21st Century Holding Targeted by Florida Insurer

Homeowners Choice, Inc., a Florida-only homeowners insurance company founded in 2006, has sent a letter to the board of directors of 21st Century Holding Co. proposing a merger between the two companies.

In an Oct. 12 letter addressed to Bruce Simberg, board chairman of 21st Century, Homeowners Choice Board Chairman Paresh Patel proposed a cash and stock deal worth about $40 million.

Clearwater-based Homeowners Choice Inc. (HCI) writes homeowners, condominium owners and tenants insurance in Florida only.

Lauderdale Lakes, Fla.-based 21st Century, through its subsidiaries Federated National Insurance Co. and American Vehicle Insurance Co., underwrites standard and non-standard personal automobile insurance, flood insurance, general liability insurance, mobile home insurance and homeowners’ property and casualty insurance in Florida.

In addition, the company is authorized to underwrite commercial general liability insurance in Arkansas, California, Georgia, Kentucky, Maryland, Missouri, Nevada, South Carolina and Virginia as a surplus lines carrier and in Texas, Louisiana and Alabama as an admitted carrier. American Vehicle has applications pending to be a surplus lines carrier in additional states.

The Oct. 12 letter from HCI follows earlier communications between Patel and Simberg in which Simberg indicated that if Patel was serious he should make a formal offer for the 21st Century board to consider. On Aug. 20, Patel made an offer that was rejected by 21st Century on Sept. 4. Patel wrote that the rejection was disappointing “because any serious consideration of our proposal should have entailed at least one conversation between the two companies” about the benefits of a merger of the two firms.

In his most recent letter, Patel renewed his earlier $40 million offer and outlined what he believes the benefits of a merger would be.

Patel told Simberg that a main benefit would be that the two could expand and be profitable together. 21st Century has a number of licenses for other lines of businesses and other states, while HCI has focused on the Florida homeowners’ insurance market. Patel said 21st Century’s licenses coupled with HCI’s cash and marketing capability “would enhance the growth of these business lines and territories.”

Shareholders would also benefit, he contended. Combined, the companies would have a value in excess of $120 million.

HCI says it has the cash on hand for the deal so the proposed offer would contain no financing contingency. Patel said the company made its offer known publicly to encourage 21st Century take it seriously.