Meadowbrook to Acquire Specialty Insurer ProCentury in $273M Deal

February 21, 2008

Michigan-based Meadowbrook Insurance Group, Inc. reported it will acquire ProCentury Corp. in a transaction valued at approximately $272.6 million in cash and stock to be paid to ProCentury shareholders.

Under the terms of the merger agreement, shareholders of ProCentury will be entitled to receive, for each ProCentury common share, either $20.00 in cash or Meadowbrook common stock having a value of $20.00, subject to adjustment as described below.

The price represents a premium of 33 percent to the 30-day volume- weighted average sale price of ProCentury common shares, according to the companies.

The combined entity will adopt and operate under the Meadowbrook name and will continue to trade on the NYSE under the ticker symbol “MIG.”

Robert S. Cubbin, Meadowbrook chief executive officer, will continue in his current role in the post-merger combined entity and two ProCentury board members will join Meadowbrook’s board of directors.

Meadowbrook’s total gross written premium for 2007 was $346.5 million and ProCentury’s was $238.3 million. Total shareholders’ equity at Dec. 31, 2007 for Meadowbrook and ProCentury was $301.9 million and $161.0 million, respectively.

The acquisition will expand and complement Meadowbrook’s specialty lines capabilities with ProCentury’s insurance professionals and product expertise in the excess and surplus lines market. Both companies are based in the Midwest and said they have similar employee cultures.

“The combination of these two companies creates a diversified platform and gives both companies the size and product depth to compete at a level that couldn’t be achieved as separate entities. We believe there are significant revenue opportunities for both sides, as well as cost savings potential. We expect meaningful accretion to earnings and will be in a position to offer specific guidance on this in the near future,” commented Cubbin.

Meadowbrook said it expects to finance the cash portion of the purchase price through a combination of cash and debt. Completion of the transaction is subject to various closing conditions, including the receipt of required regulatory approvals and approval by Meadowbrook and ProCentury shareholders. The transaction is expected to be completed in the third quarter of 2008. Meadowbrook anticipates the transaction to be accretive to earnings per share and accretive to book value in 2008 and beyond.

Meadowbrook Insurance Group, Inc., based in Southfield, Michigan, specializes in alternative risk management services for agents, professional/trade associations, and small to medium-sized insureds.

ProCentury Corp. is a specialty property and casualty insurance holding company based in Columbus, Ohio. Its subsidiary, Century Surety Co., underwrites property and casualty insurance for small and mid-sized businesses. Century Surety Co. primarily writes excess and surplus lines insurance and markets its products through general agents.

Sources: Meadowbrook
www.meadowbrook.com
ProCentury’s website
www.procentury.com

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