Florida’s Heritage Insurance to Acquire Hawaii’s Zephyr

Clearwtaer, Florida-based Heritage Insurance Holdings Inc. has agreed to acquire Zephyr Acquisition Co. and its wholly-owned subsidiary, Zephyr Insurance Co., a specialty insurance provider in Hawaii.

The acquisition will provide Heritage with an immediate presence in Hawaii as Zephyr holds approximately 30 percent of the wind-only market share in the state, according to the announcement.

Heritage officials said this acquisition will further the company’s strategic push to diversify business operations and achieve greater synergies in reinsurance while expanding growth opportunities outside of Florida.

The all-cash transaction is expected to close in the fourth quarter of 2015 and is valued at approximately $120 million. For the period ended June 30, 2015, Zephyr’s in-force premium was nearly $68 million, its statutory surplus was $58 million, and ZAC’s unaudited GAAP equity as of June 30, 2015 was $63 million, according to the announcement.

Heritage believes the addition of Hawaiian-based Zephyr will be immediately accretive to earnings per share.

Heritage Chairman and CEO Bruce Lucas said his firm will fund the deal with current capital.

Heritage Property & Casualty Insurance Co. writes $500 million of personal and commercial residential premium.

Heritage recently announced it is expanding into four coastal states: North Carolina, South Carolina, Massachusetts and Rhode Island.

Zephyr began operations in 2000 and writes wind-only insurance coverage for personal residential and commercial residential policyholders. Zephyr has an A’ rating from Demotech Inc.

In 2009, Toronto-based Kingsway Financial Services Inc. sold Zephyr Insurance Co. to Zephyr Acquisition Co., an acquisition vehicle of Ocean Harbor Holding Inc. and MP Holdings LLC, a Hawaiian based investor group.

Topics Florida Mergers & Acquisitions Hawaii