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August 3, 2009
Share ThisFollowing FPIC Insurance Group, Inc’s (FPIC) agreement to acquire Advocate, MD and its subsidiaries on July 30, A.M. Best has commented that all the ratings on FPIC and its subsidiaries remain unchanged. We think that this is primarily to support the company’s acquisition decision.
The all cash deal was signed between FPIC’s subsidiary, First Professionals Insurance Company, Inc., and Advocate, MD Financial Group. Inc. The total deal value includes $33.6 million at closing of the transaction and up to $12.0 million related to the performance of Advocate, MD over the couple of years following the closing of the deal.
As the nature of the business of Advocate, MD is almost similar with FPIC and the deal is consistent with FPIC’s long-term business strategy, we think that FPIC will gain significant scale in its operations by this acquisition. The company will also get advantages of the Texas and Mississippi markets where Advocate MD has established itself as an innovative company.
According to the rating agency, the financial strength rating of A- (Excellent) and issuer credit ratings (ICR) of “a-" of FPIC and its members remained unchanged. The agency also said that the ICR of FPIC also remained unchanged at “bbb-".
We anticipate FPIC’s results for the coming quarters to continue to benefit over its peers [American Physicians Capital (ACAP), American Physicians Service Group (AMPH), and ProAssurance Corporation (PRA)] from its sound capital position and strong financial strength rating by A.M. Best and Fitch. However, the price softening will continue to moderate top-line growth.
Read the full analyst report on "FPIC"
Read the full analyst report on "ACAP"
Read the full analyst report on "AMPH"
Read the full analyst report on "PRA"
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