) recently entered into an agreement to acquire leading underwriter
Medmarc Insurance Group for $153.7 million. As per the agreement,
the members of Medmarc will receive $146.2 million in cash as well
as future policy credits worth $7.5 million.
Medmarc is one of the leading underwriters of products liability
insurance for medical technology and life sciences in the U.S. The
acquisition is expected to be completed by the end of 2012, subject
to the approval of the regulators as well as Medmarc's eligible
members. The Boards of both the companies have approved the
After obtaining the required approval from eligible members,
Medmarc will be demutualized and converted to a non-public stock
company. Eligible Member refers to any medical technology or
life sciences company holding an in-force policy issued by the
company between December 31, 2010 and June 30, 2012.
Concurrently, ProAssurance also announced a merger agreement
with the Independent Nevada Doctors Insurance Exchange ("INDIE"), a
reciprocal exchange based in Nevada. The exchange will be converted
into a non-public stock company in order to merge with
ProAssurance. The financial and other terms of the deal, which is
expected to culminate by the end of 2012, were not disclosed.
The merger has got the nod from the Board of ProAssurance and
the Subscriber Advisory Committee of INDIE. However, it is subject
to approval of INDIE's subscribers and the Nevada Division of
INDIE is Nevada's leading medical professional liability insurer
based on direct written premiums while ProAssurance currently
occupies the fourth position in the state. Thus, following the
merger, the latter will emerge as the leading writer of medical
professional liability in Nevada by a huge margin.
Following the announcements, credit rating agency Standard &
Poor's Rating Services affirmed its long-term counterpart credit
rating on ProAssurance at "BBB" with a stable outlook.
ProAssurance, which primarily competes with
Berkshire Hathaway Inc.
MontpelierRe Holdings Ltd.
), carries a Zacks #2 Rank, implying a short-term 'Buy' rating. We
retain our long-term 'Outperform' recommendation on the
BERKSHIRE HTH-A (BRK.A): Free Stock Analysis
MONTPELIER RE (MRH): Free Stock Analysis Report
PROASSURANCE CP (PRA): Free Stock Analysis
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