Affirmative Acquires Assets of Agencies in Florida, Texas
Addison, Texas-based Affirmative Insurance Holdings Inc. reported it has signed definitive agreements to acquire the assets of two non-standard automobile insurance agency operations. In two separate transactions, Affirmative has agreed to acquire the assets of the retail agency and franchise operations of Florida-based 21st Century Holding Company and the assets of BW Insurance Agency Inc., of Texas.
Upon completion of the acquisition with 21st Century Holding Company, Affirmative will acquire the assets of 24 company-owned retail stores and franchise operations consisting of 42 franchise locations operating in four designated market areas in Florida. The retail agency and franchise operations, which operate under the FED USA brand, produce approximately $50 million in non-standard automobile insurance premiums for multiple insurance companies.
Affirmative will pay 21st Century Holding Company $7 million in cash at closing and will pay up to an additional $2.5 million subject to certain performance criteria being met. Following the close of the transaction, the retail stores and franchise locations will continue to produce business for the insurance subsidiaries of 21st Century Holding Company, as well as for other insurance companies not affiliated with 21st Century Holding Company.
In the transaction with BW Insurance Agency Inc., Affirmative is acquiring the assets of 10 retail stores in Texas. BW Insurance Agency operates nine retail stores in the Houston area and in the Beaumont area and produces approximately $5 million of non-standard automobile insurance premium for multiple insurance companies.
Affirmative will pay BW Insurance Agency $750,000 in cash at closing and will pay up to an additional $750,000 subject to certain performance criteria being met. Following the close of the transaction, the retail stores will be converted to the A-Affordable brand name and will produce business under A-Affordable’s multiple company distribution model.
Both transactions are expected to be funded from cash on hand and should be completed within the next two weeks, subject to customary closing conditions.
Affirmative also announced that its newly formed Delaware trust subsidiary, Affirmative Insurance Holdings Statutory Trust I, has completed a private placement of $30 million in 30-year floating rate trust preferred securities. Proceeds of the offering will be contributed to the company’s policyholders surplus, which will increase to approximately $135 million.
Affirmative Insurance Holdings is a producer and provider of non-standard automobile insurance policies to individual consumers in highly targeted geographic markets. Affirmative currently offers products and services in 11 states, including Texas, Illinois, California and Florida.