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SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
MIDWEST MEDICAL INSURANCE HOLDING COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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[MIDWEST MEDICAL INSURANCE HOLDING COMPANY LOGO]
MIDWEST MEDICAL INSURANCE HOLDING COMPANY
7650 EDINBOROUGH WAY, SUITE 400
MINNEAPOLIS, MN 55435-5978
---------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
---------------------------
To The Class A Stockholders of
MIDWEST MEDICAL INSURANCE HOLDING COMPANY
A special meeting of the stockholders of Midwest Medical Insurance Holding
Company will be held at the Hotel Sofitel, 5601 West 78th Street, Bloomington,
Minnesota 55439 on June 29, 2000, at 9:00 a.m., for the purpose of considering
and voting upon the following matters:
1. Adoption of an amendment to the Restated Articles of Incorporation to
authorize the Board of Directors to create additional classes of stock.
2. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
The directors have fixed the close of business on April 30, 2000 as the
record date for the determination of stockholders entitled to notice of, and to
vote at, the special meeting.
By Order of the Board of Directors
/s/ Andrew J.K. Smith, M.D.
--------------------------------------
Andrew J.K. Smith, M.D.
Chairman of the Board
Minneapolis, Minnesota
May 12, 2000
Please sign the enclosed form of proxy and
mail it promptly. You may nevertheless vote in person
if you do attend the meeting.
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[MIDWEST MEDICAL INSURANCE HOLDING COMPANY LOGO]
MIDWEST MEDICAL INSURANCE HOLDING COMPANY
7650 EDINBOROUGH WAY, SUITE 400
MINNEAPOLIS, MN 55435-5978
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PROXY STATEMENT
MAY 12, 2000
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GENERAL
The enclosed proxy is solicited by the Board of Directors of Midwest
Medical Insurance Holding Company, in connection with the special meeting of the
stockholders of Midwest Holding to be held June 29, 2000, or any adjournment or
adjournments thereof, for the purposes set forth in the accompanying notice of
the special meeting. This solicitation is being made via United Parcel Service
and U.S. Mail and may also be made by directors, officers and employees of
Midwest Holding. Any proxy given pursuant to such solicitation may be revoked by
the stockholder by communication in writing to Midwest Holding at any time prior
to exercise of the proxy. Proxies may also be revoked by delivery of a later
dated proxy or by voting in person. Shares represented by proxies will be voted
as specified in such proxies. Proxies and stockholder votes at the meeting will
be tabulated by officers of Midwest Holding.
All of the expenses involved in preparing, assembling and mailing this
proxy statement and the material enclosed herewith will be paid by Midwest
Holding. Midwest Holding may reimburse custodians, nominees and fiduciaries for
reasonable expenses incurred by them in sending proxy materials to beneficial
owners of stock. It is anticipated that these proxy materials will be mailed to
the stockholders on or about May 12, 2000.
PROPOSALS OF STOCKHOLDERS
Proposals of stockholders of Midwest Holding intending to be presented at
Midwest Holding's next meeting of stockholders must be received by the Chairman
of Midwest Holding at the above address within a reasonable time before the
meeting. No annual or special meetings are now scheduled or anticipated to be
held.
OUTSTANDING STOCK
Class A common stock, $.01 par value, of which there were 123,149 shares
outstanding on the record date held by 3,429 shareholders, constitutes the only
class of outstanding voting securities issued by Midwest Holding entitled to
vote at this meeting. Each stockholder will be entitled to cast one vote in
person or by proxy regardless of the number of Class A shares held by him or
her. Only stockholders of record at the close of business on April 30, 2000,
will be entitled to vote at the meeting. The Class A shares do not have
cumulative voting rights.
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DIRECTORS' SHARE OWNERSHIP
The names and ages of the directors of Midwest Holding, the year each first
became a director, and the number of Class A shares owned by each as of December
31, 1999, are as follows:
<TABLE>
<CAPTION>
CLASS A
COMMON
DIRECTOR SHARES
NAME AGE SINCE PRINCIPAL OCCUPATION OWNED
- ---- --- -------- -------------------- -------
<S> <C> <C> <C> <C>
MICHAEL D. ABRAMS................. 38 1996 Exec V.P. Iowa Medical Society --
JOHN R. BALFANZ, M.D.............. 54 1995 Physician 16
GAIL P. BENDER, M.D............... 52 1996 Physician 25
JAMES R. BISHOP, M.D.............. 58 1994 Physician --
DAVID P. BOUNK.................... 53 1995 President and CEO --
THOMAS C. EVANS, M.D.............. 44 1999 Physician 30
ROGER L. FRERICHS, M.D............ 60 1988 Surgeon 92
RICHARD GEIER, JR., M.D........... 59 1995 Physician 28
ANTHONY C. JASPERS, M.D........... 52 1996 Physician 54
RUSSEL J. KUZEL, M.D.............. 47 1997 Physician 29
WAYNE F. LEEBAW, M.D.............. 56 1994 Physician 26
MARK O. LIABOE, M.D............... 46 1999 Physician 7
STEVEN A. MCCUE, M.D.............. 58 1995 Physician 133
HAROLD W. MILLER, M.D............. 52 1996 Physician 29
ANTON S. NESSE, M.D............... 61 1989 Radiologist 56
MARK D. ODLAND, M.D............... 47 1996 Physician 94
G. WILLIAM ORR, M.D............... 64 1996 Physician 57
PAUL S. SANDERS, M.D.............. 55 1984 CEO-MN Medical Assoc --
RICHARD D. SCHMIDT, M.D.
Secretary....................... 56 1990 Physician 158
JUDITH F. SHANK, M.D.............. 57 1999 Physician 16
ANDREW J. K. SMITH, M.D.
Chairman of Board............... 57 1990 Neurological Surgeon --
G. DAVID SPOELHOF, M.D............ 46 1989 Physician 51
THOMAS D. THROCKMORTON, M.D....... 54 1997 Physician 76
R. BRUCE TRIMBLE, M.D.
Vice Chair of Board............. 59 1993 Physician --
</TABLE>
As of December 31, 1999, the directors of Midwest Holding, as a group,
owned 977 Class A shares, or less than one percent of the total Class A shares
outstanding as of such date. No executive officer owned any Class A shares as of
such date, and Midwest Holding has no 10% shareholders.
All of the directors have been principally engaged in the practice of
medicine for more than five years, except for Dr. Sanders who has been the
Executive Vice President of the Minnesota Medical Association since 1990,
Michael D. Abrams who has been the Executive Director of the Iowa Medical
Society since 1996, and David P. Bounk who has been President and CEO of Midwest
Holding since 1991. Prior to 1996, Michael D. Abrams was Director, Government
Relations of the Indiana Medical Association for nine years.
AMENDMENT TO RESTATED ARTICLES OF INCORPORATION
The proposed amendment to Midwest Holding's Restated Articles of
Incorporation would authorize the Board of Directors to create additional
classes of stock. Under Minnesota law, the Board can create new classes of
stock, and determine their rights and preferences, only if authorized to do so
in a corporation's articles of incorporation. Midwest Holding's Restated
Articles of Incorporation do not currently give the Board this authority.
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The immediate purpose of this amendment is to allow the Board to create the
class of Class C common stock to be exchanged for Class A shares in the exchange
offer described in the offering circular enclosed with this proxy statement. For
more information regarding the terms of the exchange offer, please refer to the
offering circular. However, if this amendment passes, the Board will also be
authorized to create and issue other classes of common or preferred stock in the
future as the need arises. The Board does not currently have any specific
intentions or plans to create any classes of stock other than the Class C
shares, nor does it have any current intention to enter into any mergers,
acquisitions or other transactions. Furthermore, the Board could not create
another class which would adversely affect the rights of Class A or Class C
shareholders without first obtaining the consent of those shareholders as a
class. It is common for companies to grant this authority to the Board in order
to facilitate the Board's management of the company and its business.
Shareholders should carefully consider the relationship between the
proposed amendment and the exchange offer described in the offering circular.
Completion of the exchange offer is contingent upon passage of this amendment to
Midwest Holding's Restated Articles of Incorporation. The exchange offer cannot
be consummated unless the amendment allowing the Board to create the Class C
shares is adopted, because the proposed Class C shares will be issued in
exchange for the outstanding Class A shares. If this amendment does not pass,
the exchange offer will be withdrawn and Class A shareholders will not receive
the exchange offer consideration (one Class C share per shareholder plus $66.00
in cash for each Class A share). Therefore, shareholders who wish to participate
in the exchange offer are strongly encouraged to vote FOR this amendment, since
it will not be possible to accept the exchange offer, and receive the exchange
offer consideration, if this amendment is not adopted.
For these reasons, the Board of Directors, at a meeting held on October 27,
1999, unanimously approved the proposed amendment, and the Board of Directors
unanimously recommends that the shareholders of Class A shares vote FOR the
proposed Amendment.
In order to approve the Amendment, a majority of all holders of Class A
shares must vote for approval, and at least two-thirds of all of the holders of
Class A shares voting must vote for approval. Abstention, or a failure to return
the proxy or vote at the meeting, will therefore have the effect of a vote
against the amendment. Proxies which are returned signed without indicating how
they should be voted will be voted FOR the proposed amendment.
DESCRIPTION OF SECURITIES
Description of Class A Common Stock. Class A shares may be owned by
individual physicians or by individual physicians jointly with the legal
entities in which they practice. In the latter case the shares can be voted only
by the physicians, although they have the right to grant proxies. No
certificates are issued. Each individual holder of shares has only one vote,
regardless of the number of shares that he or she owns. Holders of shares have
the right to vote on all corporate matters except for the election of members of
the Board of Directors of Midwest Holding. This right has been granted to the
Minnesota Medical Association, the holder of the sole authorized and outstanding
Class B share. The Minnesota Medical Association has agreed to elect the
directors nominated by a committee of the Board of Directors. See "Description
of Class B Common Stock."
As long as the Class B share remains outstanding, the holders of these
Class A shares may, at any time, cause Midwest Holding to redeem the Class B
share at par value ($1,000), and thereby gain the right to elect directors. This
requires the vote of two-thirds of the Class A shareholders who vote on the
question, who must also be a majority of the Class A shareholders.
These shares are restricted shares that cannot be transferred or sold to
any person other than Midwest Holding. Midwest Holding must redeem these shares
when a physician insured by Midwest Medical terminates his or her insurance
coverage for any reason. The redemption price will be the net book value of
Midwest Holding, excluding the net book value of Midwest Medical, which is
Midwest Holding's primary asset. By excluding the value of Midwest Medical from
the calculation of the redemption price, Midwest Medical's capital and surplus
will be preserved. The redemption amount thus reflects primarily Midwest
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Holding's net income from operations, which is primarily management fees paid by
Midwest Medical, earnings on investments, and any dividends paid by Midwest
Medical to Midwest Holding. Other terms and conditions of the redemption are
established by the board of directors of Midwest Holding.
Holders of these shares will share in any remaining assets upon liquidation
of Midwest Holding proportionately on the basis of the number of shares held by
each shareholder. All of the assets of Midwest Holding will be included,
including Midwest Medical if Midwest Medical remains a subsidiary of Midwest
Holding at the time of liquidation. In the event of any merger, sale of all or
substantially all of the assets, or other extraordinary event, any consideration
payable to holders of these shares will reflect their full value and will not be
limited to the redemption amount.
These shares do not entitle shareholders to preemptive rights or cumulative
voting, and no assignment or other transfer is permitted. Shareholders are
permitted to enter into voting agreements and appoint proxies to vote the
shares, and are permitted to assign their rights to the proceeds from any
redemption of the shares.
There is no market for these shares, and it is not anticipated that there
ever will be a public or private market in which these shares are traded.
Therefore, all holders of these shares must expect to retain them until they
cease to be insured by Midwest Medical. Midwest Holding has never paid a
dividend, nor does it intend to within the foreseeable future. If it ever does,
shareholders will have the right to receive that dividend.
Purchasers of insurance from Midwest Medical accrue and are issued
additional shares pursuant to the allocation schedule for each day they remain
insured with Midwest Medical. New purchasers of insurance of Midwest Medical are
not issued shares until they have been insured by Midwest Medical for five
years, and all rights will be forfeited if insurance coverage is not continuous
for five years. This limitation does not apply to Nebraska physicians who were
insured by Medical Liability Mutual Insurance Company of Nebraska when it was
merged with Midwest Medical. The allocation schedule has been modified since
1988 and Midwest Holding reserves the right to modify it in the future.
As of April 30, 2000, there were 123,149 Class A shares outstanding held by
3,429 physicians; 2,905 additional physicians have accrued the right to receive
14,904 additional shares upon completion of the five-year vesting period.
Description of Class B Common Stock. The holder of the one Class B share
authorized by Midwest Holding's Restated Articles of Incorporation is the
Minnesota Medical Association. The Class B share has no rights or preferences
other than the right to elect the members of the Board of Directors of Midwest
Holding. This right also gives the Minnesota Medical Association the effective
right to elect the Board of Directors of Midwest Medical, since the Bylaws of
both corporations provide that each member of the Board of Directors of Midwest
Medical will be a member of the Board of Directors of Midwest Holding, and the
Minnesota Medical Association and Midwest Holding have entered into an agreement
to exercise their respective voting rights to elect the same persons to the
Board of Directors of Midwest Holding and Midwest Medical. A nominating
committee of Midwest Holding nominates persons to be elected as members of the
Board of Directors, and the Midwest Medical Association has agreed to elect
these persons to the Board of Directors.
The Class B share is currently held in a voting trust which requires the
trustee to vote the share for the election of at least two Iowa directors
nominated by the Iowa Medical Society.
Description of Class C Common Stock. The Class C shares will have terms
and conditions identical with the Class A shares, except as follows:
- The Class C shareholders will have the same rights in the case of any
liquidation, sale or similar transaction as they would if they had
remained Class A shareholders. However, Class C shareholders will not
accrue additional shares, and therefore the following provisions are
required to ensure that Class C shareholders continue to maintain their
interest in Midwest Holding in the event of such a transaction. The
result is that each Class C shareholder will participate in any such
transaction to the same extent as if they had remained Class A
shareholders, and will receive credit in the calculations for having been
a Class A shareholder. Importantly, shareholders will continue to have
the right to receive all of the value of Midwest Holding if such a
transaction occurs.
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In order to achieve this equivalent treatment, the terms of the
Class C shares provide that, if Midwest Holding engages in (i) any
merger or consolidation with or into, or acquisition by, another
corporation, (ii) the exchange of one or more classes or series of
shares of the corporation for shares of one or more other corporations,
(iii) the liquidation or voluntary dissolution of the corporation, or
similar transaction or event involving the corporation (a
"Transaction"), the Class A shares and the Class C shares will share the
total consideration from any Transaction ("Transaction Consideration")
as follows:
1. Each Class A shareholder will be allocated "Distribution Units"
equal to the number of Class A shares held on the date of a
Transaction;
2. Each Class C shareholder will be allocated Distribution Units for
each year of continuous qualifying coverage (pro-rated for periods
less than a year) by Midwest Medical prior to the Transaction as
determined by application of Board policies, based upon the
underwriting risk classifications used by Midwest Medical. This is
intended to be equivalent to the allocation schedule used in
issuance of Class A shares;
3. The total Distribution Units allocated to Class A and Class C
shareholders will be determined; and
4. Each Class A or Class C shareholder will receive, respectively, a
percentage of the total Transaction Consideration equal to the
percentage of the total Distribution Units represented by the
Distribution Units allocated to that shareholder in subsection 1
or subsection 2 above.
- Midwest Holding will redeem all Class C shares held by an individual
physician or jointly held by such physician and his or her medical
practice group or clinic, upon the expiration or termination for any
reason of the professional liability insurance policy issued by Midwest
Medical insuring such physician. No payment will be made upon this
redemption.
- Issuance of Class C shares will not be subject to a vesting requirement.
DOCUMENTS INCORPORATED BY REFERENCE
The Annual Report on Form 10-K for the year ended December 31, 1999, SEC
File Number 0-21230, which Midwest Holding has previously filed with the
Securities and Exchange Commission, is specifically incorporated into this proxy
statement by reference.
Copies of the Form 10-K may be obtained, free of charge, by contacting Mr.
Niles Cole, Chief Financial Officer, Midwest Medical Insurance Holding Company,
7650 Edinborough Way, Suite 400, Minneapolis, MN 55435-5978 (952) 838-6700.
OTHER MATTERS
As of the date of this statement, management of Midwest Holding has no
knowledge of any other business which will be presented for consideration at the
meeting. However, if any matters other than those referred to above should
properly come before the meeting, it is the intention of the persons named in
the enclosed proxy to vote such proxy in accordance with their best judgment.
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Exhibit to Schedule 14A
Consent of Independent Auditor
We consent to the incorporation by reference in the Proxy Statement of
Midwest Medical Insurance Holding Company related to a special meeting of
stockholders of our report dated February 1, 2000, with respect to the
consolidated financial statements and schedules of Midwest Medical Insurance
Holding Company and Subsidiaries included in its Annual Report (Form 10-K) for
the year ended December 31, 1999, filed with the Securities and Exchange
Commission.
Minneapolis, Minnesota
April 26, 2000
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MIDWEST MEDICAL INSURANCE HOLDING COMPANY
7650 EDINBOROUGH WAY, SUITE 400
MINNEAPOLIS, MINNESOTA 55435
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints David P. Bounk and Andrew J.K. Smith, or
either of them, with full powers of substitution, as proxies, to vote as
indicated below on behalf of the undersigned at the special meeting of the
shareholders of Midwest Medical Insurance Holding Company to be held on June 29,
2000, at the Hotel Sofitel, 5601 West 78th Street, Bloomington, Minnesota 55439,
or any adjournment thereof.
1. Proposal to amend the Restated Articles of Incorporation to authorize the
Board of Directors to create additional classes of stock.
[ ] Approve [ ] Disapprove [ ] Abstain
2. With discretionary authority to vote with respect to any other business as
may properly come before the meeting or any adjournment or adjournments thereof.
[ ] Approve [ ] Disapprove [ ] Abstain
(sign on reverse side)
<PAGE> 10
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1 AND 2. THIS PROXY MAY BE WITHDRAWN BY THE UNDERSIGNED AT ANY TIME
BEFORE IT IS VOTED AT THE SPECIAL MEETING.
Please sign exactly as name appears on label. When signing as attorney, as
executor, administrator, trustee or guardian, please give full title as such. If
a corporation, please sign full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
Dated: , 2000
---------------------------------------
Signature
