FedNat’s Monarch stake reduced to 30% after further share sale to Hale

FedNat has sold 30,000 more shares of Monarch National Insurance to Hale Partnership Capital Management for $2.5mn, which reduces FedNat’s ownership of Monarch’s common stock to 30 percent.

The transaction, which closed on 8 September, was entered into pursuant to the put right agreed to by the parties in conjunction with the previous closing on 30 June of Hale’s investment in Monarch.

As a result, the group of investors managed by Hale has increased their ownership of Monarch’s outstanding common stock to 70 percent.

FedNat is winding down its operations while retaining a minority stake in Monarch.

Under Hale’s initial June transaction it bought a majority stake in Monarch for $15mn, with the carrier being spun off by FedNat to assume its Florida portfolio of 78,000 homeowners policies.

FedNat retained a 40 percent minority stake in Monarch after that transaction.

Sunrise, Florida-based FedNat retains two seats on Monarch’s board of directors and continues to provide MGA services, including policy servicing and claims administration, to Monarch through the wholly owned subsidiary FedNat Underwriters.

FedNat today also announced that interim CFO Erick Fernandez has resigned, effective 20 September. 

The board has appointed Gordon Jennings as interim CFO. Jennings currently serves as vice president of risk management, a position he has held since 2008.

FedNat in April had admitted there was “substantial doubt” about its ability to continue as a going concern following Demotech downgrading the carrier’s financial strength rating to ‘S’ (substantial) from ‘A’ (exceptional).

The company’s woes came against a backdrop of a worsening crisis in the Sunshine State’s homeowners insurance market.

Michael Braun, who had served as FedNat CEO since 2008, resigned in July. 

Last month FedNat received notice that it was not in compliance with requirements of Nasdaq Listing Rule 5250(c)(1) as a result of not having timely filed its Form 10-Q for the second quarter.