After months of uncertainty, the merger of ACP Re Ltd. and struggling reinsurer Tower Group International has finally closed.
Bermuda-based ACP Re and Tower announced on Sept. 12 that all regulatory approvals were in place relating to ACP Re’s acquisition of Tower, with a closing of the merger expected on Sept. 15, 2014. Now that this is done, Tower is a wholly owned subsidiary of ACP Re.
Another transaction happened in tandem with the merger deal. National General Holdings Corp. (part owner of ACP Re along with the founder of AmTrust Financial Services Inc. and Maiden Holdings Ltd., via a trust) announced that it had closed its acquisition of Tower’s personal lines business.
National General is a specialty personal lines insurance holding company. It has snatched up the rights for new and renewal business for the Tower personal lines insurance operations, which generated $433.1 million in gross written premiums in 2013, according to the deal announcement. As well, the company acquired the “Attorney-in-Facts” that manage two reciprocal exchanges (Adirondack Insurance Exchange and New Jersey Skylands Insurance Association), which produced $223 million of gross written premiums in 2013.
National General said it has had access to the Tower personal lines book under a cut-through reinsurance agreement effective as of Jan. 1, 2014.
Michael Karfunkel, National General’s chairman and CEO, said in a statement that the Tower personal lines business gives National General “a broader mix, including homeowners and umbrella coverage; an enhanced geographic footprint; and added competitive strength with the ability to bundle several personal lines P/C products.”
“It is a compelling opportunity that will enable us to deliver strong shareholder returns in both the remainder of 2014 and the coming years,” Karfunkel said.
The proposed Tower Group/ACP Re merger was first announced in January and amended during the year. Whether or not the deal would close had been increasingly in doubt, in part due to a series of ratings downgrades for Tower Group as it faced growing net losses and uncertainty over whether it could carry its debts through the intended merger.
In early September, Tower Group announced that the U.S. Securities and Exchange Commission was investigating the company—a long-struggling Bermuda insurer and reinsurer—without offering additional details.
Sources: National General Holdings Corp., Tower Group International