FedNat strikes $51m deal to acquire 1347 PIH's homeowners business

FedNat Holding Company is to acquire Maison Insurance Company and other homeowners insurance entities from 1347 Property Insurance Holdings (1347 PIH) in a $51 million deal. According to their definitive agreement, FedNat will acquire all 1347 PIH’s homeowners insurance operations, consisting of Maison Insurance Company, Maison Managers, and ClaimCor. The $51 million purchase price will be comprised of a 50/50 mix of cash and stock, including the issuance of approximately 1.35 million shares of FedNat common stock. Maison is a property and casualty insurer focused on the coastal homeowners’ markets in Louisiana and Texas, with additional operations in Florida.   “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," said Michael Braun, CEO of FedNat "The transaction is a great financial and strategic fit for FedNat," Braun added. "The acquisition is a digestible size and efficiently financed. Based on meaningful reinsurance and operating expense synergies, we expect the acquisition to be immediately accretive to earnings per share. "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. Finally, Maison brings a strong team that fits well with our culture focused on quality underwriting and excellent in-market agent and distribution relationships. We’re excited to welcome the Maison team led by Doug Raucy and Dean Stroud and look forward to our opportunity to drive enhanced value for FedNat shareholders.” In addition to the purchase price, 1347 PIH will receive five-year rights of first refusal to provide reinsurance of up to 7.5 percent of any layer in FedNat’s catastrophe reinsurance program and a five-year agreement for 1347 PIH to provide investment advisory services to FedNat.   1347 PIH has also agreed to a non-compete for five years following the closing with respect to residential property insurance in Alabama, Florida, Georgia, Louisiana, South Carolina and Texas. Certain 1347 PIH stockholders have agreed to vote in favor of the transaction, which includes a 30 day “go shop” provision. The companies anticipate closing the transaction prior to June 30, 2019. Douglas Raucy, president of Maison, stated: “We are very excited about working with Michael and the team at FedNat, which should serve as an excellent partnership for our insurance company. FedNat shares our vision for profitably growing property and casualty business through measured geographic expansion and further cultivating value-added relationships with agency partners. We look forward to continuing to execute our strategic plan under the Maison brand with the support, expertise and financial strength of our new partners at FedNat.”

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