Montpelier Re Holdings Ltd. has agreed to sell a U.S. insurance business unit to Selective Insurance Group Inc. for about $55 million in cash, the companies said Tuesday.
The sale of Montpelier U.S. Insurance Co. is expected to close in the fourth quarter, subject to regulatory approvals and closing conditions.
Once the deal is concluded, Montpelier U.S. Insurance will maintain its current operations in Scottsdale, Ariz., with Richard Nenaber remaining president and CEO, Selective Insurance said.
Selective Insurance, based in Branchville, N.J., said the deal will allow it to expand its contract binding authority business. Selective is the holding company for seven property and casualty insurance companies.
Christopher L. Harris, president and CEO of Montpelier, said the timing of the transaction is good.
He also said the deal "will allow us to redeploy additional capital into our Bermuda and London platforms, where we are seeing increasingly encouraging market conditions."
The transaction is expected to increase Montpelier's current tangible book value by about 24 cents per common share.