The MIIX Group, Inc. in Lawrenceville, N.J., which has been in runoff since May 2002, said that it has received a preliminary memorandum of terms for the acquisition of MIIX Insurance Company, New Jersey State Medical Underwriters, Inc. and certain other subsidiaries.
The offer is subject to negotiation of final price and terms, due diligence and regulatory approval. The potential acquirer is an international company specializing in insurance services, investments in insurance companies and other financial services. The company is not able to say at this time whether the proposal will lead to a definitive agreement.
The company has engaged SSG Capital Advisors, L.P. as investment bankers to provide various services including evaluation of the acquisition offer and analysis of strategic alternatives.
On May 14, the company, once New Jersey’s largest medical malpractice writer, requested an extension from the New Jersey Department of Banking and Insurance to file its annual audited financial report and first quarter statutory filing while it completes actuarial analyses of loss reserves as of March 31, 2004. In conjunction with the annual audited statutory financial statements, the company said it is working with its external accountants to complete the audit within the extended time frame.
In furtherance of the ongoing monitoring of the runoff of the insurance operations, the New Jersey Department of Banking and Insurance has appointed an administrative supervisor.
Formed in the 1970s, MIIX started as a reciprocal insurer, a non-profit company owned by the New Jersey physicians who were its policyholders. In the 1990s, MIIX changed its focus and began entering markets outside New Jersey. In 1999, it converted to a publicly traded company, and physicians who had been insured by MIIX for at least three years received stock proportionate to what they had paid in premium over the previous three years.
During its expansion, MIIX purchased a Virginia-domiciled company, Lawrenceville Property and Casualty, and used it to enter the market in other states. MIIX and it subsidiary ultimately sold policies in 25 other states. MIIX acted as the primary reinsurer of Lawrenceville, but problems at the subsidiary ended up hurting MIIX’s financial and investment performance. MIIX announced plans to withdraw from most out-of-state markets and focus on its New Jersey roots.
In March, 2002, MIIX Insurance Company reported that its surplus dropped $128 million between September and December 2001, raising questions about its ability to pay claims. By May the company was in runoff.
At the same time, MIIX submitted plans to N.J. Banking and Insurance Commissioner Holly C. Bakke for a successor company, which is now MIIX Advantage.
In September, 2002, Bakke approved the creation of MIIX Advantage as a new medical malpractice insurer in the state. MIIX Advantage provided coverage to doctors whose MIIX Group policies expired and who made contributions to the MIIX Advantage capital campaign.
MIIX Advantage was capitalized with $30 million in physician contributions. An estimated $1.2 billion in assets from the existing MIIX Group were not be used for the new venture, as those funds wiere kept to pay off claims from policies written by the existing company.
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