FPIC Completes Purchase of Professional Liability Insurer Advocate, MD

FPIC Insurance Group Inc. has completed its $33.6 million all-cash acquisition of fellow medical professional liability insurer Advocate, MD Financial Group Inc. and its subsidiaries.

First Professionals Insurance Co. also retired $9 million in existing Advocate debt (BestWire, Nov. 18, 2009). FPIC may pay out up to $12 million in additional consideration depending on Advocate's written premiums, combined ratio and underwriting profit over the next two years.

FPIC estimates the purchase will result in transaction-related costs of $800,000 to $1 million in fourth quarter 2009 results, the company said in a statement. FPIC and Advocate, through subsidiaries, provide medical professional liability insurance for physicians, dentists and other health care providers.

Charles Divita III, chief financial officer for Florida-based FPIC, previously said Texas-based Advocate adds geographic diversity (BestWire, Nov. 18, 2009). Medical tort reforms adopted in Texas in 2003 made Advocate an attractive acquisition, he said. FPIC plans to operate Advocate as an independent subsidiary and current management will stay in place.

Attempts to reach FPIC for additional comment were unsuccessful.

On Nov. 8, FPIC announced third-quarter net income had grown to $8.9 million from $6.5 million.

FPIC writes professional liability insurance for physicians, dentists and other health care providers through three of its four wholly owned subsidiaries: First Professionals Insurance Co.; Anesthesiologists Professional Assurance Co.; and Intermed Insurance Co. FPIC is the largest writer of medical professional liability insurance in Florida. The company's insurance subsidiaries are licensed in 32 states and currently have policyholders in 13 states, according to BestLink. Its products are written on a direct basis and through independent agents.

Members of FPIC Insurance Group have a current Best's Financial Strength Rating of A- (Excellent).

In mid-day trading on Jan. 18, shares of FPIC Group (NASDAQ: FPIC) were trading at $37.97, down 1.78% from the previous close.

(By Sean P. Carr, Washington Correspondent: [email protected])