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FILED BY: PROASSURANCE CORPORATION
PURSUANT TO RULE 425 UNDER THE SECURITIES ACT OF 1933
SUBJECT COMPANY: PROFESSIONALS GROUP, INC.
COMMISSION FILE NO. 333-49378
NEWS RELEASE
FOR IMMEDIATE RELEASE
CONTACT:
JOHN F. LANG
CHIEF FINANCIAL OFFICER
(517) 347-6207
PROFESSIONALS GROUP REPORTS FIRST QUARTER 2001 RESULTS
OKEMOS, MICH., MAY 8, 2001 -- PROFESSIONALS GROUP, INC. (NASDAQ: PICM)
REPORTS NET INCOME FOR THE QUARTER ENDED MARCH 31, 2001 WAS $2.7 MILLION ($0.29
PER DILUTED SHARE), COMPARED TO 2000 FIRST QUARTER NET INCOME OF $3.1 MILLION
($0.33 PER DILUTED SHARE). OPERATING INCOME FOR THE FIRST QUARTER OF 2001 WAS
$2.4 MILLION ($0.26 PER DILUTED SHARE), COMPARED TO $3.1 MILLION ($0.33 PER
DILUTED SHARE) DURING THE FIRST QUARTER OF 2000.
Victor T. Adamo, President and Chief Executive Officer stated,
"Professionals Group's pending merger with Medical Assurance, Inc. is expected
to close by the end of June. Accordingly, this will be Professionals Group's
final quarterly report to shareholders. We express our thanks for the continuing
support of Professionals Group's shareholders; and, we look forward to becoming
a founding member of the new ProAssurance Corporation."
2001 First Quarter Financial Results:
The personal lines segment (MEEMIC) generated net premiums earned of
$31.2 million during the first quarter of 2001, compared to $28.6 million during
the first quarter of 2000, an increase of 9.0% due primarily to an increase in
the number of insured vehicles and homes. Operating income attributable to
MEEMIC for the first quarter of 2001 was $3.1 million ($0.34 per diluted share),
compared to $2.9 million ($0.31 per diluted share) during the first quarter of
2000. This increase was due primarily to Professionals Group's increased
ownership interest in MEEMIC of 84% at March 31, 2001 compared to 77% at March
31, 2000. MEEMIC's combined ratio increased
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modestly from 93.6% in 2000 to 96.2% in 2001 due to a more harsh winter in 2001
compared to 2000.
The professional liability lines segment (primarily medical malpractice
coverage for health care providers and institutions through ProNational
Insurance Company) generated net premiums earned of $31.8 million during the
first quarter of 2001, compared to $28.0 million during the first quarter of
2000, an increase of 13.5%. This increase was due primarily to significant rate
increases implemented in all markets during 2000 and 2001. The operating loss
attributable to ProNational for the first quarter of 2001 was $0.7 million
($0.08 loss per diluted share), compared to operating income of $0.2 million
($0.02 per diluted share) during the first quarter of 2000. Operating income for
the first quarter of 2000 included the recognition of favorable prior year
reserve development and reduced loss costs attributable to a stop loss
reinsurance contract, neither of which existed during the first quarter of 2001.
ProNational has posted current accident year reserves at the same loss ratios as
recommended in 2000 by its consulting actuary despite significant rate increases
in all markets. The decrease in operating income was mitigated by an increase in
the federal income tax benefit reported in 2001 compared to 2000.
Professionals Group's net investment income increased 5.0%, to $11.8
million during the first quarter of 2001 compared to $11.2 million for the first
quarter of 2000.
Professionals Group's book value per common share (excluding unrealized
appreciation/depreciation on the investment portfolio) increased to $27.16 at
March 31, 2001 compared to $26.82 at December 31, 2000.
Consolidation Update:
On June 22, 2000, Professionals Group entered into a definitive
agreement to consolidate with Medical Assurance, Inc. (NYSE: MAI) and form a new
holding company, ProAssurance Corporation, that would be the nation's third
largest writer of liability insurance for health care professionals and
facilities. The proposed consolidation will be considered and voted upon by
Professionals Group's shareholders at a Special Meeting of Shareholders to be
held at 10:00 a.m. local time on June 25, 2001 at the company headquarters. The
record date for the Meeting was the close of business on April 27, 2001. The
proposed consolidation is expected to be closed before June 30, 2001, pending
receipt of, among other things, shareholder and final regulatory approvals.
This news release contains forward-looking statements that involve
risks and uncertainties. The words "anticipate," "believe," "estimate,"
"expect," "intend," "will," and similar expressions are
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intended to identify forward-looking statements. Such statements, which include
the statements regarding the above described consolidation and the ability of
the parties to complete it, reflect the current views of Professionals Group
with respect to future events and are subject to certain risks, uncertainties
and assumptions. Should one or more of these risks or uncertainties materialize,
or should underlying assumptions prove incorrect, actual results may differ
materially from those described herein. Factors that might cause such a
difference include, but are not limited to, (1) those discussed in Professionals
Group's filings with the SEC, including its Annual Report on Form 10-K/A
(Amendment No. 1) for the year ended December 31, 2000, (2) those discussed in
ProAssurance's filings with the SEC, including its Form S-4 registration
statement, as amended (Registration No. 333-49378), relating to the
consolidation, and (3) the risks and uncertainties that are inherent in any
business combination such as the above described consolidation.
A registration statement on Form S-4, as amended (Registration No.
333-49378), has been filed by ProAssurance with the SEC regarding the proposed
consolidation of Professionals Group and Medical Assurance. You are urged to
read the registration statement and the documents included or incorporated by
reference therein (including the respective Annual Reports on Form 10-K of
Professionals Group and Medical Assurance) because they contain important
information regarding the consolidation and the legal rights of security
holders. ProAssurance's registration statement, as well as other documents filed
by Professionals Group and Medical Assurance with the SEC are available from the
SEC's website (http://www.sec.gov). These documents are also available without
charge upon request to either:
Professionals Group, Inc. Medical Assurance, Inc.
2600 Professionals Drive 100 Brookwood Place
Okemos, Michigan 48864 Birmingham, Alabama 35209
Attention: Lori A. Beachnau Attention: Frank B. O'Neil
(800) 292-1036 (800) 282-6242
Corporate Profile:
Professionals Group is an insurance holding company traded under the
symbol "PICM" on the Nasdaq National Market. Professionals Group provides
professional liability insurance coverages and services to health care providers
through its wholly owned subsidiary ProNational Insurance Company. Professionals
Group owns 84% of MEEMIC Holdings, Inc. (Nasdaq listed: MEMH) that provides
personal auto, homeowners, boat and umbrella coverages primarily for educational
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employees and their families through MEEMIC Insurance Company. Both insurance
companies are rated A- (Excellent) by A.M. Best.
Press Release Fax Service:
This news release and other Professionals Group releases are available
at no charge through Professionals Group's website (www.ProfessionalsGroup.com)
and PR Newswire's Company News on-Call fax service, 800-758-5804, extension
115602.
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CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
THREE MONTHS ENDED
MARCH 31,
2001 2000
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REVENUES:
Gross premiums written (incl. assumed premiums) $ 89,665 $ 80,867
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Net premiums written $ 79,903 $ 67,853
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Premiums earned, net $ 63,002 $ 56,643
Net investment income 11,788 11,228
Net realized investment gains 456 49
Other income 1,243 1,168
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TOTAL REVENUES 76,489 69,088
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EXPENSES:
Losses, loss adjustment & DD&R expenses 62,353 53,214
Policy acquisition and underwriting expenses 12,660 11,607
Amortization expense, net (302) (220)
Interest expense 268 290
Other expense 697 512
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TOTAL EXPENSES 75,676 65,403
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Income before federal income taxes and minority interest 813 3,685
Federal income taxes (benefit) (2,338) (100)
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Income before minority interest 3,151 3,785
Minority interest - MEEMIC (465) (688)
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NET INCOME $ 2,686 $ 3,097
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Basic net income per common share $ 0.30 $ 0.35
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Diluted net income per common share $ 0.29 $ 0.33
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Diluted weighted average shares outstanding 8,961,415 9,015,246
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Operating income per share* $ 0.26 $ 0.33
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Professional liability combined ratio 141.4% 135.7%
Personal lines combined ratio 96.2% 93.6%
Professionals Group combined ratio 119.1% 114.4%
* Operating income excludes realized investment gains/losses.
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CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
MARCH 31, DECEMBER 31,
2001 2000
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Total investments $815,894 $780,940
Total assets 1,175,177 1,136,753
Loss and loss adjustment expense reserves 690,953 683,113
Total liabilities 922,970 893,177
Total common shareholders' equity 252,207 243,576
Book value per common share $28.49 $27.52
Book value per common share (excl. SFAS 115) $27.16 $26.82
Common shares outstanding 8,851,223 8,851,223