United Insurance Holdings Corp. (UPC Insurance), a property and casualty insurance holding company, has entered into a merger agreement with RDX Holding, LLC, the parent of American Coastal Insurance Co. (ACIC or American Coastal), to combine the companies in an all-stock merger meant to qualify as a tax-free reorganization. The combined entity will have over $1 billion of premium in force.
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 percent of the outstanding UPC common stock as of the signing.
Dan Peed, CEO of ACIC and majority stock owner 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 10 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 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.
“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,” said John Forney, president & CEO of UPC Insurance.
Forney added that ACIC’s position in the Florida commercial residential market and its exclusive MGA agreement with AmRisc provide UPC complementary skills and new growth opportunities.
“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,” said Dan Peed, CEO of American Coastal. “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 LLP. TigerRisk Capital Markets & Advisory and Willis Capital Markets & Advisory are acting as joint financial advisors and Debevoise & Plimpton LLP 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.
Founded in 1999, UPC Insurance is an insurance holding company that sources, writes and services residential property and casualty insurance policies using a network of independent agents and a group of wholly owned insurance subsidiaries.
UPC Insurance writes and services property and casualty insurance in Connecticut, Florida, Georgia, Hawaii, Louisiana, Massachusetts, New Jersey, New York, North Carolina, Rhode Island, South Carolina and Texas, and is licensed to write in Alabama, Delaware, Maryland, Mississippi, New Hampshire, and Virginia. From its headquarters in St. Petersburg, UPC Insurance’s team of dedicated professionals manages a completely integrated insurance company, including sales, underwriting, customer service and claims.
Founded in 2007, ACIC is a specialty underwriter focused primarily on the commercial residential property insurance market in Florida. ACIC has a long term exclusive agreement with AmRisc, LLC, a commercial windstorm MGA in the United States, which serves as the sole managing general agent to source and administer business for ACIC. In 2015, ACIC reported $308.5 million of direct premium written, $36.5 million in after-tax GAAP earnings, and finished the year with $195.8 million of tangible book value.
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