American Physicians refutes SCPIE allegations, says it was not free to increase offer

By Lisa Kerner

Charlotte, N.C., March 10 - American Physicians Capital, Inc. said it is correcting, for the benefit of its shareholders, "certain mischaracterizations" regarding the company and its dealings with SCPIE Holdings Inc.

In particular, American Physicians denied that it was "free to bid more at any time" for SCPIE as stated in a March 6 letter from SCPIE chairman Mitchell S. Karlan filed with the Securities and Exchange Commission.

American Physicians said it was not given the chance to improve its bid on the day SCPIE signed a definitive agreement to be acquired by the Doctors Co., which was Oct. 15.

The March 6 letter from Karlan urged SCPIE stockholders to approve the Doctors Co.'s $28-per-share offer for the company.

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

In the letter, Karlan maintained that the Doctors Co. offer provides liquidity, certainty and excellent value and that not approving the offer could leave the company stuck in a competitive marketplace with no other interested bidders.

Karlan asked shareholders if they would rather have $28 cash per share or "a non-existent, illusory non-cash offer of thinly traded stock in a Michigan company [American Physicians], virtually unknown to California insureds, with little or no revenue growth and no experience in the competitive California market."

It was previously reported that former SCPIE board member Joseph Stilwell said SCPIE had received superior offers that included a stock component and that the board valued the non-cash offers differently. Stilwell now sits on the board of American Physicians.

In February, Karlan said there was no offer from East Lansing, Mich.-based American Physicians on the table at that time.

In October, 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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