Item 1.01 Entry into a Material Definitive Agreement.
On September 18, 2017, United Fire Group, Inc.'s ("UFG") subsidiary, United Fire & Casualty Company, an Iowa corporation (“United Fire”), entered into an Stock Purchase Agreement, dated as of September 18, 2017, between United Fire and Kuvare US Holdings, Inc. (the “Stock Purchase Agreement”) to sell its subsidiary, United Life Insurance Company (the “Company”) to Kuvare US Holdings, Inc., a Delaware corporation ("Kuvare"), for a cash purchase price of $280 million (the “Sale”). The purchase price will be reduced by the amount of any Leakage (as defined in the Stock Purchase Agreement) from March 31, 2017 to the closing date of the Sale, which includes certain identified actions by the Company during the relevant period, including, without limitation, capital and other similar payments, and certain fees and expenses incurred by the Company in connection with the transactions contemplated by the Stock Purchase Agreement.
The Stock Purchase Agreement contains customary representations and warranties, covenants, agreements and indemnities. The closing of the Sale, which is currently expected to occur in the first half of 2018, is subject to customary conditions, including, among others, (i) applicable insurance regulatory approvals, (ii) the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (iiii) the absence of any law or court or governmental order or injunction prohibiting, restraining or enjoining consummation of the Sale, (iv) subject to materiality qualifiers, the accuracy of the representations and warranties made by United Fire and Kuvare, and compliance by United Fire and Kuvare with their respective obligations under the Stock Purchase Agreement, and (v) no fact, condition, circumstances, change or effect having occurred that has had or would reasonably be expected to have, a Company Material Adverse Effect (as defined in the Stock Purchase Agreement). The closing of the Sale is not subject to any financing contingency.
Pursuant to the terms of the Stock Purchase Agreement, United Fire has agreed that for a period of twenty-four months following the closing of the Sale, it will not (i) engage in the business of issuing, underwriting, selling, marketing and administering (a) income and deferred annuity contracts, (b) individual life insurance policies and (c) disability insurance contracts, in each case, that would compete with the Company, or (ii) solicit Company employees, each subject to certain exceptions.
This summary of the Stock Purchase Agreement is qualified in its entirety by reference to the full text of the Stock Purchase Agreement, a copy of which is attached as Exhibit 2.1 to this Current Report on Form 8-K and incorporated into this Item 1.01 by reference.
The Stock Purchase Agreement has been included in this report to provide investors with information regarding its terms and conditions. It is not intended to provide any other factual information about United Fire, the Company, Kuvare or any of their respective subsidiaries. The representations, warranties and covenants contained in the Stock Purchase Agreement were made only for purposes of that agreement and as of specific dates, were solely for the benefit of the parties to the Stock Purchase Agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Stock Purchase Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors are not third-party beneficiaries under the Stock Purchase Agreement and should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of United Fire, the Company or Kuvare or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Stock Purchase Agreement, which subsequent information may or may not be fully reflected in UFG’s public disclosures.