FPIC INSURANCE GROUP, INC.
ANNOUNCES COMPLETION OF $15 MILLION PRIVATE PLACEMENT
OF TRUST PREFERRED SECURITIES
JACKSONVILLE, Fla. (Business Wire) - October 29, 2003 - FPIC Insurance Group,
Inc. ("FPIC") (Nasdaq Symbol: FPIC) announced today that it has completed a $15
million private placement of trust preferred securities. FTN Financial Capital
Markets and Keefe Bruyette & Woods, Inc. ("FTN/KBW") acted as placement agents
for the offering.
FPIC, through its wholly owned statutory trust, along with other insurance and
insurance holding company participants, issued trust preferred securities to the
FTN/KBW investment pool. The FTN/KBW investment pool, in turn, issues its own
securities to institutional and accredited investors.
The securities issued to the investment pool by FPIC mature in 30 years and will
bear a floating interest rate equal to three-month LIBOR plus 3.85%, for an
initial interest rate of approximately 5% per annum. FPIC has purchased a
hedging instrument designed to maintain the ultimate floating rate interest cost
on the securities within a range of 4.85% to 8.5% for five years from closing.
FPIC will have the option to call its securities at 100% of the principal amount
beginning five years from closing.
FPIC will use the net proceeds of approximately $14.5 million to pay down its
revolving credit facility and the related portion of an interest rate swap
agreement currently being used as a hedge for the credit facility's floating
rate interest. FPIC has secured from its bank lender group the necessary
approvals and amendments to its credit facility to allow for the issuance of the
trust preferred securities and such use of the proceeds.
FPIC estimates it will incur a net charge of approximately $0.4 million after
tax in the fourth quarter of 2003 in connection with the completion of the
private placement, consisting primarily of the cost to partially unwind an
interest rate swap agreement associated with the pay down of its revolving
credit facility. Other costs associated with the private placement of
approximately $0.5 million will be amortized over the expected life of the newly
issued securities, which have stated maturities of 30 years. The cost of the
hedging instrument purchased in connection with the private placement of
approximately $.5 million will be amortized over 5 years.
For additional information regarding FPIC's private placement with FTN/KBW, see
FPIC's Form 8-K relating to the private placement, which will be filed with the
Securities and Exchange Commission in the near future.
John R. Byers, President and Chief Executive Officer of FPIC said, "We are
pleased to be completing another $15 million private placement of trust
preferred securities. With this placement, the Company has now completed three
private placements totaling an aggregate of $45 million of trust preferred
securities and unsecured senior notes since May 2003."
"Mr. Byers, commenting on the use of proceeds, said "These private placements
have been used to substantially reduce our bank credit facility, make a capital
contribution to our insurance operations and unwind hedge agreements related to
the credit facility. Lowering our debt levels, generally, and replacing our
commercial bank debt with longer-term institutional debt are important goals in
our business model and we are pleased to have made substantial progress towards
achieving these goals."
Commenting on the impact of the private placements on FPIC's capital position,
Mr. Byers, stated, "Our new debt structure gives us more operational
flexibility, lowers our cost of capital, enhances liquidity by significantly
reducing current debt service requirements and strengthens our balance sheet."
In closing Mr. Byers stated, "Our overriding priority is to create and maintain
a strong, stable and consistently profitable organization. Continuing to
strengthen the Company's capital structure has created positive momentum that
allows us to move forward as a stronger organization for the long-term. We will
continue to explore and aggressively pursue capital opportunities available to
us to best serve our customers and build value for our shareholders."
Corporate Profile
-----------------
FPIC Insurance Group, Inc., through its subsidiary companies, is a leading
provider of professional liability insurance for physicians, dentists and other
healthcare providers, primarily in Florida and Missouri. FPIC also provides
management and administration services to Physicians' Reciprocal Insurers, a New
York medical professional liability insurance reciprocal, and third-party
administration services both within and outside the healthcare industry.
Safe Harbor Disclosure
----------------------
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements. Any written or oral statements made by or on
behalf of FPIC may include forward-looking statements, which reflect our current
views with respect to future events and financial performance. These
forward-looking statements are subject to certain uncertainties and other
factors that could cause actual results to differ materially from such
statements. These uncertainties and other factors include, but are not limited
to:
i) Uncertainties relating to government and regulatory policies
(such as subjecting FPIC to insurance regulation or taxation
in additional jurisdictions or amending, revoking or enacting
any laws, regulations or treaties affecting our current
operations);
ii) The occurrence of insured or reinsured events with a frequency
or severity exceeding our estimates;
iii) Legal developments, including claims for extra-contractual
obligations or in excess of policy limits in connection with
the administration of insurance claims;
iv) Developments in global financial markets that could affect our
investment portfolio and financing plans;
v) The impact of surplus constraints on growth;
vi) Developments in reinsurance markets that could affect our
reinsurance programs;
vii) The impact of mergers and acquisitions, including the ability
to successfully integrate acquired businesses and achieve cost
savings, competing demands for our capital and the risk of
undisclosed liabilities;
viii) The ability to integrate Anesthesiologists Professional
Assurance Company's ("APAC") operations into First
Professionals Insurance Company, Inc.'s ("First
Professionals") and achieve associated cost savings;
ix) Risk factors associated with financing and refinancing,
including the willingness of credit institutions to provide
financing and the availability of credit generally;
x) The competitive environment in which FPIC operates, including
reliance on agents to place insurance, physicians electing to
practice without insurance coverage, related trends and
associated pricing pressures and developments;
xi) The actual amount of new and renewal business;
xii) Rates, including rates on excess policies, being subject to or
mandated by legal requirements and regulatory approval, which
could affect our business or reinsurance arrangements;
xiii) The loss of the services of any of our executive officers;
xiv) The uncertainties of the loss reserving process;
xv) The ability to collect reinsurance recoverables;
xvi) Changes in our financial ratings resulting from one or more of
these uncertainties or other factors and the potential impact
on our agents' ability to place insurance business on behalf
of FPIC;
xvii) The dependence of the reciprocal management segment upon a
single major customer, PRI, for the preponderance of its
revenue; and
other risk factors discussed elsewhere within FPIC's Form 10-Q for the
quarter ended June 30, 2003, filed with the SEC on August 13, 2003, and
in FPIC's Form 10-K for the year ended December 31, 2002, filed with
the SEC on March 28, 2003.
The words "believe," "anticipate," "foresee," "estimate," "project," "plan,"
"expect," "intend," "hope," "should," "will," "will likely result" or "will
continue" and variations thereof or similar expressions identify forward-looking
statements. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of their dates. FPIC undertakes
no obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as
required by law.
Contact
-------
Roberta Goes Cown
Senior Vice President and Corporate Counsel
(904) 354-2482, Extension 3287
For all your investor needs, FPIC is on the Internet at
http://www.fpic.com
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