Atlas Financial Holdings has concluded the sale of the stock, charter and state licenses of indirect subsidiary Gateway Insurance Company to insurtech Buckle, which is recapitalising its new purchase with financing from funds managed by Hudson Structured Capital Management (HSCM).
Embattled commercial auto insurer Atlas revealed that $4.2mn was paid to the statutory liquidator of Gateway at closing by Buckle. In addition, up to $500,000 may be paid as additional purchase price depending on how many insurance licenses of Gateway are in full force and effect without restriction at the end of 2020.
Buckle is recapitalizing Gateway to support Atlas’ wholly owned managing general agency, Anchor Group Management Inc (AGMI). Financing for the recapitalization was provided by clients of HSCM.
In partnership with Atlas, Atlanta-based Buckle will now be able to provide commercial auto protection to part-time rideshare and delivery drivers, full-time taxicab and limousine drivers, non-emergency para-transit drivers, and transportation network companies.
Chicago-based Atlas has been struggling since it announced it needed to strengthen reserves at the start of 2019.
It has received numerous warnings from Nasdaq for failing to file regulatory statements. This includes last week receiving a delinquency notice because of its non-compliance with listing rules over its failure to file its 2019 annual report on Form 10-K.
Atlas has previously announced its strategic focus includes transitioning business previously written by Gateway as well as two subsidiaries that are in rehabilitation to alternative markets through the company’s MGA, AGMI. Atlas said this would allow it to leverage the team, distribution systems and other resources aligned under this business unit.
Scott Wollney, president and CEO of Atlas, commented on the close of the Gateway sale: “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.”
He added: “Our emphasis is being placed on generating Ebitda at the MGA level while endeavouring 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.”
Atlas also said that AGMI will begin transitioning non-paratransit business that meets agreed underwriting criteria as a general agent for Gateway. This program will focus on taxi, livery, limousine and full-time transportation network company drivers.
Under the terms of this arrangement AGMI retains renewal rights to business AGMI produces for Gateway.
AGMI as underwriting manager continues to transition its paratransit business under the previously announced agreement with American Financial Group’s National Interstate Insurance Company subsidiary. This transition is expected to be completed by the end of November 2020.
AGMI hopes to continue to write New York area business along with select renewals outside of New York through the Company’s wholly owned insurance company Global Liberty Insurance Company.