FedNat has signed an agreement to acquire the homeowners insurance operations of 1347 Property Insurance (1347 PIH) in a cash and stock transaction valued at about $51m.
FedNat will acquire all of 1347 PIH’s homeowners insurance operations including Maison Insurance Company, Maison Managers and ClaimCor (collectively known as Maison).
In addition, $18m of outstanding surplus note obligations will be repaid to 1347 PIH, along with all accrued but unpaid interest.
Maison is a property and casualty insurer focused on coastal homeowners’ markets across Louisiana and Texas, with additional operations in Florida. The operations’ gross written premium as on 30 September 2018 was $70.6m and the total statutory surplus was $35.6m.
The purchase price of $51m will include 50/50 mix of cash and stock, with issuance of about 1.35 million shares of FedNat common stock.
The resale of the shares to be issued will be subsequently registered and will be subject to a five‐year Standstill Agreement.
FedNat CEO Michael Braun said: “Maison represents a unique opportunity to accelerate the diversification of our predominantly Florida homeowners’ book into Louisiana and coastal Texas, two states where we have already been operating and have been looking for additional growth opportunities. The transaction is a great financial and strategic fit for FedNat.
“Strategically, the deal diversifies our book and enhances our platform for further geographic expansion through direct access to non‐Florida agents, which complements our existing wholesale distribution in Texas and Louisiana.”
Upon completion of the transaction, 1347 PIH CEO and Maison president Douglas Raucy and 1347 PIH chief underwriting officer Dean Stroud are expected to become employees of FedNat.
1347 PIH chairman Kyle Cerminara said: “We believe that FedNat represents a strong partner that will allow Maison and its policyholders an opportunity to achieve their full potential, while at the same time receiving a valuation for Maison that we felt was fair and beneficial for our shareholders.
“Our entire Board of Directors has significant experience and skills enabling us to leverage our expertise in reinsurance and investment management to achieve a strong return for our shareholders, and we expect to announce the details of this strategy in the coming months.”