Meadowbrook Insurance To Merge With ProCentury

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

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

The deal is expected to be completed in the third quarter of 2008, subject to regulatory and shareholder approval.

The combined companies will operate under the Meadowbrook name and be traded on the New York Stock Exchange under the ticker symbol MIG.

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

Meadowbrook said the deal would expand and complement the company's specialty lines capabilities with Westerville, Ohio-based ProCentury's insurance professionals and product expertise in the excess and surplus lines market.

“The combination of these two companies creates a diversified platform and gives both companies the size and product depth to compete at a level that couldn't be achieved as separate entities,” said Mr. Cubbin in a statement. “We believe there are significant revenue opportunities for both sides, as well as cost savings potential. We expect meaningful accretion to earnings and will be in a position to offer specific guidance on this in the near future.”

“Meadowbrook's capabilities combined with our expertise in the excess and surplus lines market are expected to complement and enhance the profitability of each company,” said Edward Feighan, chairman and CEO of ProCentury. He said the company would also be taking advantage of Meadowbrook's national distribution channels.

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