Birmingham-based ProAssurance Corp. has finished its acquisition of NORCAL Mutual. Through its offer to NORCAL policyholders who elected to receive stock in the conversion of NORCAL Mutual, ProAssurance has acquired more than 98% of the stock of NORCAL Insurance Co., the successor to NORCAL Mutual. The base consideration for the transaction at closing is $441 million.
“NORCAL is one of the leading writers of medical professional liability insurance in the country. We believe their contributions to our customers and culture will expand our product capabilities with broader geographic scale and efficiencies and will support a true nationwide platform to deliver value to our customers and stakeholders,” said Ned Rand, president and CEO of ProAssurance.
Policyholders who elected to receive NORCAL stock and tender it to ProAssurance will receive their allocated share of the converted company’s equity in cash and are eligible for a share of Contingent Consideration in an amount up to approximately $83 million depending upon development of NORCAL’s ultimate net losses between Dec. 31, 2020, and Dec. 31, 2023.
ProAssurance is funding the transaction with $248 million of cash on hand, and NORCAL will pay $2 million to policyholders who elected to receive the discounted cash option for their allocated share of the converted equity. The remainder of the base consideration, approximately $191 million, is in the form of contribution certificates issued to certain NORCAL policyholders in the conversion of NORCAL Mutual, and those instruments are an obligation of NORCAL Insurance Co.
“ProAssurance’s financial strength, diverse risk transfer capabilities, success in integrating acquisitions, and — most importantly — its focus on policyholder success were the key factors in the decision to join with them,” said Sandra Beretta, MD, immediate past chair of NORCAL’s board of directors. “NORCAL has protected physicians and other healthcare professionals for more than four decades. As part of the ProAssurance family, NORCAL has increased its ability to serve its policyholders for many years to c