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On November 27, 2017, Federated National Holding Company (the “Company”) entered into a Purchase and Sale Agreement (the “Agreement”) with Crosswinds Investor Monarch LP (“Crosswinds”) and Transatlantic Reinsurance Company (“TransRe”) whereby the Company has agreed to purchase the interests held by each of them in Monarch Delaware Holdings LLC (“MDH”), the primary subsidiary of which is Monarch National Insurance Company (“MNIC”). The Company currently owns 42.4% of MDH’s Class A membership interests and, following the closing of the transactions contemplated by the Agreement, will own 50% of MDH.

to the Agreement, the Company has agreed to purchase for cash the Class A membership interests of MDH held by Crosswinds, representing 42.4% of MDH’s membership interests, for a purchase price of $12,282,000, and the Class B membership interests of MDH held by TransRe, representing 15.2% of MDH’s membership interests, for a purchase price of $4,403,000. In addition, the outstanding principal and accrued but unpaid interest due on the $5.0 millionnote from Monarch National Holding Company (MDH’s direct wholly owned subsidiary and the direct parent of MNIC) to TransRe will be repaid in full.

In connection with the Company’s purchase of the MDH interests described above, Crosswinds (or an affiliate) will continue to serve as the investment portfolio manager (or an alternate advisory capacity) to MNIC for a quarterly fee of no less than $75,000 through December 31, 2018, and each of Crosswinds and TransRe will have a right of first refusal through December 31, 2018 to participate in the Company’s catastrophe excess of loss reinsurance program, at market rates and terms, up to a placement of $10 million in reinsurance limit in the aggregate from Crosswinds and up to a placement of $10 million in reinsurance limit in excess of its placement on the Company’s current catastrophe excess of loss reinsurance program from TransRe.

The Agreement provides for customary representations, warranties and covenants of the parties. Closing of the transactions contemplated by the Agreement is subject to the Company’s receipt of financing and all required regulatory approvals, and other customary closing conditions. There can be no assurances that all such closing conditions will be satisfied.

The description of the Agreement described above does not purport to be complete and is qualified in its entirety by reference to the Agreement, which is filed as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by reference. The Agreement has been included to provide investors and security holders with information regarding its terms, and is not intended to provide any other factual information about any of the parties. The Agreement contains representations and warranties the parties made to and solely for the benefit of each other. Accordingly, investors and security holders should not rely on the representations and warranties as characterizations of the actual state of facts, since they were only made as of the date of the Agreement and are modified in important part by the underlying disclosure schedules exchanged by the parties. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures. For the foregoing reasons, no person should rely on the representations and warranties as statements of factual information at the time they were made or otherwise.

to Item 601(b)(2) of Regulation S-K, the Company has omitted certain schedules and exhibits to the Agreement and will furnish a copy of any omitted schedule or exhibit to the Securities and Exchange Commission upon request.

FEDERATED NATIONAL HOLDING CO Exhibit
EX-2.1 2 ex2_1.htm EXHIBIT 2.1 Exhibit 2.1 PURCHASE AND SALE AGREEMENT between FEDERATED NATIONAL HOLDING COMPANY and CROSSWINDS INVESTOR MONARCH LP and TRANSATLANTIC REINSURANCE COMPANY NOVEMBER 27,…
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About FEDERATED NATIONAL HOLDING COMPANY (NASDAQ:FNHC)

Federated National Holding Company (FNHC) is an insurance holding company that controls all steps in the insurance underwriting, distribution and claims processes through its subsidiaries and its contractual relationships with its independent agents and general agents. The Company is authorized to underwrite homeowners’ multi-peril (homeowners), commercial general liability, federal flood, personal auto and various other lines of insurance in Florida and various other states. The Company markets, distributes and services its own and third-party insurers’ products and its other services through a network of independent agents. The Company’s insurance lines of business include Homeowners’ Property and Casualty Insurance, Commercial General Liability, Personal Automobile and Flood. FNIC and MNIC underwrite homeowners’ insurance in Florida, and FNIC underwrites insurance in Alabama, Louisiana and South Carolina. Alabama and Louisiana.