BIRMINGHAM, Ala. and CHANTILLY, Va., Jan. 2, 2013 /PRNewswire/ -- ProAssurance Corporation (NYSE: PRA) announced today that its acquisition of Medmarc Insurance Group (Medmarc) was completed effective January 1, 2013.
Under terms of a previously announced agreement, Medmarc became part of ProAssurance through a $153.7 million, all cash, sponsored demutualization that provides Medmarc's Eligible Members with cash payments of $146.2 million and future policy credits of $7.5 million.
Medmarc is one of the nation's leading underwriters of products liability insurance for medical technology and life sciences companies, which will broaden the range of ProAssurance's insurance products to cover the wide spectrum of healthcare risks required by a rapidly evolving healthcare environment."We are pleased to bring Medmarc's recognized leadership and expertise into ProAssurance," said Stan Starnes, the Chairman and Chief Executive Officer of ProAssurance. Starnes added, "The delivery of healthcare is one of the most dynamic industries in America and Medmarc will greatly enhance our ability to respond to these new risks. Further, Medmarc's book of legal professional liability business will expand our existing lawyers' professional liability line and provide us with additional premium growth opportunities." Mary Todd Peterson, the President and Chief Executive Officer of Medmarc, said, "The financial strength of ProAssurance gives Medmarc further credibility in an industry where we are already recognized as a leader. We see great opportunity ahead as we combine our deep expertise and creativity in structuring products liability solutions for medical technology and life sciences companies, with the balance sheet strength and rating of ProAssurance." ProAssurance is funding the transaction with $125 million of secured borrowing drawn from an existing credit facility. Securities previously considered for liquidation to fund the transaction are being used to secure the loan and will yield a rate of return higher than the cost of borrowing over the loan's projected life. Ms. Peterson along with the company's other key executives will continue in their current roles at Medmarc. Medmarc's operations will remain in Chantilly, Virginia. The sponsored demutualization converted Medmarc into a non-public stock company. Simultaneously, under the terms of the Stock Purchase Agreement, ProAssurance purchased all of Medmarc's newly authorized stock for a cash price of $153.7 million. Medmarc will use the cash received from ProAssurance to provide Eligible Members with 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, 2012. Policies with effective dates between June 27, 2012 and June 30, 2012, must have had a quote issued on or before June 26, 2012. 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. About ProAssuranceProAssurance Corporation is the nation's largest independently traded specialty writer of medical professional liability insurance. ProAssurance 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 five years. ProAssurance is rated "A" (Strong) by Fitch Ratings; ProAssurance Group is rated "A" (Excellent) by A.M. Best.