Buyer Will Pay Less for Centris Unit

Fund American Enterprises Holdings Inc. cut the price it will pay for Centris Group Inc. subsidiary USF Re Insurance Co. to $92.5 million from the $97.5 million agreed on two months ago.

Centris, a Costa Mesa-based provider of medical and specialty insurance, on Jan. 29 announced a preliminary pact to sell its property-casualty reinsurance unit to Fund American. Details of the plan changed after USF Re’s surplus, or its cushion against bigger-than-expected claims, was eroded by the need to boost reserves and a $3-million loss expected from Colombia’s Jan. 27 earthquake.

The two sides have reached a definitive agreement, Centris said Thursday.

Fund American, a Hanover, N.H., insurance holding company, is paying $71.7 million in cash and $20.8 million in five-year notes. The notes’ value may be reduced if USF Re suffers bigger-than-anticipated losses.

The transaction is expected to be completed in the next two or three months. USF Re would join Fund American’s Folksamerica Holding Co. unit, a New York-based reinsurance provider.