Honolulu-based Zephyr Insurance Co. and its corporate parent will be purchased by Florida-based Heritage Insurance Holdings Inc. in a deal valued at close to $120 million.

Zephyr, with more than 70,000 customers and about 30 percent of the local hurricane insurance market, is one of the top two hurricane insurers in Hawaii along with State Farm. Zephyr has written wind-only insurance coverage for residential and commercial policyholders since 2000.

Heritage and Zephyr announced a definitive agreement for the acquisition Tuesday. The all-cash transaction is expected to close in the fourth quarter of this year, subject to regulatory and other approvals.

“The acquisition creates significant reinsurance synergies and enables us to expand into an attractive geographic market,” said Bruce Lucas, chairman and CEO of publicly traded Heritage. “We intend to fund this transaction with current capital and do not intend to pursue a new capital raise at this time, which allows us to deliver maximum shareholder value without dilution.”

Lucas said the combination of the two companies’ complementary business models will immediately add to earnings, book value and return on equity.

Heritage’s subsidiary, Heritage Property & Casualty Insurance Co., writes more than $500 million of annualized personal and commercial residential premiums.

“As the industry evolves we believe companies that are able to successfully execute strategic acquisitions will experience better growth, diversification and reinsurance savings,” Lucas said.

Heritage’s stock rose 76 cents, or 4.2 percent, to $19.01 on Tuesday. The deal was announced before the market opened.