The board of directors of American Physicians Service Group (AMPH) has decided on an early redemption of all the 3% Series A redeemable preferred stock, worth $6 million. The board also decided to pay accrued dividends on the preferred stock through the redemption date. The payment will be made on September 24, 2010, to shareholders on record as of September 3, 2010.
The company’s liquidity is adequate to support the early redemption. American Physicians ended the second quarter of 2010 with a cash balance of $15.8 million. Cash from operations during the first half of 2010 totaled $10.9 million. Also, with the early redemption of preference shares, the company will have to incur a lower dividend expense.
American Physicians reported solid second-quarter 2010 operating earnings of 88 cents per share, beating the Zacks Consensus Estimate of 68 cents. The Zacks Consensus Estimate for third-quarter 2010 earnings is 69 cents per share. For full year 2010 and 2011, the Zacks Consensus Estimates are, respectively, $2.92 per share and $2.83 per share.
Recently, American Physicians agreed to be acquired by ProAssurance Corporation (PRA) in an all-cash transaction. The shareholders of American Physicians will receive $32.50 per share in cash from the acquirer and the transaction is expected to close in the fourth quarter of 2010.
However, some of the law firms contend that a cash price of $32.50 per share undervalues the company and are thus investigating whether the board of directors breached its fiduciary duties to shareholders.
We maintain an “Outperform” recommendation on American Physicians encouraged by its expansionary initiatives and excellent policyholder retention as well as aggressive share buyback program. The quantitative Zacks #3 Rank (short-term Hold rating) for the company indicates no clear directional pressure on the shares over the near term.
Headquartered in Austin, Texas, American Physicians Service Group Inc. is a leading provider of medical professional liability insurance services for physicians, dentists and other health care providers in Texas, Arkansas and Oklahoma.
AMER PHYSICIANS (AMPH): Free Stock Analysis Report
PROASSURANCE CP (PRA): Free Stock Analysis Report
Zacks Investment Research
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Loading...
Posted In: FinancialsProperty & Casualty Insurance
Benzinga simplifies the market for smarter investing
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
Join Now: Free!
Already a member?Sign in
