Specialty insurer ProAssurance has reached an agreement to purchase Eastern Insurance Holdings (EIHI), for $24.50 per share in an all-cash transaction valued at nearly $205m.

Under the terms of the agreement, which is likely to conclude by 1 January 2014, the acquired entity will merge into a newly formed subsidiary of ProAssurance.

ProAssurance chairman and CEO W Stancil Starnes said that the strategic transaction will enable the firm to build the insurance platform that will allow the company to serve the needs of policyholders and shareholders in the years and decades ahead.

"Eastern has a strong, long-term position in healthcare workers’ compensation that will allow us to broaden the high quality products we are able to offer our existing customers," Starnes added.

"We are positioned to grow in our respective markets and believe Eastern’s segregated portfolio cell business and expertise will help expand alternative market opportunities in medical professional liability and workers’ compensation for our healthcare customers," Starnes further explained.

Under the leadership of ProAssurance current President and CEO Michael Boguski and his management team, the company will maintain Eastern’s corporate office in Lancaster, Pennsylvania and its existing regional and satellite offices.

The deal is subject to customary conditions, including regulatory and Eastern shareholder approval.

Raymond James & Associates and law firm of Burr & Forman have been hired to offer advice to ProAssurance, while Eastern Insurance is being advised by Keefe, Bruyette & Woods and the law firm of Stevens & Lee.

Through its subsidiaries, Eastern offers workers’ compensation products and services and segregated portfolio cell reinsurance business. It has service offices in Pennsylvania, North Carolina, Indiana, Tennessee, Virginia, and Mississippi.