MIDWEST MEDICAL INSURANCE HOLDING CO, SC TO-I, 2000-04-26

MIDWEST MEDICAL INSURANCE HOLDING CO
SC TO-I, 2000-04-26
FIRE, MARINE & CASUALTY INSURANCE

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<PAGE> 1

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE TO
(RULE 14D-100)
TENDER OFFER STATEMENT UNDER SECTION 14(D)(1) OR 13(E)(1) OF
THE SECURITIES EXCHANGE ACT OF 1934.
(Amendment No. )*
MIDWEST MEDICAL INSURANCE HOLDING COMPANY
- --------------------------------------------------------------------------------
(Name of Subject Company (Issuer))

MIDWEST MEDICAL INSURANCE HOLDING COMPANY (OFFEROR AND ISSUER)
- --------------------------------------------------------------------------------
(Names of Filing Persons (identifying status as offeror, issuer or other
person))

CLASS A COMMON STOCK, $.01 PAR VALUE
- --------------------------------------------------------------------------------
(Title of Class of Securities)

NONE
- --------------------------------------------------------------------------------
(CUSIP Number of Class of Securities)

David P. Bounk
President and Chief Executive Officer
7650 Edinborough Way, Suite 400
Minneapolis, MN 55435-5978
(612) 838-6700
- --------------------------------------------------------------------------------
(Name, address, and telephone number of person authorized to receive
notices and communications on behalf of filing persons)

With copies to:
Ross C. Formell
Best & Flanagan LLP
601 Second Avenue South, Suite 4000
Minneapolis, MN 55402-4331
(612) 339-7121
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<PAGE> 2

CALCULATION OF FILING FEE

<TABLE>
<S> <C>
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Transaction Valuation* Amount of Filing Fee
$155,603,000 $3,112.06
- ---------------------------------------------------------------------------------------------
</TABLE>

* Set forth the amount on which the filing fee is calculated and state how it
was determined. -- Based upon the book value of the securities acquired,
pursuant to SEC Rule 0-11.

[ ] CHECK THE BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY RULE
0-11(A)(2) AND IDENTIFY THE FILING WITH WHICH THE OFFSETTING FEE WAS
PREVIOUSLY PAID. IDENTIFY THE PREVIOUS FILING BY REGISTRATION STATEMENT
NUMBER, OR THE FORM OR SCHEDULE AND THE DATE OF ITS FILING.
Amount Previously Paid:
- --------------------------------------------------------------------------------
Form of Registration No.:
- --------------------------------------------------------------------------------
Filing Party:
- --------------------------------------------------------------------------------
Date Filed:
- --------------------------------------------------------------------------------

[ ] CHECK THE BOX IF THE FILING RELATES SOLELY TO PRELIMINARY COMMUNICATIONS
MADE BEFORE THE COMMENCEMENT OF A TENDER OFFER.

Check the appropriate boxes below to designate any transactions to which the
statement relates:

[ ] THIRD-PARTY OFFER SUBJECT TO RULE 14D-1.

[X] ISSUER TENDER OFFER SUBJECT TO RULE13E-4.

[X] GOING-PRIVATE TRANSACTION SUBJECT TO RULE 13E-3.

[ ] AMENDMENT TO SCHEDULE 13D UNDER RULE 13D-2.

Check the following box if the filing is a final amendment reporting the results
of the tender offer: [ ]

2
<PAGE> 3

ITEM 1. SUMMARY TERM SHEET.

Incorporated by reference to Offering Circular filed herewith.

ITEM 2. SUBJECT COMPANY INFORMATION.

(a) The issuer is also the filing person. The name, address and telephone
number of the issuer and filing person are Midwest Medical Insurance
Holding Company, 7650 Edinborough Way, Suite 400, Minneapolis,
Minnesota 55435; (612) 838-6700. The issuer is referred to herein as
the "Company."

(b) The securities that are the subject of this exchange offer are the
issuer's Class A Common Stock, $.01 par value (the "Class A Shares").
As of March 31, 2000, there were 122,734 Class A Shares outstanding.

ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON.

The issuer is also the filing person. The name, address and telephone
number of the issuer and filing person are Midwest Medical Insurance Holding
Company, 7650 Edinborough Way, Suite 400, Minneapolis, Minnesota 55435; (612)
838-6700. The issuer is referred to herein as the "Company."

ITEM 4. TERMS OF THE TRANSACTION.

(a) Incorporated by reference to Offering Circular filed herewith.

(b) The Company expects to purchase Class A Shares from any director,
officer or affiliate of the Company owning such shares as part of the
exchange offer. The terms of such purchases will be the same as for all
other shareholders of the Class A Shares.

ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENT.

Incorporated by reference to Offering Circular filed herewith.

ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.

(a) Incorporated by reference to Offering Circular filed herewith.

(b) Class A Shares that are tendered to the Company in connection with the
exchange offer will be returned to authorized but unissued shares of
the Company's common stock. The Company has no present intention to
reissue such shares.

(1) The Company does not have any plans to engage in any
extraordinary transaction, such as a merger, reorganization or
liquidation, involving the Company or any of its subsidiaries;
except that if the Company does not acquire all outstanding
Class A Shares in this tender offer, it may seek to acquire
the remaining shares through a merger with a newly formed
entity controlled by the Company. The remaining Class A
shareholders would receive the same consideration in such a
merger as is being offered in the tender offer. The Board of
Directors has not yet determined whether or not it will
proceed with such a merger.

(2) Any purchase, sale or transfer of a material amount of assets
of the Company or any of its subsidiaries;

(3) Any material change in the present dividend rate or policy, or
indebtedness or capitalization of the Company;

(4) Any change in the present board of directors or management of
the Company, including, but not limited to, any plans or
proposals to change the number or the term of directors or

3
<PAGE> 4

to fill any existing vacancies on the board or to change any
material term of the employment contract of any executive
officer;

(5) Any other material change in the Company's corporate structure
or business;

(6) Any class of equity securities of the Company to be delisted
from a national securities exchange or cease to be authorized
to be quoted in an automated quotations system operated by a
national securities association.

(7) Any class of equity securities of the Company becoming
eligible for termination of registration under Section
12(g)(4) of the Exchange Act; except that the Class A Shares
will be eligible for termination of registration if there are
fewer than 300 shareholders thereof upon conclusion of the
tender offer.

(8) The suspension of the Company's obligation to file reports
under Section 15(d) of the Exchange Act;

(9) The acquisition by any person of additional securities of the
Company, or the disposition of securities of the Company; or

(10) Any changes in the Company's articles, bylaws or other
governing instruments or other actions that could impede the
acquisition of control of the Company.

ITEM 7. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.

(a) Incorporated by reference to Offering Circular filed herewith.

(b) Incorporated by reference to Offering Circular filed herewith.

ITEM 8. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.

(a) Incorporated by reference to Offering Circular filed herewith.

(b) Neither the Company, nor, to the best of the Company's knowledge, any
of its directors, executive officers or affiliates, or any of the
directors or executive officers of any of its subsidiaries, or any
associate or majority-owned subsidiary of the Company, or any
retirement plan of any such person, has engaged in any transaction
involving the Class A Shares during the period of 60 business days
prior to the date hereof, except that the Company has redeemed 1,498
Class A Shares during the past 60 days pursuant to the redemption
provisions of these shares. The shares were redeemed at an average
price of $63.18 per share, according to the terms of the shares.

ITEM 9. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.

(a) No persons or classes of persons have been directly or indirectly
employed, retained, or are to be compensated to make solicitations or
recommendations in connection with the transaction.

ITEM 10. FINANCIAL STATEMENTS.

(a)(1) and (a)(2) The Consolidated Financial Statements included in Part I,
Item 8, of the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1999, are incorporated herein by reference.
The Financial Statements are available at the address of the Company
set forth in Item 2(a).

(a)(3) Not Applicable.

(a)(4) The book value per share of the Class A Shares was $1,259.85 on
December 31, 1999.

(b) Incorporated by reference to Offering Circular filed herewith.

4
<PAGE> 5

ITEM 11. ADDITIONAL INFORMATION.

(a)(1) Not applicable.

(a)(2) The loan to the Company from its insurance company subsidiary will
require a filing of prior notification and an amendment to the
Company's registration with the Minnesota Department of Commerce.

(a)(3) Not applicable.

(a)(4) Not applicable.

(a)(5) Not applicable.

ITEM 12. EXHIBITS

1. Forms of Cover letters to Offering Circular, filed herewith.

2. Offering Circular, dated May 8, 2000, filed herewith.

3. Form of Letter of Acceptance, filed herewith.

4. Form of Note between the Company and Midwest Medical Insurance Company,
filed herewith.

5. Governance Agreement between the Company and the Minnesota Medical
Association, dated November 30, 1988, relating to the election of
directors. (Incorporated herein by reference to the Company's
Registration Statement on Form S-4, filed November 24, 1992, as amended,
SEC File No. 33-55062.)

6. Voting Trust Agreement between the Minnesota Medical Association and the
Voting Trustees dated July 1, 1993. (Incorporated by reference to the
Company's Registration Statement on Form S-4, filed November 24, 1992,
as amended, SEC File No. 33-55062.)

7. Consent of Ernst & Young LLP

8. Schedule 14A Proxy Statement filed by the Company on April 26, 2000
(incorporated herein by reference).

ITEM 13. INFORMATION REQUIRED BY SCHEDULE 13E-3.

ITEM 13A. PURPOSES, ALTERNATIVES, REASONS AND EFFECTS

(a) Incorporated by reference to Offering Circular filed herewith.

(b) Incorporated by reference to Offering Circular filed herewith.

(d) Incorporated by reference to Offering Circular filed herewith.

ITEM 13B. FAIRNESS OF THE TRANSACTION.

(a) The Company believes that the exchange offer is fair to shareholders of
the Class A Shares. None of the Company's directors dissented to, or
abstained from, voting on the exchange offer.

(b) Incorporated by reference to the Offering Circular filed herewith.

(c) The exchange offer is contingent on approval of 95 percent of the
holders of the Class A Shares, but has not been structured to require
the approval of at least a majority of unaffiliated security holders.

(d) Directors who are not employees of the Company have not retained an
unaffiliated representative to act solely on behalf of unaffiliated
security holders in the exchange offer.

(e) The exchange offer was approved by all of the directors of the Company.

(f) No other offer for the Class A Shares was received.
5
<PAGE> 6

ITEM 13C. REPORTS, OPINIONS, APPRAISALS AND NEGOTIATIONS.

(a) The Company has not received any report, opinion (other than an opinion
of counsel) or appraisal from an outside party materially related to
the exchange offer.

(b) Not applicable.

ITEM 13D. THE SOLICITATION OR RECOMMENDATION.

(d) To the best of the Company's knowledge, each director or affiliate of
the Company is expected to exchange their Class A Shares pursuant to
the exchange offer. No executive officers of the Company hold any Class
A Shares.

(e) The directors of the Company have recommended in the Offering Circular
that the holders of the Class A Shares exchange their Class A Shares in
the exchange offer.

6
<PAGE> 7

SIGNATURE

After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
/s/ DAVID P. BOUNK
--------------------------------------
(Signature)

David P. Bounk, President and
CEO

--------------------------------------
(Name and Title)

April 26, 2000

--------------------------------------
(Date)

<PAGE> 1

EXHIBIT 1A
VESTED LETTER

Date

Doctor
Address
Address
City, State Zip

Dear Doctor:

STOCK RESTRUCTURE PROPOSED

Over the years, we have taken many steps to ensure the strength of your
company and, at the same time hold down premiums. Consistent with company
financial needs we've returned funds to policyholders through substantial
"retro-premiums" and "participating policyholder dividends." Payments to
shareholders have been limited to redemption payments upon termination of
coverage by retirement, death, disability or cancellation.

The principal proposal described in the enclosed Offering Circular is to
pay all shareholders who elect to accept our offer a cash payment of $66.00 per
share (current redemption value is $63.18 per share) as a part of improving the
capital structure of Midwest Medical Insurance Holding Company by exchanging
presently outstanding Class A Common Stock for newly authorized Class C Common
Stock. If the proposals are accepted by the necessary numbers of shareholders,
in excess of $9 million will be paid to shareholders upon completion of the
transaction. This represents another major step in our continuing efforts to
return funds to policyholders and shareholders consistent with the financial
strength and needs of the company.

The proposal is made possible because of the continued strong operating
results of Midwest Medical Insurance Company over recent years and the strong
performance of Midwest Medical's invested assets.

As a vested Class A shareholder of Midwest Holding you are being asked to
complete the enclosed proxy card/letter of acceptance.

You have two questions before you:

Do you wish to vote to create a new Class C Common Stock to facilitate
the proposed exchange offer? REMEMBER that the exchange proposal is
contingent upon authorization of the Class C Common Stock.

Do you wish to exchange your Class A shares for $66.00 cash per share
and 1 share of the new Class C Common stock?

Benefits and effects of the proposals include:

A. Midwest Holding will pay you slightly more than the redemption value of
your Class A shares now while you are still a customer of Midwest
Medical rather than at a point in the future when you cease coverage
with Midwest Medical.

B. Midwest Holding's stock and capital structure will be simplified for
it's and your benefit. Currently, the Class A shares are confusing to
all involved and are an administrative burden for clinics and Midwest
Holding.

C. Midwest Holding expects to save time and expense in dealing with the
SEC, and possibly receive an exemption from certain SEC reporting which
it could not obtain previously.

D. Physician voting and economic rights will not change with the
substitution of Class C for Class A stock except that the new shares
will have no redemption or accrual features. In the event of a merger,
acquisition or liquidation, shareholders will participate as always.
Allocation of net proceeds based on
<PAGE> 2

risk class and longevity will be maintained. Physician shareholders will own and
control the organization exactly as they do currently.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
IN SUMMARY:

As of April 30, 2000 you have shares of Class A stock. This
transaction will pay you or your clinic $66.00 per share, for a total of $
. You will also be immediately vested in 1 share of Class C
stock.

Class A Shares will continue to accrue through the end of the month
in which the tender offer closes. As a result the actual amount received
will increase slightly.

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- --------------------------------------------------------------------------------

PLEASE REMEMBER...

This transaction is proposed solely to:

1. Simplify the stock.

2. Return funds to you, the owner.

Midwest Medical remains committed to provide you, the owner, with high
quality, responsibly priced professional liability insurance.

If you have any questions, please contact Niles Cole at 1-800-328-5532 or
952-838-6700.

Sincerely,

Andrew J.K. Smith, MD
Chairman of the Board
<PAGE> 3

EXHIBIT 1B
UNVESTED LETTER

Date

Doctor
Address
Address
City, State Zip

Dear Doctor:

STOCK RESTRUCTURE PROPOSED

The principal proposal described in the enclosed Offering Circular is to
pay all shareholders who elect to accept our offer a cash payment of $66.00 per
share (current redemption value is $63.18 per share) as a part of improving the
capital structure of Midwest Medical Insurance Holding Company by exchanging
presently outstanding Class A Common Stock for newly authorized Class C Common
Stock. If the proposals are accepted by the necessary numbers of shareholders,
in excess of $9 million will be paid to shareholders upon completion of the
transactions. This represents another major step in our continuing efforts to
return funds to policyholders and shareholders consistent with the financial
strength and needs of the company.

The proposal is made possible because of the continued strong operating
results of Midwest Medical Insurance Company over recent years and the strong
performance of Midwest Medical's invested assets.

Your accrued shares in Midwest Holding are unvested and provide you with no
redemption or other financial benefit until vested after a period of 5 years of
continuous insurance with Midwest Medical. However, for purposes of this
proposed transaction only, the Board of Midwest Holding decided to treat your
accrued shares as if they were fully vested.

As an unvested Class A shareholder of Midwest Holding you are being asked
to complete the enclosed letter of acceptance.

You have one question before you:

Do you wish to exchange your currently unvested Class A shares for
$66.00 cash per share and 1 fully vested share of the new Class C Common
stock?

Benefits and effects of the proposals include:

C. Midwest Holding expects to save time and expense in dealing with the
SEC, and possibly receive an exemption from certain SEC reporting which
it could not obtain previously.

D. Physician voting and economic rights will not change with the
substitution of Class C for Class A stock except that the new shares
will have no redemption or accrual features. In the event of a merger,
acquisition or liquidation shareholders will participate as always.
Allocation of net proceeds based on
<PAGE> 4

risk class and longevity will be maintained. Physician shareholders will
own and control the organization exactly as they do currently.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
IN SUMMARY:
As of April 30, 2000 you have shares of Class A stock. This
transaction will pay you or your clinic $66.00 per share, for a total of
$ . You will also be immediately vested in 1 share of Class C
stock.
Class A Shares will continue to accrue though the end of the month in
which the tender offer closes. As a result the actual amount received
will increase slightly.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

PLEASE REMEMBER...

This transaction is proposed solely to:

1. Simplify the stock.

2. Return funds to you, the owner.

Midwest Medical remains committed to provide you, the owner, with high
quality, responsibly priced professional liability insurance.

If you have any questions, please contact Niles Cole at 1-800-328-5532 or
952-838-6700.

Sincerely,

Andrew J.K. Smith, MD
Chairman of the Board
<PAGE> 5

EXHIBIT 1C
CLINIC LETTER

Date

Administrator
Clinic
Address
City, State Zip

Dear Clinic Administrator:

STOCK RESTRUCTURE PROPOSED

Attached you will find a Proxy and Offering Circular from Midwest Medical
Insurance Holding Company for your review. Also included in this package is a
specific packet addressed to each of your clinic's physicians who was a
shareholder of record at April 30, 2000. Please distribute as described below.

The Proxy is to solicit the votes of vested shareholders on a proposal to
authorize the creation of Class C Common Stock.

The principal proposal described in the Offering Circular is to pay all
shareholders who elect to accept our offer a cash payment of $66.00 per share
(current redemption value is $63.18 per share) as a part of improving the
capital structure of Midwest Holding by exchanging presently outstanding Class A
Common Stock for newly authorized Class C Common Stock. If the proposals are
accepted by the necessary numbers of shareholders, in excess of $9 million will
be paid to shareholders upon completion of the transaction. This represents
another major step in our continuing efforts to return funds to policyholders
and shareholders consistent with the financial strength and needs of Midwest
Holding and especially of its subsidiary, Midwest Medical Insurance Company.

The proposal is made possible because of the continued strong operating
results of Midwest Medical over recent years and the strong performance of
Midwest Medical's invested assets. Over the years, we have taken many steps to
ensure the strength of your company and, at the same time, hold down premiums.
Consistent with company financial needs we've returned funds to policyholders
through substantial "retro-premiums" and "participating policyholder dividends."
However, payments to shareholders have been limited to redemption payments upon
termination of coverage by retirement, death, disability or cancellation. This
proposal will accelerate redemption payments to all shareholders who accept the
offer.

Vested shareholders (insured more than 5 years) will receive in their
packet:

1. Proxy Statement -- each doctor has 1 vote regardless of the number of
shares. The proposed amendment would allow the Board to create Class C
Common stock.

2. Offering Circular -- each shareholder is being asked to exchange all of
their Class A shares for $66.00 per share and 1 share of the new Class C
Common stock.

Unvested shareholders (insured less than 5 years) do not have the right to
vote on the proxy. Their shares however, will be deemed vested for the sole
purpose of this exchange offer. They will each receive in their packet:

1. Offering Circular -- each shareholder is being asked to exchange all of
their Class A shares for $66.00 per share and 1 share of new Class C
Common stock.

The main priority of this transaction is to retire all of the outstanding
Class A shares.

Benefits and effects of the proposals include:
<PAGE> 6

A. Midwest Holding will pay physicians and clinics slightly more than the
redemption value of Class A shares now while they are still customers of
Midwest Medical rather than at a point in the future when they cease
coverage with Midwest Medical.

B. Midwest Holding's stock and capital structure will be simplified for
it's and your benefit. As you know, the Class A shares are confusing to
all involved and are an administrative burden for clinic administrators
and Midwest Holding.

C. Midwest Holding expects to save time and expense in dealing with the
SEC, and possibly receive an exemption from certain SEC reporting which
it could not obtain previously.

WE NEED YOUR ASSISTANCE

This exchange offer will remain open for 45 days and will expire on June
23, 2000. Please assist us in this large undertaking by following these steps:

1. Distribute the packets promptly. Stress the importance of completing the
required forms.

2. Collect the completed forms. For confidentiality purposes, have the
physician seal the business reply envelope before returning it to you.

3. Return the business reply envelopes to us. Please track your response
rate and inform us of any unique situations that would not allow a
shareholder to respond. Follow up with physicians failing to complete
the form.

JOINT AUTHORIZATION

As the payor of the malpractice insurance premiums, many clinics have had
their physicians sign joint authorization letters which allow the clinic to
receive the redemption value of the Class A shares. Each individual physician
retains voting rights.

If your clinic wishes to have physicians sign joint authorizations at this
time, you may. This would allow the funds from the tender offer to be paid to
the clinic. A sample form of the joint authorization can be found on our website
at http://www.midmedical.com or you may request a form from Ms. Julia Kujawa at
1-800-328-5532. Please prepare the joint authorization on your clinic
letterhead, obtain the needed signatures and return to Ms. Kujawa at Midwest
Holding's address.
<PAGE> 7

If the restructuring is accomplished the need for joint authorizations as
to Class C shares will only arise if a merger, acquisition, or liquidation
occurs. In that event, unless you otherwise inform us, we will consider that
outstanding joint authorizations affecting Class A shares will continue to in
force as to Class C.

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IN SUMMARY

As of April 30, 2000 your physicians and clinic had

4 vested jointly authorized shares
4 unvested jointly authorized shares
4 vested shares that were not jointly authorized
4 unvested shares that were not jointly authorized.

At $66.00 per share the total value of these shares is . Each
physician will be immediately vested in 1 share of Class C stock.

Class A Shares will continue to accrue through the end of the month in
which the tender offer closes. As a result the actual amount received
will increase slightly.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

Please contact me at 1-800-328-5532, or 952-838-6700 or via e-mail at
[email protected] with any questions that you may have.

I thank you in advance for your assistance in this endeavor!

Regards,

Niles Cole
Vice President, Finance &
Chief Financial Officer

<PAGE> 1

EXHIBIT 2

(MMIHC LETTERHEAD)

Dear Class A Common Stock Shareholder:

Midwest Medical Insurance Holding Company is offering to acquire all of
your Class A Common Stock of Midwest Holding in exchange for (1) one share of
new Class C Common Stock per Class A shareholder, plus (2) $66.00 for each share
of Class A Common Stock as described in the enclosed Offering Circular dated May
8, 2000 (the "Exchange Offer"). Shareholders will receive just one share of new
Class C Common Stock, regardless of the number of Class A shares they own. This
Class C share will provide the same voting and liquidation rights as all Class A
shares currently owned. Unvested Class A shares are being treated as vested for
purposes of this Exchange Offer only.

Midwest Holding's Board of Directors has decided to take this action for a
number of reasons:

- To provide shareholders with the opportunity to realize the cash
redemption value of their Class A shares now, which otherwise would not
be available until retirement, death, disability or policy cancellation.

- To eliminate the accrual, vesting and redemption of Class A shares which
occurs under present stock arrangements, which is burdensome for Midwest
Holding and clinic administrators, and therefore creates a marketing
obstacle.

- To reduce the burden and cost of compliance with SEC registration
requirements for the Class A shares.

- To eliminate a possible incentive for policyholders to cancel their
insurance with Midwest Holding's insurance company subsidiary (Midwest
Medical Insurance Company), receive the redemption value of the Class A
shares, and use these funds to buy insurance from another company. This
"disincentive" effect of the Class A shares is becoming more pronounced,
and is precisely the opposite effect to what was intended. Rather than
serving a "binding" effect, the Class A shares have, in some cases,
become a source of financing for the purchase of competitors' insurance.

Among other conditions, the Exchange Offer is contingent upon (1) approval
by the shareholders of an amendment to Midwest Holding's Articles of
Incorporation authorizing the Board of Directors to create the Class C shares,
and (2) the valid tender of at least 95% of the outstanding Class A shares.

PLEASE READ THE ENCLOSED MATERIALS CAREFULLY.

For further assistance or additional copies of any of the enclosed
materials, please call Niles Cole, Vice President, at (612) 838-6700.
Very truly yours,

David P. Bounk
President and Chief Executive Officer
Midwest Medical Insurance Holding
Company

May 8, 2000
Minneapolis, Minnesota
<PAGE> 2

OFFERING CIRCULAR

MIDWEST MEDICAL INSURANCE HOLDING COMPANY

OFFER TO EXCHANGE
$66.00 FOR EACH SHARE OF CLASS A COMMON STOCK
PLUS ONE SHARE OF CLASS C COMMON STOCK

Midwest Medical Insurance Holding Company, a Minnesota corporation, hereby
offers to acquire, upon the terms and subject to the conditions set forth herein
and in the accompanying Letter of Acceptance (which together constitute the
"Exchange Offer"), all of the shares of Class A Common Stock of Midwest Holding
outstanding in exchange for: (1) one share of Class C Common Stock per Class A
shareholder, plus (2) $66.00 for each share of Class A Common Stock.
Shareholders will receive just one share of Class C Common Stock regardless of
how many Class A shares they own. This Class C share will provide the same
voting and liquidation rights as all Class A shares currently owned. Unvested
Class A shares will be treated as vested for the purposes of this offer only.
Class A shareholders will continue to accrue Class A shares through the end of
the month in which the Exchange Offer ends.

The Exchange Offer will expire at 5:00 p.m. Minneapolis time, on June 23,
2000, unless extended (the "Expiration Time").

Shares tendered pursuant to the Exchange Offer may be withdrawn prior to
the Expiration Time. Except for these rights of withdrawal, tenders are
irrevocable. See "The Exchange Offer -- Withdrawal Rights."

A Shareholder may tender all, but not less than all, of the Class A shares
held by him or her. Midwest Holding will accept any and all Class A shares
tendered. The Exchange Offer is contingent upon (1) approval by the shareholders
of an amendment to Midwest Holding's Restated Articles of Incorporation
authorizing the Board of Directors to create the Class C shares, and (2) the
tender of at least 95% of the outstanding Class A shares. If less than 95% of
the outstanding Class A shares are tendered, Midwest Holding will accept none of
the shares tendered, unless the Board of Directors determines to waive this
condition. The Exchange Offer is subject to a number of additional conditions
described in this Offering Circular, and may be amended or withdrawn in certain
circumstances. See "The Exchange Offer -- Conditions to and Amendment of the
Exchange Offer."

These securities are being offered pursuant to an exemption from
registration with the United States Securities and Exchange Commission (the
"Commission"). The Commission does not pass upon the merits of any securities
nor does it pass upon the accuracy or completeness of any Offering Circular or
nor does it pass upon the accuracy or completeness of any Offering Circular or
other selling literature.

THE DATE OF THIS OFFERING CIRCULAR IS MAY 8, 2000.

For a discussion of certain risks and other factors to be considered in
connection with the Exchange Offer, see "Risk Factors."

Midwest Holding and its Board of Directors recommend that you tender your
Class A shares pursuant to the Exchange Offer. Each shareholder must make his,
her or its own decision whether to tender Class A shares.

Midwest Holding has made no arrangements for, and has no understanding
with, any dealer, salesman or other person regarding the solicitation of
tenders. Neither the delivery of this Offering Circular nor any exchange or sale
shall, under any circumstances, create any implication that there has been no
change in the affairs of Midwest Holding since the respective dates as of which
information is given.

This Offering Circular does not constitute an offer to exchange or sell, or
a solicitation of an offer to exchange or buy, any securities other than the
securities covered by this Offering Circular by Midwest Holding or any other
person, or any such offer or solicitation of such securities by Midwest Holding
or any such other
<PAGE> 3

person in any state or other jurisdiction to any person to whom it is unlawful
to make any such offer or solicitation. In any state or other jurisdiction where
it is required that the securities offered by this Offering Circular be
qualified for offering or that the offering be approved pursuant to Exchange
Offer statutes in such state or jurisdiction, no offer is hereby being made to,
and tenders will not be accepted from residents of any such state or
jurisdiction unless and until such requirements have been satisfied.

Pursuant to rule 13e-4 of the General Rules and Regulations under the
Exchange Act, Midwest Holding has filed with the Commission Schedule TO which
contains additional information with respect to the Offer. Schedule TO,
including exhibits and any amendments, may be examined, and copies may be
obtained, at the places and in the manner set forth in AVAILABLE INFORMATION.

No person has been authorized to give any information or make any
representation on behalf of Midwest Holding in connection with the Offer other
than those contained in this Offering Circular or in the related Letter of
Acceptance. If given or made, such information or representation must not be
relied upon as having been authorized by Midwest Holding.
<PAGE> 4

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-------
<S> <C>
SUMMARY TERM SHEET..........................................
THE EXCHANGE OFFER..........................................
General...................................................
Executive Officer and Director Participation..............
Expiration Time, Extensions, Termination and Amendments...
How to Tender.............................................
Withdrawal Rights.........................................
Acceptance of Shares for Exchange; Delivery of Debentures
to be Exchanged........................................
Conditions to and Amendment of the Exchange Offer.........
No Exchange Agent.........................................
No Financial Advisor......................................
Source of Funds...........................................
REASONS FOR THE OFFER.......................................
POTENTIAL SECOND-STEP MERGER................................
CAPITALIZATION..............................................
SUMMARY SELECTED CONSOLIDATED FINANCIAL DATA................
CERTAIN PRO FORMA FINANCIAL INFORMATION.....................
BUSINESS....................................................
Background................................................
MANAGEMENT..................................................
Directors.................................................
DESCRIPTION OF CAPITAL STOCK................................
Description of Class A Common Stock.......................
Description of Class B Common Stock.......................
Description of Class C Common Stock.......................
U.S. FEDERAL INCOME TAX CONSEQUENCES........................
LEGAL MATTERS...............................................
DIVIDENDS...................................................
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS........
REGULATORY APPROVALS........................................
AVAILABLE INFORMATION.......................................
APPENDIX A -- TERMS OF CLASS C COMMON STOCK.................
</TABLE>

i
<PAGE> 5

SUMMARY TERM SHEET

We are providing this summary term sheet for your convenience. It
highlights the most material information from the Offering Circular, but you
should realize that it does not describe all of the details of the Exchange
Offer to the same extent as the Offering Circular. We urge you to read the
entire Offering Circular because it contains the full details of the exchange
offer. We have included references to the sections of the Offering Circular
where a more complete discussion is set forth.

Who is making the exchange
offer and what are the
terms?................... Midwest Holding is offering to acquire all of your
Class A shares in exchange for (i) one Class C
share, and (ii) $66 for each Class A share
currently owned.

How many shares will
Midwest Holding
purchase?................ Midwest Holding will purchase all shares tendered
for exchange. It is Midwest Holding's goal and
intent to acquire all of the Class A shares. If you
choose to participate in the Exchange Offer, you
must tender all of the Class A shares held by you.

Will Midwest Holding
purchase unvested
shares?.................. Yes. Unvested shares will be treated as vested for
the purposes of this Exchange Offer only.

How will Midwest Holding
pay for the shares?........ Midwest Holding intends to use internally generated
funds to pay for the shares.

How long do I have to
tender my shares?.......... You may tender your shares until the Exchange Offer
expires. The Exchange Offer will expire at 5:00
p.m., Minneapolis time, on June 23, 2000.

How will I be notified if
Midwest Holding extends the
Exchange Offer?.......... Midwest Holding will mail a written notice by 9:00
a.m., Minneapolis time, on the business day after
the previously scheduled expiration date, if
Midwest Holding decides to extend the Exchange
Offer.

Are there any conditions to
the Exchange Offer?........ The Exchange Offer is contingent on approval of the
creation of the Class C shares by Midwest Holding's
directors and shareholders, and the tender of at
least 95% of the outstanding Class A shares, plus
certain conditions such as the absence of court and
governmental action prohibiting the offer.

How do I tender my
shares?.................... To tender all of your shares, you must deliver a
properly completed and duly executed Letter of
Acceptance to Midwest Holding at its main office
before the exchange offer expires. See Section 3
and the instructions to the Letter of Acceptance.

Once I have tendered shares
in the offer, may I
withdraw my tender?...... You may withdraw any shares you have tendered at
any time before 5:00 p.m., Minneapolis time, on
June 23, 2000, unless Midwest Holding extends the
Exchange Offer.
<PAGE> 6

Has Midwest Holding or its
board of directors
adopted a position on the
Exchange Offer?.......... Midwest Holding and its board of directors
recommend that you tender your shares, for the
reasons discussed below. You must decide whether to
tender your shares. Midwest Holding believes that
its directors intend to tender their shares. No
executive officers hold any Class A shares.

When will Midwest Holding
pay for the shares I
tender?.................. Midwest Holding will issue checks for the shares it
acquires as soon as administratively feasible after
the expiration of the Exchange Offer.

Will I have to pay
brokerage commission if I
tender my shares?........ No.

Will I have to pay stock
transfer tax if I tender my
shares?.................. No.

Who may I talk to if I have
questions?............... Niles Cole, Chief Financial Officer of Midwest
Holding. His telephone number is (612) 838-6700 or
800-328-5532. He may also be contacted via
electronic mail at [email protected].

2
<PAGE> 7

THE EXCHANGE OFFER

GENERAL

Midwest Holding is offering to acquire, upon the terms and subject to the
conditions set forth herein and in the accompanying Letter of Acceptance, all of
your Class A shares of Midwest Holding in exchange for (1) one Class C share,
plus (2) $66.00 for each Class A shares you own .

Unvested Class A shares will be treated as vested for purposes of this
Exchange Offer. Therefore, Class A shareholders who have not been policyholders
for five years, and whose Class A shares therefore are unvested, nonetheless
will be allowed to participate in the Exchange Offer and receive one Class C
share, and $66 per Class A share owned.

Shareholders will continue to accrue Class A shares during the time this
Exchange Offer is pending. Shareholders who accept the Exchange Offer will be
credited with Class A shares through the end of the month in which the Offer
closes. For example, if the Offer closes on June 23, you will accrue Class A
shares through the end of June, and you would be paid $66.00 per Class A share
accrued.

If less than 95% of the Class A shares are tendered, Midwest Holding will
not accept any of the shares tendered and the Exchange Offer will be terminated,
unless it is extended or Midwest Holding waives compliance with this condition.
The Exchange Offer is subject to a number of additional conditions. See "The
Exchange Offer -- Conditions to and Amendment of the Exchange Offer."

The Board of Directors has approved creation of the Class C shares, subject
to shareholder approval. The following table contains a comparison of the
outstanding Class A shares and the new Class C shares:

<TABLE>
<CAPTION>
TERMS AND CONDITIONS CLASS A SHARES CLASS C SHARES
- -------------------- -------------- --------------
<S> <C> <C>
Owners............................... Physicians and their practice groups Same
Right to Elect Directors............. None, except if Class B shares are Same
retired
Limit on Number Owned................ Shares accrue annually without limit One per shareholder
Actions Requiring Approval as a Amendments to Articles, redemption of
Class.............................. Class B share and extraordinary events Same
Voting Rights........................ One vote regardless of number of Same
shares held
Certificates......................... None Same
Preemptive Rights.................... None Same
Liquidation Rights................... Based on years of coverage and risk Same
classification
Redemption........................... Company redeems on termination of Same
insurance coverage
Redemption Value..................... Based on formula (presently $63.18) None
Restrictions on Transfer............. Restricted -- none allowed Same
Vesting.............................. Five Year Vesting Immediate vesting
</TABLE>

The above table is set forth for comparative purposes only and does not
take into account all factors relating to a comparison of the Class A shares to
the Class C shares, nor does it take into account any factors relating to the
tax consequences of accepting the Exchange Offer. For a more complete
description of the Class A shares and the Class C shares, see "Description of
the Class A Common Stock" and "Description of the Class C Common Stock." See
also "Federal Income Tax Consequences."

Tendering stockholders will not be obligated to pay brokerage commissions
or fees or transfer taxes with respect to the exchange of shares pursuant to the
Exchange Offer. Midwest Holding will pay all charges and expenses in connection
with the Exchange Offer. See "The Exchange Offer".

3
<PAGE> 8

EXECUTIVE OFFICER AND DIRECTOR PARTICIPATION

The executive officers of Midwest Holding do not hold any Class A shares.
The directors of Midwest Holding unanimously approved the Exchange Offer, and
Midwest Holding believes they intend to tender all of their shares to Midwest
Holding in the Exchange Offer.

EXPIRATION TIME, EXTENSIONS, TERMINATION AND AMENDMENTS

The Exchange Offer will terminate at 5:00 p.m., Minneapolis time, on June
23, 2000, unless extended by Midwest Holding in its sole discretion. During any
extension of the Exchange Offer, all shares previously tendered and not yet
exchanged will remain subject to the Exchange Offer (subject to withdrawal
rights specified herein) and may be accepted for exchange by Midwest Holding.
The later of 5:00 p.m., Minneapolis time, on June 23, 2000, or the latest time
and date to which the Exchange Offer may be extended, is referred to herein as
the "Expiration Time."

Midwest Holding expressly reserves the right, at any time or from time to
time, to extend the period of time for which the Exchange Offer is to remain
open by giving written notice to the shareholders of such extension prior to
9:00 a.m., Minneapolis time, on the business day after the previously scheduled
Expiration Time. Midwest Holding also expressly reserves the right (i) to
terminate the Exchange Offer and not accept for exchange any shares not
theretofore accepted for exchange upon the occurrence of any of the events set
forth herein under "The Exchange Offer -- Conditions to and Amendment of the
Exchange Offer" or (ii) to amend the Exchange Offer. Any extension, termination
or amendment will be followed as promptly as practicable by written notice
thereof, such notice in the case of an extension to be issued no later than 9:00
a.m., Minneapolis time, on the next business day after the previously scheduled
Expiration Time.

HOW TO TENDER

The Class A shares are uncertificated. Except as set forth below, for a
stockholder to duly tender shares pursuant to the Exchange Offer, a properly
completed and duly executed Letter of Acceptance or manually signed facsimile
thereof, and any other required documents, must be transmitted to and received
by Midwest Holding on or prior to the Expiration Time. Signatures on Letters of
Acceptance need not be guaranteed or notarized.

Tendering stockholders may return the Letter of Acceptance in the business
reply envelope provided, or by other means, at their election.

Midwest Holding will accept shares by giving notice to the shareholder by
mail.

All questions as to the form of all documents and the validity (including
time of receipt) and acceptance of all tenders will be determined by Midwest
Holding, in its sole discretion, which determination shall be final and binding.
Midwest Holding reserves the absolute right to reject any and all tenders not in
proper form or the acceptance of which would, in the opinion of Midwest
Holding's counsel, be unlawful. Midwest Holding also reserves the absolute right
to waive any of the conditions of the Exchange Offer or any defect or
irregularity in the tender of any of the shares. Midwest Holding's
interpretation of the terms and conditions of the Exchange Offer (including the
Letter of Acceptance and the instructions thereto) will be final. No tender of
Shares will be deemed to have been properly made until all defects and
irregularities have been cured or waived. Neither Midwest Holding, nor any other
person, shall be under any duty to give notification of any defects or
irregularities in tenders, nor shall any of them incur any liability for failure
to give such notification.

WITHDRAWAL RIGHTS

All tenders duly and validly made are irrevocable, except that shares
tendered pursuant to the Exchange Offer may be withdrawn prior to the Expiration
Time.

To be effective, a written, telegraphic or facsimile transmission notice of
withdrawal must be received by Midwest Holding on a timely basis. Any notice of
withdrawal must specify the name of the person having tendered the shares to be
withdrawn and the number of shares to be withdrawn. All questions as to
validity,

4
<PAGE> 9

form and eligibility (including time of receipt) of notices of withdrawal will
be determined by Midwest Holding, in its sole discretion, which determination
shall be final and binding. Any shares effectively withdrawn will be deemed not
to have been duly tendered for purposes of the Exchange Offer.

Neither Midwest Holding, nor any other person, will be under any duty to
give notification of any defects or irregularities in any notice of withdrawal
or incur any liability for failure to give such notification. However, Midwest
Holding may attempt to correct any defective tenders by contacting the tendering
stockholder. Withdrawals of tenders of shares may not be rescinded, and any
shares properly withdrawn will thereafter be deemed not validly tendered for
purposes of the Exchange Offer. However, withdrawn shares may be tendered by
following one of the procedures described under "The Exchange Offer -- How to
Tender" at any time prior to the Expiration Date.

ACCEPTANCE OF SHARES FOR EXCHANGE; DELIVERY OF CASH PAYMENT AND SHARES TO BE
EXCHANGED

Upon the terms and subject to the conditions of the Exchange Offer, the
acceptance for exchange of shares validly tendered and not withdrawn will be
made as soon as administratively feasible after the Expiration Time. For
purposes of the Exchange Offer, Midwest Holding will be deemed to have accepted
for exchange validly tendered shares when Midwest Holding has given oral or
written notice of acceptance to the shareholder. If Midwest Holding should
extend the Exchange Offer or be delayed in consummation of the Exchange Offer
for any reason, then, without prejudice to Midwest Holding's rights under the
Exchange Offer, Midwest Holding may retain tendered shares, and such shares may
not be withdrawn, subject to the withdrawal rights of tendering stockholders set
forth above under "The Exchange Offer -- Conditions to and Amendment of the
Exchange Offer" or for any other reason.

Delivery of cash payment and notice of issuance of Class C shares in
exchange for Class A shares tendered pursuant to the Exchange Offer will be made
by Midwest Holding as soon as administratively feasible after the Expiration
Time.

CONDITIONS TO AND AMENDMENT OF THE EXCHANGE OFFER

The Exchange Offer is subject to (1) approval by the shareholders of an
amendment to the Restated Articles of Incorporation authorizing the Board of
Directors to create the Class C shares, and (2) the tender of a minimum of 95%
of the Class A shares, and to the other conditions described below.

In addition to the foregoing conditions, Midwest Holding may decline to
accept any shares, and may withdraw the Exchange Offer as to shares not then
accepted if, before the time of acceptance, there shall have occurred any of the
following events which, in Midwest Holding's sole judgment, makes it inadvisable
to proceed with such acceptance:

(a) any government agency or other person shall have instituted or
threatened any action or proceeding before any court or administrative
agency (i) challenging the acquisition of shares pursuant to the
Exchange Offer or otherwise in any manner relating to the Exchange
Offer or (ii) otherwise materially adversely affecting Midwest Holding;
or

(b) any statute, rule or regulation shall have been proposed or enacted, or
any action shall have been taken by any governmental authority, which
would or might prohibit, restrict or delay consummation of the Exchange
Offer or materially impair the contemplated benefits of the Exchange
Offer to Midwest Holding; or

(c) any state of war, national emergency, banking moratorium or suspension
of payments by banks in the State of Minnesota shall have occurred, or
any currency or exchange control laws or regulations or general
suspension of trading or limitation on prices shall have been imposed
on any securities exchange or there shall have occurred a material
adverse change in the securities markets generally; or

(d) any required consents or approvals from third parties or government
regulatory agencies shall not have been obtained; or

5
<PAGE> 10

(e) any material change, or development involving a prospective material
change, in or affecting the business or financial affairs of Midwest
Holding shall have occurred.

Midwest Holding reserves the right to waive any of the foregoing
conditions. Midwest Holding will determine that these conditions have been
satisfied or waived prior to the Expiration Time. Midwest Holding also reserves
the right to amend the Exchange Offer by written notice to the shareholders of
any amendment. The Exchange Offer, however, may not be amended or withdrawn
unless the amendment or the circumstances described above regarding withdrawal
occur prior to the Expiration Time.

NO EXCHANGE AGENT

Midwest Holding is not utilizing an exchange agent. All correspondence in
connection with the Exchange Offer and the Letter of Acceptance should be
addressed to Midwest Holding as follows:

MIDWEST MEDICAL INSURANCE HOLDING COMPANY
ATTN: TENDER OFFER
7650 Edinborough Way
Suite 400
Minneapolis, MN 55435-5978
Phone: (612) 838-6700
Fax: (612) 838-6808

Delivery to an address other than as set forth above or transmission via a
facsimile number other than as set forth above will not constitute valid
delivery.

NO FINANCIAL ADVISOR

No financial advisor has been retained to render, and no financial advisor
has rendered, an opinion as to the fairness of the Exchange Offer to holders of
Midwest Holding's Class A shares or to solicit exchange of Class A shares.

The Exchange Offer is being made by Midwest Holding in reliance on the
exemption from the registration requirements of the Securities Act of 1933, as
amended, afforded by Section 3(a) (9) thereof. Midwest Holding will not pay any
commission or other remuneration to any broker, dealer, salesman or other person
for soliciting tenders of the shares. However, regular employees of Midwest
Holding (who will not be additionally compensated therefor) may solicit tenders
and will answer inquiries concerning the Exchange Offer.

Midwest Holding will pay all fees and expenses related to the Exchange
Offer.

SOURCE OF FUNDS

Midwest Holding intends to finance the cash portion of the Exchange Offer
consideration from funds generated by it and its subsidiaries. Mechanically,
Midwest Holding will obtain a loan of approximately $9,000,000 from its
insurance subsidiary, Midwest Medical. This loan will be represented by an
unsecured, non-interest bearing note, payable upon demand. This loan will be
repaid shortly after completion of the Exchange Offer, using funds obtained
through a dividend declared by Midwest Medical, payable to Midwest Holding.

REASONS FOR THE OFFER

Midwest Holding's Board of Directors has decided to take this action for a
number of reasons:

6
<PAGE> 11

- To eliminate the accrual, vesting and redemption of Class A shares, which
is burdensome for Midwest Holding and confusing and burdensome for some
shareholders and clinic administrators, and therefore creates a marketing
obstacle.

- To reduce the burden of compliance with SEC registration requirements. At
a minimum, it will only be necessary to register the relatively small
number of Class C shares which will be issued each year to new
policyholders, rather than the much larger number of Class A shares
issued to all policyholders each year. In fact, it may be possible to
issue the Class C shares in reliance upon an exemption from registration
(Regulation D, for example). Although Midwest Holding would continue to
be a 1934 Act reporting company, due to its assets and number of
shareholders, we believe it may be possible to obtain a specific waiver
of these requirements from the SEC with this new structure. We did
request such an exemption several years ago, but we believe the
continuous offering aspects of the Class A shares significantly impeded
the SEC's ability to grant such an exemption. We believe that, with this
new structure which involves a much more limited ongoing offering,
perhaps otherwise exempt, it may be possible to convince the SEC to grant
such an exemption now.

- To eliminate a possible incentive for policyholders to cancel their
insurance with Midwest Medical, receive the redemption value of the Class
A shares (which, in the case of some clinics, can be quite significant),
and use these funds to buy insurance from another company. This
"disincentive" effect of the Class A shares is becoming more pronounced,
and is precisely the opposite effect to what was intended. Rather than
serving a "binding" effect, the Class A shares have, in some cases,
become a source of financing for the purchase of competitors' insurance.

Class A shareholders should also consider the following factors:

- Shareholders will no longer accrue additional shares for each year they
remain policyholders of Midwest Medical .

- Income tax will be payable on cash received in the exchange, as further
described in the Section entitled "U.S. Federal Income Tax Consequences".

- If the redemption value of the Class A shares increases above $66.00 in
the future, shareholders who have tendered their shares will not receive
this increased amount. Midwest Holding does not believe that this
redemption value will increase substantially in the future. The Board
currently supports this redemption value by causing Midwest Medical to
pay dividends to Midwest Holding for this purpose. The Board has
determined that it will not continue to do this after completion of the
Exchange Offer. Therefore, it is likely that this value will decrease
after the Exchange Offer. See -- "Potential Second-Step Merger".

Finally, holders of shares contemplating the Exchange Offer should consider
that Midwest Holding has not retained any financial advisor or investment
banking firm to assist Midwest Holding in determining the price and terms of the
Exchange Offer, or whether the consideration offered in the Exchange Offer is
adequate to tendering stockholders. Midwest Holding also has not requested any
report, opinion, or appraisal relating to the fairness of the consideration
being offered pursuant to the Exchange Offer.

Midwest Holding's Board of Directors believes that the Exchange Offer is
fair to shareholders of the Class A shares primarily because:

- The Class C share offered provides Class A shareholders with the same
voting rights as the Class A shares;

- The Class C share provides Class A shareholders with the same economic
rights as the Class A shares if Midwest Holding is ever sold, liquidated,
or merged with another company; and

- The Class A shareholders are receiving a cash payment greater than the
current redemption value of the Class A shares.

If the Exchange Offer is completed, the shares accepted for exchange will
be returned to authorized but unissued shares. Midwest Holding has no present
intention to reissue the shares.
7
<PAGE> 12

POTENTIAL SECOND-STEP MERGER

As previously stated, it is Midwest Holding's goal to acquire all of the
outstanding Class A shares, and eliminate the class entirely. If at least 95% of
the Class A shares are offered for exchange, and the other conditions are met,
Midwest Holding will complete the Exchange Offer. After completion of the
Exchange Offer, those Class A shareholders who have not offered their shares for
exchange will continue as Class A shareholders, and will continue to accrue
additional shares as they do currently. If this happens, Midwest Holding will
not have fully achieved its goal of eliminating the administrative burden and
marketing obstacle presented by the Class A shares.

Therefore, if fewer than all of the Class A shares are acquired pursuant to
this Exchange Offer, Midwest Holding may proceed with a second-step merger in
order to eliminate the remaining outstanding Class A shares. Such a merger would
involve Midwest Holding forming a subsidiary or controlled affiliate, and
engaging in a merger with that new entity. The new entity would be an exact
mirror-image of Midwest Holding, with Class B and Class C shares with terms
identical to those of the Class B and Class C shares of Midwest Holding.
However, the new entity would have no Class A shares. The remaining Class A
shareholders would receive the same consideration offered in this Exchange Offer
($66.00 per Class A share, plus one share of Class C Common Stock per Class A
shareholder). The Class A shareholders would also have dissenter's rights to
receive the "fair value" of their shares in such a transaction, under Minnesota
corporate law.

The Board of Directors has not yet determined whether or not to engage in
such a second-step merger transaction if fewer than all of the Class A shares
are acquired in the Exchange Offer. If the Board did determine to proceed with
such a transaction, it would be necessary to submit it to the shareholders for
approval. Complete information regarding the transaction, and shareholder's
rights in the transaction, would be distributed to shareholders at that time.

If the Board determines not to proceed with such a second-step merger
transaction, the remaining Class A shareholders would continue to hold their
Class A shares, and would continue to accrue additional shares while they remain
policyholders. However, all new policyholders would receive only Class C shares.
As Class A shares are redeemed due to policy terminations, the number of Class A
shares would decrease and, eventually, all outstanding Class A shares will be
eliminated.

Shareholders should also keep in mind that the Board of Directors of
Midwest Holding has determined, after the conclusion of the Exchange Offer, to
cease taking action to support the redemption value of the Class A shares, as is
explained above. Therefore, the value paid upon redemption of the shares in the
future may well be substantially less than the $66 per share offered in the
Exchange Offer.

CAPITALIZATION

The following table sets forth the capitalization of Midwest Holding at
December 31, 1999 and pro forma to give effect to the Exchange, assuming the
maximum number of shares were tendered.

<TABLE>
<CAPTION>
ACTUAL AS ADJUSTED
-------- -----------
<S> <C> <C>
Debt........................................................ $ -- $ --
Redeemable Stock and Other Shareholders' Equity
Redeemable Stock.......................................... 7,802 --
Other Shareholders' Equity................................ 147,801 146,863
-------- --------
Total Capitalization........................................ $155,603 $146,863
======== ========
</TABLE>

8
<PAGE> 13

SUMMARY SELECTED CONSOLIDATED FINANCIAL DATA

The selected data presented below under the captions "Statement of
Operations Data" and "Balance Sheet Data" for, and as of the end of, each of the
years in the five-year period ended December 31, 1999 are derived from the
consolidated financial statements of Midwest Holding.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-----------------------------------------------
OPERATIONS DATA 1999(1) 1998(1) 1997(1) 1996(2) 1995(2)
- --------------- ------- ------- ------- ------- -------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Net premiums earned......................... $46,583 $35,014 $32,916 $31,177 $29,798
Net investment and other income............. 21,006 21,404 19,276 15,558 14,258
------- ------- ------- ------- -------
Total revenue............................... 67,589 56,418 52,192 46,735 44,056

Loss and loss adjustment expenses........... 41,468 37,494 31,834 32,257 37,560
Policyholder dividends...................... 10,175 -- -- -- --
Underwriting and other operating expenses... 13,394 10,287 6,595 5,539 6,482
------- ------- ------- ------- -------
65,037 47,781 38,429 37,796 44,042
------- ------- ------- ------- -------
Income before income taxes.................. 2,552 8,637 13,763 8,939 14
Income taxes (benefit)...................... 816 2,689 4,463 1,458 (1,711)
------- ------- ------- ------- -------
Net income.................................. $ 1,736 $ 5,948 $ 9,300 $ 7,481 $ 1,725
======= ======= ======= ======= =======
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-----------------------------------------------
1999(1) 1998(1) 1997(1) 1996(2) 1995(2)
------- ------- ------- ------- -------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Net income per common share -- assuming
dilution.................................. $12.53 $43.65 $70.23 $58.33 $13.74
Number of shares used in per share
calculation............................... 138,517 136,251 132,427 128,259 125,536(3)
Net income/total revenue.................... 2.6% 10.5% 17.8% 16.0% 3.9%
Return on average equity.................... 1.1% 4.2% 7.4% 6.5% 1.7%
</TABLE>

9
<PAGE> 14

<TABLE>
<CAPTION>
DECEMBER 31
----------------------------------------------------------
FINANCIAL CONDITION 1999(1) 1998(1) 1997(2) 1996(2) 1995(2)
- ------------------- ---------- ---------- --------- --------- --------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
ASSETS
Fixed maturities at fair value..... $ 153,950 $ 164,652 $ 171,975 $ 183,561 $182,817
Equity securities at fair value.... 104,898 86,553 49,759 38,001 28,311
Short-term investments............. 9,128 3,556 13,909 7,898 15,015
Other.............................. 10,000 10,000 10,000 -- --
---------- ---------- --------- --------- --------
Total investments.................. 277,976 264,761 245,643 229,460 226,143
Reinsurance recoverable on paid and
unpaid losses.................... 19,285 16,499 19,117 22,174 25,112
Other assets....................... 22,915 14,223 10,755 10,359 13,329
---------- ---------- --------- --------- --------
Total assets....................... $ 320,176 $ 295,483 $ 275,515 $ 261,993 $264,584
========== ========== ========= ========= ========
LIABILITIES
Unpaid losses and loss adjustment
expenses......................... $ 119,141 $ 110,964 $ 107,806 $ 110,037 $120,264
Other liabilities.................. 45,432 33,926 33,942 33,074 34,053
---------- ---------- --------- --------- --------
164,573 144,890 141,748 143,111 154,317
REDEEMABLE STOCK
Class A and Class B Common Stock at
redemption value................. 7,803 8,147 7,477 7,604 6,975
OTHER SHAREHOLDERS' EQUITY......... 147,800 142,446 126,290 111,278 103,292
---------- ---------- --------- --------- --------
Total liabilities, redeemable stock
and shareholders' equity......... $ 320,176 $ 295,483 $ 275,515 $ 261,993 $264,584
---------- ---------- --------- --------- --------
Book value per share............... $ 1,259.85 $ 1,198.21 $1,102.58 $1,005.69 $ 948.53
========== ========== ========= ========= ========
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31
----------------------------------------------------
1999(1) 1998(1) 1997(1) 1996(2) 1995(2)
------- -------- ------- -------- ----------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Midwest Medical Insurance Holding
Company:
Class A Common Shares issued and
outstanding....................... 123,509 125,682 121,322 118,209 116,251(3)
Redemption value per share........... $ 63.18 $ 64.81 $ 61.63 $ 64.33 $ 60.00
Class A Common Shares redeemed....... 15,024 9,005 10,306 10,272 12,424
Amount paid to terminating
policyholders upon redemption..... $ 954 $ 523 $ 648 $ 608 $ 829
</TABLE>

- ---------------

(1) Amounts derived from audited consolidated financial statements of Midwest
Holding included in Item 8 of the 1999 Annual Report on Form 10-K.

(2) Amounts derived from audited consolidated financial statements of Midwest
Holding.

(3) Includes pro forma shares computed to give retroactive effect to the merger
of Midwest Medical with Medical Liability Mutual Insurance Company of
Nebraska. See Note 1 to the consolidated financial statements included in
Item 8 of Midwest Holdings' 1999 Annual Report on Form 10-K.

10
<PAGE> 15

CERTAIN PRO FORMA FINANCIAL INFORMATION

This table set forth below shows the pro forma effects the Exchange Offer
would have had on the adjusted financial condition and results of operations of
Midwest Holding for the year ended December 31, 1999, assuming the maximum
number of shares had been exchanged on December 31, 1999.

11
<PAGE> 16

MIDWEST MEDICAL INSURANCE HOLDING COMPANY AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1999
(Dollars in thousands, unaudited)
(Assuming transaction at 12/31/99 with 100% participation)

<TABLE>
<CAPTION>
DECEMBER 31, PRO FORMA NOTE
1999 ADJUSTMENTS REF PRO FORMA
------------ ----------- ---- ---------
<S> <C> <C> <C> <C>
ASSETS
Investments:
Fixed maturities at fair value................. $153,950 $153,950
Equity securities at fair value................ 104,898 104,898
Short-term..................................... 9,128 $(7,235) 3 1,893
Other.......................................... 10,000 10,000
-------- ------- --------
277,976 (7,235) 270,741
Cash............................................. 1,821 (1,821) 3 --
Other assets..................................... 40,379 40,379
-------- ------- --------
Total assets..................................... $320,176 $(9,056) $311,120
======== ======= ========
LIABILITIES, REDEEMABLE STOCK AND OTHER
SHAREHOLDERS' EQUITY
Liabilities:..................................... $164,573 $ (316) 1 $164,257
Redeemable stock:
316 1
938 2
Class A Common Stock........................... 7,802 (9,056) 3 --
Class B Common Stock........................... 1 1
Class C Common Stock........................... -- -- 3 --
Other Shareholders' Equity....................... 147,800 (938) 2 146,862
-------- ------- --------
Total other shareholders' equity................. 147,801 (938) 146,863
-------- ------- --------
Total liabilities, redeemable stock and other
Shareholders' equity........................... $320,176 $(9,056) $311,120
======== ======= ========
</TABLE>

12
<PAGE> 17

MIDWEST MEDICAL INSURANCE HOLDING COMPANY AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
DECEMBER 31, 1999
(Dollars in thousands, unaudited)
(Assuming transaction at 12/31/99 with 100% participation)

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, PRO FORMA
1999 ADJUSTMENTS NOTE REF PRO FORMA
------------ ----------- -------- ---------
<S> <C> <C> <C> <C>
Revenues:
Net premiums earned......................... $46,583 $46,583
Net investment income....................... 10,963 10,963
Realized capital gains...................... 7,220 7,220
Other....................................... 2,823 2,823
------- ----- -------
67,589 67,589
Losses and expenses:
Losses and loss adjustment expenses......... 41,468 41,468
Policyholder dividends...................... 10,175 10,175
Underwriting, acquisition and insurance
expenses................................. 7,197 7,197
Other operating expenses.................... 6,197 $ 904 1 7,101
------- ----- -------
65,037 904 65,941
------- ----- -------
Income before income taxes.................... 2,552 (904) 1,648
Income taxes.................................. 816 (316) 1 500
------- ----- -------
Net Income (Loss)............................. $ 1,736 $(588) 1 $ 1,148
======= ===== =======
</TABLE>

EXPLANATION OF PRO FORMA ADJUSTMENTS:

1. Expense necessary to reflect the deemed issuance of shares for unvested
shares as of the date of redemption. Total unvested shares at December
31, 1999 were 13,698 shares. Expense equal to those shares multiplied by
$66 per share. Expense is deductible for tax purposes by the Company
hence the $316,000 tax benefit. The net effect of this transaction is a
$316,000 increase to the value of Class A redeemable stock.

2. Concurrent with the redemption transaction, a dividend in the amount of
$938,000 is paid to Midwest Holding by Midwest Medical. The dividend
increases the redemption value as of the time of the stock restructure
transaction to $66 per share for all vested and unvested shares as of
December 31, 1999 (the Pro Forma assumes 100% of vested and unvested
shares are tendered).

3. The tender is completed through the distribution of $9,056,000 in cash
for the vested and unvested Class A shares as of December 31, 1999 and
the issuance of one Class C to each former Class A shareholder. No value
is ascribed to the Class C share as they are no par shares with a
redemption value of $0.

13
<PAGE> 18

BUSINESS

Background. Midwest Medical was originally organized in 1980 under the
direction of the Minnesota Medical Association to provide professional liability
insurance to Minnesota physicians who were its members. At that time, claims and
awards in medical malpractice cases had been increasing dramatically, and
physicians were faced with substantial premium increases and a declining number
of insurers offering medical malpractice coverage. The business was reorganized
in 1988 into a stock insurance company, Midwest Medical, wholly owned by a
holding company, Midwest Holding, which could pursue other business
opportunities. The reorganization also was effected to give physicians a limited
equity interest in their malpractice insurer, which would give them input into
the operations of the insurer and an opportunity to share in any profits, while
preserving the capital and surplus of Midwest Medical. On July 1, 1993, the Iowa
physician-owned malpractice insurer, Iowa Physician's Mutual Insurance Trust,
was merged into Midwest Medical, and on June 5, 1996, the Nebraska
physician-owned malpractice insurer, Medical Liability Mutual Insurance Company
of Nebraska, was merged into Midwest Medical.

Midwest Medical now provides professional liability insurance to physicians
and clinics in Minnesota, Iowa, Nebraska, Wisconsin, Illinois, North Dakota and
South Dakota. Professional liability, general liability and umbrella excess
liability insurance is also available to hospitals, and healthcare systems
through Midwest Medical. Midwest Medical has had the sponsorship of the
Minnesota Medical Association since inception and also has the sponsorship of
the Iowa Medical Society and North Dakota Medical Associations.

During 1997, Midwest Holding formed Midwest Medical Solutions, Inc. as a
business development company to strengthen and promote the independence and
interdependencies of physicians, clinics and hospitals served by Midwest
Medical. Solutions is currently considering several business development
opportunities. These include practice enhancement, strategic consulting, and
electronic processing and integration services and support. Solutions purchased
the assets of MedPower Information Services, Inc. effective January 1, 1998.
Solutions then contributed those assets to its newly formed, wholly-owned
subsidiary, MedPower Information Resources, Inc. MedPower processes and
electronically submits medical claims for over 100 healthcare providers in the
Upper Midwest. MedPower also provides various information consulting and network
support services. Together, Solutions and MedPower had assets of less than
$3,000,000 at December 31, 1999 and revenues of less than $500,000 for the year
ended December 31, 1999.

MMIHC Insurance Services, Inc. was incorporated in 1995 and began active
operations in January 1999 with the acquisition of a book of business from
Johnson-McCann Benefits, Inc., Midwest Holding provided $1,500,000 of capital to
Services to fund the first of three installment payments on this purchase as
well as to provide additional funds for future agency acquisitions. Another
installment payment was made in January, 2000 and the third will be made in
2001. Services is an insurance agency specializing in providing clients with
group insurance products such as health, dental, life, and disability.
Commission income from insurance carriers is the principal source of revenue.
Services had assets of approximately $1,600,000 at December 31, 1999 and
revenues of approximately $1,700,000, for the year ended December 31, 1999.

14
<PAGE> 19

MANAGEMENT

DIRECTORS

The names and ages of the directors of Midwest Holding, the year each first
became a director, and the number of 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 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
TOM D. THROCKMORTON, M.D.............. 54 1997 Physician 76
R. BRUCE TRIMBLE, M.D.
Vice Chair of Board................. 59 1993 Physician --
</TABLE>

On December 31, 1999 the directors of Midwest Holding, as a group, owned
977 shares, or less than one percent of the total shares outstanding. No
executive officer owned any shares.

The Bylaws of Midwest Holding require its Board of Directors to include the
following: (1) up to 20 physicians divided into three classes and elected for
staggered three-year terms; (2) for as long as the Class B Common share is
outstanding, the Chief Executive Officer of the Minnesota Medical Association
and the Executive Vice President of the Iowa Medical Society, both of whom are
non-voting directors; (3) the President of Midwest Holding as a non-voting
director; and (4) such additional non-voting and advisory members as the Board
of Directors may determine. At least two-thirds of the voting members of the
Board of Directors must be members of a state medical association and insured by
Midwest Medical. The Minnesota Medical Association, which has the exclusive
right to elect directors, has agreed to elect the directors nominated by a
committee of the Board of Directors. Directors serve until their successors are
elected and qualified or until their prior resignation, removal, death or
disqualification.

The Bylaws of Midwest Holding also require the election of directors who
are members of the Iowa Medical Society in a number, when compared to the total
number of directors, which is proportionate to the number of Iowa purchasers of
insurance compared to the total number of Midwest Medical purchasers of

15
<PAGE> 20

insurance, with a minimum of two Iowa directors, one of whom shall be the
Executive Vice President of the Iowa Medical Society, for as long as the class B
common share is outstanding. The Minnesota Medical Association has placed the
class B common share in a voting trust which requires the trustee to vote the
share for the election of the Iowa directors nominated by the Iowa Medical
Society.

DESCRIPTION OF CAPITAL STOCK

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
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.

16
<PAGE> 21

As of March 31, 2000, there were 122,734 Class A shares outstanding held by
3,428 physicians; 2,896 additional physicians have accrued the right to receive
14,529 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 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.

In order to achieve this equivalent treatment, the Class C share provides
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.
17
<PAGE> 22

- Issuance of Class C shares will not be subject to a vesting requirement.

U.S. FEDERAL INCOME TAX CONSEQUENCES

The following summary describes the principal U.S. federal income tax
consequences of receipt of cash and stock for shares pursuant to the Exchange
Offer. This summary is based upon the Internal Revenue Code of 1986, as amended
to the date hereof (the "Code"), existing and proposed Treasury Regulations,
published rulings, administrative pronouncements and judicial decisions. Changes
to these authorities could change the tax consequences, possibly on a
retroactive basis.

This summary addresses only shares held by shareholders subject to U.S.
federal income tax. It does not address all of the tax consequences that may be
relevant to particular shareholders in light of their personal circumstances, or
to certain types of shareholders (such as certain financial institutions,
traders in securities, insurance companies, "S" corporations, or expatriates).
This summary does not address the state, local or foreign tax consequences of
participating in the Exchange Offer. EACH HOLDER OF SHARES SHOULD CONSULT SUCH
HOLDER'S TAX ADVISOR AS TO THE PARTICULAR CONSEQUENCES TO SUCH HOLDER OF
PARTICIPATION IN THE EXCHANGE OFFER.

Management of Midwest Holding believes that:

1. The Exchange Offer will constitute a reorganization within the meaning
of Section 368(a)(1)(E) of the Code. Midwest Holding will be "a party to
a reorganization" within the meaning of Section 368(b) of the Code.

2. No gain or loss will be recognized by Midwest Holding on its exchange of
Class C shares and cash for Class A shares.

3. No gain or loss will be recognized by the Class A shareholders on their
receipt of Class C shares solely in exchange for Class A shares pursuant
to the Exchange Offer.

4. It is likely that the cash received by each Class A shareholder will be
treated as a dividend. Midwest Holding intends on issuing a form
1099-DIV to each recipient of cash in the Exchange Offer.

5. The basis of the Class C shares received by each Class A shareholder
will be the same as such Class A shareholder's basis in the Class A
shares surrendered in exchange therefor. Each Class A shareholder should
maintain a record of their basis, as this may reduce any future gain, or
increase any future loss, upon disposition of their Class C shares.

6. The holding period of the Class C shares with respect to each Class A
shareholder will include the period during which such Class A
shareholder held the Class A shares.

THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION
ONLY. EACH SHAREHOLDER IS URGED TO CONSULT SUCH HOLDER'S OWN TAX ADVISOR TO
DETERMINE THE PARTICULAR TAX CONSEQUENCES TO SUCH HOLDER OF THE EXCHANGE OFFER,
INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL AND FOREIGN TAX LAWS.

LEGAL MATTERS

The validity of the shares of Midwest Holding to be issued in this
offering, and other legal matters, are being passed upon for Midwest Holding by
Best & Flanagan LLP, Minneapolis, Minnesota.

DIVIDENDS

Midwest Holding has never paid a dividend and does not intend to within the
foreseeable future.

18
<PAGE> 23

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Statements other than historical information contained in this Offering
Circular are considered to be "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Act of 1934, as amended.

All forward-looking statements address matters that involve risks and
uncertainties. Accordingly, in addition to the factors discussed in this
Offering Circular, there are or will be other important factors that could cause
actual results to differ materially from those indicated in such statements.
These factors include, but are not limited to:

- the impact of changing market conditions on Midwest Holding's business
strategy;

- the effects of increased competition on pricing, coverage terms,
retention of customers and ability to attract new customers;

- greater severity or frequency of the types of losses that Midwest Holding
insures;

- faster or more adverse loss development experience than that on which
Midwest Holding based its underwriting, reserving, and investment
practices;

- developments in global financial markets which could adversely affect the
performance of Midwest Holding's investment portfolio;

- litigation, regulatory or tax developments which could adversely affect
Midwest Holding's business;

- risks associated with the introduction of new products and services;

- dependence on key personnel; and

- the impact of mergers and acquisitions.

The facts set forth above should be considered in reviewing any
forward-looking statement contained in this Offering Circular. The important
factors that could affect such forward-looking statements are subject to change,
and Midwest Holding does not intend to update any forward-looking statement or
the foregoing list of important factors. By this cautionary note, Midwest
Holding intends to rely upon the safe harbor from liability with respect to the
forward-looking statements provided by Section 27A and Section 21E referred to
above.

REGULATORY APPROVALS

Except as described above, Midwest Holding is not aware of any license or
regulatory permit that is material to Midwest Holding's business that might be
adversely affected by Midwest Holding's acquisition of shares as contemplated
herein or of any approval or other action by any government or governmental,
administrative or regulatory authority or agency, domestic or foreign, that
would be required for the acquisition or ownership of shares by Midwest Holding
as contemplated herein. Should any such approval or other action be required,
Midwest Holding presently contemplates that such approval or other action will
be sought. Midwest Holding is unable to predict whether it will be required to
delay the acceptance for payment of or payment for shares tendered pursuant to
the Exchange Offer pending the outcome of any such matter. There is no assurance
that any such approval or other action, if needed, would be obtained or would be
obtained without substantial conditions or that the failure to obtain any such
approval or other action might not result in adverse consequences to Midwest
Holding's business. Midwest Holding's obligations under the Exchange Offer to
accept for payment and pay for shares is subject to conditions.

AVAILABLE INFORMATION

Midwest Holding is subject to the information reporting requirements of the
Securities Exchange Act of 1934, and files Form 10-K, Form 10-Q and other
reports and information with the Securities and Exchange Commission. Midwest
Holding has also filed a Tender Offer Statement on Schedule TO with the
Commission. Schedule TO and Reports and other information filed by Midwest
Holding can be inspected and
19
<PAGE> 24

copied at the Public Reference Room maintained by the Commission at 450 Fifth
Street N.W., Washington, D.C. 20549, and at the following Regional Offices: 26
Federal Plaza, New York, New York 10278; and 219 South Dearborn Street, Chicago,
Illinois 60604. The public may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an
Internet site that contains reports, proxy and information statements and other
information regarding issuers that file electronically with the SEC at
http://www.sec.gov.

Midwest Holding provides its shareholders with an annual report containing
consolidated Midwest Holding and subsidiaries year-end financial statements
presented in accordance with accounting principles generally accepted in the
United States ("GAAP"). Midwest Holding's insurance company subsidiary ("Midwest
Medical") separate net income and shareholders' equity are presented on both a
GAAP and statutory accounting basis in the notes to the consolidated financial
statements. Midwest Medical is subject to the insurance company filing
requirements of the Minnesota Department of Commerce and files the National
Association of Insurance Commissioners annual statement each year with the
Department of Commerce, which includes financial statements presented in
accordance with statutory requirements, together with an independent auditor's
report on those financial statements. Insurance holding company regulations
apply to Midwest Holding and it files Form B with the Minnesota Department of
Commerce annually. Form B contains current information about management, the
Board of Directors, and significant operating agreements, as well as a financial
report. Copies of any of these reports, the Form 10-K, or any of the documents
referred to in this prospectus, can be obtained free of charge by requesting
them from Niles Cole, Chief Financial Officer, Midwest Medical Insurance Holding
Company, 7650 Edinborough Way, Suite 400, Minneapolis, Minnesota 55435-5978;
(612) 838-6700.

20
<PAGE> 25

APPENDIX A
TERMS OF CLASS C COMMON STOCK

The Board of Directors of Midwest Holding has approved creation of new
Class C common stock, with the following rights and preferences:

A. Eligibility of ownership shall be limited to physicians, and their
respective medical practice or clinics as joint tenants, who are insured
for medical practice liabilities by Midwest Medical.

B. Class C shareholders shall not have the right to vote for directors of
the corporation except in the event of redemption by the corporation of
the Class B shares.

C. No individual physician may hold more than one share of Class C common
stock. In the case of jointly held shares, the joint Class C
shareholders shall be entitled to only one vote per physician
shareholder.

D. The Class C shareholders have the right to approve or disapprove, as a
class, any of the following transactions:

(i) Amendment of the Articles of Incorporation;

(ii) Redemption of Class B shares;

(iii) Merger into or acquisition by another corporation;

(iv) Exchange of one or more classes or series of the shares of the
corporation for shares of one or more other corporations;

(v) Liquidation or voluntary dissolution of the corporation;

(vi) Sale, lease, transfer or other disposition of all or substantially
all of the corporate assets, including its goodwill, not in the
usual and regular course of business;

(vii) Authorization of the corporation as the sole shareholder of
Midwest Medical to amend, change or repeal the Articles or Bylaws
of Midwest Medical.

E. Approval of any of the above transactions must be by an affirmative
vote of two-thirds of the Class C shareholders voting on the
transaction, provided that a majority of all Class C shareholders have
also affirmatively voted for the transaction.

F. Class C shareholders shall have no preemptive rights in any future
issuance of stock by the corporation.

G. Except as otherwise provided herein, no Class C common stock may be
pledged, sold, assigned, or otherwise transferred in any way to any
person other than the corporation.

H. No certificates evidencing Class C common stock shall be issued by the
corporation.

I. The Board of Directors of the corporation is authorized to issue
shares of Class C common stock to eligible physicians and jointly to
entities by resolution, in its discretion.

J. Upon (i) any merger or consolidation 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 shall share
the total consideration from any Transaction ("Transaction
Consideration") as follows:

1. The Class A shareholders shall be allocated "Distribution Units"
equal to the number of Class A shares held by such shareholder at
the effective date of a Transaction;

2. Each Class C shareholder shall 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 and Board policies which exist from
time to time
A-1
<PAGE> 26

and the allocation schedule prepared from year to year by the
Company for this purpose, based upon the underwriting risk
classifications used by Midwest Medical, and which shall be
approximately 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 shall be determined; and

4. Each Class A or Class C shareholder shall 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 such shareholder in subsection 1 or
subsection 2 above.

K. The corporation shall have the right to, and shall, redeem any and all
Class C common stock of the corporation 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. The redemption price shall be $0.00 per share.

L. The Class C shares shall have no par value.

A-2

<PAGE> 1

EXHIBIT 3

LETTER OF ACCEPTANCE

Midwest Medical Insurance Holding Company
7650 Edinborough Way, Suite 400
Minneapolis, MN 55435

RE: Exchange Offer

I, the undersigned holder of Class A shares of Midwest Medical Insurance
Holding Company, do hereby accept Midwest Holding's offer to acquire all of the
Class A shares registered in my name on the books of the corporation in exchange
for:

(1) One share of Class C Common Stock of Midwest Holding, and

(2) $66.00 per Class A share registered in my name on the books of the
corporation on June 30, 2000.

I understand that Midwest Holding's offer to acquire my Class A shares, and
my acceptance of that offer, is subject to the terms and conditions contained in
the Offering Circular dated May 8, 2000, receipt of which I acknowledge.

Please sign exactly as name appears below. 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:
- -------------------------------------------------

- ---------------------------------------------------------
Signature

- ---------------------------------------------------------
Name (Please print)

The payment for the Class A shares, and the Notice of Issuance of the Class
C share, will be sent to the last known address of the shareholder. If you would
like this payment and notice sent to another address, please include it below:

- ---------------------------------------------------------

<PAGE> 1

EXHIBIT 4

FORM OF
NOTE
$ MINNEAPOLIS, MINNESOTA
, 2000

FOR VALUE RECEIVED, the undersigned ("Borrower") promises to pay Midwest
Medical Insurance Company, or order, the principal sum of ($ ), with no
interest, payable on demand.

Presentment, notice of dishonor, and protest are hereby waived by all
makers, sureties, guarantors and endorsers hereof. This Note shall be the joint
and several obligation of all makers, sureties, guarantors and endorsers, and
shall be binding upon them and their successors and assigns.

Any notice to Borrower provided for in this Note shall be given by mailing
such notice by certified mail addressed to Borrower at the Property Address
stated below, or to such other address as Borrower may designated by Notice to
the Noteholder. Any notice to the Noteholder shall be given by mailing such
notice by certified mail, return receipt requested, to the Noteholder at the
address stated in the first paragraph of this Note, or at such other address as
may have been designated by notice to Borrower.

MIDWEST MEDICAL INSURANCE HOLDING
COMPANY

By:
--------------------------------------
Its: President

Property Address:

<PAGE> 1

EXHIBIT 7

CONSENT OF INDEPENDENT AUDITOR

We consent to the reference to the incorporation by reference in Schedule
TO (dated April 26, 2000) 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