HCC Withdraws Offer for Centris Group Shares

HCC Insurance Holdings Inc. on Wednesday withdrew its offer to buy Centris Group Inc. after the Costa Mesa medical stop-loss insurer rejected the bid as inadequate.

Houston-based HCC, which earlier this month proposed to pay about $143 million, or $13.25 a share, in cash for the 92.2% of Centris it doesn’t own, said it decided to end the pursuit because Centris management wouldn’t negotiate.

“They didn’t contact us. They made no attempt to call us,” said HCC Chairman and Chief Executive Stephen Way. “We had left the door open to visit with them and their board . . . and to perhaps [make] an increased offer.”

Earlier, Centris Chief Executive David L. Cargile called the HCC offer “grossly inadequate.” He said Centris prefers to build its insurance business on its own. Medical stop-loss insurance covers unexpected medical claims against employers that self-insure their employees’ health care.

Centris shares rose 24% Jan. 12, the day after HCC announced its offer, which valued the California company at $155 million. On Wednesday, Centris shares gained 25 cents to $14.06, their highest level since May. The stock is up 44% this year.

Shares of HCC, which withdrew its offer after the close of trading, were up 6 cents to $19.44.

Centris, with about $225 million in annual gross written medical stop-loss premiums, believes it’s the largest provider of that type of insurance, said Howard Singer, executive vice president of corporate finance.

HCC’s business lines include aviation, marine and accident insurance. The company also expects to write about $225 million in medical stop-loss premiums this year, Chief Financial Officer Edward H. Ellis Jr. said.

Way didn’t rule out the possibility that HCC will expand its medical stop-loss business through acquisitions of other companies.

“We do have other opportunities available to us,” he said.

Centris fended off another takeover bid five years ago, when it was known as US Facilities Corp. In 1994, Fidelity National Financial started buying up stock in the company and sought a shareholder mandate to force US Facilities to take bids. The measure passed at the annual shareholders meeting, but Fidelity lost a second vote to elect its slate of directors, which Fidelity said was needed to make sure the mandate was followed.

Fidelity later called off its effort and sold its stake in the company.