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Filed by: ProAssurance Corporation
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: Medical Assurance, Inc.
Commission File No. 333-49378
[MEDICAL ASSURANCE LOGO] NEWS RELEASE
Frank B. O'Neil
Senior Vice President, Corporate Communications
205-877-4460 - 800-282-6242 - foneil@maih.com
MEDICAL ASSURANCE REPORTS FIRST QUARTER RESULTS
AND PROVIDES MERGER UPDATE
- INCREASES IN PREMIUMS AND REVENUES OVER Q1 2000
- NO MODERATION SEEN IN LEGAL COST TRENDS
- MERGER DOCUMENTS MAILED TO SHAREHOLDERS ON MAY 7, 2001
BIRMINGHAM, AL - (BUSINESS WIRE) - May 8, 2001 - Medical Assurance, Inc. (NYSE:
MAI) today reported that Net Premiums Earned and Total Revenues were higher in
the first quarter of 2001 than in the same period last year.
Medical Assurance's Chairman and President A. Derrill Crowe, M.D. said, "We
continue to focus on increasing premiums to properly reflect the increased risk
we face. Higher rates and stricter underwriting have ensured that we are
receiving more premium for each unit of exposure, and while we do face higher
legal costs and losses, we believe our rate actions and underwriting discipline
are beginning to pay off. Medical Assurance remains profitable and is one of the
most stable companies in our industry. Our merger with Professionals Group is
heading into the home stretch now that we have mailed merger documents to
shareholders, and we believe the completion of that merger will enhance our
competitive position."
RESULTS OF FIRST QUARTER 2001 OPERATIONS
Total premiums written in the first quarter were $78.9 million, an increase of
$16.9 million over the first quarter of 2000. Price increases accounted for $9.7
million of that increase, while normal variability in the number of insureds,
particularly in accident and health and workers compensation programs, accounted
for the remainder. Net Premiums Earned increased $12.3 million to $49.5 million,
reflecting the result of price increases put in place over the past year. Net
Premiums Earned is the primary component of Total Revenues, which were $60.4
million in the quarter, $12.5 million higher than last year. The other
components of Total Revenues, Net Investment Income, and Other Income, which
includes Capital Gains, were flat, quarter-over-quarter.
Offsetting these revenues were Total Expenses, which were $59.0 million in the
quarter, compared to $38.3 million last year. The increase in expenses was a
result of the higher losses and legal costs the Company has highlighted for the
past year, and higher acquisition costs resulting from commissions that increase
in proportion to premiums. The Company did not recognize any development on
prior accident year reserves during the quarter; during 2000, it recognized $10
million of favorable development.
As a result, Net Income and Operating Income, which excludes Capital Gains and
guaranty fund assessments, was $2.3 million for the quarter. Operating Income
per share and Net Income per share was $0.10 per share (basic and diluted). In
2000's first quarter Operating Income was $0.32 per share (basic and diluted)
and Net Income per share was $0.33.
ADDITIONAL PER SHARE DATA
Book Value per Share, or Total Stockholders' Equity per outstanding share, is
$15.39 at March 31. Book Value per Share, excluding the effects of unrealized
gains (and losses) on investments (FAS 115), is $15.36.
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[MEDICAL ASSURANCE LOGO] NEWS RELEASE CONTINUES
PROASSURANCE MERGER UPDATE
Medical Assurance also announced today that it would hold a Special Meeting of
Shareholders on June 25, 2001 to vote on the proposed merger with Professionals
Group, which will also hold a meeting that day to vote on the merger. Both
companies mailed a Notice and Proxy to their shareholders on May 7, 2001.
Medical Assurance expects the merger to be approved at the respective meetings,
and the transaction is expected to close on June 27, 2001. Under that timetable,
ProAssurance Corporation, the holding company formed as a result of the merger,
would begin trading on the New York Stock Exchange on Thursday, June 28, 2001,
under the trading symbol PRA.
CONFERENCE CALL INFORMATION
Medical Assurance will host a conference call at 9:00 AM ET on Wednesday, May 9,
2001 to discuss the results of 2001's first quarter and the progress of the
merger with Professionals Group. Investors may participate by calling (888)
868-9080. The call will be webcast at www.streetevents.com and their associated
websites and on the Investor Relations section of the Medical Assurance website,
www.medicalassurance.com. As previously announced, there will be no replay of
the call available by any means.
Investors who wish to be notified in advance of the Company's conference calls
and live webcasts may register to receive e-mail notification at the Investor
Relations section of the Company's website, or they may call or write the
Company's Investor Relations Department.
CAUTION REGARDING FORWARD LOOKING STATEMENTS
This news release contains historical information, as well as forward-looking
statements that are based upon Medical Assurance's estimates and anticipation of
future events that are subject to certain risks and uncertainties that could
cause actual results to vary materially from the expected results described in
the forward-looking statements. The Company's expectations regarding the timing,
financing, closing, and effects of the merger with Professionals Group may be
beyond the Company's control and thus difficult to predict. There are numerous
important factors that could cause actual results to differ materially from
those in the forward-looking statements. The principal risk factors that may
cause actual results to differ materially from those expressed in the
forward-looking statements are described in various documents filed by Medical
Assurance and ProAssurance Corporation with the Securities and Exchange
Commission, including Medical Assurance's Form 10K for the year ended December
31, 2000 and the ProAssurance Form S-4 Registration Statement and Amendments
(Registration No. 333-49378). In view of the many uncertainties inherent in the
forward-looking statements made in this document, the inclusion of such
information should not be taken as representation by the Company or any other
person that Medical Assurance's objectives or plans will be realized.
AVAILABILITY OF MERGER DOCUMENTS
Investors and shareholders are encouraged to read the ProAssurance Registration
Statement (Registration No. 333-49378) because it contains information regarding
the consolidation and their legal rights. Investors and shareholders can obtain
a free copy of the Registration Statement from the ProAssurance website,
www.proassurance.com. The Registration Statement, as well as documents filed by
Medical Assurance with the Securities and Exchange Commission are also available
from the Securities and Exchange Commission's website at www.sec.gov. All
documents are available without charge upon request to:
Medical Assurance, Inc.
100 Brookwood Place
Birmingham, Alabama 35209
Attention: Frank B. O'Neil
205-877-4460 or 800-282-6242
Medical Assurance and its directors and officers, may be deemed to be
participants in the solicitation of proxies from the shareholders of Medical
Assurance in connection with the consolidation. Information about the directors
and officers of Medical Assurance and their ownership of Medical Assurance
common stock is set forth in Medical Assurance's Form 10K for the year ended
December 31, 2000. You can obtain a free copy of the Form 10K at the Securities
and Exchange Commission's website at www.sec.gov or by contacting Medical
Assurance at the address set forth above.
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[MEDICAL ASSURANCE LOGO] NEWS RELEASE CONTINUES
When Medical Assurance files its Form 10Q for the first quarter of 2001 with the
Securities and Exchange Commission, copies may be obtained from the Company's
website, www.medicalassurance.com, or by contacting the Company directly. For
further information, contact Frank B. O'Neil, Senior Vice President, Corporate
Communications (205-877-4460 or foneil@maih.com), or James J. Morello, Treasurer
(205-877-4400); P. O. Box 590009; Birmingham, AL 35259; or consult the Company's
website.
CORPORATE INFORMATION
Medical Assurance's financial strength is recognized by Standard and Poor's,
which rates Medical Assurance's Claims Paying Ability as A+, and by A. M. Best,
which awards Medical Assurance a rating of A (Excellent), the highest rating
given to insurance groups specializing in health care liability.
Medical Assurance is a leader in providing excellent customer service and
innovative, cost-effective malpractice protection to physicians, hospitals,
dentists, and health care organizations. The Company serves its insureds from a
national headquarters in Birmingham, Alabama and offices throughout the
Southeast and Midwest. The Company continues to investigate the feasibility of
growth through acquisition or other business combinations.
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[MEDICAL ASSURANCE LOGO] NEWS RELEASE CONTINUES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME:
(in thousands, except per share data)
Three Months Ended
March 31,
2001 2000
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Direct and assumed premiums written $ 78,870 $ 61,954
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Revenues
Net premiums earned $ 49,545 $ 37,276
Net investment income 10,178 9,765
Other income 691 883
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Total revenues 60,414 47,924
Expenses
Net losses and loss adjustment expenses 46,986 29,655
Underwriting, acquisition and insurance expenses 12,016 8,679
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Total expenses 59,002 38,334
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Income before income taxes 1,412 9,590
Provision (benefit) for income taxes (861) 1,895
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NET INCOME $ 2,273 $ 7,695
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Weighted average number of common shares outstanding
(basic and diluted) 22,697 23,403
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Earnings per share (basic and diluted)
Net income $ 0.10 $ 0.33
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Operating income $ 0.10 $ 0.32
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OPERATING INCOME $ 2,253 $ 7,483
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UNAUDITED SELECTED BALANCE SHEET DATA:
(in thousands, except per share data)
MARCH 31, 2001 December 31, 2000
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Book Value per Share $ 15.39 $ 15.22
Book Value per Share (ex FAS115) $ 15.36 $ 15.26
Stockholders' Equity $ 349,000 $ 345,000
Total Investments $ 810,000 $ 797,000
Total Assets $1,162,000 $1,123,000
Policy Liabilities $ 800,000 $ 765,000
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