AmTrust Financial Services, Inc. (NASDAQ:AFSI) Files An 8-K Entry into a Material Definitive AgreementItem 1.02Entry into a Material Definitive Agreement.
On September 13, 2017, AmTrust North America, Inc. (“ANA”), a wholly-owned subsidiary of AmTrust Financial Services, Inc. (the “Company”), entered into an Asset Purchase and License Agreement (the “Agreement”) with National General Holdings Corp. (“NGHC”), to which ANA sold to NGHC ownership of a personal lines policy management system that ANA had developed for NGHC (the “System”), the related intellectual property, as well as a non-exclusive perpetual license to certain software programs NGHC may use in connection with the System. NGHC will pay ANA consideration of $200 million, which is payable in three equal installments, with the first payment made upon the execution of the Agreement, the second payment payable upon the 6-month anniversary of the Agreement, and the third payment payable upon the completion of the full separation and transfer of the System to NGHC’s operating environment in accordance with the terms of the Agreement or eighteen months, whichever is later. In addition, NGHC will be required to pay ANA costs for the implementation of the System in NGHC’s environment (up to $5 million) and certain other support costs consistent with past practice. NGHC is also required to offer employment to over 100 ANA employees who currently support the System.
The Company will have a perpetual license to use the System for its own internal purposes. The Company may not sell or sublicense the System to a third party and, for a period of three years, the Company may not build a personal lines policy system for any third party. NGHC will have a perpetual license to use certain Company software applications in connection with the System, while the Company retains all ownership rights to these software applications. Except in certain limited circumstances, NGHC may not sell or sublicense the Company software to a third party.
The Agreement terminates the existing Master Services Agreement, dated February 22, 2012, between ANA and a subsidiary of NGHC (the “MSA”) to which ANA developed and licensed the System to NGHC, provided certain ancillary and related services to NGHC, and under which NGHC was obligated to pay a licensing fee for use of the System until 2023 and actual cost for the other ancillary services. However, under the Agreement, for a limited period of time until the parties agree upon a transition date, ANA will continue to provide NGHC and its affiliates printing, mailing and lockbox services and hosting of certain infrastructure, under the same terms as these services were provided under the MSA.
The description of the Agreement is qualified in its entirety by reference to the full text of the Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
Item 1.02Termination of a Material Definitive Agreement.
The information related to the termination of the MSA required by this Item 1.02 is set forth under Item 1.02 above and is hereby incorporated by reference in response to this Item.
Item 1.02Exhibits.
(d)Exhibits.
Amtrust Financial Services, Inc. ExhibitEX-10.1 2 ex101assetpurchaseandlicen.htm EXHIBIT 10.1 Exhibit Exhibit 10.1ASSET PURCHASE AND LICENSE AGREEMENTThis ASSET PURCHASE AND LICENSE AGREEMENT (the “Agreement”) is entered into as of September 13,…To view the full exhibit click here
About AmTrust Financial Services, Inc. (NASDAQ:AFSI)
Amtrust Financial Services, Inc. (AmTrust) is an insurance holding company. The Company, through its subsidiaries, provides specialty property and casualty insurance focusing on workers’ compensation and commercial package coverage for small business, specialty risk and extended warranty coverage, and property and casualty coverage for middle market business. Its segments include Small Commercial Business, Specialty Risk and Extended Warranty, and Specialty Program. The Small Commercial Business segment is engaged in providing workers’ compensation, commercial package and other commercial insurance lines produced by wholesale agents, retail agents and brokers in the United States. The Specialty Risk and Extended Warranty segment is engaged in providing coverage for consumer and commercial goods and custom designed coverages. The Specialty Program segment is engaged in writing commercial insurance for defined classes of insureds through general and other wholesale agents.
