UPC Insurance announced Wednesday that that it has entered into a merger agreement with RDX Holding, LLC, the parent company of American Coastal Insurance Company (ACIC).
The union will result in an all-stock merger to be qualified as a tax-free reorganization.
Under the terms, 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.
ACIC CEO Dan Peed, who 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.
The UPC stock issued to Peed as part of the deal 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,” a press release said.
As part of the transaction, the UPC Board will be expanded to ten members.
UPC president and CEO John Forney will serve the role of CEO of the combined entity.
“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 Forney in a release.
“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.”
“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,” commented Peed.
“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.”
Raymond James & Associates served as UPC’s advisor in this transaction. The law firm of Sidley Austin LLP. TigerRisk Capital Markets & Advisory and Willis Capital Markets & Advisory all acted as joint financial advisors. Debevoise & Plimpton LLP served as legal counsel to RDX for the transaction.
The merger is subject to certain conditions, such as approval by UPC’s stockholders of the issuance of shares in the merger and receipt of required regulatory approvals.
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