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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 2, 1998
PROFESSIONALS GROUP, INC.
(Exact name of registrant as specified in its charter)
Michigan 0-21223 38-3273911
(State or other jurisdiction of (Commission File No.) (IRS Employer
incorporation) Identification No.)
2600 Professionals Drive, Okemos, Michigan 48864
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (517) 349-6500
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ITEM 5. OTHER EVENTS
On November 2, 1998, and in connection with the proposed
demutualization (the "Proposed Demutualization") of Michigan Educational
Employees Mutual Insurance Company ("MEEMIC"), MEEMIC Holdings, Inc. (an entity
affiliated with MEEMIC) filed a registration statement on Form S-1 (registration
no. 333-66671) with the Securities and Exchange Commission for the purpose of
registering certain shares of its common stock to be issued in connection with
the Proposed Demutualization. Said registration statement should be consulted
for a description of the Proposed Demutualization and the expected role of
Professionals Group, Inc. therein.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
Exhibit Reference
Number Exhibit Description
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99.1 Press Release dated October 27, 1998.*
* Filed herewith
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PROFESSIONALS GROUP, INC.
Date: November 4, 1998 By: /s/ John F. Lang
-----------------------------
Name: John F. Lang
Its: Vice President, Treasurer and
Chief Accounting Officer
(Principal Financial Officer
and Principal Accounting Officer)
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Exhibit Index
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Exhibit No. Description
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99.1 Press Release dated October 27, 1998*
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Exhibit 99.1
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NEWS RELEASE
FOR IMMEDIATE RELEASE
CONTACT:
JOHN F. LANG, CHIEF ACCOUNTING
OFFICER, PROFESSIONALS GROUP
(517) 347-6207
WILLIAM D. BAXTER, CHIEF FINANCIAL OFFICER,
PRONATIONAL
(517) 347-6323
PROFESSIONALS GROUP ANNOUNCES ADJUSTMENT TO JUNE 30, 1998 PPTF
LOSS RESERVES
OKEMOS, MICH., OCTOBER 27, 1998 - PROFESSIONALS GROUP, INC. (NASDAQ:
PICM) announced today that Physicians Protective Trust Fund ("PPTF") will take a
one-time pretax charge of $27.6 million related to loss reserve increases as of
June 30, 1998. As previously announced in Professionals Group's second quarter
earnings release, these charges result from a recently completed full actuarial
analysis of the PPTF loss reserves conducted as of June 30, 1998 and will be
reported in the June 30, 1998 pre-merger financial statements of PPTF. The
charges will not effect third quarter financial results of Professionals Group.
The charges will, however, impact the nine-month financial statements of
Professionals Group as a result of the "pooling of interests" accounting
treatment of the merger of PPTF and Professionals Group.
The $27.6 million one-time pretax charge is composed of the following:
- - $25.6 million increase in loss reserves to reflect June 30, 1998 actuarial
estimates and the application of Professionals Group's more conservative
reserving practices to PPTF's reserves;
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- - $2.0 million related to an adverse development stop loss reinsurance
agreement. This agreement will provide an additional $14.5 million of
reinsurance cover in excess of the increased PPTF loss reserves at June 30,
1998 to protect earnings against future adverse development.
In addition, as a part of ongoing operations, PPTF results for the
period ending June 30, 1998 include $9.5 million of additional incurred losses
related to an excess limits verdict on one claim. Although the case is on appeal
to the Florida Supreme Court, management posted the full amount of the excess
limits verdict and related costs into loss reserves for the second quarter after
the Florida Court of Appeals ruled in favor of the plaintiff. This case arose
from a suit filed against a PPTF insured in 1994 when PPTF did not have coverage
for excess policy limits verdicts. Management has since taken actions designed
to limit the company's exposure to excess limits verdicts. In addition,
reinsurance contracts entered into by PPTF after 1995 include certain coverage
for losses in excess of policy limits and the PPTF book of business has been
added to Professionals Group's errors and omissions insurance coverage covering
excess limits exposure.
On a pro-forma basis, Professionals Group's book value per share after
giving effect to the merger with PPTF was $27.16 at June 30, 1998 as compared
with the pro-forma book value per share of $28.66 at December 31, 1997.
Victor T. Adamo, Chairman and Chief Executive Officer of Professionals
Group, said, "After a full actuarial review, the charges were taken in order to
increase reserves and thereby maintain our position as a strong and
conservatively reserved insurance group."
Certain statements made by Professionals Group in this release may
constitute forward-looking statements. Actual results may differ materially from
those projected in the forward-looking statements. These forward-looking
statements involve risks and uncertainties including, but not limited to, the
following: the frequency and severity of claims; uncertainties inherent in
reserve estimates; catastrophic events; a change in the demand for, pricing of,
or supply of reinsurance or insurance; increased competitive pressure; changing
rates of inflation; and general economic conditions.
Press Release Fax Service:
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This news release and other Professionals Group releases are available
at no charge through Professionals Group's World Wide Web site
(http://www.picm.com) and PR Newswire's Company News on-Call fax service,
800-758-5804, extension 115602.
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