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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )*
PROFESSIONALS GROUP, INC.
(Name of Issuer)
Common Stock, No Par Value
(Title of Class of Securities)
742954100
(CUSIP Number)
Medical Assurance, Inc.
Attention: Frank O'Neil
100 Brookwood Place
Birmingham, AL 35209
(205) 877-4400
(Name, Address and Telephone Number
of Person Authorized to Receive
Notices and Communications)
Copy to:
Jack P. Stephenson, Jr., Esq.
Burr & Forman LLP
Suite 3100, SouthTrust Tower
420 North Twentieth Street
Birmingham, Alabama 35203
(205) 251-3000
March 15, 2001
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition that is the subject of this Schedule 13D, and
is filing this schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or
240.13d-1(g), check the following box. [ ]
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Note: Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See ss.
240.13d-7 for other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class
of securities, and for any subsequent amendment containing information
which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of
the Act (however, see the Notes).
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CUSIP No. 742954100
1. Name of Reporting Person: Medical Assurance, Inc.
IRS Identification No. 63-1137505
2. Check the Appropriate Box if a Member of a Group
(1) [ ]
(2) [X]
3. SEC Use Only
4. Source of Funds: WC
5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e) [ ]
6. Citizenship or Place of Organization: Delaware
Number of Shares Beneficially Owned by Each Reporting Person With:
7. Sole Voting Power: 538,620
8. Shared Voting Power: 0
9. Sole Dispositive Power: 538,620
10. Shared Dispositive Power: 0
11. Aggregate Amount Beneficially Owned by Each Reporting Person: 538,620
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares [ ]
13. Percent of Class Represented by Amount in Row (11): 6.08%
14. Type of Reporting Person: IC, CO
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ITEM 1. SECURITY AND ISSUER
This statement relates to shares of Common Stock, no par value of
Professionals Group, Inc. ("Professionals Group"). The principal executive
offices of Professionals Group are located at 2600 Professionals Drive, Okemos,
Michigan 48864.
ITEM 2. IDENTITY AND BACKGROUND
(a)-(c) and (f). This statement on Schedule 13D is being filed by
Medical Assurance, Inc., a Delaware corporation ("Medical Assurance"). Medical
Assurance is an insurance holding company whose principal executive offices are
located at 100 Brookwood Place, Birmingham, Alabama 35209.
The names of the directors and executive officers of Medical Assurance
and their respective business addresses or residences, citizenship and present
principal occupations or employment are set forth on Exhibit A hereto, which is
incorporated herein by reference.
(d) and (e). Neither Medical Assurance nor any executive officer
or director of Medical Assurance has, during the past five years, (a) been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors), or (b) been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or a finding of any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
On June 22, 2000, Medical Assurance and Professionals Group entered
into an Agreement to Consolidate (the "Agreement to Consolidate") in order to
consolidate their businesses under a to be formed holding company. Pursuant to
the Agreement to Consolidate, Medical Assurance and Professionals Group caused
ProAssurance Corporation ("ProAssurance") to be formed as a Delaware corporation
and caused ProAssurance to form two wholly-owned subsidiaries, Medical Assurance
Acquisition Corporation I and PICM Acquisition Corporation. The Agreement to
Consolidate sets forth the plans for the merger of Medical Assurance and Medical
Assurance Acquisition and for the merger of Professionals Group and PICM
Acquisition. Upon completion of the mergers contemplated by the Agreement to
Consolidate:
- Medical Assurance will become a wholly owned subsidiary of
ProAssurance and each share of Medical Assurance common stock
will be converted into and exchanged for one share of
ProAssurance common stock; and
- Professionals Group will become a wholly-owned subsidiary of
ProAssurance and each share of Professionals Group common
stock will be converted into and exchanged for, at the
election of the holder, either of the following, subject to
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certain adjustments and limitations set forth in the Agreement
to Consolidate:
-- $26.00 payable in cash; or
-- $12.00 payable in cash and shares of ProAssurance
common stock initially valued at $14.00 per share
(based on the average market value of Medical
Assurance common stock over a specified twenty
trading days period preceding the consolidation).
On November 6, 2000, ProAssurance filed with the Securities and
Exchange Commission a Registration Statement on Form S-4 (Registration No.
333-49378), as amended by Amendment No. 1 to Form S-4 filed on January 3, 2001
(as amended, the "Registration Statement"), to register under the Securities Act
of 1933 the shares of its common stock proposed to be issued to the shareholders
of Medical Assurance and Professionals Group under the Agreement to Consolidate.
The Registration Statement includes a detailed discussion of the transactions
contemplated by the Agreement to Consolidate and a copy of the Agreement to
Consolidate, as amended. The shares of ProAssurance common stock to be issued in
the consolidation will be approved for listing on the New York Stock Exchange,
subject to official notice of issuance, before the completion of the
consolidation. Upon completion of the consolidation, Medical Assurance common
stock will be delisted from the New York Stock Exchange, Professionals Group
common stock will be delisted from the Nasdaq National Market, and both Medical
Assurance and Professionals Group will no longer be subject to periodic
reporting requirements under the Securities Exchange Act of 1934. The
consolidation, which is subject to certain regulatory approvals and to
shareholder approvals, is expected to be completed in the second quarter of
2001.
ProAssurance was organized as a business corporation in the State of
Delaware on October 20, 2000, in accordance with the terms and conditions of the
Agreement to Consolidate. At this time, ProAssurance has no assets and
liabilities, conducts no business activities, and has no shareholders. Since (i)
Medical Assurance and Professionals Group will continue their respective
businesses as separate wholly-owned subsidiaries of ProAssurance after the
completion of the consolidation, (ii) all of the former directors of Medical
Assurance and three of the former directors of Professionals Group will comprise
the Board of Directors of ProAssurance, and (iii) their former shareholders will
own all of the stock of ProAssurance immediately after the consolidation, each
of Medical Assurance and Professionals Group may be considered affiliates of
ProAssurance.
To increase the likelihood that the consolidation will be completed,
and to discourage other persons who may be interested in acquiring Professionals
Group, Medical Assurance required Professionals Group to grant Medical Assurance
a stock option that allows Medical Assurance to buy up to 437,320 shares of
Professionals Group common stock at a price of $26.00 per share (the "Stock
Option Agreement"). Medical Assurance can exercise this option only if another
person attempts to acquire control of Processionals Group. A reciprocal stock
option was granted by Medical Assurance to Professionals Group.
Medical Assurance has also purchased 101,300 shares of Professionals
Group in open market transactions at an aggregate price of $2,336,591. Medical
Assurance used
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its own working capital to fund the open market purchases of Professionals Group
common stock. Due to the proposed consolidation of Medical Assurance and
Professionals Group, all open market purchases of Professionals Group common
stock by Medical Assurance have been made substantially in accordance with the
requirements of Rule 10b-18 promulgated under the Securities Exchange Act of
1934 ("1934 Act").
ITEM 4. PURPOSE OF TRANSACTION
As described in Item 3 above, this Schedule 13D relates to (1) shares
of Professionals Group potentially issuable to Medical Assurance under the Stock
Option Agreement, and (2) shares of Professionals Group purchased by Medical
Assurance in the open market. The Stock Option Agreement was entered in
connection with the Agreement to Consolidate in order to increase the likelihood
that the consolidation will be completed and to discourage other persons who may
be interested in acquiring Professionals Group. Medical Assurance has purchased
Professionals Group shares in the open market for investment purposes and in
order to reduce the total consideration to be paid by ProAssurance to
Professionals Group shareholders in effecting the consolidation.
Section 8.1(b)(iii) of the Agreement to Consolidate prohibits Medical
Assurance from purchasing Professionals Group common stock without the prior
written consent of Professionals Group. By letter agreement dated March 14,
2001, Professionals Group consented to the purchase of its shares in the open
market by Medical Assurance. As consideration for Professionals Group's consent,
Medical Assurance has agreed that in the event the consolidation is terminated
for any reason, Professionals Group will have the option to purchase any
Professionals Group shares purchased by Medical Assurance in open market
transactions. This option will extend for a period of one hundred twenty (120)
days from the date of any press release issued by Medical Assurance and
Professionals Group announcing the termination of the consolidation. The
purchase price per share under the option will be equal to the price per share
that Medical Assurance paid to purchase such Professional Group shares.
Except as specified herein, Medical Assurance and the directors and
officers of Medical Assurance, do not presently have any plans or proposals
which relate to or would result in (a) the acquisition by any person of
additional securities of Professionals Group, or the disposition of securities
of Professionals Group; (b) an extraordinary corporate transaction involving
Professionals Group or any of its subsidiaries; (c) a sale or transfer of a
material amount of assets of Professionals Group or any of its subsidiaries; (d)
any change in the present board of directors or management of Professionals
Group; (e) any material change in the present capitalization or dividend policy
of Professionals Group; (f) any other material change in Professionals Group's
business or corporate structure; (g) changes in Professionals Group's charter,
bylaws or instruments corresponding thereto or other actions which may impede
the acquisition of control of Professionals Group by any person; (h) causing a
class of securities of Professionals Group to be deregistered or delisted; (i) a
class of equity securities of Professionals Group becoming eligible for
termination of registration; or (j) any action similar to any of the actions
enumerated above.
Medical Assurance may purchase additional shares of Professionals Group
common stock from time to time in the open market. Medical Assurance has no
present intention to beneficially
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own more than 9.9% of the total outstanding shares of Professionals Group
because of the restrictions on the acquisition of control of a Michigan
domiciled insurance company under Sections 500.1311-1319 of the Michigan
Insurance Holding Company Act. As with past purchases, all future purchases of
Professionals Group shares will be made substantially in accordance with the
requirements of Rule 10b-18 of the 1934 Act.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) and (b) Medical Assurance owns of record 101,300 shares of
Professionals Group common stock and may be deemed to own an additional 437,320
shares of Professionals Group common stock issuable upon the exercise of the
Stock Option Agreement, as described in Item 3 above. Such shares, represent
approximately 6.08% of the outstanding common stock of Professionals Group. This
percentage amount is based upon 8,851,223 shares of Professionals Group common
stock outstanding as of December 31, 2000, as reported by Professionals Group to
Medical Assurance.
To the best of Medical Assurance's knowledge, none of the directors or
executive officers of Medical Assurance own any of Professionals Group's common
stock.
(c) The following table sets forth all transactions by Medical
Assurance with respect to shares of Professionals Group effected during the past
sixty days. Each transaction set forth below reflects a purchase by means of
open market transactions on the Nasdaq National Market.
TRADE DATE NO. OF SHARES PRICE PER SHARE ($)
PURCHASED
03/15/01 15,300 22.81
03/16/01 3,000 23.06
03/19/01 20,000 22.87
03/20/01 3,000 23.06
03/21/01 1,000 23.06
03/22/01 20,200 23.16
03/23/01 35,700 23.31
(d) No person, other than Medical Assurance or its directors and
officers, has the right to receive or the power to direct the receipt of
dividends from, or the proceeds from the sale of, the Professionals Group shares
reported herein.
(e) Not Applicable.
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ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER
As stated in Item 3, Medical Assurance and Professionals Group will be
consolidated as subsidiaries of a newly formed holding company, ProAssurance
Corporation. The consolidation, which is subject to certain regulatory approvals
and to shareholder approvals, is expected to be completed in the second quarter
of 2001. The description of the Agreement to Consolidate herein is qualified in
its entirety by reference to such Agreement which is filed as Exhibit B and C
hereto.
As stated in Item 3, Professionals Group granted Medical Assurance a
stock option that allows Medical Assurance to buy up to 437,320 shares of
Professionals Group common stock at a price of $26.00 per share. The description
of the Stock Option Agreement herein is qualified in its entirety by reference
to such Agreement which is filed as Exhibit D hereto.
As stated in Item 4, Section 8.1(b)(iii) of the Agreement to
Consolidate prohibits Medical Assurance from purchasing Professionals Group
common stock without the prior written consent of Professionals Group. By letter
agreement dated March 14, 2001, Professionals Group consented to the purchase of
its shares in the open market by Medical Assurance. As consideration for
Professionals Group's consent, Medical Assurance has agreed that in the event
the consolidation is terminated for any reason, Professionals Group will have
the option to purchase any Professionals Group shares purchased by Medical
Assurance in open market transactions. The description of the letter agreement
herein is qualified in its entirety by reference to such letter agreement which
is filed as Exhibit E hereto.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 99A: Directors and Executive Officers of Medical
Assurance, Inc.
Exhibit B: Agreement to Consolidate dated as of June 22, 2000,
by and between Medical Assurance, Inc. and
Professionals Group, Inc. incorporated herein by
reference to Exhibit 2.1 of Medical Assurance's
Current Report on Form 8-K dated June 22, 2000, and
filed with the Securities and Exchange Commission on
June 30, 2000.
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Exhibit C: First Amendment to Agreement to Consolidate, dated
November 1, 2000, by and between Medical Assurance,
Inc. and Professionals Group, Inc. incorporated
herein by reference to Exhibit 2.2 of Amendment No. 1
to Form S-4 of ProAssurance Corporation filed with
the Securities and Exchange Commission on January 3,
2001.
Exhibit D: Professionals Group, Inc. Stock Option Agreement by
and between Professionals Group, Inc. and Medical
Assurance, Inc. dated June 22, 2000, incorporated
herein by reference to Exhibit 2.3 of Medical
Assurance's Current Report on Form 8-K dated June 22,
2000, and filed with the Securities and Exchange
Commission on June 30, 2000.
Exhibit 99E: Letter Agreement dated March 14, 2001 between
Professionals Group, Inc. and Medical Assurance, Inc.
re: Consent to Purchase of Professionals Group common
stock.
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: March 26, 2001
MEDICAL ASSURANCE, INC.
By: /s/ A. Derrill Crowe
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A. Derrill Crowe
President
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