BIRMINGHAM, Ala., Nov. 2 /PRNewswire-FirstCall/ -- ProAssurance
(NYSE: PRA) reports Operating Income of $52.2 million, or $1.58 per
diluted share for the third quarter of 2009. Net Income in the
quarter was $55.2 million, or $1.67 per diluted share. For the nine
months ended September 30, 2009, Operating Income was $135.8
million, or $4.08 per diluted share, and Net Income was $137.4
million, or $4.13 per diluted share. (Logo:
http://www.newscom.com/cgi-bin/prnh/20081024/PROASSURANCELOGO )
Gross Premiums Written increased 34% compared to the year-ago
quarter, to $168.6 million, primarily due to recent acquisitions.
Book Value per share is $50.50, an 18% increase since year-end.
Unaudited Consolidated Financial Summary (in thousands, except per
share data) Three Months Ended Nine Months Ended September 30,
September 30, 2009 2008 2009 2008 ---- ---- ---- ---- Gross
Premiums Written $168,559 $126,122 $434,714 $374,393 ========
======== ======== ======== Net Premiums Written $158,705 $116,409
$401,634 $343,609 ======== ======== ======== ======== Net Premiums
Earned $131,956 $113,449 $363,591 $349,794 ======== ========
======== ======== Net Investment Income $38,573 $39,845 $112,839
$122,218 ======= ======= ======== ======== Equity in Earnings
(Loss) of Unconsolidated Subsidiaries $1,637 $(1,967) $328 $(3,916)
====== ======= ==== ======= Net Realized Investment Gains (Losses)
$7,275 $(34,236) $4,822 $(41,011) ====== ======== ====== ========
Total Revenues $182,594 $118,088 $488,804 $430,779 ========
======== ======== ======== Guaranty Fund Assessments (Recoupments)
$(152) $(356) $(630) $(995) ===== ===== ===== ===== Interest
Expense $808 $1,141 $2,638 $5,855 ==== ====== ====== ====== Loss on
Extinguishment of Debt $2,839 $- $2,839 $- ====== == ====== ==
Total Expenses $103,118 $90,891 $295,081 $294,358 ======== =======
======== ======== Tax Expense $24,275 $4,950 $56,274 $34,988
======= ====== ======= ======= Net Income $55,201 $22,247 $137,449
$101,433 ======= ======= ======== ======== Operating Income $52,219
$44,269 $135,751 $127,443 ======= ======= ======== ======== Net
Cash Provided by Operating Activities $3,867 $43,432 $15,941
$144,887 ====== ======= ======= ======== Earnings per Share Three
Months Ended Nine Months Ended September 30, September 30, 2009
2008 2009 2008 ---- ---- ---- ---- Weighted average number of
common shares outstanding Basic 32,701 33,496 32,988 32,519 Diluted
33,023 33,866 33,267 34,561 Operating Income per share (Basic)
$1.60 $1.32 $4.12 $3.92 ===== ===== ===== ===== Operating Income
per share (Diluted) $1.58 $1.31 $4.08 $3.73 ===== ===== ===== =====
Net Income per share (Basic) $1.69 $0.66 $4.17 $3.12 ===== =====
===== ===== Net Income per share (Diluted) $1.67 $0.66 $4.13 $2.98
===== ===== ===== ===== Key Ratios Three Months Ended Nine Months
Ended September 30, September 30, 2009 2008 2009 2008 ---- ----
---- ---- Current Accident Year Loss Ratio 84.9% 83.9% 83.5% 84.0%
Prior Accident Year Loss Ratio (32.2%) (26.4%) (26.9%) (23.2%)
------ ------ ------ ------ Net Loss Ratio 52.7% 57.5% 56.6% 60.8%
Expense Ratio 21.9% 21.5% 22.5% 21.6% ----- ----- ----- -----
Combined Ratio 74.6% 79.0% 79.1% 82.4% ===== ===== ===== =====
Operating Ratio 45.4% 43.9% 48.1% 47.5% ===== ===== ===== =====
Return on Equity 13.9% 6.9% 11.9% 10.5% ===== ==== ===== =====
ProAssurance's Chief Executive Officer, W. Stancil Starnes, said,
"In our historical professional liability book we are adding new
insureds who value our commitment to Treated Fairly and the
financial security that we offer. At the same time, we are bringing
in substantial new premium writings from The PICA Group and our
other recent acquisitions, which validates the effectiveness of our
strategy of profitable growth through carefully thought out
M&A. We believe this level of success clearly demonstrates the
power of our disciplined operating philosophy." Non-GAAP Financial
Measures Operating Income is a "Non-GAAP" financial measure that is
widely used in our industry to evaluate the performance of
underwriting operations. Operating Income excludes the after-tax
effects of realized gains or losses, guaranty fund assessments and
debt retirement loss, and we believe it presents a more appropriate
view of the performance of our insurance operations. While we
believe disclosure of certain Non-GAAP information is appropriate,
you should not consider this information without also considering
the information we present in accordance with GAAP, which includes
the effect of net realized gains and losses incurred during the
quarter and nine month period ended September 30, 2009. The
following table is a reconciliation of Net Income to Operating
Income. Reconciliation of Net Income to Operating Income (in
thousands, except per share data) Three Months Ended Nine Months
Ended September 30, September 30, 2009 2008 2009 2008 ---- ----
---- ---- Net Income $55,201 $22,247 $137,449 $101,433 Adjustments,
net of tax effects: Add: Net Realized Investment Losses $- $22,253
$- $26,657 Debt Retirement Loss $1,845 $- $1,845 $- Subtract: Net
Realized Investment Gains $4,728 $- $3,133 $- Guaranty Fund
Recoupments 99 231 410 647 -- --- --- --- Operating Income $52,219
$44,269 $135,751 $127,443 ======= ======= ======== ======== Per
diluted common share: Net Income $1.67 $0.66 $4.13 $2.98 Effect of
adjustments $(0.09) $0.65 $(0.05) $0.75 ------ ----- ------ -----
Operating Income per diluted common share $1.58 $1.31 $4.08 $3.73
===== ===== ===== ===== Business Commentary -- The PICA Group,
which writes approximately 50% of its business in the third
quarter, accounted for $43.1 million of new business for
ProAssurance in the quarter ($56.9 million for the year). --
Retention, which is calculated on renewing physician policies,
remained at 89% for the quarter and year-to-date in our historical
medical liability book. PICA's retention was also steady at 95% for
the quarter and year-to-date. -- Premium rates on policies renewing
in our historical medical liability book declined three percent in
the quarter, and four percent year-to-date as a result of
improvements in overall loss trends over the past few years. This
compares to a seven percent decline last year. Premium rates on
renewing business at PICA held steady for the quarter and
year-to-date. -- Favorable net loss reserve development was $42.5
million in the third quarter. Year-to-date, our favorable net loss
reserve development has been $98.0 million. This favorable
development is principally the result of a reduction in expected
loss costs, primarily from accident years 2004 through 2007. There
was no reserve development at PICA. Investment Commentary -- The
improvement in our income from investments in unconsolidated
subsidiaries was principally due to improved market conditions and
helped offset a three percent decline in net investment income in
the quarter. Net Investment income was down primarily due to lower
interest rates on both short term and fixed income securities. The
PICA Group added $1.9 million to our investment result in the
quarter ($4.0 million for the year). -- Gains in our trading
portfolio and net proceeds from the sale of securities resulted in
$7.3 million in net realized investment gains in the quarter. This
compares to net realized investment losses of $34.2 million in the
same period a year ago. -- We have updated the online disclosure of
our investment portfolio to provide details of our holdings at
September 30, 2009. The disclosure is available under Supplemental
Investor Information in the Investor Relations section of our
website, http://www.proassurance.com/. Balance Sheet Highlights
September 30, December 31, 2009 2008 ---------- ----------
Shareholders' Equity $1,649,460 $1,423,585 Total Investments
$3,863,396 $3,575,942 Total Assets $4,669,440 $4,280,938 Policy
Liabilities $2,853,794 $2,693,101 Accumulated Other Comprehensive
Income (Loss) $76,394 $(35,898) Goodwill $118,997 $72,213 Book
Value per Share $50.50 $42.69 Capital Management -- In the third
quarter we purchased approximately 41,000 shares of our common
stock on the open market at a cost of $2.1 million. That brought
the total share repurchase through the first nine months of the
year to approximately 881,000 shares, purchased at a cost of $38.1
million. Since the end of the third quarter we have purchased
approximately 250,000 shares at a cost of $12.9 million. This
leaves $116.3 million left in our outstanding authorization, which
includes the additional $100 million authorized for repurchase by
our Board in September, 2009. -- In September we redeemed $7.0
million of Surplus Notes we acquired in our transaction with PICA.
As previously disclosed, this resulted in a pre-tax loss of
approximately $2.8 million ($1.8 million after-tax). About
ProAssurance ProAssurance Corporation is the nation's fifth largest
writer of medical professional liability insurance, based on the
2008 writing of its subsidiaries. ProAssurance is recognized as one
of the top performing insurance companies in America by virtue of
its inclusion in the Ward's 50 for the past three years.
ProAssurance is rated "A" by Fitch Ratings and the ProAssurance
Group is rated "A" (Excellent) by A.M. Best. Conference Call
Information -- Live: Tuesday, November 3, 2009, 10:00 am et.
Investors may dial (888) 587-0595 (toll free) or (719) 325-2104.
The call will also be webcast on our website,
http://www.proassurance.com/, and on StreetEvents.com. -- Replay:
By telephone, through November 20, 2009 at (888) 203-1112 or (719)
457-0820, using access code 5246524. The replay will also be
available through November 27, 2009 on our website,
http://www.proassurance.com/, and on StreetEvents.com. -- Podcast:
A replay, and other information about ProAssurance, is available on
a free subscription basis through a link on the ProAssurance
website or through Apple's iTunes. Caution Regarding
Forward-Looking Statements Statements in this news release that are
not historical fact or that convey our view of future business,
events or trends are specifically identified as forward-looking
statements. Forward-looking statements are based upon our estimates
and anticipation of future events and highlight certain risks and
uncertainties that could cause actual results to vary materially
from our expected results. We expressly claim the safe harbor
provisions of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, for any forward-looking statements in this news release.
Forward-looking statements represent our outlook only as of the
date of this news release. Except as required by law or regulation,
we do not undertake and specifically decline any obligation to
publicly release the result of any revisions that may be made to
any forward-looking statements to reflect events or circumstances
after the date of such statements or to reflect the occurrence of
anticipated or unanticipated events. Forward-looking statements are
generally identified by words such as, but not limited to,
"anticipate," "believe," "estimate," "expect," "hope," "hopeful,"
"intend," "may," "optimistic," "potential," "preliminary,"
"project," "should," "will," and other analogous expressions. When
we address topics such as liquidity and capital requirements, the
value of our investments, return on equity, financial ratios, net
income, premiums, losses and loss reserves, premium rates and
retention of current business, competition and market conditions,
the expansion of product lines, the development or acquisition of
business in new geographical areas, the availability of acceptable
reinsurance, actions by regulators and rating agencies, court
actions, legislative actions, payment or performance of obligations
under indebtedness, payment of dividends, and other, similar
matters, we are making forward-looking statements. The following
important factors are among those that could affect the actual
outcome of future events: -- general economic conditions, either
nationally or in our market areas, that are different than
anticipated; -- regulatory, legislative and judicial actions or
decisions that could affect our business plans or operations; --
the enactment or repeal of tort reforms; -- formation of
state-sponsored malpractice insurance entities that could remove
some physicians from the private insurance market; -- the impact of
deflation or inflation; -- changes in the interest rate
environment; -- the effect that changes in laws or government
regulations affecting the U.S. economy or financial institutions,
including the Emergency Economic Stabilization Act of 2008 and the
American Recovery and Reinvestment Act of 2009, may have on the
U.S. economy and our business; -- performance of financial markets
affecting the fair value of our investments or making it difficult
to determine the value of our investments; -- changes in accounting
policies and practices that may be adopted by our regulatory
agencies and the Financial Accounting Standards Board or the
Securities and Exchange Commission; -- changes in laws or
government regulations affecting medical professional liability
insurance or the financial community; -- the effects of changes in
the health care delivery system; -- uncertainties inherent in the
estimate of loss and loss adjustment expense reserves and
reinsurance, and changes in the availability, cost, quality, or
collectability of insurance/reinsurance; -- the results of
litigation, including pre-or post-trial motions, trials and/or
appeals we undertake; bad faith litigation which may arise from our
handling of any particular claim, including failure to settle; --
the loss of independent agents; -- changes in our organization,
compensation and benefit plans; -- our ability to retain and
recruit senior management; -- our ability to purchase reinsurance
and collect payments from our reinsurers; -- increases in guaranty
fund assessments; -- our ability to achieve continued growth
through expansion into other states or through acquisitions or
business combinations; -- changes to the ratings assigned by rating
agencies to our insurance subsidiaries, individually or as a group;
-- changes in competition among insurance providers and related
pricing weaknesses in our markets; and -- the expected benefits
from completed and proposed acquisitions may not be achieved or may
be delayed longer than expected due to business disruption, loss of
customers and employees, increased operating costs or inability to
achieve cost savings, and assumption of greater than expected
liabilities, among other reasons. Additional risk factors that may
cause outcomes that differ from our expectations or projections are
described in various documents we file with the Securities and
Exchange Commission, such as our current reports on Form 8-K, and
our regular reports on Forms 10-Q and 10-K, particularly in "Item
1A, Risk Factors."
http://www.newscom.com/cgi-bin/prnh/20081024/PROASSURANCELOGODATASOURCE:
ProAssurance CONTACT: Frank B. O'Neil, Sr. Vice President,
Corporate Communications & Investor Relations, +1-800-282-6242,
+1-205-877-4461, Web Site: http://www.proassurance.com/
Copyright