Queensway cleans house

Queensway Financial Holdings Ltd. (TSE: QFH) has entered into an agreement to sell its U.S. subsidiaries North Pointe Financial Services Inc. and Hermitage Insurance Co. to the Argonaut Group Inc. for US$36.5 million. The troubled specialty insurer, which operates in both Canada and the U.S., is also considering the disposal of its remaining U.S. interests of Consolidated Property & Casualty Co. and Universal Fire and Casualty Insurance Co. to the same buyer.

Queensway has pegged the value of all four operations in excess of US$40 million. If the final price put on offer proves unsatisfactory, Queensway says it may terminate the entire proposed transaction. The proceeds of the deal will be used to reduce debt, the company says.

Should the deal with Argonaut go through, Queensway will have fully divested itself from the U.S. market and will only have its Coachman Insurance operation in Canada as an active subsidiary. A press statement issued by the company notes, “These [being the four U.S operations mentioned above] subsidiaries account for approximately 83% of Queensway’s assets and approximately 91% of Queensway’s gross written premiums”.

Following the sale announcement of the four U.S subsidiaries, A.M. Best issued a statement saying that it will change its review of the operations to positive should the deal go through.