Scpie (NYSE:SKP)
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SCPIE Holdings Inc. (NYSE:SKP), a major provider of healthcare
liability insurance, today announced the mailing of a letter to its
stockholders, reiterating the SCPIE Board’s
continuing support of The Doctors Company all-cash offer of $28 per
share, and refuting many of the statements made by Joe Stilwell in
several recent letters to SCPIE stockholders. Additionally, the Company
reminds stockholders that a special stockholder meeting is scheduled for
March 26, 2008. The Company has sent out proxy materials including a
WHITE proxy card, and encourages all stockholders to vote FOR the
transaction.
Dated February 27, 2008, and signed by Mitchell S. Karlan MD, Chairman
of the SCPIE Holdings Board of Directors, the letter —
in its entirety — is as follows:
Let me begin by expressing my sincere apologies for sending you yet
another piece of correspondence. I know all of the back-and-forth that
has been going on may seem confusing, but I feel that we must set the
record straight for the benefit of all of our stockholders.
All the qualifiers and veiled language in the world won’t
change the fact that there is no offer from American Physicians Capital,
Inc. (ACAP) of East Lansing, Michigan, on the table or that the one that
was on the table in October of last year lacked certainty both of
closing and valuation. Stilwell continues to try to mislead you in an
effort to get you to line up with his preference for a transaction with
a company on the board of which he and his lawyer sit and in whose stock
he has significantly more money at stake — you
can draw your own conclusions, but let us point out a few facts for you
to consider:
• Stilwell would have you believe that the “spot”
price of ACAP’s stock today is a relevant
data point. It is not. He further wants you to believe that the thinly
traded stock of this Michigan company, which has been affected by its
recently announced stock buyback programs, could have had a value higher
than $28 per share under the terms of their offer last October. What
he fails to point out is that it just as easily could have been valued
at well less than $28 per share at the time of the closing of the
transaction.
• Stilwell also isn’t
telling you that, under its proposal, the Michigan company would have
needed to run the printing presses and create millions and millions of
new shares of its stock to give you in exchange for your SCPIE stock. He
fails to mention that, at some point, running the printing presses does
not create wealth — it just makes ACAP’s
shares worth less and less.
• Stilwell also isn’t
telling you that the Michigan company’s
shareholders would have had a veto right over the Michigan company’s
ill-advised deal, and could have prevented the dilution that would
have been wrought by the millions of new shares the Michigan company
would need to issue.
• As for continuity of service,
The Doctors Company has made its commitment clear that all agreements
including premium rates, coverage terms, limits of liability and
retirement “tail”
vesting will be honored. The Doctors Company has also assured us that it
will staff a full-service office in Los Angeles, and that it intends to
continue to provide California doctors the high level of service that
SCPIE insureds have enjoyed for more than 30 years. Stilwell would have
you believe that he can make the same commitment on behalf of ACAP, but
does he have the authority to do so?
• Finally, and arguably most
important, we believe we would have lost considerable business had we
entered into a transaction with an out-of-state insurer with a
less-than-stellar A.M. Best rating. This loss of business would have
given the Michigan company the opportunity to abandon its proposal and
seek to renegotiate for a lower price — to
your detriment! Where would we be then? Your Board was not willing
to take that chance.
Ask yourself, what is Stilwell really trying to accomplish by raising
tax issues in every single piece of correspondence —
does he think deferred taxes are the same as no taxes? We all know
better than that unfortunately. In fact, with capital gains rates at
their lowest in 75 years, who knows how high they may go under a new
political administration. Maybe the bottom line is the fact that
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?
So, please consider, which would you rather have?
$28 OF 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.
Please vote FOR the merger proposal by telephone, Internet or
mail today. We ask you to ignore Stilwell’s
GOLD cards and reject his self-serving attempt to force your SCPIE to
merge with the company from Michigan with which he is affiliated.
Additional Information and Where to
Find It
On January 30, 2008, SCPIE filed a definitive proxy statement with the
Securities and Exchange Commission (SEC) in connection with its proposed
acquisition by The Doctors Company. The proxy statement has been mailed
to SCPIE’s stockholders, who are urged to
read the proxy statement and other relevant materials filed with the SEC
because they contain important information about the acquisition.
Investors and security holders may obtain free copies of these documents
and other documents filed with the SEC at the SEC’s
website at www.sec.gov. In addition,
investors and security holders may obtain free copies of the documents
filed with the SEC by SCPIE at the Investors/Media section on its
corporate website at www.scpie.com.
SCPIE’s executive officers and directors may
be participants in the solicitation of proxies from SCPIE stockholders
with respect to the acquisition. Information about SCPIE’s
executive officers and directors, and their ownership of SCPIE Holdings
common stock, is set forth in the definitive proxy statement SCPIE filed
with the SEC on January 30, 2008, and in the reports filed by the
executive officers and directors under Section 16 of the Securities
Exchange Act of 1934, as amended, since such date. Additional
information regarding the direct and indirect interests of SCPIE’s
executive officers and directors in the acquisition is in the definitive
proxy statement.