-
NATL Special Committee unanimously approves AFG’s offer price of
$32.00 per share and $0.50 per share pre-closing dividend
-
NATL transaction would generate a non-core tax benefit of
approximately $64 million to AFG at the time it is consummated
-
AFG second quarter net earnings attributable to shareholders
will be in the range of $0.60 to $0.65 per share and include a
non-core charge of $65 million related to Neon’s exited lines of
business
-
Second quarter 2016 core net operating earnings estimated to be
in the range of $1.25 to $1.30 per share
-
Full year 2016 core net operating earnings guidance maintained
at $5.35 to $5.75 per share
CINCINNATI--(BUSINESS WIRE)--Jul. 25, 2016--
American Financial Group, Inc. (NYSE: AFG) today announced that it
reached an agreement with the Special Committee of the Board of
Directors of National Interstate Corporation (Nasdaq: NATL) to acquire
all shares of National Interstate that are not currently owned by AFG’s
wholly-owned subsidiary, Great American Insurance Company (GAIC).
Shareholders of National Interstate, other than Great American, will
receive $32.00 per share in cash in the transaction, without interest
and less any required withholding taxes. In addition, National
Interstate will pay a one-time special dividend to its shareholders of
$0.50 per NATL share in cash immediately prior to the closing of the
merger. The transaction remains subject to the approval of shareholders
holding a majority of the shares of National Interstate not owned by AFG
or its affiliates. GAIC has entered into a voting agreement with Alan
Spachman under which Mr. Spachman has agreed to vote his beneficially
owned shares, totaling approximately 10% of the outstanding National
Interstate common shares (and representing approximately 20% of the
shares not owned by GAIC), in favor of the transaction.
Based on a $32.00 per share purchase price plus $0.50 special dividend,
the purchase price to acquire the National Interstate shares not
currently owned by Great American will be approximately $320 million.
The proposed transaction will not be subject to a financing condition.
The proposed transaction would allow National Interstate and its
subsidiaries to become members of the AFG consolidated tax group, which
would result in a non-core tax benefit of approximately $64 million to
AFG at the time the transaction is consummated, which is expected to be
during the fourth quarter of 2016.
Carl H. Lindner III, Co-Chief Executive Officer of AFG, commented: “The
purchase of the remaining National Interstate shares enables us to make
an additional investment in a business we know well, while at the same
time simplifying the ownership structure; we are pleased that National
Interstate’s shareholders will have the opportunity to vote on and
approve the transaction.”
S. Craig Lindner, Co-Chief Executive Officer of AFG, added: “Capital
management is a top priority for AFG, and we strive to find the highest
and best use of capital to create long-term value for our shareholders.
In doing so, our goal is to generate an appropriate return on capital
over time. We will continue to evaluate opportunities to deploy our
excess capital through a combination of dividend payments, share
repurchases, acquisitions or bolt-on/start-up opportunities.”
Further information regarding the terms and conditions in the Merger
Agreement will be contained in a Current Report on Form 8-K, which will
be filed promptly with the Securities and Exchange Commission (SEC) by
AFG.
Preliminary AFG Second Quarter 2016 Core EPS
Estimate and 2016 Core EPS Guidance
On June 13, 2016, AFG’s specialist Lloyd’s market insurer completed a
strategic review of its business under a new leadership team and
re-launched as Neon Underwriting Ltd. As part of its strategic review,
Neon sold and/or exited certain historical lines of business including
its UK and International Medical Malpractice and General Liability
classes. After completing a claims review of the exited lines, based on
information available at this time, AFG estimates that it will incur a
non-core charge of approximately $65 million in connection with Neon’s
exited lines of business. Consistent with our treatment of other items
that are not indicative of AFG’s ongoing operations (both favorable and
unfavorable), this charge is being treated as non-core because it
resulted from a special strategic review of lines of business that the
company no longer writes.
It is estimated that net earnings will be in the range of $0.60 to $0.65
per share and that core net operating earnings, exclusive of the Neon
non-core exited lines charge, will be in the range of $1.25 to $1.30 per
share for the second quarter of 2016.
Second quarter 2016 earnings before fair value accounting in our Annuity
Segment were strong compared to the second quarter of 2015; however, a
significant drop in interest rates during the second quarter of 2016
will result in a negative impact on the Annuity Segment’s reported core
earnings. The negative impact of fair value accounting is reflected in
the estimated $1.25 to $1.30 per share range for AFG’s core net
operating earnings for the second quarter 2016.
Based on results for the first six months of 2016, AFG continues to
expect core net operating earnings for the full year of 2016 to be
between $5.35 and $5.75 per share, including the impact of fair value
accounting for fixed-indexed annuities. Core earnings per share guidance
excludes non-core items such as realized gains and losses, as well as
other significant items that are not able to be estimated with
reasonable precision, or that may not be indicative of ongoing
operations.
About American Financial Group, Inc.
American Financial Group is an insurance holding company, based in
Cincinnati, Ohio with assets of approximately $50 billion. Through the
operations of Great American Insurance Group, AFG is engaged primarily
in property and casualty insurance, focusing on specialized commercial
products for businesses, and in the sale of fixed and fixed-indexed
annuities in the retail, financial institutions and education markets.
Great American Insurance Group’s roots go back to 1872 with the founding
of its flagship company, Great American Insurance Company.
Additional Information and Where to Find It
In connection with the transaction, National Interstate intends to file
a proxy statement and other relevant materials with the SEC, and
National Interstate and certain other persons, including Great American,
intend to file a Schedule 13E-3 transaction statement with the SEC.
National Interstate shareholders and other interested parties are
strongly advised to read these materials when they become available
because they will contain important information. National Interstate
shareholders will be able to obtain such documents (when available) free
of charge at the SEC’s website, www.sec.gov.
National Interstate shareholders will also be able to obtain any
documents that are filed by AFG (when available) free of charge from AFG
at www.AFGinc.com
or by writing to American Financial Group, Inc., Great American
Insurance Group Tower, 301 East Fourth Street, Cincinnati, Ohio 45202,
Attn: Diane P. Weidner, or that are filed by National Interstate (when
available) free of charge from National Interstate at www.nationalinterstate.com
or by writing to National Interstate Corporation, 3250 Interstate Drive,
Richfield, Ohio 44286, Attn: Gary Monda.
Participants in the Solicitation
National Interstate, its directors (including certain executive officers
of AFG and GAIC), executive officers and other members of its
management, employees, and certain other persons may be deemed to be
participants in the solicitation of proxies from National Interstate’s
shareholders in connection with the transaction. Information regarding
the interests of participants in the solicitation, which may be
different than those of National Interstate’s shareholders generally,
will be included in the proxy statement relating to the transaction when
it becomes available.
Forward-Looking Statements
This press release contains, and certain oral statements made by our
representatives from time to time may contain, certain statements that
may be deemed to be “forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Forward-looking statements, by their
nature, are subject to a variety of inherent risks and uncertainties
that could cause actual results to differ materially from the results
projected. Many of these risks and uncertainties cannot be controlled by
AFG and include, but are not limited to: (a) that GAIC and National
Interstate may be unable to complete the proposed transaction because,
among other reasons, conditions to the closing of the proposed
transaction may not be satisfied or waived; (b) uncertainty as to the
timing of completion of the proposed transaction; (c) failure to realize
the anticipated benefits and synergies from the proposed transaction,
including as a result of failure or delay in the implementation of
integration plans; (d) the inability to retain key personnel; (e) any
changes in general economic and/or industry-specific conditions; and (f)
the outcome of any legal proceedings to the extent initiated against
AFG, GAIC, National Interstate or others following the announcement of
the proposed transaction, as well as AFG, GAIC and National Interstate
management's response to any of the aforementioned factors. For a
detailed description of other risks and uncertainties affecting AFG,
please refer to AFG’s filings with the SEC, available as set forth above
under “Additional Information and Where to Find It.”
Any forward-looking statements herein are made only as of the date of
this press release. AFG assumes no obligation to publicly update any
forward-looking statements. No information contained on any website
referenced in this press release is incorporated by reference herein.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160725005669/en/
Source: American Financial Group, Inc.
American Financial Group, Inc.
Diane P. Weidner, 513-369-5713
Asst.
Vice President – Investor Relations
or
Websites:
www.AFGinc.com
www.GreatAmericanInsuranceGroup.com