NASHVILLE, Tenn., Oct. 28 /PRNewswire/ -- The PICA Group (PICA) announced
today it will become part of ProAssurance Corporation through an all cash,
sponsored demutualization.
Jerry D. Brant, DPM, the Chief Executive Officer of PICA, is enthusiastic
about the proposed combination. He said, "We have found the ideal partner in
ProAssurance - we've known their management team for years and we know they
are committed to treating every stakeholder fairly. This underscores the
dedication to claims defense, underwriting excellence and meaningful risk
management that have made PICA the dominant insurer of podiatric physicians."
"Bringing PICA into ProAssurance provides a compelling opportunity to grow
our business, expand the number of states in which we operate, and broaden our
pool of risk," said Stan Starnes, the Chief Executive Officer of ProAssurance.
He added, "We are bringing together two companies that are recognized leaders
in their respective markets. It adds to the legacy of intelligent growth
through selective business combinations that has allowed ProAssurance to
create a company offering unquestioned security for policyholders and steadily
increasing value for shareholders.
Dr. Brant said he's also excited that the ProAssurance-sponsored
demutualization of PICA will allow policyholders to realize the benefits of
building a strong company over the years. When the demutualization is approved
by the Illinois Division of Insurance and PICA's mutual policyholders, a total
of $120 million will be paid to current and certain former policyholders in
accordance with the approved plan of demutualization. The plan of
demutualization also provides a total of $15 million in premium credits to
eligible renewing PICA policyholders beginning in 2010 and spread over three
years. ProAssurance will pay cash to purchase the PICA stock authorized in the
demutualization; PICA will then use that cash to fund the cash distribution
and premium credits to be paid to its policyholders.
The PICA Group, based in Nashville, is the nation's leading provider of
professional liability to doctors of podiatric medicine, insuring
approximately 9,800 podiatric physicians in 47 states and the District of
Columbia, giving it market share of approximately 70%. PICA insures other
healthcare professionals and also provides E&O insurance for a small, but
growing, number of independent insurance agents through its PACO subsidiary.
PICA wrote $99 million in premium in 2007, has $284 million in total assets
and has maintained an A. M. Best rating of "A-" (Excellent) for the past 13
years.
ProAssurance, headquartered in Birmingham, Alabama is the fifth largest
insurer of medical professional liability in the country, with almost 33,000
policyholders in 27 states and the District of Columbia. ProAssurance has
total assets of $4.4 billion, stockholders equity of $1.3 billion dollars and
wrote $549 million in total premium in 2007. ProAssurance is rated "A-"
(Excellent) by A. M. Best and "A" by Fitch ratings, and is recognized as one
of the top performing insurance companies in America by virtue of its
inclusion in the Ward's 50 for the past two years.
PICA will operate its core insurance activities from its home office in
Nashville, with the current management team remaining in place and its Board
serving in an advisory capacity to ProAssurance. Some functions such as
reinsurance and investments are likely to be consolidated within ProAssurance,
as is the case for its other subsidiaries. Starnes said, "Looking ahead, this
business model can be used to bring other specialty insurers into
ProAssurance, when we can identify companies that serve a distinct market or
possess a unique skill set."
The transaction has been approved by the Boards of both companies and now
requires the approval of PICA policyholders and approval of insurance
regulators in Illinois, where PICA is domiciled. The transaction is expected
to close in the first quarter of 2009. Dr. Brant is expected to join the Board
of ProAssurance after the transaction closes.
ProAssurance is being advised in the transaction by Fox-Pitt Kelton,
Cochran Caronia Waller and the law firm of Burr & Forman, LLP. PICA is being
advised by Raymond James & Associates and the law firm of Sidley Austin, LLP.
SOURCE PICA Group
Contact: Scott M. Meert, Director of Marketing, Corporate Communications & Investor Relations, +1-800-251-5727 x2026, +1-615-984-2026, smeert@picagroup.com