Florida Office of Insurance Regulation Holds Hearing on Merger and Acquisition of First Professionals Insurance Company and Anesthesiologists Professional Assurance Company by The Doctors’ Company
Jul 21, 2011
Today, July 21, 2011, the Florida Office of Insurance Regulation (“OIR”) held a public hearing on the merger and acquisition of FPIC Insurance Group, Inc. (“FPIC”), the holding company of First Professionals Insurance Company, Inc. and Anesthesiologists Profession Assurance Company by The Doctors’ Company.
OIR officials participating in the hearing included Attorney Bob Prentiss, Examiner Jeffrey Rainy, Assistant General Counsel Catherine Shoenecker, Actuary Joe Boor and Director of Company Admissions Mary Mostoller.
Mr. Prentiss recognized the company officers and representatives from The Doctors’ Company and FPIC to provide opening comments. All participants were sworn in prior to testifying. Letters of support from the Florida Medical Association and Florida Dental Association were introduced into the record.
The Doctors’ Company
The Doctors’ Company officers provided an overview of their company and purchase plan. A member-owned company and the largest insurer of doctors with 2,900 members in Florida, The Doctors’ Company originated in California and began writing coverage in Florida in the 1990s.
According to The Doctors’ Company officers, the purchase of FPIC is consistent with The Doctors’ Company mission and is expected to improve corporate economies of scales and spread risk. The acquisition is expected to have a minimal impact on agents, the officers said.
The Doctors’ Company plans to transition their 2013 policy renewals using the FPIC rates as the base. They plan to offer cyber liability insurance as an additional coverage.
FPIC officers also provided remarks, saying they support the acquisition and change to become member-owned. On August 12, 2011, the FPIC Board will meet and provide shareholders with the opportunity to discuss the acquisition. A vast majority of shareholders are expected to support this move. The acquisition will result in lower expenses, as well as a policyholder dividend program.
Questions from the OIR
OIR officials asked officers of the respective companies various questions about the acquisition. From those questions, the following information was ascertained:
- The source of funds for the acquisition will come from The Doctors’ Company’s existing surplus.
- The shares acquired from FPIC will be at a purchase price of $42, for a total of approximately $8.4 million.
- Pending approval from the OIR, the deal would be expected to close in September 2011.
- According to both parties, the transaction meets fairness requirements.
- A related actuarial analysis and claim study was performed by The Doctors’ Company.
- Future rate levels were not able to be predicted due, in part, to anti-trust restrictions.
- The management agreement will be consistent with the industry standard.
The only member of the public to testify at the hearing was a representative from the Florida Justice Association (“FJA”). Although the FJA did not take a formal position, it recommended that the OIR require premium reductions as part of the merger approval.
Mr. Prentiss concluded the hearing following public comments. He noted the record will remain open for 30 days for additional written comments. Further, a transcript of the hearing will be posted on the OIR Web site at www.floir.com.
To access today’s agenda, click here.
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