Meadowbrook Insurance Group Inc. said it will merge withProCentury Corporation in a cash and stock transaction worth $273million.

The Southfield, Mich.-based insurer said that shareholders ofProCentury would receive either $20 in cash or Meadowbrook commonstock valued at $20 per share for each share of ProCentury stock,subject to adjustments. The stock value represents a premium of 33percent over ProCentury's common stock based on the 30-day averageshare price, Meadowbrook said. The cash portion of the deal will befinanced through a combination of cash and debt.

The deal is expected to be completed in the third quarter of2008, subject to regulatory and shareholder approval.

The combined companies will operate under the Meadowbrook nameand be traded on the New York Stock Exchange under the tickersymbol MIG.

Robert S. Cubbin, Meadowbrook's chief executive officer, willcontinue in his current role. Two ProCentury board members willjoin Meadowbrook's board, the company said.

Meadowbrook said the deal would expand and complement thecompany's specialty lines capabilities with Westerville, Ohio-basedProCentury's insurance professionals and product expertise in theexcess and surplus lines market.

“The combination of these two companies creates a diversifiedplatform and gives both companies the size and product depth tocompete at a level that couldn't be achieved as separate entities,”said Mr. Cubbin in a statement. “We believe there are significantrevenue opportunities for both sides, as well as cost savingspotential. We expect meaningful accretion to earnings and will bein a position to offer specific guidance on this in the nearfuture.”

“Meadowbrook's capabilities combined with our expertise in theexcess and surplus lines market are expected to complement andenhance the profitability of each company,” said Edward Feighan,chairman and CEO of ProCentury. He said the company would also betaking advantage of Meadowbrook's national distributionchannels.

Meadowbrook's total gross written premium for 2007 was $346.5million and ProCentury's was $238.3 million. Total shareholders'equity at the end of 2007 for Meadowbrook and ProCentury was $301.9million and $161.0 million, respectively, the company said.