FILED BY NCRIC GROUP, INC.
PURSUANT TO RULE 425 UNDER THE SECURITIES ACT OF 1933 AND
DEEMED FILED PURSUANT TO RULE 14A-12 OF THE SECURITIES EXCHANGE ACT OF 1934
SUBJECT COMPANY: NCRIC GROUP, INC.
COMMISSION FILE NO. 000-25505
Press Release
March 4, 2005
For Immediate Release
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For Information Contact:
NCRIC Group, Inc.:
Eric R. Anderson, Senior Vice President, Corporate Communications and
Investor Relations - 202.969.3102
SUMMARY
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NCRIC Group, Inc. announces a change in the A.M. Best rating of its insurance
subsidiary, NCRIC, Inc., to B++ (Very Good). NCRIC's goal is to work to restore
the rating to its previous level of "A-" (Excellent) once its merger with
ProAssurance is finalized and A.M. Best has more time to factor in the financial
strength that will be provided by the transaction.
NCRIC, INC. A.M. BEST RATING CHANGED TO B++ (VERY GOOD)
WASHINGTON, D.C. - (BUSINESS WIRE) - March 4, 2005 - NCRIC Group, Inc. (NASDAQ
National Market: NCRI) announced today that the financial rating of its
insurance subsidiary, NCRIC, Inc., has been changed by A.M. Best Company from
"A-" (Excellent) to "B++ " (Very Good) with negative implications. The action by
A.M. Best follows the February 28, 2005 announcement of NCRIC Group's fourth
quarter and year-end 2004 results of a net loss of $8.3 million and $7.1
million, respectively. The results were driven primarily by adverse development
on claims reported in prior years. The rating will remain under review pending
A.M. Best's review of NCRIC, Inc.'s loss reserves, completion of the transaction
and discussions with management.
"This is not unexpected given our 2004 results," said R. Ray Pate, Jr., the
President and Chief Executive Officer of NCRIC Group, Inc. "However, we are very
disappointed that A.M. Best has taken this action given our announcement of a
definitive agreement to merge with ProAssurance. After the merger is completed,
we anticipate that NCRIC, Inc. will continue to operate as a D.C. domiciled
insurance subsidiary of ProAssurance. Our goal is to restore the rating to its
previous level of `A-' once A.M. Best has more time to factor in the financial
strength provided by the transaction with ProAssurance."
Pate further commented that NCRIC is very pleased to join the ProAssurance
family of companies and that the company is looking forward to continuing to
serve the physicians of the mid-Atlantic region. He said, "We entered into the
agreement to merge NCRIC Group, Inc. - the parent company of NCRIC, Inc. - into
ProAssurance out of concern for our ability to continue to operate successfully
as a small, independent medical professional liability insurance company in
today's volatile climate. ProAssurance writes approximately $790 million in
gross written premiums and has assets in excess of $3 billion. This transaction
provides us with the necessary financial stability to continue to fulfill our
promise to policyholders in our various markets."
Nelson P. Trujillo, M.D., the chairman of NCRIC Group, Inc., said that joining
ProAssurance will provide significant benefits for NCRIC, Inc. policyholders not
only because of the added financial strength but also because of the many
similarities between the two organizations. "Joining ProAssurance will make us a
part of a larger, stronger organization and we can better provide the financial
security that our policyholders expect. Furthermore, like NCRIC, ProAssurance is
very physician-focused, utilizing the unique perspective of physicians in
governance and advisory roles to ensure that the voices of physicians are
heard."
Trujillo continued, "Merging with ProAssurance will preserve NCRIC's heritage
and philosophy, and will enable us to continue to achieve our objective of
serving as a partner and advocate for our physician policyholders."
A. Derrill Crowe, M.D., the chairman and CEO of ProAssurance, said the Company
had conducted extensive due diligence with NCRIC's cooperation, with a
particular focus on NCRIC's loss reserves and physician-focused operating model.
He said, "We believe the action NCRIC has recently taken to strengthen their
loss reserves brings them to a level of adequacy comparable to that of
ProAssurance. Because NCRIC's operational goals are similar to those of
ProAssurance, we believe they will fit into our operating model with minimal
disruption for either organization."
The proposed transaction will be submitted to NCRIC's stockholders for their
consideration. ProAssurance and NCRIC will file with the SEC a registration
statement and a proxy statement/prospectus, and other relevant documents
concerning the proposed transaction. Stockholders of NCRIC are urged to read the
registration statement and the proxy statement/prospectus when they become
available and any other relevant documents filed with the SEC, as well as any
amendments or supplements to those documents, as they will contain important
information. You will be able to obtain a free copy of the proxy
statement/prospectus, as well as other filings containing information about
ProAssurance
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and NCRIC, at the SEC's Internet site (http://www.sec.gov). Copies of the proxy
statement/prospectus and the SEC filings that will be incorporated by reference
in the proxy statement/prospectus can be obtained, without charge, by directing
a request to Eric Anderson, Senior Vice President, Investor Relations, NCRIC
Group, Inc., 1115 30th Street, N.W., Washington, D.C. 20007, tel: (202) 969-3102
or to Frank B. O'Neil, Senior Vice President, Corporate Communications and
Investor Relations, ProAssurance Corporation, 100 Brookwood Place, Birmingham,
Alabama 35209, tel: (205) 877-4461.
NCRIC Group, Inc., and its respective directors and executive officers, may be
deemed to be participants in the solicitation of proxies from the stockholders
of NCRIC in connection with the proposed merger. Information about the directors
and executive officers of NCRIC and their ownership of NCRIC common stock is set
forth in the proxy statement, dated April 2, 2004, for NCRIC's 2004 annual
meeting of stockholders, as filed with the SEC.
About NCRIC Group, Inc.
NCRIC is a healthcare financial services organization that assists individual
physicians and groups of physicians in managing their practices by providing
medical professional liability insurance, practice management and financial
services, and employee benefits plan design and pension administration. In
addition to its headquarters in Washington, D.C., NCRIC has offices in
Wilmington, Delaware; Greensboro, North Carolina; Richmond and Lynchburg,
Virginia; and Charleston, West Virginia. NCRIC provides services to more than
4,700 physician clients.
Caution Regarding Forward-Looking Statements
This news release contains historical information as well as forward-looking
statements that are based upon our estimates and anticipation of future events
that are subject to certain risks and uncertainties that could cause actual
results to vary materially from the expected results described in the
forward-looking statements. The words "anticipate," "believe," "estimate,"
"expect," "hopeful," "intend," "may," "optimistic," "preliminary," "project,"
"should," "will," and similar expressions are intended to identify these
forward-looking statements. There are numerous important factors that could
cause our actual results to differ materially from those in the forward-looking
statements. Thus, sentences and phrases that we use to convey our view of future
events and trends are expressly designated as Forward-Looking Statements as are
sections of this news release clearly identified as giving our outlook on future
business. The principal risk factors that may cause actual results to differ
materially from those expressed in the forward-looking statements are described
in various documents we file with the Securities and Exchange Commission,
including Form 10K for the year ended December 31, 2003 and Form 10Q for the
most recent quarter. These forward-looking statements are subject to
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significant risks, assumptions and uncertainties, including, among other things,
the following important factors that could affect the actual outcome of future
events:
Relating to the ongoing operations of the combined companies:
o General economic conditions, either nationally or in our market area, that
are worse than expected;
o regulatory and legislative actions or decisions that adversely affect our
business plans or operations;
o price competition;
o inflation and changes in the interest rate environment the performance of
financial markets and/or changes in the securities markets that adversely
affect the fair value of our investments or operations;
o changes in laws or government regulations affecting medical professional
liability insurance and practice management and financial services;
o changes to our ratings assigned by A.M. Best;
o the effect of managed healthcare;
o uncertainties inherent in the estimate of loss and loss adjustment expense
reserves and reinsurance; and changes in the availability, cost, quality,
or collectibility of reinsurance;
o significantly increased competition among insurance providers and related
pricing weaknesses in some markets;
o changes in accounting policies and practices, as may be adopted by our
regulatory agencies and the Financial Accounting Standards Board; and
o changes in our organization, compensation and benefit plans.
Relating to the proposed transaction with ProAssurance:
o The business of ProAssurance and NCRIC may not be combined successfully, or
such combination may take longer to accomplish than expected;
o the cost savings from the merger may not be fully realized or may take
longer to realize than expected;
o operating costs, customer loss and business disruption following the
merger, including adverse effects on relationships with employees, may be
greater than expected;
o governmental approvals of the merger may not be obtained, or adverse
regulatory conditions may be imposed in connection with governmental
approvals of the merger;
o restrictions on our ability to achieve continued growth through expansion
into other states or through acquisitions or business combinations; and
o the stockholders of NCRIC may fail to approve the merger.
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We wish to caution readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date made, and wish to
advise readers that the factors listed above could affect our financial
performance and could cause actual results for future periods to differ
materially from any opinions or statements expressed with respect to future
periods in any current statements. We do not undertake and specifically decline
any obligation to publicly release the result of any revisions that may be made
to any forward-looking statements to reflect events or circumstances after the
date of such statements or to reflect the occurrence of anticipated or
unanticipated events.
For further information, contact:
NCRIC Group, Inc.
Eric R. Anderson
Senior Vice President, Investor Relations
202.969.3102
800.613.3615
anderson@ncric.com
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March 4, 2005
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