FedNat has agreed to acquire substantially all of homeowners insurance operations of 1347 Property Insurance in a cash and stock deal valued at about $51m.

Under the terms of the deal, FedNat will buy Maison Insurance Company, Maison Managers, and ClaimCor. These businesses are collectively known as Maison.

Maison operates as a property and casualty insurer focused on the coastal homeowners’ markets in Louisiana and Texas, as well as Florida.

The deal amount will be equally paid in a mix of a 50/50 cash and stock, including the issuance of about 1.35 million shares of FedNat common stock.

The cash component of deal, along with the replacement of surplus notes owed by Maison to 1347 PIH, totalling $18m along with accrued interest, will be repaid at closing of the transaction.

FedNat CEO Michael Braun said: “Maison represents a unique opportunity to accelerate the diversification of our predominantly Florida homeowners’ book into Louisiana and coastal Texas, two states where we have already been operating and have been looking for additional growth opportunities.

“The transaction is a great financial and strategic fit for FedNat. The acquisition is a digestible size and efficiently financed. Based on meaningful reinsurance and operating expense synergies, we expect the acquisition to be immediately accretive to earnings per share.

“Strategically, the deal diversifies our book and enhances our platform for further geographic expansion through direct access to non-Florida agents, which complements our existing wholesale distribution in Texas and Louisiana.”

Besides the purchase price, 1347 PIH will have five-year rights of first rejection to provide reinsurance of up to 7.5% of any layer in FedNat’s catastrophe reinsurance programme and a five-year agreement for 1347 PIH to provide investment advisory services to FedNat.

Completion of the transaction is conditional upon Maison posting consolidated GAAP net book value of minimum $42m as of closing and satisfaction of other customary closing conditions.