UPC Insurance Announced All Stock Merger With American Coastal

Transaction Overview

On 8/17/16, UPC entered into a Merger Agreement with RDX Holding (American Coastal’s parent)

  • $674mm all-stock merger meant to qualify as a tax-free reorganization
  • RDX members received 49% of the outstanding UPC common stock as of the closing
    • Implies $330mm(a) valuation for American Coastal or 9.0x 2015 net income / 1.70x TBV
  • Dan Peed became non-executive Vice-Chair of UPC’s Board and nominated two directors
    • Peed was the CEO of ACIC and owns a majority of RDX stock
  • John Forney, UPC’s President and CEO, assumed the role of CEO of the combined entity
  • Transaction was subject to UPC shareholder approval and required regulatory approvals

Combination created combined entity with over $1 billion of premium in force

  • Leading specialty personal and commercial lines property underwriter focused on coastal states
  • Transaction immediately accretive to United’s earnings per share and ROE

American Coastal is the largest commercial residential insurer in Florida with $309mm DPW

  • ACIC is a specialty underwriter focused primarily on FL commercial residential property
  • Long-term exclusive agreement with AmRisc, largest commercial windstorm MGA in the US

Publicly-traded (UIHC), UPC was the 25th largest homeowners insurer in the U.S. for 2015(a)

  • Specialized personal and commercial property cat writer
  • Geographically diversified book of business
  • Long track record of consistent underwriting profitability and strong returns on invested capital

TigerRisk Capital Markets & Advisory Role

TCMA acted as financial advisor to RDX and American Coastal

  • Evaluated a broad set of strategic alternatives for American Coastal
  • Introduced the counterparties
  • Created the proposed transaction structure
  • Performed financial analysis on the pro forma combination
  • Performed reinsurance program analysis and synergy evaluation
  • Assisted American Coastal in negotiation of final transaction terms