SCPIE Holdings continues to back offer from Doctors Co.; shareholders to vote March 26

By Lisa Kerner

Charlotte, N.C., Feb. 27 - SCPIE Holdings Inc., in an open letter to its stockholders, reiterated its support of an offer by the Doctors Co. to acquire the company for $28 cash per share.

The letter follows claims by former SCPIE board member Joseph Stilwell that the company had received superior offers that included a stock component and that the board valued the non-cash offers differently.

SCPIE stockholders will vote on the transaction, valued at some $281 million, at a special meeting on March 26.

According to SCPIE chairman Mitchell S. Karlan, there was no offer from Lansing, Mich.-based American Physicians Capital, Inc. on the table. Stilwell sits on the board of American Physicians.

Karlan, in refuting Stilwell's claims, said that:

• The spot price of American Physicians is not a relevant data point;

• American Physicians would have to "create millions and millions" of new shares of its stock to give in exchange for SCPIE stock;

• American Physicians' shareholders could veto the "ill-advised" deal;

• The Doctors Co. committed to honor all agreements including premium rates, coverage terms, limits of liability and retirement "tail" vesting; and

• A transaction with American Physicians would have resulted in a loss of business for SCPIE.

"Stilwell has millions invested in the Michigan company, stands to gain more for his investment in that company than he does in SCPIE, and therefore would rather boost the value of ACAP with our successful franchise," Kaplan said in his letter.

In closing, Kaplan urged SCPIE shareholders to ask themselves if they would rather have $28 cash per share or "a non-existent offer of thinly traded stock in a Michigan company, virtually unknown to California insureds, with little or no revenue growth and no experience in the competitive California market."

American Physicians weighed in on the matter in a separate statement, claiming that many of Karlan's points are "factually untrue and misleading."

American Physicians said that:

• Its bid for SCPIE exceeds $28 per share, based on American Physicians' current "spot price;"

• Its stock transaction would have been accretive to American Physicians' shareholders and increased the value of its stock;

• American Physicians would have been legally obligated to honor all terms and conditions of SCPIE's contracts; and

• The company's A.M. Best rating is in the "secure" range and higher than SCPIE's.

It was previously reported that SCPIE rejected a bid from American Physicians, citing its prohibitive conditions and the possibility that the proposed merger could not be accomplished.

Los Angeles-based SCPIE provides health-care liability insurance for physicians and other health-care providers, medical groups and health-care facilities.

The Doctors Co. is a physician-owned medical malpractice insurer located in Las Vegas.

American Physicians provides medical professional liability insurance.

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