North Pointe Holdings Corp, a Southfield, Mich.-based specialty insurer that counts bowling centers and skating rinks among its underwriting niches, said late yesterday that a unit of QBE Insurance Group will pay $146 million to buy the company.

The firm said it had signed a definitive merger agreement to be acquired by QBE Holdings Inc. in New York, a subsidiary of Australia's QBE Insurance Group Ltd.

In 2007 the Sydney-based property-casualty insurer completed two much larger U.S. deals--for Winterthur U.S. and Praetorian.

In June 2007, QBE announced that it completed the acquisitions of Winterthur, a regional p-c insurer of small and midsized business written through independent agents, and Praetorian, a specialty program business writer, for a total purchase price of $2.5 billion, adding roughly $2.8 billion in gross premiums to its books.

The $146 million cash deal for North Pointe, which is subject to satisfaction of certain closing conditions, is expected to close in the next six months, and QBE expects the deal to add $150 million to its books. Through the first six months of 2007, QBE reported $6.5 billion in gross premiums worldwide.

North Pointe said its board of directors has unanimously approved the merger agreement that will have QBE acquire all of North Pointe's outstanding common shares for $16 per share--a figure that represents a premium of 50 percent over Wednesday's closing stock price of $10.65.

In a statement, James Petcoff, president and chief executive officer of North Pointe, noted QBE's intention to actively build out its U.S. specialty insurance platform, and in a separate statement, Tim Kenny, president and CEO of QBE the Americas, said the deal increases QBE's distribution through independent agents.

From North Pointe's perspective, Mr. Petcoff said the deal improves future growth opportunities for his company and increases access to capital.

North Pointe, which focuses on insuring owner-operated businesses and describes itself as the nation's largest insurer of independent bowling centers and the largest insurer of liquor liability insurance in Michigan, grew its gross premiums nearly 9 percent for the first nine months of 2007 to $98.1 million.

The jump was fueled by an acquisition and a strategy to grow casualty business in Florida while moving out of the Florida property market.

In July, North Pointe completed a $41 million deal for Capital City Holding Company, acquiring a South Carolina-based specialist in workers' compensation and other commercial lines for the forestry industry.

Early last year, Mr. Petcoff told analysts at an investor conference that his company intended to grow casualty business in Florida and neighboring states, after it was forced to cancel 40 percent of its commercial property policies in the state in June 2006.

"We couldn't buy enough reinsurance. And it sure occurred to me that if we don't think we can pay a claim in the event of a hurricane, then we probably shouldn't take anybody's money," said Mr. Petcoff, explaining the strategy with respect to Florida property business at the January 2007 investor conference.

In October 2007, North Pointe took another step out of the Florida property market, selling all of its homeowners and dwelling fire operations for roughly $15 million to American Capital Assurance Corp.

Growth in casualty lines--in the bar and restaurant segment, for example--came through geographic expansion beyond Florida, Mr. Petcoff said last year.

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QBE Buying North Pointe For $146 Million

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