Heritage Insurance Holdings, Inc. is to acquire NBIC Holdings, Inc., the parent company of Narragansett Bay Insurance Company, for $250 million in a deal that is expected to close in the fourth-quarter of 2017.
The acquisition price will be financed with $210 million in cash and $40 million of the firm’s common stock, and will create a leading super regional personal lines insurance carrier, says Heritage.
The combined entity will have a presence in 12 states and gross written premiums of more than $900 million, and the takeover is expected to be immediately accretive to earnings per share and ROE, says Heritage.
The Boards of Directors of both companies have unanimously approved the acquisition, and expect the deal to close in Q4 2017, subject to regulatory approval and other customary closing conditions.
Bruce Lucas, Chairman and Chief Executive Officer (CEO) of Heritage, said; “We are very excited to join forces with NBIC, a seasoned company with a strong track record and talented management team. Completing this acquisition is the next critical step in executing our geographic diversification strategy. Post-transaction, we expect approximately 45% of our revenue to be generated outside of Florida, and Florida Tri-County personal lines policies will represent only approximately 7% of all total insured value, further hedging against assignment of benefits volatility.
“We will also look to capitalize on the opportunity to expand the commercial residential expertise we have cultivated in our current markets to the Northeast. In 2018, we expect an approximately 50% increase in gross premiums written and net income as a result of the transaction. The new products, partnerships and bundled products that we will gain from the NBIC business make this transformative acquisition an important step in our continued growth. We look forward to working with NBIC’s employees and agents for years to come.”
Citi is acting as the exclusive financial advisor to Heritage in regards to the transaction, with Greenberg Traurig, LLP serving as legal counsel. Evercore is serving as the exclusive financial advisor to NBIC, while Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal counsel for the firm.
Todd Hart, CEO of NBIC, said; “NBIC has demonstrated strong and consistent financial performance over the past several years, and has grown to be a premier provider of homeowners insurance. We strongly believe that joining forces with Heritage will complement and strengthen our business, and position us to better serve our agents and policy holders.”