Acceptance in Redlands Partnership with Clarendon

Acceptance Insurance Companies and Clarendon Insurance Group said they've reached an agreement in principle for Clarendon to acquire Acceptance's Redland Insurance Company. Under terms of the deal, Acceptance will be Redland's exclusive representative for the lines of business it already writes through Redland. Acceptance also will reinsure parts of the business written by Redland in the future. Beyond this, Acceptance and Clarendon say they will jointly develop additional specialty program business.

The sale of Redland will be a cash transaction based upon the statutory book value of Redland after the divestiture of Redland assets associated with Acceptance's crop insurance operations. The companies expect the deal to be done during the second quarter of this year.

Acceptance will retain an option to repurchase Redland under certain circumstances. Upon closing, Redland is expected to cede most of its business to Clarendon National Insurance Company.

"We are excited about the benefits and opportunities that this transaction provides for the agents and customers of Acceptance, and for both our company and Clarendon," said John Martin, president and chief executive officer of Acceptance. "This transaction will combine the financial strength of the Clarendon Group with the expertise of our underwriting and claims personnel, allowing our agents not only to maintain, but grow the profitable business they have developed with Redland. Our agreement with Clarendon continues the process of focusing our property and casualty operations on our core lines of profitable specialty business."

Ralph Milo, chairman and chief executive officer of the Clarendon Group said, "This transaction is a win/win situation for both companies. The new partnership will create a unique combination of marketing, underwriting, administration, and financial resources to develop specialty program business. We are looking forward to working with Acceptance to develop the full potential of Redland Insurance Company."

E.W. Blanch Capital Markets acted as a financial advisor to Acceptance in this transaction.