American Safety Insurance Group, Ltd. Files Suit to Rescind Acquisition of Michigan Insurance Agency and Related Insurance Companies.Business/Insurance Editors HAMILTON, Bermuda--(BUSINESS WIRE)--April 24, 2000 American Safety Insurance Group, Ltd. (NYSE NYSE See: New York Stock Exchange :ASI ASI, n See Anxiety Sensitivity Index. ) today announced that it has filed suit to rescind To declare a contract void—of no legal force or binding effect—from its inception and thereby restore the parties to the positions they would have occupied had no contract ever been made. rescind v. the previously announced acquisition of a Michigan insurance agency and two related insurance companies specializing in insurance program business. In January 2000, American Safety Holdings Corp. acquired (i) the stock of L&W Holdings, Inc. and its wholly-owned subsidiary, RCA See RCA connector and video/TV history. Syndicate #1, Ltd., an Illinois licensed insurance carrier operating on the INEX INEX Integrated Numerical Experiment INEX Internet Neutral Exchange (formerly the Illinois Insurance Exchange), and (ii) the stock of Principal Management, Inc., an insurance program development and management group headquartered in Okemos, Michigan Okemos (IPA: /ˈoʊkəmɨs/) is an unincorporated community in Meridian Charter Township, Ingham County in the U.S. state of Michigan. ; in a related transaction, American Safety Insurance Group, Ltd. acquired the stock of Pegasus Insurance, a Cayman Islands Cayman Islands (kā`mən), British dependency (2005 est. pop. 44,300), 100 sq mi (259 sq km), comprising three islands in the West Indies. licensed insurance carrier. The transactions were structured as stock acquisitions with the purchase price payable by American Safety consisting of cash plus American Safety common shares and earnout provisions for the future issuance of additional common shares. When RCA Syndicate #1, Ltd. filed its 1999 Annual Statement with the Illinois Department of Insurance in March 2000, American Safety first became aware that there had been a material adverse change in the business affairs and financial condition of the acquired companies from that represented by the sellers. American Safety launched an investigation which disclosed that the insurance claims experience of the acquired companies had been misrepresented and that incurred losses from insurance claims were significantly in excess of the amounts reported in their claims records and their financial statements. As a result, American Safety then made written demand upon the selling shareholders of the acquired companies for rescission The abrogation of a contract, effective from its inception, thereby restoring the parties to the positions they would have occupied if no contract had ever been formed. By Agreement of the transactions, including a return of the purchase price paid for the companies, and has now filed suit to rescind based upon the sellers' breach of the representations and warranties made concerning the business affairs and financial condition of the acquired companies. Based on presently available information, the effect on the first quarter 2000 results of American Safety Insurance Group, Ltd. is expected to be a reduction both in net income of approximately $3.5 million and earnings per share of approximately $.59. American Safety's demand for rescission of the transactions will have no effect on American Safety's 1999 earnings. The sellers' misrepresentations as to the business affairs and financial condition of the acquired companies, and the under-reserving for claims, relate only to the operations of the acquired companies. Lloyd A. Fox, President and Chief Executive Officer, stated: "The sellers' misrepresentations concerning the business affairs and financial condition of the acquired companies were a shock to American Safety. Upon learning of the adverse changes in the financial condition of the acquired companies, we took appropriate steps to investigate the situation which led us to conclude that the selling shareholders had not accurately disclosed their claims experience and had betrayed the trust that was placed in them by American Safety. We are pursuing appropriate legal remedies A legal remedy is the means by which a court of law, usually in the exercise of civil law jurisdiction, enforces a right, imposes a penalty, or makes some other court order to impose its will. In Commonwealth common law jurisdictions and related jurisdictions (e.g. to rescind these transactions and to restore American Safety to its position prior to these transactions. Despite this unfortunate situation, American Safety remains a financially strong organization." American Safety Insurance Group, Ltd. is a specialty insurance and financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. company which, through its subsidiaries, develops, underwrites, manages and markets primary casualty insurance and reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. programs in the alternative insurance market for environmental risks, employee leasing and staffing industry risks, and other specialty risks, as well as providing a broad range of financial services and products to middle market businesses. Additional information about American Safety can be found at www.americansafetygroup.com. This news release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . These forward-looking statements reflect the Company's current views with respect to future events and financial performance. Forward-looking statements involve risks and uncertainties which may cause actual results to differ, and are subject to change based on various factors, including, the outcome of the Company's lawsuit for rescission of the acquisition of the Michigan insurance agency and two related insurance companies, competitive conditions in the insurance industry, unpredictable developments in loss trends, changes in loss reserves, market acceptance of new coverages and enhancements, changes in insurance regulatory requirements Regulatory requirements are part of the process of drug discovery and drug development. Regulatory requirements describe what is necessary for a new drug to be approved for marketing in any particular country. and tax statutes, changes in levels of general business activity and economic conditions, and the Company's ability to integrate and operate acquired businesses and the risks associated with such businesses. For additional factors which could influence the results of the Company's operating and financial performance, see the Company's filings with the Securities and Exchange Commission. |
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