Fairfax Financial (FFH.CN) to acquire American Safety Insurance Holdings for $29

[dcollon]

Fairfax Financial (FFH.CN) to acquire American Safety Insurance Holdings for $29.25/sh in cash

Monday, June 03, 2013 01:04:50 PM (GMT)

 

 

Fairfax Financial Holdings Limited (FFH.CN) and American Safety Insurance Holdings, Ltd. (ASI) announced that Fairfax and American Safety have entered into a merger agreement pursuant to which Fairfax will acquire all of the outstanding shares of American Safety common stock. American Safety stockholders will receive $29.25 per share in cash, representing an aggregate transaction value of approximately $306M. The price represents a premium of 22.1% to the closing price of American Safety common stock on 31-May-13, the last trading day prior to this announcement. The transaction is expected to close in Q4 of 2013.

The board of American Safety, after unanimously determining that the merger is in the best interest of American Safety and its stockholders, unanimously approved the merger agreement and resolved to recommend that American Safety's stockholders vote to approve the merger.

Certain of the directors and executive officers of American Safety, who beneficially own approximately 10% of the outstanding shares of American Safety common stock, have agreed to vote their shares in favor of the merger.

The transaction is subject to customary conditions, including approval by American Safety's stockholders and regulatory approvals. There is no financing condition to consummate the transaction.

Concurrent with the execution of the merger agreement with American Safety, Fairfax entered into a purchase and sale agreement with Tower Group International, Ltd. pursuant to which Fairfax agreed to sell the Bermuda subsidiary, American Safety Reinsurance, Ltd. promptly upon acquiring it from American Safety. Such transaction is subject to customary conditions including regulatory approvals.

The acquisition is expected to be financed using internal resources and is not expected to require Fairfax holding company cash. Fairfax expects several of the American Safety specialty lines groups to move to Crum & Forster and Hudson. The acquisition is expected to provide the Fairfax group with $480M of additional investable assets.

[Redskin212]

 

Fairfax is also selling of the reinsurance operations of ASI

 

http://www.cnbc.com/id/100784389

 

 

[InelegantInvestor]

As a longtime ASI shareholder, I'm very happy to see the deal, though it feels like FFH is getting a bargain. Can anyone recommend another insurer to put the cash in? Only other one I'm in is KINS, and I don't want to add to it right now.

[Alekbaylee]

Can anyone recommend another insurer to put the cash in?

- Fairfax maybe?  ;D

[InelegantInvestor]

Can anyone recommend another insurer to put the cash in?

- Fairfax maybe?  ;D

 

cute.

[ap1234]

Has anyone followed American Safety Insurance Holdings? I'm not familiar with the business.

 

Based upon a very cursory glance, I notice the business has generated underwriting losses for 4 of the past 5 years while at the same time growing in a soft market.

 

Does anyone have any thoughts on the quality of American's underwriting business (excl. the reinsurance business that is being sold)? Is this a turnaround business or a higher quality business that has been impacted by a prolonged soft market?

[A_Hamilton]

Has anyone followed American Safety Insurance Holdings? I'm not familiar with the business.

 

Based upon a very cursory glance, I notice the business has generated underwriting losses for 4 of the past 5 years while at the same time growing in a soft market.

 

Does anyone have any thoughts on the quality of American's underwriting business (excl. the reinsurance business that is being sold)? Is this a turnaround business or a higher quality business that has been impacted by a prolonged soft market?

 

Yes, they have been increasing writings but look at NPW/Shareholders' Equity....these guys were/are not writing that much business relative to their capital.

[dcollon]

They had an A rating, which was always important to them.  I don't understand why based on the lines that they were involved with over time.  However, every time we met with management they mentioned it. There is plenty of capital that Fairfax will be able to free up.