FedNat Holding (FNHC) Announces $15M Investment by Hale Partnership in Monarch National Insurance Company
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FedNat Holding Company (Nasdaq: FNHC) 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.
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