Atlas Financial To Acquire Global Liberty Insurance

(RTTNews) - Atlas Financial Holdings, Inc. (AFH) said Friday that it has agreed to buy Global Liberty Insurance Company of New York along with its affiliated underwriting and premium finance companies for about $25 million, subject to final adjustment.

The deal 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.

Global Liberty's principal business is in the light commercial auto sector, principally insuring limousine, black car, and luxury car vehicles. The company, based in Melville, New York, currently underwrites about $40 million of annual commercial auto direct written premiums with the majority of this business generated in the New York metro area. Estimated annual pre-tax income generated by the businesses to be acquired is about $4 million on a pro-forma basis.

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. 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 deal effective date.

The deal is expected to be completed during the first quarter of 2015.

Atlas Financial anticipates that non-recurring expenses related to the deal of $0.05 to $0.07 per share will be incurred in the fourth quarter of 2014 and $0.06 to $0.08 per share will be incurred in the first quarter of 2015.