Letterhead of Burr & Forman LLP]
Exhibit 8(a)
[Letterhead of Xxxx & Xxxxxx LLP]
Xxxxx X. Xxxxx
Direct Dial: (000) 000-0000
Direct Fax: (000) 000-0000
Email: xxxxxx@xxxx.xxx
Direct Dial: (000) 000-0000
Direct Fax: (000) 000-0000
Email: xxxxxx@xxxx.xxx
June 1, 2006
Re: | Agreement and Plan of Merger dated December 8, 2005, as amended on February 14, 2006, between ProAssurance Corporation (“PRA”) and Physicians Insurance Company of Wisconsin, Inc. (“PIC-WISCONSIN”) (the “Agreement”) |
Dear Members of the Board:
This letter is in response to your request pursuant to Section 7.2 of the Agreement that we
provide you our opinions with respect to certain of the federal income tax consequences of
consummating the transactions set forth in the Agreement.
In rendering our opinions, we have relied upon the facts presented to us in (i) the Agreement
and (ii) the Proxy Statement and Prospectus filed with the Securities and Exchange Commission as
part of PRA’s Registration Statement on Form S-4, including the exhibits thereto (the “Proxy
Statement-Prospectus”). Additionally, we have relied upon the written representations of
management of PIC-WISCONSIN and management of PRA (which representations we have neither
investigated nor verified) (together with the Agreement and the Proxy Statement-Prospectus
collectively referred to as the “Reviewed Documents”). Capitalized terms used and not defined
herein have the meanings given to them in the Agreement. We have also assumed that: (i) the
transactions contemplated by the Agreement will be consummated in accordance therewith and as
described in the Proxy Statement-Prospectus (and no transaction or condition described therein and
affecting this opinion will be waived by any party); (ii) the Merger will qualify as a statutory
merger under the Merger Laws, as amended; and (iii) the Merger will be reported by PRA and
PIC-WISCONSIN on their respective federal income tax returns in a manner consistent with the
opinions set forth below.
In our examination of the Reviewed Documents, we have assumed, with your consent, that all
documents submitted to us as photocopies (including without limitation the Agreement) reproduce the
originals thereof, that such originals are authentic, that all such documents have been or will be
duly executed to the extent required, and that all statements set forth in such documents are
accurate and complete and will be accurate and complete as of the Effective Time of the Merger.
Based upon and subject to the foregoing and assuming that the Merger will take place as
described in the Agreement and that the representations made by PRA and PIC-WISCONSIN in
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the Certificates are true and correct both as of the date hereof and as of the Effective Time,
we are of the following opinions:
(1) The Merger will be treated as a reorganization within the meaning of Section
368(a) of the Code, and each of PRA, NEWCO and PIC-WISCONSIN will be a “party to the
reorganization” within the meaning of Section 368(b) of the Code.
(2) No gain or loss will be recognized by PIC-WISCONSIN shareholders upon the
exchange of their PIC-WISCONSIN Common Stock solely for PRA Common Stock, including
any fractional share interests to which they may be entitled.
(3) The basis of the PRA Common Stock to be received by a holder of PIC-WISCONSIN
Common Stock as a result of the Merger will be the same as the basis of the
PIC-WISCONSIN Common Stock surrendered in exchange therefor, less any basis
attributable to the fractional shares of PRA common stock for which a PIC-WISCONSIN
shareholder receives cash.
(4) The holding period of the PRA Common Stock received by the holders of
PIC-WISCONSIN Common Stock as a result of the Merger will include the holding period
of the PIC-WISCONSIN Common Stock surrendered in exchange therefor, provided the
PIC-WISCONSIN Common Stock was held as a capital asset at the Effective Time.
(5) The payment of cash in lieu of fractional share interests of PRA Common Stock
will be treated as if the fractional shares were distributed as part of the exchange
and then redeemed by PRA. These cash payments will be treated as having been
received as distributions in full payment in exchange for the PRA Common Stock
redeemed as provided in Section 302(a) of the Code.
(6) If a PIC-WISCONSIN shareholder dissents from the Merger and receives solely
cash in exchange for such shareholder’s PIC-WISCONSIN Common Stock, such
PIC-WISCONSIN shareholder generally would recognize gain or loss measured by the
difference between the amount of cash received and the shareholder’s basis in the
PIC-WISCONSIN Common Stock surrendered.
(7) No gain or loss shall be recognized by PRA, NEWCO or PIC-WISCONSIN by reason of
the Merger.
Our opinions are on matters solely related to certain United States federal income tax
consequences of the Merger, and no opinion is expressed as to the tax consequences under any
foreign, state or local tax law or under any federal tax laws other than those pertaining to
federal income tax. This opinion represents and is based upon our best judgment regarding the
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application of relevant current provisions of the Code and interpretations of the foregoing as
expressed in existing court decisions, administrative determinations (including the practices and
procedures of the Service in issuing private letter rulings, which are not binding on the Service
except with respect to the taxpayer receiving such a ruling) and published rulings and procedures
all as of the date hereof. An opinion of counsel merely represents counsel’s best judgment with
respect to the probable outcome on the merits and is not binding on the Service or the courts.
There can be no assurance that positions contrary to our opinions will not be taken by the Service,
or that a court considering the issues will not hold differently from the Service (and no ruling
will be sought) as to any of the federal income tax consequences addressed in this opinion.
Furthermore, no assurance can be given that future legislative, judicial or administrative changes,
on either a prospective or retroactive basis, will not adversely affect the accuracy of the
opinion expressed herein. We undertake no responsibility to advise you of any new developments in
the law or in the application or interpretation of the federal income tax laws.
In addition, our opinions are based solely on the documents that we have examined, the
additional information that we have obtained, and the statements set out therein, which we have
assumed and you have confirmed to be true on the date hereof and will be true as of the Effective
Time. Our opinions cannot be relied upon if any of the facts contained in such documents or if such
additional information is, or later becomes, inaccurate, or if any of the statements set out herein
is, or later becomes, inaccurate. Further, no opinion is expressed with respect to the United
States federal income tax consequences to holders of PIC-WISCONSIN Common Stock subject to special
treatment under United States federal income tax law, such as holders of PIC-WISCONSIN Common
Stock, if any, who hold PIC-WISCONSIN Common Stock other than as a capital asset, who receive
PIC-WISCONSIN Common Stock upon the exercise of employee stock options or otherwise as
compensation, who hold PIC-WISCONSIN Common Stock as part of a “hedge” “straddle,” “constructive
sale” or “conversion transaction,” or who are insurance companies, securities dealers, financial
institutions or foreign persons. Finally, our opinions are limited to the tax matters specifically
covered thereby, and we have not been asked to address, nor have we addressed, any other tax
consequences of the proposed transaction.
We consent to the reference to this opinion in the Proxy Statement and to the inclusion of
this opinion as an exhibit to S-4 Registration Statement.
Very truly yours, | ||
/s/ Xxxx & Xxxxxx LLP | ||
XXXX & XXXXXX LLP | ||
BAR/ch |