Maiden to merge with US specialty programme insurer

Bermuda-based Maiden Holdings is to merge with a US specialty programme insurer to form a new Bermuda-based publicly listed re/insurer. 

Under the terms of the deal, a new Bermuda-based holding company will acquire both Maiden and Dallas-based insurer Kestrel to form a new business rebranded as Kestrel Group. 

Each outstanding common share of Maiden will be converted into one common share of Kestrel Group. 

A statement said the transaction values Kestrel at up to $167.5 million, consisting of upfront cash of $40 million, 55 million common shares of the combined company valued at $82.5 million and an earnout of up to $45 million payable in common shares of the combined company. The shares are expected to be listed on the Nasdaq.

“The combination of Maiden and Kestrel brings together two values-driven insurance organizations with a shared commitment to innovation, service and long-term relationships,” the companies said. 

The combined company will be led by Kestrel chief executive officer Luke Ledbetter (pictured centred) as CEO, Kestrel executive chairman Terry Ledbetter (pictured left) in the same role, and Maiden CEO Pat Haveron (pictured right) as president and chief financial officer. 

Following closing of the transaction, Kestrel will continue to write business through its use of insurance carriers Sierra Specialty Insurance Company, Rochdale Insurance Company, Park National Insurance Company, and Republic Fire and Casualty Insurance Company (collectively, the “Insurers”), all subsidiaries of AmTrust Financial Services, Inc. (“AmTrust”). In connection with the transaction, the combined company will have the option to acquire the Insurers from AmTrust.

 “The combination with Kestrel represents a transformative milestone for Maiden,” Haveron said. “Kestrel’s balance sheet light, fee revenue model will enable Maiden to realize our vision of delivering a strong fee-based insurance platform while selectively deploying underwriting capacity to optimise returns for shareholders. 

“The Ledbetters and the broader Kestrel team have a long and proven track record of success in the specialty programme market, and we look forward to partnering with them to deliver value to program managers, MGAs, reinsurers and reinsurance brokers across a range of attractive specialty lines. The transaction provides a unique opportunity for Maiden shareholders to participate in the growth of what we believe will be a significant and differentiated competitor in the specialty insurance market.”

Luke Ledbetter said: “The combination with Maiden will allow us to accelerate our growth plan and capitalize on favourable market tailwinds as we continue our efforts to become the leading specialty programme group in the United States. 

“We believe a balance sheet light, fee revenue model will best position the combined company for future growth. We look forward to working with Pat Haveron and the Maiden team.”

The transaction has been unanimously approved by all of the directors of Maiden that voted on the matter (with two directors, having declared their interest in the transaction, recusing themselves from voting) and unanimously approved by the Board of Managers of Kestrel. 

Following completion of the transaction, the board of directors of the combined company will consist of seven directors, made up of four directors selected by an affiliate of the Ledbetters, two of whom will be independent under applicable securities laws and stock exchange rules, and three directors selected by AmTrust, two of whom will be independent under applicable securities laws and stock exchange rules.

Kestrel Group was formed by the Ledbetters in 2022. Both were formerly senior executives of programme insurer State National Companies, which Terry Ledbetter founded.  It was bought by Markel in 2017. 

In connection with the transaction, Maiden has suspended its share repurchase programme.

The transaction is expected to close in the first half of this year, subject to Maiden shareholder approval and other regulatory conditions. 

Insurance Advisory Partners LLC is acting as exclusive financial advisor and Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting as legal counsel to Maiden. Appleby (Bermuda) Limited is acting as independent legal counsel to the disinterested members of Maiden’s Board of Directors.

Evercore is acting as exclusive financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal counsel to Kestrel.

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