Medical professional liability insurer American Physicians Service Group Inc. (AMPH-OLD) has been acquired by ProAssurance Corporation (NYSE:PRA), as announced earlier. Per the agreement, the shareholders of American Physicians will receive $32.50 per share in cash from the acquirer.
Excluding one-time transaction and restructuring costs, ProAssurance expects the transaction to be accretive to its 2011 earnings.
American Physicians believes that ProAssurance will offer superior quality insurance protection for policyholders. The company is also of the opinion that its shareholders, who remained insulated even during the economic turmoil, will stand to benefit from the merger.
American Physicians is the second largest writer of medical professional liability insurance in Texas. The acquisition will help ProAssurance to immediately expand its footprint in Texas, an important part of its growth strategy. Given American Physicians’ track record of operating profitably in Texas, ProAssurance expects to accrue immediate tangible benefits.
American Physicians’ expansion plans in Arkansas and Oklahoma also complement that of ProAssurance. We believe the Arkansas and Oklahoma markets hold the key to ProAssurance’s long-term growth.
American Physicians ended the third quarter with earnings surpassing the Zacks Consensus Estimate as well as the prior-year figure. Higher premium revenue, lower claims coupled with favorable underwriting margins aided the earnings beat.
However, earnings of ProAssurance in the third quarter of 2010 came in line with the Zacks Consensus Estimate and lagged the year-ago results. The Zacks Consensus Estimate for fourth-quarter 2010 is $2.47 per share. For full years 2010 and 2011, the Zacks Consensus Estimates are, respectively, $5.25 per share and $5.26 per share.
Based in Birmingham, Alabama, ProAssurance Corporation, through its subsidiaries, provides professional liability insurance products primarily to physicians, dentists, other healthcare providers and healthcare facilities in the United States. It is also engaged in the legal professional liability business. It is the fourth largest writer of medical professional liability insurance in America.
Headquartered in Austin, Texas, American Physicians Service Group Inc. is a leading provider of medical professional liability insurance services for physicians, dentists and other health care providers in Texas, Arkansas and Oklahoma.