EGI Financial (EGI) has inked a definitive stock purchase agreement with a specialty insurance firm, White Pine Insurance Company (White Pine), to dispose of its US non-standard automobile insurance operations.
Based on the agreement, White Pine will acquire EGI Insurance Services (EGI US) and its all subsidiary companies, including American Colonial Insurance Company (American Colonial), a Florida domiciled insurance company and EGI Insurance Services (Florida), a Florida based managing general agency.
EGI said that the transaction, which is likely to complete during the fall of 2013 and subject to receipt of concerned regulatory approvals, will result in a pre-tax $5.7m diminution in book value, which will reflect in its third quarter financial result.
Commenting on the company’s decision to offload the business, EGI Financial chief executive officer Steve Dobronyi said, "The results of our U.S. business were not tracking to profitability as quickly as originally planned."
"The exit from the U.S. is expected to add $0.30 per share to our annual 2014 earnings and will allow management to concentrate its time and resources on our profitable Canadian and European businesses," Dobronyi added.
In 2012, American Colonial wrote $10m of direct premiums and is currently writing new and renewal non-standard automobile insurance in Florida and also has insurance licenses in Georgia, Louisiana and Alabama. EGI will remain responsible for the run-off of its discontinued Texas operations.
Philo Smith & Co served as exclusive advisor and agent to EGI, while McKenna Long & Aldridge (MLA) offered legal counseling.
Set up in 1997, EGI operates in the property and casualty insurance industry in Canada, the US and Europe, with specific focus on non-standard automobile insurance and other specialty general insurance products.