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July 13, 2005
Sale of Medical Malpractice Insurance Company Approved
Washington, DC -- The Department of Insurance, Securities and Banking (DISB) issued its final approval today for the sale of NCRIC, Inc., the District’s largest writer of medical malpractice insurance, to ProAssurance, Corp., an Alabama-based company that is licensed to sell medical malpractice insurance in 22 states located in the Southeast and Midwest.
A public hearing on the proposed sale was held on June 6, 2005. The ruling issued today by the Honorable Lawrence H. Mirel, commissioner of the DC Department of Insurance, Securities and Banking, was based on the conclusion that ProAssurance, Corp. meets all the criteria required under District law for approval of the proposed sale. “Based on the evidence before us, it is clear that the sale is in the best interests of the NCRIC, Inc. policyholders and the general public,” Commissioner Mirel said.
NCRIC, Inc. will continue to operate as a District of Columbia domestic insurer, but it will become part of the ProAssurance, Corp. holding company, which also includes affiliated companies based in the states of Alabama, Florida, Illinois and Michigan. The insurance regulators in those states wrote letters in support of the proposed sale, which was also supported by the District of Columbia Medical Society, which represents many of the physicians who are insured by NCRIC, Inc.
“ProAssurance Corp. has demonstrated to our satisfaction that it has the resources and experience to run a successful medical malpractice insurance company in the District of Columbia,” Mirel said. Commissioner Mirel noted that NCRIC, Inc. had experienced some underwriting losses in recent months and was downgraded by A.M. Best from A- to B++, with negative implications. ProAssurance, Corp. is rated A- by A.M. Best and is the fourth largest medical malpractice insurer in the United States. Both are publicly traded companies. “The additional financial strength of ProAssurance, as well as its ability to spread costs over a much larger geographic area, will help ensure the stability of the medical malpractice insurance market in the District of Columbia,” according to Commissioner Mirel.
NCRIC, Inc. and ProAssurance, Corp. were both founded by physicians to fill a gap when commercial insurers were withdrawing from the medical malpractice business, and both companies continue to have heavy involvement of physicians on their boards of directors. Although some of NCRIC, Inc.’s “back-office” functions, such as accounting, actuarial and information systems, will be shifted to ProAssurance, Corp.’s Birmingham office, the NCRIC, Inc.’s existing office in the District of Columbia will continue to handle underwriting, policy administration, claims and risk management. The existing office in the District of Columbia will become the regional office for all ProAssurance, Corp. business in the District of Columbia and the states of Virginia, Delaware and Maryland.
There were no objections to this sale by the U.S. Department of Justice and the Federal Trade Commission and the registration statement is awaiting approval by the U.S. Securities and Exchange Commission is expected to be deemed effective. The sale must also be approved by vote of the shareholders of NCRIC, Inc. and the vote is expected to be held in August 2005. |
