Specialty lines property/casualty insurance and risk-management holding company WRM America Holdings LLC said it will acquire the flood insurance business of title insurer Fidelity National Financial Inc. for $210 million.

WRM America Chief Executive Officer and Chairman William Fishlinger told BestWire the acquisition is the next step in its growth as a specialty lines property/casualty insurance and risk management holding company. The deal "will significantly add to our fee-for-service offering and continue to grow our platform," he said.

Fidelity National Financial's flood and excess flood business -- Fidelity National Indemnity Insurance Co. -- will operate as a wholly owned subsidiary of WRM America. Patty Templeton-Jones and G. Michael Sloane will continue to lead the company and become members of the senior management team at WRM America.

Fidelity National Indemnity said its flood business is the largest U.S. provider of federal flood insurance through the National Flood Insurance Program, capturing more than 17% of the total "Write Your Own" program market in 2010. Its flood business offers NFIP and excess flood insurance through its national network of independent agents and brokers, and has consistently achieved an industry-leading renewal rate through its customer-focused approach, the company said in a statement.

On July 12, the U.S. House of Representatives approved a five-year reauthorization of the federal flood insurance program. NFIP is scheduled to expire Sept. 30 and is nearly $18 billion in debt. The House bill, which passed 406-22, would set actuarially sound premiums, reduce current rate subsidies, improve flood area mapping, call for the Federal Emergency Management Agency to study incorporating private insurance and increase coverage for homes and commercial buildings. FEMA administers the program (BestWire, July 13, 2011).

The "Write Your Own" program, which operates as part of the NFIP, is a cooperative undertaking of the insurance industry and FEMA. It allows participating property/casualty insurers to write and service the Standard Flood Insurance Policy in their own names.

WRM America will acquire Fidelity National Indemnity and Fidelity National Insurance Services for $210 million, consisting of about $122.5 million in cash, $75 million in a seller note and approximately $12.5 million in an expected cash dividend. The company expects the transaction to close during the fourth quarter, subject to regulatory approval and customary closing conditions.
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Central operations of the Fidelity National Indemnity flood business will continue to be based in St. Petersburg, Fla. The company said it plans to retain its 220 employees.

WRM America said it worked closely with its lead shareholder, global financial services private equity firm Aquiline Capital Partners, to consummate the agreement.

Risk financing and insurance-management company Wright Risk Management, along with Aquiline Capital Partners, formed WRM America Holdings, based in Uniondale, N.Y., in 2008 to initially serve the specialized insurance needs of the education market and grow into the not-for-profit and municipal markets nationally.

In 2003, the Fidelity National Group acquired the flood business of Mutual of Omaha's subsidiary, Omaha Property and Casualty Insurance Co., and the Bankers Group of St. Petersburg, Fla., and purchased Bankers' subsidiary, First Community Insurance Co. The acquisitions expanded the group's penetration in the flood market, making it the single largest writer of "Write Your Own" flood insurance policies under the NFIP, according to BestLink, which provides online access to A.M. Best's database of insurance information. Fidelity National Property and Casualty, licensed in all 50 states and the District of Columbia, principally writes flood business through participation in the NFIP "Write Your Own" program. It does not retain insurance risk on the program, as it cedes 100 percent to the NFIP.