NEW YORK, Jan. 6, 2014 (GLOBE NEWSWIRE) -- National General Holdings Corp. (NGHC) announced it has agreed to acquire the renewal rights and assets of the personal lines insurance operations ("Personal Lines Business") of Tower Group International, Ltd in connection with an agreement simultaneously entered into by ACP Re Ltd, a privately held Bermuda corporation, and Tower pursuant to which a subsidiary of ACP Re has agreed to acquire 100% of the outstanding stock of Tower for $3.00 per share and merge with Tower, subject to regulatory and shareholder approval.
In addition, NGHC has also reached an agreement with several Tower subsidiaries to enter into, immediately upon the receipt of regulatory approval, a 100% quota share reinsurance agreement and provide a cut-through endorsement (the "Cut Through Reinsurance Agreement") on most of Tower's in force personal lines policies and on new and renewal personal lines business. NGHC has also obtained a 10-day option to reinsure, on a prospective basis, not less than 60% of the unearned premium reserve relating to Tower's personal lines business. NGHC expects to exercise the option and to reinsure, prospectively, most of the business included in the unearned premium reserve. The Cut Through Reinsurance Agreement, when approved, will be effective as of January 1, 2014. The Company will pay a 20% ceding commission to Tower on all Tower premium subject to the Cut Through Reinsurance Agreement.
Upon the completion of the merger of Tower with an ACP Re subsidiary, NGHC expects to acquire the assets necessary to support the Personal Lines Business (the "Assets"), including several of Tower's domestic insurance companies, the Personal Lines Business renewal rights, the systems, books and records required to effectively conduct the Personal Lines Business as well as the right to offer employment to certain Tower employees engaged in the conduct of the Personal Lines Business.
The Company will acquire these Assets from ACP Re for cash in an amount equal to the statutory tangible book value of the acquired companies. The total purchase price for the Personal Lines Business is expected to be approximately $130 million. The acquired companies will be used to support Tower's Personal Lines Business and will contain assets and surplus equivalent to the purchase price. Through a reinsurance agreement that will be fully collateralized, ACP Re will retain and run off all historical liabilities of the acquired companies. The acquisition is expected to close in the summer of 2014, pending regulatory approvals and the consummation of the merger.
"I am very excited about this transaction as it will add increased product offerings to our customers, agents and brokers. This transaction will introduce homeowners and umbrella coverage into our product offerings which will allow us to bundle these coverages with our existing auto business and make our product offerings even more competitive. The transaction will also add geographic and product enhancements to our auto business. The reinsurance agreement and cut through endorsement are designed to stabilize and secure Tower's business and allow Tower's agents, brokers and policy holders to rely on the financial strength of National General to stand behind Tower's new, renewal and in-force policies," commented Michael Karfunkel, Chairman and CEO.
About National General Holdings Corp.
National General Holdings Corp. is an insurance holding company headquartered in New York, NY. It offers both personal lines property and casualty and accident and health insurance products, including personal and commercial automobile insurance and recreational vehicle, supplemental health insurance products and other niche insurance products.
About ACP Re Ltd.
ACP Re Ltd. is a Bermuda based reinsurance company. The controlling shareholder of ACP Re is a trust established by the founder of AmTrust, Maiden Holdings, Ltd. and National General who has had a long successful history in the financial services sector.
CONTACT: Investor and Press Contact: National General Holding Corp: Office of the CFO (212) 380-9500 Email: email@example.com
Source:National General Holdings Corp.