Item 1.01 Entry into a Material Definitive Agreement
On January 18, 2021, we entered into a Renewal Rights Agreement with United
Insurance Holding Corp. and certain of its affiliates, including United Property
& Casualty Insurance Company, to transition all of United's personal lines
insurance business in the states of Connecticut, New Jersey, Massachusetts and
Rhode Island to HCI. The business to be transitioned represents approximately
$124.9 million of annual premiums.
Under the agreement, we agreed to provide 69.5% quota share reinsurance on all
of United's in-force, new and renewal policies in the four states from December
31, 2020 through May 31, 2021. In exchange, we will pay United an allowance of
$4.4 million towards already purchased catastrophe reinsurance and a provisional
ceding commission of 25% of premium. That percentage could increase up to 31.5%
depending on the direct loss ratio results for the reinsured business.
As part of the transaction, we issued to United 100,000 shares of HCI common
stock. We also agreed to pay United a cash payment of up to $3.1 million
depending on the amount of premium transitioned to us. Consummation of the
transactions contemplated by the renewal rights agreement is subject to
regulatory approvals in the four states.
Our corresponding press release appears as Exhibit 99.1 to this form 8-K.
Item 9.01 Exhibits.
Exhibit 99.1 Press Release
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