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Atlas Financial Holdings Signs Definitive Agreement to Acquire Global Liberty Insurance Company of New York and Related Companies

10/17/2014

 

CHICAGO--(BUSINESS WIRE)--Atlas Financial Holdings, Inc. (NASDAQ:AFH) (“Atlas”) announced today that it has entered into a definitive agreement to acquire Global Liberty Insurance Company of New York along with its affiliated underwriting and premium finance companies (“Global Liberty”) for approximately $25 million. This transaction is expected to significantly accelerate Atlas’ commercial automobile presence in select sub-segments of the large New York livery market and will add valuable infrastructure on the East Coast to support Atlas’ continuing growth.

 

"Founded in 2003, Global Liberty’s principal business is in the light commercial auto sector, principally insuring limousine, black car, and luxury car vehicles. The company is based in Melville, New York and is an admitted carrier in 14 states. Global Liberty currently underwrites approximately $40 million of annual commercial auto direct written premiums with the majority of this business generated in the New York metro area and is expected to have approximately $19.5 million of GAAP book value at closing. Estimated annual pre-tax income generated by the businesses to be acquired is approximately $4 million on a pro-forma basis."

 

"The founder of Global Liberty, Mr. Hossni Elhelbawi, has been committed to serving the insurance needs of the public for more than 25 years. He built an exceptional business based on his expertise and extensive knowledge of the specialty markets that Global Liberty serves. Under Atlas’ ownership, the best practices Global Liberty utilizes to service and support the company’s policy holders and producers will continue going forward.

 

"Scott D. Wollney, President and Chief Executive Officer of Atlas, stated, "This is a very important acquisition for Atlas, as Global Liberty’s current premium base is highly complementary to our existing infrastructure. As with our other subsidiaries, Global Liberty has a strong heritage in the public auto market with a committed and experienced management team. This transaction is expected to greatly accelerate our ability to grow to proportionate share in the largest light commercial vehicle market in the country. Based on the size and nature of the New York market, we plan to maintain Global Liberty’s local infrastructure on Long Island and have the location serve as an East Coast regional office for Atlas.”

 

Upon the closing of the transaction, Atlas will continue to manage Global Liberty’s public auto insurance business utilizing its best practices and intends to provide a seamless transition for existing Global Liberty customers and agents. Atlas intends to continue to distribute products under the current brand name emphasizing the complementary nature of these products relative to those offered by Atlas’ other insurance subsidiaries. The addition of Global Liberty’s New York based team will provide additional incremental value to Atlas as well.

 

Hossni Elhelbawi, Chief Executive Officer and owner of Global Liberty commented, “We are delighted to join with Atlas to expand and continue to deliver the quality of service and products to our insurance policyholders and agents.”

 

The purchase price will include $4 million of AFH preferred shares with an annual dividend rate of 4.5%, payable in cash or in kind, which are convertible to AFH common stock after the fifth anniversary of issuance at a strike price of $20 per common share. The final amount of preferred shares will be adjusted based on actual loss development related to Global Liberty’s pre-acquisition reserves. Atlas and the seller have a mutual right to exchange these shares for cash after the third anniversary of issuance at face value plus any accrued interestsubject to certain conditions. The remainder of the purchase price will be paid in cash. An earn out of up to an additional $1 million may be paid based on underwriting profitability of the New York business during the three years subsequent to the transaction effective date. Completion of the transaction is subject to customary closing conditions, including regulatory approval of the change of control of Global Liberty, and is expected to be completed during the first quarter of 2015.

 

We anticipate that non-recurring expenses related to the transaction of approximately $0.05 to $0.07 per common share will be incurred in the fourth quarter of 2014 and approximately $0.06 to $0.08 per share will be incurred in the first quarter of 2015.

 

Under the terms of the agreement, the purchase price will be subject to final adjustment based on audited December 31, 2014 financial results.

 

Sandler O’Neill + Partners, LP acted as financial advisor and DLA Piper LLP acted as legal counsel to Atlas for this acquisition. StoneRidge Advisors acted as financial advisor and Jaspan Schlesinger LLP acted as legal advisors to the seller.

 

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