FedNat Announces $15 Million Investment by Hale Partnership in Monarch National Insurance Company
May 24 2022 - 9:00AM
FedNat Holding Company (Nasdaq: FNHC) (FedNat), a regional
insurance holding company, has entered into an agreement with Hale
Partnership Capital Management LLC (Hale) pursuant to which funds
managed by Hale will invest $15,000,000 in FedNat’s subsidiary
Monarch National Insurance Company (MNIC), subject to satisfaction
of certain conditions. Under the terms of the agreement, FedNat
will also then contribute additional capital to MNIC, further
enhancing MNIC’s surplus position. Following its investment, Hale
will become the majority owner of MNIC, with FedNat holding a
minority interest.
Following completion of the Hale transaction,
which has been approved by the Florida Office of Insurance
Regulation (OIR), subject to satisfaction of certain conditions,
MNIC will assume approximately 83,000 policies insuring Florida
insureds from another FedNat subsidiary, FedNat Insurance Company
(FNIC), effective June 1, 2022. FNIC’s remaining Florida
policies will be canceled effective June 29, 2022. Upon
cancellation of the FNIC Florida policies, all unearned premiums
will be remitted to policyholders in accordance with applicable
law. FNIC currently has adequate assets on hand to refund all
required unearned premiums. FedNat also will cancel the remaining
Florida policies of another subsidiary, Maison Insurance Company
(Maison), effective June 30, 2022, subject to obtaining applicable
regulatory approvals. All business written by Maison is currently
in run-off, with policyholders being sent notices of nonrenewal as
their policies come up for expiration.
Policy servicing and claims administration with
respect to the policies transferred to MNIC will continue to be
performed by a wholly owned subsidiary of FedNat. MNIC expects to
obtain catastrophe excess of loss reinsurance for the 2022-2023
storm season to protect its surplus consistent with its historical
reinsurance structure. MNIC anticipates that its reinsurance
structure will provide appropriate and responsible protection
against multiple catastrophic events.
FedNat also announced that for all FNIC business
written in states other than Florida (Alabama, Louisiana,
Mississippi, South Carolina and Texas), which is written through
SageSure Insurance Managers (“SageSure”), FNIC’s contracted
third-party managing general underwriter, FNIC and SageSure intend
to seek regulatory approval of a transaction pursuant to which
effective July 1, 2022, a SageSure insurance carrier partner would
assume all remaining FNIC in-force policies in Alabama,
Mississippi, South Carolina and Texas. With respect to FNIC’s
Louisiana policies, it is proposed that such policies would be
canceled by FNIC effective July 1, 2022, with policyholders
receiving an offer of replacement coverage from a SageSure carrier
partner effective upon the cancellation of their FNIC policy.
About the Company
FedNat Holding Company is an insurance holding
company that controls substantially all aspects of the insurance
underwriting, distribution and claims processes through our
subsidiaries and contractual relationships with independent agents
and general agents. The Company, through its wholly owned
subsidiaries FedNat Insurance Company and Monarch National
Insurance Company, is transitioning to providing homeowners
insurance exclusively within the state of Florida. More
information is available at
https://www.fednat.com/investor-relations/.
Factors that could affect
forward-looking statements
This press release contains statements that may
be deemed forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Forward-looking statements generally may be
identified by the use of forward-looking terminology such as
"anticipate," "believe," "budget," "contemplate," "continue,"
"could," "envision," "estimate," "expect," "forecast," "guidance,"
"indicate," "intend," "may," "might," "outlook," "plan,"
"possibly," "potential," "predict," "probably," "pro-forma,"
"project," "seek," "should," "target," "will," "would," "will be,"
"will continue" or the negative thereof or other variations thereon
or comparable terminology and, in this report includes our
statements regarding the expected continuation of the credit rating
of MNIC, the assumption/cancellation of FNIC and Maison policies
(including those being assumed by SageSure) and the remitting of
unearned premiums, the continuation of policy servicing and claims
administration and the expectation of the retention of loss
reinsurance. The Company has based these forward-looking statements
on its current expectations, assumptions, estimates and
projections. While the Company believes these expectations,
assumptions, estimates and projections are reasonable, such
forward-looking statements are only predictions and involve a
number of risks and uncertainties, many of which are beyond the
Company's control. Management cautions that any such
forward-looking statements are not guarantees of future
performance, and readers cannot assume that such statements will be
realized or that the forward-looking events and circumstances will
occur. Factors that might cause such a difference include, without
limitation, approval of regulatory authorities, final results
regarding catastrophe losses, our ability to make reinsurance
purchases, as well as the risks and uncertainties discussed under
“Risk Factors” in the Company's 2021 Form 10-K, and discussed
from time to time in the Company's reports filed with the
Securities and Exchange Commission. These and other important
factors may cause our actual results, performance or achievements
to differ materially from any future results, performance or
achievements expressed or implied by these forward-looking
statements. The Company expressly disclaims any intent, obligation
or undertaking to update or revise any forward-looking statements
made herein to reflect any change in our expectations with regard
thereto or any change in events, conditions or circumstances on
which any such statements are based.
Contacts
Michael H. Braun, CEO (954) 308-1322
Erick Fernandez, Interim CFO (954) 308-1341
Bernard Kilkelly, Investor Relations (954) 308-1409,
or investorrelations@fednat.com
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