ProAssurance Completes INDIE Deal

Last week, ProAssurance Corporation ( PRA - Analyst Report ) announced the culmination of its acquisition of Independent Nevada Doctors Insurance Exchange (INDIE) – a reciprocal exchange based in Nevada. Consequently, INDIE will be converted into a stock insurance company from a reciprocal exchange, and thereafter operated as a subsidiary of ProAssurance.

Financial and other terms of the deal were not divulged. However, it has been declared that the subscribing policyholders of INDIE will receive the purchase consideration within 2 weeks.

The deal was announced in June this year and received the approval of the board of ProAssurance and the Subscriber Advisory Committee of INDIE in the same month. Later, it was approved by INDIE’s subscribing policyholders in a special meeting on October 29, 2012, and subsequently by the Nevada Division of Insurance on November 28, 2012. The approval by the Nevada Division of Insurance was based on a string of regulatory hearings.

Before the acquisition, INDIE was Nevada’s leading medical professional liability insurer, based on 2011 direct written premiums, whereas ProAssurance occupied the fourth position in the state. Thus, following the completion of the deal, the latter has emerged as the leading writer of medical professional liability insurance in Nevada by a huge margin, based on 2011 direct written premiums.

The acquisition will not only amplify ProAssurance’s medical professional liability insurance business, but also substantially boost its operations in Nevada. ProAssurance has been operating in Nevada since 1993. The company is one of the largest publicly-traded writers of medical professional liability insurance in the U.S.

Over the years, ProAssurance has significantly expanded its geographic footprint through the successful acquisition and integration of companies. In June 2012, the company announced an agreement to acquire Medmarc Insurance Group for an estimated cost of $153.7 million.

Medmarc is one of the leading underwriters of products liability insurance for medical technology and life sciences in the U.S. The acquisition is expected to be completed by the end of 2012, subject to the approval of the regulators as well as Medmarc’s eligible members.

ProAssurance carries a Zacks #2 Rank (Buy). We retain our long-term Neutral recommendation on the shares. Another operator in the property and casualty industry – EMC Insurance Group Inc. ( EMCI - Snapshot Report ) – carries a Zacks #1 Rank (Strong Buy).