**Exhibit 10.23**

 

PROASSURANCE, INC. AND SUBSIDIARIES

CONSOLIDATED TAX ALLOCATION AGREEMENT

 

This agreement (“Agreement”),dated June 27, 2001, is by and between ProAssurance, Inc. (“Parent” or“ProAssurance”) and its subsidiaries, each of which has caused this agreementto be executed by a duly authorized officer. This Agreement succeeds the Consolidated Tax Allocation Agreement, datedDecember 30, 2000, by and between Medical Assurance, Inc. (“MAI”) and itssubsidiaries and the Tax Allocation Agreement, dated September 15, 2000, by andbetween Professionals Group, Inc. (“PGI”) and its subsidiaries.  A list of ProAssurance’s subsidiaries andtheir effective participation dates as they pertain to this Agreement is attachedas Exhibit A.

 

RECITALS:

 

Each of the corporations listed on Exhibit A (collectively, the“Group”) is an affiliated corporation permitted to file a consolidated federalincome tax return, as a member of the group (“Member”), under the terms ofSection 1501, et seq., of the Internal Revenue Code of 1986, as amended(“IRC”), and the Treasury Regulations (“Regulation(s)”) promulgatedthereunder.  The Members recognize thatcertain benefits will accrue to all Members from this election to file aconsolidated federal income tax return. Therefore, the Members have determined that it is in their bestinterests to enter into this Agreement to file a consolidated federal incometax return.

 

In consideration of the mutual benefits to be derived from thisAgreement, each Member agrees as follows:

 

ARTICLE ONE

 

ELECTION TO FILE A CONSOLIDATED INCOME TAXRETURN

 

The Members have agreed and elected to file a consolidated federalincome tax return pursuant to the provisions of IRC Section 1501, et seq. andthe Regulations thereunder.

 

ARTICLE TWO

 

METHOD OF ALLOCATION

 

The Members shall pay the consolidated tax liability of the Group inthe following manner:

 

Pursuant to Regulation Section 1.1552-1(c), Parent elects to allocatethe consolidated tax liability of the Group among the Members in accordancewith the ratio which that portion of the consolidated taxable incomeattributable to each Member having taxable income bears to the consolidatedtaxable

 

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income.  This calculation shallbe made pursuant to Regulation Section 1.1552-1(a)(1).  Each Member shall pay such amount(s) to theParent on the applicable due date or dates that said amount(s) would have beenpayable by the Member had it not been included in the Group’s consolidatedreturn, or as soon after that date as possible.  In lieu of actual payments, adjustments to intercompany payablesand receivables will be made if such exist on the subsidiary’s books.

 

ARTICLE THREE

 

COMPENSATING PAYMENTS

 

In conjunction with the method of allocation delineated in Article Two,the Parent augments the method given at Regulation Section 1.1552-1(a)(1) byelecting the method given at Regulation Section 1.1502-33(d)(2)(ii) as follows:

 

Any Member(s) having losses or tax credits in a given year (“LossMember(s)”), resulting in reduced taxes for the other Member(s), shall bereimbursed by the Member(s) enjoying the tax reduction (“BenefitedMember(s)”).  Generally, thereimbursement of a Loss Member for the tax benefit of its losses or tax creditswill be made by reducing the Loss Member’s intercompany payables to the BenefitedMember(s).  If the tax benefit exceedsthe Loss Member’s intercompany payable to the Benefited Member(s), an actualcash payment may be made.  The requiredcalculation shall be made pursuant to Regulation Section 1.1502-33(d)(2)(ii) byallocating to each Benefited Member an additional tax liability amount equal to100% of the excess, if any, of (1) the separate return tax liability of eachBenefited Member for the taxable year (computed as provided by Article Two),over (2) the tax liability allocated to that Benefited Member under ArticleTwo.  This total additional taxliability shall be paid (or adjustments to intercompany balances shall be made)to the Loss Member(s) on the ratio of the separate return tax benefit to thetotal tax benefit of all Loss Members having such separate return tax benefits.

 

Each Benefited Member having an additionaltax amount shall pay (or adjust intercompany balances, if possible, for) suchamount to the Loss Member(s) on the due date or dates that would have been applicableto the Member had it not been included in the consolidated return, or as soonthereafter as possible.

 

If a Member shall have made payments to (oradjusted intercompany accounts for) another Member for any taxable year inexcess of its liability computed under Articles Two and Three (whetherdetermined on audit or otherwise), the amount of any overpayment (orover-adjustment) shall be repaid (or readjusted) to that Member.  The repayment (or adjustment of intercompanybalances) shall be made to the Member no later than the date the payment wouldhave been made to this Member by the Internal Revenue Service had the Memberfiled a separate return, or as soon thereafter as possible.

 

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If a Member shall have made payments (orintercompany account adjustments) to another Member for any taxable year in anamount less than its liability computed under Articles Two and Three (whetherdetermined on audit or otherwise), the Member shall pay (or adjust intercompanybalances) the amount of such deficiency to the Member entitled to thepayment.  The payments (or intercompanyaccount adjustments) should be made no later than the date such payments wouldhave been required by the Internal Revenue Service if the Member had filed aseparate return, or as soon thereafter as possible.

 

Subsequent changes in the amount of aMember’s tax liability and the reimbursement payment shall be considered anintercompany liability or receivable and not a dividend or surplus contribution,as the case may be, until such adjustment is paid.

 

ARTICLE FOUR

 

TERM AND CANCELLATION

 

This Agreement shall take effect as of the day of execution and shallcontinue until terminated by the mutual agreement of the Members.  For federal income tax purposes, suchtermination is subject to obtaining the requisite approval of such terminationby the Internal Revenue Service in accordance with Regulation Sections1.1502-33(d)(3) and 1.1552-1(c).  In theevent any Member(s) ceases to be affiliated with the Group, this Agreementautomatically terminates as to that corporation.

 

ARTICLE FIVE

 

AMENDMENTS

 

This Agreement may, from time to time, be amended, modified, andsupplemented in such manner as may be mutually agreed upon by the Members.  Any amendment, modification or supplement tothe Agreement shall be in writing and shall be executed by a duly appointedrepresentative of each of the Members.

 

### ARTICLE SIX

 

SEVERABILITY

 

Every article, term, condition, and provision of this Agreement isdeclared to be independent of and severable from all other articles, terms,conditions, and provisions of the Agreement. Invalidation, whether judicial or otherwise, of any article, term,condition or provision contained in this Agreement shall in no way affect anyother provisions of this Agreement, all of which shall remain in full force andeffect.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to beexecuted by the duly authorized officers on the day and year set forth on page1.

 
| Medical Assurance, Inc.                    | Professionals Group, Inc.                 |
|--------------------------------------------|-------------------------------------------|
|                                       |                                      |
|                                       |                                      |
| By:                                        | /s/ James J. Morello                      |   | By: | /s/ Victor T. Adamo |   |
|                                       |                                      |
|                                       |                                      |
| Mutual Assurance Agency, Inc.              | ProNational Casualty Company              |
|                                       |                                      |
|                                       |                                      |
| By:                                        | /s/ James J. Morello                      |   | By: | /s/ Victor T. Adamo |   |
|                                       |                                      |
|                                       |                                      |
| The Medical Assurance Company, Inc.        | PICOM Claims Service Corp.                |
|                                       |                                      |
|                                       |                                      |
| By:                                        | /s/ James J. Morello                      |   | By: | /s/ Victor T. Adamo |   |
|                                       |                                      |
|                                       |                                      |
| Medical Assurance of West Virginia, Inc.   | ProNational Insurance Agency              |
|                                       |                                      |
|                                       |                                      |
| By:                                        | /s/ James J. Morello                      |   | By: | /s/ Jeffrey L. Bowlby |   |
|                                       |                                      |
|                                       |                                      |
| Mutual Assurance Agency of Ohio            | Medadvantage, Inc.                        |
|                                       |                                      |
|                                       |                                      |
| By:                                        | /s/ James J. Morello                      |   | By: | /s/ Victor T Adamo |   |
|                                       |                                      |
|                                       |                                      |
| Medical Assurance of Indiana Agency        | American Insurance Management Corporation |
|                                       |                                      |
|                                       |                                      |
| By:                                        | /s/ James J. Morello                      |   | By: | /s/ James J. Morello |   |
|                                       |                                      |
|                                       |                                      |
| Professionals National Insurance Co., Ltd. | Physicians Protective Plan, Inc.          |
|                                       |                                      |
|                                       |                                      |
| By:                                        | /s/ James J. Morello                      |   | By: | /s/ Jeffrey L. Bowlby |   |

 

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|   | Professionals Group Services Corporation |
|--------|------------------------------------------|
|   |                                     |
|   |                                     |
|   | By:                                      | /s/ Victor T. Adamo |   |
|   |                                     |
|   |                                     |
|   | ProNational Insurance Company            |
|   |                                     |
|   |                                     |
|   | By:                                      | /s/ James J. Morello |   |
|   |                                     |
|   |                                     |
|   | MEEMIC Holdings, Inc.                    |
|   |                                     |
|   |                                     |
|   | By:                                      | /s/ Christine C. Schmitt |   |
|   |                                     |
|   |                                     |
|   | MEEMIC Insurance Company                 |
|   |                                     |
|   |                                     |
|   | By:                                      | /s/ Christine C. Schmitt |   |
|   |                                     |
|   |                                     |
|   | MEEMIC Insurance Services Corp.          |
|   |                                     |
|   |                                     |
|   | By:                                      | /s/ Christine C. Schmitt |   |
|        |                                          |  |  |  |

 

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# **EXHIBIT A**

 

ProAssurance is the parent company of the following subsidiaries, whichare at least 80% owned by ProAssurance:

 
|   |   | **Effective Date of Participation** |   |
|--------|--------|-------------------------------------|--------|
| MAI    |   | 6/27/01                             |   |
| PGI    |   | 6/27/01                             |   |

 

MAI includes the following subsidiaries:

 
|                                      |   | **Effective  Date of Participation** |   |
|-------------------------------------------|--------|--------------------------------------|--------|
|                                      |   |                                 |   |
| Mutual Assurance Agency, Inc.             |   | 6/27/01                              |   |
| The Medical Assurance  Company, Inc.      |   | 6/27/01                              |   |
| Medical Assurance of West  Virginia, Inc. |   | 6/27/01                              |   |
| Mutual Assurance Agency of  Ohio          |   | 6/27/01                              |   |
| Medical Assurance of Indiana  Agency      |   | 6/27/01                              |   |

 

 

PGI includes the following subsidiaries:

 
|                                        |   | **Effective  Date of Participation** |     |
|---------------------------------------------|--------|--------------------------------------|----------|
|                                        |   |                                 |     |
| ProNational Casualty Company                |   | 6/27/01                              |     |
| PICOM Claims Service Corp.                  |   | 6/27/01                              |     |
| ProNational Insurance Agency                |   | 6/27/01                              |     |
| Medadvantage, Inc.                          |   | 6/27/01                              |     |
| American Insurance Management  Corporation  |   | 6/27/01                              |     |
| Physicians Protective Plan,  Inc.           |   | 6/27/01                              | * * |
| Professionals Group Services  Corporation   |   | 6/27/01                              |     |
| ProNational Insurance Company               |   | 6/27/01                              |     |
| MEEMIC Holdings, Inc.                       |   | 6/27/01                              |     |
| MEEMIC Insurance Company                    |   | 6/27/01                              |     |
| MEEMIC Insurance Services  Corp.            |   | 6/27/01                              |     |
| Professionals National  Insurance Co., Ltd. |   | 6/27/01                              |     |

 

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