Tower Group International Ltd. has entered into a merger agreement with ACP Re Ltd., and a wholly owned subsidiary of ACP Re. The subsidiary will merge with Tower. Tower will remain as the surviving corporation in the merger and a wholly owned subsidiary of ACP Re. The transaction is expected to close by summer 2014.
Each outstanding share of Tower’s common stock, par value $0.01 per share (following the settlement of all outstanding equity awards) will be converted into the right to receive $3 in cash, with an aggregate value of about $172.1 million.
Several subsidiaries of Tower have entered into Cut Through Reinsurance Agreements. A subsidiary of AmTrust and a subsidiary of NGHC will reinsure Tower’s new and renewal commercial lines or personal lines policies. The subsidiaries also have each acquired a 10-day option to reinsure on a prospective basis not less than 60 percent of the unearned premium reserve, relating to Tower’s in-force commercial lines or personal lines business. Tower will receive a 20 percent ceding commission from AmTrust or NGHC on all Tower premiums that are subject to the Cut Through Reinsurance Agreements.
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