Tampa, Florida-based 1347 Property Insurance Holdings Inc., which sells homeowners insurance in Louisiana and has plans to expand to other coastal states, announced it has bought out the management services contract with a subsidiary of one of its founding firms, Kingsway Financial Services Inc.
The insurer reported that is paying at least $5 million to terminate the contract with the services firm, 1347 Advisors LLC.
Under the contract, 1347 Advisors provided PIH with forecasting, analysis of capital structure and reinsurance programs, and consulting in corporate development.
The contract was initiated last year when PIH was going through its initial public offering, which occurred in March.
PIH, which started in business in 2012, will pay 1347 Advisors $2 million in cash plus $3 million of PIH preferred stock, redeemable in five years. It could end up paying more depending on how well the stock performs.
Douglas N. Raucy, a former Allstate executive who is CEO of PIH, said the termination is part of PIH’s “continued progression” as a public company.
“[W]e were pleased to reach an agreement with 1347 Advisors where both parties can focus on executing their respective growth strategies,” he said in a statement. “We appreciated the support that Kingsway provided PIH during its founding and initial growth phase. We look forward to entering new insurance markets and continuing to expand our business.”
Kingsway Financial Services Inc. is a holding company chaired by Joseph Stilwell, an activist investor. KFS owned about 29 percent of PIH’s stock when the company went public.
In December 2012, the company began providing property/casualty insurance in Louisiana through its wholly-owned subsidiary, Maison Insurance Co. The company’s insurance offerings currently include homeowners’ insurance, manufactured home insurance and dwelling fire insurance.
In addition to its subsidiary Maison Insurance Co., PIH runs a managing general agency in Louisiana, Maison Managers Inc., and recently closed on the acquisition of a claims handling company, ClaimCor.
In its February 2015 presentation to investors, the insurer’s executives said they see opportunities to expand in areas where they believe industry giants including State Farm, Allstate and Farmers are looking to decrease their coastal exposure. Its strategy includes taking advantage of residual market depopulation programs. Its plans include expansion into Florida, Texas and Hawaii.
Topics Carriers Louisiana Homeowners
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