FedNat Holding, an insurance holding company, has signed an agreement with Hale Partnership Capital Management following which funds managed by Hale will invest $15m in FedNat’s subsidiary Monarch National Insurance Company (MNIC).
This investment is subject to meeting of certain conditions.
As per the terms of the agreement, FedNat will also contribute further capital to MNIC.
After the investment, Hale will become the majority owner of MNIC, with FedNat holding a minority stake.
With the completion of the Hale deal, which has secured approval from the Florida Office of Insurance Regulation (OIR), MNIC will assume around 83,000 policies insured in Florida from FedNat Insurance Company (FNIC), another subsidiary of FedNat, effective 1 June.
FNIC’s remaining policies in Florida will stand cancelled effective 29 June.
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After cancellation of these policies, all unearned premiums will be remitted to policyholders as per the applicable law.
FNIC claimed that it has sufficient assets to refund all required unearned premiums.
FedNat also will cancel the rest of the policies in Florida of another subsidiary, Maison Insurance Company (Maison), effective 30 June> This is subject to securing regulatory permits.
Policy servicing as well as claims administration with regard to those policies transferred to MNIC will continue to be undertaken by a completely owned subsidiary of FedNat.
MNIC expects to receive catastrophe excess of loss reinsurance for the 2022-2023 storm season to safeguard its surplus in line with its historical reinsurance structure.
For all FNIC business written in other states – such as Alabama, Louisiana, Mississippi, South Carolina and Texas – through its contracted third-party managing general underwriter SageSure Insurance Managers, regulatory approval will be sought by the two entities for a transaction.
Following this transaction, effective 1 July, a partner of SageSure insurance carrier would assume all remaining FNIC in-force policies in the US states of Alabama, Mississippi, South Carolina and Texas.
With regard to the Louisiana policies of FNIC, it is proposed that these would stand cancelled effective 1 July by FNIC, with policyholders getting an offer of replacement coverage from a SageSure carrier partner.