Carl Icahn To AmTrust Financial In Lawsuit: 'We Deserve More'

Activist investor Carl Icahn owns a 9.4-percent stake in AmTrust Financial Services Inc AFSI and is continuing his activist campaign against the casualty insurance company.

What Happened

Icahn, one of AmTrust Financial's biggest shareholders, argued in an open letter to the company May 17 that management is taking advantage of minority shareholders in a go-private deal that undervalues the stock. On Monday, the billionaire investor confirmed a complaint was filed in the State of Delaware against AmTrust that alleges the following: 

• The transaction undervalues AmTrust's stock at $13.50 per share, which is less than half of what it was trading at in early 2017.
• The controlling founders and families are "blatantly disadvantaging" shareholders as part of the voting process for the go-private deal.
• The transaction should therefore be conducted under the "entire fairness" standard instead of the "business judgment" standard.
• The transaction would occur at a time when a period of expected recovery and earnings growth is potentially on the horizon.
• The controlling founders and families' misuse of company resources is the "final insult" to public shareholders.

Why It's Important

"We stand on behalf of ordinary investors and will campaign aggressively to protect their interests when we believe they are not being served by management," Arca Capital, a 2.4-percent stakeholder in AmTrust Financial said in a report that confirms it shares the same objectives as Icahn. "In short — we've got their backs."

What's Next

Simply put, Icahn said AmTrust investors both big and small "deserve more." The litigation will proceed in the Delaware court system.

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