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Dec. 12 (Bloomberg) — AmTrust Financial Services Inc., the insurer that bought an auto-warranty business from Ally Financial Inc., plunged after GeoInvesting challenged the company’s accounting.

AmTrust dropped $4.63, or 12 percent, to $33.67 at 4 p.m. in New York, paring its gain for the year to 29 percent. Barry Zyskind, the insurer’s CEO, said the company has “never been stronger” and was being targeted by investors who profit when the stock falls.

The insurer may be taking advantage of discrepancies in U.S. and Luxembourg accounting practices to minimize losses reported in Securities and Exchange Commission filings, according to a report today from GeoInvesting, a website that provides research to subscribers. GeoInvesting in 2011 questioned the accounting of Yuhe International Inc., a Chinese chicken breeder that subsequently lost most of its market value.

“Short sellers have the winning position in AmTrust,” GeoInvesting said. Investors “should take careful note of the discussions of consolidation of earnings and valuation of assets that could result in large losses and regulatory scrutiny for the company.”

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