FPIC Insurance Group, Inc. (NASDAQ:FPIC) (“FPIC”) and Advocate,
MD Financial Group, Inc. (“Advocate, MD”) today announced that the
companies have signed a definitive agreement under which FPIC’s
subsidiary, First Professionals Insurance Company, Inc., will
acquire Advocate, MD and its subsidiaries in an all cash
transaction.
The total consideration for Advocate, MD is comprised of $33.6
million at closing of the transaction (subject to certain terms and
conditions) and up to $12.0 million in additional consideration
depending on the performance of Advocate, MD during the two-year
period following completion of the acquisition. The amount of
additional consideration will depend on Advocate, MD’s written
premiums, combined ratio and underwriting profit over the two year
period following the closing.
Through its subsidiary, Advocate, MD Insurance of the Southwest,
Inc., Advocate, MD is the fourth largest provider of medical
professional liability (“MPL”) insurance in Texas and also writes
MPL insurance in Mississippi. Advocate, MD has established a
meaningful market presence in its core markets through an intensive
focus on excellent customer service, innovation and organizational
excellence. Based on information provided by Advocate, MD, it wrote
$25.4 million in premiums in 2008 and had unaudited GAAP-basis
assets and shareholders’ equity of $89.0 million and $26.5 million,
respectively, as of June 30, 2009.
FPIC intends to operate Advocate, MD as an independent
subsidiary with its current management team and operations in
Austin, Texas. Accordingly, FPIC has entered into certain
employment and non-competition arrangements in connection with the
transaction, which will be effective upon closing.
“We are very pleased to announce this transaction and we are
looking forward to working with Advocate, MD as an integral part of
our combined organization. This transaction provides meaningful
benefits to both organizations and is consistent with our long-term
business strategy,” said John R. Byers, FPIC’s President and Chief
Executive Officer. Mr. Byers added, “Advocate, MD has established
itself as an innovative company with an unwavering focus on serving
the medical professional liability insurance needs of healthcare
practitioners in Texas and Mississippi. As an ongoing part of our
organization, Advocate, MD will continue to serve these markets
with the same high degree of service and commitment.”
Commenting on the transaction, Mark E. Adams, Advocate, MD’s
Chairman, President and Chief Executive Officer said “We are very
pleased to have found a strategic partner that values our
organization and intends to build upon our local presence and
market knowledge to continue differentiating Advocate, MD in the
Texas and Mississippi markets.” Mr. Adams continued, “FPIC is a
financially strong and well-respected organization, and shares our
steadfast commitment to providing exceptional service to our
policyholders and to the long-term success of the business. We
believe that this transaction will benefit our policyholders while
rewarding our shareholders for the value created since our founding
in 2003.”
The transaction has been approved by the respective Boards of
Directors, and must also be approved by the Texas Insurance
Commissioner and the shareholders of Advocate, MD. Subject to the
satisfaction of these and certain other conditions, the transaction
is expected to close prior to the end of the year.
FPIC has been advised by Sandler O’Neill + Partners, L.P. and
Advocate, MD has been advised by Fox-Pitt Kelton Cochran Caronia
Waller.
Further information concerning the proposed acquisition can be
found in FPIC’s Current Report on Form 8-K pertaining to the
acquisition.
Conference Call Information
We will host a conference call at 11:00 am, Eastern Time,
Thursday, August 6, 2009, to review our second quarter 2009 results
and to discuss the transaction with Advocate, MD. To access the
conference call, dial (866) 830-9065 (USA and Canada) or (660)
422-4543 (International) and use the conference ID code
19993657.
The conference call will also be broadcast live over the
Internet in a listen-only format via the Company’s corporate
website at http://www.fpic.com. To access the call from the
Company’s home page, click on “Investor Relations” where a
conference call link will be provided to connect listeners to the
call. Questions can be submitted in advance of the call until 10:00
a.m., Eastern Time, Thursday, August 6, 2009, via e-mail to
ir@fpic.com.
The Company will also provide a link on the “Investor Relations”
page of its corporate website where questions can be submitted.
For individuals unable to participate in the conference call, a
telephone replay will be available beginning at 2:30 p.m., Eastern
Time, Thursday, August 6, 2009, and ending at 11:59 p.m., Eastern
Time, Thursday, August 13, 2009. To access the telephone replay,
dial (800) 642-1687 (USA and Canada) or (706) 645-9291
(International) and use the conference ID code 19993657. A replay
of the conference call webcast will also be available beginning at
2:30 p.m., Eastern Time, Thursday, August 6, 2009, on the Company’s
website.
About FPIC
FPIC Insurance Group, Inc., through its subsidiary companies, is
a leading provider of medical professional liability insurance for
physicians, dentists and other healthcare providers.
About Advocate, MD
Headquartered in Austin, Texas, Advocate, MD is a leading
provider of medical professional liability insurance in Texas and
Mississippi through its subsidiary Advocate, MD Insurance of the
Southwest, Inc.
Forward-Looking Statements
Statements in this press release that are not historical facts
are forward-looking statements that reflect management's current
expectations, assumptions, and estimates of future performance and
economic conditions. Such statements are made in reliance upon the
safe harbor provisions of Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements in this press release include, but are
not limited to: anticipated timing of the closing of the
acquisition of Advocate, MD and satisfaction of the conditions to
closing. Further information relating to factors that may impact
our results and forward-looking statements are disclosed in our
filings with the SEC. The forward-looking statements contained in
this press release are made as of the date of this press release,
and we disclaim any intention or obligation, other than imposed by
law, to update or revise any forward-looking statements, whether as
a result of new information, future events, or otherwise.
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