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MLMIC Shares Anticipated Timeline for Berkshire Hathaway Transaction

NOTICE: As the Berkshire Hathaway transaction has progressed, timelines and other details have been updated. Though accurate at the time of publication, this post no longer contains the most current information. Please click here for an update.

As you know, in July of 2016, MLMIC announced its intention to be acquired by Berkshire Hathaway. We’re pleased to advise you that the transaction is on track and progressing forward in accordance with the measures and actions required under New York Insurance Law Section 7307 (NYIL §7307), designed to protect the interests of the policyholders and the public. We are, however, disappointed that the process is taking slightly longer than anticipated.  As you know, we anticipated a culmination of the process in the third quarter of 2017. We are now hopeful that the process will be completed by year end 2017.  As such, policyholders can expect several major milestones to occur between now and the expected close of the transaction. The estimated timeline for these milestones is currently as follows:

  1. In accordance with NYIL §7307, MLMIC is being examined by the NYS Department of Financial Services (DFS) to assess the financial condition of the Company. That examination is expected to be completed during the second quarter of 2017.
  2. In accordance with NYIL §7307, the DFS will also conduct an independent valuation of the Company to assess the fairness of the cash consideration to be paid by Berkshire to owners of eligible MLMIC policies from July 14, 2013 through July 14, 2016. This valuation is expected to be completed during the third quarter of 2017.
  3. In accordance with NYIL §7307, once the examination and independent valuation are done, MLMIC’s Board will request permission from the Superintendent to submit a Plan of Conversion for approval by DFS. MLMIC will then prepare and disseminate detailed information regarding the Plan of Conversion to all of those who are eligible to vote (i.e. those who were policyholders on July 14, 2016) on this transaction. The Superintendent will then hold a public hearing regarding the Plan of Conversion. Following this hearing, the Superintendent will review the Plan of Conversion, and if approved, will authorize MLMIC to conduct a vote.
  4. In accordance with NYIL §7307, we expect to hold a vote of those eligible to vote on this transaction during the fourth quarter of 2017. If two-thirds or more of those voting elect to proceed with the transaction, the transaction will close and Berkshire will authorize distribution of payments shortly thereafter.

As we progress forward and achieve these milestones, we will provide an update here on the blog and theFrequently Asked Questions” webpage. If you have any questions about the transaction, please call 1-888-998-7871.

Posted in Dentists, Hospitals, Physicians

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32 thoughts on “MLMIC Shares Anticipated Timeline for Berkshire Hathaway Transaction

  1. Is there any way to know what the cost basis will be for policy holders when we get paid out on this?

    In other words, what percentage of the payout is likely to be taxable?

    1. Although policy owners should consult with their own tax advisors, it is anticipated that the funds will be treated as taxable.

  2. is there any additional benefit to individuals who have had MLMIC for over 25 years and now part time as compared to those who have a shorter coverage and now part time coverage.
    In other word, is there any advantage of long term loyalty?

    1. The conversion consideration will be allocated to policyholders based on the premium paid during the 3 years preceding the date of the meeting of directors held on July 15, 2016. This allocation is mandated by the New York Insurance Law.

  3. Shanthamallappa Ashok says:

    I will retire in April 2017.I have owned MIMIC policy for more than a decade.
    Will I be eligible to vote and then receive distribution from Berkshire Hathaway ?

  4. Will the cash consideration be applicable for those who have retired prior to July’16 and also to those who switch to a different insurance company for Insurance coverage after July’16 ?

    1. The cash consideration will be applicable to those who were owners of an eligible policy at any time from July 14, 2013, through July 14, 2016. Please give us a call at 1-888-998-7871 to discuss your specific circumstances.

  5. Mary Rivera Casamento says:

    When will we be informed of the individual payout and changes to coverage and cost of coverage as this will influence our vote

    1. In accordance with NYIL 7307, we expect to provide eligible policy owners with detailed information regarding the transaction, payout and ongoing operations during the third or fourth quarter of this year. Changes in coverage will remain subject to regulatory approval, and the cost of coverage (i.e. the setting of rates) will remain under the authority of the Department of Financial Services of the State of New York.

  6. The implication of this communication is that it is possible that if all of this goes through according to plan that the distribution of the checks to the eligible policy holders may not take place in 2017 but may be in 2018 and the 1099’s of such refunds would be for the tax year of when the checks are written?

    1. It is possible that the payouts could occur in 2018 and hence 1099’s would be issued for the year in which any payout was made.

  7. Barry Belgorod says:

    How will the vote be performed?

    Will there be paper ballots, or will it be web-based, or both?

    What safeguards will there be, to ensure an honest vote?

    MLMIC is already regarded as one of the best-managed professional liability insurance companies, primarily because of its heritage of being owned by and run by clinicians for the defense of clinicians. What does the transition to a non-clinician administered insurance company mean for our insured clinicians?

    We have been informed about some draft plans to compensate the policyholders for the sale of MLMIC to Berkshire Hathaway, which is highly dependent upon existing premium structure, by specialty.
    This clearly rewards high-premium specialties, in dollar terms, more than low-premium specialties. How is this disparity to be made more equitable?

    How are the Board, management, legal counsel (Fager & Amsler) to be compensated for this transaction?

    How will this transaction affect longstanding and critical MLMIC policies, such as not settling out from under an Insured, against the Insured’s will?

    1. The process for conducting the conversion of MLMIC to a stock insurer is prescribed in detail by the New York Insurance Law (NYIL) and is subject to close scrutiny by the New York Department of Financial Services (DFS). For example, the NYIL sets forth a process for the conduct of a hearing by the DFS, including the distribution of a policyholder information packet approved by the DFS prior to the hearing. The NYIL also sets forth the process for the holding of a meeting of policyholders to vote on the proposed conversion and the formula for the allocation of the conversion consideration if the conversion is approved at the meeting.

      Details of the process, the business reasons that led the Board to unanimously approve the conversion and the future plans for our company will all be addressed in detail in the policyholder information packet. We do point out that the NYIL prohibits the payment of special compensation to officers and directors in conjunction with a conversion.

  8. 3 questions:
    Would the MLMUC payout be considered earned income or unearned (this has implications for funding pension plan)

    Can two checks be issued such that the proceeds can be deposited in separate accounts. Furthermore, might there be an option to take the payout over time (for tax purposes)

    If a policyholder pays a premium surcharge, would the total premium be reimbursed or the standard premium for that class??

    1. (a) You should consult with your tax advisors in order to address your specific circumstances.

      (b) The conversion consideration will be paid to owner of the eligible policy. It is not anticipated that there will be an option to defer payment.

      (c) The Policyholder Information Statement will set forth which items are to be considered as premium for the purposes of the conversion.

    1. The conversion consideration will be allocated to policyholders based on the premium paid during the 3 years preceding the date of the meeting of directors held on July 15, 2016.

    1. The conversion consideration was determined through arms-length negotiations between the company and Berkshire Hathaway.

  9. I was wondering how the payout amount will be calculated. Is it based on the individual premiums the dentist has payed over the 2013-2016 period? Or is it based on the total premiums received by MLMIC from all dentists and doctors then divided by the amount of doctors eligible for the payout? In other words – is it based on how much we payed as an individual?

    1. The conversion consideration will be allocated to policyholders based on the premium paid during the 3 years preceding the date of the meeting of directors held on July 15, 2016.

  10. Joseph Goscilo,DDS says:

    I do not understand how changing from a not for profit,mutual insurance company that exists for the benefit of it’s policyholders/shareholders to ownership by a for profit conglomerate will benefit the policyholders? Our premiums have been reasonable and the company strong due to reduced risk and reduced payouts. What will our premiums rise to in order to compensate the shareholders looking for profit?

    If

    1. The future plans for the operations of the company will be set forth in the Policyholder Information Statement.

  11. Daniel W Miner, MD says:

    On what legal basis are you treating the person or entity that paid the premiums in the past three years as the “owner” of the policy, if the doctor is the owner of the policy? In my case, I joined MLMIC 38 years ago, and only in the past 9 years have the premiums been written by my employer.
    By designating the employer as “administrator,” never agreed to transfer ownership of the policy.

    1. The Policyholder Information Statement will set forth who is considered by MLMIC as its policyholder in the case of a group policy.

        1. MLMIC will determine the process for the distribution of the conversion consideration to policyholders in consultation with the New York regulators. This process will be set forth in the Policyholder Information Statement.

    1. No, the conversion consideration will be allocated to policyholders based on the premium paid during the 3 years preceding the date of the meeting of directors held on July 15, 2016. This allocation is mandated by the New York Insurance Law.

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