and renewal insurance policies, including non-paratransit policies for Anchor.
Subject to its underwriting guidelines, Anchor will begin to transition the entirety of Atlas’ expiring taxi, livery and other non-paratransit business from its pool of subsidiaries to a recapitalised Gateway operating under a resumptive corporate charter as the insurer under an MGA agreement.
Under this minimum three-year arrangement, Anchor expects to be able to produce up to $100 million in annual premium for non-paratransit business using Gateway as one of its insurance markets.
Buckle plans to hire the Atlas claims team currently working for the rehabilitation estates of the ASI Pool Companies, with the objective of continuing to provide best-in-class claims service.
The claims team will continue to work from Atlas’ offices and serve as a third-party claims administrator for the ASI Pool Companies supporting legacy Atlas insureds as well as business written by AGMI and Buckle via the resumptive Gateway on a post transaction basis.
“We are very excited about this proposed transaction which will provide many positive benefits to both companies, our employees, customers, investors, and other stakeholders,” said Scott D. Wollney, President & Chief Executive Officer of Atlas.
“There are a number of synergies between Atlas and Buckle which we believe will result in a mutually beneficial long-term relationship as well.
“We are confident in our MGA strategy and this next step will build upon the progress we made in 2019 through our previously announced arrangement for paratransit business with American Financial Group, Inc. and its National Interstate subsidiary.”
