Subsequent Events

9 Months Ended

Sep. 30, 2012

Subsequent Events

Subsequent Events

NOTE 15. Subsequent Events

On October 16, 2012, the Company announced its agreement to terminate its underwriting arrangement with the Hagerty Insurance Agency and to sell the Company’s indirect wholly owned subsidiary, Essentia Insurance Company (“Essentia”), which writes the Hagerty collector car and boat business, to Markel Corporation. The sale is expected to close in the first quarter of 2013, subject to regulatory approval. The Company anticipates recording a $23 million pre-tax gain on sale ($15 million after tax) upon closing the transaction. The termination of the agency agreement will be effective as of the close date of the Essentia sale. The business associated with this agreement generated written premiums of approximately $179 million, or 16% of consolidated written premiums, for the 12 months ended September 30, 2012.

On October 17, 2012, the Company entered into a definitive agreement to sell the Runoff Business.  As further described in Note 1, Note 2, and Note 14, the loss related to this sale was reflected in the September 30, 2012 financial statements as the Runoff Business was accounted for as held for sale in the September 30, 2012 balance sheet.  In addition, the related operations were accounted for as discontinued operations. The Runoff Transaction is expected to close in the second half of 2013, subject to regulatory approvals.