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Delwinds Insurance Acquisition Corporation *

Delwinds Insurance Acquisition Corporation *

Oct 16, 2020 by Roman Developer

PROPOSED BUSINESS COMBINATION: FOXO Technologies Inc.

ENTERPRISE VALUE: $297 million
ANTICIPATED SYMBOL: FOXO

Delwinds Insurance Acquisition Corporation proposes to combine with FOXO Technologies Inc., a technology company applying epigenetic science and AI to modernize the life insurance industry.

The operator of an epigenetic technology company intended to support scientific research and disruptive next-generation business initiatives. The company offers leading supervised machine learning and artificial intelligence technologies to identify epigenetic signatures related to biomarkers of human health and aging, enabling pharmaceuticals, nutraceuticals, longevity markets, agriculture, and clinical research to bring insights into cohort differentiation.

SUBSEQUENT EVENT – 9/14/22 – LINK

  • Delwinds Insurance Acquisition Corp. announced today that it has entered into a Forward Share Purchase Agreement with Meteora Capital Partners or its affiliates, pursuant to which Meteora
    • (i) has committed to owning, as of the date of consummation of DWIN’s previously announced business combination with FOXO Technologies Inc., a certain number of shares of DWIN Class A common stock, and
    • (ii) may purchase up to an additional number of Public Shares from other holders of Public Shares, which shares in the aggregate may be up to a maximum of 3,000,000 shares (the “Meteora Shares”).
  • The Meteora Shares are subject to an agreement between the Company and Meteora in effect for a period of up to 15 months after the BC Closing Date.
  • Pursuant to such arrangement, Meteora has the right to sell the Meteora Shares in the open market and, at the end of the term of the Meteora agreement, or upon an accelerated maturity date, to require the Combined Company to purchase any Meteora Shares held by Meteora as of the 15 month anniversary of the BC Closing Date at a price equal to the redemption price per Public Share at the Closing of the Business Combination.
  • Additionally, DWIN and the investors (the “Backstop Investors”) party to the previously disclosed backstop subscription agreements have agreed, with approval from FOXO, to amend the Backstop Subscription Agreements, and, in connection therewith, it is no longer anticipated that the Backstop Investors will subscribe for DWIN shares concurrent with the consummation of the Business Combination.

SUBSEQUENT EVENT – 9/13/22 – LINK

  • The common shares will also be listed on the NYSE American Exchange, instead of the NYSE as originally planned.

SUBSEQUENT EVENT – 9/13/22 – LINK

  • Ahead of the business combination vote on 9/14/22, Delwinds has received requests to redeem a total of 10,991,407 Public Shares (99.5%), which requests may be withdrawn at any time prior to the consummation of the Business Combination.

SUBSEQUENT EVENT – 9/12/22 – LINK

  • Delwinds Insurance Acquisition Corp. announced today that DWIN anticipates entering into an arrangement whereby an institutional investor and its affiliates:
    • (i) would commit to own, as of the date of consummation of Delwinds’ previously announced business combination with FOXO Technologies Inc., a certain number of shares of Delwinds Class A common stock (“Public Shares”)
    • (ii) may purchase up to an additional number of Public Shares from other holders of Public Shares, which shares, in the aggregate may be up to a maximum of 3,000,000 shares.
    • The Investor Shares would be subject to an agreement between the Company and the Investor in effect for a period of up to 15 months after the Business Combination Closing.
  • Pursuant to such arrangement, the Investor would have the right to sell the Investor Shares in the open market and, at the end of the term of the Investor agreement, or upon an accelerated maturity date (applicable upon the occurrence of certain events, including based on a the trading price per share of the Class A common stock of the combined company after the Business Combination (the “Combined Company”)), to require the Combined Company to purchase any Investor Shares held by the Investor as of date at a price equal to the redemption price per Public Share at the Business Combination Closing.
  • Upon entering into such Investor arrangement, Delwinds anticipates an amendment to the previously-disclosed Backstop Subscription Agreements between Delwinds and each of Delwinds’ Chairman and Chief Executive Officer and an affiliate of certain of Delwinds’ officers and directors to reflect that a forward purchase agreement is among the arrangements intended to reduce the Backstop Investors’ obligations under the Backstop Subscription Agreements, as a result of which, upon the expected non-redemption of Public Shares in connection with the anticipated Investor arrangement, the Backstop Investors would be not be obligated, and are not expected to, subscribe for Delwinds shares in connection with the Business Combination Closing.

SUBSEQUENT EVENT – 8/12/22 – LINK

  • On August 12, 2022, Delwinds, FOXO and the Purchaser Representative entered into a third amendment to the Merger Agreement, pursuant to which the parties agreed to:
    • (i) eliminate super-voting shares from the capitalization structure of the combined company following the Business Combination and, in connection therewith, agreed that, at the Closing, all of the outstanding shares of Class B common stock of the Company shall be exchanged for shares of Delwinds Class A common stock on a one-to-one basis, as Stockholder Merger Consideration,
    • (ii) expand the national securities exchanges on which Delwinds securities may be listed at or prior to the Closing to include additional national securities exchanges,
    • (iii) reflect certain changes to the expected size and terms of service of the board of directors of the Combined Company immediately following the Closing and
    • (iv) revise the Form of Management Contingent Share Plan intended to take effect upon Closing.

SUBSEQUENT EVENT – 7/6/22 – LINK

  • The number of shares included in the earnout was reduced from 10 million to 9.2 million shares

EXTENSION 4/28/22 8-K LINK

  • On June 6, 2022, Delwinds Insurance Acquisition Corp. issued a promissory note in the aggregate principal amount of up to $1,159,995.69 to FOXO Technologies Inc., pursuant to which FOXO agreed to loan to the Company up to $1,159,995.69 (the “Extension Funds”) to deposit into the Company’s trust account for each share of Class A common stock of the Company that was not redeemed in connection with the extension of the Company’s termination date from June 15, 2022, to September 15, 2022. 
  • The Company will deposit the Extension Funds into the Trust Account, which equates to $0.035 per remaining Public Share, for each month past June 15, 2022 until September 15, 2022.
  • Stockholders holding 9,077,422 Public Shares exercised their right to redeem their shares for a pro rata portion of the funds in the Trust Account.
  • As a result, approximately $90,792,966.89 (approximately $10.00 per Public Share) will be removed from the Trust Account to pay such holders.
  • Following the redemption, the Company’s remaining Public Shares outstanding were 11,047,578.
  • After such funding, the Trust Account will contain approximately $10.035 per remaining Public Share outstanding.

SUBSEQUENT EVENT 4/28/22 8-K LINK

  • On April 26, 2022, Delwinds, FOXO, and the Purchaser Representative entered into an amendment (the “Amendment”) to the Merger Agreement. 
  • The Amendment amends the “2022 Bridge Financing End Date” to provide an extension to the end date of the 2022 Bridge Financing by extending the end date to the “Outside Date”.

TRANSACTION

  • The transaction, combined with recent capital raising actions by FOXO, is expected to raise up to $224 million in total gross cash proceeds.
  • FOXO’s recent capital raising transactions include a convertible debenture offering, led by institutional investors and joined by The Gray Insurance Company, generating a minimum of $22.5 million of cash proceeds to FOXO prior to consummation of the transaction.
  • Andrew J. Poole, Chairman and CEO Delwinds, alongside Gray & Company, Inc. have committed to invest up to $10 million, subject to adjustment, in the form of cash or debt in the event that the Delwinds trust does not maintain at least $10 million in cash following satisfaction of redemptions.
  • FOXO has secured a $40 million committed equity facility from CF Principal Investments LLC, an affiliate of Cantor Fitzgerald.
    • CF Principal Investments LLC will provide a Facility of up to $40 million for 36 months

delwinds

PIPE

  • There is no PIPE for this transaction

EARNOUT

  • 10.0 million of the merger consideration shares will be allocated to FOXO management pursuant to an earnout plan, subject to restrictions and forfeiture depending on the satisfaction of post-closing performance milestones.
    • The restrictions are not included in the merger documents, once the initial S-4 is released, the information will become available.
    • The number of shares included in the earnout was reduced from 10 million to 9.2 million shares – LINK

BACKSTOP AGREEMENT

  • Subsequent Event – 9/14/22 – DWIN and the investor’s party to the previously disclosed backstop subscription agreements have agreed, with approval from FOXO, to amend the Backstop Subscription Agreements, and, in connection therewith, it is no longer anticipated that the Backstop Investors will subscribe for DWIN shares concurrent with the consummation of the Business Combination.
  • Delwinds entered into backstop agreements with Andrew J. Poole, Delwinds’ Chairman and Chief Executive Officer, and The Gray Insurance Company
    • If at the Closing, Delwinds has less than $10 million, the Backstop Investors will subscribe for up to 1,00,000 shares for $10/Share provided that the Threshold Amount will be reduced up to a maximum of $5,000,000 by the amount of any agreed-upon reduction of the deferred underwriting fee payable to Delwinds’ IPO underwriters

LOCK-UP

  • Company and Sponsor
    • 180 days after the Closing

FINANCING AGREEMENT

  • Delwinds entered into a Common Stock Purchase Agreement with CF Principal Investments LLC (“Cantor”)
  • The Combined Company has the right to sell to Cantor up to $40 million in shares of Delwinds Class A Common Stock.
  • The purchase price of the shares of Delwinds Class A Common Stock that the Combined Company elects to sell to Cantor pursuant to the Purchase Agreement will be 97% of the volume-weighted average price.
  • The Combined Company will have the right to terminate the Purchase Agreement at any time after Commencement, at no cost or penalty, upon 10 trading days’ prior written notice.
    • Additionally, Cantor will have the right to terminate the Purchase Agreement on the seventh trading day following the Closing if the total market capitalization of the Combined Company is less than $100 million as of such date. No termination of the Purchase Agreement will affect the registration rights provisions contained in the Registration Rights Agreement.

NOTABLE CONDITIONS TO CLOSING

  • August 25, 2022, Outside Date, which can be extended to September 25, 2022

NOTABLE CONDITIONS TO TERMINATION

  • Subsequent Event – On April 26, 2022, Delwinds, FOXO, and the Purchaser Representative entered into an amendment (the “Amendment”) to the Merger Agreement. 
  • The Amendment amends the “2022 Bridge Financing End Date” to provide an extension to the end date of the 2022 Bridge Financing by extending the end date to the “Outside Date”.
  • The execution of the Lock-Up Agreements, Employment Agreements, and Non-Competition Agreements

ADVISORS

  • Deutsche Bank Securities acted as exclusive financial advisor to FOXO [at the time of the deal announcement]
  • RBC Capital Markets acted as Exclusive Financial Advisor to Delwinds and also a Capital Markets Advisor to Delwinds [at the time of the deal announcement]
  • Cantor Fitzgerald acted as Capital Markets Advisors to Delwinds.
  • Houlihan Lokey provided additional financial advice to the Delwinds board of directors.
  • Cohen & Company Capital Markets, a division of J.V.B. Financial Group, LLC acted as placement agents for the convertible debenture and redemption backstop.
  • Mitchell Silberberg & Knupp and Stinson LLP acted as legal advisors to FOXO.
  • Ellenoff, Grossman & Schole LLP acted as legal advisor to Delwinds while Lamson, Dugan and Murray LLP acted as insurance regulatory counsel to Delwinds.
  • Proskauer Rose LLP is serving as legal advisor to Cohen & Company Capital Markets.

MANAGEMENT & BOARD

Executive Officers

Andrew J. Poole, 39
Chief Executive Officer & Chairman of the Board of Directors

Mr. Poole has over 16 years of diversified investment experience. Mr. Poole was the Chief Investment Officer of Tiberius, a blank check company which went public in March 2018 with $174.225 million held in trust and which consummated its initial business combination with International General Insurance Holdings Ltd. (Nasdaq: IGIC), or “IGI”, an international specialty insurance and reinsurance group registered in Bermuda, in March 2020 under very challenging market conditions. Upon the closing of Tiberius’ business combination, Mr. Poole joined the board of IGI. Concurrently, since 2015, he has been and remains an investment consultant at The Gray Insurance Company. Mr. Poole’s most recent role prior to joining Tiberius and The Gray Insurance Company was as Partner and Portfolio Manager at Scoria Capital Partners, LP, a long/short equity hedge fund, where he managed a portion of the firm’s capital including insurance sector investments from 2013 to 2015. Prior to Scoria, Mr. Poole held various positions at Diamondback Capital Management from 2005 to 2012 (including Portfolio Manager from 2011 onwards) and SAC Capital from 2004 to 2005, both of which are multi-strategy multi-manager cross capital structure long/short hedge funds. Earlier, Mr. Poole started his career at Swiss Re (SIX: SREN) working in facultative property placements in 2003 and was on the board of Family Security, a personal lines insurance company, from 2013 to 2015 prior to the sale of the company to United Insurance Holdings Corporation (Nasdaq: UIHC). Mr. Poole is a graduate of The George Washington University.

Bryce Quin, 37
Chief Financial Officer and Secretary

Mr. Quin has over 15 years of diversified operational experience in the insurance industry. Mr. Quin was the Chief Financial Officer of Tiberius from its initial public offering through the consummation of its initial business combination with IGI. Concurrently, he served as a Process Improvement Specialist for The Gray Insurance Company, a subsidiary of Gray & Company, where he started his career in 2003 and obtained his CPA designation. From 2012 to 2016, he was Accounting Manager for The Gray Insurance Company working as a direct report to the CFO and Treasurer and prior to that he held various roles of increasing responsibility. From 2003-2007, Mr. Quin was Accountant and Systems Administrator for Delta Title, a subsidiary of Gray & Company. He has been a member of the Gray & Company Investment Committee since its inception in 2013. As a result, Mr. Quin has experience analyzing investment opportunities in the insurance industry, the oil and gas sector, and commercial property development. Mr. Quin is a current member of the American Institute of Certified Public Accountants. Mr. Quin is a graduate of the University of New Orleans where he also earned a Master of Business Administration.

 

Board of Directors

Michael T. Gray, 60
Director

Mr. Gray has over 30 years of leadership experience in the insurance industry. He was the Executive Chairman and Chief Executive Officer of Tiberius since its inception in 2016 and has served as a director of IGI since March 2020. He is the principal executive and President of The Gray Insurance Company. Mr. Gray became President of The Gray Insurance Company in 1996. In addition to his role at The Gray Insurance Company, Mr. Gray is Chairman of the Board of the Louisiana Insurance Guaranty Association since 2008 (and was a director since 1995), director of the American Property Casualty Insurance Association (APCI) since 2019 (and was director of the predecessor organizations American Insurance Association since 2011 and Property Casualty Insurers Association of America since 2010), director of the Tulane University Family Business Center Advisory Council since 2008 and, from 1999 to 2003, served on the board of directors of Argo Group International Holdings (NYSE:ARGO), a global property and casualty, specialty insurance, and reinsurance products provider. Mr. Gray was the Chairman of the Board of Family Security, a personal lines insurance company, in which The Gray Insurance Company held an ownership interest from 2013 to 2015. This culminated in the sale of the company, which Mr. Gray led, to United Insurance Holdings Corporation (Nasdaq: UIHC). The parent of The Gray Insurance Company, Gray & Company, has acquired or developed several businesses under Mr. Gray’s guidance, including title insurance, casualty and surety insurance, oil production and exploration facilities, technology development and real estate. Mr. Gray earned a Master of Business Administration from Tulane University and is a graduate of Southern Methodist University.

Senator E. Benjamin Nelson, 79
Director

Senator Nelson is an American businessman, lawyer and politician with over 50 years of insurance, regulatory, government and leadership experience. He was a non-executive director of Tiberius since its inception. Since 2019, Senator Nelson has been Chief Executive Officer and member of the Advisory Board of Insurance Care Direct (ICD), a health and life insurance agency, and since 2016, he has been an attorney in private practice and Of Counsel at Lamson Dugan & Murray, LLP (LDM). From 2013 to 2016, Senator Nelson was Chief Executive Officer of the National Association of Insurance Commissioners (NAIC), the U.S. standard setting and regulatory support organization created and governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S territories. From 2001 to 2013, Senator Nelson served two terms representing the State of Nebraska in the U.S. Senate and was a member of the Senate Agriculture Committee and the Senate Armed Services Committee. Senator Nelson was instrumental in gaining passage of the Terrorism Risk Insurance Act (TRIA), which provided a “backstop” for catastrophic insurance losses resulting from acts of terrorism. From 1990 to 1998, Senator Nelson was Governor of Nebraska where he led the state to eight straight balanced budgets. Senator Nelson has extensive experience in the insurance sector and started his career in insurance law. In addition to his service at the NAIC, he served as Chief Executive Officer of the Central National Insurance Group and was the director of the Nebraska Department of Insurance. Currently, Senator Nelson serves on the Advisory Board of Behlen Manufacturing Corporation, a global manufacturer headquartered in Nebraska, since 2005, as well as a founding board member of the National Strategic Research Institute, a United States Strategic Command sponsored University Affiliated Research Center at the University of Nebraska focused on combating and responding to national security threats, since 2012. Senator Nelson is a graduate of the University of Nebraska where he also earned a Juris Doctorate, as well as a Master of Business Administration. He also received the 2011 Distinguished Alumni Award from the University of Nebraska College of Law and an honorary doctor of letters from the University of Nebraska in 2013.

Paul Britton Newhouse, 67
Director

Mr. Newhouse has over 40 years of insurance underwriting, brokerage, operational and public company executive leadership experience. He last served as Chairman of Guy Carpenter & Co. (NYSE: MMC), a leading global risk and reinsurance specialist subsidiary of Marsh & McLennan Companies helping clients with specialized reinsurance broking expertise, strategic advisory services, industry leading analytics and insurtech, from 2008 until 2018. Mr. Newhouse joined Guy Carpenter & Co. in 1979, in the firm’s New York Casualty Treaty Department. He served as President of the Americas broking operations and was a member of the firm’s executive committee. Previously, he headed the U.S. Eastern Region and served as the New York branch manager. In 2015, he became interim Chief Executive Officer of Guy Carpenter & Co.’s U.S. operations. Prior to joining Guy Carpenter & Co., Mr. Newhouse began his career as a marine underwriter with AIG. Currently, Mr. Newhouse is a director of the Brokers & Reinsurance Markets Association and insurtech companies Athenium Analytics, LLC, a risk assessment software provider, since 2019, and BuildPay, LLC, a provider of financial technology allowing insurance companies to leverage their own buying power when settling claims to reduce building time and lower costs, since 2018. Mr. Newhouse is a graduate of Windham College.

Ryan Rugg, 41
Director

Mr. Rugg has over 18 years of diversified investment, banking and blockchain software experience and possesses an in depth understanding of insurance markets, financial markets and economics. In addition, Ms. Rugg is an advocate for diversity in corporate management positions and its positive correlation with company financial outperformance. Since 2019, Ms. Rugg has been the Global Head of Industry for R3, an enterprise blockchain software firm working with a broad ecosystem of participants across multiple industries from both the private and public sectors to develop blockchain applications on Corda, an open-source blockchain platform, and Corda Enterprise, a commercial version of Corda for enterprise usage. She is responsible for the strategic direction of R3’s key verticals and is helping industry leaders capture the full benefits of blockchain for their businesses. Ms. Rugg joined R3 in 2016 as Head of North America and in 2017 was named Global Head of Insurance, where she launched the Center of Excellence for Insurers and Reinsurers in partnership with ACORD (a non-profit, industry-owned organization that seeks to enable the success of the global insurance industry by leveraging the flow of data and information across all insurance stakeholders through relevant and timely data standards), which accelerated deployment of DLT (distributed ledger technology) solutions at scale within the financial services industry. From 2009 to 2016, she was Executive Director at Morgan Stanley (NYSE: MS) where she collaborated across multiple facets of the business to develop multi-sector investment approaches for clients which were primarily asset managers and insurers. From 2003 to 2009, Ms. Rugg worked in Fixed Income at JPMorgan Chase & Co. (NYSE: JPM). She began her career at Lehman Brothers in 2002 in Technology, experiencing first-hand the inefficiencies in the legacy infrastructure which she is now working to solve. Ms. Rugg is Chair of the Board at Harvest Home, a 501(c)(3) non-profit organization dedicated to increasing access to local, farm-fresh produce in low-income neighborhoods since 2012. Ms. Rugg is a graduate of The George Washington University.

ByRoman Developer