(RTTNews) - Financial services provider GMAC Inc. (GJM: News ) Monday said in a filing with the U.S. Securities and Exchange Commission that, on October 16, 2009, one of its subsidiary has reached an agreement to sell its U.S. consumer property and casualty insurance business to American Capital Acquisition Corp., a newly formed acquisition corporation and an affiliate of American Capital Partners LLC.

The Detroit, Michigan-based company noted that the agreement is made after a review of GMAC's broader insurance business, which includes U.S. automobile, commercial vehicle, motorcycle and recreational vehicle insurance offerings. GMAC added in the filing that the dealer-related insurance business that includes extended service contracts and insurance for auto dealer inventories is not affected by the transaction and remains a strategic component of its insurance platform.

Separately, AmTrust Financial Services Inc. (AFSI: News ), a New York-based insurer, announced today that it would make a strategic investment of $42.5 million in American Capital Acquisition. AmTrust noted that the deal provides it with immediate access to a new distribution force of 10,500 agents that will be equipped to cross sell its products. In addition, the investment is expected to generate substantial fee income and underwriting profits for AmTrust.
GMAC's decision is noted as a response to the losses tied to home and auto loans. In November, GMAC made a deal with Maiden Holdings, Ltd. (MHLD) to sell a reinsurance business and two insurance units.

AFSI is currently trading at $12.14, up 0.37 or 3.14%, on a volume of 150K shares on the Nasdaq. MHLD is currently tradin at $7.76, up 0.03 or 0.39%, on the Nasdaq.

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by RTT Staff Writer

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