15 Jun Estimated MLMIC Acquisition Payout to Nearly Double
As part of the ongoing acquisition of MLMIC by National Indemnity Company (NICO), a Berkshire Hathaway subsidiary, MLMIC recently announced updates on the transaction’s progress, including new estimates on the payout for eligible policyholders.
MLMIC is a mutual insurance company and is currently owned by its policyholders/insured physicians. Once the transaction between MLMIC and NICO is complete, the company will be demutualized and will turn into a stock insurance company that is owned by NICO’s shareholders. This means that during demutualization, each eligible policyholder will receive a payout from the transaction.
Any individual who was a policyholder between July 15, 2013 and July 14, 2016 (payout period) is eligible for the payout. Current MLMIC insured status is not required. When this deal was originally announced in 2017, policyholders were expected to receive a payout equal to 1 times the annual premium paid during the payout period as part of their MLMIC acquisition by Berkshire Hathaway.
Now, MLMIC is estimating each eligible policyholder’s payout will be 1.9 times the sum of the premiums paid from during the payout period (Source: https://www.mlmic.com/mlmic-joins-berkshire-hathaway-faq/, point #5). This nearly-doubled payout is a welcome surprise and due in part because MLMIC’s value has increased since the original transaction agreement.
For example, if a physician was insured during the entire payout period and paid $20,000 in malpractice premium annually, they would be eligible to receive a $114,000 payout based on the new estimates. This is $54,000 more than the original estimate.
The transaction is projected to be complete by September 30, 2018. Once this occurs, payment terms will be outlined. This is all pending final approval by MLMIC policyholders eligible to vote on the transaction and the Superintendent of Financial Services of the State of New York.
Phalanx Healthcare Solutions is a New York based medical malpractice insurance consultant specializing in insurance and reinsurance solutions for physicians, physician organizations, and healthcare systems. For more information, visit our web site at www.phalanxllc.com.