ProSight Specialty Insurance to Acquire Insurance Holding Company NYMagic

ProSight Specialty Insurance Holdings Inc. will acquire insurance holding company NYMagic Inc. for $25.75 per share, NYMagic said.

That represents a premium of 23.5% to NYMagic's closing price on July 14 of $20.85, NYMagic said in a statement.

ProSight Specialty, founded by Chief Executive Officer Joseph Beneducci and a group of senior executives from the property/casualty industry, is backed by affiliates of TPG Capital and GS Capital Partners. ProSight is a specialty P&C company that creates and delivers specialized solutions for groups of customers through limited, exclusive distribution partners.

Under terms of the agreement, NYMagic stockholders will receive $25.75 per share in cash. The transaction will be fully equity funded by ProSight Specialty. And completion of the transaction, which is expected to close sometime in the fourth quarter, is subject to the approval of NYMagic shareholders, customary closing conditions and regulatory approvals.

NYMagic said its shareholders owning approximately 40% of its fully diluted common shares have agreed to vote in favor of the deal.

Keefe, Bruyette & Woods Inc. provided a fairness opinion to the NYMagic board and its negotiating committee of independent directors, according to the company. Dewey & LeBoeuf LLP is acting as legal adviser to NYMagic. Goldman, Sachs & Co. is acting as financial adviser, and Weil, Gotshal & Manges LLP is legal adviser to ProSight Specialty, TPG Capital and GS Capital Partners.

NYMagic's property/casualty insurance subsidiaries specialize in underwriting ocean marine, inland marine and nonmarine liability insurance. Its agency subsidiaries specialize in establishing markets for such business.

The company declined to add information beyond its statement.

A.M. Best Co. said on July 15 that the financial strength rating of A (Excellent) and issuer credit ratings of a of New York Marine Group and its members and the ICR of bbb of its ultimate holding company, NYMagic Inc., are unchanged following the announcement of the proposed acquisition. The members of NY Marine include New York Marine and General Insurance Co. and Gotham Insurance Co.

In April, NYMagic named George R. Trumbull as president and CEO, upon the retirement of former CEO A. George Kallop.

NYMagic -- with an increase of 8.11% -- led July 9's A.M. Best's Global Insurance Composite Index as the global insurance index rose 0.91% (BestWire, July 12, 2010).

On the afternoon of July 15, shares of NYMagic (NYSE: NYM) were trading at $25.32, up 21.44% from the previous close.

(By Lori Chordas, senior associate editor, Best's Review: [email protected])