United Insurance Holdings, a property and casualty insurance holding company, announced today that it has entered into a Merger Agreement with RDX Holding, the parent of American Coastal Insurance Company (ACIC or American Coastal), to combine the companies in an all-stock merger meant to qualify as a tax-free reorganization.
Under the terms of the transaction, RDX members will receive UPC Insurance common stock based on an exchange ratio providing for RDX members to own 49% of the outstanding UPC common stock as of the signing.
Dan Peed, who is the CEO of ACIC and owns a majority of the stock of RDX, will become non-executive Vice-Chair of UPC’s Board of Directors and will nominate two additional independent directors to join the UPC Board, which will be expanded to ten as part of the transaction.
John Forney, UPC’s President and CEO, will assume the role of CEO of the combined entity. The UPC stock issued to Mr. Peed as part of the transaction will have certain voting and transfer restrictions designed to demonstrate his long-term commitment to the combined entity and his alignment of interest with other UPC shareholders.
UPC Insurance president and CEO John Forney said: “This is a transformational transaction for UPC, and the culmination of many months of careful consideration of this opportunity to accelerate UPC’s path to creating the premier provider of property insurance in catastrophe-exposed areas.
“ACIC has an enviable track record of delivering strong earnings and very high returns on equity to its shareholders. Its market-leading position in the Florida commercial residential market and its exclusive MGA agreement with AmRisc provide UPC complementary skills and new growth opportunities.
“Dan Peed has proven his ability to create huge shareholder value, and we look forward to his vision and leadership as part of the UPC Board.”
American Coastal CEO Dan Peed said: “I am excited to join the UPC Insurance team and believe this merger will build on the excellent platform they have created, providing more opportunities for growth and profit with our valued trading partners.
“John Forney and his team bring an extensive amount of energy and knowledge, and we share a vision to create one of the strongest specialty cat underwriters in the U.S. AmRisc is the largest cat commercial property MGA in the country and will continue to underwrite on behalf of American Coastal Insurance Company, bringing many opportunities for continued growth to American Coastal, UPC Insurance and AmRisc.”
UPC Insurance is being advised in this transaction by Raymond James & Associates and the law firm of Sidley Austin. TigerRisk Capital Markets & Advisory and Willis Capital Markets & Advisory are acting as joint financial advisors and Debevoise & Plimpton is serving as legal counsel to RDX in connection with the transaction.
The transaction is subject to certain conditions, including approval by UPC Insurance’s stockholders of the issuance of shares in the merger and receipt of required regulatory approvals.