The NORCAL Group of companies are engaged in offering medical professional liability insurance, risk management solutions and provider wellness resources
ProAssurance has agreed to acquire NORCAL Group for $450m in a move to create one of the major specialty writers of liability insurance for healthcare professionals and facilities in the US.
The NORCAL Group of companies offers medical professional liability insurance, risk management solutions and provider wellness resources. The insurance group caters to physicians, medical groups, hospitals, healthcare extenders, community clinics, and allied healthcare facilities across the US.
Based in Alabama, ProAssurance is a specialty insurer with expertise in healthcare professional liability, workers’ compensation insurance, legal professional liability, and also in products liability for medical technology and life sciences.
The specialty insurer expects the deal to generate multiple strategic and financial benefits. Some of the benefits for the company will be better scale and capabilities, access to the California physicians market amid hardening of the healthcare professional liability market, and an estimated $18m in pre-tax synergies.
The company said that the synergies will cover corporate and back-office expenses, staffing, and other cost areas like real-estate and technology, apart from consolidation of reinsurance and investments.
ProAssurance CEO comments on NORCAL Group acquisition
ProAssurance president and CEO Ned Rand said: “Bringing together these two great organizations provides ProAssurance and NORCAL with a transformational opportunity to enhance the services we can deliver to our customers and distribution partners, while creating significant long-term value for ProAssurance shareholders.
“Much like ProAssurance’s predecessors, NORCAL was founded by physicians in the 1970’s to serve the professional liability insurance needs of physicians. NORCAL’s history and physician-focused culture make it a perfect fit for the ProAssurance family.”
As per the terms, NORCAL Group will become a part of ProAssurance after the demutualisation of NORCAL Mutual Insurance, which will ultimately be the controlling party of the former.
NORCAL Group president and CEO Scott Diener said: “Given today’s challenging healthcare environment, both organizations will benefit significantly from the formation of this enhanced company.
“Combining with ProAssurance brings tremendous strategic value to NORCAL through increased financial strength, access to new and innovative products for policyholders, and the increased scale of our core services and data analytics.
“The completion of this transaction will enhance and expand NORCAL’s ability to serve its customers in the highly competitive MPL industry as we strive to carry out our mission.”
According to ProAssurance, the demutualisation and the acquisition agreement are mutually dependent and are subject to the receipt of necessary regulatory and policyholder approvals. The parties are targeting to close the acquisition by the end of this year.