(February 19 – 17:30 ET) – Specialty insurer Queensway Financial Holdings Ltd. has entered into a letter of intent to sell the shares of its subsidiaries, North Pointe Financial Services Inc. and Hermitage Insurance Co., to Argonaut Group, Inc.

The letter of intent also contemplates a possible purchase of the shares or assets of Consolidated Property & Casualty Co. and Universal Fire and Casualty Insurance Company.

North Pointe, Hermitage, Consolidated and Universal represent all of Queensway’s ongoing U.S. operations. According to Queensway –excluding Sun States Insurance Group and Paradigm Insurance Company — these subsidiaries account for approximately 83% of Queensway’s assets and approximately 91% of the company’s gross written premiums.

The purchase price offered for North Pointe and Hermitage is US$36.5 million. The company says that the purchase price for Consolidated and Universal has not yet been finally determined.

Should the final aggregate purchase price for North Pointe, Hermitage, Universal and Consolidated (which is expected to be in excess of US $40 million) be unsatisfactory to Queensway, the company says it may terminate the entire proposed transaction.

Failure to complete the transaction for any reason (other than the non-fulfillment of a condition of closing) would require Queensway to pay a break fee of US $2.4 million.

The proceeds of the sale will be applied to outstanding indebtedness. Queensway’s board of directors continues to review options available with respect to its other assets to maximize value for all stakeholders.
-IE Staff