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United Insurance To Buy Family Security

United Insurance Holdings Corp. (UIHC) said on Monday it has entered into an Agreement and Plan of Merger with Family Security Holdings LLC.

Family Security is an insurance holding company with two wholly-owned subsidiaries, Family Security Insurance Co, a Hawaii-domiciled property and casualty insurer authorized in Hawaii and Louisiana, and Family Security Underwriters LLC, a managing general agency performing administrative and marketing services for Family Security Insurance Co.

Under the terms of the agreement, which is subject to Family Security shareholder approval, United Insurance will acquire all of the issued and outstanding shares, units and other ownership rights of Family Security for $9 million (merger consideration).

The merger consideration will be paid 100% in shares of the company's common stock, with the number of shares issued to be determined by the average closing price of the company's stock in the 180-days immediately prior to closing.

In addition to the merger consideration, United Insurance agreed to pay Family Security contingent consideration of 3% of all gross premiums written on the renewal of Family Security Insurance Co policies in-force as of the closing during the subsequent twelve month period following the closing of the transaction.

The contingent consideration will be paid in the form of additional shares of the company's stock issued in a manner similar to the merger consideration within approximately 30 days following the twelve month anniversary of the closing.

The shares underlying both the merger consideration and the contingent consideration will be subject to a one-year lock-up from the time they are issued.

The transaction is expected to close on or before January 31, 2015.

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