A.M. Best Co. has commented that the ratings and outlook of ProAssurance Corporation’s (PRA) (NYSE: PRA) insurance subsidiaries remain unchanged following its recent announcements of two transactions.
On October 28, 2008, PRA announced that the PICA Group (PICA) (Nashville, TN) will become part of PRA. The ratings and outlook of PICA also are unchanged.
The PICA transaction is an all-cash, sponsored demutualization, which has been approved by its and PRA’s Board of Directors and now requires the approval of PICA policyholders and approval of insurance regulators in Illinois, where PICA is domiciled. When the demutualization is approved by PICA’s insureds, PRA will pay PICA’s eligible mutual policyholders $120 million to buy the stock created by the demutualization. The transaction, which is expected to close in first quarter 2009, also provides PICA policyholders a total of $15 million in premium credits upon policy renewals, beginning in 2010 and spread over three years. The approved definitive agreement also includes a capital contribution from PRA to PICA upon closing. PICA is expected to operate as a wholly-owned, stand-alone subsidiary of PRA with its current management.
On October 15, 2008, PRA announced its purchase of Georgia Lawyers Insurance Company (GLIC) (Fayetteville, GA). ProNational Insurance Company (ProNational) (Okemos, MI), a PRA subsidiary, will pay $4.3 million in cash to GLIC shareholders. The closing, which also is expected in first quarter 2009, has been approved by GLIC’s shareholders and is subject to the approval of the Georgia Department of Insurance. Following the closing, GLIC will be merged into ProNational.
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