Exhibit 2.2 / Letter to the Wisconsin OCI
Jack P. Stephenson, Jr.
Direct Dial: (205) 458-5201
Direct Fax: (205) 244-5708
Email: jstephen@burr.com
March 31, 2006
Office of the Commissioner of Insurance
State of Wisconsin
125 South Webster Street
Madison, Wisconsin 53707-7873
Attention: Mr. Tim Vande Hey
Insurance Financial Examiner
Bureau of Financial Analysis and
Examination
Re: Acquisition of Control of Physicians Insurance Company of Wisconsin,
Inc. by ProAssurance Corporation (Case No. 06-C29893)
Dear Mr. Vande Hey:
We have acted as corporate and securities counsel for ProAssurance
Corporation ("ProAssurance") in connection with its proposed acquisition of
control of Physicians Insurance Company of Wisconsin, Inc. ("PIC-Wisconsin")
pursuant to the terms of the Agreement and Plan of Merger between ProAssurance
and PIC-Wisconsin dated December 8, 2005, as amended February 14, 2006 (the
"Merger Agreement"). We have been asked to respond to the request for additional
information in connection with the review by the Office of the Commissioner of
Insurance of Wisconsin ("OCI") set forth in your letter dated March 29, 2006. We
have been asked to address Item 2 which reads as follows:
2. Please provide legal justification as to the transferability
of PIC-WI outstanding shares of common stock. Your response should
include a discussion related to the original intent of transferability
of the outstanding shares of PIC-WI stock and any provision and/or
communication that you are aware of that were meant to restrict the
transferability of the shares.
We have enclosed a letter from Jeffrey B. Bartell of Quarles & Brady LLP,
counsel for PIC-Wisconsin, that addresses the original intent of the
restrictions on the transferability of the outstanding shares of PIC-Wisconsin
stock. As indicated in the letter, the shares were initially issued pursuant to
exemption from registration under the federal securities laws provided by
Section 3(a)(11) of the Securities Act of 1933 and Rule 147 promulgated
thereunder (the so-called "intra-state exemption"). That exemption required that
the shares not be transferred to persons who are not Wisconsin residents for a
certain period of time after the completion of the offering. The transferability
of the shares was not prohibited. The restriction was placed on the shares to
ensure compliance with the intra-state exemption.
Mr. Bartell further discusses the Shareholder Rights Agreement that was
adopted by the Board of Directors of PIC-Wisconsin to discourage transfers of
PIC-Wisconsin stock that could result in a change of control of PIC-Wisconsin
without the prior approval of the PIC-Wisconsin board. While the Shareholder
Rights Agreement does not restrict the transferability of the shares of
PIC-Wisconsin's stock, the rights, when triggered, adversely affect the
purchaser of the shares thereby discouraging the transfer of the shares in a
transaction that triggers the issuance of rights under the Shareholder Rights
Agreement. The Merger Agreement has been approved by the PIC-Wisconsin board of
directors, and as Mr. Bartell indicated, the board amended the Shareholder
Rights Plan to exempt ProAssurance and the transactions contemplated by the
Merger Agreement from its application.
Mr. Bartell concludes his letter with his opinion that there are no
restrictions on transfer of the PIC-Wisconsin common stock that would affect or
limit the exchange of PIC-Wisconsin stock for ProAssurance stock as contemplated
by the Merger Agreement. In addition, we are of the further opinion that the
proposed acquisition of control of PIC-Wisconsin will constitute a corporate
transaction involving the conversion of PIC-Wisconsin's stock (as opposed to a
transfer of the shares). The change of control will be accomplished by the
merger of PIC-Wisconsin and a subsidiary of ProAssurance, Physicians Merger
Company, Inc., under the terms of the Merger Agreement. If the Merger Agreement
is approved by the stockholders of PIC-Wisconsin and other regulatory approvals
are obtained, Physicians Merger Company, Inc. will be merged into PIC-Wisconsin;
the outstanding shares of PIC-Wisconsin will be converted into shares of
ProAssurance common stock; and the outstanding shares of Physicians Merger
Company will be converted into shares of PIC-Wisconsin so that PIC-Wisconsin
will survive as a wholly owned subsidiary of ProAssurance. The merger agreement
provides that the outstanding shares of PIC-Wisconsin common stock will
automatically be converted into shares of ProAssurance common stock at the
completion of the merger. Certificates for shares of PIC-Wisconsin common stock
will be deemed to evidence the number of shares of ProAssurance common stock
which the holder is entitled to receive under the terms of the Merger Agreement
until the certificates are physically surrendered in exchange for certificates
of ProAssurance stock.
There will be no restriction on the transferability of the ProAssurance
common stock issued under the Merger Agreement (except for limitations on the
manner of sale of shares by control persons of PIC-Wisconsin under SEC Rule
145). As you are aware, ProAssurance has filed a registration statement with the
SEC to register the shares of ProAssurance common stock to be issued to the
holders of PIC-Wisconsin common stock under the Merger Agreement. The
ProAssurance shares to be issued in the merger will be listed on the New York
Stock Exchange and will be eligible for trading immediately after the merger.
The merger has been structured so that all PIC-Wisconsin shareholders will have
the opportunity to continue to own stock in the combined companies and so that
those who do not want to continue to own the stock may sell the shares in the
public market at any time after the merger.
We trust you will find our letter and the letter from Mr. Bartell
responsive to your request. Please let us know if you desire any additional
information.
Yours very truly,
/s/ Jack P. Stephenson, Jr.
Jack P. Stephenson, Jr.