The Doctors Company to buy medical liability insurer ProAssurance for $1.3 billion
19/03/2025 21:30
By Michael Loney March 19 - (The Insurer) - The Doctors Company said on Wednesday it had agreed to buy ProAssurance for $25 per share in cash, valuing the New York-listed medical liability insurer at $1.3 billion. Deal offers 60% premium over ProAssurance's closing stock price Transaction expected to close in first half of 2026, pending approvals ProAssurance to become wholly owned subsidiary of The Doctors Company The definitive deal represents a premium of approximately 60% to the closing price of ProAssurance common stock on March 18, The Doctors Company said in a joint statement. New York-listed ProAssurance’s shares closed down 1.3% at $15.54, before the deal was announced. The price surged after markets to $23.44 as of 4:52 p.m. EST. The combined company will have assets of approximately $12 billion. “We are excited to further our mission to advance, protect, and reward the practice of good medicine to an even greater number of healthcare providers across the nation,” said Richard Anderson, chairman and CEO of The Doctors Company. The addition of ProAssurance “significantly enhances our ability to serve healthcare professionals now and well into the future”, he added. Birmingham, Alabama-headquartered ProAssurance provides medical professional liability and products liability insurance for medical technology and life sciences. It is also a provider of workers’ compensation insurance in the eastern U.S. ProAssurance’s board of directors has unanimously approved the transaction, and resolved to recommend that its shareholders approve the agreement. The transaction is expected to close in the first half of 2026, and is subject to customary closing conditions. This includes approval by ProAssurance’s stockholders and the receipt of regulatory approvals. The transaction is not subject to a financing condition. ProAssurance president and CEO Ned Rand said the transaction “will deliver significant value to our shareholders”. “Both ProAssurance and The Doctors Company were founded by physicians in response to the medical liability crisis of the 1970s. Both companies have grown over the years by bringing together other physician-founded companies,” he said. ProAssurance reported $1.05 billion in gross premiums written for 2024, down 2.9% from $1.08 billion in 2023. Its combined ratio improved to 109.4% last year, from 112.7% in 2023. Rand said in his company’s results release in February that “we believe it is prudent to continue to shrink in some areas where market conditions remain a headwind, which will help us reach our target for long-term sustained profitability across all business segments.” Upon completion of the transaction, ProAssurance will become a wholly owned subsidiary of Napa, California-headquartered The Doctors Company, which has annual revenue of $1.5 billion and more than $8 billion in assets. The Doctors Company is an interinsurance exchange, and the lead member of The Doctors Company Insurance Group. AM Best responded to the announcement by stating that The Doctors Company Insurance Group’s financial strength rating of A and the long-term issuer credit ratings of a-plus are unchanged, with stable outlooks. The rating agency said the group is the second-largest writer of medical professional liability insurance in the U.S. based on direct premiums written, while ProAssurance is the fourth-largest MPL insurer. ProAssurance is rated A by AM Best, which does not expect the transaction to have any material change to the insurer's rating fundamentals. Houlihan Lokey Capital and Howden Capital Markets & Advisory are financial advisers and Mayer Brown legal counsel to The Doctors Company on the deal. Goldman Sachs is financial adviser to ProAssurance on the deal and Simpson Thacher & Bartlett and Willkie Farr & Gallagher are legal counsel.