Attached files
| file | filename |
|---|---|
| EX-2.1 - FedNat Holding Co | v209061_ex2-1.htm |
| EX-99.1 - FedNat Holding Co | v209061_ex99-1.htm |
| EX-10.1 - FedNat Holding Co | v209061_ex10-1.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of Report: January 25,
2011
(Date
of earliest event reported)
21ST CENTURY HOLDING
COMPANY
(Exact
name of registrant as specified in its charter)
|
Florida
|
0-2500111
|
65-0248866
|
|||
|
(State
or other jurisdiction
of
incorporation)
|
(Commission File
Number)
|
(I.R.S.
Employer Identification
No.)
|
|
3661
West Oakland Park Blvd., Suite 300
|
|||||
|
Lauderdale
Lakes, FL
|
33311
|
||||
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Registrant’s
telephone number, including area code: (954)
581-9993
NOT
APPLICABLE
(Former
Name or Former Address, if Changed Since Last Report)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
| o |
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|
|
| o |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
| o |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
|
|
| o |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
|
Item
1.01 Entry into a Material Definitive Agreement
On
January 26, 2011, 21st
Century Holding Company (the “Company”) entered into an Agreement and Plan of
Merger with its two wholly owned insurance company subsidiaries, Federated
National Insurance Company (“Federated National”) and American Vehicle Insurance
Company (“American Vehicle”). Pursuant to this agreement Federated National has
merged with American Vehicle effective January 26, 2011 (the “Merger”), with
American Vehicle as the surviving company (the “Merged Company”). As
part of this Merger, American Vehicle has also changed its name to Federated
National Insurance Company.
The
Company believes that the combining of its two insurance company subsidiaries
will enable it to utilize its capital in a more effective manner. This
utilization will come in the form of obtaining reinsurance on more favorable
terms, allowing more flexibility in its reinsurance programs, reducing
regulatory filing and compliance expenses, and eliminating redundant
administrative expenses, including personnel associated with operating two
separate insurance companies.
The
Florida Office of Insurance Regulation (“OIR”) has approved the Company’s
request for the Merger. As part of this approval, the Company,
Federated National and American Vehicle entered into a consent order with the
OIR dated January 25, 2011 (the “Order”) pursuant to which the Company and
Merged Company have agreed to the following:
|
·
|
Merged
Company shall retain the following licenses: (010) Fire, (020) Allied
Lines, (040) Homeowners Multi Peril, (050) Commercial Multi Peril, (090)
Inland Marine, (170) Other Liability, (192) Private Passenger Auto
Liability, (194) Commercial Auto Liability, (211) Private Passenger Auto
Physical Damage, and (212) Commercial Auto Physical
Damage.
|
|
·
|
Merged
Company shall not write Commercial Multi Peril policy premium without
prior approval from the OIR. The Merged Company currently has no
Commercial Multi Peril policy premium in
force.
|
|
·
|
Merged
Company shall surrender its Surety license. The Merged Company currently
has no Surety policy premium in
force.
|
|
·
|
Merged
Company shall not write new Commercial Habitation “condo associations”
without prior approval from the OIR. The current Commercial Habitation
book of business is approximately $2.6 million of policy premium, which
will be renewed pursuant to normal underwriting
guidelines.
|
|
·
|
Merged
Company has agreed to reduce the total number of its homeowners’ policies
in Miami-Dade, Broward and Palm Beach counties (the “Tri-County Area”) to
40% of its entire homeowners’ book by December 31, 2011 and limit its new
homeowners’ policies in the Tri-County Area to $500,000 of new policy
premium per month. The 40% will be achieved through the increased writing
of property located outside of the Tri-County Area, the non-renewal of
certain policies located within the Tri-County Area, and limiting the
writing of new property located within the Tri-County Area. As of
September 30, 2010, the Company had approximately 45% of its homeowners’
policies located within Tri-County
Area.
|
|
·
|
The
managing general agency fees payable by the Merged Company to Assurance
Managing General Agents, Inc., the Company’s wholly owned subsidiary,
which are currently 6% of gross written premium, will be reduced and will
not exceed 4% without prior approval from the OIR. The Merged Company has
lowered the fee to 2% of gross written premium for the first quarter of
2011, 3% of gross written premium for the second quarter of 2011, and 4%
of gross written premium thereafter. This will have no impact
on the Company’s consolidated financial
results.
|
|
·
|
The
claims service fees payable by the Merged Company to Superior Adjusting,
Inc., another of the Company’s wholly owned subsidiaries, will be reduced
from 4.5% of gross earned premium to 3.6% of gross earned premium. This
will have no impact on the Company’s consolidated financial
results.
|
|
·
|
The
Order continues the prohibition on the Company from the payment of
dividends until the Merged Company reports two consecutive quarters of net
underwriting income.
|
|
·
|
The
Company provided the OIR with a plan of operation and has agreed to
provide certain reports to the OIR on a monthly basis, and agreed to
obtain the OIR’s approval prior to making any changes to the officers of
the Merged Company during the first year following the effective date of
the Merger.
|
The
foregoing description of the Order does not purport to be complete and is
qualified in its entirety by reference to the full text of the Order, a copy of
which is attached as Exhibit 10.1 to this Form 8-K and is incorporated by
reference herein.
Demotech,
Inc. (“Demotech”) has reviewed the terms of the Merger and the impact on the
Merged Company and has maintained its Preliminary Financial Stability
Rating® (PFSR)
of A for the Merged Company at this time. Demotech provides Financial Stability
Ratings of insurance companies, including American Vehicle and Federated
National, which are based on an insurance company’s financial stability related
to maintaining surplus. These ratings reflect factors of concern to mortgage
lenders, agents, reinsurers and policyholders, and are not primarily directed
toward the protection of investors. Demotech’s policy is to review
and update its ratings periodically and therefore there can be no assurances
that Merged Company’s rating will remain the same in the future.
Item
9.01 Financial Statements and Exhibits
The following exhibits are filed with
this Current Report on Form 8-K:
|
2.1
|
Agreement
and Plan of Merger dated as of January 26, 2011 among 21st
Century Holding Company, Federated National Insurance Company and American
Vehicle Insurance Company
|
|
|
10.1
|
Consent
Order dated January 25, 2011 among the Florida Office of Insurance
Regulation, 21st Century Holding Company, Federated National Insurance
Company, American Vehicle Insurance Company
|
|
|
99.1
|
Articles
of Merger dated as of January 26, 2011 of Federated National Insurance
Company with and into American Vehicle Insurance
Company
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
|
21ST
CENTURY HOLDING COMPANY
|
||
|
Date: January
27, 2011
|
By:
/s/ Peter
J. Prygelski,
III
|
|
|
Name: Peter
J. Prygelski, III
|
||
|
Title:
Chief Financial Officer
|
||
|
(Principal
Accounting and Financial Officer)
|
||
EXHIBIT
INDEX
|
Exhibit No.
|
Exhibit Title
|
|
|
2.1
|
Agreement
and Plan of Merger dated as of January 26, 2011 among 21st
Century Holding Company, Federated National Insurance Company and American
Vehicle Insurance Company
|
|
|
10.1
|
Consent
Order dated January 25, 2011 among the Florida Office of Insurance
Regulation, 21st Century Holding Company, Federated National Insurance
Company, American Vehicle Insurance Company
|
|
|
99.1
|
Articles
of Merger dated as of January 26, 2011 of Federated National Insurance
Company with and into American Vehicle Insurance
Company
|