SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported): November 4, 2005
ProAssurance Corporation
(Exact name of registrant as specified in its charter)
Delaware 001-16533 63-1261433
(State of Incorporation) (Commission File No.) (IRS Employer I.D. No.)
100 Brookwood Place, Birmingham, Alabama 35209
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(Address of Principal Executive Office ) (Zip code)
Registrant's telephone number, including area code: (205) 877-4400
Item 1.01 Entry into a Material Definitive Agreement
On November 4, 2005, ProAssurance Corporation ("ProAssurance") agreed
to sell to Motors Insurance Company ("Buyer") all of the stock of its
personal lines operating subsidiaries, MEEMIC Insurance Company ("MEEMIC
Insurance") and MEEMIC Insurance Services Corporation ("MEEMIC Agency")
under the terms of a Stock Purchase Agreement dated as of November 4, 2005,
by and among Buyer, MEEMIC Insurance, MEEMIC Agency, MEEMIC Holdings, Inc.
("Holdings"), and ProAssurance (the "Stock Purchase Agreement"). The Buyer
is a wholly owned subsidiary of GMAC Insurance. Prior to the execution of
the Stock Purchase Agreement, ProAssurance had no material relationship
with Buyer or any of its affiliates.
The Stock Purchase Agreement provides for the sale by Holdings of all
of the stock of MEEMIC Insurance and MEEMIC Agency (collectively sometimes
referred to as the "Companies") for a cash price of $327,000,000. The Stock
Purchase Agreement contemplates that the Companies will distribute to the
Companies' holding company, Holdings, up to $73,000,000 as 2005 dividends
prior to the closing. The transaction is expected to close in the first
quarter of 2006.
The sale of the Companies' stock is subject to regulatory approvals
and certain other conditions in the Stock Purchase Agreement. The sale of
the Companies' stock will be subject to approval by the Michigan insurance
regulators of the change of control of MEEMIC Insurance and will be subject
to review by the federal antitrust regulators under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976. The Stock Purchase Agreement includes
other customary conditions that must be satisfied or waived prior to
closing.
The payment of the dividend to Holdings is also subject to approval by
the Michigan insurance regulators and such approval is a condition to
closing. MEEMIC Insurance has paid an ordinary dividend of $15.0 million
earlier in 2005. MEEMIC Insurance will require regulatory approval of an
additional 2005 dividend of approximately $38 million in order to
distribute $73,000,000 prior to closing. Because Holdings is a subsidiary
of ProNational Insurance Company, the distribution of the 2005 dividends
and the proceeds realized on the sale of the Companies' stock to
ProAssurance will be subject to review and approval of the Michigan
insurance regulators.
In connection with the anticipated sale of the stock of the Companies,
ProAssurance agreed to pay a success fee to Lynn M. Kalinowski as president
of the Companies. The agreement with Mr. Kalinowski provides that he will
be paid an amount equal to two times his base salary. This payment is
in addition to any payment that may be due to him under his existing
Release and Severance Agreement, dated June 15, 2001, which the Buyer has
agreed to assume.
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A copy of the Stock Purchase Agreement has been attached as Exhibit
2.1 of this report and a copy of Mr. Kalinowski's agreement has been
attached as Exhibit 10.1 of this report.
Item 7.01
On November 7, 2005, ProAssurance announced the execution of the Stock
Purchase Agreement providing for the sale of the stock of the Companies to
Buyer. A copy of the news release announcing the sale is attached as
Exhibit 99.1 to this report
Caution Regarding Forward-Looking Statements
This filing contains historical information as well as forward-looking
statements that are based upon our estimates and anticipation of future
events that are subject to certain risks and uncertainties that could cause
actual results to vary materially from the expected results described in
the forward-looking statements. The words "anticipate," "believe,"
"estimate," "expect," "hopeful," "intend," "may," "optimistic,"
"preliminary," "project," "should," "will," and similar expressions are
intended to identify these forward-looking statements. There are numerous
important factors that could cause our actual results to differ materially
from those in the forward-looking statements. Thus, sentences and phrases
that we use to convey our view of future events and trends are expressly
designated as Forward-Looking Statements as are sections of this filing
clearly identified as giving our outlook on future business. The principal
risk factors that may cause actual results to differ materially from those
expressed in the forward-looking statements are described in various
documents we file with the Securities and Exchange Commission, including
Form 10K for the year ended December 31, 2004 and Form 10Q for the most
recent quarter.
Relating to the sale of the Companies:
o The transaction may not occur as expected or it may take longer
to accomplish than we expect;
o governmental approvals of the transaction may not be obtained, or
adverse regulatory conditions may be imposed in connection with
governmental approvals of the transaction;
o the sale is subject to the satisfaction or waiver of certain
conditions which are beyond the control of ProAssurance; and
o the distribution of proceeds arising from the sale to
ProAssurance may not be approved by governmental authorities, or
such approval may be for an amount less than requested.
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We wish to caution readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date made, and wish
to advise readers that the factors listed above could affect our financial
performance and could cause actual results for future periods to differ
materially from any opinions or statements expressed with respect to future
periods in any current statements. We do not undertake and specifically
decline any obligation to publicly release the result of any revisions that
may be made to any forward-looking statements to reflect events or
circumstances after the date of such statements or to reflect the
occurrence of anticipated or unanticipated events.
Item 9.01 Financial Statements and Exhibits
Exhibit No. Description
2.1 Stock Purchase Agreement dated as of November 4, 2005, among
Motors Insurance Corporation, MEEMIC Insurance Company,
MEEMIC Insurance Services Corporation, MEEMIC Holdings, Inc.
and ProAssurance Corporation (without Exhibits & Schedules).
10.1 Letter Agreement between ProAssurance and Lynn Kalinowski,
dated November 4, 2005.
99.1 News release announcing the sale of the Companies released
on November 7, 2005. We are furnishing this exhibit in
accordance with Item 7.01 of Form 8-K. This exhibit shall
not be deemed to be filed for purposes of Section 18 of the
Securities Exchange Act of 1934 (the "Exchange Act") or
otherwise subject to the liability of such section, nor
shall such information be deemed to be incorporated by
reference in any filing under the Securities Act of 1933 or
the Exchange Act, regardless of the general incorporation
language of such filing, except as shall be expressly set
forth by specific reference in such filing.
SIGNATURE
Pursuant to the requirements of the Securities Exchange act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: November 7, 2005
PROASSURANCE CORPORATION
By: /s/ Edward L. Rand, Jr.
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Edward L. Rand, Jr.
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