Recently, the shareholders of Bermuda based insurer,
American Safety Insurance Holdings Ltd.
) approved its merger with Toronto based financial services
holding company, Fairfax Financial Holdings Limited.
The deal was previously announced on Jun 2, 2013 whereby it was
stated that Fairfax will acquire all the outstanding shares of
American Safety for a purchase consideration of $29.25 per share
or $306 million in aggregate. On Aug 7, 2013, Fairfax increased
the purchase consideration by 3.4% to $30.25 per share. The deal
was expected to culminate in the fourth quarter of 2013 and was
pending regulatory approval as well as approval from American
Safety's shareholders. After receiving the nod from the
shareholders of American Safety, the agreement only awaits
regulatory approval, following which we expect the acquisition to
close ahead of the scheduled date.
Previously, executives who had a 10% stake in American Safety,
supported the decision and agreed to vote for the merger. At
present, nearly 84.48% of the shareholders voted at the company's
Special General Meeting out of which nearly 99.4% voted in favor
of the deal.
As previously stated, Fairfax will utilize internal resources to
fund the transaction and will not need holding company cash for
the purpose. On closing, many of the specialty lines of American
Safety are expected to be added to two subsidiaries of Fairfax.
These include Crum & Forster and Hudson Insurance Group. The
acquisition will render Fairfax in receipt of $480 million of
additional investable assets. American Safety being one of the
leading names in certain specialty lines of business, the deal is
expected to enhance the insurance operations of Fairfax.
On Jun 3, 2013, in connection with the above deal, Fairfax inked
a purchase and sale agreement with
Tower Group International Ltd.
). After the close of the deal, American Safety Reinsurance Ltd.
(ASRe), a subsidiary of American Safety is to be acquired by
Tower Group from Fairfax for $59 million. This deal is expected
to culminate in the second half of 2013 and is subject to
regulatory approval. As per the deal, the operations and
employees of ASRe will join the Bermuda reinsurer of Tower -
Tower Reinsurance Ltd. (Tower Re).
American Safety currently carries a Zacks Rank #5 (Strong Sell).
Among other insurers,
EMC Insurance Group Inc.
Everest Re Group Limited
) carry a favorable Zacks Rank #1 (Strong Buy).
AMER SAFETY INS (ASI): Free Stock Analysis
EMC INSURANCE (EMCI): Free Stock Analysis
EVEREST RE LTD (RE): Free Stock Analysis
TOWER GRP INTL (TWGP): Free Stock Analysis
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