FedNat Completes Acquisition of 1347 Property Insurance Homeowners Operations

December 4, 2019

FedNat Holding Company (FNHC), an insurance holding company, has completed its acquisition of the homeowners insurance operations of 1347 Property Insurance Holdings, Inc. (PIH), consisting of Maison Insurance Co., Maison Managers, Inc., and ClaimCor LLC (collectively, Maison), in a cash and stock transaction valued at approximately $51 million. The acquisition was announced back in February of this year.

Maison is a property and casualty insurer focused primarily on coastal homeowners markets in Texas and Louisiana, with additional operations in Florida. For the trailing 12months ended Sept. 30, 2019, Maison reported $96.1 million of gross written premiums. On a proforma basis, the combined company reported $684.2 million in gross written premiums across five southeastern states for the trailing twelve months ended Sept. 30, 2019.

“This acquisition represents a significant milestone in our long-term strategy to profitably expand FedNat’s core homeowners operations in the southeast United States,” said. Michael H. Braun, FedNat’s chief executive officer. “With the acquisition of Maison, we’ve grown our book of business in markets where we already operate and where we like the macro fundamentals, specifically Texas and Louisiana. Further, we will move quickly in integrating Maison to capture over $3 million in expected expense synergies from in-sourcing, which will be incremental to the $7 million of reinsurance synergies we’re already experiencing in this treaty year. We expect the transaction to be accretive to EPS and ROE beginning in 2020 and beyond.”

Braun added Doug Raucy and Dean Stroud and their teams have joined FedNat.

Raucy, president of Maison, said the acquisition allows Maison to significantly expand its margins in its book of business, “adopting FedNat’s prudent underwriting approach and reducing expenses in the near-term.”

The $51 million purchase price was comprised of a 50/50 mix of cash and stock, including the issuance of 1,773,102 shares of FedNat common stock. This issuance was based on the weighted‐average closing share price of FedNat common stock for the 20 trading days prior to closing, and represents approximately 12% of shares outstanding.

The resale of the shares issued will be subject to a five‐year Standstill Agreement. In addition, $18 million of outstanding surplus note obligations of Maison Insurance Company were repaid to 1347 PIH and were replaced with new surplus notes funded by FedNat.

“FedNat is pleased to have 1347 PIH as a substantial shareholder in the Company,” said Bruce F. Simberg, chairman of the Board of Directors of FedNat. “We are committed to creating value for our shareholders and believe the Maison acquisition will enable FedNat to build on our long-term track record of growth in book value per share.”

“We believe Maison is a perfect fit for FedNat,” said D. Kyle Cerminara, chairman of the Board of Directors of 1347 PIH. “Moving forward, we’re thrilled to be shareholders of FedNat, and are confident that the right management team and strategy are in place to generate long-term shareholder value.”

Raymond James & Associates served as exclusive financial advisor to FedNat while Nelson Mullins Riley & Scarborough LLP served as legal counsel.

FedNat is a super-regional insurance holding company that controls substantially all aspects of the insurance underwriting, distribution and claims processes through its subsidiaries and contractual relationships with independent agents and general agents. The company, through its wholly owned subsidiaries, is authorized to underwrite and/or place homeowners multi-peril, federal flood and other lines of insurance in Florida, Texas, Louisiana, South Carolina and Alabama. FedNat markets, distributes and services its own and third-party insurers’ products and other services through a network of independent and general agents.

1347 Property Insurance Holdings, Inc. is a diversified insurance, reinsurance and investment management holding company incorporated in Delaware.

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