ProAssurance Corp. announced that the Medmarc Insurance Group (Medmarc) has agreed to become part of ProAssurance through a proposed $153.7 million, all cash, sponsored demutualization that will provide Medmarc's eligible Members with cash payments of $146.2 million and future policy credits of $7.5 million.
According to a release on June 27, ProAssurance is one of the nation's medical professional liability insurers and also maintains a book of legal professional liability business. Medmarc is one of the nation's underwriters of products liability insurance for medical technology and life sciences, and also underwrites a book of legal professional liability insurance. Medmarc had direct written premium of $40.6 million in 2011 and $320 million in total assets as of March 31. Medmarc's A. M. Best rating of "A-" (Excellent) was recently affirmed.
"The addition of Medmarc helps ProAssurance take another step toward our goal of expanding the range of our insurance products to cover a wide spectrum of healthcare risks. As the delivery ofhealthcare evolves in the U.S., the professionals and organizations delivering the continuum of care will require additional and more complex insurance products, and this transaction will enhance our ability to respond to these dynamic new risks. Further, Medmarc's book of legal professional liability business expands our existing lawyers' professional liability line," said Stan Starnes, the Chairman and Chief Executive Officer of ProAssurance. He added, "Medmarc shares a common heritage with ProAssurance, having been founded in 1979 by medical technology companies to cover unique risks that were not adequately addressed by the commercial insurance industry. Medmarc continues to focus on those specialized insurance needs and will bring this expertise and insurance product scope to ProAssurance."
ProAssurance will maintain Medmarc's operations in Chantilly, Virginia under the direction of its President and Chief Executive Officer, Mary Todd Peterson. "
Jaxon A. White, Medmarc's Chairman and officer in charge of Medmarc's formation, said the ProAssurance-sponsored demutualization will benefit policyholders now and in the future. "ProAssurance is an ideal partner. Their dedication to the promise of Treated Fairly, coupled with their exceptional financial strength and a demonstrated, long-term business focus will allow us to continue Medmarc's 33-year record of service. The transaction also will reward eligible Members for helping to build Medmarc. We look forward to providing our eligible Members with details of the proposed transaction."
The Boards of Directors for both companies have unanimously approved the transaction, whichnow requires the approval of Medmarc's eligible Members and insurance regulators in Vermont, where Medmarc is domiciled. The transaction is expected to close before the end of 2012.
If approved by Medmarc's eligible Members, the sponsored demutualization will convert Medmarcinto a non-public stock company. Simultaneously, under the terms of the Stock Purchase Agreement, ProAssurance will purchase the stock authorized in the demutualization and Medmarc's eligible Members would then receive $153.7 million in cash payments and future policy credits, as outlined in the Plan of Conversion. The Plan of Conversion defines an eligible Member as a medical technology or life sciences company with an in-force policy issued by a Medmarc company at any time from December 31, 2010 through June 30. Policies with effective dates between June 27, and June 30, must have had a quote issued on or before June 26.
ProAssurance's financial advisor in the transaction is Wells Fargo Securities; Burr & Forman is serving as legal advisor to ProAssurance. Medmarc's financial advisor is Sandler O'Neill + Partners, L.P. and its legal advisor is Luse Gorman Pomerenk & Schick, P.C.
ProAssurance Corp. is an independently traded specialty writer of medical professional liability insurance.
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